Q3 2023 Grupo Aeroportuario del Pacífico SAB de CV Earnings Call
Speaker 1: transcript
Speaker 1: Callifications unfolded. Don't forget your patience. And please continue to send by me. Be patient.
And you mentioned some please continue.
Okay.
[music].
Yes.
Speaker 2: transcript
Speaker 2: you Police and by your programming about to begin
Okay.
[music].
Speaker 2: transcript
Speaker 2: Good morning and welcome to the F-conference Coal. Olions have been placed on mute to prevent any background annoyance.
Good morning, and welcome to <unk> Conference call all lines have been placed on mute to prevent any background noise.
Speaker 2: transcript
Speaker 2: After the presentation, we will open the floor first questions. Another time instructions will be given if you would like to ask a question.
After the presentation, we will open the floor for questions and at that time instructions will be given if you would like to ask a question.
Speaker 2: transcript
Speaker 2: Now my pleasure to turn the conference over to Gap's Investor Relations team.
He is now my pleasure to turn the conference over to caps Investor Relations team. Please go ahead.
Speaker 3: transcript
Speaker 3: Thank you and welcome to Group 1 of Porto Adio del Pacifico's third quarter 2023 conference call. Presenting for the company today we welcome Mr. Raul Rehuelta, Gaps Chief Executive Officer and Mr. Sousi Rial, Chief Financial Officer.
Thank you and welcome to group one of our portfolio and fussy, because third quarter 2023 conference call.
Presenting for the company today, we welcome Mr. Walter <unk>, Chief Executive Officer, and Mr sell would be Eylea Chief Financial Officer.
Speaker 3: transcript
Speaker 3: Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, company performance, or financial results. As such, statements made are based on several assumptions and factors that could be...
Please be advised that forward looking statements may be made during this conference call. These do not account for future economic circumstances industry conditions company performance or financial results.
Statements made are based on several assumptions and factors that could change it could cause actual results to materially differ from current expectations for.
Speaker 3: transcript
Speaker 3: This could cause actual results to materially differ from current expectations. For complete note-ons forward-looking statements, please refer to the Quarterly Rebellion.
For a complete note on forward looking statements. Please refer to the quarterly report at this point I'd like to turn the call over to Mister car went out for his opening remarks. Please begin sir.
Speaker 3: transcript
Speaker 3: At this point, I'd like to turn the call over to Mr. Rehuelta for his opening remarks. Please begin, sir.
Speaker 4: transcript
Speaker 4: Thank you Maria and thank you to everyone who took the time to join us today. Let's be in with by addressing the recent events. We know that the last week has been told on the market, even the decision made by the Mexican government.
Thanks, so much and thank you to everyone, who took the time to join US today, let's begin by addressing their restaurants events. We know that the last week has been felt on the market, even though the official date by the Mexican government because.
Speaker 4: transcript
Speaker 4: Today I would like to clarify this changes during this presentation. And as we're all of the questions regarding this.
Because that I would like to clarify these changes during this presentation and those were older question regarding Disney goes for.
Speaker 4: transcript
Speaker 4: First, I will start with the financial results and then I will go deeper into the regulation.
First I will start with our financial results.
Go deeper into their regulation.
Speaker 4: transcript
Speaker 4: There were got gaps of rational and financial performance for the third quarter of 2022. And then there was some events buried to taking questions.
<unk> got gaps of professional on financial performance for the third quarter of 2022, and then very sound events very to taking questions.
Speaker 4: transcript
Speaker 4: For the period, gaps of support at 16.2 million passengers throughout the 14 airports, representing at 10.8% increase.
For the period Gupta of sport to $16 2 million in Boston just throughout the 14 airports, representing a 10, 8% increase together with the solid results we experienced in the first half of this year. This results keep us on track to reach our annual growth guidance.
Speaker 4: transcript
Speaker 4: together with the Southern salt we experienced during the first half of the year. These results keep us on track to reach our honor world get guys.
Speaker 4: transcript
Speaker 4: Aeronautical revenues increased by 8.2%. In Gas Mexican Airport, there was not increase in the product price index, excluding petroleum, which led to zero inflation, increasing the maximum tariff approach.
Domestic revenues increased by eight 2% you got Mexican airport. There was nothing creek at the present price index, excluding petroleum, which led to surety inflation, increasing the maximum tariff upward.
Speaker 4: transcript
Speaker 4: In addition, the nearly 16% of the population of Mexican pass over the US dollar negatively impacts the conservation of the two Jamaican airpurs during the three-quired 20-
In addition, the nearly 16% application of Mexican peso U S dollar negatively impact the consolidations to Jamaica and airports.
<unk> acquired 23.
Speaker 4: transcript
Speaker 4: Therefore, affecting our overall increase in revenue. As a result, there was a decline in the consolidated and analytical revenue per pass.
Therefore.
Our overall revenue.
As a result, there was a decline in the consumption data.
Cause revenue purposes.
Speaker 4: transcript
Speaker 4: Non-elastic revenue grew by 14%. Most of the increase was attributed to the opening of the new spaces in the airport of Guadalajara, Montego Bay, and Los Cabos.
Northern Africa revenue grew by 14% most of that went to the opening of the newest spaces in the airport of while the huddle, well jewelry and scarves.
Speaker 4: transcript
Speaker 4: Passenger traffic growth and the renegotiation of tenant contracts also contributed to this increase.
Passengers traffic growth on the rent negotiation of tenant contract also contributed to the two D C.
Speaker 4: transcript
Speaker 4: It is remarkable that despite the nearly 16% petroleum appreciation during the inquiry, which affected 39% of commercial revenue, non-runout revenue per profit increase 3%.
It is remarkable that despite the nearly 16% peso appreciation during the acquired which affect their debt to 9% of commercial revenue.
The revenue increase.
<unk> increased 3%.
Speaker 4: transcript
Speaker 4: On that note, I want to mention that just this past week at the Guadalajara Airport, we opened a terrace.
On that note I want to mention that just this past week I didn't want her book, we don't put out at the rough.
Speaker 4: An obscure rooftop is faced featuring well-known restaurants and bars.
In upscale rooms focused space, featuring well know restaurants and bars.
Speaker 4: Also at this airport, the Nixos Geos building is nearly complete and is expected to be fully operational during the first quarter of 2026.
Also if you start getting mixed use building is nearly complete I do suspect to be fully operational during the first quarter of 2024.
Speaker 4: EBDA reaches 4.3 billion pesos for the choir, rising 4.5% with an EBDA margin of 67.5%.
That'd be reached $4 3 billion pesos for the quarter rising four 5% with an EBITDA margin of 67, 5%.
Speaker 4: transcript
Speaker 4: This increase was not aligned with the passenger's traffic route because of the almost new inflation in the maximum tariff and the appreciation of the peso, which in fact taught our revenues growth.
This increase was not aligned with the passenger traffic growth because of the almost no inflation and the maximum tariff.
Precision of the peso, which impacted total revenues growth.
Speaker 4: transcript
Speaker 4: In addition, cost increase was related to concession taxes mainly in Jamaica where we saw a positive traffic recovery, specifically in Montego Bay. If you recall, the concession fee in Montego Bay is viable based on the excess earned about the project scenario that was established at the beginning of the concession.
Sure.
The increase was related to concession taxes.
Mike, where we saw passenger strophic recovery.
Especially in Montego Bay, if you'll recall because visuals piedmont be Colby is viable based on success. There about the project scenario that was established at the beginning of the goldfish.
Speaker 4: transcript
Speaker 4: We have been below this project scenario with the pandemic. Hence, we haven't reflected additional concession fee in the past.
We have been the largest project scenario, we get underneath him we haven't reflected additional concession fee in the past years.
Speaker 4: transcript
Speaker 4: However, we are now seeing a recovery medieval bait and of higher concession.
However, we are now seeing a recovery among people be and thus higher concession fees.
Speaker 4: transcript
Speaker 4: Furthermore, inflation has caused higher cost of services and has the hiring of additional personnel and the changes in labor law.
Furthermore, you place your house calls higher cost of services, how has the hiring of additional personnel and the changes in labor law.
Speaker 4: transcript
Speaker 4: Additionally, the minimum wage increase has affected not only the figures for salaries, but also personal contracts, such as canitorial, security, and maintenance.
Additionally, the minimum wage increase has affected not only a few goes for salaries, but also personnel contracts such as janitorial security on Monday.
Speaker 4: transcript
Speaker 4: Moving on to the CAPEX, this continues to be carried out in accordance with the master development program, along with commercial and vendor.
Let me go to the Capex because this continues to be carried out in accordance with the Master development program, along with commercial investment.
Speaker 4: transcript
Speaker 4: During the quarter, we deployed 2 billion pesos, which were mainly allocated to the Guadalajara and Puerto Vallarta airports.
During the quarter, we dipped below 2 billion pesos, which were mainly allocated to the Guadalajara.
Airports.
Speaker 4: transcript
Speaker 4: We have also continued with that acquisition process for the Lamb Reserve in Yohara.
We have also continued to see shrimp for all tests for the laundry therapies.
Perfect.
Yeah.
Speaker 4: transcript
Speaker 4: In recent events, this past September , Brock and Whitney, a world leader in aircraft engines, announced a preventive accelerated inspections of the Airbus 320 and Airbus 321 EOs in Ghana.
And we're saying to them despite the timber products.
We're a leader in aircraft engines, and also importantly accelerated inspections of the Airbus through 'twenty.
It was 231 years and James.
Speaker 4: transcript
Speaker 4: If it is detected around 710,000,000, that's worthwhile, will undergo a inspection from 2023 to 2020.
You guys expected at around 700000 jobs worldwide with longer globe spectrum from 'twenty to 'twenty three 'twenty 'twenty six.
Speaker 4: transcript
Speaker 4: These inspections are mandated by the FFA after a specific number of cycles, depending on the enzyme time.
These inspections are Monday hit by that.
After a specific number of cycles depending of the enzyme.
Speaker 4: transcript
Speaker 4: Currently the FAA has only issued the first service instruction for the initial batch of engines.
Currently it has.
As all of you should have first servicing stroke shrunk for.
Gotcha Okay.
Speaker 4: transcript
Speaker 4: It is estimated that it will take from 250 to 300 days for B&W to remove and inspect the engines to be returned to the operation.
It is import estimated that it will take for.
150 to 300 days for BMW to remove and expect it to be returned to the operations.
Speaker 4: transcript
Speaker 4: Bolais is a brother of 42% of our total passenger traffic. And now it's in his conference goal that from the current 126 aircraft fleet, they have 22 Airbus 321-0 and 55-20 Nios. That may be temporarily affected.
Well I'll start representing 42% of our total passenger subject announced at his conference call cut from the Korean contractors used aircraft fleet. They have 22 Airbus <unk> hundred 21, 55 to 20 deals that may be temporarily affect.
Speaker 4: transcript
Speaker 4: The visibility is limited, but GAAP estimates that most of the impacts will be felt in 2024 and 2035.
The beauty of it easily.
The GAAP estimate that most of the impact will be felt in 2020 for around 2035.
Speaker 4: transcript
Speaker 4: The situation is still evolving. We will keep you updated once more information is available.
There's a question is if Dr. Bobby we will keep you updated once more information is about.
On the other hand.
Speaker 4: transcript
Speaker 4: On October 19, the Mexican House of Representatives present a bill regarding the Mexican Federal Duries' lows changes the concessions fee for 5% to 9%.
On October 19, the Mexico House of Representatives present, our view regarding the Mexican federal jewelry slows changes the concession fee for five.
<unk> nine per se.
Speaker 4: transcript
Speaker 4: This bill was passed by the Mexican Senate yesterday, going into effect on January 1st, 2024.
Theres been buffeted by the Mexican Senate yesterday going into effect on January one 'twenty 'twenty four.
Speaker 4: transcript
Speaker 4: The amount paid in excess over the 5% of the genomic revenues during 2024 will be included in a reference volume for 2024.
The amount paid in excess over the 5% of our revenues do in 'twenty 'twenty four will be included in our references ballroom for 2025.
Speaker 4: transcript
Speaker 4: For the 2025-2029 MDP period, the new concession tax over the aeronautical revenues will be included in our operational costs and will be recovered through the June maximum target.
For the 20 to 25 2029, MTP approved the new concession tax or government.
Revenues will be included in our operational costs will be recovered.
Yeah, John maximum tariff.
Speaker 4: transcript
Speaker 4: On October 4th, we received a notification from the Civil Aviation Agency modifying the rules of tariff regulation that have been in place since 1999.
On October four we received a notification for the C V live nation agents modifying their roof tiles recommendation that had been in place since 1999.
Speaker 4: transcript
Speaker 4: After two weeks of analysis on October 19th, the authority announced the amended rules to verify in the methodology for determining the joint maximum tariff and defining the scope regarding supervision of compliance by the...
After two weeks.
On October 19, Dow 30, I know the amended rules clarifying the methodology for determining the maximum tariff and defining the scope regarding supervision of compliance.
Speaker 4: transcript
Speaker 4: The full text of the new rules was disclosed in our press release on that same day and can be found on our website under press release.
The full text of the new roof rack.
