Aeroports De Paris Sa

Welcome to the Group ADP 2023 9-Month Revenue Call. The conference is now open, and I leave the floor to Cécile Combo, Head of Investor Relations.

Thank you, and good evening, everyone. I am Cécile Combo, Head of Investor Relations of Group ADP, and with me are Philippe Pascal, our CFO, and Christelle Jacques, my Deputy CFO. Philippe will go through some prepared remarks before taking your questions with Christelle and in order to allow as many of you as possible to dialogue with the management, I would like to kindly ask you please to limit your questions to one or two each time you take the line and of course you can queue again if you have additional questions. As a reminder, Certain information to be discussed on today's call is forward-looking and is subject to risks and uncertainties that could cause actual results to differ materially. For this, I refer you to the disclaimer statement included at the end of our press release and on slide 29 of our presentation. And with that, let me hand it over to Philippe.

So thank you, Cecile, and good evening everyone. Let's jump directly to slide two with the highlights. Our consolidated revenue is standing at 4.1 billion euros for the first nine months, up 22% compared to 2022. We continue to see solid dynamics in all businesses and we fully confirm our targets for 2023. As expected, our airports have been busy this summer. Retail's performance continues to be strong as well. We remain focused on preparing to host the Paris Olympics in 2024 and want the industrial and environmental transformation undertaken with our 2025 Pioneer Strategy Roadmap. Regarding the most recent developments, So, as you know, we communicated the estimated impact of the new tax projected by the French government. As indicated for the regulated scope, a part of the tax revenue is being included in the business plan that we will base our next regulated tariff proposal. This is a work in progress. and we expect to submit tariffs to the regulator in the coming weeks. Regarding the text of the bill itself and the parameters of the tax, discussion and amendment process continue at the Senate and could still result in change to the text. The law must be voted and promulgated by the end of December the latest. Slide three, we can see overall traffic evolution, which is in line with our expectation. Traffic is growing at a faster pace in international asset, plus 26% compared to the last year, leading to recovery of 101% against 2019. At group level, Traffic is growing to plus 24% and recovery stands at 97.9% in the first nine months. In Paris, we welcomed close to 76 million passengers since the beginning of the year, up 18% compared to nine months 2022. This represents a recovery of 91.4% versus nine months 2019. In Q3, traffic was up 8% compared to Q3 2022. On this basis, we are confident to end up the year with a recovery level in the upper part of our assumption, up to 93%. in Paris. Continue to focus on Paris on slide four, traffic with mainland France turned at 76% of 2019. This is in line with our expectation and reflects the closure of several domestic routes compared to before COVID crisis. Going forward, we expect low growth in domestic traffic. Internal traffic, which is the most accretive, stood at 93% of 2019, showing improvement compared to June, as expected, driven notably by the acceleration of traffic with China during the third quarter. In Q3, traffic with China reached a recovery level of 37% compared to Q3 2019, We expect a further step up at the end of this year with a projected winter schedule totaling 48 weekly flights for the end of November to be compared to 34 weekly flights currently and 93 in 2019. Slide 5, looking at retail business in Paris, sales per pax was 29.7 euros in the first nine months, with 30.2 euros in Q3. That is 3.6 euros more than last year, reflecting the positive impact of greater and improved offering of our X-Time strategy, especially with the reopening of Terminal 1, new international area. In terms of rollout of X-Time, the latest development is good news. this summer of the green light received from the French Competition Authority for the implementation of the partnership with SSP in Ex-Time Food and Beverage. Going forward, as commented in previous quarter, we expect SPP to experience more pressure due to the staging and upgrading works in Terminal 2E Olki that we will span over the next two years. Next year, we will also have the reopening of Terminal 2E and 2C that might slow FPP growth down. Accordingly, our sales per pack target for the moment is 29.5 euros in 2025 and remains valid. Slide 6. We have a specific focus on our two main international assets, TAV and GMR. As a reminder, TAV numbers are fully consolidated in our account, and GMR airport results are equity accounting. As you can see on the left side, TAV's traffic recovery stands at 97.8% of 2019 level. Thierry's international assets performed well, with several having reached full recovery, especially Almaty, standing at 147% of 2019 traffic level. Thierry's airport in Turkey, we have a slower recovery on their domestic traffic, but there is offset by international traffic reaching above 2019 traffic levels. This summer, Thierry also conducted the sale of a part of its stake in Medina airport, The net gain from this transaction is estimated at 38 million euros in the net result attributable to the group. The airport remains consolidated under the equity method. On the right side of the slide, GMR airport traffic stands at 107% recovery. In India airport, strong recovery is driven both by domestic traffic standing at 111% of 2019 level, but also for international traffic now nearly at the full recovery. Regarding the merger between GEMA Infrastructure Limited and GEMA Airport, the merger application has been fully approved by the Indian Stock Exchange and is now being reviewed by the National Company Law Tribunal. According to the schedule, we expect the completion of the merger during the first half of 2024. So globally, all is under control. Moving on slide seven, our revenue reached 4.1 billion euros for the first nine months, up 22% with revenue from all segments increasing. In Paris, Continued traffic recovery drove aviation revenue up 18%, as well as retail and services revenue up 27%, supported by consistently strong ex-time sales per pack. Revenue of real estate activity in Paris is up 8%, thanks to the additional rents from assets returns in full ownership in 2022 and new indexation in terms of rent. In the international business, revenue is up 27%, mainly driven by the nearly full recovery of TAV Airport, but also by the strong dynamic of all the services companies of TAV, especially in ground handling, lunges and food and beverage. To conclude, let's move to slide nine. We can see our assumption, our traffic assumption and financial guidance for 2023. We can confirm all our guidance and assumption. We continue to expect traffic in Paris up to 93% of 2019. And for the group, between 95% to 105% of the 2019 traffic. For EBITDA guidance, we expect an EBITDA between 32% and 33% of the revenue. Dividend policy, still the same, 60% of EPS as a payout guidance. with a floor of 3 euros per share. And for investment, we expect around 1.3 billion euros per year on average, between 23 and 25, on which 900 million euros are just for EDP mother companies. Going forward, we continue to fully focus on our 2025 Pioneer Strategy roadmap, contributing to the ecological transition of our sector. We are also working on our future capacity management plan for Paris. And with a shorter perspective, we, of course, continue to get ready for the Olympics next year. With that, I propose now to go directly to the Q&A. Thank you very much.

