Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE: ASR), or ASUR, continued to experience some issues at its recently acquired airports. While traffic rose slightly in the second quarter, earnings went in reverse.
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 company's newest additions continued to be a drag on its results:
- Total passenger traffic in ASUR's nine Mexican airports rose 4.8% in the second quarter to 8.3 million. The main contributor continues to be the Cancun airport, where traffic increased 4.5% to 6.4 million passengers. The company's eight other Mexican airports combined to serve 1.9 million passengers during the quarter, which was 5.9% higher than the year-ago period.
- Traffic at the Luis Munoz Marin airport in San Juan, Puerto Rico, fell 5.9% to 2.3 million due to the lingering effects of Hurricane Maria, which slammed into the U.S. territory last September. International traffic was the hardest hit, down 18.4% year over year to around 246,000.
- Passenger traffic at the company's recently acquired Colombian airport group also declined in the second quarter, dropping 4% to 2.5 million. The main driver was a dip in domestic traffic, which dipped 6.5%, more than offsetting an 11.8% increase in international passenger traffic.
- Net income went down 4.1% due in part to the higher interest expenses associated with its recent acquisitions as well as increased operating costs.
ASUR recently announced that it received approval from the Mexican Department of Communications and Transportation for the Master Development Programs at each of its Mexican airports from 2019 through 2023. Cancun will see the greatest investment over that time frame at 5.9 billion pesos ($311 million), with the bulk of that spending coming in 2020 and 2021 as the company builds a fifth terminal at that fast-growing airport. The company also plans to make some upgrades at the nearby Cozumel airport, which has experienced a noticeable uptick in tourist traffic in recent years.
Meanwhile, the second-largest expansion-related investment will be at the Merida airport, which is on the other side of the Yucatan from Cozumel and Cancun. ASUR plans to invest more than $100 million into an even more robust remodeling of the airport so that it can handle more passengers in the future.
These investments will enable the company to continue serving more passengers at its core Mexican airports, which should help drive revenue and earnings growth in the coming years.
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