Sureste Domestic Air Traffic Grounded - Analyst Blog

Mexican airport operator, Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) recorded only a 1.0% increase in passenger traffic in November 2010 compared with the year-ago period. Domestic traffic dropped 1.8% while International traffic shot up by 3.4% year over year.

Decrease in domestic traffic was primarily attributable to the 30.1% decline in passenger traffic at the Minatitlán airport. During October 2010, also Sureste recorded a 34.8% decrease in passenger traffic at the Minatitlán airport. However, overall passenger traffic went up by 5.1% year over year with only a 0.3% increase in domestic traffic and 10.3% increase in International traffic.

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 moved 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 total 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 on account of 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.

However, the decrease in domestic traffic forces us to maintain our long-term Neutral recommendation on Aeroportuario del Sureste.

 
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