March 26, 2020 / 7:33 PM / 10 days ago

UPDATE 1-Italian travel caterer Autogrill in talks to cut rents -source

(Adds source on Italian motorway operators, petrol stations)

By Francesca Landini and Stephen Jewkes

MILAN, March 26 (Reuters) - Italian travel caterer Autogrill is in talks with airports, motorway operators and other landlords around the world to cut fixed rents, a source close to the company said, as the group faces falling sales due to the coronavirus outbreak.

The Milan-based group - which operates restaurants at airports, motorways, rail stations and shopping centres - said on March 12 that the coronavirus outbreak had reduced its revenue by 25 million-30 million euros ($27.5-33 million) from the beginning of the year to the end of the first week of March.

The group, which is controlled by the Benetton family, said it would not pay its dividend on 2019 results because of the high uncertainty created by the infectious disease.

“There are ongoing negotiations with all channels and markets where the group works, with the aim of either cutting the fixed part of rents or making it variable and linked to sales,” the source said.

According to Autogrill’s latest balance sheet, the group paid 983 million euros last year for leases, rentals, concessions and royalties. Fixed costs for rents are an undisclosed item.

Italy, Autogrill’s home country, has suffered the most deaths from the coronavirus, with more than 8,000 fatalities as of Thursday. Its total number of cases, which rose to 80,539, is now close to the more than 81,000 infections recorded in China, where the pandemic began.

To reduce the contagion, the government has introduced strict curbs to people’s movements.

On Sunday, the government ordered non-essential businesses to close until at least April 3, but said others in strategic sectors should keep working.

The containment measures have cut Italian motorway traffic to a trickle, denting sales for Autogrill, rival travel food providers and petrol station operators. Earlier this week, petrol station operators threatened to close down pumps on the country’s motorway network due to the coronavirus epidemic.

In a statement on Tuesday, the government said the ministers were looking to broker a deal between motorway operators and the service station networks to avoid pumps being switched off.

One source close to the matter told Reuters on Thursday that Italy’s biggest motorway operator, Autostrade per l’Italia, part of infrastructure group Atlantia, was open to discuss with both petrol station operators and food providers about fixed costs they pay to run their outlets on motorways.

It would be up to the government to broker a final deal that would guarantee the free movement of freight and transport, which are seen as being of essential public interest.

$1 = 0.9080 euros Reporting by Francesca Landini editing by Giulia Segreti and Leslie Adler

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