Q3 2023 Grupo Aeroportuario del Sureste SAB de CV Earnings Call

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Speaker 1: If you are using a speakerphone, please lift the handset before making a selection. As a reminder, today's...

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As a reminder, today's call is being recorded.

Speaker 1: I now turn the call over to Mr. Adolfo Krastro, Chief Executive Officer. Please go ahead, sir. Thank you, sir.

I would now turn the call over to Mr. Adolfo Castro Chief Executive Officer.

Please go ahead Sir.

Thank you Ryan and good morning, everyone.

Speaker 2: Before I begin discussing our results, let me remind you that certain statements made during this call may constitute forward looking statements, which are based on current management expectations and needs, and are subject to several ways and uncertainties that could cause active results due to materially, including factors that may be given to our company's control.

Before I begin discussing our results, let me remind you that certain statements made during this.

Cool.

Of course these forward looking statements, which are based on current management expectations and beliefs and are.

It's subject to several days.

Good cause active installs to be dramatic.

Great.

Including factors that may be beyond our company's control.

Speaker 2: Adjutional, additional details about our quarterly results can be found in our personal use, which was issued yesterday after market closed. And it's available on our website in the better relational section.

As usual additional details about our quarterly results can be found in our press release, which was issued yesterday after market close.

It's available on our website.

Relations sector.

Speaker 2: Forward Metresultation, I will be available to Q&A.

Following my presentation I will be available for Q&A.

Before getting into a discussion of the quarterly results, let me start today's call with a recap.

Speaker 2: Before getting into a discussion of the quality of results, let me start today's call with a recap of the recent developments in connection with the Confession Agreements of our Mexican operations at recently announced.

The recent developments in connection with the concession agreements.

Mexican operations have recently announced.

Speaker 2: On the dollar the port has received enough education from the Mexican federal civil aviation agency. They have decided to amend with immediate effect the chance of the party-based regulation.

Those are the fourth that's at least even if the engagement from the Mexican Federal relaxation agency.

He has decided to a man with immediate effect in terms of the tiny space renovation.

Speaker 2: These turns were laid out in the exhibit seven of the Concertion's Cleanance Establish in 1998 and then amended in 1999.

These terms were laid out in the seven or the completion of three names established in 1998, and then handed in 1999.

Speaker 2: On October 19th, that's who received an notification from the Mexican third-hand civil aviation agency, which modified the document to see one October the fourth.

On October 19, we received benefits issue from the Mexican food.

As your agency.

It's more of a spike of documents that people towards it.

Speaker 2: The full text of their men who'd exceeded seven was filed with it.

Thanks.

Mendes exceeding seven months fine with it.

Speaker 2: Mexican, Bolsa and the Security Center Change Commission.

Mexican Bolsa and the Securities and Exchange Commission.

Speaker 2: On October 18, the lower house of the Mexican Congress approved the initiative to increase the position of being from 5% to 9%, which is now under review by the Senate.

On February 18, the lower house of the Mexican Congress.

The initiative to increase the concession fees from 5% to 9%.

Which is now under review by the thing that we do not know when these may be approved.

Speaker 2: We do not know, one did maybe approve. I won't change in the case, will be effect.

One big change in the case will be effective.

How soon is currently evaluating the charges the changes implemented by the Mexican Federal don't see collaboration agency.

Speaker 2: As we currently are loading the changes implemented by the Mexican federal civil aviation agency, and the potential impact that it may have on its business, including its finances.

And the potential impact that it may have on its business, including its financing.

Speaker 2: Now moving onto a smooth operating and connection performance to the quarter.

Now moving on pet foods, operating and financial performance for the quarter.

Speaker 2: Before starting, notes that all comparisons are year-to-year for less of a white note.

Before study note that all comparisons are year on year, unless otherwise noted.

Starting with top.

Speaker 2: Starting with traffic on a consolidated basis, 17.6 million passengers travel to our airport to the third water.

On a consolidated basis, 17, 6 million passengers traveling through airports and water.

Speaker 2: I'm required high for a third quarter. We accomplish these even as the growth rate is low to 3.4%. Additional traffic trends.

Record high for the third quarter.

Water.

We accomplished these even though the growth rate slowed.

One 4%.

Additional traffic trends by country, where next.

Speaker 2: As in the tri-quarter, the suspension of two Colombian airlines earlier in the year, together with the increase in the value of the taxes resulted in a construction of nearly 15% in total track team Colombia.

I think the Frac water this suspension of two Columbia, Maryland earlier in the year together with the piece of the value added tax is so busy.

Nearly 15% total drag could be in Colombia.

Speaker 2: By contrast, Puerto Rico, again delivered the fastest growth of nearly 25% driven by solid performance in both domestic and international trials.

By contrast.

Recall the degree the fastest growth of nearly 25% driven by solid performance in both domestic and are still on track.

Speaker 2: Lastly, traffic in Mexico was up close to 6% driven by domestic traffic that offset a 0.6% decline in international traffic.

Lastly, traffic in Mexico was close to 6%.

Driven by domestic traffic that upset.

<unk>, 6% decline.

It's all truck.

Speaker 2: This was primarily due to its light year-to-year decrees in the passenger traffic too, and from Europe , South America, upset by a higher traffic from the US and Canada.

It was primarily due to a slight year over year decrease in the passenger traffic too.

From Europe , South America upset by higher traffic from the U S and Canada.

Speaker 2: Moving into the P&L as a reminder, all reference to revenue and cost, exclude construction and cost revenue.

Moving into the P&L as a reminder, all references to revenue and core dumps.

Something cool revenues.

Speaker 2: Also note that Puerto Rico Colombia figures reflect the strong Mexican peso, which appreciated over 13% and 3% versus the US dollar and the Colombian peso since the end of the third quarter, 2022, to the end of the third quarter of these years, Thank you.

Also note that Puerto Rico, Colombia figures reflect the strong Mexican peso, which I appreciated over 13% and 2%.

And the Colombian peso.

The end of the third quarter 2032 through the end of the third quarter of this year respectively.

Speaker 2: With these, revenues increase of a 3% to just over 6 billion pesos in the third quarter, mainly driven by clothing, and the amount you can earn or out can be revenue in Mexico, while Puerto Rico and Colombia are posted the clients of nearly 1% and 16% respect.

With these revenues increased 3% to just over 6 billion persons in the third quarter, mainly driven by growth and got them altogether.

Revenues in Mexico, what Puerto Rico, and Colombia posted declines of nearly 1% and 16% respectively.

Speaker 2: However, measuring local currencies, revenues increased 18.6% in Puerto Rico and 3.4% in Colombia. Overall, Mexico represented 73% of total revenues, while Puerto Rico and Colombia accounted for nearly 16 and 11% respectively.

However, measured locally cover the Pes revenues increased 18, 6%, Puerto Rico, and three 4% in Colombia.

Mexico represented 73% of total revenues, while Puerto Rico, and Colombia accounted for me.

Okay.

And 11% respectively.

Speaker 2: Commercial revenues were up 3% in line with passing the traffic growth. The revenue by increases of 2% in Mexico, 8% in Puerto Rico, partially offset by a 1% decline in Colombia.

Commercial revenues were up 3% in line with passenger traffic growth driven by increases of 2% in Mexico, 8%, Puerto Rico, partially upset by a 1% decline in Colombia.

Speaker 2: On a per capita basis, commercial revenue remained flat at 116.5 pesos with Mexico and Puerto Rico contracting 200 pesos.

On a per passenger basis commercial revenue remained flat occupancy.

Longer than 16 five.

With Mexico, and Puerto Rico contracting.

Speaker 2: and $36 pesos and $39 pesos per passenger, respectively.

I'm 36 vessels.

39 passengers respectively.

Speaker 2: once Colombia posted a mid-term increase to 43%.

While Colombia posted a nice increase.

Increased to 43 basis.

Speaker 2: In local currency, Puerto Rico and Colombia posted increases in commercial revenue per passenger, approximately 2.5% and 27.3% respectively.

Local currency, Puerto Rico, Colombia posted increases in commercial revenues per passenger.

