Q4 2024 Grupo Aeroportuario del Pacífico SAB de CV Earnings Call
We'll open the floor for questions.
Operator: After the presentation, we will open the floor for questions. I am pleased to turn the call over to GAP's Investor Relations team. Please go ahead.
Speaker Change: I am pleased to turn the call over to Gap's Investor Relations team. Please go ahead.
Speaker Change: Thank you and welcome to the part about the ideal perceived because fourth quarter 2024 conference call presenting from the company today, we have Mr. Walter <unk>, Chief Executive Officer, and Mr. <unk> <unk> Chief Financial Officer.
[Company Representative] (GAP): Thank you, welcome to Grupo Aeroportuario del Pacífico's Q4 2024 conference call. Presenting from the company today, we have Mr. Raúl Revuelta, GAP's Chief Executive Officer, and Mr. Saúl Villarreal, Chief Financial Officer. Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, future performance, or financial results. As such, statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report. At this time, I'd like to turn the call back over to Mr. Revuelta for his opening remarks. Please begin, sir.
Speaker Change: Please be advised.
Speaker Change: [laughter].
Speaker Change: The forward looking statements may be made during this conference call. These do not account for future economic circumstances industry conditions future performance or financial results as such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations.
Speaker Change: For a complete note on forward looking statements. Please refer to the quarterly report at this time I'd like to turn the call back over to Mr. <unk> for his opening remarks, please begin sir.
Speaker Change: Good morning, everyone and thank you for joining us for our fourth quarter full year 234 earnings sculptures.
Raúl Revuelta Musalem: Good morning, everyone, and thank you for joining us for our Q4 and Full Year 2024 Earnings Conference. It is a pleasure to be with you here today to share GAP's financial and operational development. Let me begin with the financial highlights. This quarter has been a period of recovery. After various industry challenge, both revenues and profitability have remained positive. Total revenues without IFRIC 12 increased by 16.4% compared to the same Q of the last year. The 32.7% increase in non-aeronautical revenue was the main driver for the growth we experienced. Overall, passengers traffic grew by 1.4% year over year, driven by the opening of 22 international and 11 domestic routes, in addition to more capacity from Volaris and Viva fleet. The non-aeronautical revenue segment rose by 32.7%, being the top contributor to our revenue growth.
Speaker Change: Are sure to be with you <unk> financial operational developments, let me begin with the financial highlights.
Speaker Change: This quarter has been a period of recovery after various industry challenge both revenues and profitability have remained positive.
Speaker Change: Total revenues with our deposit growth grew by 16, 4%.
Speaker Change: Compared to the same quarter of the last year, the 32, 7%.
Speaker Change: None of our Medicare revenue was the main driver for the growth we experience.
Speaker Change: Overall passenger traffic grew by one 4% year over year, driven by the opening of 42 International on 11 divesting works.
Speaker Change: As shown to more capacity from <unk>.
Speaker Change: The Northern Africa revenue segment Rose by 32, 7%.
Speaker Change: The top contributors to our revenue growth.
Speaker Change: Here, we saw a remarkable improvement to the consolidation of the cargo facility businesses better performance on VIP lounges, and the branch of the HOKA.
Raúl Revuelta Musalem: Here we saw a remarkable improvement to the consolidation of the cargo facility businesses, better performance on VIP lounges, and the operation of the hotel, in addition to the good performance in the retail, duty free, and food and beverage divisions. The new businesses line have contributed significantly to overall revenue diversification, which make it one of our main strategic growth pillars going forward. From expenses perspective, service costs have increased by 29%, largely driven by consolidation of the cargo facilities and the cost of operation of the hotel, besides the additional headcount for airport operations and salary increases in Mexico, derived from several changes in labor law. On the other hand, new operational areas have implied higher consumptions of energy, security, and cleaning services, which are unavoidable despite the efforts from management to control costs.
Speaker Change: In addition to the good performance in retail due to three food and beverage division.
Speaker Change: The new businesses have contributed significantly.
