Grupo Aeroportuario del Sureste SA de CV Q3 FY2026 earnings call

Key managerial messages and operational highlights include:

• Strategic Expansion & Diversification:
  • Completed the acquisition of CPC Aeroportos Promotiva on September 1, 2026, adding 20 airports (primarily in Brazil) for 5.5 billion Reais (~$992 million).
  • Combined with the December 2025 U.S. commercial acquisition, ASUR now operates 36 airports across seven countries plus U.S. commercial sites.
  • Pro forma passenger volume for 2025 is estimated at 120 million, up from 70 million, significantly reducing dependence on the Mexican market.
• U.S. Commercial Growth Platform:
  • Building non-regulated, dollar-denominated commercial revenue streams at JFK, LAX, and Chicago O'Hare.
  • New Terminal 1 at JFK is expected to open toward the end of Q1 2027.
  • Developing commercial spaces at LAX for the 2028 Olympic Games.
• Mexican Airport Investments:
  • Cancún Terminal 1 expansion will be completed in Q4 2026, relieving pressure on Terminal 2 and enhancing commercial capabilities.
  • Cancún Terminal 4 investment is underway, with operational completion targeted for end-2028, adding significant gate capacity.
  • Mexico remains central to the business, but management acknowledges challenging macro conditions, particularly for international traffic.
• Sustainability Initiatives:
  • Began procuring clean energy from third-party suppliers in Mexico, covering >40% of electricity consumption in Q3.
  • Executive design for solar panels in parking facilities started; expected to generate 8 million kWh annually by 2027.
  • Received ACI Green Airport recognition for its Digital Renewable Energy Management System.
• Operational Challenges:
  • Airline capacity constraints, higher jet fuel prices, and Spirit Airlines’ bankruptcy are weighing on demand, especially for international travel.
  • Middle East conflicts continue to impact airline schedules and yields.
  • One-time expenses related to CPC integration (technical assistance, bond generalization) occurred in Q3 but will not recur.
  • Future costs in Mexico will be affected by government-mandated reduction in working hours from 40 to 38 per week.

The company reports consolidated revenues of 7.8 billion pesos, an increase of nearly 13% year-on-year. Consolidated EBITDA increased by 1.7% to 4.7 billion pesos. Financial performance by region is as follows:

• Mexico: Aeronautical revenues were impacted by a nearly 5% decline in traffic, primarily due to weaker international travel at Cancún (El Cú). Commercial revenue per passenger was 129 pesos, down 10% year-on-year due to lower traffic and passenger mix. However, domestic traffic growth across other Mexican airports partially offset this weakness.
• Puerto Rico: Traffic declined slightly over 3%, driven by Spirit Airlines' bankruptcy and soft demand. Aeronautical revenues increased, primarily due to favorable exchange rate differences. Commercial revenue per passenger reached 163.3 pesos, up 2%, posting the highest in the portfolio.
• Colombia: Traffic grew just over 5%, outperforming the rest of the portfolio with strength in both domestic and international segments. Commercial revenue per passenger saw double-digit growth, reaching 65.2 pesos.
• Brazil and Others: This segment contributed operations for September only, adding nearly 4 million passengers. Total traffic in this region increased just over 1%, driven by low single-digit growth in Brazil and Ecuador, which offset declines in Costa Rica and Curaçao. Commercial revenue per passenger was 64.7 pesos. EBITDA contribution from this segment was $313 million pesos for the month.
• U.S. Commercial Operations: This segment contributed $456 million pesos in non-aeronautical revenues and $49 million pesos in EBITDA for the quarter. The reported EBITDA margin was close to 11%, though management notes this is not directly comparable to airport operations due to different cost structures, including lease obligations.