Ladies and gentlemen, if you'd like to ask a question, please press star 1 on your telephone keypad. I would like to kindly ask you to please leave your questions to one or two each time you take the line. And of course, you can queue again if you have additional questions. We will take our first question from Marco Weaver from JP Morgan. Your line is open. Please go ahead.

Oh, hi. It's from JP Morgan. Can you hear me?

Yes, very well.

Okay. Okay, I think Marco registered me. Thank you for taking my question. I have a question on tariffs. You mentioned getting ready to submit your proposal for next year. Could you share with us a little bit of your thoughts into what you're going to propose, and in addition, what you're going to have to do in terms of tariff increase to offset the tax going forward, and if you think all of this is possible in the context of competition? So that's my first question. And my second question is on regulation. There is, again, I think a proposal from the regulator to switch from dual-tier to profit-sharing. Is it something that could happen in your view for ADP, or what's your thoughts on that? Thank you.

So thank you, Elodie, for your first question about the new tax. Just remember the impact of this new tax. We expect an impact around for 120 million euros for 2024 in a full year basis. With the pass-through of the regulated portion, we can also try to increase the tariff, but we have to submit our proposal directly for the French regulator. For the regulated part of the tax, we estimate that it's around 90 million euros in terms of impact, we have to mechanically increase our tariff for around 6% globally. It's not possible to increase our tariff for 6% in one shot due to the law and the French law that we have to increase the tariff with moderation. So we try to increase for 24 part, the mid part of the impact to try to offset the mid part of the regulated part of the tax. So the mid of 90 million euros. For that, we have to convince all the airlines, and after that, to submit our proposal for the regulators. That is, for the moment, the plan. We are in an ongoing process. And due to the announcement of the tax last September, we have some delays in our tariff submission process. But all in all, we try to submit probably during November. So for your second question, it's very clear for us. It is the French state. who has the authority to determine the till structure of regulated airport. It's not at the end of the ERT. So globally, the French regulator tried to put some pressure about that, but for the moment, to our knowledge, The change of the economic regulation of EDP is not in the agenda of the French government.

