Welcome. Thank you, operator.

Good afternoon, ladies and gentlemen, and good morning to those of you connecting from the U.S. and welcome to ENAV's First Half 2020 Results Call.

I am here in Rome with our Chief Executive Officer, Mr. Paolo Simioni; and Luca Colman, our Chief Financial Officer.

As always, we will go through a formal presentation followed by a Q&A session, where we'll be happy to reply to you. With that, I will hand the call over to Mr.

Paolo Simioni.

Okay. Thank you, Stefano.

Good afternoon, ladies and gentlemen, and welcome to ENAV 6-month 2020 Results Call. As you know, starting from March 2020, the aviation sector has been severely impacted by COVID-19 with en-route service unit down 58.4% and terminals down 60.1% in the first half of the year.

Despite the challenging environment, further affected by the lockdown measures in Italy from March to May, we have maintained full business continuity while also protecting our employees in terms of health and physical safety while maintaining their full salaries. Following the gradual re-operating of the country from the second half of May, we saw a pickup in traffic volume in June, further confirmed by an improvement in July and August.

We are currently monitoring the development of the traffic for the last part of the year, but the situation remains very volatile. For this reason, we are withdrawing the 2020 outlook, provided in our first quarter 2020 results, in which we had indicated a net revenue decline of mid-single-digit year-on-year and a net income decline of high single digit.

At the same time, we confirm our CapEx outlook of roughly EUR 80 million for the year, lower than the normalized CapEx spend of around EUR 120 million per year. Moving on to our results.

Let's take a closer look at the first half financial performance. Net revenue decreased by 10.7% year-on-year from EUR 416 million (sic) [ EUR 417 million ] to EUR 372 million despite a reduction in revenue from operations of 61.7%, which was largely offset by a positive balance.

As we will explain later in the presentation, the balance recorded in the first half of 2020 is based on our best estimate on the effect of the temporary derogation to the performance scheme regulation proposed in July 2020 by the European Commission for 2020 and 2021. Thanks to the cost efficiency put in place in the second quarter, we managed to offset a significant part of the EUR 45 million net revenue decline, leading to an EBITDA of EUR 88 million, down by EUR 27 million year-on-year, minus 23.5%.

Our EBITDA margin was 23.6%. Notwithstanding the dramatic decline in the traffic revenue, the efficiency measure put in place and the solid traffic risk-sharing mechanism enabled us to close the first half 2020 with a net profit of EUR 15.6 million compared to a net profit of EUR 34 million recorded in the previous year.

To complete the figures, the CapEx was EUR 27.8 million, in line with the first half of 2019. Despite of the very critical situation created by coronavirus, we are well equipped to weather the storm, banking on a strong liquidity profile and a solid balance sheet that provides resilience over the medium term.

Okay. Moving on to Slide 2.

Let's have a closer look at the traffic trends recorded in the first 6 months of 2020. As I said before, en-route traffic performance reflects the severe effects of the COVID-19 outbreak, with a total decrease of 58% in service unit year-on-year.

The decline is the combined effects of a very strong growth, the traffic experienced in January and February when the service units growth was 8.5% and 11.2%, followed by a sharp slide in March, reaching a 90% decline in April and May, and the minor recovery in June. Looking in detail at our en-route.

It's important to observe the largest percentage decline in traffic over 2019 was mainly related to the international flights with national traffic and overflight recording a less severe decrease. As a result, as you can see in the graph, the split of total en-route saw overflights accounting for 44%, international 36% and national 20%.

The decrease in traffic seen in Italy in the first half of the year is in line with the performance of the other major countries in Europe, with Germany suffering the least with a decline of 50.3% and France suffering the most with a deadline of 58.8%. Terminal traffic volumes were also materially hit by the virus emergency, with a 60.1% decrease in service unit, determined by an overall negative performance in both national and international traffic segments and in all 3 charging zones.

In percentage terms, terminal zone 3 saw the largest percentage decrease year-on-year, followed by the terminal zone 1 and zone 2. That is from June.

