Grupo Aeroportuario: May Traffic Up – Analyst Blog

Grupo Aeroportuario del Pacifico S.A.B. de C.V. (PAC) has announced the total passenger traffic for May 2010. Passenger traffic increased 39.0% year over year, with domestic passenger traffic increasing 32.5% and international passenger traffic increasing 55.4%.

 

The increase was attributable to a huge decrease in passenger traffic in May 2009 due to the H1N1 flu. However, during April 2010, total passenger traffic decreased 0.9% with a 0.4% decline in domestic traffic and a 1.8% drop in international passenger traffic.

 

The decrease in April was the after-effect of the global recession that took place in 2008, when oil prices reached their peak of $150 per barrel. However, markets are picking up currently and oil prices have fallen to their mid-seventies. This can be a favorable situation for the entire industry and the company in particular.

 

The industry is likely to continue improving in 2010, but it will take years to recover the losses incurred in 2008 and 2009. The company will continue posting lower passenger traffic for the next couple of quarters.

 

Moreover, other Latin American, Mexican and Chinese airline stocks performed well in 2009. We believe that 2010 may be another profitable year for the airlines industry in the emerging markets, provided the overall economy continues to grow. Besides, the growth in emerging markets will beat that in the developed markets.

 

The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010. We reiterate our Neutral recommendation on the stock until a significant economic recovery is visible.