Close in our first relief on that same day and can be found on our website under press releases.
Speaker 4: transcript
Speaker 4: As you as one to briefly review some of the main changes in the rules for different links.
I just want to briefly review some of the main changes in the rules for timeframe image.
Speaker 4: transcript
Speaker 4: First of all, changes in the discount rate going from cost of capital to weighted average cost of capital.
First of all changes in discount rate going from cost of capital weighted average cost of capital.
Speaker 4: transcript
Speaker 4: We believe that this reflects the actual balance sheet position of the company as well as the leverage strategy followed in recent.
We believe that usually fix that's all balance sheet position of the company.
Well deliver struck as you followed with us in juice.
Speaker 4: transcript
Speaker 4: Secondly, a pullback over 3% excess in warlock units for the 12th Air Force Project in the King Canyon.
Secondly, a claw back over 3% exit <unk>.
Judy it's for the 12th surplus project in Turkey.
Speaker 4: transcript
Speaker 4: The trigger for the calculation will be when the aggregate workload units of the period exceeds 3% of the world workload units' projection, established in the MDP.
The trigger for the calculation will be when the aggregate world June each of the previous exceed 3% of the real World Juniors prediction established in the MVP.
Speaker 4: transcript
Speaker 4: In that case, we will have to calculate the excess revenue generate offset by the concession of basically paying French Your Se Skype for dons-Re?.
That case, we will have to calculate the expense revenue generate offset by the concession fee paid for those revenues.
Speaker 4: transcript
Speaker 4: Their result would be just struck from the reference value of the next
The result will be struck from the reference value of the Mexican Kenya.
Speaker 4: transcript
Speaker 4: It is important to mention that this will be reviewed for the wireless unit of the 2025 to 2029 period. Hence, will be applicable in the 2030 reference balance.
It's important to mention that.
<unk> will brief review for the world's Julien.
20% to 25% 20, putting Iberian paint will be applicable in the 20th Turkey reaffirms its Ralph.
Speaker 4: transcript
Speaker 4: Third, the change in the terminal value. In the former rules, we project the net cash flow from the year 16 to the end of the concession period.
The judge and that certainly.
In the form of our little rules, we project, our net cash flow from the <unk> to the end of the concession per year no.
Speaker 4: transcript
Speaker 4: Now, the terminal value will begin in the year six until the end of the concession.
No, they're not with value will be union that euro six until the end of the concession lumpier.
Speaker 4: transcript
Speaker 4: It is important to note that GAF's John Lachemontalister for 2023 and 2024, as well as the MVP, remains the
It is important to note that gap's, Jordan maximum targets for 2023, and 2024 as well as the MTBE remained the same.
Speaker 4: transcript
Speaker 4: Before we move to Q&A, I would like to confirm our guidance figure for 2023, published in the second quarter of 2022.
Before we move to Q&A I would like to confirm our guidance figure for Clinton pretty tree published in the second quarter of 2020.
Yeah.
Speaker 4: transcript
Speaker 4: I just want to underscore our confidence in the underlying fundamental of our business and our commitment to our shareholders.
I just want to underscore our confidence in the underlying fundamentals of our business and our commitment to our shareholders.
Speaker 4: transcript
Speaker 4: Thank you for your attention. I will ask your prayer to from the floor for your question.
Thank you for your attention I will ask the operator to open the floor for your questions.
Speaker 2: transcript
Speaker 2: Thank you. At this time, we will open the floor for your question.
Thank you at this time, we will open the floor for your questions.
Speaker 2: transcript
Speaker 2: First, we will take the questions from the conference call and then the webcast questions.
First we will take the questions from the conference call and then the webcast questions.
Speaker 2: transcript
Speaker 2: If you would like to ask a question, please press the star key followed by the one key on your telephone keypad.
If you would like to ask a question. Please birthday Starkey followed by the one key on your telephone keypad.
Speaker 2: transcript
Speaker 2: You have at any time you would like to remove yourself from the questioning to you. Just press the pound.
You bet anytime you would like to remove yourself from a question in queue just press the pound key.
Speaker 2: transcript
Speaker 2: For the webcast participants, simply type your question in the box and click send.
The webcast participants simply type your question in the box and click send.
Speaker 2: transcript
Speaker 2: Will there go first question from Guillermo Mendez with JP Morgan? Please go ahead, your Lenny's open.
Well take our first question from Guillermo Fernandez with JP Morgan. Please go ahead. Your line is open.
Speaker 5: transcript
Speaker 5: Good morning, Raul, Saul. Thanks for taking my question. I have two questions. The first one is related to the GTF engine situation. I know there's still a lot of moving ports and uncertainty, but...
Good morning ROE. So thanks for taking my question I have two questions. The first one is related to the GTS engine situation.
I know theres still a lot of moving portion of certainty but.
Speaker 5: transcript
Speaker 5: What is your best estimate for the potential impacts for traffic in 2024 and 2025?
What is your best estimate for the potential impacts for traffic in 2000 and in 'twenty four 'twenty five.
Speaker 5: transcript
Speaker 5: And the second question is regarding the MDP changes, so the changes on the regulatory front, if you see any room for any kind of legal measures against the changes. And just a clarification in terms of the MDP negotiation, if the base case is due to have it completed before the potential election or more towards the end of next year. Thank you.
And the second question is regarding the DMT changes so the changes on the regulatory front.
You see any room for any kind of legal measures against the changes and just a clarification in terms of the MTP negotiation if the base cases Q to have it completed before the presidential election.
More towards the end of next year. Thank you.
Speaker 4: transcript
Speaker 4: Thank you, Guillermo, this is our old, I mean, talking about the engines, how is this difficult to have a number right now because it's something that is really above?
Thank you Guillermo.
I mean talking about the and James I would say it is difficult to do half number right now because it's something that is really well.
Speaker 4: transcript
Speaker 4: I will say that in a couple of months, we're going to have more clarity about what could come. But at the moment, and our really first view, we think that it could have an impact from minus 5 to minus 7% on the total passengers of GAP. For sure, this could be.
I will say is that in a couple of bonds. We now have more clarity about what could come.
At the moment I'm not really first view, we think that could have an impact from minus five to minus 7% on the total passenger yourself.
For sure Colby.
Speaker 4: transcript
Speaker 4: Much better if the number of planes in some way come to fly early or don't have any kind of or they don't have the number of the batch of engines on that plane but
Mhm much better here.
The number of planes in some way come to fly yearly or don't have any kind of <unk> or if they don't have the number of the batch of paying janesville battling but today, it's really difficult to say so we run some I would say a big numbers.
Speaker 4: transcript
Speaker 4: Today is really difficult to say, so we want some, I would say, big numbers.
Speaker 4: transcript
Speaker 4: about some of our routes taking account the low factor for instant in the routes that there are some additional space we think that the impact will be lower.
So all of our routes taking dot com.
The load factor for even stand and the routes that there are some additional space.
Think that the impact will be lower.
Speaker 4: transcript
Speaker 4: but also we have to take in accounts that in January on the Mexico City Airport, gonna be a cutoff capacity announced, already announced by the federal government, that
Also we have to <unk> com.
Back in January on the Mexico CV effort.
That type of capacity announced already announced by the federal government.
Good cause.
Speaker 4: transcript
Speaker 4: Also, are we ordered on some of the operations that who have a car result that some planes or some rotation of planes will move from Mexico City Airport to other airports in the country?
Also.
We are there on some of the expirations that who have a result that some planes.
Well some rotation of claims will move from Mexico City Airport to other airports in the country.
Speaker 4: transcript
Speaker 4: Saying all that, our view today gonna be an impact that could be around 5 to 7%. But again, we think that there's a lot of information that today is not completely clear.
Saying all of that.
Our beautiful day.
The impact that could be around 5% to 7%, but again.
Saying that Theres a lot of information that today is not completely clear.
Speaker 6: transcript
Speaker 6: Okay, hi, Guillermo, this is so good. Well, in terms of the MDP changes, we don't see any potential legal claim in the common monstrosity, what is the effects? In regard to the MDP negotiation, is I think it's more...
Okay.
Let me see so well.
In terms of the MTB changes who we.
We don't see.
Any any hope any show you go clean them.
In the in the coming months, we will see what do you see the effects.
In regarding the MTBE negotiation.
Thank you.
More.
Speaker 4: transcript
Speaker 4: We have more certainty, more clarity about some of the calculations in terms of the scan rate. I think it's good for the market to have this certainty, and it's very early to know what could be. The effect, we know that.
Yeah more surface anymore clarity about some of the calculations in terms of that sounds great.
It's good for the market to have the certainty.
And it is very early to know what could be.
The effect, we know that the election will be in the same here. We did not expect any any change in terms of that with you with the with the government. We believe that this is the basis.
Speaker 6: transcript
Speaker 6: will be in the same year. We do not expect any change in terms of the review with the government. We believe that this is...
Speaker 6: transcript
Speaker 6: that that basis for the MVP review for 2025-29. And by the end of September , we will have the change of the government. And probably in the last quarter, 2024, we will have or wish you have the new MVP and the new TARDIS.
For that hold the MVP with us 20 <unk>.
559.
And by the end of September we will have the change of the bornemann.
Probably in the last quarter of 'twenty 'twenty four we will have once you have been won.
You do new targets.
Yeah.
Speaker 5: transcript
Speaker 5: That's super clear. Thank you, Raul and Saul. Have a great day.
That's super clear. Thank you Roland so that every day.
Speaker 2: transcript
Speaker 2: Our next question comes from Alberto Valerio with UBS. Please go ahead.
Our next question comes from Alberto Valerio with UBS. Please go ahead.
Speaker 7: transcript
Speaker 7: Hi Raul, Saúl and all the team, thank you for taking my question. My question is regarding the discount rate. When move to cost of equity to work, we usually see a decrease and if you take the methodology that the government just reported to us, we would see this change. However,
Hi, Hello, So Oh, Jim Thank you for taking my question.
My question is regarding the discount rates.
When when move to cost of equity to watch, we usually see a decrease in <unk>.
You take the methodology that the golfing match just report was.
You.
Sure.
However for.
Speaker 7: transcript
Speaker 7: For the old regulatory framework, we used to have a maximum 10-year bond plus a spread that we estimate close to 4%.
For the old rig.
Big lots very framework.
You used you had a Mexican 10 year bonds.
Brett that's we estimate close to 4%.
Speaker 7: transcript
Speaker 7: And with this new regulatory framework, even working being below the cost of equity, this would be higher than the previous one. My question is, this doesn't make sense with the announcement of tariff cuts. Where could I be wrong here? What I could be missing on these new discount rates for the new regulatory framework? Thank you.
And with this new regulatory framework.
Even walk you being below the cost of equity.
Would it be higher than the previous one my question is does it make sense to each denosumab.
Good.
What could that I'd be wrong here, but what I could be missing on these new discount rates for the new regulatory framework. Thank you.
Speaker 4: transcript
Speaker 4: Thank you very much. I will set up going from which could be the impact on why now for us is difficult because we are more than I mean I hear before we really know which going to be the specific rate
Thank you I will say that going forward from which will be the impact well why not false is difficult because we are more than I mean.
Sure.
Really no which cannot be the TCE rates.
Speaker 4: transcript
Speaker 4: that we will have taking account, inflation, and all the different variables that today are in some way moving.
I'm thinking that come in place Shaun.
All the different variables that today or are in some way moving one of the things that you said is interesting also is that in the cost of capital in the new format.
Speaker 4: transcript
Speaker 4: One of the things that you said that is interesting also is that in the cost of capital in the new formula, the government at all the.
The garbage man.
<unk>.
All of the different maturity bonds.
Speaker 4: transcript
Speaker 4: from 10, from 5 years to 30 years. I think that is good for the calculation of the cost of capital, because at the end of the day,
From 10 from prior years.
30 years I think that is good for the calculation of the cost of capital because I don't know the date.
Speaker 4: transcript
Speaker 4: in the time, it will reflect in some way.
In the time.
It will reflect in some way.
Speaker 4: transcript
Speaker 4: the long term cost of capital for a company in Mexico. So I think that one of the things that are...
The long term cost of capital for our company in Mexico. So I think thats one of the things that art.
Speaker 4: transcript
Speaker 4: interesting and in some way have been clarified by the system is related to the cost of capital and the different maturities that we'll use that will take in account all the different maturities for the UMS. But it's I think a good news for the company and for the regulation.
Interesting.
Having clarified by the system.
Of the cost of capital and the different maturities that we'll use that will take in account already figured matures for join me, but he is I think a good a good news for for the company and for the regulation.
Speaker 6: transcript
Speaker 6: is difficult to say which is going to be the impact because there are a lot of variables happening right now and we are more than one year ago from our actual...
It's difficult to say which is that.
The impact because there are a lot of variables happening right now.
We are more than one year ago from from from our trials.
The.
Speaker 4: transcript
Speaker 4: review of the calculation of the maximum time.
Review of the of the of the of the calculation.
The maximum tax.
[noise] bump basket and if I may just a follow up in terms of topics before.
Speaker 7: transcript
Speaker 7: Fantastic. And if I may, just a follow-up in terms of CAPEX. Before we are talking about to keep the same CAPEX per passenger, close to 40 billion pesos for the next MDP, should we keep in mind the same reference value or should increase or decrease than you were thinking six months ago?