Speaker Change: The lead to overall revenue diversification, which make it one of our many strategic growth pillars going forward.
Speaker Change: From expense perspective service cost have increased by 29% largely driven by consolidation of the cargo facilities and the cost of operations of the hotel.
Speaker Change: Besides the additional head count for wafer operations on salary increases and Mexico delivered from several changes in labor.
Speaker Change: On the other hand, new operational area have implied a higher consumption of energy security and cleaning services, which are on available. Despite the air force for money management to control costs.
Speaker Change: February increased 14, 9% year over year, reaching $4 8 billion pesos with an EBITDA margin of 66, 9% excludes the effect of the asset class.
Raúl Revuelta Musalem: EBIT increases by 14.9% year over year, reaching MXN 4.8 billion with an EBITDA margin of 66.9%, excludes the effect of the IFRIC 12 profits. Slightly below our EBITDA margin in Q2 2023, mainly due to the increase in the concession fee in our Mexican airports, which changed from 5% to 9% in 2024. Moving to a macroeconomic perspective, the 14.1% MXN to USD depreciation has played a dual role. While it has caused higher revenues generated in USD, it has also led to higher financial costs, particularly in terms of debt service. Moreover, inflation in Mexico and US CPI decreased in 2024, diminishing pressure to the future interest rates for loans denominated in MXN and USD. We continue to carefully track and manage this impact to ensure continued financial stability.
Speaker Change: They are slightly below our EBITDA margin in <unk> 2023, mainly due to the increase in our concession fee in our Mexican airports with changes from five 9% in 2024.
Speaker Change: Moving to a macroeconomic perspective, therefore, pinpoint 1% peso to dollar depreciation has played at low Roe.
Speaker Change: While it has caused higher revenues generated in U S dollars, which has also led to higher financial costs.
Speaker Change: In terms of debt service.
Speaker Change: Moreover, the inflation in Mexico, and U S CPI decreasing 2044.
Speaker Change: Meaningful pressure to the future inventory rates for loans denominated in pesos, Andrew as others.
Speaker Change: We continue to carefully track and manage these impacts to ensure continued financial stability.
Speaker Change: If we look at full year financial results.
Raúl Revuelta Musalem: If we look at full year financial results, 2024 was a year of strategic growth and one where GAP demonstrated resilience once again. There were industry challenges, such as the grounding of Volaris and Viva fleet, and increase of the concession fee. However, revenue and profitability remain in a positive trend. As a result, full year results were in line with our expectations. Total revenue rose by 5.3%. This growth was primarily driven by the 24.4% increase in commercial revenues, which more than offset the slight 0.8% decrease in aeronautical revenues. The significant growth was mainly due to the business line operated directly by us, which saw a 58.4% increase. It is essential to note that in 2024, we commenced operations with mixed-use building and acquired GWTC, both located in Guadalajara.
Speaker Change: 2024 was a year of subdued growth.
Speaker Change: One word gap demonstrated resilience on one second.
Speaker Change: There were in this industry challenges such as the grounding of our lives and dealer fleet.
Speaker Change: The increase of the concession fee power.
Speaker Change: However, revenue unprofitable, we remain in a positive trend.
Speaker Change: As a result full year results were in line with our expectations.
Speaker Change: Total revenue rose by five 3%. This growth was primarily driven by the 24, 4% decrease in commercial revenues, which more than offset the slight <unk>, 8% decrease in our logical revenues.
Speaker Change: The significant growth was mainly due to the business of nine operated directly by US, which saw 58, 4% increase.
Speaker Change: Isn't there something note that in 'twenty 'twenty four will commence operations with mixed use building acquired GWG see both located in Guadalajara.
Speaker Change: Regarding the bidding alliance operated by third parties.