So at least two 5% the twin cities and 3% respectively.

Speaker 2: These increases were partially driven by actions we have undertaken to further engage our passenger traffic experience. This includes 66 new commercial spaces open across our airport network during the last 12 months.

These increases were partially driven by actions we have undertaken to further engage our passenger traffic as beers.

Seek new commercial spaces open across all our airport network.

Last two months of the 16% up in New Mexico, 40, Puerto Rico and food seats in Colombia.

Speaker 2: Of these, 16% have been in Mexico, 4% in Puerto Rico, and 4% in Colombia.

Speaker 2: Consolidated EVDA for the quarter increased year over year 3% to 4.2 billion pesos in Mexico, remaining the main contributor to profitability posting a 3% increase to 3.3 billion pesos. Followed by a recovery in Puerto Rico with EVDA up 8% to just over 500 million pesos.

Consolidated EBITDA for the quarter increased year over year, 3% to $4 2 billion peso, Mexico remaining main contributed to profitability posting a 3% decrease.

Pretty good.

Yes.

Both my recovery was the Rico with eight 8% to just over five.

100 million passes.

Speaker 2: Performance in Colombia also improved with EVA of 411 million pesos.

The full month in Colombia, and Peru.

EBITDA for hunker down 11 million, although this represented a decline of nearly 10%.

Speaker 2: Although this represented a decline of nearly 10 percent, it was better than the 21 percent decrease reported in the second quarter, 2013.

It was better than the 20% decrease reported in the second quarter at 23.

Speaker 2: In turn, consolidated adjustability margin, which excludes construction, remains relatively flat to 69.60 per year.

Consolidated adjusted EBITDA margin, which excludes construction.

Remained relatively flat.

Eight nine points year over year.

Speaker 2: A strong performance in Puerto Rico, which delivered a 400 basis points margin in Greece, upset declines of 90 and 300 basis points in Mexico and Colombia respectively.

Our strong performance in Puerto Rico, which deliver a 400 basis points margin increase offset declines of 93 basis points in Mexico, and Colombia, respectively.

Speaker 2: In summary, we deliver another good quarter despite the strong peso. Good results in Mexico were further supported by a strong performance in Puerto Rico and improving profitability in Colombia, reflecting the suspension of operations of two Colombian airlines earlier in the year and higher value-added tax.

In summary, we delivered another good quarter. Despite this drove pendulum good results in Mexico.

Boosted by strong performance in Puerto Rico.

Improving book studied in Colombia, reflecting the suspension of operations to Colombian aggregating the airlines and the in the year and high value added taxes.

Speaker 2: remain a strong and healthy balance sheet with cash and cash equivalents over 16.9 billion pesos and a healthy debt profile.

We remain a strong and healthy balance sheet with cash and cash equivalents over 16.9 billion cancers and it shouldn't be.

Fine.

Speaker 2: Our strong financial position enables to return cash to shareholders in the form of billions.

I was drunk.

<unk> enabled.

We turn gas because all the tier one.

Yes.

Speaker 2: Specifically, in May, we pay an ordinary dividend that amounted of nearly 3 billion pesos, and in November we will be paying an extraordinary cash dividend of 10 pesos per share, equivalent to approximately another 3 billion pesos.

Specifically in May we paid an ordinary dividend that a mountain of nearly 3 billion business and in November we will be bidding and extraordinary cash dividend.

Sure.

Equivalent to approximately.

You bet.

Speaker 2: Finally, capital expenditures in the quarter totaled 367 million pesos of which 64% was allocated to Mexico, 35% to Puerto Rico, and the remainder in Colombia.

Finally capital expenditures in the quarter totaled 367 days, a week, 54% was allocated to Mexico.

As long as central Puerto Rico and to be made there in Colombia.

Speaker 2: This ends my presentation. Brian , please open the floor, the floor for questions.

D. C is dense presentation, Brian please open the floor for.

Good questions.

Thank you.

Speaker 1: Again, to the audience, it is star, then one for questions.

Again to the audience. It is star then one for questions.

Speaker 1: And again, please make sure your mute function is turned off or the handset is picked up before pressing the corresponding digit.

And again, please make sure your mute function as dawn off all the handset picked up this whole pressing the corresponding digits.

Yeah.

Our first question comes from Juan Ponce with Bradesco BBA. Please go ahead.

Speaker 1: Our first question comes from Juan Ponce with Bradesco BBI. Please go ahead.

Speaker 3: Alan Fo, good morning. Good morning, everybody. Thank you for taking my question. Considering that the NDP negotiation is a long process, and the fact that you are now in the last stretch of the tariff negotiation, what are the implications from the regulatory changes on your NDP negotiating process?

Hello. Good morning, Good morning, everybody. Thank you for taking my question considering that the Mvpds negotiation that was a long process and the fact that you are now in the in the last stretch of the tariff negotiation, what what are the implications from some of the regulatory changes on your MDT negotiate.

Living process.

Speaker 3: That's my first question. And my second question would be, do you agree that perhaps the initial tariff impact could be around 10%, which is what some members of the SCTF have mentioned? And if the impact, if the financial impact is unknown, or if we get an even greater negative impact, are there any legal avenues you can take to curtail these measures? Thank you very, very much.

That's my first question and my second question would be do you agree that perhaps the the initial tariffs impact would be around 10%, which is what some members of the <unk>.

S E T as I've mentioned and as the impact of the financial impact.

This is a known or or if we get an even greater negative impact are there any legal avenues you can take to two clips on these measures. Thank you very very much.

Speaker 2: Good morning. In the case of the MDP process, as you have mentioned, this is almost a two-year process.

Okay.

Good morning indications B M. B P process as you have mentioned this it's almost two years process.

Speaker 2: We were almost at the end of the process and now with this document we will have to restart again in terms of the document that we will have to present to the authorities in the coming days, I would say.

We were almost at the end of the process and now with these documents we wouldn't have to restart again in terms of the document that we will have to consent to the authorities and become base I would say.

Speaker 2: As we speak, we are adjusting the document in accordance with the new regulation that we have received last week.

As we speak we are adjusting to document it in accordance with the U N.

Regulation that we have to see last week.

Speaker 2: So we are now in the process to evaluate what the impacts may be on this respect.

So we are now in the process stuff of late what are you back.

Maybe on this respect.

Speaker 2: In terms of what you're saying, of the 10% tariff reduction, etc., it's not something that we are, for the moment, available to answer. We will have to see and wait.

In terms of what you were saying Oh, the 10% tariff.

Dogs et cetera is not something that we are at the moment.

And so we will have to see and wait.

Speaker 2: until these new basis of regulations are applied in the numbers of the company.

On the new basis of regulations on applied.

And then you get.

The numbers of the company.

Speaker 2: And that, I believe, is going to be toward the end of the year, probably the first week of January , when we are going to be able to say what was the implication of these new bank static regulations on the numbers of the company.

And that I believe is going to be.

Towards the end of the year, probably but that's a week of January when we aren't going to be able to say what lumpy implication of these nut based diet reclamation on the.

The numbers of the company.

Speaker 3: Okay, thank you very much Adolfo. And regarding any legal avenues you can take to control these measures, is this a possibility or not at all?

Okay. Thank you very much a little blend and and and regarding the any legal avenues you can take to could tell these measures of this as a possibility or or another.

Thank you.

Speaker 2: For the moment, we are not considering any legal action in this respect.

At the moment, we're not considering any medium.

Action on this respect.

Got it thank you very much helpful.

Thank you.

Speaker 1: Our next question comes from the line of Gail Hermes-Mendez with JPMorgan, please go ahead.

Our next question comes from the line of Gil Humming Mendez with J P. Morgan. Please go ahead.

Speaker 4: Good morning, Adolfo, and thanks for taking my question. I have a follow-up on the MDP and the regulatory changes which is related to the

Good morning, Adolfo and thanks for taking my question I have a follow up on the on the M. D. P. M D regulatory changes, which is related to the concession fees.