Before we are talking about to keep the same capex bessinger close to 40 would be done it suits for the next MVP should keep in mind you. The same half of rich valuable who should increase or decrease than you you were thinking six months ago.
Speaker 4: transcript
Speaker 4: I will say that one of the parts that will be – is one of the moving parts that we are seeing right now, today we don't know how big is going to be the impact or how long going to take the impact of the Airbus A320 and A321 engines, if they go.
I will say that one of the parts that would be is it.
One of the moving parts that we are seeing right now.
Today, we are we don't know how big.
The impact or how long to take the impact of the earthquake.
There was through 2020 one.
And James is to go deeper into the MD business. He is.
Speaker 4: transcript
Speaker 4: deeper into the MVP is saying not only in 2025 or even 2026. So today is really difficult.
Saying not only in 2025 or even 2026.
So today, it's really difficult.
Speaker 4: transcript
Speaker 4: to save which additional capacity it will bring to the table. For sure, right now we are working right now on all our...
Can you say, which of each unit capacity will bring to the table.
Please be sure to leave.
For sure right now we are working right.
Right now.
All of that were.
Speaker 4: transcript
Speaker 4: quality services and capacity reviews to understand which is going to be the biggest amount or the amount that we will have on CAPEX for the coming years. One of the things that is important to have in mind that
Quality services and capacity reviews for them their sandwich.
The.
The biggest the biggest amount or the amount that we will have on capex for deferred for coming years, one of the things that is important to have in mind that.
Speaker 6: transcript
Speaker 6: Some of the cappers that will be reflected in the new master plan has already
Some of the Capex that will be reflected in the new Master plan.
<unk> already.
Speaker 6: transcript
Speaker 6: And with that, I was saying about mainly the Guadalajara land reserve that already passed through the balance sheet of GAAP.
Hey.
I was saying about mainly that while our high right now.
<unk> reserve that.
Already passed through the balance sheet of gap.
Speaker 6: transcript
Speaker 6: But it will be reflected on the maximum tariff in the next period. So in general terms, I will say that the capex per passenger could be closer of what we have in the past, but it's important to know that the effect of the Guadalajara Land Reserve
But it will be a reflection on the maximum tariff in the next.
In the next period, so in general I will say.
That the capex for passengers could be closer to what we have in the past, but it's important to know that the effect of the Guadalajara along with sharp.
Speaker 6: transcript
Speaker 6: has already paid, so it will not have future effect on the cash flows of the company, even if it will be reflected on the new master plan as a part of our program.
Has already paid so it will not have future effect on the on the cash flow as a result.
If the company, even if will be reflected on the new Master plan.
Maria Barona: Please, and bye. Your program is about to begin. Good morning, and welcome to the ASC conference call. Olives have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions. Another time, instructions will be given if you would like to ask a question. It is now my pleasure to join the conference over to gaps investor relations team. Please go ahead. Thank you, and welcome to Grupo Aeroportuario del Pacifico's third quarter, 2023 conference call.
As a part of our program.
Yeah.
Okay. Thank you very much for the detail.
Oh I'm sorry.
Yeah.
Thank you we will take our next question from Pablo <unk> Vice.
Speaker 2: transcript
Speaker 2: We will take our next question from Pablo Monsivais with Barclays, please go ahead.
He is with Barclays. Please go ahead.
Speaker 8: transcript
Speaker 8: Hi, thanks for taking my question. It's kind of a follow up to the previous question. The fact that we're moving to a WAC from a cost of equity, but your debt ratio is very low.
Hi, Thanks.
Thanks for taking my question.
Maria Barona: Presenting for the company today, we welcome Mr. Raul Rehuelta, gaps chief executive officer, and Mr. Saudi Areas chief financial officer. Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, company performance, or financial results. As such, statements made are based on several assumptions and factors that could change. This could cause actual results to materially differ from current expectations. For complete note-on forward-looking statements, please refer to the quarterly report.
It's kind of a follow up to.
A previous question.
The fact that from.
From a well to a work from a cost of equity.
Sure Brian.
Sure.
Oh.
Speaker 8: transcript
Speaker 8: It is correct to think that you're basically back again to a cost of equity calculation because your debt ratio is quite low. That's number one. Number two, in general, how do you feel about this agreement? Do you feel comfortable with having these rules? Or is there anything that probably...
That's correct.
Basically.
Again to our cost of equity calculation.
The ratio is quite small.
That's number one.
Number two.
How do you feel about that.
Feel comfortable with having these rules or is there anything that you feel like smoke right.
Speaker 8: transcript
Speaker 8: feel it's not right. And I don't know, perhaps a related question on that. Do you feel like the government liberty to estimate?
I don't know if perhaps a related.
Question on that.
Raul Rehuelta: At this point, I'd like to turn the call over to Mr. Raul Rehuelta for his opening remarks. Please begin, sir. Thank you, Maria, and thank you to everyone who took the time to join us today.
Okay.
Oh.
The growth.
Speaker 8: transcript
Speaker 8: growth variable on the terminal value calculation is something that you probably dislike or how you feel in general about this. Thank you.
139 calculation suffering probably dislike or how are you feeling in general about.
Yeah.
Raul Rehuelta: Let's begin by addressing the recent events. We know that the last week has been told on the market, even the decision made by the Mexican government. Today, I would like to clarify this changes during this presentation, and as we're also questioning regarding this news.
Speaker 4: transcript
Speaker 4: Thank you, Pablo. Let me read with the g-factor for the terminal volume.
Thank you Paolo let me received with J D.
<unk> factor for the terminal value.
Speaker 4: transcript
Speaker 4: Do you remember that the G-factor has a thesis in all the life of our conversation? But on the past is just to be the average of the last five years before the counting of the beginning on the terminal value on the formula. So on the past is what will it clear? And the authority applied just directly from that average of traffic growth.
Remember that the <unk> factor has ceased.
In all the life of our compression, but on that on the past is just to be there.
Raul Rehuelta: First, I will start with the financial results, and then I will go deeper into the regulation. There were some gaps of rational and financial performance for the third quarter of 2022. And then, there were some events buried to take in question.
As of the last five years before the accounting of the beginning they're telling me nobody on the formula.
On the past because it was really clear and and our total capitalized just directly for them from that average.
Raul Rehuelta: Sponsors. For the period, gaps of support at 16.2 million passengers throughout the 14 airports representing at 10.8% increase. Together with the southern results, we experienced during the first half of the year. These results keep us on track to reach our annual World Guidance. Ironautical revenues increased by 8.2%. In gas-Mexican airport, there was no increase in the process price index, excluding the trillion, which led to zero inflation increasing the maximum tariff approved.
Of traffic growth.
Speaker 6: transcript
Speaker 6: On this new version, the yield still be, I would say, the same in terms of the terminal value. It still be a calculus from average growth from the projections of traffic.
And on these new bearish on the yield deals say B I would say the same in terms of the terminal volume is still be a calculus from.
Uh huh.
Uh huh.
However, as growth from the projections of traffic is still the same way.
Speaker 6: transcript
Speaker 6: the same way and for sure it has a big
For sure.
A big.
Speaker 6: transcript
Speaker 6: a bigger impact than in the past because it will take from the year six until the end of the confession.
A bigger impact than in the past because it will take from the <unk> until the end of the concession.
Raul Rehuelta: In addition, the nearly 16% of the population of Mexican countries over the US dollar negatively impact the consolidation of the two Jamaican airports during the two required 23. Therefore, our overall increase in revenue, as a result, there was a decline in the consolidated Ironautical Revenue per passenger. Not Ironautical Revenue grew by 14%. Most of the increase was activated to the opening of the new spaces in the airport of Guadalajara, Multigoway and Wisconsin.
Speaker 6: transcript
Speaker 6: but at least thinking on what the past.
But I believe.
On what that path.
Speaker 6: transcript
Speaker 6: the way that in the past was the G calculated and in some way accepted by the government, the federal government, I will not foresee any changes in the way that could or not could affect. At the end of the day, Pablo, the new rules are in some way clear about the way of the calculus of the G. The only part.
The way that the past in the past why did you did you calculate it and in some way affected by the government the federal government.
I will not foreseeing any changes in the way that.
Good quarter not cook effect.
Pablo than you were a little short in some way clear about the weight of the calculus of the Jeep.
Raul Rehuelta: Passes your traffic road on the renewable stage of tenant contracts, also contributed to this increase. Here's a remarkable that despite the nearly 16% personal appreciation during the choir, which affected 39% of commercial revenue, not Ironautical revenue per passenger increased 3%. On that note, I welcome mention that just this past week at the Guadalajara Airport, we operated at the Ross, an upscared rooftop space featuring well-known restaurants and bars. Also, this airport that mixes just building is nearly complete and is expected to be fully operational during the first choir of 20.4.
The only path that we need to.
Speaker 6: transcript
Speaker 6: to have a much better understand is the normalization of the capex.
You have a much better under that he's been normalization of the capex for the long term on the term nobody I will say that that is the.
Speaker 6: transcript
Speaker 6: for the long term on the terminal value. I will say that that is the...
Speaker 6: transcript
Speaker 6: the tricky part that we'll need to understand better how the authority will apply that.
The tricky part that we'll need to understand better how the scout Dorothy we'll apply that.
Speaker 6: transcript
Speaker 6: But I am, we have enough time to understand on the couple of months, and to begin any before we have the new negotiation of the maximum.
But.
We will have enough time to understand.
On a couple of months and to begin any any before we have the.
The new negotiation of the maximum tariff.
Raul Rehuelta: EBI reaches 4.3 billion pesos for the choir, rising 4.5% with an average of 67.5%. This increase was not aligned with the passenger's traffic route because of the almost-nual inflation in the maximum tariff and the appreciation of the peso, which in fact, taught our revenues growth figures. In addition, cost increase was related to concession taxes, mainly in Jamaica, where we saw a passing of traffic recovery, especially in Multigoway. It's your recall the concession fee in Multigoway is viable, based on the excess earned about the project scenario that was established at the beginning of the concession.
Speaker 9: transcript
Speaker 9: In terms of the cost of equity or WAC, we believe that this change reflects the composition of our balance sheet.
Yes.
In terms of Pablo this is so in terms of the cost of equity or walk.
We believe that.
This change reflects the composition of our balance sheet.
Speaker 9: transcript
Speaker 9: So obviously the cost of equity and what has been different.
So.
Obviously, the cost of equity and what I mean.
Difference, but it is going to get to say now that's cool.
Speaker 9: transcript
Speaker 9: But it's complicated to say now that if we could return to the cost of equity calculation, that basis of period clear and we have to do as management is to analyze the best composition, the best balance of our debt, our...
Let's turn to the cost of equity calculation.
Basically are pretty clear.
We have to do as management is to analyze the base composition of the best balance of our.
Our debt our.
Speaker 9: transcript
Speaker 9: in general terms of our capital structure and to see what is the best approach for the next party review and obviously to try to obtain the first return for our investors in terms of our NDP and obviously in terms of the new regular basis.
In general terms, our capital structure.
Raul Rehuelta: We have been below this project scenario with the pandemic, hence we haven't reflected additional concession fee in the past years. However, we are now seeing a recovery in Multigoway and thus higher concession fees. Furthermore, inflation has caused higher cost of services and has the hiring of additional personnel and the changes in labor law. Additionally, the minimum wage increase has affected not only the figures for salaries, but also personal contracts, such as janitorial, security, and maintenance.
See what is the base.
Approach for that for that makes it a body with you and others need to try to talk to that fair a fair return for our investors in terms of our O.
Our MVP and obviously in terms of the new where we are.
A basis.
Okay.
Okay. Thank you very much.
Speaker 2: transcript
Speaker 2: Our next question comes from Bruno Amorim with Goldman Sachs, please go ahead.
Our next question comes from Bruno Amorim with Goldman Sachs. Please go ahead.
Raul Rehuelta: Moving on to the program, along with commercial events. During the choir, we deployed two billion pesos, which were mainly allocated to the Guadalajara and Porto Vajata airports. We have also continued with that acquisition process for the lamb reserve in Guadalajara Airport.
Speaker 10: transcript
Speaker 10: Thank you good morning everybody. So I have two questions, the first one on the new regulatory framework for the calculation of the tariffs as of the MDP. I like to ask you some help to understand the big picture because you know, you corrected me from wrong, but the it seems...
Thank you good morning, everybody so I have.
Two questions. The first one on the new regulatory framework for the.
Calculation of the tariff as of the MVP I like to ask you some help to understand the big picture because.
You're correct me, if I'm wrong, but.
The deep <unk>.
It seems that those changes they point to lower tariffs.
Speaker 10: transcript
Speaker 10: Those changes, they point to lower tariffs, the concession fee.
Raul Rehuelta: In recent events, this past September, probably with a world leader in aircraft engines, announced the presently accelerated inspections of the Airbus 220 and Airbus 220 Oneos in Jans. It is expected around 700 engines worldwide, will undergo a inspection from 2023 to 2026. These inspections are mandated by the FSA after a specific number of cycles, depending on the engine time. Currently, the FAA has only issued the first service instruction for the initial batch of engines.