We have seen a gradual improvement of the situation in Italy with en-route service unit over the key summer months of July and August down 67.5% and 55.8%, respectively. Looking at our revenues more in detail on Slide 3.

Net revenues, as you can see, decreased by 10.7% year-on-year due to a decline in revenue from operations, down 61.7% from EUR 229 million to EUR 164 million, largely offset by a positive balance of EUR 191.4 million. We saw a material decrease in both en-route and terminal revenue, down 64.5% and 65.3%, mainly as a result of the lockdown following the COVID-19, combined with lower tariffs in 2020 versus 2019.

However, thanks to the existing traffic potential mechanism, with net revenues decreased from EUR 417 million to EUR 372 million, which includes the positive balance of EUR 191.4 million but mainly driven by en-route and terminal traffic materially lower than forecast. It's worth highlighting that the positive balance posted in our first half 2020 accounts includes our best estimate of the impact of the European Commission derogation proposal for 2020 and 2021, published last July, as you know.

The derogation indirectly poses a cap on the total amount of balance that can be recovered by service providers over the 2 years in order to help the traffic sector in such a difficult scenario. The best estimate is built on the assumption of an adequate reduction of ENAV's total actual determined cost of 2019 to be applied to the cost recoverable in the tariff for 2020, assuming a recovery of the CapEx balance cumulated for 2020 and 2021 over 5 years from 2023.

Despite of this, positive contribution to our top line came from the nonregulated business, mainly due to revenue from IDS AirNav that was not consolidated in the first half of 2019 with revenue almost tripling year-over-year to EUR 11.7 million. Finally, core operating income was EUR 16.6 million, a slight decline of EUR 1.3 million over H1 2019, mainly due to a lower level of EU-founded projects -- funded projects.

Moving on to cost on Slide 4. In the first half of 2020, we continued to deliver on our OpEx efficiency plan, implementing further exceptional initiatives in the second quarter to offset the material decline in revenue and help reduce our cash burn.

Overall, total costs were reduced by 5.9% year-on-year, reaching EUR 284.5 million. More in detail, as you know, in the graph, we recorded external cost savings of EUR 3.6 million, a 5.4% reduction year-on-year, mainly thanks to lower cost of several services such as utilities and telecommunication costs, which declined by 21%, also due to lower consumption in our facility driven by most admin staff who's not working from March onwards as well as thanks to lower costs related to our full IP digital network.

We also saw the reduction by 5.7% of some expenses related to the work performed by our subsidiary, TechnoSky, given the slowdown of many activities due to the health emergency. This significant reduction were partly counterbalanced by higher costs for external services linked to COVID-19 specific initiatives undertaken by the company, including extraordinary sanitization of our facilities.

It's worth noting that the external cost savings from a like-for-like basis, including the impact of IDS AirNav, which was not consolidated in the first half of 2019 were a significant 10.9%. Personnel costs in the first 6 months of the year decreased by EUR 13.9 million to EUR 235.2 million, down 5.6% year-on-year.

This positive result was mainly driven by a material decrease in variable pay and social security cost as a consequence of reduced overtime and the use of outstanding vacation balances of our personnel. The fixed salary component increased 2.5% year-on-year as an effect of the 2018 labor contract renewal and more importantly, the inclusion of IDS AirNav employees in H1 2020.

I want to underline that excluding the IDS AirNav employees, personnel costs would have decreased by a material 5.2% over last year -- excuse me, I made a mistake, 7.2%. At the end of the first half of 2020, our organization, including IDS AirNav, reached headcount of 4,230 people.

Lastly, capitalized internal work was almost stable year-on-year at about EUR 13.2 million. As you can see on Page 5, there have been certain important developments over the recent months.

In light of the material impact of COVID-19, since March 2020, ENAV has undertaken several measures to deal with the implication of the traffic performance for 2020 and beyond. As mentioned in our first quarter results, Eurocontrol and the vast majority of its member states agreed to postpone the payment of traffic charges due by airlines to service provider related to the period February, May 2020.