Speaker 4: On the old contract, there used to be a compensation on tariffs regarding any potential increase

On the old contract are they used to be a compensation on tariffs regarding any potential increase of concession fees.

Speaker 4: Just wondering how should we think about this going forward, so this increase from nine to five.

Just wondering how should we think about this going forward. So with this increased from nine to 5% to 9% on the excess of few should be fully incorporated by companies or there might be some kind of compensation on the new contract and the second question is regarding to the investment LNG Dominican Republic, if there's any.

Speaker 4: be fully incorporated by companies or their IBSM kind of compensation.

Speaker 4: And the second question is regarding to the investment on the Dominican Republic. If there's any updates on that front.

Dates on that front, if you could share it and details in terms of timing or particularly the financials of the project. Thank you.

Speaker 4: share any details in terms of timing or potentially the financials.

Speaker 2: Good morning. In the case of the 529, as I have mentioned during the initial remark,

Hey, good morning indications of five to nine as I had mentioned to you and give you shouldn't be tomorrow.

Speaker 2: This is not being approved yet. On the first place is subject to standard approval.

This is not being approved yet on.

The first place is subject to send them.

Proven.

Speaker 2: And second, we can know when this is going to be applicable for us, from when the case is approved.

And secondly, we can know what this is gonna be.

The applicable or from one in that case, saying that accrues.

Speaker 2: So in that sense we don't know yet how to do it.

So in that sense, we don't know yet.

The.

Speaker 2: the new document or the new types of regulations are going to treat these charges.

The new dolphin or build a new phase of regulations aren't gonna treat beast.

Speaker 2: In the case of your second question, could you repeat that again?

In the case of your second question could you repeat that again.

Speaker 4: Yes, sure, it's regarding the investments on the Dominican Republic. There you announce that on the previous quarter, if there's any updated on this project or if you could share something in terms of time.

Yeah sure.

R&D investments on the Dominican Republic that you announce it on the previous quarter. If there's any updated on this project oriented you could share some thing in terms of timing or the financials of the investment. Thank you.

Speaker 2: Yes, we are in the process today as we speak, finalizing the design of the building.

Yes, we are in that process today, as we speak and finalizing the design of the buildings.

Speaker 2: And we would leave that we would initiate construction in the test heart of Leclerc.

We will we believe that we will initiate construction is the best capital next year.

Okay.

Thank you Adolfo.

Youre welcome.

Speaker 1: Thank you. Our next question comes from the line of Fernanda, Rekia with BTG, factual. Please go ahead.

Thank you.

Question comes from the line of Amanda <unk> with BTG Pactual. Please go ahead.

And also the mining cycle my question sure.

Speaker 5: Yeah, no for good morning, important my question. I have to first on the parking with me, sure that we saw that might impact a variety than the real estate. Just wondering how are you expecting the impact on a sewer? I know it maybe could be early, but you know that Comcom has a great exposure to a variety. So if you could give us your premium and any thoughts, if you expect this capacity to be absorbed by all their airlines or including tech.

On the truck and we've made sure that we saw that Mike can pick up a lot of them.

Okay. Good.

Wondering how are you expecting the impact on our floor.

Maybe it could be argued that Oh, who has a great exposure to varieties.

If you could give us your preliminary thoughts.

Do you expect this capacity to be absorbed by other airlines.

Sure it could impact us.

Speaker 5: And back on on traffic evolution, as you mentioned on your remarks, particularly very well, it is wondering where your first cat for Puerto Rico went forward.

And satcom on traffic of our motion.

As you know her remarks, but equally doing very well. So just wondering where you are for cats.

One toward on Colombia.

Speaker 5: And Colombia, we are down by more than 10% or less. I think the last time we spoke to you mentioned a 20% of fall that you were expecting. We just wondering if you're still for testing this number and when should we start to see growth situation normalize. Thank you.

They are down by more than 10% more or less I think the last time. We spoke you mentioned a 20% tell Paul that you were expecting.

But just wondering any tariff pill, a free caffeine is number and when should we start to see real patient my life. Thank you.

Speaker 2: you welcome. Well, in the case of your first question, I've had to do with a button with me engine.

You're welcome well in the case of your first question has to do with the.

Britain Whitney engines.

Speaker 2: It is not just the convolade, this is all around the world. 3,000 engines that must be recalled that 1500 airplanes.

And it is not just because of a lot of this is all around the world.

Operator: At this time, all participants are in lesson only mode. We will conduct a question and answer session towards the end of today's conference. If you'd like to ask a question, please press star followed by one. If you want to withdraw your question at any time, please press star followed by two. If you are using a speakerphone, please lift the handset before making a selection. As a reminder, today's call is being recorded.

So 3000.

And you must be recall, that's 1500 airplanes.

Speaker 2: And that account for many of the airlines. I know that JetBlue has some speed, has some American airlines. Very...

And that accounts for many other airlines are I know that Jetblue had some speed tests.

And American Islands very few of them.

Speaker 2: So to be honest, today we do not have enough information to say what the implication is going to be in the traffic of the world.

So to be honest today, we do not have enough information to say, what the implication is going to be in the traffic of the world.

Adolfo Castro: I now turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir. Thank you, Ryan. Good morning, everyone. Before I begin discussing our results, let me remind you that certain statements made here in this call may constitute forward-looking statements which are based on current management expectations and needs. And our subject to several ways can ensure that these that could cause active results do it from material, including factors that may be beyond our company's control. Adjutant additional details about our quarterly results can be found in our priorities, which was issued yesterday after market closed and is available on our website in better relational sector.

Speaker 2: In the case of B-Bomboliding, B-Bomb has set to all that they do not see a major implication with these situations.

And in the case of Veeva vault Veeva has a set of tools that they do not see a major indication that would be the situation.

Speaker 2: In the case of Bolaris, what I understand is that around 60% of the fleet have its kind of engine, so we are expecting any major impact from Bolaris. And I agree with you that the boom has...

In the case of <unk>, what I understand is that around 60% of the fleet athletes kind of aging. So we aren't expecting any major impact from the lotteries and I agree with you that at all.

It has.

Speaker 2: and a lot of flights would be there, right, sure.

A lot of flags will be sadly true.

Speaker 2: The best way to evaluate this situation will be to hear Polaris and to see what they're gonna say during their conference. But yet, we do expect some effects of these next year. And that will of course depend of how fast I mean, how the

The best way to deliver like this situation will be here, ladies and I see what they're going to say during their conference, but yet we do expect some effects of these next year.

And that will of course depend on how fast and how bad.

Speaker 2: The manufacturer recalls the engines of Polaris. That's have to do with the cycle they have in their engines and it's something that we don't know. Yet in the case of Colombia.

The manufacturer recalls but the engine so well that he said that has to do with the cycles. They happy their engines and it's something that we don't know yet in the case of Colombia.

Adolfo Castro: Following my presentation, I will be available for Q&A. Before getting into a discussion of the quarterly results, let me start today's call with a recap of the recent developments in connection with the confirmation agreements of our Mexican operations and recently announced. On October 4th, as we receive a notification from the Mexican Federal Civil Aviation Agency, that it has decided to amend with immediate effect the terms of the panic-based regulations. These terms were laid out in the October 7th of the Concertion agreements established in 1998 and then amended in 1999.

Speaker 2: The 20% was what we have said that the two islands meant 20% of our traffic last year.

The 20% was what we have said that these two elements men, 20% of web traffic last year.

Speaker 2: So whatever number is better than the 20%, that means that the other two islands, the Bianca Laptain are recuperating from these two islands that disappear or that one in top operations. No? So the number we have recently published is that my opinion could number because it's lower than the 20%. No?

So whatever number is better than the 20% that means that the other two islands that'd be and kind of I've recuperating.

From these two element that disappear or that one team and stop operations no.

Adolfo Castro: On October 19th, as we receive a notification from the Mexican Federal Civil Aviation Agency, which modified the document received on October 4th. The full text of the amended exceeded 7 was filed with the Mexican Volsa and the Securities and Exchange Commission. On October 18th, the lower house of the Mexican Congress approved the initiative to increase the coefficient from 5% to 9%, which is now under review by the Senate. We do not know when this may be approved and when the change in the case will be effective. As soon as currently evaluating the changes implemented by the Mexican Federal Civil Aviation Agency, and the potential impact that it may have on its business, including its financials.