Concession fee.
Speaker 10: transcript
Speaker 10: will increase, the concession is not being extended.
We'll increase the concession is not being extended and capex at the end of the day is a function of traffic. So he is not being changed so if you have lower tariffs higher concession fee and other variables are not changing is it fair to say the return on the regulated side of the business is coming down or is there.
Speaker 10: transcript
Speaker 10: and you know CAPEX at the end of the day is a function of traffic so it's not being changed so if you have lower tariffs, higher concession fee
Speaker 10: transcript
Speaker 10: and other variables are not changing, you know, is it fair to say the return on the regulated side of the business is coming down or is there, you know, any offset that I'm not aware of? And the second question is on the parallel discussion for the short-term reduction in the TUA which has been
Any offsets that I'm not.
And the second question is on the parallel discussion for the.
Short term reduction in the tour, which has been in the press over the past few days you know, what's the basis for that for that the revision into outside of the MVP what could be the offsets to keep the contract balanced.
Raul Rehuelta: It is important estimated that it will take from 250 to 300 days for B&W to remove and expect the engines to be returned to the operations. Bola is about 42% of our total passenger traffic, announced in his conference call that from the choir and 126 aircraft fleet, they have 22 Airbus 220 Oneos and 55 to 20 Oneos, that may be temporarily affected. The visibility is limited, but Guad estimates that most of the impacts will be felt in 2024 and 2025. The expectation is still evolving, we will keep you updated once more information is about.
Speaker 10: transcript
Speaker 10: in the press over the past few days. You know, what's the basis for that? You know, for that revision in two outside of the MDP. What could be the offset to keep the contract balanced? You know, those are my two questions. Thank you very much.
My two questions. Thank you very much.
Speaker 6: transcript
Speaker 6: Thank you, Bruno. Today, it's difficult to say which is going to be the final result of the calculus, because at the end of the day.
Thank you Bruno.
Today, it's difficult to say, which cannot be the final result of the of the calculus, because I cannot debate we have.
Speaker 6: transcript
Speaker 6: moving parts on the demand, moving parts on the rates. So it's, I would say that it's difficult today to say which gonna be the direct impact on the new calculation. In general terms, I will say that the biggest change in all these regulatory framework is the weight of the calculation of the, from cost of capital to what.
Moving parts on the remarks, when we embarked.
On the rate so.
I will set that is difficult to do today to say, which one IV.
Raul Rehuelta: On the other hand, on October 19, the Mexican House of Representatives, present a bill regarding the Mexican federal duties' loans, changes the concessions fee from 5% to 9%. This bill was passed by the Mexican Senate, which is Thursday, going into effect of January 1, 2024. The amount paid to excess over the 5% of our nationalical revenues, due in 2024, will be included in reference value for 2025. [inaudible] years.
The direct impact.
On the new calculation.
In general terms I.
I will say that.
The biggest change in all of these regulatory framework.
The calculation of the AV from cost of capital to work.
Speaker 6: transcript
Speaker 6: So, over there, depending in the structure of God's of death of the company for the future.
So over.
The pending in the structure of cost of debt of the company for the future.
Speaker 6: transcript
Speaker 6: it will be or not offset the possible impacts on the calculus of the WAC. But again.
It will be or not.
The offset.
The possible impact on on the calculus of Iraq, but again.
Speaker 6: transcript
Speaker 6: It's really difficult to today say a number or say by itself that it's going to be a decrease on time. We need to run.
It's really difficult.
Today say, a number or say bye bye bye itself that is going to be a increase on tariff we needed to run.
Speaker 6: transcript
Speaker 6: the numbers, we need to understand the new characteristics of the market.
The numbers, we need to understand the new characteristics of the market.
Speaker 6: transcript
Speaker 6: to understand specifically which are going to be the size of our capex, and after that, we could have a more correct number that will happen in the coming months. It is important to say in terms of the change on the concession fee.
To understand the.
Specifically, which would have either facts of our capex.
After that we will have.
A more correct number that.
It will happen in the coming in the forthcoming months. It is important to say in terms of the change.
The concession fee.
Speaker 4: transcript
Speaker 4: It's important to notice that the regulation, the new regulation is still having the tool.
It is important to note is that the regulation the new regulation.
If youre having.
The two.
Pass through the tariff.
Speaker 6: transcript
Speaker 6: at least the cost of the concession fee that is implied by the aeronautical revenue.
I believe the cost of the concession fee.
That is implying that the rollout to calculate it.
So I would say it.
Speaker 6: transcript
Speaker 6: that the effect of the concession fee on their article revenue.
The effect.
The concession fee on their optical revenues.
Speaker 6: transcript
Speaker 6: in the next modification of the maximum car if would be neutral. Just a pair of the of the of the
In the next.
A modification of the maximum tariff.
Raul Rehuelta: Secondly, at low back, over 3% access in World Loved Units for the 12th Air Force Project in the Canaan. The trigger for the calculation will be when the aggregate World Loved Units of the period exceeds 3% of the World Loved Units projection established in the NDP. In that case, we will have to calculate the excess revenue generated offset by the concession paid for those revenues. Their result will be subtracted from the reference value of the next Canadian. It is important to mention that this will be reviewed for the World Loved Units of the 2025 to 2029 period. Hence, will be applicable in the 2030 reference value.
B <unk> L just apparel.
<unk> consistently.
Speaker 9: transcript
Speaker 9: Has a highyou know this is so in terms of A. the short term lection of two are constuents in the P.
Yes.
So in terms of.
So central to the tune of two high schools and depressed.
Speaker 9: transcript
Speaker 9: We would like to let you know that it is
Okay.
I would like to let you know that is something that we do every year and to provide to the market is kind of a.
Speaker 9: transcript
Speaker 9: Something that we do every year and we provide to the market this kind of
Speaker 9: transcript
Speaker 9: a benefit. It's not an exception, ladies.
Benefits is not an exception it is probably.
Speaker 9: transcript
Speaker 9: Probably right now there's additional notes on that.
Probably right now there are additional notion that I think it's something that we do almost every year.
Speaker 9: transcript
Speaker 9: But it's something that we do almost every year, providing this kind of a incentive to the market.
This is kind of a.
Incentives to the to the market and in the discounts into all of this come in and agronomic.
Speaker 11: transcript
Speaker 11: And the discounts in tour or discounts in aeronautical services, it's happening all the time. Obviously, right now, it was part of a review with the authorities.
Raul Rehuelta: Third, the change in the terminal value. In the former rules, we project the net cash flow from the year 16th to the end of the concession period. Now, the terminal value will begin in the year 6th until the end of the concession period. It is important to note that gas join maximum tariff term for 2023 and 2024, as well as the NDP, remain the same.
Services is it's all these coupled and oldest obviously right now is it was part of that would you would do with the authorities.
Speaker 11: transcript
Speaker 11: But it's something that we do regularly.
The bodies.
It's something that we do regularly so it is it has to.
Speaker 11: transcript
Speaker 11: So it is true, it is a scam, but it's something that we just do every year. So it's not an exception, but just now, because on this.
Somebody is something that we just to do a every every year. So it was not on.
Raul Rehuelta: Before we move to Q&A, I would like to confirm our guidance for 2023 published in the second quarter of 2023. I just want to underscore our confidence in the underlying fundamental of our business and our commitment to our shareholders. Thank you for your attention.
In his section.
Now because you can say on this.
Speaker 6: transcript
Speaker 6: And to be clear about the two reductions.
Yeah.
To be clear about that too.
The reduction.
Speaker 6: transcript
Speaker 6: One of the things that we're going to announce in the coming days is that we will have a discount of 2 out of 10 percent in nine of our airports.
One of the things that we're going to announce in the coming days is that we will have.
Discount.
<unk>, 10% in nine of our airports.
Maria Barona: I will ask the operator to open the floor for your questions. Thank you.
Speaker 6: transcript
Speaker 6: During November and December , then we will review inflation in all our types.
During November and December.
Maria Barona: At this time, we will open the floor for your questions. First, we will take the questions from the conference hall and then the webcast questions. If you would like to ask a question, please press the store key followed by the one key on your telephone keypad. If at any time you would like to remove yourself from the questioning queue, just press the pound key. For the webcast participants, simply type your question in the box and click send.
We will review your inflation in all our target.
Speaker 6: transcript
Speaker 6: not only TUA, and we will keep with the new tariff a discount of the 10% in nine of our airports. In general terms, that is a promotion that we will put in place for the coming year, from 2024. And it is important, again,
Not only do it and we will keep with a new tariff discount of the 10% and nine of our airports in charters that is a promotion that we were fully in place for the coming year from 'twenty to 'twenty four.
And it is important again.
Speaker 6: transcript
Speaker 6: really important to say that these promotions or discounts on 2A is not...
Really important to say that these promotions are discounts on tour.
Guillermo Mendes: We'll dig a first question from Guillermo Mendes with JP Morgan. Please go ahead, your one is open. Good morning, Ro. Saul. Thanks for taking my question. I have two questions. The first one is related to the GTF engine situation. I know there is still a lot of moving importance in the certainty, but what is your best estimate for the potential impacts for traffic in 2024 and 2025? And the second question is regarding the NDP changes to the changes on the regulatory front.
It's not affecting.
Speaker 4: transcript
Speaker 4: or changing the rules on the maximum tariff, because the maximum tariff is still in place. It's still exactly the same that were negotiated and announced by the government four years ago.
Or changing the rules on the maximum tariff because the maximum tariff is still in place is still exactly the same that we're.
Negotiated and announced by the government of five years four years ago.
Speaker 6: transcript
Speaker 6: So, just to make sure that we got it, so you're saying it doesn't change the maximum tariff, but you're going to charge a lower tour by 10% in some airports. So, is it fair to say in those specific airports, the tariff or the revenues per passenger will be roughly 10% below the maximum tariff going forward? Not necessarily, because as you know, the maximum tariff is a basket of services.
So just for me.
Sure.
Got it. So you were saying you it doesn't change the maximum tariff video, we're going to charge a lower tour by 10% in some airports. So is it fair to say those specific airports.
Guillermo Mendes: If you see any room for any kind of legal measures against the changes and just clarification in terms of the NDP negotiation, if the base case is still to have it completed before the potential election or more towards the end of next year. Thank you. Thank you, Guillermo Mendes.
Or the revenues per passenger will be roughly 10% below the maximum tariff going forward.
No not necessarily because as you know the maximum value for south basket of services and that services.
Speaker 6: transcript
Speaker 6: and other services, and of course, for example, there are two variables that really changed the way that we...
At all other services and of course for us.
Raul Rehuelta: I was talking about the engines. I was very difficult to have a number right now because it's something that is really evolving. I will say that in a couple of months, we're going to have more clarity about what could come, but at the moment, and our really first view, we think that it could have an impact from minus 5 to minus 7 percent on the total passengers of Gap. For sure, this could be... Much better if the number of planes in some way come to fly early or don't have any kind of the, or they don't have the number of the batch of engines on that plane.
There are two variables that really changed the way that we.
Speaker 6: transcript
Speaker 6: calculate, make the figures about the maximum tariff, that is, the inflation and the exchange rates. So what we are saying on this moment for the coming year and what some of the things that we will announce in the coming days is that we will have a reduction of the 10% of TUA in nine of our airports.
Taco Bell.
Figures about the maximum type studies the inflation.
And the exchange rate so what we're saying on this model for the company with <unk> and what some of the things that we will announce and come in this is that we will have a reduction of the 10% of <unk>.
Nine of our airports.
Speaker 6: transcript
Speaker 6: This 10% is in, I would say, it will be after the inflation review, and it's just in that specific.
This 10% is in.
I would say it would be after the financial review and if just in that specific.
Speaker 4: transcript
Speaker 4: a specific type. It's not directly applied, a reduction on the 10% of the total ironautical
Specific type.
Not directly fly a reduction on the 10% of the total.
Raul Rehuelta: But today is really difficult to say. So we want some, I would say big numbers about some of our routes taking an account, the low factor for instance, in the routes that there are some additional space we think that the impact will be lower. But also, we have to take in an account that, in January, on the Mexico City Airport, going to be a cut of capacity announced already and out by the federal government that Cooke House also are reordered on some of the operations that could have as a result that some planes will, some rotation of planes will move from Mexico City Airport to other airports in the country.
Now to our revenues.
Speaker 9: transcript
Speaker 9: Yes, and just to add something in that, is that the effect of inflation that was almost
Yes.
Just to add something to your game that is that the effect of inflation, that's almost new during the three year SaaS for the maximum study has more a higher effect than that discount into us and also the appreciation of the peso.
Speaker 9: transcript
Speaker 9: new during the year for the maximum tariff has more high effect than the discount to us.
Speaker 9: transcript
Speaker 9: and also the appreciation of the peso is affecting the revenue and represents obviously a new patch in the revenues but it also affects the recovery to the fulfilling of our maximum tariff. So those macroeconomics affect...
King.
The the revenue and represents a obviously an impact in the in the revenues, but it doesn't affect directly to the funding of our maximum tariff so those those.
Macroeconomics effects and.