This is intended to allow airlines to take out the liquidity issues they are facing currently and to be able to pay those charges starting from November 2020 onwards. To understand the impact of this measure, as you can see on Slide 5, February 2020 traffic will be paid within the current year in November, while March, April and May payments will be postponed in 2021 with a last cash-in due in August 2021.

However, it's worth noting that April and May traffic was down about 90%, which in terms of revenues also means much lower revenues recorded for this month and the minimal impact on cash flow of roughly EUR 35 million in total for March to May. Starting from the traffic flow in June, the normal 2-month billing and settlement cycle has been restated, and the receivables from airlines for both June and July have been cashed in, in August and September, respectively.

Let me now give you a summary update on the regulatory approval process for RP3, also in light of the recent derogation proposal to the Single European Sky performance scheme made last July by European Commission for the next 2 years or the present and the next year, 2020 and 2021. As you recall, the RP3 regulatory framework was approved in February 2019, and the EU-wide cost efficiency targets were set in May 2019.

Based on this framework and target, each country submitted a performance plan for RP3 at the end of 2019. The approval by the European Commission of country-specific performance plans for RP3 originally scheduled for March 2020 was put on hold due to the COVID-19 pandemic.

Based on the formal submission by Italy, the applied 2020 tariffs are the following: EUR 66.02 per service unit for en-route, EUR 167.33 for terminal zone 1, EUR 167.56 for zone 3 and EUR 298.93 for zone 3. These tariffs were all reduced compared to those applied in 2019.

In July, European Commission published a proposal for a temporary derogation to Single European Sky performance and charging scheme, allowing for special rules for the setting of revised union-wide performance targets for 2020 and 2021 in order to mitigate the impact of COVID-19 and ensure the long-term viability of this sector. Based on this proposal, the commission expects the national supervisory authority to provide cost data and information about traffic forecast for 2020 and '21 by November 2020 as input for the setting of the revised union-wide performance target for RP3.

Then the commission should adopt the revised performance targets for RP3 not later than April 2021. Later, the national supervisory authorities should submit the new RP3 performance plan up to 2024 to the commission within July 2021.

And finally, the commission should approve the RP3 performance plan by year-end 2021. It's possible that the time line will slip by 1 or 2 months, but the performance plan certainly is expected to be approved in any case by the end of 2021.

That's all I have to say about this part of the presentation. So I will now hand the call to Luca Colman for detailed view of the first financial half.

Thank you, Mr. Simioni.

So let's move on to Slide 8. As you can see, our net revenue in the first quarter of the year decreased by 10.7% year-on-year, driven by a negative performance in both en-route and terminal revenue, which were largely offset by a positive balance.

The main contribution to the year-on-year decline in revenue from operations came from en-route activities, which saw a revenue decrease of EUR 200.1 million. Terminal activities also posted a negative performance, with revenue down EUR 71 million over last year.

It is worth noting that both results were impacted by the effect of COVID-19 emergency, combined with a lower tariffs applied in 2020 on en-route and terminals. And as mentioned before, the significant negative contribution of revenue from operations was, however, largely compensated by a positive contribution of EUR 221.2 million of balance.

The increase of en-route balance over last year was EUR 164.1 million, while the increase in terminal balance over last year was EUR 57.1 million. As we mentioned previously, the balance recorded in the first half of this year was defined as the best estimate by the company on the new rules proposed by the European Commission that allows the potential recovery of the lower revenue resulting from the COVID-19 pandemic based on the recovery of the total actual determined cost for 2019 minus a percentage per cap borne by the company.

Despite the material reduction in the top line of EUR 44.8 million, thanks to our relentless focus on personnel and external cost discipline, we managed to contain the impact on EBITDA to EUR 0.7 million, reaching EUR 88 million with an EBITDA margin of 23.6%. Looking at the P&L on Slide 9.