So the number we have recently published he said he'd say my opinion, a good number because it's lower than the 20%.

Speaker 2: Remember that these areas were out since February this year, so as from February next year, we will see that the traffic you start going again.

Remember that these airlines were out since February this year. So as from February next year, we will see them there.

The traffic you start growing again.

Yes.

Speaker 5: Thank you, and just follow up on Puerto Rico. Do you expect to keep the double digit road space going once?

Thank you and just a follow up.

Equal do you expect to keep them there.

It's a real thing right.

Speaker 2: The issue of the very growth we are seeing in Puerto Rico right now has to come with a new well and ultra-local carrier that is target operations in Puerto Rico and they have increased our traffic substantially.

The girl with the they it's something that a group we are seeing in Puerto Rico right now has to come with a new airline and ultra low cost carrier that has started operations in Puerto Rico and they have increased traffic substantially.

Adolfo Castro: Now moving on to assures operating and financial performance for the quarter. Before starting, notes that all comparisons are year and year, unless otherwise noted. Starting with traffic, on a consolidated basis, 17.6 million passengers travel to our warehouse in the third quarter. A record high for a third quarter. We accomplish these even as the growth rate is low to 3.4%. Additional traffic trends by country were next. As in the track quarter, the suspicion of two Colombian airlines earlier in the year, together will increase in the value of the taxes resulted in a construction of nearly 15% in total track in Colombia.

Speaker 2: So this is good news for Puerto Rico, we don't know how long it's going to last, but for the moment we are very happy to see this 20-something to send you peace every year.

So this is good news for Puerto Rico, we don't know how much or how long you're going to lap, but for the moment I'm very happy to see the don't eat something dissenting piece a.

On a year over year.

Thank you Adolfo.

Thank you.

Yeah.

Speaker 1: Thank you. Our next question comes from the line of Bruno Amorim with Goldman Sachs. Please go ahead.

Thank you.

Our next question comes from the line of Bruno Amorim with Goldman Sachs. Please go ahead.

Yes, good morning, and thank you for taking my questions I have two the first one.

Speaker 6: yeah good morning thank you for taking my questions i have to the first one you know i just wanted to uh... reconciled the big picture here you know did actually the government is increasing the concession fee they have

Went to true reconciled at the Big picture here.

They're actually the government is increasingly a concession fee. They have stated that they want to lower tariff. So if you want to keep the contract balanced meaning allowing for the private operators to earn the allowed return on invested capital I guess, you could extend the life of the concession or eventually pull.

Speaker 6: stated that they want to lower tires. So if you want to keep the contract balanced, meaning allowing for the private operators to earn.

Adolfo Castro: By contrast, Puerto Rico again delivered the fastest growth of nearly 25% even by solid performance in both domestic economic and national traffic. Largely, traffic in Mexico was up close to 6%, driven by the domestic traffic that upset a 0.6% decline in industrialized traffic. This was primarily due to a slight year-a-year decrease in the passenger traffic to and from Europe, South America, upset by a higher traffic from the US and Canada.

Speaker 6: the allowed return on university capital, I guess you could extend the life of the concession or eventually postpone capex. So the question is, are those the two levers issue on the table and are you, you know, in talks with the government to eventually postpone capex or to extend the life of the concession? So that's the first question. And the follow up on that is

Paul topics. So the question is are those that you Levered. If you wanted to table and are you you know in talks with the government to eventually postpone capex at you extend the life of their call fashion. So that's the that's the first question and the follow up on that is you know if we get to a situation where.

Speaker 6: If we get your situation where it's not possible to square all those variables, if they contract.

You know its not possible choice square all those horrible if big contract you know he's not a balanced if they are big they called fashion. He is not earning the allowed return easy if you have an option to go to their cards are not you know how do you think about this trade off going to the courts are not what.

Adolfo Castro: Moving into the PNL as a reminder, all reference to revenue cost, dispute construction and cost revenues. Also note that Puerto Rico Colombia figures reflect the strong Mexican peso, which appreciated over 30% and 30% versus the US owner and the Colombian peso since the end of the third quarter 2022 to the end of the third quarter of this year respectively. With these, revenues increase of a 30% to just over 6 billion pesos in the third quarter, mainly driven by growth in La Romaltica and La Romaltica and La Romaltica and Revenience in Mexico, while Puerto Rico Colombia posted declines of nearly 1% and 16% respectively.

Speaker 6: you know, is not balanced if the concession is not earning the allowed return. Is it an option to go to the courts or not, you know, how do you think about this trade off going to the courts or not? What could trigger this decision? Thank you.

Trigger these decision thank you.

Speaker 2: So in the case of your first question, extending the concession or the menacing Catholics, well first of all, I have to say that Catholics is not because we want the Catholics, it's a mathematical relation in terms of the man, so keep the man.

In the case of your first question extending the concession board.

Diminishing capex well first of all I have to say that capex is not because we want the campuses.

Domestic domestic ambulation and in terms of the demand so keep the men.

Speaker 2: increases of course, Catholics increases. So we would have to construct whatever it necessary to support the level of service for the man that is coming. We are not in talks about extending the concession contract. And in terms of the balance, I do agree with your question about...

Increases of course Capex increases so we will have to construct whatever is necessary to support the level of service for the amendments from we are not in dogs about extending the concession contract I mean in terms of the balance.

Adolfo Castro: However, measured in local currencies, revenues increased 18.6% in Puerto Rico and 3.4% in Colombia. Overall, Mexico represents a 73% of total revenues, while Puerto Rico Colombia accounted for nearly 16 and 11% respectively. Commercial revenues were up 3% in line with passenger traffic growth, driven by increases of 2% in Mexico, 8% in Puerto Rico, partially upset by a 1% decline in Colombia. On a passenger basis, commercial revenues remained flat at 116.5 pesos, with Mexican Puerto Rico contracting 236 pesos and 139 pesos per passenger respectively.

I agree with your question about.

Speaker 2: how to reduce rates of your increasing peace. It's something that we will have to see. Once we apply this new regulation document in our numbers or in our MVP, towards the end of the year.

How to reduce rates youre increasing fees.

And it's something that we will have to see once we apply these new regulation.

Okay.

In our numbers already in our MTBE.

The end of the year.

Speaker 6: Thank you Adolfo and so if at the end of the day, there is no offset for the higher concession fee and for the lower tires.

Thank you Adolfo and so if at the end of the day you know there is no offset for the higher concession fees for the lower tariffs.

Speaker 6: if it's actually say the returns would likely be lower than what they should be and in that case you know

Is it fair to say the returns it would likely be lower than what they should be and in that case.

Adolfo Castro: While Colombia posted a mid-term increase to 43 pesos. In local currency, Puerto Rico Colombia posted increases in commercial revenue to passenger, approximately 2.5% and 20% and 4.3% respectively. These increases were partially driven by actions we have undertaken to further enhance our passenger traffic experience. This includes 56 new commercial spaces open across all our effort network during the last month. Of these, 16% up in Mexico, Puerto Puerto Rico, and 4.6 in Colombia.

You know.

Could the company go to the court.

Speaker 2: Well Bruno, in the case of the document, you already have the full text of the document. So in terms of this can't write, I do believe that you all have all the information, the necessary information to calculate what is that number today.

Well Bruno indications that document you already have with food banks. The documents. So in terms of the discount rate I do believe that you all have all the makes the necessary information to calculate.

What is that number today.

So.

Speaker 7: is now more than ever completely transpired for you to calculate the number.

And it is now more than ever completely transparency for you to calculate the number.

Yeah.

Thank you I. Therefore, we can follow up offline if necessary. Thank you.