Raúl Revuelta Musalem: Regarding the business lines operated by third parties, it increased by 10.5%, mainly due to the food and beverage, car rentals, retail, and leasing of the space. Cost of service increased by 20.2%, mainly driven by increasing headcount and higher salaries, security and insurance, maintenance expenses, and utility costs. The consolidation of the cargo facilities and the operation of the hotel contributed to the higher cost of operations and the additional square meters of the terminal buildings resulting from all expansions, as well as added personal and minimum wage increase. EBITDA grew by 2.4%, reaching roughly MXN 18.1 billion, while EBITDA margin, excluding IFRIC 12, reached 67.6%. GAP's overall financial position remaining robust. As of 31 December 2024, we reported total asset increase of MXN 14.2 billion, an increase primarily driven by the improvements to concession assets, a stronger cash position, and strategic investment.
Speaker Change: The increase it by 10, 5%, mainly due to the <unk> car rentals retail and leasing office space.
Speaker Change: Cost of service increased by 22%, mainly driven by reducing head count and higher <unk> sellers security and insurance maintenance expenses and utility costs.
Speaker Change: The consolidation of the cargo facilities under operation the hotel contributed to a higher cost of operations and the additional square meters two of the terminal buildings.
Speaker Change: <unk> for longer expansions as well as added personnel and minimum wage increases.
Speaker Change: EBITDA grew by two 4%, reaching roughly $18 1 billion basis, while EBITDA margin, excluding asset 12, Richard 67, 6%.
Speaker Change: That's overall financial position remains robust.
Speaker Change: As of December 31, 2044.
Speaker Change: The total asset increase of $14 2 billion pesos, an increase primarily driven by the improvements to concession assets, a stronger cash position and our strategic investments.
Speaker Change: Total liabilities increased by $10 5 billion pesos, mainly due to the issuance of long term debt securities and bank loans.
Raúl Revuelta Musalem: Total liabilities increased by MXN 10.5 billion, mainly due to the issuance of long-term debt securities and bank loans, thus reinforcing our capital structure for future growth. Moving on to the CapEx, we deployed MXN 7.9 billion during the year, thereby completing the committed investment for 2020-2024 period, in addition to the commercial projects. In the next 5 years, we are planning unprecedented growth in our infrastructure. It is reflected in many of our airports. Just a few weeks ago, GAP presented its 2025-2029 Master Development Program for Guadalajara and Puerto Vallarta with a large event in Jalisco. The event, titled Transforming for You, featured the upcoming investment plans for our major airports in Jalisco.
Speaker Change: Thus reinforcing our capital structure for future growth.
Speaker Change: Moving on to the Capex, we deployed seven 9 billion pesos during the year.
Speaker Change: Thereby completing the comedian burner for 'twenty 2024 period in additional to the commercial products.
Speaker Change: In the next five years, we are planning unprecedented growth in our infrastructure and is reflected in many of our airports.
Speaker Change: Joseph few weeks ago.
Speaker Change: What percent that is 25 2029 Master development program for <unk>, and Petrodelta, where larger bank in Canada.
Speaker Change: The event titled transforming for you.
Speaker Change: Peter <expletive> upcoming impediment planet for our major airports in high risk.
Speaker Change: We invite you to take a look at our social media accounts, where we illustrate our commitment to the original development and our strategic focus on infrastructure enhancement to meet the growing demand in the market.
Raúl Revuelta Musalem: We invite you to take a look at our social media accounts, where we illustrate our commitment to regional development and our strategic focus on infrastructure enhancement to meet the growing demand in the market. Most importantly, this investment reflects our confidence in the long-term growth potential of our main markets. The main projects include the second terminal at the airport of Guadalajara, which will add around 73% capacity, as well as new vehicle access roads, which will make it easier for traffic to flow to this airport. In Puerto Vallarta, we will conclude the second terminal, increasing capacity by 134%. Please note that the investment amounts disclosed at the event are the after-asset figures by our regulator, but included annual projected inflation at a rate of 4.4% using the Construction Price Index.
Speaker Change: Most importantly, these investments reflect our confidence in our long term growth potential of our main markets.