With regards to below EBITDA items, D&A was substantially stable year-on-year at EUR 65 million. Provisions and write-downs in the first half of 2020 grew to EUR 2.3 million, materially higher than those recorded last year due to the application of the valuation model utilized to measure the recoverability of receivables in light of the current issues faced by the air transport sector.

This is purely a prudential accounting approach since, as mentioned before, we have not had any issue with the receipt of payments due so far. August and September payments due were, in fact, fully cashed in.

The item net financial income and expenses were stable year-on-year. You can also see a material decrease in income taxes in the first half driven by a lower taxable income and by the positive impact of the deferred taxes on balance actualization.

As a result of the bold movements in the first 6 months of 2020, we recorded a net profit of EUR 15.6 million despite the severe impact on revenue caused by COVID-19. Moving on to Slide 10.

Let's have a look to our cash flow and financial position. ENAVs liquidity and financial position remains solid.

In addition to the cash available -- availability -- sorry, the cash available at the end of June 2020 of EUR 218.3 million, we also have financial investments for EUR 25 million and undrawn credit lines for EUR 247.5 million, of which EUR 150 million committed. Our net financial position as of June 30, decreased by EUR 225 million year-on-year, reaching a net debt of EUR 98.5 million mainly due to the lower cash-in due to the sharp decline in traffic and to the postponement of receivables due from the airlines for the months of April to July as well as the payment in May of dividends for EUR 112.1 million and payments of amounts due to the Italian airports for EUR 10.2 million, partially compensated by the receipt of a VAT refund and funds received under European financed projects and PONs.

En-route and terminal charge from June onwards have been cashed in regularly, which means within the normal 2 months billing and settlement cycle. On the cost side, we have reduced our average cost run rate from approximately EUR 50 million per month to EUR 45 million per month, thanks to further cost-cutting initiatives.

We also have an additional liquidity buffer by postponing the part of 2020 CapEx, which have been reduced from approximately EUR 120 million to about EUR 80 million. It is important to point out that the remaining CapEx of EUR 40 million are only postponed and did not have a negative impact on our key strategic initiatives.

Finally, I would like to highlight that we have no material debt maturities until 2022. Before opening the floor to your questions, let me give you an update on 2020 outlook, which remains highly uncertain.

Traffic, after reaching a trough in April and May due to COVID-19 pandemic and subsequent lockdown, has gradually recovered over the summer period of June to September to levels approximately 50% below 2019. This, as you know, is the most important period of the year for ENAV in terms of traffic.

It is also worth noting that the comparison is unfavorable, considering that 2019 was a record year in terms of traffic for ENAV. However, in recent weeks, we are seeing growing concerns on a potential second wave of COVID, and a number of countries have introduced limitations on travel, quarantine, lockdowns, et cetera, which could have a negative effect on air traffic in the last part of the year and into early 2021.

This is currently not the case for Italy, but the potential slowdown of traffic in other European countries could have a negative impact on international travel and overflights. In light of this uncertainty, we have decided to withdraw the fiscal year 2020 outlook we have communicated in May 2020 of a mid-single-digit decline in net revenue versus 2019 and a high single-digit year-on-year decline in net income.

However, we confirm our outlook on CapEx for 2020 of approximately EUR 80 million. We also decided to postpone any decision on the 2020 financial year dividend until the approval of the full year 2020 results by ENAV's Board of Directors in order to have a clear view on the cash flow dynamics for the last part of the year and a more robust view on the business outlook for 2021.

In the meantime, we remain fully focused on maintaining operational continuity while ensuring maximum protection for our employees. We are continuing to deploy further cost efficiency measures in order to preserve our margins and liquidity.

With that, we are now ready to answer any questions.

First question on the derogation to the regulation. Can you provide us some quantitative details to better explain the reasoning behind your best guess?

In particular, how much would have been the balance generation in the first half of 2020, if there had been no derogation to the rules? Second question, do you -- the air navigation service providers get anything in change for this derogation?

Is it just a net loss for the system? Or can we expect maybe a more supportive framework when we go back to normality in 2022?