Adolfo Castro: Consolidated EVDA for the quarter increase year of a year, 3% to 4.2 billion pesos in Mexico, remaining the main contributor to profitability, posting of 3% increase to 3.3 billion pesos. All by a recurring, what Rica would EVDA up 8% to jump on a 500 million pesos. The format in Colombia also includes with EVDA of 411 million pesos. Although these were presented as a decline of nearly 10%, it was better than the 20% decrease reported in the second quarter, 23.

Youre welcome.

Thank you.

Speaker 1: Thank you. Our next question comes from the line of Alberto Malavio with UBS. Please go ahead.

Our next question comes from the line of Alberto <unk>.

UBS. Please go ahead.

Speaker 8: I think I voted for taking my question, but my first one I would like to if you put

Uh huh.

Thank God awful lot taking my question My first of all I would like to you.

Speaker 8: provided some details on Mexican traffic. We see a resilient domestic demand and a post-19 international. This is a trend. It's something that we should see recovering.

Provide us some details on Mexican traffic, we see a reason that domestic demand and Boston.

National Dizzy.

This is the trend.

Then we should see a recovery.

Speaker 8: and as porters and as here and my second one if you could give it some hollow as well or Mexican and the other John how should we treat it should we see both the thumb and cleave and supply

Adolfo Castro: In turn, Consolidated Adjusted EVDA margin, which excludes construction, remained relatively at last to 69.60 a year. A strong performance in Puerto Rico, which believer at 400 basis points margin increase, upset the clients of 90 and 300 basis points in Mexico and Colombia respectively.

The next quarter and next year and my second one if you could give me some color as well, while Mexico not dead, yet, Sean Oh shouldn't eat a should we see this and creed and supply and then where you might see some company struggling through.

Speaker 8: And then we might see some company struggling to follow the price. What is your follow-on on it?

We'll follow the price why did you sell followed on it. Thank you.

Adolfo Castro: In summary, we will leave another quarter despite the strong personal growth results in Mexico will further support it by a strong performance in Puerto Rico and improving profitability in Colombia, reflecting the suspension of operations of two earlier airlines, earlier in the year and higher value added practice. We remain a strong and healthy balance sheet with cash and cash equivalents over 16.9 billion pesos and a healthy debt profile. Our strong financial position enables to return cash to shareholders in the form of idiots.

Youre welcome in indications of Mexicana traffic.

Speaker 2: You're welcome. In the case of the Mexican traffic, Assad has said,

Sorry, that's it.

Speaker 2: Here's what we do expect some negative effects next year, due to the fact of these pattern won't with any engines in the case of polis. No? Of course, on the other side, as you have mentioned, the government has announced that they will initiate operations with Mexican Airlines.

Yes, we do expect some some negative effect next year.

Due to the fact of these strengthen Whitney engines in the case of full life no of course on the other side.

Shouldn't the government has announced that they will then initiate operations with Mexicana Airlines.

Speaker 2: Please mitigate what we have heard from them is a Tegulim shade with 10 aircolour.

He is making what we have heard from them is that they will initiate wood 10 aircrafts.

Adolfo Castro: Specifically, it made me pay an ordinary dividend that amounted of nearly 30 billion pesos and in November we will be paying an extraordinary cash dividend of 10 pesos per share equivalent to approximately another 3 billion pesos. Finally, capital expenditures in the quarter total 3.67 million pesos of V64% was allocated to Mexico 35% to Puerto Rico and the remaining in Colombia.

Speaker 2: Just to give you an idea today, the Mexican fleet is around 3156 aircrafts. So a wheel...

Just to give you an idea today the Mexican fleet is around 356 aircrafts.

We at 10.

Speaker 7: It is not an important detracts on the whole scenario. In the case of a track and woodman engines, four bolaris, that means more than 60 aircraft that could be stopped for 250 days.

It is not.

An important good thing on the on the whole scenario.

It gives a preference with me.

Engines affordable luxuries that means more or less 60 aircraft that could be stopped for 200 or 250 days.

Adolfo Castro: This ends my presentation.

Speaker 2: So the negative effect is offsetting these new addition airline of of Magic Canada, let us see on what

The negative effects.

Operator: Brian, please open the floor for questions. Thank you. Again, to the audience, it is star then one for questions. And again, please make sure your mute function is turned off or the handset is picked up before pressing the corresponding digits.

Offsetting these new addition airline Mexicana legacy on what are we.

Speaker 2: We say what we know that they have not received

We say, what we know that they had not receive.

Speaker 7: As of today, the light has to start operations even though they were saying that they will be initiating flights the December 1st is here. So that maybe it will take more time.

So today.

The license due to start operations, even though they were.

And saying that they wouldn't be initiating Florence December this year.

Juan Ponce: Our first question comes from Juan Ponce, with Radistco BBI. Please go ahead. Good morning. Good morning everybody. Thank you for taking my question.

So that maybe.

It will take more time.

Okay. Thank you.

Youre welcome.

Okay.

Juan Ponce: Considering that the NDP negotiation is a long process and the fact that you are now in the in the last stretch of the third negotiation, what are the implications from the regulatory changes on your NDP negotiating process? That's my first question.

Speaker 1: Thank you. Our next question comes from the line of Anton Modenkocher with GBM. Please go ahead.

Thank you.

Our next question comes from the line of Anton Modern car care with G. B M. Please go ahead.

Okay.

Hi, Thank you for taking my question without getting too much into details I understand you're still evaluating the fixed or the regulatory change we will have.

Speaker 9: question. Without getting much into details, I understand yours.

Juan Ponce: And my second question would be, do you agree that perhaps the initial tariff impact be around 10%, which is what some members of the STT have mentioned? And if the impact of the financial impact is unknown or if we get an even greater negative impact, are there any legal avenues you can take to curtail these measures? Thank you very Thank you very much.

Speaker 9: regulatory change will have, but thinking on a more strategic way and knowing the most relevant changes of these amendments.

Thinking on a more strategic way and knowing the most relevant changes of do something Edmonds. What would you say are the main ways that these modifications could affect your way of looking at it but decisions taken on us going forward.

Speaker 2: Well, again, in that sense, until we are transforming or updating or adjusting our documents to easily move in the lottery today.

Yeah.

Well again in that sense, and we are transporting oil dating or adjusting our documents to these new video lottery today.

Speaker 2: that we have received last Thursday, so it's too early to tell. And once they apply this new developer regime, we will be able to say what the effects were in the case of our MVP. Thank you.

Adolfo Castro: Good morning. In the case of the MVP process, as you have mentioned, this is almost two years process. We were almost at the end of the process, and now with this document, we will have to restart again in terms of the document that we will have to present to the authorities in the coming days, I would say. As we speak, we are adjusting the document in accordance with the new regulation that we have received last week.

That we have received less exactly so it's too early to tell and once they apply these new regulatory regime, we wouldn't be able to say what the effects were in the case of our MVP.

Okay. Thank you and also just a quick follow up I just didn't get them I'm not sure if I got this right.

Speaker 9: Given that this was just been worse quickly and you were already at the end of the MBD, is it possible for you to...

But.

Given that this was folks that just remember so quickly and you were already at the end of that and B is it possible for you to delay the final outcome over them to deal with it has to be ready for the beginning of the next year.

Adolfo Castro: So we are now in the process to avoid what the impacts may be on this respect. In terms of what you are saying, of the 10% category doctrine, etc., is not something that we are, for the moment, available to answer. We will have to see and wait until these new basis of regulations are applied in the data. And the numbers of the company, and that I believe is going to be at the end of the year, probably because week of January, when we are going to be able to say what was the implication of these new base data regulation on the numbers of the company.

I do believe that it has to be ready by the end of the year unless.

Speaker 2: I do believe that it has to be ready by the end of the year unless they say that they are not ready.

They say that they they're not trained so we will.

Speaker 7: I actively that we will believe that our documents are updated with these new legal third days in the coming days and we will take it from there.

I do believe that we will deliver our dropped and then update it with these days are in the coming days and we will take it from there.

Okay.

Perfect. Thank you.

Youre welcome.

Okay.

Speaker 1: Thank you. Our next question comes from the line of Stephen Crent with City. Please go ahead.

Yes.

Thank you.

Next question comes from the line of Stephen Trent with Citi. Please go ahead.

