Mexican Airlines Fight Turbulence

Mexican airport operator Grupo Aeroportuario del Sureste, S.A.B. de C.V., aka ASUR (ASR - Snapshot Report) announced the total passenger traffic for the month of August 2009.

During the month, total passenger traffic decreased 12.8% year over year. Total passenger traffic fell to 1.3 million from 1.5 million in August 2008.

Domestic passenger traffic was down 5.6% from August 2008. It fell from 694,360 passengers in August 2008 to 655,242 passengers in August 2009. International passengers reached 664,445 from 818,491 in August 2008. The decline in international passenger traffic resulted mainly from a decline of 20.2% in international traffic at the Cancun airport, a main tourist attraction.

ASR’s business is highly dependent on international tourists; the Cancun airport generates 70% of the company’s revenues. Thus, we believe that the company’s principal competition comes from the other tourist destinations of Acapulco, Puerto Vallarta and Los Cabos in Mexico, and destinations such as Puerto Rico, Florida, Cuba, Jamaica, the Dominican Republic and other Caribbean islands and Central American resorts.

Despite the hurricanes, Mexican tourist destinations like Cancun and Cozumel continue to be highly attractive. However, the outbreak of swine flu in Mexico in the beginning of 2009 was challenging. Apart from the global economic crisis, this is one more reason for the decrease in passenger traffic during August.

Thus, other Mexican airline operator like Grupo Aeroportuario del Pacifico (PAC - Snapshot Report) and Grupo Aeroportuario del Centro Norte S.A. de C.V. (OMAB - Snapshot Report) will also face the consequences.

Recently, ASR paid an ordinary dividend of MXN3.24 and an extraordinary dividend of MXN3.04 on May 13, 2009. We believe the company will pay dividends in 2009 of at least US$1.65 per ADR, representing a dividend yield of at least 4.6% for 2009. ASUR has a solid monopolistic nature, a strong balance sheet and an interesting dividend yield, which makes it attractive.

Read the full analyst report on ASR

Read the full analyst report on PAC

Read the full analyst report on OMAB