Then I would like to ask a comment, if possible, on the tariff we should expect for next year and maybe an update on the traffic in September and your best guess for the last quarter of the year.

Okay. I will start with the first one about the derogation and what is our guess that we used for our half quarter result -- half year, sorry, result.

What we have done in -- following what the proposal of the commission said in their paper, we tried to figure out what's going to be the best environment where we could move together with the national authority. So we worked with our national authority in July and August, tried to find what could be the -- let's say, the level of costs that could be in some way acceptable for Italy and so forth for ENAV.

On the base of that, that in some way was also, I'll say, discussed with the European Commission, not approved, nothing at all, but it was just a really -- I mean, that is agreed -- was agreed at least at a national level with our national authority. We have set our figure in our half year results and after we have an idea of what could be the end of the 2020 -- what could be the figures in 2020 or so.

That's for the first point. The second point, I would say net loss, with -- not anything on the table at the moment.

It will be part of negotiation, where we have to negotiate the target for 2020 and '21 but also for '22, '23 and '24, where there is a general negotiation. For what concern the tariffs, let's say that 2021 tariff, there will be the one that we present in the performance plan.

So at the moment, just see it -- I mean definitely, there would be the one that we already, in some way, give some disclosure some months ago when we show what could be our tariff, taking in consideration our previous performance plan. And the reason is 2020 and 2021 tariff as the commission is not able to change -- to approve any performance plan before the end of 2021.

They will assess their tariff. And then the balance that we will calculate, we will be able to recover in the future years, in the way that you already know.

So what concerns traffic forecast, at the moment, there is not any forecast done for Italy by the official of its Eurocontrol or the stuff. If it's supposed to -- they are supposed to publish for all the countries in November the one that will be considered the base of traffic, so the forecast for the traffic that we have to consider in our performance plan.

So then November, December, there will be some data available. Right now, what we are considering in our internal forecast is the scenario that Eurocontrol -- general scenario that Eurocontrol will publish.

And it's not particular for Italy, but it's just a general view of all European countries -- all Europe. And we are using that for our internal forecast analysis.

For September, Nicolò, the traffic we're seeing is very much in line with what we saw in August. So down about 50%, 55%.

As to the end of the year.

As to the end of this year, yes.

All right. So very clear.

Maybe if I can, can you just remind us which kind of disclosure you gave in the past on the 2021 tariff?

Okay. Sorry, it's my mistake.

I thought we did, but we didn't. But if you take in consideration what are the tariff -- sorry, I just -- I was almost -- I thought we gave some disclosure on 2021, but we didn't.

Let's say that they are, in some way, done in a way very close to 2020 tariffs because it's part of the previous performance plan. So the traffic that is considered and the costs that are considered are the one that has in some way followed 2020 tariff and performance plan.

So yes. They will not be updated.

They will not be updated with the current traffic, but they will be more or less in line with the one that you -- that we are applying in 2020.

I have 3 questions. The first one is on the net financial position.

So assuming en-route and terminal traffic in the range of minus 50 on a full year basis, could you provide a guidance for the net debt by year-end? The second question is on the RP3.

What is your feeling on negotiation, in particular, on the determined cost for 2022? So how far in your view would be the determined cost compared to the pre-COVID level?

Your feeling so far? And the last question, if you can quantify the assumption related to the balance size cap in -- for staff, that you included in for staff?

And which amount do you expect for 2020 and 2021?

Okay. So what concerns the net financial position at the end of the year, I don't think we give any disclosure.

I just think that -- I'll just give you some information about the next month. As our CEO said before, in November, we will cash in also traffic that was done in February that we were supposed to cash in, in April.

And this is a really important amount of money. Now we are cashing in regularly what's the traffic that the airlines are doing in this month.

So this is a good signal. Looking at what is our position now in the first half of the year, we will a little bit…

Worsen.

Worsen this number for the reason that, as we said, we have a cash out of about EUR 45 million on average per month. And at the moment, the traffic is not -- the traffic that we cash in is not able to cover totally this amount of money.