Speaker 10: Good morning, Adolfo. Thanks very much for taking my question. The first is actually a follow up from a Burtol Valario and Amelow's new airline. Are you hearing anything at all pushback wise with respect to the government, arguably having control of some airport and an airline in the same market?

Hey, good morning, Adolfo and Ah. Thanks.

Thanks very much for taking my question. The first is actually a follow up from Alberto Valerio and I'm lowest new airline.

Adolfo Castro: Okay, thank you very much for the plan. And regarding any legal avenues you can take to control these measures, is this a possibility or not in the cards? Thank you. For the moment, we are not considering any legal action on these respects. Thank you very much. Thank you.

Are you hearing anything at all.

Oh pushback wise with respect to the government are arguably having control of some airports and airlines are in the same market.

Yeah.

Speaker 7: Well, I was trying to understand they have adjusted the law because in the past that was not possible.

And I was trying to understand they have adjusted the law because in the past it was not possible.

Fernanda Recchia: Our next question comes from the line of girl, homie, Mendez with JP Morgan. Please go ahead. Good morning, Adolfo, and thanks for taking my question. I have a follow-up on the MDP and the regulatory changes, which is related to the construction fees. On the old contract, there used to be a compensation on tariffs regarding any potential increase in the construction fees. Just wondering how should we think about this going forward? So this increased from 9 to 5 to 9 percent on such a fee should be fully incorporated by companies or there might be some kind of compensation on the new contracts.

Speaker 7: There was no way that someone would have air force in Ireland in both centres of more than 5% from one to the other. So I believe that they are just the law or that they can capture.

There was no way that someone will have airports in Netherlands.

In both the centers of more than 5% from once every other month. So I do believe that they are just at the low end or that they can kind of practice.

Wow Okay.

Speaker 10: Wow, okay, appreciate that Adolfo. Just one other very quick one for me. I know that Amel's also has this to-lume airport that seems to be in the works. You know, do you have any high-level view with respect to weather?

Appreciate that Adolfo.

Just one other very quick one for me I know that.

No animals also.

Has this to loom airport.

Is that.

It seems to be in the works you know do you.

Fernanda Recchia: And the second question is regarding to the investment on the Dominican Republic, if there's any updates on that front. If you could share any details in terms of timing or potentially the financials of the project. Thank you.

You have any high level view with respect to weather.

Yeah.

Speaker 10: the risk to charter traffic could impact your joint maximum tariffs.

The risk to.

Charter traffic could impact you.

Or a joint maximum tariff.

What are the indications to learn airport then that's a good question.

Speaker 2: On the case of to learn airport and that's a good question.

Adolfo Castro: Good morning. In the case of the 5 to 9 percent, I have mentioned during the inshielding March, this has not been approved yet. On the first place is subject to Senate approval. And second, we can know why this is going to be applicable for us from one in the case Senate approves. So in that sense, we don't know yet how the new documents of the new types of regulations are going to treat these charts.

Speaker 7: At Mexico, Alviva started to sell tickets as from December 1st from that airport. So it's something that you can see in their webpage on there.

And in Mexico, and Viva and started to sell tickets from December that says from that airport. So it's something that you can see in there what nature in there.

Speaker 2: in the reservations page, they will start December 13th.

Reservations page.

They will start there.

December that indicate some charter flights.

Speaker 7: I can believe that sort of lies that have found in this donation that they think they're sound to play with God. And they should be using to move as airport because their kind of this donation is closer to that airport.

I believe that charter flights to the final destination at say 10 kilometers south of the plans they've got them and they will they should be using to mean as.

Adolfo Castro: In the case of your second question, could you repeat that again? Yes, sure. It's regarding the investment on the Dominican Republic. There you announce it on the previous quarter. If there's any updated on this project, or if you could share something in terms of timing or a definition of the investment. Thank you. Yes, we are in the process today as we speak, finalizing the design of the buildings. And we believe that we will initiate construction in the best part of Leclerc. Thank you, Rodolfo. You are welcome.

Airport, because their final destinations closer to that as well.

Speaker 7: And that quote will have an impact on the curriculum that has been considered in our MVP and that technical speaking made the short period of the principle, the Dari of Cancunervo.

And that of course will have an impact on it.

Okay cool and that has been can see there.

Our N b b and that technically speaking maybe jump in and cleaned itself.

Daddy Cancun Airport.

Speaker 10: Okay, perfect. Appreciate the color of Delphur and thanks for the time.

Okay perfect I appreciate the color on California, Thanks for the time.

Thank you.

Yeah.

Speaker 1: Next question comes from the line of Pablo Victor de with Santander. Please go ahead.

Thank you.

Question comes from the line of Pablo.

But Santander. Please go ahead.

Speaker 2: And now that you have to discount your small work, which is a little bit of that, you have to use. The one that you have on the Mexico structure or the one that you have to take.

Hi, Thanks for taking my question.

Fernanda Recchia: Thank you. Our next question comes on the line of Fernanda Recchia with BTG factual. Please go ahead. Thank you. Yeah, I know for the morning, for my question. I have to first, on the parking with me, sure that we saw that might impact a variety that we've all faced. Just wondering how are you expecting the impact on the sewer? I know it maybe could be early, but we know that Comcom has a great exposure to a variety.

What is the relation as well and now that you described.

Okay.

To use that one.

On the Mexico stroke.

Consolidated.

Speaker 7: That's my question. Come on, look. I know there is no way to understand what you're saying. Your line is cutting in a red with that red.

For my question.

I know there is no way to understand what Youre, saying Youre line is cutting it in a very bad way.

I don't know if you can hear me better now.

Yeah more or less.

Speaker 7: franchise.

[laughter].

Fernanda Recchia: So if you could give us your opinion and thoughts, if you expect this capacity to be absorbed by all the airline, or it could impact us. And second, on traffic evolution, as you mentioned on your remarks, particularly very well. Just wondering where your forecast for Puerto Rico went forward. And Colombia, they are down by more than 10% or less. I think the last time we spoke to you mentioned a 20% of all that you were expecting. Just wondering if you are still for testing this number and when should we start to see growth patient normalize. Thank you. Welcome.

Speaker 2: I have a question on that deck you choose to calculate that block. Now on the new district rate, we have to use the one in Mexico or you choose the one from today.

I have a question that you use to calculate what.

You'd be.

We have.

The one in Mexico to use it wasn't consolidated.

Speaker 2: Well, in the case of that, you can see a part of that in the document we have found that weeks that says that in terms of the depth, it should only be included.

What are the indications that you can see that in the documents. We have filed this week that said that in terms of the debt. It should only be included.

Speaker 2: The operations in Mexico show if you are using conservative data

The operations in Mexico, So if you aren't using some data.

Speaker 7: and pronounce out statements of cancun, you should mark the scloops, what is related to Puerto Rico Colombia. GREEN

In financial statements of grant.

Good morning.

Related to Puerto Rico and Colombia.

Okay.

Okay perfect.

You're welcome.

Adolfo Castro: Well, in the case of your first question, that has to do with a button with me engines. It is not just you have a lot, this is all around the world. It's 3000 engines that must be recalled that 1500 airplanes. And that accounts for many other airlines. I know that JetBlue had some spirit, had some American airlines, very few of them. So, to be honest, today we do not have enough information to say what the implication is going to be in the traffic of the world.

Okay.

Thank you.

Speaker 1: Our next question comes from the line of Pablo on C-Reyes with Buckley's piece ahead.

Our next question comes from the line of Pablo <unk> with Barclays. Please go ahead.

Okay.

Speaker 6: Hi, a lot of thanks for taking my question. I just have two quick questions. The first one is on the commercial revenue spread, Baznier remix.

Hi, Thanks for taking my question I just have two quick questions. The first one is on the commercial revenues per passenger in Mexico on a dollar basis. It has increased a lot and you just mentioned the opening of the newest spaces, but if you have money for more detail.

Speaker 6: On the dollar basis, it has increased a lot and you just mentioned the opening of new spaces. But if you have more details, it will be good. Also, on the expectation for your end on international travel to Cancun, I mean, international travel has decreased over the last few months. How are you seeing the final stretch?

