Grupo Aeroportuario's Traffic Grows - Analyst Blog

Mexican airport operator Grupo Aeroportuario del Centro Norte, S.A.B. de C.V (OMAB) recorded a 1.8% growth in passenger traffic in December 2010 compared with the year-ago period. Domestic traffic and International traffic rose 0.5% and 8.0%, respectively. For fiscal 2010, total passenger traffic went up 0.6% year over year with International traffic increasing 6.7%, while domestic traffic decreased marginally by 0.5%.

During the third quarter of fiscal 2010, passenger traffic rose 4.3% year over year with 2.7% and 14.9% increases in Domestic and International traffic, respectively. In this context, we note that the second quarter saw a turnaround in traffic after a long hiatus, since the beginning of fiscal 2009, with traffic rising 6.5%.

The rebound in traffic during the second quarter was not specific to the company. Centro Norte, Grupo Aeroportuario del Pacífico S.A.B. de C.V. (PAC) and Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) have experienced an increase in passenger traffic since the second quarter of fiscal 2010 compared with the huge drop suffered 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 are in their low-$90s, down from the peak of nearly $150 per barrel in 2008. Further, the International Air Transport Association (IATA) expects the airline industry to make a profit of $9.1 billion in 2011.

Hence, we maintain our long term Neutral recommendation. The ADS also currently retains its Zacks #3 Rank (short-term Hold rating).

 
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