Speaker Change: The main projects include the second terminal, therefore, Guadalajara, which will add around seven 3% capacity as well as new vehicle access road, which will make it easier for traffic to flow to the circuit.
Speaker Change: You talked about that we will conclude the second terminal increasing capacity by 134%.
Speaker Change: Please note that the investment amounts disclosed at that event.
Speaker Change: <unk> figures by hour, we narrowed but included annual projected inflation at a rate of four 4% Youre seeing the construction price index.
Speaker Change: Looking ahead, we are pleased to announce our growth guidance for the full year 2025, compared to <unk> 44, reflecting our strategy development across our operations.
Raúl Revuelta Musalem: Looking ahead, we are pleased to announce our growth guidance for the full year 2025 compared to 2024, reflecting strategic development across our operations. In terms of passenger traffic, we expect to grow from 4% to 6%, driven by the consolidation of existing routes, increasing flight frequencies, and additional seat capacity. Regarding aeronautical revenues, we expect to grow from 23% to 25%, supported by the implementation of new tariffs approved by the authority for our airports in Mexico, alongside positive traffic performance, inflation adjustments, and expected exchange rates. We anticipate an increase of 24% to 26% on non-aeronautical revenues due to the improved contract conditions, the full year operation of our cargo facility, the hotel, and corporate office, as well as the development of the additional business lines managed directly by the company. In terms of EBITDA margin, we expect it to be 66 ±1%.
Speaker Change: In terms of passenger traffic.
Speaker Change: Expect to grow from 4% to 6% driven by the consolidation of existing routes, increasing flat for equities and additional seat capacity.
Speaker Change: Regarding and I will now take our revenues, we expect a growth of 23% to 25% supported by the implementation of new titles approval by the authority for our airports in Mexico.
Alongside positive traffic performance inflation adjustments and expected exchange rates.
Speaker Change: We anticipate an increase of 24% to 26% on non aeronautical revenues.
Speaker Change: Due to the improved contract conditions, the food Europe ratios of our cargo facility the hotel and corporate office.
Speaker Change: Our growth at the development of the additional building advanced managed directly by the company.
Speaker Change: In terms of EBITDA margin, we have big to be 66, plus minus 1%. This is mainly due to the change in the concession fee, which for US has increased four 7% to 9% forward opportunity.
Raúl Revuelta Musalem: This is mainly due to a change in the concession fee, which has increased from 5% to 9% for airports in Mexico. To finalize, CapEx will be around MXN 13 billion. This includes MXN 8.8 billion for committed investments at airports in Mexico under Master Development Programs, MXN 1.7 billion for the continued construction of the new terminal building in Puerto Vallarta, MXN 1.5 billion for the investment at airports in Jamaica, and MXN 1 billion for the commercial investment. This growth guidance reflects our commitment to strategic development and value creation, setting a solid foundation for the continued success in 2025. We are confident and excited about our strategic direction. We believe that diversifying revenue streams, enhancing commercial operations, and leveraging the cargo facilities will be key to our continued growth. We are extremely focused on these areas and on their success.
Speaker Change: The final Capex will be around 13 billion. This includes $8 8 billion for comedian impediments at airports in Mexico under the Master development programs.
Speaker Change: One 7 billion for the continued construction of the new terminal building, particularly at that.
Speaker Change: One 5 billion for the bedroom of airports in Jamaica, and 1 billion for the commercial investments.
Speaker Change: This will guidance reflect our commitment to protect the development and value creation setting a solid foundation for the continued strength in 2025.
Speaker Change: We are confident and excited of our strategy.
Speaker Change: <unk> direction.
Speaker Change: We believe that diversifying revenue streams, enhancing commercial operations and leveraging the cargo facilities will be key to our continued growth.
Speaker Change: Therefore, we are squarely focused on these areas and on their success.
Speaker Change: We know we must continue to stay in our <unk> as well as optimize operational efficiencies in order to lever long term value for our stakeholders.