We'll be good also on the expectation for year end on international travel to Cancun, I mean international travel has had decrease over the last few months how are you seeing.

Uh huh.

Adolfo Castro: In the case of Viva Bolaris, Viva has said to us that they do not see a major implication with these situations. In the case of Bolaris, what I understand is that around 60% of their fleet has this kind of engine. So, we are expecting any major impact from Bolaris. I agree with you that can come has a lot of flights will be utilized. The best way to evaluate this situation will be to hear Bolaris and to see what they are going to say during their conference.

The final stretch of the year. Thank you.

Speaker 2: Well, in the case of commercial revenues, we are having some effects of course from the aim.

Well in the case of commercial revenues were having some stomach brands of course from the game.

Speaker 2: from the Mexican strong petrol. That is the case of duty free. No, that is the case of.

From the Mexican strong bench. So that is the case of duty free and all of that is the case of <unk>.

Jim.

Speaker 2: Some of our activities are related to foreign people. And in the case of the traffic, as I have mentioned during the initial remarks, what we saw from the quarter, on the first side, we have to understand that there should be a normalization of the numbers. Normalization means that normal double digit numbers, no more external growth.

Some of the activities that are related to boring people.

In indications that traffic as I had mentioned during the initial remarks, what we saw from the quarter on the first side.

We have to understand that there should be enough money nation.

Of the numbers non musician means that no more double digit numbers no more extra room night growth.

Adolfo Castro: But Jet, we do expect some effects of these next year. And that will of course depend on how fast and how they are. The manufacturer recalls the engines of Polaris that have to do with the cycles they have in their engines, and it's something that we don't know yet.

Speaker 2: But in the case of international, the decrease was related to the traffic, to and from Europe and to and from South America.

But indications of international and the decrease was related to the traffic to.

One from Europe and from South America.

Sure.

Speaker 2: The case of the US and Canada will are like the, are like the increase that offset these negatives. But the strong pencil, of course, is taking,

In the case of the U S and Canada.

It's like that.

I think fees that offset these negatives but.

Adolfo Castro: In the case of Colombia, the 20% was what we have said that these two islands meant 20% of our traffic last year. So whatever number is better than the 20%, that means that the other two islands, the Bianca and La Palma, are recuperating from these two islands that disappear or that one thing in top operations. So the number we have recently published is my opinion, it could not be because it's lower than the 20%. Remember that these islands were out since February this year. So as from February next year, we will see that the traffic you start going again. Thank you.

This drove pencil of course is baked in.

Sure.

Speaker 2: and some some point people out from this country that's true.

And some some flooring people out from this country. That's that's true.

Yeah.

Yeah.

Thank you.

You're welcome.

Okay.

Thank you.

Speaker 1: Our next question comes from the line of Arter, Suriloto with APO Capital.

Our next question comes from the line of auto so a little but a P. O capital. Please go ahead.

Speaker 11: Thank you, good morning, and also for just a quick follow-up, please regarding the confessions. Are you in talks to extend the terms of your confessions at this point? I know that someone asked this previously, but just I couldn't get your answer just to check if you are discussing this with the governor at this point, considering all the changes that were announced recently. Thank you.

Thank you.

And also just a quick follow up please regarding the concessions are you in talks to extend developed do you know the the terms of ethical session. At this point I know that someone asked this previously but just I couldnt get your answer just so just to.

Jackie who are discussing this with the government at this point no considering all the changes that were announced recently thank you.

Yeah.

Speaker 2: Well, we are exactly at the middle of the term. So the reaching of term was 50 years where we have 25 in Trump. And as I have mentioned, we are not in talks.

Well and we are exactly at the middle of the term so they're reaching out in terms of what 50 years, where we have 25 being front and I was I had mentioned we are not in dogs.

Adolfo Castro: Andressa, follow up on Puerto Rico. Do you expect to keep this double digit road space going on? The road, the it's already very good. We are seeing Puerto Rico right now has to come with a new hell and ultra local carrier that is darker operations in Puerto Rico and they have increased our traffic substantially. So this is good news for Puerto Rico. We don't know how long it is going to last, but for the moment, we are very happy to see this 20-something-percently piece every year. Thank you all for having me. Thank you.

Speaker 7: at all about the extension of the confession.

One about the extension of the concession.

Okay.

Very clear thank you.

You're welcome.

Speaker 1: Thank you. Our next question comes from the line of Louis Lama with BlackRock. Please go ahead.

Thank you.

Next question comes from the line of Louis Lama with Blackrock. Please go ahead.

Hi Adolfo.

Speaker 12: Hi Adolfo, thanks for taking the question. I'm just trying to clarify something that is a bit ambiguous on the new regulatory document. So are these changes to be applied at the end of this current MDP cycle or only for the next cycle?

Thanks for taking the question I'm, just trying to clarify something that was a bit ambiguous on the new regulatory document.

So are these changes to be applied at the end of this current MTP cycle or only for the next cycle.

These bookings is enforceable.

Speaker 7: This book is impossible to speak. In the case of all the main implications of course are within next NDP. That is some process to show.

Bruno Amorim: Our next question comes from the line of Bruno Amorim with Goldman Sachs. Please go ahead. Yeah, good morning. Thank you for taking my questions. I have two.

Pete.

In the case of rules the main implications of course within Nexsan E beam that is in process. So high.

Bruno Amorim: The first one, I just wanted to reconfile the big picture here. You know, the government is increasing the concession fee. They have stated that they want to lower tires. So if you want to keep the contract balanced, meaning allowing for the private operators to earn the allowed return on invested capital, I guess you could extend the life of the concession or eventually postpone copy. So the question is, are those the two levers issue on the table and are you, you know, in talks with the government to eventually postpone copies or to extend the life of the concession?

Speaker 2: I would say if everything is okay in terms of time from the authorities respect.

I would say ive ever seen needs, okay in terms of buying.

From the authorities to respect these documents will be.

Speaker 2: This document will be applied as one before the year's over with our rates up from the Thursday of next year.

Clive.

What.

Before the year's over with.

Our rates up from the first day of the next year.

Okay. Thank you.

You're welcome.

Thank you.

Ladies and gentlemen, if you wish to ask a question Please press star and one.

Speaker 1: Ladies and gentlemen, if you wish to ask a question, please press star and one.

Okay.

Speaker 1: As there are no further questions that concludes the question and answer portion of the race conference call. I would now like to go on to call back over to Mr. Castro for closing remarks.

Bruno Amorim: So that's the first question. And the follow-up on that is, you know, if we get your situation where, you know, it's not possible to square all those variables. If the contract, you know, is not balanced. If the concession is not earning the allowed return, is it an option to go to the courts or not? You know, how do you think about this trade off going to the courts or not? What could trigger this decision?

As there are no further questions that concludes our question and answer portion of today's conference call.

Now I'd like to turn the call back over to Mr. Castro for closing remarks.

Speaker 2: Thank you Ryan and thank you all of you again for participating in our third quarter results conference goal on behalf of us who we wish you a good day and good bus.

Thank you Ryan and thank you all of you again for participating in our third quarter results conference call on behalf of mushroom, we wish you a good day and goodbye.

Now you may disconnect.

Thank you, ladies and gentlemen that concludes our third quarter 2023 results conference call. We would like to thank you again for your participation you may now disconnect your lines.

Speaker 1: Ladies and gentlemen, that concludes a soothed quarter of 2023 results conference call. We would like to thank you again for your participation. You may now disconnect your line.

Adolfo Castro: Thank you. Well, in the case of your first question, extending the concession or the menacing Catholics, well, first of all, I have to say that Catholics is not because we want the Catholics is not in the mathematical relation in terms of with the man, so if the man increases, of course, Catholics increases, so we will have to construct whatever it necessary to support the level of service. We are not in talks about extending the concession contract, and in terms of the balance, I do agree with your question about how to reduce rates if you're increasing fees, you know, it's something that we will have to see once we apply this new regulation document in our numbers, or in our MPP, towards you.