So it probably will worsen a little bit that number. I mean, the number that you…

Maybe just worth adding, Luigi, that the cash burning in the second quarter is obviously the worst cash burn of this year because clearly, we had 4 months of no cash-in whatsoever from the airlines. So clearly, Q3 and Q4 should be slightly better.

But in any case, we'll be absorbing cash, yes.

For what concerns the -- okay. The negotiation of RP3 will, I mean, officially start after the commission will approve the new regulations, the change of the new regulation.

And this will happen, I would say, just in a month, more or less. It's not possible at the moment to say that -- what would be the level of cost that will be recognized in 2022, but from what we are -- what we think is it would be a mix between the negotiations that we have for 2020, 2021 in terms of cost reduction because we need to do some action.

But probably not too many, not too much because -- to keep the cost base in the ecosystem we -- to restart, to overperform in 2022 onwards. That's more or less our estimate, but it's not yet discussed within the commission.

We have some discussions internally with the national authority and that was important, but not with the European Commission. It's too early at the moment.

For what concerns the impact of balance by the end of the year? Based on our assumption, based on what I said before, we expect to have an [ aircraft ] on the balance recoverable for 2020 of around EUR 65 million, EUR 70 million.

That's one and that's what we expect. That will be on our net revenue directly.

And this [ aircraft ] to the balance of extreme '21 -- actually, sorry, and the one in '21 should be lower than the one in 2020. So 2020, around EUR 65 million, EUR 70 million and '21 less.

A few from me. I guess just the first one was really around why you had decided to sort of drop the guidance at this point.

And then I guess when we spoke at Q1, the operate -- we would have been thinking about a level of traffic whereby operating revenue would have been fully offset by balance. And therefore, nothing really would have changed there from a sort of total revenue perspective.

So just wondering why that's happened. And second question really.

You're obviously accruing a determined unit cost of EUR 66.02 for this year. But clearly, the cost base that you're accruing is materially lower than what you would have expected prior to the COVID-19 crisis.

And my question there is, will the regulator subsequently adjust the determined costs down, and therefore, there'll be an adjustment in respect of the tariffs accrued for the year? Or indeed, is there something that I have missed there?

And I guess my third question is you've obviously mentioned that you're going to have 5 years to utilize the balance receivable and you're obviously accruing more balance than you ever have. How confident are you that you're going to be able to utilize all of the balance within that 5-year period?

I will start from the last one for the balance. Yes, the balance is going to be very high for 2020.

But if we look at what was the balance a couple of years ago, even in 2019 tariff, I remember that we cover more than EUR 60 million of balance in that year. And if you think that we should split in 5 years that amount of balance, you can imagine that more or less, we are assuming the same amount of money -- same impact on the tariff that we had in 2019.

For what was -- the second question about the cost. We are not really having a drop of cost -- a heavy drop on cost, actually.

What we are reducing are the valuable part of our costs. So the one related to the vacation balances, extra time, travel costs, all the variable parts that we stopped and in some way we're not having because there is no traffic.

While the traffic will come back, we will have this cost. And the commission -- I mean the regulator knows that and we are telling that, that is just an impact of the -- reduction in the costs are just impacting this year because we have no traffic.

But our costs are, in general terms, very fixed cost, rigid cost. And for that reason, we will start probably 2022 with the amount of determined costs vary in line, more or less in line with the one that we used to have in 2019 and in '20 tariff that we are applying.

And then for what concerned the outlook, yes. I mean the main reason why we withdrew the outlook is because of the uncertainty on the scenario -- traffic scenario that it was -- I mean it was increasing since the 3 or 4 months ago when we gave the outlook.

And the reason is mainly related to the possibility of second wave of COVID and then for the regulation because the regulation is not set yet even if we know more or less on what could be the impact. And we try to anticipate with -- also with the figure that we are giving to you what can be the impact.