Speaker 9: transcript
Speaker 9: is implied in the in the fulfilling of the maximum tariff. So it's fair to say and it's just to let you know that this council has an
He's a fly in the in the ceiling.
Raul Rehuelta: Saying all that, our view today, going to be an impact that could be around five to seven percent. But again, we think that there's a lot of information that today is not completely clear. Okay, we'll see where is the, the, the effects. In regarding the MDP negotiation, it's, I think it's, it's a more, we are more certainty, more clarity about some of the calculations in terms about the scan rate. Everything is good for the market to have this certainty.
Got it so.
It is fair to say and this is just to let you know that.
That discounts him to Uh huh.
Speaker 9: transcript
Speaker 9: an effect in the maximum tariff, but it's not full. So it will be part of the fulfilling of the maximum tariff in 2023 and the fulfilling of the maximum tariff for 2024.
And in fact in the Mountain study.
It's about food so it will be part of the two.
The maximum.
'twenty 'twenty suite and the fulfillment of the maximum tariff for 2024.
Speaker 10: transcript
Speaker 10: How much of the regulated tariff is the TUA or the regulated revenues, roughly? It's the majority, right?
How much of the regulated tariff phase two or are they related revenues roughly if the majority right.
Speaker 9: transcript
Speaker 9: of our political ruin is a percent around 85% of our political ruin.
Oh.
Electrical ownership since around 85% or around optical revenues.
Speaker 10: transcript
Speaker 10: Okay, so if you lower the 2% by 10%, you lower your revenues with a regulated side by 8.5. Can there be enough set like increasing tires for their lines?
Okay. So if you lower the two of about 2% you lower your revenues on the regulated side by $8 five can there be an offset like increasing tariffs for the airlines.
Raul Rehuelta: And it's very early to know what could be the effect we know that the election will be in the same year. We did not expect any, any change in terms of the review with the, with the government. We believe that this is that, that basis for the, for the MDP review for 20, 20, 5, 29. And, by the end of September, we will have the change of the government. And probably in the last quarter, 20, 24, we will have, or we should have the new MDP and the new, the new TARDIS.
Speaker 6: transcript
Speaker 6: It will be some kind of offset because the inflation for all for 2034 for all the ties including the Cuba will be put in place on the first month of the year. And again, it will be for the maximum time for the basket.
It will be some kind of.
Fifth because the inflation.
For 2034 for all the tariffs, including the true up will be put in place on the first month of this year.
And again it won't be for the maximum value for the basket.
Speaker 6: transcript
Speaker 6: It's important to know what's going to happen with the exchange from peso and dollar with inflation. So it's not like a completely...
It's important to know what's going to happen with a possible.
With the.
The exchange from peso Angola.
With inflation, so it's not like a completely.
Speaker 6: transcript
Speaker 6: back through from this account.
Raul Rehuelta: That's super clear. Thank you, Rowan. So, every day.
Bob through from from discount.
Speaker 4: transcript
Speaker 4: is don't have a direct, I would say direct a third one to one, to what it means, I don't know, so it's the mix of the basket what we announced is that I decreased on the tour for nine of our co-operts of 10% of this.
Don't they have a direct I will say, yes direct effect one to one two why do you mean zero now took our revenue. So is the mix up the basket, but we are now is that decreased on the two up four nine of our Gulf Our parks.
Alberto Valério: Our next question comes from Alberto Valerio with UPS. Please go ahead. Hi, how are you? So, and all that team. Thank you for taking my question. My, my questions regarding this country, right? When, when move to cost of equity to work, we usually see a decrease and if you, you take the methodology that the government just report towards, we would see this change. However, for the old Regulatory framework, we used to have max-companion bonds plus as I spread that we estimate close to 4% and with this new Regulatory framework, even working being below the cost of equity, this would be higher than the previous one.
Oh 510, 10% discount.
Speaker 10: transcript
Speaker 10: Thank you very much. I have other questions, but I'll let others ask. Thank you.
Okay. Thank you very much I have other questions, but I'll, let others ask thank you.
Mhm.
Speaker 2: transcript
Speaker 2: We'll take our next question from Jay Singh with City. Please go ahead.
We will take our next question from Jason <unk> with Citi. Please go ahead.
Speaker 6: transcript
Speaker 6: Hey, thanks for taking my questions. My first one is how much traffic flow are you guys seeing from the New Mexicana Airlines? Are they actually selling tickets? And as a follow-up, how much damage have you seen in Cabos because of Hurricane Wilma? Thanks.
Hey, Thanks for taking my questions. My first one is how much traffic. What are you guys seeing from Ginnie Mae He kind of airlines, who are they actually selling tickets and as a follow up how much damage will be seen in cabos because of hurricane Dorian.
Mhm.
Yeah.
Speaker 6: transcript
Speaker 6: Hi, Jade, this is Saul. Well, we don't know exactly what could be the effect and the benefit in Cabos because of the hurricane. But we believe that, obviously, the tourist destinations will be benefited by this diversion of the tourists.
Hi, a J this is well hey, we didn't know.
So exactly what could be the effect.
Alberto Valério: My question is, this, this doesn't make sense with the announcement of tariffs cuts. Where, where could I be wrong here? What I could be missing on these new discount rates for, for the new Regulatory framework. Thank you. Thank you, Alberto.
And the benefit and Cabos.
Of a share gain but we believe that the obviously the destination tourist destinations will be benefited by E D.
<unk> of the of the.
Tourism, but yes, but the good part of the normal I mean, saying about.
Speaker 4: transcript
Speaker 4: But yeah, but for the case for the Norma, I mean, saying about what I was saying is the case of Otis, of the impact of Eureka and of Acapulco, I mean, it's terrible, a huge destruction there. For sure, some of the passengers would move to other.
Raul Rehuelta: I will say that going from which could be the impact when I know for us is difficult because we are more than, I mean, a year before we really know which going to be the specific rates that we are taking account, inflation, and all the different variables that today are in some way moving. One of the things that you said, that is interesting also is that in the cost of capital, in the new formula, the government at all the different maturities of bonds from 10, from 5 years to 30 years.
I will say it is the case of Fortis of the of the impact of your kind of a couple of calls I mean its.
It's stable now a huge destruction there for sure some of the passengers was moved to other.
Speaker 4: transcript
Speaker 4: laser detonations, but for the case of normat that affected a couple of days ago in the past and in the shadows, we don't have major impact on the first two, we only have a closure of their airport for one day.
Leisure destination.
For the case, so it's not a matter of fact, a couple of days ago in the past on the Los Cabos, we don't have.
Major impact on the infrastructure, we own behalf.
Closer of the Air Force for one day.
Speaker 1: transcript
Speaker 1: we are seeing a really quick recovery on traffic on Cabo San and in La Paz. So we don't see really major impacts on traffic because it will be only reflect a couple of days of closing, but not just only that.
We are seeing a really quick recovery.
On traffic.
Signing.
In la.
Raul Rehuelta: I think that is good for the calculation of the cost of capital, because at the end of the day, in the time, it will reflect in some way, the long-term cost of capital for a company in Mexico. So I think that one of the things that are interesting and in some way have been clarified by the system is related to the cost of capital, and the different maturities that we will use that will take in account all the different materials for the UMS, but I think a good news for the company and for the regulation.
So we don't feel really measure our impact.
On traffic because it will be only reflect a couple of days of closing but not.
Only that.
Thank you. Our next question comes from John <unk>.
Carter with GBM. Please go ahead.
Alright, great.
Speaker 12: transcript
Speaker 12: Yeah. Hi. Thank you for taking my question. I just have two quick questions. One is regarding your investments on the commercial front. Given the higher concession fee that will certainly pressure some of your cash flows, do you expect to continue at the same pace that you've been having? I mean, I know most of the projects are almost done, but do you expect this to have an effect? And also, if are you considering buyback?
Yes, hi, Thank you for taking my question.
I just have two quick questions.
Raul Rehuelta: It is difficult to say which is going to be the impact because there are a lot of variables happening right now, and we are more than one year ago from our actual review of the calculation and the maximum tax.
One is regarding your investments on the commercial front.
Given the concession fee.
Some of the pressure some of your cash flows.
Back to continue at the same pace that just didn't happen.
Most of the projects are almost done.
This business does have an effect and also if you're considering buybacks.
Speaker 4: transcript
Speaker 4: Thank you, Adam. In terms of the commercial graphics, you know, when we...
Thank you Don.
Raul Rehuelta: Fantastic, and if I may just follow up in terms of topics, before we are talking about to keep the same topics that passenger close to 40 billion issues for the next MDP, should you keep in mind the same reference value or should increase or decrease the new, we were thinking six months ago. [inaudible] Some of the capex that will be reflected in the new master plan has already faced, and with that I was saying about mainly the Wala-Hara land reserve that already passed through the balance sheet of gap, that but it will be reflected on the maximum target in the next period.
In terms of the commercial Capex.
As you know when we.
Speaker 6: transcript
Speaker 6: a major decision to have a major commercial capex in place, for sure we see a really short time recovery rate, we see that the recovery of the investment is really, really fast. For sure we will incorporate the impact, the possible impact of the 9% on our business cases and if the return for the investment is still being
<unk> made a decision to have a major commercial pilot capex in place for sure we see a really.
Short times recovery rates I mean, we see that the recovery of the business.
Really really fast for sure we will incorporate the impact of the possible impact of the 9% on our business cases.
And if the return for the bedroom and still being <unk>.
Speaker 6: transcript
Speaker 6: higher that our work as a company and it's interesting for create the creation value for the company. We will still put in place CapEx, but for sure we will have to take in account on our business plan, commercial business plans and a specific business plan for new CapEx, these new impacts.
Higher.
Our our work as a company is interesting for forward create the creation of value for the company. We will see you put in place Capex, but for sure. We will have to take into account on our business plan commercial business plans and specific business plans for new Capex.
These new impact.
Speaker 6: transcript
Speaker 6: for sure in case that the return for the investor is not the correct, we will not put in place that specific additional topics. In case of the...
For sure.
In case that the return for the Investor is not the correct was not put in place that is specific.
Capex.
In case of the buybacks.
Yeah.
Speaker 6: transcript
Speaker 6: For sure, it's something that we will continue analyzing, but it's important to understand that.
For sure is something that we will continue analyzing but it's important to understand that.
Dave.
Speaker 6: transcript
Speaker 6: The new rules for work will make different, possible different decisions. We are analyzing that, which gonna be our new cost of death structure for the future. So I will say that for the moment, it is more important for the company to have.
The new rules for what will made us make different possible different decision we are analyzing that.
Rich <unk>, our new cost structure for the future.
I will say that for the moment. It is more important for the company go half.
Speaker 4: transcript
Speaker 4: First, the clarity which gonna be our leverage for the future for you staff, before we make a way we put in poise any kind of, of bad act program.
First the clarity.
Good I E.
Sure.
As for the future or your staff before we made our way were put in place any carrier of a buyback program.
Raul Rehuelta: So in general terms, I will say that the capex per passenger could be closer of what we have in the past, but it's important to know that the effect of the Wala-Hara land reserve has already paid. So it will not have future effect on the caseloads or the company, even it will be reflected on the new master plan as a part of our poem.
Yeah.
Okay.
That's pretty clear thank you.
Speaker 13: transcript
Speaker 13: Your next question comes from Pedro Palacal, with Santander. Please go ahead.
Your next question comes from Andrew Cowen.
Got it.
Please go ahead.
Your line is open.
Please check your mute.
And we will move next wave one matters.
Vista with GBM. Please go ahead.
Raul Rehuelta: Okay, thanks very much for the video answer.
Speaker 8: transcript
Speaker 8: Hi, thanks for taking my question. My question is regarding the direct operation of commercial business. Obviously revenues in that segment have been growing but also costs. Are you expecting costs to continue growing or are they on a normalized level?
Hi.
My question. My question is regarding the separation of commercial business obviously.
Pablo Almanza: Thank you, and we will take our next question from Pablo Almanza, advice with Parkleece, please go ahead. Hi, thanks for taking my question. It's kind of a follow up to the previous question. The fact that we're moving from two at work from a cost of equity, what your debt ratio is very low. It is correct to think that you're basically back again to a cost of equity calculation because your debt ratio is quite low.
What segments have been growing but also costs.
Are you expecting costs to continue growing or are they in a normal lifespan of them now.
Speaker 4: transcript
Speaker 4: Taiwan, it will be, I mean, they're going to be a part of the cost, I mean, the cost of sale if the revenues on the direct operations of GAAP on some of the business lines that we operate directly as could be the convenience stores of the VIP lounges.
Hi, Juan.
I mean, they're going to be a part of the call or in the cost of sale if the revenues on the <unk>.
Direct operations so on the some of the business lines that we operate directly as could be the convenience stores of the VIP lounges.
Speaker 6: transcript
Speaker 6: For sure, it's a part of the cost that is related to cost of sales. So if the revenues are still growing, we're going to have some kind of growth on the cost of sales for sure, on the total cost. But it is important to say some part of this cost also comes from the new openings, pre-operational costs, and in some of these directly operated by us,
Pablo Almanza: That's number one. Number two, in general, how do you feel about this agreement? Do you feel comfortable with having these rules, or is there anything that probably you feel is not right? And I don't know perhaps a related question on that. Do you feel like the government liberty to estimate the growth variable on the terminal value calculation is something that you probably dislike, or how do you feel in general about this? Thank you. Thank you, Pablo.