Raúl Revuelta Musalem: We know we must continue to strengthen our infrastructure as well as optimize operational efficiencies in order to deliver long-term value to our stakeholders. We appreciate your continued trust and support in GAP. Thank you for joining us today. We now open the floor to your questions.
Speaker Change: We appreciate your continued to Atlanta Perking up.
Speaker Change: Thank you for joining us today, and we'll now open the floor to your questions.
Speaker Change: Okay.
Speaker Change: At this time, we will open the question and answer session.
Operator: Our first question today will come from Rodolfo Ramos with Bradesco BBI.
Speaker Change: Like to ask a question. Please press star and one on your telephone keypad and youll be placed into the queue in the order received.
Speaker Change: You may remove yourself from the queue at any time by pressing pound and one.
Speaker Change: Once again to ask a question press star one on your phone now.
Speaker Change: And our first question today will come from Rodolfo Ramos with Bradesco BBA.
Speaker Change: Yes.
Rodolfo Ramos: Thanks for taking my question.
Rodolfo Ramos: Buenos días Raúl, Saúl, Ale. Thanks for taking my question. I have a couple, if I may. Could you just help us reconcile what seems to be a rather conservative traffic guidance in a year where a lot of the headwinds in terms of traffic will not be there anymore? If you can elaborate a little bit on the drivers behind the guidance. Secondly, on the gradual rollout of your new maximum tariffs, can you just give us a little bit more detail on the schedule and magnitude that you're intending to follow, and whether this was a commercially driven decision to postpone this? Thank you.
Rodolfo Ramos: I have a couple if I may could you just help us reconcile what seems to be a rather conservative traffic guidance in a year, where a lot of the headwinds in terms of traffics will not be there anymore. So maybe you can elaborate a little bit on the drivers behind the guidance.
Rodolfo Ramos: And secondly on the on the gradual rollout.
Rodolfo Ramos: Your new tariffs Maxim targets can you just give us a little bit more detail on the schedule and magnitude that you're intending to follow and whether this was a commercially driven decision.
Rodolfo Ramos: Thank you.
Rodolfo Ramos: Thank you Ron for the C zone in terms of the pricing the FERC to 6% guidance is related to the number of seats already.
Raúl Revuelta Musalem: Thank you, Rodolfo Ramos. This is Raúl. In terms of the traffic, the 4% to 6% guidance is related to the number of seats already in the pages for commercialization, the slots that are already solicited by airlines. In this line, for sure, if there's some other additional routes that have not been announced yet from the part of airlines, will be for sure an upside in our guidance. For the moment, the only thing that we are taking into account is the specific routes already announced by the airlines, or the ones that are already solicited by the airlines on asking for a specific slot. In that way, our guidance only reflects this kind of data that comes from database. The second part of the question related with our strategy for the change on the specific tariffs for the coming years.
Rodolfo Ramos: In the in the paycheck for commercialization and the slots that are.
Rodolfo Ramos: Already.
Rodolfo Ramos: So we see that it by by the Airlines in.
Rodolfo Ramos: In this line.
Rodolfo Ramos: Sure. If there is some other additional routes that have not been announced yet from the bulk of that will be for assura and upside in our guidance.
Rodolfo Ramos: Guidance for the moment the only thing that we are taking in account.
Rodolfo Ramos: Is that the Pacific routes already announced that borderlands.
Rodolfo Ramos: The ones that are already.
Rodolfo Ramos: A solid data by by the airlines on asking for a specific and slots.
Rodolfo Ramos: So in that in that way.
Rodolfo Ramos: Our guidance only reflects this.
Rodolfo Ramos: This kind of data that come from database.
Rodolfo Ramos: The second part of the question related with the strategy.
Rodolfo Ramos: The change on <unk>.
Rodolfo Ramos: Specific targets for the coming years.
Rodolfo Ramos: March 1st.
Raúl Revuelta Musalem: On 1 March, we will increase a 15% of the passenger charge. For sure, that will give us the chance to have a fulfillment of the maximum tariff from 89% to 90%, depending on the change rate. We will have three different moments for additional increase. What we are expecting is to have the 100% of fulfillment of the maximum tariff during the 2026.