Until we will not be able -- I mean we will finish the negotiation with the commission, with the regulator, we cannot say that, that would be a definite impact.

Got it. Just one thing to sort of clarify there on the second one that you answered on the cost side.

So I mean correct me if I'm wrong, but the finalization of the determined unit cost for 2020 will take place by the end of 2021. You've obviously talked about, for example, just seeing your labor cost being EUR 5 million per month lower for 9 months of the year.

So sort of EUR 45 million on a full year basis. And I guess what I'm trying to understand is if the regulator has the opportunity to look back over that period, wouldn't they -- or my question is really why wouldn't they adjust that EUR 66.02 determined unit cost down proportionally.

Or is there something that I've missed there?

The main reason is if they adjust the tariffs, they should adjust also the -- sorry, if they adjust the tariffs, yes, they should adjust not only the cost but also the traffic. At this moment, they adjust the traffic -- the tariff would increase around EUR 100.

So the reason is we prefer to lose EUR 50 million in cost other than increasing the tariffs so much because the impact on the system would be much higher. And in this case, we prefer to generate balance that we will recover in 3 years onwards other than adjusting the tariff and reducing the impact on service provider and increasing impact on the system on the lines.

Sure. That's really helpful.

And I guess just finally on that point, if your -- if the regulator does come out with a different determine unit cost, whatever that may be, whether higher or lower at the end of 2021, what would happen? Would that be a sort of big restatement to your 2020 and indeed, 2021 -- part of 2021 accounts?

Or how would that work?

Now at the moment, as we said, we have the European Commission that will set the target, all the target for 2020, '21 in April -- around April 2021. And at that time, they will also set the target for '22, '23, '24.

After that, we will submit the performance plan. And that will be -- I mean it will be clear what is the amount of the determined cost that will be allowed for 2021 and onwards.

But we have to wait. Before that, it's impossible to know.

We have to -- I mean we have to wait, yes, May -- April, May.

Yes. Just a very quick clarification.

The EUR 65 million to EUR 70 million [ aircraft ] you expect for 2020, does it include both the en-route and the terminal zones 1 and 2?

Yes.

Just one follow-up question from me. Could you talk about how the industrial plan has been affected by COVID?

Are you still going ahead with your plans to kind of shrink the 4 air control centers down to 2 operations in the 2 that are left and your plans around kind of remote tower technology and so on at the remaining 2? Can you confirm if those plans are on track?

So I'll give you the answer regarding the strategic plan. We will kick off a review of our business plan 2020, 2024 over the last weeks and together the management team and the consultants, we expect to have a new plan at the beginning of 2021.

Let me say, however, that our business plan will depend to target that the European Commission will set in mid-2021. As such, we've not planned for us an Investor Day to present the new business plan and will only officially communicate our targets after we have a clear indication from the European Commission.

Generally, in terms of business initiatives, our updated business plan will maintain as much as possible continuity with the initiative included in the last existing business plan. So this is what I'll say regarding that.

At a glance, it looks like the personnel costs in the second quarter were sort of down the last -- than you might have seen in the prior -- in the first quarter relative to the prior year. Is that sort of quick analysis right?

And if so, why is the decline smaller?

Yes. Let's say that the main reason is we pushed a lot on vacation balances above all in the first part of the -- I mean, in the first quarter.

And as actually people start to finish the balance, that's part of the impact that was -- I mean, the impact was reduced and then we start to come back a little bit in…

For the second half of May.

Yes. For second half for May, we came back to -- part of us came back to -- in office.

So part of the cost reduction that we were able to achieve previously, we are not anymore able to do it. But that's the main reason.

All right. Thank you very much, operator.

Thank you very much, ladies and gentlemen, for being on the call this afternoon. As always, we -- if you have any follow-up questions, please reach out to myself or to Vittorio.

You have our contact details. With that, thank you, Mr.

Simioni. Thank you, Luca, and thank you, everyone, for being on the call this afternoon.

Bye-bye.

Bye-bye. Thank you to all.

Bye. Thank you.