For sure as a part of the cost that is related of course wholesale. So if the revenues are still growing we're going to have so kind of growth.
On the cost of sales for sure.
Of the total comp.
But it is important to say some part of these calls also come from the new openings pre operational costs.
And in some of these direct directly operated by US business as soon as we are having.
Speaker 6: transcript
Speaker 6: bigger amounts of bigger volumes, we could achieve better prices for the cost that in some moment will begin to give.
Bigger.
Raul Rehuelta: Not very good with the G factor for the terminal value. Do you remember that the G factor has this in all the life of our compassion, but on the past is just to be the average of the last five years before the counting of the beginning of the terminal value on the formula. So on the past, it was really clear and the authority applied just directly from that average of traffic growth.
So bigger volumes, we could achieve better prices for the cost that in some moment, we will begin to give.
Speaker 4: transcript
Speaker 4: better margins for this specific business. But in general, I would say that...
Better margins for just specific for visa specific business, but.
In general terms I will say that.
Speaker 6: transcript
Speaker 6: Some of the costs related with the business directly operated by us will keep growing in their line or alliance with the.
Some of the costs related with the with the <unk>.
Business directly operated by Us.
With two growing in their line or our lineup with des.
Speaker 6: transcript
Speaker 6: talks on the ground on the breakfasts.
Cost of the growth.
On the revenues.
Raul Rehuelta: On this new version, the G will still say, I would say the same in terms of the terminal value. It will be a couple from a average growth from the projections of traffic. Still the same way. And for sure, it has a bigger impact than in the past because it will take from the year six until the end of the confession. But at least thinking on what the way that the past, in the past, what the G calculated and in some way accepted by the government, the federal government, I will not foresee any changes in the way that could or not could affect.
Alright, thanks for the clarity.
Yeah.
Speaker 2: transcript
Speaker 2: We have a follow-up from Pavardo Muncievice with Barclays. Please go ahead.
And we have a follow up from Bob.
With Barclays. Please go ahead.
Hello, Hi, can you hear me well.
Speaker 8: transcript
Speaker 8: Yes, Pablo. Okay. One question that I wanted to follow up on Bruno's question. Is the DUA that we're seeing in the press, the 10% decrease, is unrelated to these new rules that the government is setting? I mean, there are like two different things. You are offering discounts on the DUA, and the rules are a different thing. Can you please clarify that? Thank you.
Yes.
Okay. One question that I wanted to follow up on Bloomers are.
The question.
Is it too that we're seeing in the press the 10% decrease east unrelated to these new rules that the government is sitting I.
I mean, there are like two different things you are offering discounts on the tour and the rules are a different thing.
Please clarify that thank you.
Hi, Pablo this is old.
Speaker 6: transcript
Speaker 6: I just want to point out that there is a scum seat to us.
Just one just want to point out that the.
Raul Rehuelta: At the end of the day, Pablo, the new rules are. In some way clear about the way of the capitals of the G, the only part that we need to have a much better understand is the normalization of the capics for the long term on the terminal value. I will say that that is the tricky part that will need to understand better how the the authority will apply that. But we have enough time to understand on the couple months and to begin any before we have the new negotiation of the maximum time.
<unk> to us.
Speaker 9: transcript
Speaker 9: It happens almost every year and we do regularly as part of our incentives to the market.
Katherine Oh, almost 70 years and we do it regularly as far following incentives.
The market to the airlines.
Speaker 9: transcript
Speaker 9: We provide a different kind of discounts, not only to us. We provide discounts when they open additional routes, when the airlines add additional frequencies. So it's part of the business that we have to take into consideration is the fulfilling of the maximum tariff. That's our target. And as you know, we are in almost 99% of that fulfilling tariff that will be affecting us.
We provide a good.
Kind of Wisconsin that damaging to us.
But boy discounts when they opened additional routes.
The airlines.
Oh frequencies. So it's part of the business that we have to.
You take into consideration is that fulfilling of the maximum tariff that's our target and as you know we are in almost 99% of that hopefully entity that will be affecting us.
Speaker 9: transcript
Speaker 9: There are other two effects, the exchange rate, the appreciation of the peso, and also the inflation applicable to the tariff.
There are two effects the exchange rate depreciation of the peso.
So the installation applicable today.
Raul Rehuelta: Yes, in terms of, in terms of the cost of equity or what, we believe that here this change reflects the composition of our balance ship. So, obviously, the cost of equity and what has an indifference. But it's, it's complicated to say now that if we could return to the cost of equity calculation that basis are very clear and we have to do as management is to analyze the best composition, the best balance of our debt, our internal terms, our capital structure, and to see what is the best approach for the next party review. And obviously, we need to try to obtain the first return for our investors in terms of our GDP in terms of the new regular basis.
Speaker 9: transcript
Speaker 9: So just to be clear, the discounts in 2R will be 10% for these two months of the year, November to December . And for 2024, there will be discounts in 2R the same.
So just.
Just to be clear the discounts will.
Will be 10% for these two months of the year.
And for 2024 will be something to us the same.
Speaker 9: transcript
Speaker 9: But we will have to update all the specific targets, not only to us, all the specific targets for the four years with inflation. So at the end, and I end just to try to point out.
We will have to update all the specific studies not only to US all the specific studies for the full year with inflation. So at the end.
And just to to thrive to point out.
Speaker 6: transcript
Speaker 6: Our target is to fill the 100% of the maximum tariff. Last year, we reached around 96% of the maximum tariff. And what we are expecting at the end of the year, around 98, 97.5%. And for 2024, we will see what will be the range, but probably will be in that area, 98, 99% of the maximum tariff.
Our our Tiger is fulfilled the 100% of the of the maximum tariff.
Last year, we reached around 96% of the maximum tariff.
And what we are expecting at the end of the year around 90, 90, 897, 5% and 454, we will see what will be the range, but probably will be.
I think that area 90, 899% of that of the maximum tariff.
Speaker 8: transcript
Speaker 8: Okay, and just follow up on this, like we have seen the shirt price at it, dramatically move.
Okay and.
Just a follow up on this like we have seen the share price I E.
Bruno Amorim: Your next question comes from Bruno Amorim with Goldman Sachs. Please go ahead. Thank you.
Dramatically move to the downside.
Speaker 8: transcript
Speaker 8: What is a piece of information that the market or us, we're not understanding based on what we have here on the rules? What do you think is a key issue to close the gap and to understand what is economic impact, the actual economic impact of these changes? Thank you.
What is a piece of information that the market or also were not understanding based on what we have here on the rules what do you see news.
Raul Rehuelta: Good morning, everybody. So, I have two questions. The first one on the new regulatory framework for the calculation of the tariffs as of the MDP. I like to ask you some help to understand a big picture because, you know, you correct me from wrong, but it seems that those changes they point to lower tariffs. The concession fee will increase. The concession is not being extended and, you know, capex at the end of the day is a section of traffic, so it's not being changed.
Is it is a key issue to close that gap and to understand what is the economic impact the actual economic impact of these changes. Thank you.
Speaker 9: transcript
Speaker 9: Pablo, I think that the main difference is the change in discount rate from key...
Hi.
Hello.
In fairness.
Change in discount rate.
One key to walk and if that's the.
Speaker 11: transcript
Speaker 11: And that's the main part. Just to know what could be the effect is complicated to say now, we have to continue with our regular review, the 14 in terms of CAPEX, in terms of the MVP, the different inputs, the OPEC that is currently everything.
I mean, the main part just to know what could be the effect is complicated to say now we have to continue with our regular review of the 14 in terms of Capex in terms of the MVP the different inputs, the opex that discount rate everything.
Raul Rehuelta: So, if you have lower tariffs, higher concession fee and other variables are not changing, you know, is it fair to say the return on the regulated side of the business is coming down, or is there, you know, any offset that I'm not aware of?
Speaker 6: transcript
Speaker 6: I think the effect on the share price is more the uncertainty about the basis where announced by the government, and we didn't know exactly, but after different meetings and conversations, I think we have a regular basis.
I see the effect on the share price is more of the uncertainty about the the paces were announced by the government and we didn't know exactly but up there different meetings and conversations.
Raul Rehuelta: And the second question is on the parallel discussion for the short-term reduction in the tour, which has been in the press over the past few days. You know, what's the basis for that? You know, for that revision in tour outside of the MDP, what could be the offset to keep the contract balanced? You know, those are my two questions. Thank you very much. Thank you, Bruno. Today is difficult to say, which is going to be the final result of the calculus, because at the end of the day, we have moving parts on the demand, moving parts on the way.
We have Uh huh.
Regular basis that you can see is hitachi nowhere in our last week.
Speaker 9: transcript
Speaker 9: transcript
Speaker 9: week press release is fully explained there, and I think in terms of interpretation.
The lease is fool explained there and I think in terms of interpretation, it's more that the perception of the market than a.
Speaker 9: transcript
Speaker 9: more the perception of the market than a real change. You will see what is the real effect in terms of return.
I read out a change we will see what is the real effect in terms of return until next year. When we are at the end of the year that different inputs that different rates.
Speaker 6: transcript
Speaker 6: until next year when we are at the end of the year, the different inputs, the different rates.
Speaker 9: transcript
Speaker 9: the composition, the capital structure of the balance sheet of the company, with all different assumptions, we will have more visibility on that. But for now, it's just to let you know where the new rules are fully translated and it's in our present list, and you can go through and see all the main changes.
Raul Rehuelta: So I would say that it's difficult to today to say, which is going to be the direct impact on the new calculation. In general, I would say that the biggest change in all these regulatory frameworks is the way of the calculation of the, of the, from cost of capital to work. So, over there, depending in the structure of cost of capital of the company for the future, it will be or not of the possible impacts on the calculus of the work.
Position the capital structure of that of that Oh, the balance sheet of the company with all different assumptions will have more visibility on that but for now is just to let you know why is that the new rules.
Food.
Translated and he seemed to India.
Press release, and you can go through and see all the main changes.
Thank you.
Okay.
Speaker 2: transcript
Speaker 2: We will now take our webcast questions. I will turn the call over to my next.
Thank you we will now take our webcast questions I will turn the call over to management.
Yeah.
Speaker 14: transcript
Speaker 14: Thank you. We have several questions in the webcast. There are one of them that we have already answered, so I will skip those ones. So I will start with the question of Pablo Coloma from MetLife.
Thank you.
Several questions in the webcast and there are one of them that we have already answered. So I will keep those ones. So I will start with the question of Pablo kilometers of Metlife.
Raul Rehuelta: But again, it's really difficult to today say a number or say by, by, by itself, that it's going to be a decrease on tires. We need to run the numbers. We need to understand the new characteristics of the market to understand the, specifically, which is going to be the size of our capital. And after that, we could have a more correct number that it would happen in the coming months. It is important to say in terms of the change on the concession fee.
Speaker 14: transcript
Speaker 14: Is it fair to assume that evita margin were reduced by 4% with the new Concession fee in 2024?
Is it fair to assume that EBITDA margins were reduced by 4% with the new concession fee in 2024.
Speaker 14: transcript
Speaker 14: is at 66% the new expected level of the company going forward.
It's a 66% then you expected the level of the company going forward.
Thank you Pablo I will say that.
Speaker 4: transcript
Speaker 4: Today we were out for the coming day, for the coming year we were out made.
Today, we went out for the coming days for the coming to you what I make.
Raul Rehuelta: It is important to notice that the regulation, the new regulation, is still having the tool for path through the tires, at least the cost of the concession fee, that is implied by the aronautical revenue. So, I would say that the effect of the concession fee on the aronautical revenues in the next modification of the, of the maximum tires would be neutral. Just a pair of the, of the, of the concession fee.
Speaker 6: transcript
Therefore in terms of because management. So it's today I would say that it is not completely clear, which going to be the impact on that on that on the margin.
We have a couple of effects today to the table.
The effects of the endgame, but we are pretty clear.
Today about the size of that of that impact.
Speaker 6: transcript
Speaker 6: In the other hand, we have the temporarily impact on their monautical revenue coming from the change on the concession fee.
And the other half we have there.
Temporarily impact on them now to grow revenue coming from the change on the concession fee.
But also we have.
Speaker 4: transcript
Speaker 4: part of our revenues that comes from Jamaica and I know fully I would say affected or not affected by these changes on the law of federal rights. So in that view I would say that this for all this early.
Part of our revenues.
That comes from Jamaica, and Eric North.
Fully I would say affected or not affected by these changes.
Raul Rehuelta: Yes, I had, you know, this is so in terms of the short term of the chain of two, that has been mentioned in the press. We would like to, to let you know that it is something that we do every year and we provide to the market this kind of benefit. It's not an exception. It is probably right now there is additional notice on that, but in something that we do almost every year providing this kind of incentive to, to the market.
On the LOE of federal.
Right.
So in that view I will say that this is early.
Speaker 4: transcript
Speaker 4: to completely say which is going to be the impact on the margin for the coming year.
