Equity Analysis /

AIRPORTS: Passengers confirm slower growth pace

  • Passengers at the airports operated in Mexico reported a slightly lower-than-expected growth dynamism

  • As of total operations (including those outsides Mexico), Asur recorded a 23.1% increase, Gap +18.6% and Oma +22.2%

  • Given the challenging environment, our positive outlook remains due to solid demand and attractive valuations

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

8 July 2022
Published byBanorte

Passengers confirm slower growth pace

  • Passengers at the airports operated in Mexico by Asur, Gap, and Oma, continued to reflect a solid performance, although with moderate advances given the normalized base

  • Regarding total operations (including those outsides of Mexico), Asur registered a 23.1% hike in passenger growth, Gap a 18.6% advance, and Oma a 22.2% increase

  • Even though traffic was slightly lower-than-expected, we believe good demand dynamism shall continue. We will keep an eye on 2Q22 reports and any outlook updates

In June, the total number of passengers of the 3 airport groups recorded an annual increase of 18.6% (airports operated in Mexico). Considering a normalized base, a slowdown in passenger’s increase y/y was registered despite the strong demand. Thus, total passengers at the airports operated in Mexico increased by 18.6% y/y (vs. 24.8% in May), being slightly below our 21.0% estimate. Domestic passengers (representing 62.1% of the total) increased 18.9% y/y, while the international passengers grew 18.1% y/y.

Individually, Asur showed a 23.1% y/y growth, including a 20.0% y/y increase in Mexico’s passengers. In San Juan, Puerto Rico, traffic surprised negatively by dropping 5.8% annually, while Colombia continued with solid numbers by jumping 66.0% y/y. In turn, Gap recorded a total passenger advance during June of 18.6% y/y. Passenger traffic from the airports it operates in Mexico, excluding Montego Bay Airport in Jamaica (+38.3% y/y, already surpassing pre-pandemic figures by representing 100.4% of June 2019) and Kingston Airport (+13.0% m/m), had an annual increase of 16.0%. Finally, Oma presented a growth of 22.2% y/y in passengers.

Total passenger variations of Asur, Gap, and Oma of the LTM were placed at 85.1%, 58.0%, and 59.0% (July 2021 – June 2022), compared to the LTM of May of 107.8%, 71.6%, and 73.2% (June 2021 – May 2022), respectively.

Corporate News

·      Gap mentioned that during the month two new routes were opened and the volume of seats offered increased 23.7% y/y, while the load factor was placed at 81.6% vs. 77.6% in June 2021.

·      Oma reported that one new route began to operate: Monterrey‒Las Vegas by Frontier.

Conclusion... Although passengers at airports operated in Mexico by private groups presented a slightly lower-than-expected dynamism, we believe the demand performance will continue to be favorable in the upcoming months. Considering all operations, including those outside of Mexico, once again Asur stood out for achieving the highest annual growth, followed by Oma, and finally, Gap which we recall was the most resilient during the pandemic. Given the challenging environment, we foresee the sector as defensive due to the solid growth outlook for the year and companies’ attractive valuations. In turn, it will be relevant to know the groups' comments when they publish their 2Q22 reports in the following weeks. In our institutional portfolio, we have exposure to Asur with a PT of MXN 483.50 per share with a Buy recommendation, to Gap with a PT of MXN 300.00 with a Hold recommendation. As well as to Oma, with a PT is MXN 158.00 per share, and we have a Buy recommendation.

June passenger traffic

The following graphs show the evolution of the airport groups' total passengers over the last 12 months (percentage variation y/y) and the performance shares vs. S&P/BMV IPC.

Sector comparison – Figures at June 2022