Rodolfo Ramos: We will increase or 15% of the passenger seats.
Speaker Change: For sure Doug will give us the chance for half a fulfillment of the marker.
Rodolfo Ramos: The maximum tariff.
Speaker Change: From.
Speaker Change: 89% to 90% depending of the exchange rate.
Speaker Change: And we will have three different.
Speaker Change: Moments for phone from additional increase so what we are expecting it to having the 100 profiles.
Speaker Change: <unk> of fulfillment the maximum date during the 2026.
Speaker Change: Perfect. Thank you.
Speaker Change: To clarify.
Rodolfo Ramos: Perfect. Thank you. Just to clarify, you will not have increased in any amount the tariffs during this quarter? It'll be until 1 March. Did I understand that correct?
Speaker Change: So you will not have increased any.
Speaker Change: Any amount of tariffs during this quarter.
Speaker Change: Until March 1st.
Speaker Change: That's correct.
Speaker Change: That's correct.
Speaker Change: You can see it's five years.
Raúl Revuelta Musalem: That's correct. If you can see, it's 5 years. It happens always in the same way. The Ley de Aeropuertos made us some different steps until we get the authorization of the authority. Always, it take us around 90 days. On this case, the authority give us the authorization for the release of the new tariff that will be applied for 1 March.
Speaker Change: It happens always in the same way they are.
Speaker Change: Oh of airports made us.
Speaker Change: Some different.
Speaker Change: Steps, although we gapped out the recession of the therapy.
Speaker Change: Or will it take us lightly.
Speaker Change: 90 days on this case 30 give us about a recession for the release of the new tariff.
Speaker Change: That would be applied for March 1st.
Speaker Change: Okay. Thank you everyone.
Russell: Thank you Russell.
Rodolfo Ramos: Okay. Thank you, Raúl.
Speaker Change: Our next question will come from Pablo <unk> with Barclays.
Raúl Revuelta Musalem: Thank you, Rodolfo Ramos.
Operator: Our next question will come from Pablo Monsivais with Barclays.
Russell: Hi.
Speaker Change: Good morning, just.
Pablo Monsivais: Hi. Good morning, Raúl Revuelta Musalem. I have a question on the commercial revenues of Guadalajara. Last year, you opened a lot of new spaces and the commercial revenues are increasing. Are we, in 2025, in a more normalized environment, or still there is some upside to the numbers that you are right now reporting? Thank you.
Russell: Yes.
Russell: I have a question on the commission revenues of.
Russell: Last year you open.
Russell: A lot of new spaces on the commercial revenues are increasing.
Russell: But.
Are we in 2025 more normalized environment or is still there is some.
Russell: Our upside to the numbers that you are.
Russell: Right now reported thank you.
Pablo: Thank you Pablo.
Pablo: I will say that it could be some kind of upset depending on the mix of traffic for that while ahead airport.
Raúl Revuelta Musalem: Thank you, Pablo Monsivais. I would say that it could be some kind of upside depending on the mix of traffic for Guadalajara Airport. For instance, if we begin to see a more strong trend of growing on the international side, always, for instance, the food and beverage business will grow in an even a faster pace than we expected. Let me put it in this way. Today, we have all the new spaces already operating. We are seeing that the brands, the new brands, for instance, in food and beverage or retail, have been well affected by the consumer, by the passengers in the airport. For sure, we expect a better, I would say, knowledge of these new brands, and for sure, a possible increase on possible sales on these business lines.
Pablo: For instance, it will begin to see a more a strong trend of growing on the international side.
Pablo: Always for instance, the food and beverage.
Pablo: The business will grow at even a faster pace that we expected.
Pablo: Let me put it this way today, we have all the newest basic spaces already operating.
Pablo: We are seeing that the brands the new brands for instance into <unk>, our retail has been well accepted by the by the consumer by the passengers do diaper.
