7/06/2024 CLASS CNBC - L'Italia nei cieli: intervista all'AD di ENAV Pasqualino Monti

Thank you, thank you for the invitation. Well, first of all, let's position ENAV, its activity, the 45 control towers, the 400 regional control centers, but not only that, also a bit of history of how we got to today. Yes, let's start from far back, 1981, about 40 years ago, so it's difficult to tell the history in a few minutes of a beautiful but also complex company like ours. It is a company that has evolved over time. In 2001 it underwent the transition from a National Flight Assistance Agency, essentially a public entity, to a company. In 2016 it was listed on Piazza Affari, and while before it was a company that managed only and exclusively our airspace and therefore the control of our airspace, over the years it has become a company present internationally, present in 60 countries, exporting technology, exporting know-how, exporting capacity and efficiency. It is the first service provider in Europe in terms of efficiency, one of the first in the world, and it is one of the very few cases, at least the only one certainly in Europe, one of the very few cases in the world where the entity that manages this service, because it is a service, does so through a listed company. So it is the only listed service provider in Europe, and that says a lot. We do not base our activity only and exclusively on cost coverage, but we also base our activity on the ability to generate profits, and you generate profits if you can separate the role given by the regulator, that is, the role of service provider, manager of a public monopoly service, from the activities in international markets. And it is on this that we have focused our attention on your path of technological advancement, the reason why you go to international markets and skies. But let's also start from the results, because you are also a listed company, as rightly mentioned, and so we also tell the story from the perspective of investors, to whom you recently provided the picture of 2023, which was substantially a record year, with revenue growth over one billion, up 5.9%, and net profit up 7.9% to almost 113 million. What drove the results in 2023 and especially how do you see the year that has now opened? We are almost mid-year, but as she said, we reached the historical record, we surpassed 2019, which is the only year that for us represents the benchmark because the other years were marked by the pandemic, and we exceeded one billion euros in revenue, we reached 113 million in net profit. We distributed, and I like this data, we distributed the highest dividend in the history of our company for our shareholders, and we are changing our dividend policy, trying to meet and always improve the dividend for those who believe and invest in our company.

Indeed, when you announced this dividend towards the end of March, the chart of your stock also spiked, which is up about 12% since the beginning of the year. Yes, yes, it is a share that, well, the stock has also risen a lot, we are very happy, we are grateful to our investors, to those who believe, also in the presentation we had towards the end of March of our Investor Day, of what our business is, of what our business will be for the future. We are very focused on technology, we are very focused on international markets, but we never forget that our core business is the regulated market. So implementing the industrial plan, improving the efficiency of our service provider with respect to the regulated market, and improving our numbers with respect to what our regulator tells us, represents an important goal for us to focus on, but it also gives us the opportunity to measure ourselves with the improvement of technologies, with their growth, and therefore opens us to markets where we were simply not present before the last year. In the last year we achieved very important results that for me are decisive in terms of transfer to the financial community, because we improved, we doubled our presence in international markets. 2024 presents itself as a further increase, not only with respect to the regulated numbers but also and especially with respect to the numbers that we are gradually consolidating in international markets. This is important for us and it is what we are measuring ourselves on. We strongly believe that this company, with its group, because today it is a group made up of four entities: ENAV, IDS that manages and creates innovative software for airspace management, Techno Sky that is our company that does maintenance and also installs our systems around the world, and D-Flight that is the further company on which we rely a lot because it is the company delegated by the regulator for the management of airspace for drone services. We are also focusing a lot on this, it is the future, and on this we are definitely concentrated, absolutely.

Monti, look, I'll tell you, I just came out of a staff meeting with all my direct reports and I must say that the numbers are growing, they are extraordinary. Consider that we are growing compared to 2023, which I reiterate was a record for our company, by almost 11%, and this is a data point that we will certainly consolidate until the end of this year. So this makes us believe that the results that will be achieved from now until the end of the year will be very, very important. It is clear that we are also at the close of our regulatory period, so we are heading towards what will be the future regulatory period, the next 5 years. So we are sitting with the commission to decide the future, so to speak, the future tariff to apply in our airspace. But we are truly facing a data point that is epochal, because never has ENAV managed such a high number of flights. So combining such significant growth with the maintenance of efficiency that we guarantee, because I repeat we are the best service provider numerically tested in terms of efficiency, and also environmental sustainability, is something to pay attention to. Just in these hours, IATA, the airline association, provided record data saying that airline profits will exceed 30 billion compared to 2023, and air traffic continues to grow. Naturally, during COVID, everyone thought that the number of people traveling by plane would substantially decrease, but it has changed. However, operators also tell us that the composition is perhaps a bit less business traffic and a bit more leisure traffic, as they say in jargon, i.e., related to vacations. Is that so, or how do you see the main trends that will continue this year? But look, I'll give you a data point, I'll speak numerically. We closed the quarterly report, the quarterly report improved a lot compared to the quarterly report of last year. Simply to answer your question, usually our peaks are concentrated for the majority in the 6 months of seasonality, spring and summer, so the first months we suffer in terms of revenues, the last months of the year we suffer in terms of revenues, with the same costs because our costs are spread equally over all 12 months. So in the first quarter we improved a lot both the margin, i.e., the difference between revenues and costs, because we had a large increase in costs, and the margin in terms of EBITDA, i.e., operating costs. So from this point of view, traffic increased even in the months when usually we suffer a decline, which is a physiological decline due to seasonality. This in my opinion is the most important data point, and it also makes us understand how summer will be a very, very important summer, because if we increased numbers by double digits in the first three months of the year, in the other three months we can say we even slightly increased volumes compared to the previous year. We expect that July, August, and September will be very, very important months from the traffic point of view. And we are proud to say that we guarantee great efficiency because we are a service provider that has an incredible capacity. So even with our regulator, with Eurocontrol, regarding capacity, we always say we are available, we always say send us traffic, we are ready to manage it. Also because a data point: how much traffic our system, including airport, is able to handle, you know it well, it is also able to withstand, because it is positive news that there is greater desire, availability, interest in moving by plane, but at the same time it must be done in a manageable way.

