Grupo Aeroportuario Del Sureste (ASUR)

Khair Mirza (Kuala Lumpur, Malaysia)

Traffic Performance

Grupo Aeroportuario del Sureste (“ASUR”) is a Mexican airport operator with nine airports in Mexico, one in Puerto Rico and six in Colombia. Among its key assets include Cancun Airport (“CUN”), San Juan (“SJU”) and Rionegro (“MDE”). The company is listed on the Mexican Stock Exchange and on the New York Stock Exchange. It is 17.3% owned by Mexican billionaire Fernando Chico Pardo, 16.1% by transport company Group ADO and 9.3% by Aberdeen Asset Management while the rest remains a public float. System-wide, ASUR served a total of 52.3 million passengers in 2018.

ASUR’s traffic numbers for 3Q2019 grew at 6.4% relative to 3Q2018 to 37.9 million passengers, of which 38% were made up of international passengers. Growth was mainly driven by Airplan, ASUR’s wholly owned subsidiary operating in Colombia which enjoyed 15% Y-o-Y growth and by Aerostar, ASUR’s 60%-owned subsidiary in Puerto Rico which grew 11%.

Mexico traffic grew very moderately at 2.5%, which is in line with other domestic competitors such as GAP. The slowdown is mainly due to Mexico’s flattish GDP growth which was posted at 0%, which eventually led to a cut in full year forecast by the International Monetary Fund (“IMF”) from 1.6% to 0.9% as prospects remain slightly pessimistic.

The crown jewel of ASUR’s portfolio, CUN, has felt the effects of the economic slowdown and only grew 1% – a clear drop compared to previous years where growth hovered around the 9-12% mark. For 3Q2019, CUN contributes 70% of ASUR’s Mexican traffic and 47% of system-wide traffic.

Hurricane Dorian might impact future traffic flow especially at CUN, as flights are cancelled while holidaymakers and business travellers abandon their plans. The hurricane has not only affected flights, as cruise lines were also forced to change course and take refuge at a nearby island. However, the impact is not expected to move the needle in terms of overall ASUR traffic.

Aerostar (Puerto Rico) and Airplan (Colombia), ASUR’s overseas subsidiaries, performed much better, registering double-digit growth of 11.4% and 15%. SJU, Aerostar’s sole airport in the country, continues to recover from the devastation of Hurricane Maria which plagued the country in 2017. Meanwhile, in Colombia, Airplan’s airport in Rionegro led the way, growing 18% Y-o-Y for 3Q2019 compared to 3Q2018.

Corporate Developments

ASUR’s investment in Aerostar continues to recover as the airport remains the key gateway to Puerto Rico an accounting for 93% of total traffic of the US territory and is the busiest airport in the Caribbean. Since operating the airport in February 2013, traffic has seen steady growth but was impacted by Hurricane Maria in September 2017. Numbers are approaching pre-disaster levels but will still likely need some more time before outpacing its previous trajectory.

There is approximately 34 years left in the concession that ASUR paid USD 615 million for in 2013, combined with a revenue share with the Puerto Rican government that is fixed at USD 2.5 million for the first five years, 5% of gross airport revenues for years 6-30 and 10% of gross airport revenues for years 31-40.

AviAlliance owns 40% of Aerostar and can become an important partner for ASUR to further explore its international expansion ambitions. AviAlliance is the airport investment arm of Canadian pension fund PSP and is also looking to expand its footprint outside of its portfolio in Europe.

Airplan is ASUR’s point of entry towards the South American market where it currently operates six airports in Colombia. These airports account for approximately 16% of Colombia’s traffic in 2018. A further partnership together with its current investors cannot be ruled out as ASUR looks to broaden its horizons.

In conclusion, despite the slowdown of growth in Mexico, ASUR’s relatively diversified portfolio or airports means that it is ready to weather any upcoming storm, even if somewhat unlikely. Having a strong infrastructure and airport investor in PSP and AviAlliance provides opportunities for ASUR to explore more regional expansion to mitigate any concentration risk in Mexico.

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