Sureste Posts Higher Traffic - Analyst Blog

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) recorded a 5.1% increase in passenger traffic in October 2010 compared with the year-ago period. Domestic traffic rose 0.3% while International traffic shot up by 10.3% year over year.

During the third quarter of fiscal 2010, Aeroportuario del Sureste recorded a 10.8% increase in passenger traffic in comparison with the year-ago quarter with domestic traffic surging 1.3% while International traffic moving up 20.9% year over year.

Aeroportuario del Sureste together with Grupo Aeroportuario del Pacífico S.A.B. de C.V. (PAC), Aeroportuario del Centro Norte S.A.B. de C.V. (OMAB) have been experiencing an increase in passenger traffic since the second quarter of fiscal 2010 compared with the huge drop in traffic during the comparable period in fiscal 2009.

The decrease in passenger traffic from the second quarter of fiscal 2009 through March 2010 was based on the H1N1 flu, which broke out in April 2009, and the difficult business environment due to the economic instability since the second half of fiscal 2008.

However, markets are now gradually picking up and are expected to show some decent results in the coming years. Fuel prices have also reduced to their mid-80s from the peak of nearly $150 per barrel. The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010.

We maintain our long-term Neutral recommendation on Aeroportuario del Sureste with a Zacks #3 Rank for the shorter term, equivalent to a short-term Hold rating.