ASR Shows No Improvements - Analyst Blog

Last week, Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) announced a decrease of 7.2% in total passenger traffic for October, compared to the year-ago period. 

Domestic passenger traffic decreased 6.5%, while international passenger traffic decreased 8.1% compared to October 2008. 

The decline in international passenger traffic resulted mainly from a decline of 31.31% in international traffic at the Cancun airport, main touristic attraction. The 21.63% decline in domestic passenger traffic resulted mainly from declines of 29.77%, 17.41%, 26.17%, 30.56% and 62.66% at the Merida , Cancun , Veracruz , Villahermosa and Cozumel airports, respectively. Major Mexican airlines companies reported a decrease in passenger traffic during the second and the reason was the outbreak of swine flu in the country. Declining business and leisure travel in Mexico affected local airlines' business to a larger extent. In the third quarter 2009 the business environment showed no real improvement. 

Airlines all over the world are facing difficulties, primarily due to the collapse of the global economy. Declining business and leisure travel is affecting airlines' business to a larger extent. 

Moreover, the Mexican economy could face a tight money period in the upcoming quarters as the Bank of Mexico recently lowered its benchmark interest rate by just 25 basis points to 4.5%, reducing the scope for further rate cuts. The Mexican economy is rapidly slowing down and the trend is likely to continue in the short term. Thus, it certainly would be a difficult year for ASR, Grupo Aeroportuario del Centro Norte S.A. de C.V. (OMAB), and Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC). 

It seems that odds are against the Mexican tourism industry in the very short-term, mainly considering the difficult economic conditions in the U.S.
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