Grupo Aeroportuario del Sureste SAB CV (NYSE: ASR), or ASUR, reported a decent start to 2018. While passenger traffic and earnings didn't expand quite as briskly as they have in previous quarters due to some issues at its recently acquired airports, the company still managed to grow both in the first quarter.
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?
The new additions weighed it down again this quarter:
- Total passenger traffic in ASUR's nine Mexican airports rose 9.3% in the first quarter to 8.5 million. The main contributor was the Cancun airport, where traffic increased 9.6% to 6.5 million passengers. The company's eight other Mexican airports combined to serve 2 million passengers, which was 8.2% more than the year-ago period.
- Partially offsetting strong passenger traffic in Mexico was a 19.2% decline at the Luis Munoz Marin airport in San Juan, Puerto Rico, as a result of the continued impact from Hurricane Maria, which hit the region in September. While flight levels returned to normal toward the end of last year, fewer passengers are traveling to the area.
- Traffic in the company's newly acquired Colombian airports also slipped in the first quarter, sinking 5.2% to 2.4 million. While international traffic soared 19.9%, that wasn't enough to offset an 8.7% drop in domestic traffic.
- While traffic increased overall, commercial revenue per passenger slipped, including a 3.2% drop at ASUR's Mexican airports because traffic grew faster than revenue from non-aeronautical services like duty-free stores, car rentals, retail operations, and banking. Another issue was that banking and currency exchange services revenue slipped 7.8% year over year.
Puerto Rico continued to slowly recover from the devastating blow by Hurricane Maria last fall. While ASUR's airport in San Juan is back to operating at full capacity, it did sustain some damage. ASUR has insurance covering this damage, as well as the loss of direct income from it, outside of a $10 million deductible. While the company and its insurance provider are still evaluating the damage, as they settle this claim and the island starts returning to normal, traffic and profitability at this airport should improve. However, it could be quite some time before that happens, and traffic might not get back up to where it was before the storm due to the number of people who have left the island permanently.
Colombia also reported another weak quarter. The country's airports are coming off a strike by local pilots of a major carrier, which has continued weighing on domestic traffic. However, as travelers put that behind them, traffic should start returning to more normalized levels.
While those locations hit some recent turbulence, traffic at Cancun continues to soar. ASUR recently finished the fourth terminal at that location, which not only increased its ability to handle passenger traffic but also added several new commercial revenue opportunities. The tailwind from this new terminal should help offset much of the headwinds encountered by the company's other airports in Latin America in the coming quarters.
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