Yesterday, Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) announced a 4.1% decrease in total passenger traffic for December 2009 compared to last year’s figure.
 
Domestic passenger traffic decreased 3.5%, while international passenger traffic decreased 4.6% compared to December 2008.
 
The lower international passenger traffic resulted mainly from a decline of 5.3% in international traffic of 5.3%, 12.0%, and 14.5% at the Cancun, Tapachula and Huatulco airports respectively. The 3.5% decline in domestic passenger traffic resulted mainly from declines of 5.7%, 6.2%, 9.7%, 10.5%, 12.7%, 24.9%, and 26.2% at the Minatitlan, Huatulco, Tapachula, Villahermosa, Veracruz, Oaxaca, and Cozumel airports respectively.
 
Declining business and leisure travel in Mexico affected local airlines business to a larger extent. It seems that odds are stacked against the Mexican tourism industry in the very short-term, mainly considering the difficult economic conditions in the U.S.
 
Airlines all over the world are facing difficulties, primarily due to the collapse of the global economy. However, Latin American and China’s airline stocks have performed well in 2009. 2010 may be another profitable year for the airlines industry in emerging markets if the overall economy continues to grow. Current estimates for 2010 suggest that the economic growth in emerging markets will be higher than developed markets.
 
The Bank of Mexico recently lowered its benchmark interest rate by 25 basis points to 4.5%. The Mexican economy is gradually growing and the trend is likely to continue in the short term. This can be another reason for the company performing well in the coming quarters with a significant rise in passenger traffic. Thus, we maintain a neutral recommendation on the stock.
Read the full analyst report on “ASR”
Zacks Investment Research