Grupo Aeroportuario del Pacífico SAB de CV Q2 FY2024 earnings call

• Passenger traffic in Q2 2024 was 15.3 million, a 3.9% decrease from 2023 due to engine inspections. Added 13 routes in H1 2024, with plans for 11 more in H2, including resumed Tijuana to Beijing route.
• Operational disruption on July 19 due to Microsoft outage caused 274 delays and 23 cancellations in Mexican network.
• Non-aeronautical revenues up 11% led by food/beverage, car rentals, VIP lounges; opened second VIP lounge at Vallarta airport; Vallarta hotel had MXN18.6 million revenue in Q2 with 51% occupancy.
• Expect to consolidate GWTC results in Q3 2024; purchase price allocation in H2 2024.
• Opened second runway at Guadalajara Airport, offering 50%-70% additional operations long-term.
• Bidding process for Turks and Caicos airports ongoing, deadline Oct 23, 2024, expected to conclude Dec 2024.

Aeronautical revenues decreased by MXN213 million (3.3%) due to a decline in passenger traffic, reaching only 95% of maximum tariffs. Non-aeronautical revenues saw an almost 11% increase, driven by commercial activities like food and beverage, car rentals, and VIP lounges. The cargo company GWTC, acquired in 2023, generated over MXN1 billion in revenue with a 40% EBITDA margin and no financial debt, expected to be consolidated in Q3 2024. Aeronautical revenue contribution was impacted by passenger traffic decline, while non-aeronautical contributed through commercial growth.

• Passenger traffic and aeronautical revenue remain as originally stated. Non-aeronautical revenues updated with commercial performance and GWTC consolidation. EBITDA and EBITDA margin revised considering recent law changes and GWTC consolidation.

• Passenger traffic decline due to engine inspections on A320neo and A321neo engines, expected to continue into 2025.
• Operational disruptions from airline system outages like the July 19 Microsoft outage causing delays and cancellations.
• Regulatory changes affecting concession fees and potential impact on EBITDA and margins.

Q: Why was aeronautical revenue fall worse than traffic fall?

A: Mix of factors including 95% fulfillment of maximum tariffs, and certain airports like Puerto Vallarta and Cabos with zero tariff increases.

Q: How will GWTC change 2024 results?

A: Already included in guidance, expected revenue 10% above 2023, EBITDA integrated starting July 1.

Q: Will GAP pay concession fees on GWTC?

A: No, GWTC already pays concession fee to authority.

Q: What variables improve EBITDA in second half vs first half?

A: Consolidation of GWTC, which adds around MXN300 million EBITDA, and positive commercial revenue performance.

Q: When will full benefit from Guadalajara expansion be seen?

A: 100% of new commercial spaces in Guadalajara will be operating by August 2024, with full year benefit in 2025