Grupo Aeroportuario del Sureste SAB CV Earnings Fly Higher on Cancun's Strong Traffic Growth

By Markets

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While Grupo Aeroportuario del Sureste SAB CV (NYSE: ASR), or ASUR, owns nine Mexican airports, its Cancun location continues to be the most important driver of its financial results. That was certainly the case during the third quarter as Cancun drove the bulk of its passenger traffic growth. With a fourth terminal currently under construction, ASUR appears poised to drive even more traffic to its bustling airport.

ASUR's results: The raw numbers


Q3 2016 Actuals

Q3 2015 Actuals

Growth (YOY)

Total passenger traffic

7.2 million

6.6 million


Total commercial revenue per passenger

94.57 pesos

82.80 pesos


Earnings per average diluted share




Data source: Grupo Aeroportuario del Sureste SAB CV. YOY = year over year.

What happened with ASUR this quarter?

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Traffic at Cancun continues to grow:

  • Domestic traffic rose at seven of ASUR's nine Mexican airports and was up 10.2% year over year, to 3.7 million passengers. Cancun supplied the bulk of those passengers, accounting for 56% of total domestic passenger traffic after its traffic rose 12%, to 2.1 million. That offset weaker traffic at several of its smaller airports.
  • Internationally, Cancun was an even more significant contributor to traffic. It accounted for 95% of total international passengers after traffic grew 7.5%, to 3.3 million passengers. Like its domestic results, the company's weaker traffic across several other airports, including a 12.4% decline at Cozumel, weighed on total international traffic growth, which was up 7%, to 3.5 million.
  • ASUR continues to leverage its increasing traffic at Cancun by capturing more revenue per passenger. Last quarter the company's total commercial revenue improved by 14.2%, to 94.57 Mexican pesos per passenger. Driving that growth was a 44% increase in teleservices, a 35.9% jump in food and beverage operations, and a 25.6% jump in retail operations. The addition of four new food and beverage locations, and eight retail locations at Cancun over the past year was one of the factors driving the increase in revenue per passenger.
  • Another driver of profit growth is that total operating costs and expenses declined 2.3% because of a drop in construction costs. That said, overall costs were up 16%, due in part to rising costs of services from the recently completed Terminal 3 expansion at Cancun.

What's driving this growth?

ASUR continues to benefit from controlling an airport in a prime tourist destination. However, several factors are driving an increase in passenger traffic throughout Mexico. According to competitor Grupo Aeroportuario del Pacifico (NYSE: PAC), September was its best month for domestic passenger traffic growth because of the federal government's campaign Let's All Travel Through Mexico. Meanwhile, Grupo Aeroportuario del Pacifico noted that international passenger traffic flow continues to rise due to lower oil prices and the depreciation of the Mexican peso. Those factors drove Grupo Aeroportuario del Pacifico's domestic traffic up 25.2% and its international passenger traffic up 12% during September.

Rival Grupo Aeroportuario del Centro Norte (NASDAQ: OMAB), likewise, experienced a significant rise in domestic traffic last month. Grupo Aeroportuario del Centro Norte specifically noted that traffic from its Monterrey Airport increased 17.4% due in part to higher traffic volumes on its Cancun routes, which of course benefited ASUR as well. Meanwhile, it continues to see strong international traffic growth between its airports and the key U.S. hubs of Los Angeles, Chicago, and Houston. In other words, passengers are not just flocking to Cancun these days, but they are flying around Mexico, as well as from the U.S. to Mexico and vice versa.

Looking forward

Those travel trends should continue to drive incremental traffic toward ASUR's airports. That said, Cancun stands to benefit the most due to the Terminal 3 expansion, which added six new gates and commercial areas, and increased its annual passenger traffic capacity from 6 million to 10 million. Meanwhile, the new Terminal 4 is expected to be complete next year, which should boost its capacity by 9 million more passengers. Needless to say, growth at ASUR's top airport should continue to soar.

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Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Grupo Aeroportuario del Pacifico and Grupo Aeroportuario del Sureste. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.