Management provided the following forward-looking guidance and capital allocation expectations:

• Capital Expenditures (CAPEX): Next year’s total CAPEX is expected to be 11.1 billion pesos, funded primarily by operational cash flows (except Puerto Rico). Breakdown includes ~6 billion pesos in Mexico, 1.8 billion in Costa Rica, 1.7 billion in Puerto Rico, 1.5 billion in Brazil, and smaller amounts in Colombia, Curaçao, and U.S. operations.
• Leverage: Net debt/EBITDA rose to 2.6 times due to acquisitions. Management explicitly stated they do not expect any additional leverage next year, as CAPEX will be self-funded.
• Traffic Outlook: Management remains cautious about near-term recovery, particularly for international traffic in Mexico. Winter season schedules show limited seat capacity increases compared to last year, which is viewed as discouraging. However, Colombia continues to grow, and Puerto Rico showed improvement in September.
• U.S. Margins: Long-term margins for U.S. operations are expected to improve beyond the current 11% level as new terminals (e.g., JFK Terminal 1) begin generating revenue.
• Dividends: Two extraordinary dividends of $10 each are payable on November 30 and December 23, 2026.

Discussion of risks and operational failures includes:

• Macroeconomic and Geopolitical Risks: Continued challenges in the global macro environment, specifically geopolitical conflicts in the Middle East affecting airline operations and yields.
• Airline Industry Instability: The bankruptcy of Spirit Airlines has negatively impacted traffic in Mexico, Puerto Rico, and Colombia. General airline capacity constraints and reduced international flight offerings further suppress demand.
• Regulatory and Political Risk in Mexico: Implementation of a government mandate reducing working weeks from 40 to 38 hours will increase operating costs in Mexico starting next year.
• Integration Risks: While synergies are not heavily emphasized, there are ongoing costs associated with integrating CPC Aeroportos and U.S. operations, including one-time technical assistance and restructuring expenses.
• Debt Refinancing Risk: Although bridge loans were refinanced with long-term senior notes, the increased leverage ratio (from 0.2x to 2.6x net debt/EBITDA) requires careful cash flow management to service debt without additional borrowing.

Q: Analyst asked for details on the traffic decline drivers, specifically regarding winter season outlook and airline capacity decisions. / A: CEO Adolfo Castro stated that winter schedules are not encouraging, with only December showing year-over-year growth. He cited a "cocktail" of negatives: reduced airline capacity, airlines shifting to higher-yield markets, and the lingering impact of Spirit Airlines' bankruptcy. Additionally, conflicts in the Middle East continue to disrupt routes. Only Canada traffic (+5.7%) was positive; Europe (-14.4%) and South America (-7.9%) declined significantly. He noted that while airline programs can adjust, current visibility is weak.

Q: Analyst asked if the company plans further acquisitions in Brazil or other regions and how leverage will be managed post-acquisition. / A: CEO confirmed the company is currently focused on consolidating existing operations rather than pursuing new acquisitions like Brasilia. Regarding leverage, he clarified that next year's projected CAPEX of 11.7 billion pesos will be funded entirely by regional cash flow generation. Therefore, no additional leverage is expected next year, stabilizing the balance sheet after the recent spike to 2.6x net debt/EBITDA.

Q: Analyst asked about the sustainability of EBITDA margins for Brazilian airports (currently 47%) versus historical levels (50%), and regulatory issues. / A: CEO acknowledged the 47% margin in September and expressed belief that margins could improve to reach or exceed historical 50% levels, citing opportunities for optimization. On regulatory fronts, he confirmed that tagalones (taxes) are included in the transaction structure and that the company is awaiting final approvals from Infraero and other entities to resolve confidence stakes (e.g., 49% in Infraero, 12.5% in Sureste) to achieve full control.

Q: Analyst asked about the selection criteria for the new Brazil CEO, Jose Formoso, and metrics for measuring integration success. / A: CEO explained that the primary objective of the acquisition was to use the balance sheet to correct equity structure, hence the leverage increase. For operational success, the focus is on increasing commercial revenue per passenger and improving operational efficiencies. Jose Formoso was selected for his 20+ years of experience managing concessions in Brazil, his successful track record of implementing changes, and his understanding of Mexican corporate culture, facilitating smoother integration.

Q: Analyst asked about the Tulum airport traffic forecast amidst news of potential postponements or reduced airline activity. / A: CEO noted that Tulum started with 40,000 passengers in late 2023 and grew thereafter. However, he highlighted negative developments such as Aeromexico and Polar reducing domestic market presence. Consequently, he expects Tulum's traffic next year to settle between 700,000 and 800,000 passengers, indicating a moderation in growth expectations despite initial optimism.