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AIRPORTS (May): Passenger recovery accelerates

  • Passengers at airports in Mexico operated by Asur, Gap and Oma continued with y/y rise in May, exceeding expectations
  • As of total operations, Asur showed a 2,124.2% rise in passengers, Gap an 904.2% jump and Oma a 1,080.4% hike
  • Sector outlook remains favorable, despite Mexican aviation downgrading, and we expect sequential improvements
  • Passengers at the airports operated in Mexico by Asur, Gap and Oma continued with year-over-year increases in May that exceeded expectations

  • Regarding total operations (including those outside Mexico), Asur showed a 2,124.2% rise in passenger traffic, Gap an increase of 904.2% and Oma a 1,080.4% jump

  • In our view, the sector outlook remains favorable, despite the downgrading of Mexican aviation, and we expect sequential improvements to continue in the coming months

Total passenger traffic of the 3 airport groups during May registered a 1,154.3% y/y rise (airports operated in Mexico). An easier comparative base and greater dynamism in demand boosted passenger figures, which in the aggregate exceeded expectations, showing a 1,154.3% y/y growth (+13.2% m/m) and representing 88.3% with respect to 2019 traffic, compared to our estimate of 75.0%-85.0% for airports in Mexico. The traffic with the greatest weight in the total, domestic traffic (65.1% of total aggregate passengers), presented an increase of 882.5% y/y and international traffic of 2,491.4%.

Individually, Asur posted a 2,124.2% y/y rise, comprised by an annual increase of 2,455.6% in passengers from Mexico. In San Juan Puerto Rico, traffic represented 115.4% of what was reported in 2019, while those from Colombia reached 63.7% of the 2019 figures. Meanwhile, Gap presented an increase in total passengers in May of 904.2% y/y. Passenger traffic at the airports it operates in Mexico, excluding Montego Bay Airport in Jamaica ( +36.4% m/m) and Kingston Airport (+32.3% m/m), had an annual rise of 842.4%. Finally, Oma showed a 1,080.4% y/y jump in total passengers.

Total passenger variations of Asur, Gap and Oma for the LTM were -37.9%, -28.5% and -38.3% (June 2020 – May 2021), compared to LTM as of April 2021 of -50.9%, -42.0% and -50.4% (May 2020 – April 2021), respectively.

Corporate news

·      Gap noted that the volume of seats offered in May increased by 268.9% y/y and that the load factor during the month stood at 81.7% vs. 29.6% in May 2020.

·      Oma announced that the Board of Directors authorized a tender offer by Aerodrome Infrastructure, an affiliate of Fintech, for up to 24.9% of the total outstanding shares of the airport group for MXN 137.00 per share. It should be noted that the tender offer period is from May 24 to June 22.

Sector news

·      The Federal Aviation Administration (FAA) downgraded Mexican aviation to Category 2, as it did not comply with the minimum safety standards of the International Civil Aviation Organization (ICAO). Therefore, Mexican airlines flying to the US will continue to operate under the conditions prior to this downgrade, but will not be able to launch new routes, nor increase or reduce frequencies, in addition to the fact that it also affects (restricts) code-share programs.

·      The International Air Transport Association (IATA) favorably updated its global outlook for the sector, which incorporates a full recovery in passenger numbers in 2023 (vs. previous estimate of 2024). The agency forecasts that in 2021 passenger numbers will recover to 52% of pre-pandemic levels, by 2022 it would reach 88% and by 2023 it would stand at 105%.

Conclusion... May passenger traffic at airports operated by private groups in Mexico showed a faster pace of annual growth that exceeded estimates. Considering also operations outside Mexico, Asur once again stood out for registering the highest y/y increase; however, Gap was the closest to pre-pandemic (2019) levels. This month's figures point to a greater dynamism in passenger demand in the coming months, despite the downgrade to the Mexican aviation category, in which we foresee a moderate impact for airport groups. On the other hand, we must continue to monitor the evolution of restrictive measures in other countries (mainly in the US, which is our main tourist supplier), which we believe could diminish relatively soon, and thus trigger a better performance on the international side. Therefore, we remain optimistic about the sector's favorable outlook. In our institutional portfolio we have exposure in Gap with a 2021 PT of MXN 245.00 per share and in Oma with a 2021 PT of MXN 146.00, both with a Buy recommendation. On the other hand, for Asur our PT 2021 is MXN 414.00 per share and we have a Buy recommendation.

May Passenger Traffic

In the following graphs below, we can observe the evolution of the total passengers of the airport groups as a percentage of the 2019 figures in the last 12 months and the performance of their shares vs. S&P/BMV IPC.

Sector comparison – Figures at May 2021


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