Pablo: But for sure we expect that.
Pablo: A better I will say no no knowledge of the of these new brands and for sure a possible increase.
Pablo: Sure.
Pablo: The.
Pablo: Placebo sales on these on these on these business lines, but for sure the mix of the passengers could make some upside.
Raúl Revuelta Musalem: For sure, the mix of the passengers could make some upside for the revenues on the commercial side. The other part that is important to have in account is the cargo facility, GWTC. As you remember, in July of last year, we began with the consolidation of this facility, of this new business. We will have, I would say, as you come, we will consolidate 6 months of revenue that we were having in the past year. The other thing that going to be interesting to see is the maturation of the hotel. The hotel in Guadalajara began operations the last week of March on last year. The pace of how the load factors, the yield of each room, begins to grow gradually.
Pablo: Four four.
Pablo: So the revenues on the commercial side.
Pablo: The other part that is important to having account is.
Pablo: The cargo facility Jws team as.
Pablo: You'll remember in July last year, we began with the consolidation.
Pablo: Of the.
Pablo: This facility of these new business. So we will have I will say <unk> com, we will consolidate six month of revenue that we won't have it on the past year.
Pablo: The other part that the other thing that's going to be interesting to see is the maturation of the wholesale.
Pablo: The hotel well ahead, all began began operations on March the last week of March of last year.
Pablo: The pace of the of the.
Pablo: We'll see how the load factors.
Pablo: The yield of each room begins to growth gradually I mean.
Pablo: We begin like all the all the like all the new hotels begins the development that we think that <unk> going to be.
Raúl Revuelta Musalem: It begins like all the new hotels begin the development that we think that this year is going to be an excellent year in terms of consolidation and a more, I would say, bigger growth on the hotel that we have on the last year. That mainly some of the additional colors for Guadalajara.
Speaker Change: Excellent year in terms of consolidation.
Pablo: More I would say.
Speaker Change: A bigger growth on the wholesale that we have.
Speaker Change: On the last year, but that mainly some of the some some additional colors for color.
Speaker Change: Perfect and I have a second question if I may on the Turks and Caicos.
Pablo Monsivais: Perfect. I have a second question, if I may, on the Turks and Caicos acquisition process. Are we still in the schedule that you provided last year? How are we doing in that project? Thank you.
Speaker Change: Acquisition process.
Speaker Change: Are we still in the schedule that you provided last year, how are we doing that.
Speaker Change: That project. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Pablo.
Speaker Change: Government may have changed again the final time for therefore forgive the results of <unk>.
Raúl Revuelta Musalem: Thank you, Pablo. The government has changed again the final time for give the results of the tender. We are still waiting for that. We think that could be during March, but we really don't know if that's going to be the case. We are waiting for the final results.
Speaker Change: Of the tender. So we are still waiting for that we've seen that could be duty in March but we really don't know is that whatever the.
The case, but we are waiting for the final results.
Speaker Change: Understood. Thank you very much.
Pablo Monsivais: Understood. Thank you very much.
Speaker Change: Our next question will come from Alberto Valerio with UBS.
Operator: Our next question will come from Alberto Valerio with UBS.
Speaker Change: Thank you <unk>.
Alberto Valerio: Thank you, Raúl, for the opportunity, Alejandra, also. My question. I have two on my side. One is, how about the negotiation with the airlines, mainly for the airports that have the higher increase in tariffs that will start this year? If it's already done, if they chose some substitute to be negotiated yet? The second one about M&A as well, if you have any interest in other assets outside Mexico, in Caribbean, Brazil? As you may know, we have some players having assets in South America and Central America this time. Thank you. These two from me.
Speaker Change: Also.
Speaker Change: My question I have two on my side.
Speaker Change: How about the decision.
Speaker Change: The airlines.
Speaker Change: For the endpoint study.
Speaker Change: Got it.
Speaker Change: Yes.
Speaker Change: So that's one.
Speaker Change: Thank you.
Speaker Change: That's true.
Speaker Change: Yes.