Great. Thank you. And can I just, on the amount of tariffs increase you need for next year to offset half of that 90 million impact on EBITDA, can you just tell us what percentage increase you need to propose?

No. For the moment, we don't disclose that.

Okay. Thanks.

Next question. We will take our next question from Rosandra Hardo-Doza from HSBC. Your line is open. Please go ahead.

Good afternoon. Thank you for taking my questions. On TAV, please. A large part of the consolidated debt will mature next year. What are the refinancing plans? And in the current environment, could you consider new shareholder loans? And I think that also... The shareholder loan from Aéroports de Paris will mature next year. What will happen with this loan? Will it be rolled over? And I understand that the bridge loan at Antalya Airport matures in H1 next year. What is the status on the discussions with the banks? And could you please give us a guidance for interest costs for Group Aéroports de Paris next year? Thank you very much.

So, thank you, Roxana, for your question. So, for our first question, so clearly for us, for the moment, we have to deliver a TAV and the part of the delivery of the TAV is to reimburse the loan of EDP. That is the plan. For the moment, the TAV executes this plan and tries to have a new new guidelines for that. And we are very confident for TAF to accelerate the delivery and to reimburse quickly the loan of EDP. For your second question about TAV in Antalya with Rapport, clearly it's an ongoing process. We have a huge discussion with all the bankers. And if it's possible, we have the capacity to have an extension of the bridge loan. So no issue for the moment in our fight. For your third question about the interest cut for EDP, you know for the moment the interest cost. If we have to launch a new bond for a new debt that is not for the moment in our plan, for a new debt, for most companies, EDP most companies, we expect around 4%. But for the moment, we don't have a need for that. We have enough cash. And remember that the cost of the existing debt is 2%. So it's not in our interest to launch a new bond at 4% if we don't have a key reason for that. So globally, for the moment, we are happy with our cash. Thank you. Thank you.

Thanks. Thanks, Philippe.

We will take our next question from Graham Hunt from Jefferies. Your line is open. Please go ahead.

Thank you very much for the questions. I'll just stick to two. Maybe on China demand, you mentioned what you expect the flight schedule to look like in the winter. But do you have any sense of how that will develop as we go into 2024, taking it from that 48 you mentioned up to how long should we expect that to take to get back to the 93 from 2019? And then on the second question, I think it's your X time conversion rate. Looked like it slowed a little bit in Q3, still very strong, but maybe a little bit lighter than maybe you would have hoped. Did you see any change in spending patterns across the platform during the quarter that would cause you additional concern? Thanks.

So for your first question, so traffic with China is developing in line with our expectation. It was at 37% recovery in the third quarter. So as I explained, we expect an increase in terms of flights per week in November to go to 38 flights. We do not expect a full recovery in 2024, notably because of continuing constraints on demand. That is a key point. For two aspects, the first aspect is the fact that the tourism industry has been massively disrupted in China. And it takes time for Chinese people to renew their passport, obtain a visa, which is difficult, notably with the Chinese embassy, but also the French embassy in China. But we expect an improvement due to the fact that in 2024, we have the Olympics in Paris. And the second reason is the price of hotel, especially, but also for the travel package with massive inflation, which we expect to wait somewhat on demand. So globally, at this time, We are optimistic, but we don't expect a full recovery in 2024. For the second question, if you want to start.

Okay, so for your question on our possible slowdown in X-time and possible concerns, so first of all, as mentioned by Philippe, we foresee the strong performance in Q3. You can see the seasonality of the business. So it's quite classical that the performance in Q3 is a little bit lower than in previous quarter. But all in all, we had a very strong performance. thanks to our strategy and particularly with the reopening of Terminal 1, which was consistently higher and which is still higher than it was in Terminal 2E, which was previously our flagship. Both terminals have performance above €60 per pack, so strong performance. But indeed, there could be some possible headwinds looking forward, explaining the fact that we remain cautious for 2024 and 2025. First of all, the volatile macroeconomic context, as always. And secondly, we also mentioned the works that started in April 2023 in Terminal 2A All-K. So the objective is to transform and enlarge the X-time duty-free areas to integrate the fourth learning of Terminal 1 in this Terminal 2E All-K. So those work could have an impact on the SPP in the next two years. Also could have no impact, but at this stage, we prefer to stay cautious. And secondly, we already mentioned it in the previous result, but the reopening of Terminal 2A-C in 2024 could also have a dilutive impact on the retail performance. So all in all, we posted a very good performance in Q3, showing the robustness of our X-Time model, but we stay cautious for the years to come.