To completely says which cannot be the impacts the margin for the coming year.
Speaker 6: transcript
Speaker 6: I could assure you that the management we are working to offset any kind of off.
Sure drew.
<unk> management, we are working to offset any kind of off of.
Speaker 6: transcript
Speaker 6: trying to offset the maximum on all the effort on the cost management, to cut the correct margin for the company. But again, today's team will still be nearly to understand the impact.
Trying to offset the maximum on them all the effort on the cost manager management two two to cap the correct margin for the company, but again today as D&B is still being early to understand.
Raul Rehuelta: And, and, but it counts in two, our, in, in aronautical services. It's, it's happening all the time. Obviously, right now is a, it was part of that review with the, with the authorities, the, but it's, it's, it's something that we do regularly. So, it is, it is true, it is a, it's come, but it's something that we just to, to do every, every year. So, it's not an, it's not an exception, but just now because, because on this. And it is to be clear about the two reduction.
Sure.
Speaker 14: transcript
Speaker 14: Thank you, Raul. Now I am going to move to Ana Cecilia Regis, she's from Grupoval. She has some questions having a little more clarity on the regulation changes. Would you plan to continue with the issue of the new bond?
Thank you and now I am going to morph to celebrate his from political violence.
She got some questions and having a little more clarity on the regulation changes did you plan to continue with the issue.
Bonds.
Speaker 14: transcript
Speaker 14: and also are there any changes on the video impose?
And also are there any changes on the dividend policy.
Speaker 4: transcript
Speaker 4: Hi, I will say that today we
Hi.
Hey.
Raul Rehuelta: One of the things that we will announce in the coming days is that we will have a discount of 12-10% in nine of our airports during November and December. Then we will review inflation in all our types, not only two, and we will keep with the new tariff at discount of the 10% in nine of our airports. In general terms, that is a promotion that we will put in place for the coming year from 2024.
I will say that.
Today, we are not.
Speaker 6: transcript
Speaker 6: We don't have yet what's going to be the policy for the next master plan, 2025 to 2029. We need to run the numbers. We need to understand what's going to be the new tariff, the new capex, and then we will make the decisions about our policies on leverage and dividends. So for the moment.
We don't have Jeff wood, you're going to be the policy for the next Master plan 20, 25% in 2029.
We need to run the numbers, we need to understand where you're going to have the new dive then your capex and then we will make.
The decisions about our policies our labor on dividends.
So for the moment.
Speaker 4: transcript
Speaker 4: It's not clear which is going to be our future policy.
It's not clear, which Gordon happy hour, our future policies.
Raul Rehuelta: And it is important, again, really important to say that these promotions or discounts on two are not affecting or changing the rule on the maximum tariff. Because the maximum tariff is still in place, is still a factor the same that were negotiated and announced by the government five years, four years ago. So just to make sure that we got it, so you were saying it doesn't change the maximum tariff, but you are going to charge a lower tour by 10% in some airports.
Four we see we need to understand.
Speaker 6: transcript
Speaker 6: which is going to be the new tariff on the next regulation and on the next review of the maximum tariff and to understand the size of the CAPEX and to understand specifically in which year I will need to put in place.
Grab user types on the on the on the next regulation.
Review of the maximum tariff and getting them to understand the size of the capex and to understand it.
Typically in which year I will need to see.
To put in place, which size held for investment on which kind of investment.
Speaker 4: transcript
Speaker 4: which size of investment and which kind of investment. So in general, I say that today we don't have yet the clarity to say which gonna be the new or our division and labor as policy for the 20, 25, 20, 29 period.
In general terms I would say that today, we don't have.
Raul Rehuelta: So is it fair to say in those specific airports that tariff or the revenues per passenger will be roughly 10% below the maximum tariff going forward? Not necessarily because, as you know, the maximum tariff is a basket of services. In that service, we have other services, and of course, for example, there are two variables that really change the way that we calculate the figures about the maximum tariff that is the inflation and the exchange rates.
Yet the clarity to say, what's going to be the new or our DB liberalized policy for data for the 20 $25 29 spirit.
Speaker 14: transcript
Speaker 14: Thank you, Raul. I am going to move to Alejandro's first question.
Thank you.
I am going to enough to Alejandro first questions.
Speaker 14: transcript
Speaker 14: He has two, first one, the concession tax going to 9%. On the bill percent that it says that the taxes paid on gross sales, as it was in the past. If I understood correctly on the remarks, do you mention that it was on Aronautica revenue? Has that changed?
And he has two and the.
First one the concession tax going from 9% on the 30% that it says that the taxes paid on gross sales.
It was in the past if I understood correctly on the remarks, you mentioned that it was an iron I'll start revenue has that changed.
Speaker 9: transcript
Speaker 9: Hi, Alejandro, it's basically the same calculation, the same methodology to apply this tax. The change is only about from 5 to 9, that's the change, everything is the same.
Hi, Alejandro.
It is basically the same.
They shouldn't that same methodology for two.
Raul Rehuelta: So what we are saying on this moment for the coming year and what some of the things that we will announce in coming days is that we will have a reduction of the 10% of 12% in nine of our airports. This 10% is in, I would say, it would be after the inflation revealed, and it's just in that specific type. It's not directly applied a reduction on the 10% of the total aeronautical revenues.
To apply these these attacks.
Tax the change is only about from five to nine that's the change everything is the same.
Speaker 15: transcript
Speaker 15: And the second one, you mentioned that the higher cost concession tax will be passed through higher tariffs, if I understand correctly, but on the new law, that clause was taken. Could you please clarify this point as well?
And the second one.
You mentioned that higher cost concession tax will be passed through higher tight if I understood correctly, but on the new law that club was taken could you. Please clarify this point as well.
Yes.
The the maximum studies.
Speaker 11: transcript
Speaker 11: includes the cost of the concession fees.
It includes the cost of that conversation piece.
Raul Rehuelta: Yes, and just to add something here in that, is that the effect of inflation that was almost noon during the year for the maximum tariff has more high effect than the discount to us. And also, the appreciation of the present is affecting the revenue. It represents, obviously, an impact in the revenues, but it doesn't affect directly to the fulfilling of our maximum tariff. So those macroeconomics effect is in supply in the fulfilling of the maximum tariff.
Speaker 6: transcript
Speaker 6: In general terms, we will include this for the MDP for 29, 25 to 29, but for the year 24, because this new bill will be
In general terms.
We will include these four P M D b.
29, 25% to 29.
For the year 24, because these new view will be in.
Speaker 9: transcript
Speaker 9: enact in January 1st, 2024, we will include the excess of the payment of our diagnostic revenues on the next...
Enact in January 1st 24, we will include the access of the payment of our debt and that's good revenues on the next.
Speaker 9: transcript
Speaker 9: a reference value that will be used for the calculations of the period 25-29.
And reference value that will be used for the calculation of the peers.
25 29.
Speaker 14: transcript
Speaker 14: Thank you. So, well, now I'm going to move to Marco Montanier's from Victor.
Thank you Hello.
Well now I'm going to month to knock off one finance from Victor.
Ah.
Speaker 14: transcript
Speaker 14: And he says, reviewing the form of a lot to calculate the maximum tariff, it seems that the companies have been sent if to increase the leverage to increase the discount rate. What do you think? And which could be the equilibrium to increase the discount rate versus increase the leverage? Thank you.
And he says we're getting the formula to calculate the maximum tariff it seems that the companies have the incentive to increase that leverage to increase that discount rate, but do you think and which would be the Cleveland and crazy discount rate versus increase that leverage.
Raul Rehuelta: So it's fair to say, and it's just to let you know that the discount to us has an effect, and effect in the maximum range, but it's not true, so it will be part of the fulfilling of the maximum range in 2023 and the fulfilling of the maximum range for 2024.
Speaker 9: transcript
Speaker 9: Hi, Marco. Well, it is some way to see it, but we will have to do a deeper analysis on that. What is the best balance for the company? Obviously, looking for the higher return for our investors. We have to think that moving from key to WAC is a huge difference.
Hi, Michael well it is some way to see it but we will have to do a deeper analysis on that what is the best balance for the company obviously looking for that.
Raul Rehuelta: How much of the regulated tariff is the tool or the regulated ravages roughly? It's the majority, right? So if you lower the two of the percent, you lower your revenues of the regulated side by 8.5. Can there be enough set like increasing tires for the airlines? It will be some kind of offset because the inflation for all for 2024 for all the tires included in the two will be put in place on the first month of the year.
The higher up time for our for our investors. We have two things that are moving from key to what you saw in fact defense and we have to analyze that total effects into the discount rate. So is something that we will go deeper and therefore with once a week.
Speaker 9: transcript
Speaker 9: And we have to analyze that total effect into that scan rate. So it's something that we will go deeper in the following months. And we have, as Raul explained early, that we have almost a year to analyze and to see what could be the real effect in terms of that scan rate.
<unk>.
Spain.
Ali.
<unk>.
We have almost a year or two and a license to see what could be the real effect in terms of that discount rate.
Speaker 4: transcript
Speaker 4: just complementing the algebra of Saúl.
And just complementing the answer of that.
Speaker 4: transcript
Speaker 4: Again, it's important to think that the effect is not only related on size by itself.
Sure.
Okay.
Two things.
It's not only related.
Raul Rehuelta: And again, it will be for the maximum target for the basket. It's important to know what will happen with a possible or with the exchange from peso and dollar and the inflation. So it's not like a completely pass-through from discount. It doesn't have a direct, I would say direct a third one to one to what it means, I don't know, so it's the mix of the basket. What we are announced is that a decrease on the two out for nine of our goal purpose of 10% discount. Thank you very much.
On.
<unk> by itself.
Speaker 4: transcript
Speaker 4: The tires, the new tires that we could have in 2025 to 2029, we need to see the full picture. That means catnip.
The types of new times that it will have in 2025%.
Unknown Executive: I have other questions when I'll let others ask.
We need to see the full picture that means capex flavor us dividend policy. So as soon as we have clarity around that.
Speaker 4: transcript
Speaker 4: and be given in police. So as soon as we have clarity about that.
Speaker 6: transcript
Speaker 6: we will, we will, we could say which is going to be the new.
Unknown Executive: Thank you.
Rick will save which would have given you the new policies in that in that way for Gaslog why do you think four studies.
Speaker 4: transcript
Speaker 4: the new policies in that way for GAFA. What is important is trying not to...
Not to insulate it jumped the effect of the maximum tariff from the future here.
Speaker 4: transcript
Speaker 4: just the effect of the maximum tariff of the future year.
Speaker 4: transcript
Speaker 4: across a full picture of the F?? that The God
C N as a full picture does incorporate the capex.
Speaker 4: transcript
Speaker 4: the leverage and the dividends in different ways for understall what gonna be the policy for the future of the country.
And the dividend and different ways for understanding.
What would be the.
The partnership for the future of the company.
Speaker 14: transcript
Speaker 14: Thank you. Uh, canton Morehead from DWS. He's asking if this increase in tax from 5 to 9% includes IRA and non-IRO, correct? But IRO can be a recover, is that right?
Thank you.
Ken Kunze, nor have crowd dws, she's asking if this increase in tax from type two 9% includes Iran. On the error correct.
Jay Singh: We'll take our next question from Jay Singh with City. Please go ahead. Thanks for taking my questions. My first one is how much traffic were you guys seeing from the new Mahi kind of airline? Are they actually selling tickets? And as full of how much damage have you seen in Cabos because of Hurricane Milno? Thanks. Hi, Jay. This is so well.
IRA can be recover is that right.
Speaker 9: transcript
Speaker 9: a high-content, that's correct. It's basically the same effect and calculation that we have before is just the change in terms of the person page that should be applicable to the hero and non-hero level.
Yeah, Hi Kingdom coal that's correct. It's basically the same the same effect and calculation that we had before is just the change in terms of the person stage that should be applicable to the aero and non aero revenues.
Yeah. Thank you so Ah and.
Speaker 14: transcript
Speaker 14: Thank you. So, and probably a lot more from my to life again. What will apply with the suspend that ishans? Will you come back to the market? Do you think that that cost could have increased with a new revolution?
Raul Rehuelta: We don't know exactly what could be the effect in the benefit in Cabos. We believe that obviously the destination toll destination will be benefited by the diversion of the tourist. But yeah, but for the case for the norma, I mean, saying about what I would say is the case of what is of the impact of the hurricane of the Capulco. It's terrible, a huge destruction there for sure. Some of the passengers with moved to other.
The tablet from Metlife again here, what will apply with us as planned debt issuance would you come back to the market do you think that that cost could have increased with annual regulations.
Speaker 11: transcript
Speaker 11: Well, as Seywa is explaining, we will analyze.
Well as I was explaining we will analyze that.
Speaker 9: transcript
Speaker 9: That, because the level of leverage is really important so far. We know that the story from the company last year.
That's because the level of leverage is it was really important so far.
We know that the study for from the company.
Yes.
Speaker 9: transcript
Speaker 9: We have a huge commitment in terms of CAPEX for at the end of this year and for next year and we have to finalize the new MDP to review and define, but it's something that we will analyze in the following months and decide as soon as possible, but for now, it's something that we will analyze.
