Equity Analysis /
Mexico

AIRPORTS: Strong passenger demand is confirmed

  • Passenger traffic in Asur rose 20.6%, in Gap 21.6% and in Oma 21.4% given a strong demand

  • In Mexico’s operations Asur achieved the greatest advance in international segment followed by Oma’s boost in domestic

  • We reaffirm the sector’s positive outlook, given the rest of the year perspectives

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

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Banorte
9 November 2022
Published byBanorte

Strong passenger demand is confirmed

  • Passengers at the airports operated by Asur, Gap, and Oma, showed a good demand performance, although with more moderate growth rates, in line with expectations

  • In relation to total operations, Asur reported an increase in passengers of 20.6%, Gap a rise of 21.6%, and Oma a hike of 21.4%

  • October's figures reaffirm our expectation of continued year-end passenger growth, which stands out given the complex environment, thus reiterating our positive outlook for the sector

In October, total passenger traffic for the 3 airport groups increased 21.0% y/y (airports operated in Mexico). Demand continued to show strength, although there was a slowdown in passenger surges y/y, in line with our expectations. In this way, total passenger traffic at the airports operated in Mexico rose 21.0% y/y (vs. 26.3% growth in September), similar to our estimate of ~22%. Domestic segment (67.8% of the total) recorded a growth of 22.7% y/y, and the international of 17.5% y/y.

Individually, Asur recorded a 20.6% y/y hike, including a 24.1% y/y rise in passengers from Mexico. In San Juan Puerto Rico, traffic continued to be weak, falling 2.9% y/y, while Colombia continued its solid performance, up 28.3% y/y. In turn, Gap registered an increase in total October passengers of 21.6% y/y. Passenger traffic at the airports it operates in Mexico, that is, excluding Montego Bay Airport in Jamaica (+51.9% y/y) and Kingston Airport (+80.9% y/y), grew 18.6% y/y. Finally, Oma recorded a 21.4% y/y advance in passengers.

Asur, Gap, and Oma's LTM total passenger variations stood at 45.0%, 37.0%, and 35.1% (November 2021 – October 2022), compared to LTM as of September of 51.1%, 39.7%, and 38.4% (October 2021 – September 2022), respectively.

Corporate News

·      Gap mentioned that during the month 2 new routes were opened and that volume of seats offered rose 18.9% y/y, while the annual increase in load factor went from 7.4pp to 81.3%.

·      Oma will call a shareholders' meeting on November 30th to discuss issues related to the sale of a portion of its shares by some Fintech affiliates to a subsidiary of VINCI Airports SAS. On the other hand, the group noted that three new routes began operating during the month.

Conclusion...  Passengers at Mexico's private airport groups continued to show strong demand, albeit at a slower growth rate. In this sense, we believe that by the end of the year, traffic will maintain a solid dynamism. Taking into account only operations in Mexico, once again Asur was positioned with the highest annual increase, where the international segment continues to stand out, followed by Oma with a good momentum in domestic segment, and finally, Gap. It should be noted that, considering also the airports operated outside of Mexico, Gap recorded higher growth than Asur. We reaffirm our favorable view for the sector given the interesting growth outlook following the positive 3Q22 results, which stands out in the complex backdrop, although we remain alert to economic challenges. In our institutional portfolio we have exposure to Asur with a PT of MXN 483.50 per share and to Oma with a PT of MXN 158.00 per share, both with a Buy recommendation. On the other hand, for Gap our PT is MXN 300.00 and a Hold recommendation.

October 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 October 2022