Thank you very much. We'll take our next question from Andrew Lobenberg from Barclays. Your line is open. Please go ahead.

Oh, hi there. Can I just come back on that retail? Because, I mean, I hear what you're saying about Hall K and the reopening of 2AC. But at the same time, you've got inflation and you've got an increase in Chinese traffic. So... I mean, doesn't it look incredibly pessimistic to expect your spend per bank to go down from here? Second question would be just on the international assets. Aman, how does that trade through the present instabilities, geopolitical instabilities, and what risks are there around that asset for you guys?

So for your first question about the retail, so I can confirm that Christelle explained, we are for the moment we are cautious. In fact, we have probably upside, as you say, and we have also probably some downside. So perhaps it's a little bit cautious. Perhaps we have to change. Our guidance, perhaps it's difficult to change. So for the moment, without a clear vision, we are still cautious and we confirm that our guidance. But obviously, if we are right, we are very happy. But cautious, it's the tradition of the company. For your second question, so the impact, if I understand well, is the impact of Israel conflict. And for the moment, we don't expect a huge impact. In Paris, traffic with Israel and Lebanon was respectively 1 million passengers and 0.6 million passengers. So it's not so huge. And so we don't see for the moment a clear impact about that. For our airport in Amman, the only two countries, the Ministry of Foreign Affairs formally advised against traveling there. Israel and Lebanon but one can expect that the geopolitical situation in the region could have an impact on tourism to Jordan but it's a little bit early to see clearly if we have a good impact for the moment for Jordan we are still cautious so for the first question we are cautious and the second question we are cautious Thank you.

Thank you. We will take our next question from Dario Maglione from BNB Paribas Exxon. Your line is open. Please go ahead.

Good evening. Two questions from him. One on GMR and the merger process between GMR Infrastructure Limited and GAL. It should happen in H1. And one of the aims of this transaction was to reveal the true value of ADP stake. So maybe roughly speaking, how much should we expect ADP stake will be worth after the completion of the transaction? Second question on the guidance for next year. It's a wide range. And of course, there is the new tax. Excluding the effect of the tax, do you expect to be more on the top or at the bottom of that 35% to 38% range? Thanks.

