Grupo Aeroportuario Descends

Last week, Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC - Analyst Report) reported gloomy results for the third quarter ended September 30, 2009.

During the quarter, revenues declined 4.8% year over year and reached MXN$40.2 million. The decrease was primarily due to the decrease in aeronautical revenues. Revenues from aeronautical services declined 5.8% and reached MXN$37.8 million, mainly as a result of a decline of MXN$42.4 million in passenger charges, which was offset by an increase in airplane landing fees and airplane parking fees. Non-aeronautical service declined 1.3% to MXN$2.3 million.

Cost of services declined 22.4% to MXN$56.1 million; as a percentage of revenues, cost of services decreased 560 basis points. Per workload unit ("WLU"), cost of services declined MXN$6.1 million from MXN$44.3 million in the third quarter of 2008 to MXN$38.2 million in the third quarter of 2009.

As a result of the decrease in total revenues, the cost of government concession taxes decreased 4.7%, while the technical assistance fees increased 3.3%.

Operating income increased 1.8%. EBITDA increased 3.3%, due to the higher rate in decrease of costs as compared to the decrease in revenues.

Net income decreased 18.0%, MXN$68.8 million lower that the figure reported in the third quarter of 2008, mainly due to the decline in revenues caused by lower passenger traffic.

Airlines all over the world are facing difficulties, particularly in Mexico and primarily due to the outbreak of swine flu during the last several months. Moreover, declining business and leisure travel is affecting airlines' business to a larger extent.

The Mexican economy could face a tight monetary period in the upcoming quarters as the Bank of Mexico recently lowered its benchmark interest rate by just 25 basis points to 4.5%, reducing the scope for further rate cuts. The Mexican economy is rapidly slowing down and the trend is likely to continue in the short term. Thus, it certainly would be a difficult year for PAC, Grupo Aeroportuario Del Sureste SA de CV (ASR - Analyst Report), and Grupo Aeroportuario del Centro Norte S.A. de C.V. (OMAB - Snapshot Report).