Despite some turbulence at a couple of its airports, Grupo Aeroportuario del Sureste SAB CV (NYSE: ASR), or ASUR, reported a solid finish to 2017, which was a transformational year for the Latin American airport operator. The company's earnings took off after it boosted its stake in a joint venture that operates a major airport in Puerto Rico and bought a company that operates several more in Colombia.
ASUR's results: The raw numbers
What happened with ASUR this quarter?
The new additions were the main story:
- Total passenger traffic in ASUR's nine Mexican airports increased 6.2% in the fourth quarter to 7.3 million, driven mainly by a 7.3% increase at the company's Cancun airport, which served 5.6 million passengers during the quarter.
- Offsetting Cancun's solid showing was a 26.9% drop in traffic at the Luis Munoz Marín airport in San Juan, Puerto Rico, due to the lingering effects of Hurricane Maria, which hit the region in September. While flight levels returned to normal in October, fewer passengers traveled to the area during the quarter.
- Traffic in the company's newly acquired Colombian airports also dropped, falling 13% year over year due mainly to strikes by local pilots of a major carrier. That caused domestic traffic to fall 16.6%, more than offsetting an 11.7% increase in international traffic.
- While traffic slipped at ASUR's latest additions, those locations caused the company's earnings to take off during the quarter.
ASUR recently began operations at the newly constructed terminal 4 in its Cancun airport. The new terminal will have the capacity to handle 9 million passengers, significantly increasing the space of an airport that already handled 23.6 million passengers last year. That expanded space will enable Cancun to continue growing revenue from the increased traffic as well as the 64 new commercial spaces now open.
In October, the company closed the acquisition of a majority stake in Airplan, which operates six airports in Colombia. That deal, as well as the increased stake in the San Juan airport, should help drive earnings growth in the next year.
It's also worth noting that ASUR had a deal in place to acquire a majority stake in Oriente, which operates several airports in Colombia. That acquisition has yet to close, and as of its last update in October, ASUR was still waiting for regulatory approval and was negotiating with the sellers to adjust the acquisition terms due to the delay. If this deal is closed, it will provide a further boost to earnings in the coming year.
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