Okay. For the first question, if I understand well, it's the impact of the reverse manager and globally also the level of share of GDP. So for the moment, we have 49%. Globally, at the end of the day, we have a decrease in our shares, but a strong increase in the valuation of the company. So globally, it's a good thing for ADP. The preparatory steps are developing in line with the planning, as you say, and we are confident that the merger can be completed in the first half of 2024. But keep in mind that upon completion, we will record non-cash expenses, translating for two points. First point is the change in economic interest of Group EDP, including the settlement of Ratchett Close, as well as the liquidity premium. And the second thing is the fact that the integration of the assets and liabilities of New Gill, the new company after the reverse manager, with expected net value at the date of merger. And we expect that this net value will be negative. The assets and liabilities of New Deal that are taken into account in the calculation obviously exclude GAL, Gemma Report, but the liabilities include the FCCV granted by EDP. So the impact was estimated at around 100 million euros on group EDP net income from ordinary activities in March. That is the key point. We disclosed that in our press release. The exact amount will be determined, updated at the reverse merger, the date of the reverse merger, and for the moment, The treatment of the FCCB in GMR Infrastructure Limited account are still to be determined. So at the end of the day, current value of GIL is two or three times of the acquisition. So we are, at the end of the day, we are shareholders and a huge shareholder of a large company. So it's a good deal. Thank you. Further guidance. So perhaps to have a global point of EBITDA guidance. We start by the traffic, and after that, we can have a point about the EBITDA margin guidance. For the traffic, as I said, for 2023, what we can see, we can confirm that Paris traffic should reach the upper part of our assumption, so close to 93%. For 2024, our traffic assumption is unchanged. at this stage, between 19 and 100% compared to 29. We expect traffic to grow compared to 2023. So mechanically, it's more than 23. But full recovery looks more like in 25, or perhaps 2026, but probably more in 25, if you look at what is missing to reach full recovery. For the moment, we have domestic traffic that is not in full recovery. It's like 75%. But also the international traffic, we don't have the full recovery of the international traffic. But for this traffic, we expect an increase, specifically for China, but Mechanically, for China, it's better than 23. So globally, for traffic, we can now, if we understand well, modelize in the right manner. For the EBITDA margin, for the EBITDA margin for 23, we can confirm our EBITDA margin guidance between 32 and 37. We posted 33.9% margin in the first half of 23, and we expect, for the second half, an EBITDA margin higher than the first half, driven by the seasonality, by the traffic, by the retail growth. So globally, we can see that we expect higher than 33.9%, but below than 37%. For 24, we are currently in the progress of updating our budget for 24. It's a little bit early to quantify it precisely, so we don't give you more color. But in the meantime, we can refer to our EBITDA margin range of 35 to 38% from 24 to 25. But bear in mind, that it excludes any impact of the new tax. So this guidance is without the new tax, without the new tax. At this stage, and despite expected growth in traffic for 24 EBITDA margin, we should mechanically be in the lower part of this range. So the lower part of the range of 35 to 38%. Due to the combination of the Olympic Games, it's not a surprise we take in our guidance, but we are still in our guidance due to the Olympic Games, but also the evolution of staff, the inflation in Paris, but obviously also the inflation and the evolution of staff in Europe. Turkey, that is a key point. And finally, for the overall tax increase, it's not possible for the month to have a clear view without our budget. But remember that our guidance is without tax and probably without tax in the lower part of this range.

So it's clear?

We will take our next question from Manish Beria from Societe Generale. Your line is open. Please go ahead.

Yes, so hi there. So my first question is on the regulated aviation business. So, of course, I mean you are taking three tariff hikes to cover the tax impact, two or three hikes to cover the tax impact. But in the meantime, there is also inflation. So how should we think about it? Like you take the tariff hike to just cover the tax impact, and then the inflation feeds negatively with the evolution, I mean.

So thank you for your question. So just to summarize, if we can increase the tariff, we increase the tariff. But we have a cap. And you understand the different cap in our regulation, the cap in terms of the regulated work, the cap in terms of moderation, and the cap in terms of to cover the regulated OPEC by the regulated revenue, the aeronautical fees. So our regulation does not provide for any direct pass-through mechanism from inflation to tariff. We can ask for a tariff increase, obviously, and we try to ask, and due to the fact that we expect an impact due to the inflation, due to the new tax in our regulated roadshed, that creates some room of manoeuvre to increase our tariff, but we have to be below the regulated WAC. Calculated not by EDP, but by the regulators themselves. So, cost inflation or any other effect that puts pressure on the regulated ROCE could therefore provide room of manoeuvre, obviously. But we try to manage now, it's to to increase the tariff due to the part of inflation and part of new tax. Just to manage a trajectory in our tariff increase to be just below the cap, but not higher, because if we are higher than the cap, we don't have the homologation. So it's a little bit... early to have the result of this debate. We have to have the debate with the airlines, and we have also to submit our proposal in November for the French regulator.

So can I ask, like, what is the cap on the tariff hike each year that you can do?

We don't know. The French regulator has to clarify the position of the WAC, first of all. The second question is about the moderation, the second cap. The moderation, it's a subjective approach, linked by the fact that if it's acceptable or not for the airlines. But we know that for MIS in France, the regulator accept 4.9% increase. So it's around between 4% and 5%.

Okay. And then the second one is just on, like, is there any plan to monetize the international asset in the medium term or in the near term? I understand you are listing this Indian asset. I mean, the merger, that would reveal some value. But other than that, is there any more plan to, I mean, reflect more value for ADP or to monetize the value international assets?

