Airline Traffic Shoots in Mexico - Analyst Blog

Aeroportuario del Sureste, S.A.B. de C.V. (ASR), a top Mexican airport operator, recorded a 8.9% increase in passenger traffic for August 2010 in comparison with the same period of fiscal 2009.

Domestic traffic rose 2.5% while International traffic shot up by 15.1% year over year. In July 2010, Aeroportuario del Sureste recorded a 16.2% year-over-year increase in its traffic with a 3.5% increase in domestic traffic and 29.8% International traffic.

In the second quarter of fiscal 2010, passenger traffic grew 26.8% year over year with an increase of 37.8% in international traffic and 13.8% in domestic traffic. However, in the first quarter of fiscal 2010, total traffic declined 3.6% year over year with domestic traffic and International traffic declining 3.9% and 3.5%, respectively.

Mexican airport operators, Grupo Aeroportuario del Pacífico S.A.B. de C.V. (PAC), Aeroportuario del Centro Norte S.A.B. de C.V. (OMAB) and ASR have been experiencing an increase in passenger traffic since the second quarter of fiscal 2010 compared to the huge drop in traffic during the same 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-70s 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 ASR, PAC and OMAB. For the shorter term, all the ADRs currently retain their Zacks #3 Rank, equivalent to short-term Hold rating.
 
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