Grupo Aeroportuario del Centro Norte SAB de CV Q2 FY2024 earnings call

Operational Performance - Passenger Traffic: Domestic passenger decreased 4.3%, excluding Acapulco (recovering from hurricane OTIS impact), domestic passenger traffic declined by 3.1% due to Pratt & Whitney engine recall. International passenger traffic grew 12%, with Monterrey airport driving growth on routes to Atlanta, Las Vegas, etc. - Financial Performance: Aeronautical revenue decreased 2.5% primarily due to domestic passenger traffic decline. Non-aeronautical revenues grew 13.8%, with commercial revenues up 12% (driven by VIP Lounges, Parking, etc.), cargo up 35%, hotel services up 16%. - Capital Expenditure: Achieved milestone in Monterrey airport's infrastructure development, inaugurated Terminal A East public area expansion (over 6,000 sq meters), which is the third phase of initial expansion project.

In the second quarter of 2024, OMA's passenger traffic reached 6.5 million, a decrease of 2.4% versus the second quarter of last year. Domestic passenger decreased 4.3%, while international passenger traffic achieved a 12% increase. Aeronautical revenue decreased by 2.5%, while non-aeronautical revenues grew by 13.8%. Commercial revenues increased 12% compared to the second quarter of last year. OMA cargo contributed most of this quarter's growth with an increase of 35%. Hotel services grew by 16%. For revenue contribution, aeronautical revenue had a certain proportion, non-aeronautical revenues contributed 13.8% growth, etc.

Traffic Guidance: Remain with the previous projection of low-single-digit decrease in traffic for the second half of the year due to the Pratt & Whitney issue. ### Non-aeronautical Revenue Guidance: On the commercial side, expect MXN58 per passenger revenue to be sustainable for the next six months and increase at least with inflation going forward. Other diversification activities' performance is not correlated to passenger growth.

• Pratt & Whitney engine recall affecting the fleet of Mexican low-cost carriers, impacting airports like Monterrey and Culiacan. - Reduction of movements per hour announced by the Mexican Government at the beginning of the year, which had an impact on routes to Mexico City International Airport.

Q: Please provide your expectations for traffic for the second half of the year in Mexico.

A: We remain with the same projection we had in the previous call, which we believe we're going to be in the low-single-digit decrease in traffic as a result of the Pratt & Whitney issue.

Q: How do you look at the potential for non-aeronautical revenue per passenger in more in the medium to long term and how relevant do you think Toluca can be to serve as an alternative to Felipe Angeles and the ICMA?

A: In terms of non-aero revenue, on the commercial side, around MXN58 per passenger revenue is sustainable for the next six months and expected to increase with inflation. As for Toluca, the government has a strategy of a metropolitan system of airports composed of Mexico City airport, Toluca and Santa Lucia, and we believe most of the excess will go more to Santa Lucia than to Toluca.

Q: What's the reason behind the decline in the Monterrey-Cancun route and what's the current capacity utilization of the industrial park?

A: The Monterrey-Cancun saw a decline in traffic in the second quarter, primarily related to a cut of capacity by some of the carriers operating that route. Regarding the industrial park, currently working on expanding warehouses, and once the four projects are completed, the park would be around 98% of its buildable area built, and after middle of 2025, if growth continues, additional infrastructure investment would be needed.

Q: Are you guys considering doing anything along those lines of overseas projects?

A: We're always looking for opportunities to expand internationally. Obviously, that would have to be a joint decision with VINCI. But we're currently not working in any tender bidding processes internationally.

Q: How close are you to reaching your maximum tariff this year?

A: We're close to 99.3% compliance with maximum tariff at this point.

Q: Is the good commercial growth dynamics this quarter primarily related to the traffic mix or deployment of commercial strategies? And how does the impact of Acapulco on commercial revenues per passenger?

A: The increase in commercial revenues is more related to overall strategy. The impact of Acapulco is limited as it accounted for approximately 3.5% of total traffic, and the increase in commercial revenues is driven by overall strategy not depending on international traffic growth primarily.