So two points about that. First, we are an industrial company. We are not a fund, so we are not here to monetize. We are just here to create value due to the operation of the airport. But a second part of my answer, it's clearly that if we have a good window, with a good opportunity, we monetize partially or totally. For example, now, we, Thierry, sell a part of Thibas. And GMR sells Cebu. And that is a good example. But we don't have a plan, our strategy is to deliver Thierry, to deliver GMR, and to deliver slightly EDP.

Okay, thank you.

We'll take our next question from Nicholas Moore from Morgan Stanley. Your line is open. Please go ahead.

Yes, good afternoon. Just a few for me. First, big picture, can you talk about the winter schedule, what you expect in terms of airline capacity over the next five months? That's number one. Number two, just coming back on the retail, if you don't mind, I mean, On the positive side, supporting retail we've had, so we had the Terminal 1 international opening. You've got China accelerating from a low level. What about inflation? And really about the impact of renovation from the 2E whole K. At the end of the day, I'm not quite sure how big the impact is. I mean, to be honest, can you help us understand a little bit? just how much of the terminal is genuinely closed for now, just for us to assess a little bit the mathematical impact. And then, again, on retail, I mean, X-Time is more than duty-free. Can you talk a bit about the other drivers of growth? I mean, we see advertising is reactivating. Food and beverage, pretty good. Any specific comments there? And... Very last point on, can you say a word on CapEx? Are you still very late in the spending pattern? Are you holding up a little bit because of the concession tax discussions with the regulator? Just give us a little bit of a point of where you stand after a pretty soft first half of spending. Thank you.

So, thank you. So, for the winter schedule, so we... We have now a clear view about the winter schedule. We can see the seed capacity at Paris, and we can see that the seed capacity come down. But that is clear for us. It's the fact that this impact, which is a slight impact, not so huge, is due to the deployment of ETC modernized traffic management traffic management system. This new system is called ForeFlight. And the French Airport Slot Coordinator published some information on his website with details regarding the exceptional capacity reduction that will occur from January and February 24 in Paris, Korea. But it's not so, we have an impact, but it's not so huge. Eventually, the objective of this new system is to increase traffic control efficiency, allowing for optimized routes, for decarbonization, and so on. So all in all, at the end of the day, it's good news for Paris in terms of ETC. But in fact, when you see the winter schedule, we can see the reduction between the mid of January and the mid of February. So I think it's my answer. For the second question, Christine.

Yes, so on SPT and retail performance, so clearly, In the performance to date, there is a path of conjunctural effect. You were speaking about inflation. So inflation has helped us a little bit over the past two months in our performance. The same for the FX rates. We know that it helped us to reach this performance, but it's difficult to quantify the precise impact of those conjunctural elements. But the big part of this performance is due to our X time strategy. Looking forward, as you were mentioning, maybe there could still be this impact of inflation, but at the same time, we see also a sign of economic slowdown, so this could maybe lead to a slowdown, the impact, the positive impact we had thanks to inflation, so this is a reason why we stay prudent. There could be in the structural impact, you mentioned China, so Philippe explained our Assumption in terms of China recovery in terms of traffic, we don't expect a full recovery in 2024. So clearly, the performance will also depend on this rate of recovery regarding Chinese traffic. And indeed, the structural performance, thanks to X-Time Strategy, could be negatively impacted by the renovation of the terminal to IK. So far, we haven't seen a huge impact. The road just started a few months ago. Clearly, as I mentioned, in the performance to date, in Terminal 1 and in Terminal 2 IK, we don't see any impact of this work, because as I mentioned, we posted a performance above 60 euros in Terminal 2 IK, and even a little bit higher for Terminal 1. It's not a closure of Terminal 2 IK, but there could be, it's a two-year program, there could be some specific closure on some luxury shops. So that's why also we remain very very cautious on that. We don't have enough experience so far on the beginning of the swap to tell really and to quantify the impact it could have. Regarding Regarding the other extreme activities, so yes, we don't speak often about them, and indeed, in terms of advertising, there is a good performance, thanks to some recent events. The World Cup will be, and the Olympics will be a good accelerator of the performance regarding advertising activities. In FNB, it's also an important part of our strategy, and as mentioned in the presentation earlier on, we recently had the green light of the French Authority competition to implement our GV with SFP. So it will be the opportunity for us now to implement clearly our strategy and to rethink the the allocation of specific F&B shops to put inside the terminal. So we also expect a positive impact of all other activities, even if, of course, duty-free represents, I think, 80% of the global performance of retail performance.

