Grupo Aeroportuario Traffic Booms – Analyst Blog

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) has released its total passenger traffic data for the month of May 2010.

During the month, passenger traffic topped with 85.8% rise year over year, with domestic passenger traffic increasing 42.7% and international passenger traffic moving up 144.5%.

The increase in domestic passenger traffic was primarily driven by higher footfall at all airports, primarily those at Cozumel, Veracruz, Merida and Huatulco.

International traffic benefited from the incredible boom at the Minatitlan and Cancun airports.

The huge spike was attributable to the lower traffic in the May 2009 due to the outbreak of H1N1 Influenza in Mexico.

Moreover, the markets are picking up currently and oil prices are in their mid-seventies. This can be a favorable situation for the entire industry and Grupo Aeroportuario in particular. The industry is likely to show some improvements in 2010, but it will take years to recover the losses incurred in 2008 and 2009. International Air Transport Association (IATA) estimates the losses to need around two years to recover.

Other Latin American, Mexican and Chinese airline stocks will perform well in 2010 provided the overall economy continues to grow. Besides, the economic growth in emerging markets will be higher than that in the developed markets.

Thus, Mexican airline operators like Grupo Aeroportuario – Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB), Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC), and airlines in the Latin America such as Lan Airlines S.A. (LFL) and Gol Linhas Aereas Inteligentes S.A. (GOL) – will grow.

However, we reiterate our Neutral recommendation on the ADR based the volatile nature of the fuel prices.