OMAB Begins New Terminal Operation – Analyst Blog

Mexican airport operator, Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB) began operation at its new Terminal B at Monterrey International Airport, where Aeromexico and Aeromexico Connect were the first to operate flights. Later in September, the company is expected to start Delta Airlines and Northwest.

 

The new terminal would definitely help increase passenger traffic as it has the capacity to accommodate approximately two million passengers annually and has platform for 13 aircraft at any given point in time.

 

Since fiscal 2010, the company was experiencing an increase in passenger traffic with the growth of 4.6% year over year in July, where domestic traffic shot up 2.2% and international traffic increased 20.8%.

 

During the second quarter of 2010, which ended on June 30, 2010, Grupo Aeroportuario recorded a 6.5% year-over-year increase in total passenger traffic, the highest in eight successive quarters, including the current quarter. Domestic passenger traffic grew 5.1% and International traffic rose 15.3% year over year.

 

The increase in July as well as in the second quarter was primarily attributable to a huge decrease in passenger traffic in the same period during 2009 due to the outbreak of the H1N1 flu in Mexico.

 

Passenger traffic was also driven by the commencement of new routes by VivaAerobus and Aeromexico, and also due to the marginal market recovery.

 

Markets are picking up gradually and are expected to show some decent results in the coming years. The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010.

 

Fuel prices have also reduced, which led to lower operating expenses in the second quarter for Grupo Aeroportuario. Total operating expenses based on revenues fell by 490 basis points.

 

We maintain our Neutral recommendation until any significant recovery. However, the stock currently retains its short term “Sell” rating (Zacks #4 Rank) based on the indefinite suspension of Grupo Mexicana de Aviación since August 28, 2010, which contributed 12.5% of total revenues between January and July 2010.