Thank you.

We will take our next question from Christian Ndelso from UBS. Your line is open. Please go ahead.

Hi. Thank you for taking my questions. The first one, could I come back to the Middle East traffic? Did I understand well, so other than Israel and Lebanon, you are not seeing any erosion in demand for traveling to the Middle East these days? So any airlines reducing capacity to other countries or hearing about bookings weakening or anything like that. So that's the first one. Secondly, on the regulation, on the cost allocation between regulated and non-regulated, is there any update there? And do we have a timeline when we're going to have a final outcome from the regulator on how OPEX will be split between regulated and non-regulated? And the third one, just you talked in the past about the electricity and sort of hedging more and trying to use the REN facility. Is there any progress at this stage you can tell us for 2024 electricity costs or how much they could increase? Thank you.

So thank you. So for your first question, it's a little bit earlier. We don't see for the moment a real impact, but we are very cautious and we have to wait. So a little bit early to speak about that. For your second question, for cost allocation. So as you know, the IFT decision dealt with cost allocating principle. And for the moment, we are in line with the general principle of the French authority. So no huge issue and concerns about that. But at the same time, we have launched a process to explain all our key cost allocation system with the airlines. The outcome of this review is not going to end, but with a decision from the regulator for the regulator, so we don't expect for the moment a huge impact. All in all, this cost allocation will be included in the overall tariff homologation, and we are going to propose some correction as early as the next tariff proposal, so in November. It's very slight correction due to the discussion with the airlines without a huge impact in the economic model. So for your third question about the energy cost. So as you know, our energy edging structure has been defined now. And price for the portion of electricity we need to buy on the market has been fully secured for 2024. and partially for 2025. Our edging structure is based with three pillars, the market, the PPA, and the RN system. Globally, at the end of the day, for 2024, the mixed price is approximately two times higher than 2023 price. So, remember for 2022, The electricity cost for Paris was around 30 million euros, so we expect globally 60. A little bit more because we have some dynamics in terms of volume. We are in the process of building our budget, so it's a little bit early, but we assume this impact was also in our guidance. We can, in the meantime, we can refer to our EBITDA margin range of 35% to 38% that I mentioned just previously. The increase in energy costs was anticipated and is included in this range, but not the new tax. Excellent. Thank you very much. And last question, please.

We'll take our next question from Eric Lamari from CIC. Your line is open. Please go ahead.

Yes, thanks. Thanks for taking my question. I've got just one, actually. Coming back on this regulated work you don't know today, I was wondering if you got any idea of the way the regulator could take account of this new rate environment, because surely the rates are higher than in the past, and It should be translated into the regulated work, I guess. But do you reckon it could happen?

So, for the moment, we don't have additional information provided by the French regulator. The French regulator launched a consultation, and we understand that several buy-side analysts have been consulted by the French regulator, and we trust that investors will provide useful information useful input to the French regulator. But all in all, for the moment, we don't have a clear view, but remember that the WAC assumption is based on an average, five years average, with historical market data. So mechanically, the inflation, the new inflation, the new rates taken account by the WACC, it's just one year compared to five years of WACC. So at the end of the day, we have mechanically dynamic and an increase in our WACC. But we know also that the French regulator wants to to have perhaps a new methodology, and we don't have a clear view about this new methodology for the moment.

All right.

Thank you. So thank you. Thank you very much.

Now I would like to turn the call back over to the speaker for closing remarks.

Yes, thank you very much. So, yeah, thank you, everyone, for having logged on to our conference. So we'll be attending actually several investor relations meetings and conferences. So we'll be traveling to meet you in the coming weeks, and we are looking forward to that. We will then release our full year 2023 results on the morning of the 15th of February next year. So feel free, of course, to get in touch with Elliot and me for any follow-up questions. And with that, good evening, everyone. Bye-bye.