Look, we had a slowdown in the implementation of our industrial plan, also physiological during the COVID years. In the last year we accelerated a lot, and when you put the company and technology at your disposal, when you manage to keep up with the times, and in this you also manage to advance from the point of view of efficiency in airspace management, you can certainly guarantee a higher capacity than in previous years. We are moving in this direction. We know that the years ahead will be years in which, perhaps also to recover what happened during the pandemic, there will be an increase in traffic. So we must increase our level of technological efficiency to guarantee always safe, always certain management, always with the same degree of efficiency. And this is what we are investing in, we have invested and will continue to invest. It is clear that recovering 3 years was not easy, it is not easy, but let's say we have our foot firmly on the accelerator. The results tell us that we have done well, we have done well because certainly the results achieved and those that we will achieve in the near future tell us that the investment made was a right and correct investment.

But look, from January to today we have managed almost, indeed more than half a million flights, and so it is normal that when we talk about sustainability, it is clear that to guarantee sustainability you must guarantee airlines the ability to fly, yes certainly, safely, but trying to save as much fuel as possible. We did this by being the first service provider in Europe to make planes fly not by entering a zigzag route network but by sending them straight, to simplify the concept and make it understandable to everyone, in our skies. So when they arrive above 6,500 meters in altitude, the planes that enter a certain point of our airspace exit from a certain point of our airspace, they do so with a very straight trajectory. This has allowed us, allows us, and will allow us only in 2024 to save airlines almost 90 million kilograms of fuel, which means that in terms of CO2 emissions, we are certainly a service provider that guarantees truly exceptional savings and sustainability. And on this I must say that technology has helped us a lot. The deadline was December 31, 2025 from the European Community regulation. On March 21 of this year, 2024, with over a year and a half in advance of the deadline set by the European Union, by the European Commission, we are already operational with this type of management. So we certainly guarantee savings in terms of environmental sustainability, which then translates because it also becomes a cost saving for airlines, and this can also fuel a reasoning for the airlines themselves in terms of higher margins.

Yes, we are transforming. We have four control centers: one in Milan, another in Rome, another in Padua, and another in Brindisi. We are transforming Padua and Brindisi into two remote control centers that will manage 26 airports, 13 in southern Italy and 13 in northern Italy, from remote towers, directly from these control centers without having the person, so to speak, who controls directly from the control tower at the airports. This type of technology is already operational for us. We already have the first local tower in Brindisi, the second will arrive in Perugia by October, the third will arrive in the first months of next year in Grottaglie, and then gradually it will extend to all 26 airports. This will certainly allow us a much more efficient, much faster, much more direct management in technological terms, and will also allow us to be at the forefront and thus to mature that technology that will then allow us to have added value in global competition, compared to those countries where we want to enter, we will enter with a product that is already operational.

But they are seen very well. We are proud, we are what we are thanks to our controllers, thanks to our employees, the men and women who constantly work to achieve results, to make us achieve the results that we then try to transfer externally as best we can. I repeat, we are very focused on the core business, but when we talk about the regulated market, we also talk about technology, technological evolution. Our capacity must certainly be to continue investing in the core business but also to look at the parallel market to the core business, i.e., the world market. On this we are good. We are the country of beauty, goodness, and well-made things. In this case, in our case, of well-made things. So the agreement with Amazon goes precisely in this direction, in trying to make people understand that we are a player at the disposal of the great global industries, the great global companies, because we are good at what we do. So managing airspace in full safety for the transport of goods and people in the future through drones can happen if these great global players have a very efficient service provider at their disposal. And Amazon was able to test our equipment, our software, our platform, embraced it, shared it, and with them we finally entered an important partnership that will see, by the end of 2024 or early 2025, the first experimental delivery of packages. Then it is clear that there is a market, the future is concentrated there. We are very attentive to the evolution of the drone industry because alongside it, certainly the attention to airspace management to make them fly in full safety will also evolve.

Certainly attention is also focused on following the indications of the government and the extraordinary work that the government is doing in the foreign community, on Africa, on the Mattei Plan, on three countries in particular: Kenya, Algeria, Morocco. We want to develop there, we want to increase our presence. In Southeast Asia, in India, in the United States, where we participated in a very important tender with the American service provider. And we are focused in South America, where we are present with our systems but we have not yet, so to speak, verticalized all our products. So we are certain that the global portfolio will increase in our company. We are absolutely convinced that we are very competitive compared to our global partners, both in terms of product and in terms of price, so we expect great results also in this sense.

Ah, look, I'll tell you the truth, I could never replace a headline writer, I think that's what they're called, those who write the headlines in the print media. No, I could never. I can say, I can try to fill the article with content, then the headline we leave to those who know how to do it. Fill it with positive content, because this is a truly very, very efficient company that will give great satisfaction to its shareholders with extraordinary numbers, because it will be able to continue, to proceed along the path it has undertaken, and we are convinced that certainly, net of the headline, the content of the article will be decidedly positive. In bocca al lupo.

Thank you, thank you, thank you all. See you soon.