Hurricane Maria slammed into Puerto Rico in late September causing widespread damage. One of the many consequences of that storm was the temporary suspension of operations at Luis Munoz Marin Airport in San Juan, which is now 60% owned by Grupo Aeroportuario del Sureste SAB CV (NYSE: ASR), or ASUR. While the impact of the hurricane on that location weighed on ASUR's third-quarter passenger growth, the company more than overcame that issue thanks to the strength of its Mexican airports, once again led by Cancun.
ASUR's results: The raw numbers
Total passenger traffic
Earnings per share
Data source: Grupo Aeroportuario del Sureste, S.A.B. de C.V..
Image source: Getty Images.
What happened with ASUR this quarter?
Cancun continues to drive growth:
- Total passenger traffic in ASUR's nine Mexican airports was up 8.1% to 7.8 million. Leading the way was Cancun, where traffic was up 9.4% to 5.9 million thanks to healthy growth in both domestic and international passenger traffic.
- Partially offsetting that strong showing was a decline at San Juan, where ASUR has now started reporting traffic after completing a transaction to take a majority stake in that location. During the quarter, traffic fell 5.5% to 2.1 million, led by a 12.2% drop in international passengers due to the impact of Maria. That's after the airport suspended operations on Sept. 19 before reopening on a limited basis on the 21st with just 10 flights. While it ramped up to 41 flights per day by the end of the month, it's still operating on a limited basis. Furthermore, the airport sustained some minor damage, though it doesn't yet have an estimate for repairs.
- Despite the lower traffic, San Juan still bolstered ASUR's bottom line because the company now owns a larger stake in the entity. Those incremental earnings, along with the Cancun-driven growth in Mexico, helped propel earnings 20% higher this quarter.
ASUR is putting the finishing touches on terminal 4 at its Cancun airport, which should be completely operational this quarter. The new terminal will have the capacity to handle 9 million passengers, enabling Cancun to continue growing traffic.
That said, while Cancun has been the story at ASUR over the years, the company is starting to diversify away from that airport by acquiring stakes in other Latin American locations. It began that strategy earlier this year when it boosted its interest in San Juan. Meanwhile, it announced deals last quarter to acquire controlling interests in two Colombian airport groups. The first transaction closed this month, with ASUR taking a controlling stake in Airplan, which is the second-largest airport concession holder in Colombia. That deal will add six airports, which served more than 10 million passengers last year. It's still working to close the acquisition of Oriente, which holds concessions in several more Colombian airports that handled over 5 million passengers last year.
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