Grupo Aeroportuario: Traffic Takes Off - Analyst Blog

Grupo Aeroportuario del Pacifico SAB de CV (PAC) has announced its total passenger traffic for August 2010. Passenger traffic increased 3.6% year over year, with domestic passenger traffic increasing 2.3% and international passenger traffic increasing 6.6%.
 
Passenger traffic increased significantly during the first two months of the third quarter of fiscal 2010. During July 2010 passenger traffic increased 11.3% year over year with domestic passenger traffic and international passenger increasing 7.8% and 19.7%, respectively.
 
During the second quarter of 2010, which ended on June 30, 2010, the company recorded a 14.6% increase in total passenger traffic in comparison with the second quarter of fiscal 2009. Domestic passenger traffic grew 12.2% and International traffic rose 19.5% year over year. The increase in traffic since the second quarter of fiscal 2010 compares with a huge decrease in passenger traffic in the same period during 2009 due to the outbreak of the H1N1 flu in the month of April.
 
Another reason for the increase was the resumption of certain flights and new routes coupled with the World Cup soccer held in June and July. During the economic downturn in 2008, the aviation industry saw cancelled flights and discontinuation of certain routes to combat the steep rise in operating costs.
 
However, markets are picking up gradually and are expected to show some decent results in the coming years. The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010. Fuel prices have also reduced, which led to lower operating expenses in the second quarter for Grupo Aeroportuario.
 
The ADR currently has a short-term Zacks #3 Rank (Hold) rating and we reiterate our long-term Neutral recommendation for Grupo Aeroportuario.