Sureste's Traffic Decreasing - Analyst Blog

Mexican airport operator, Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) recorded a marginal decrease in the passenger traffic for December 2010 compared with December 2009. Traffic inched down by 0.1% year over year based on 2.1% drop in the domestic passenger traffic. However, International passenger traffic went up 1.3% year over year.

Decrease in domestic traffic was primarily attributable to the 37.0% decline in passenger traffic at the Minatitlán airport. During October and November, Sureste recorded 34.8% and 30.1% decline in the domestic passenger traffic at the Minatitlán airport, respectively. However, total passenger traffic of both these months surged 5.1% and 1.0%, respectively.

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 due to the H1N1 flu, which broke out in April 2009, and the difficult business environment resulting from 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 $9.1 billion in 2011.

However, the decrease in domestic traffic forces us to maintain our long-term Neutral recommendation on Sureste. The ADS currently retains its Zacks #3 Rank, equivalent to short-term Hold rating.

 
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