Okay.

Yeah.

Okay.

[music].

Speaker 13: Work J F.

Adolfo Castro: Thank you, Adolfo, and so if at the end of the day, you know, there is no offset for the higher concession fee and for the lower tariffs, you did search and say the returns would likely be lower than what they should be, and in that case, you know, could the company go to the courts? Well, Bruno, in the case of the document, you already have the full tax of the document, so in terms of the discount rate, I do believe that you all have all the information, the necessary information to calculate what is that number today. So it's now more than ever completely transparency for you to calculate the number.

Bruno Amorim: Thank you Adolfo, we can follow up offline if necessary, thank you. You're welcome.

Operator: Thank you.

Alberto Valério: Our next question comes from the line of Alberto Valerio with UBS, please go ahead. Hi, I think I'd also for taking my question, but my first one, I would like to, if you could provide us some details on Mexican traffic, we see a resilient domestic demand and a constant international. This is a trend.

Adolfo Castro: It's something that we should see, you know, recovering in a quarter in a year. And my second one is you could give it some follow as well, or Mexican at the action, how should we treat it, should we see first the term increase and supply, and then we might see some company struggling to follow the price. What is your comment on it? Thank you. You're welcome. In the case of the Mexican traffic, as I have said, yes, we do expect some negative effects next year, due to the fact of this pattern won't witness engines in the case of police.

Adolfo Castro: Of course, on the other side, as you have mentioned, the government has announced that they will initiate operations with Mexican airless. These medical, well, what we have heard from them, is that they will initiate with 10 aircrafts. Just to give you an idea, today the Mexican fleet is around 3156 aircrafts. So, if we add 10, it is not an important attack on the whole as an area. In the case of Pratt & Whitney engines, four polaris, that means more than 60 aircrafts that could be stopped for 200 or 250 days.

Adolfo Castro: So, the negative effect is offsetting this new addition airline of medical evaluation, what we say, what we know that they had not received as of today, the license to start operations even though they were saying that they will be initiating flights the summer of the first is yet.

Adolfo Castro: So, that maybe it will take more time. Thank you.

Anton Mortenkotter: Our next question comes from the line of Anton Mortenkotter with GBM, please go ahead. Hi Adolfo, thank you for taking my question. Without getting much into details, I understand you're still evaluating the effects that the regulatory change will have. But thinking on a more strategic way, and knowing the most relevant changes of these amendments, what would you say are the main ways that these modifications could affect your way of looking at the path and decisions taken as we're going forward?

Anton Mortenkotter: Well, again, in that sense, Anton, we are transporting or updating or adjusting our documents to these new regulatory debates, that we have received last Thursday, so it's too early to tell. And once they apply this new regulatory regime, we will be able to say what the effects were in the case of our MVP.

Adolfo Castro: Okay, thank you. And also just a quick follow-up, I didn't get, I'm not sure if I got it right, but given that this was the adjustment was so quickly and you were already at the end of the MVP, is it possible for you to delay the final outcome of the MVP or it has to be ready for the beginning of the next year? I do believe that it has to be ready by the end of the year unless they say that they are not ready, so we will... I do believe that we will deliver our documents, updating it with these new regulatory debates in the coming days, and we will take it from there.

Adolfo Castro: Perfect, thank you. You're welcome.

Operator: Thank you.

Stephen Trent: Our next question comes from the line of Stephen Trent with City, please go ahead. Good morning, Adolfo, and thanks very much for taking my question. The first is actually a follow-up from Alberto Valario and Amelo's new airline.

Adolfo Castro: Are you hearing anything at all pushed back wise with respect to the government, you know, arguably having control of some airport and an airline in the same market? Well, as far as I understand, they have adjusted the law because in the past it was not possible. There was no way that someone would have airports and airlines in both centers of more than 5% from one to the other, no? So I do believe that they are adjusted the law in order that they can practice.

Adolfo Castro: Wow, okay, appreciate that Adolfo. Just one other very quick one for me. I know that, you know, Amel's also has this to-loom airport that seems to be in the works. You know, do you have any high-level view with respect to whether the risk to charter traffic could impact your journey? What's your maximum tariff? Well, in the case of to-learn airport and that's a good question. At Mexico and Viva, it started to sell tickets as from December the first from that airport.

Adolfo Castro: So it's something that you can see in their webpage or in the reservations page. They will start December the 13th. In the case of charter flights, I don't believe that charter flights that have final destination, let's say, thinking on their South to play with the government. They should be using to move as airports because their final destination is closer to that airport. That of course, we'll have an impact on calculus and that has been considered in our NDP and that technical speaking may be shorter than the piece of the tariff of Cancun Airport.

Stephen Trent: Okay, perfect. Appreciate the color of Delphorn. Thanks for the time.

Operator: Thank you.

Pablo Ritalde: Our next question comes from the line of Pablo Ritalde with Santander. Please go ahead. [inaudible] Well, in the case of that, you can see a part of that in the document we have filed a week that says that in terms of the theft, it should only be included.

Adolfo Castro: The operations in Mexico. So if you aren't using conservative data, and the pronounce of statements of Cancun, you mock the scoops, what is related to Puerto Rican Colombia? Okay, perfect. You're welcome. Thank you.

Pablo Monsivais: Our next question comes from the line of Pablo Monsivais with Douglas, please go ahead. Hi, thank you for taking my question. I just have two quick questions. The first one is on the commercial revenues per passenger in Mexico. On a dollar basis it has increased a lot and you just mentioned the opening of new spaces, but if you have more in for more detail will be good. Also on the expectation for your end on international travel to Cancun, I mean, international travel has decreased over the last few months. How are you seeing the final stretch of the year?

Adolfo Castro: Thank you. Well, in the case of commercial revenue, we are having some some effects of course from the from the Mexican strong personal. That is the case of duty free. No, that is the case of some of our activities that are related to foreign people. In the case of the traffic, as I have mentioned during the initial remarks, what we saw from the quarter on the first side, we have to understand that there should be a normalization of the numbers.

Adolfo Castro: The normalization means that no more double digit numbers, no more external growth. But in the case of international, the decrease was related to the traffic to and from Europe and to and from South America. In the case of the US and Canada, who are like the lighting, please that offset these negatives. But the strong pencil, of course, is taking some point people out from this country. That is true.

Adolfo Castro: Thank you.

Operator: You're welcome.

Pablo Loto: Thank you. Our next question comes from the line of auto through a loto with APO capital. Please go ahead. Thank you. Good morning, although for just a quick follow up, please regarding all the concessions, are you in talks to extend the development, you know, the terms of your concession at this point. I know that someone asked this previously, but just I couldn't get your answer just to check if you are discussing this with the governor at this point, considering all the changes that were announced recently. Thank you.

Adolfo Castro: Well, we are exactly at the middle of the term. So the original term was 50 years where we have 25 in Trump. And as I have mentioned, we are not in talks at all about the extension of the concession. Very clear. Thank you. You're welcome. Thank you.

Luis Plama: Our next question comes from the line of Louis Plama, with BlackRock. Please go ahead. Hi Adolfo, thanks for taking the question. I'm just trying to clarify something that is a bit ambiguous on the new regulatory document. So are these changes to be applied at the end of this current MVP cycle or only for the next cycle? This document is enforceable as we speak. In the case of all the main implications, of course, are within next MVP. That is some process to show. I would say if everything is okay in terms of time from the authorities respect, this document will be applied as what?

Operator: So before the year's over, I will raise up from the third day of next week. Okay. Thank you. You're welcome. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one.

Operator: As there are no further questions that concludes the question and answer portion of the race conference call.

Adolfo Castro: I would now like to jump all back over to Mr. Castro for closing remarks. Thank you, Ryan. And thank you all of you again for participating in our third quarter results conference call on behalf of us.

Operator: We wish you a good day and good luck. Now you made this connect. Thank you.

Operator: Ladies and gentlemen, that concludes our third quarter 2023 results conference call. We would like to thank you again for your participation.

Operator: You may now disconnect your lines. Thank you.