Well as to leverage kind of person.
Capex, we sell our future commitments.
In terms of Capex for at the end of this year and for next year and we have to finalize the new MVP to to review and besides that is something that we will.
Raul Rehuelta: But for the case of norma that affected a couple of days ago in La Pasa and in Los Cabos, we don't have major impact on the first two. We only have a closure of their airport for one day. We are seeing a really quick recovery on traffic, on cars and in the past, so we don't see really major impacts on traffic because it will be only reflected a couple of days of closing, but not just only that.
In analyzing the following months and beside.
As soon as possible.
Now is something that we are analyzing.
Speaker 14: transcript
Speaker 14: Thank you. And the last one comes from Evan Kurtz from Lord Abbott. Is the WAC calculation based on net debt to total cap or gross debt to total cap?
Thank you and the last one come from Evan Kurtz from.
<unk> of it is the right calculation based on net debt to total cap our gross debt to total cap.
Speaker 11: transcript
Speaker 11: this is how long apologise and this is the total difference.
Hey, Craig Tyler.
This is Hank I'm sorry.
This is the.
Although the total daus.
Debt.
Speaker 14: transcript
Speaker 14: Perfect. So thank you so and with this we will finish the webcast call
Perfect.
And with this we will.
Ernst Mortenkotter: Thank you, our next question comes from Anzon Mortenkotter with GPMs, please go ahead. Hi, thank you for taking my question, I just have two quick questions. One is regarding your investments on the commercial front, given the higher concession fee that will certainly pressure some of your cash flows, do you expect to continue at the same pace that you've been having? I mean, I know most of the projects are almost done, but you'll do this to have an effect.
Finished and then webcast call.
Speaker 14: transcript
Speaker 14: And I will return the work to Raul Revuelta for the final remarks.
And I would return to that.
That for the final remarks.
Speaker 4: transcript
Speaker 4: Thank you everyone for joining us today in our third-quare results conference. The team remains a valid and to us where any questions you may be had. Please enjoy the rest of the day. Thank you very much.
Thank you everyone for joining us today, our third quarter results conference.
The tumor mandates have other than to answer any questions you may be hot.
Please enjoy the rest of the day, thank you very much.
Speaker 2: transcript
Speaker 2: And this also includes today's program. Thank you for your participation. You may disconnect at any time.
And this does conclude today's program. Thank you for your participation you may disconnect at any time.
Speaker 13: transcript
Speaker 13: Thank you for watching!
Okay.
Yeah.
Okay.
Yeah.
[music].
Ernst Mortenkotter: And also, if I you're continuing, bye-bye. Thank you, Adon, in terms of the commercial topics, you know, when we made our decision to have a major commercial topics in place, for sure we see really short-term recovery rates, I mean, we see that the recovery of the investments is really, really fast. For sure, we will incorporate the impact, the possible impact of the 9% on our business cases, and if the return for the investment still being higher that our work as a company is interesting for creating the creation value for the company, we will still put in place topics, but for sure, we will have to take in account on our business plans, commercial business plans, and a specific business plan for new topics, these new impacts, and for sure, in case that the return for the investor is not the correct, we will not put in place that specific additional topics.
Yeah.
Yes.
Yeah.
[music].
Yeah.
Okay.
[music].
Yeah.
[music].
Hum.
[music].
Uh huh.
Yes.
[music].
Uh huh.
[music].
Okay.
[music].
Raul Rehuelta: In case of the buybacks, for sure, it's something that we will continue analyzing, but it's important to understand that the new rules for work will make different possible different decisions, we are analyzing that, which is going to be our new cost debt instructor for the future, so I will say that for the moment, it is more important for the company to have further clarity, which is going to be our leverage for the future for new steps, before we make a very important point, is any kind of buyback progress. That is pretty good.
Unknown Executive: Thank you.
Pedro Balcalo: Your next question comes from Pedro Balcalo, please go ahead, Pedro, your line is open. Pedro, please check your mute.
Juan Mendesa: And we will move next with Juan Mendesa with GBM, please go ahead. Hi, Pedro, taking my question. My question is regarding the direct operation of commercial business, obviously revenue that segment have been growing but also costs are you expecting costs to continue growing or are they on a normal life level now? Hi, Juan, it will be, I mean, they're going to be a part of the cost of sale. If the revenues on the direct operations of gap on the some of the business lines that we operate directly as could be the convenience stores of the VIP lounges, for sure it's a part of the cost that is related to commercial sales.
Juan Mendesa: So in the revenue, so still growing, we're going to have some kind of growth on the cost of sale for sure on the total cost. But it is important to say some part of this cost also come from the new openings, pre-operational cost. And in some of these direct directly operated by us a business, as soon as we are having bigger amounts of bigger volumes, we could achieve better prices for the cost that in some moment will begin to give better margins for the specific, for this specific business.
Juan Mendesa: But in general terms, I would say that some of the costs related with the business directly operated by us will still growing in the line or align it with the cost of the growth on the revenues.
Raul Rehuelta: Right, thanks for the clarity.
Pablo: Hello, hi. Can you hear me well? Yes, Paulo. Okay, one question that I wanted to follow up on Bruno's question is the tour that we're seeing in the press, the 10% decrease is unrelated to this new rules for the government is setting. I mean, there are like two different things you are offering discounts on the tour and the rules are a different thing. Can you please clarify that? Thank Hi, Pablo, this is all.
Pablo: I just want to point out that the Scansi to us happened almost a big year and we do regularly, as part of our incentives to the market, to the airlines. We provide a different kind of Scansi, not only to us, we provide Scansi when they open additional routes. When the airlines add additional frequencies, so it's part of the business that we have to take into consideration is the fulfilling of the maximum value.
Pablo: That's our target. And as you know, we are in almost 99% of that fulfilling target, that will be affecting us. They are all the two effects, the exchange rate, the appreciation of the personal, and also the installation applicable to the targets. So just to be clear, the Scansi to us will be 10% for these two months of the year, November and December, and for 2024 will be Scansi to us the same.
Pablo: But we will have to update all the specific targets, not only to us, all the specific targets for the full years with inflation. So at the end, in our end, just to try to point out, our target is fulfilled, the 100% of the maximum targets. Last year, we reached around 96% of the maximum target, and what we are expecting at the end of the year, around 98%, 97.5%, and for 2024, we will see what will be the range, but it will be repeating that in that area. 98%, 99% of the maximum target.
Raul Rehuelta: Okay, and just a follow-up on this, like we have seen the share price that it dramatically moves to the downside. What is the piece of information that the market or us, we are not understanding based on what we have here on the rules? What do you think is a key issue to close the gap and to understand what is the actual economic impact of these changes? Thank you. I think the main difference is the change in discount rate from key to work, and that's the main part.
Raul Rehuelta: Just to know what could be the effect is completed to say now, we have to continue with our regular review of the 14 in terms of the MDP, the different inputs, the all-pakes that discount rate everything. I think the effect on the share price is more of the uncertainty about the basis where it announced by the government, and we didn't know exactly, but after different meetings and conversations, I think we have a regular basis that you can see is a patch in our last week.
Raul Rehuelta: It is full explained there, and I think it's in terms of interpretation, it's more the perception of the market than a real change. We will see what is the real effect in terms of return, until next year when we are at the end of the year, the different inputs, the different rates, the composition, the capital structure of the balance sheet of the company, with all different assumptions, we will have more visibility on that. But for now, it's just to let you know why the new rules are full translated anything in our prejudice, and you can go through and see all the main changes.
Unknown Executive: Thank you.
Unknown Executive: We will now take our webcast questions. I will turn the call over to management. Thank you. We have several questions in the webcast. There are one of them that we have already answered so I will skip those ones.
Pablo Coloma: So I will start with a question of Pablo Coloma from MetLife. Is it fair to assume that Evita Margin will reduce by 4% with the new Concession fee in 2024? Is 66% the new expected level of the company going forward? Thank you Pablo. I will say that today we were for the coming year we were made a big air for in terms of the cost management. So today I would say that it is not completely clear which is going to be the impact on that on the margin because we have a couple of effects today in the table.
Pablo Coloma: We have the effects of the engines but we are not pretty clear today about the size of that impact. In the other hand we have the temporally impact on the economical revenue coming from the change on the concession fee. But also we have part of our revenues that comes from Jamaica and I know fully I would say affected or not affected by these changes on the law of federal rights. So in that view I would say that this for us is early to completely say which is going to be the impact on the margin for the coming year.
Pablo Coloma: I could assure you as management we are working to offset any kind of trying to offset the maximum of all the effort on the cost management to cut the correct margin for the company. But again today is still being early to understand the impact.
Raul Rehuelta: Thank you Raul.
Raul Rehuelta: Now I am going to move to Ana Cecilia Regis from Grupo Val. She has some questions having a little more clarity on the regulation changes. Did you plan to continue with the issue of the new bonds and also are there any changes on the dividend policy? Hi I would say that today we are not, we don't have yet which is going to be the policy for the next master plan 2025 to 2029.
Raul Rehuelta: We need to run the numbers we need to understand which is going to be the new tiles, the new Catholics. And then we will make the decisions about our policies on leverage and dividends. So for the moment. It's not clear which is going to be our future policy. Policy, we need to understand which is going to be the new type on the next regulation and on the next review of the maximum target and to understand the size of the capex and to understand it specifically in which year I will need to put in place which size of investment and which kind of investment. So, in general, Fernanda, I'll say that today we don't have yet the clarity to say which is going to be the new or our division and leverage policy for the 20, 25, 20, 29 period.
Raul Rehuelta: Thank you, Raul.
Alejandro Fush: I am going to move to Alejandro Fush's questions. He has two, first one, the concession tax going to 9%. On the bill percent that it says that the tax is paid on growth sales as it was in the past. If I understood correctly on the remarks, do you mention that it was on Arunotka revenue? Has that changed?
Raul Rehuelta: Hi, Alejandro. It's basically the same ratio, the same methodology to apply these tax. The change is only about from 5 to 9. That's the change. Everything is the same.
Raul Rehuelta: And the second one, you mentioned that higher cost concession tax will be passed through higher tariff. If I understand correctly, but on the new law, that clause was taken. Could you please clarify this point as well? Yes. The maximum tariff includes the cost of that concession fees. In general terms, we will include this for the NDP for 29, 25 to 29. But for the year 24, because this new view will be enact in January 1, 24, we will include the excess of the payment of Arunotka revenues on the next reference value that will be used for the calculation of the period 25 to 29.
Raul Rehuelta: Thank you.
Marco Montañez: So, well, now I'm going to move to Marco Montañez from Victor. And he says, reviewing the formula to calculate the maximum tariff, it seems that the companies have been sent it to increase the leverage to increase the discount rate. What do you think? And which would be the equilibrium to increase the discount rate versus increase the leverage? Thank you.
Raul Rehuelta: Hi, Marco. Well, it is some way to see it, but we have to do a deeper analysis on that. What is the best balance for the company? Obviously, looking for the higher term for our investors. We have to think that moving from key to work is a huge difference. And we have to analyze that total effect into that discount rate. So, it's something that we will go deeper in the four months.
Raul Rehuelta: We have, as Robert explained earlier, that we have almost a year to analyze and to see what could be the real effect in terms of the discount rate. And just a couple of minutes in the hours of Saul. Again, it's important to think that the set is not only related on ties by itself. The start is the new time that we will have in 2025-29. We need to see the full picture, that means tactics, leverage, and be given in policy.
Raul Rehuelta: So, as soon as we have clarity about that, we could say which could have been the new policies in that way for gap. What is important is trying not to insulate the effect of the maximum value from the future years, but seeing as a full picture that incorporates the tactics, the leverage and the dividends in different ways for understanding what could have been the policy for the future. Thank you.
Unknown Executive: Can Tom Moreth from DWS, he's asking if this increase in tax from five to nine percent, includes IRA and non-IRO, correct? But IRO can be a recover, is that right? That's correct. It's basically the same effect and calculation that we have before. It's just a change in terms of the person's pace that should be applicable to the ARO and non-IRO revenues. Yeah. Thank you.
Raul Rehuelta: So, and the problem from Matt White, again, what will apply with the suspend that issuance? Will you come back to the market? Do you think that that cost could have increased with a new revolution? Well, as I was explaining, we will analyze that because the level of leverage is really important so far. We know that the story from the company last years was to leverage hundred percent of our topics. We have a huge commitment in terms of capex for the end of the year and for next year and we have to finalize the new MVP to review and define. That is something that we will analyze in the following months and decide as soon as possible. But for now, it's something that we are analyzing. Thank you.
Unknown Executive: And the last one comes from Evan Courts from Lord of it. Is the what calculation based on net debt, tutorial cap, or growth debt, tutorial cap? Hi, Lord. This is Hi, I'm sorry. This is over the total debt. Perfect. So, thank you so.
Raul Rehuelta: And with this, we will finish the webcast call. And I will return the work to Raul Ravelta for the final remarks. Thank you everyone for joining us today in our third-quare results conference. The team remains a valid and to us where any questions you may be had. Please enjoy the rest of the day. Thank you very much. And these are concluded this program. Thank you for your participation. You may disconnect at any time.