Speaker Change: Second one about M&A as well.
Speaker Change: Indeed.
Speaker Change: Interest messages on sites.
Speaker Change: Ah modality.
Speaker Change: Mexico I think.
Speaker Change: Have you been in Brazil.
Speaker Change: These methods.
Speaker Change: Supplementary payment from at this time.
Speaker Change: Thank you.
Speaker Change: You too.
Speaker Change: Okay.
Speaker Change: And tuberculosis.
Speaker Change: Just two.
Raúl Revuelta Musalem: Thank you, Alberto. This is Raúl. Just to remember, it's important to have in mind that the change on tariff, it would not be like some kind of direct negotiation in terms of the Ley de Aeropuertos. We could change it directly, I mean, passes through a procedure through the authority. Each year, we have some different package of discounts on specific routes that we use for support on the ramp-up of some of the routes. On that area of, I would say, airport marketing and new routes, we used to have different packages for support the new routes and the new launches of routes from airlines. In that way, we negotiate several different discounts in all our airports depending the amount of new routes that will happen. On this year, we have for sure, in one hand, a big increase in terms of the maximum tariff.
Speaker Change: Remember remember use important to have in mind that the tension type.
Speaker Change: It would not be like some kind of direct negotiation in terms of the airports low we could change yet there.
Speaker Change: We're actually in in passes through a proceeding through the regulatory team.
Speaker Change: Got it.
Speaker Change: Each year, we have some different package of discounts on specific routes that we used to.
Speaker Change: For support on the ramp up of some of the routes.
Speaker Change: That area for marketing our new routes.
Speaker Change: We used to have different packages of for support of new routes and new launches of routes from from from Airlines.
Speaker Change: In that way we negotiate.
Speaker Change: Several different discounts in our all our airports.
Speaker Change: Ending the among a few awards that will will happen. So on this year, we have for sure.
Speaker Change: This increase in terms of the maximum tariff.
Speaker Change: But in the other hand, we have different several packets of discounts for airlines with idea of.
Raúl Revuelta Musalem: On the other hand, we have different or several package of discounts for airlines with idea of supporting their relaunching of some routes that will happen on the coming months. That would be, I would say, the kind of negotiation that we have on daily basis with the airlines. In terms of different M&As, we always are looking for opportunities in our sector. For sure, we have an important discipline trying to look for or bring to the table only opportunities that will be accretive to us for other stakeholders. In general terms, for sure, we will review each kind of opportunities that could be in the market for airports in our region, but always with the discipline of only participate in the ones that we think that could be accretive for the value of the company.
Speaker Change: Supporting the Relaunching of some routes that will happen.
Speaker Change: On the coming months, so that would be the.
Speaker Change: I will say that.
Speaker Change: The kind of negotiation that we have on daily basis with their life.
Speaker Change: Okay.
Speaker Change: In terms of different M&A.
Speaker Change: We always are looking for opportunities in our sector.
Speaker Change: For sure we are.
Speaker Change: An important discipline trying to look for Jos will bring to the table along the opportunities that will be our creative tool for other stakeholders. So in general terms for sure we would review.
Speaker Change: Each kind of opportunities that could be in the market for airports.
Speaker Change: Our region.
Speaker Change: But always with the DCP note only participated the ones that we think that can bring Dr created for the value of the company.
Speaker Change: Okay.
Speaker Change: Makes perfect sense. Thank you very much.
Alberto Valerio: Make total sense, Raúl. Thank you very much for the updates.
Speaker Change: Yes.
Ian Spice: We'll move to our next question from Ian Spice with Morgan Stanley.
Operator: We'll move to our next question from Jens Spiess with Morgan Stanley.
Ian Spice: Yes. Thank you for taking my question.
Jens Spiess: Yes. Thank you for taking my question. Just along those same lines, just want to understand the 15% increase you mentioned for March. Why not 20% and what's the thought process there? You already mentioned some marketing campaigns for your routes and stuff like that, but I guess, how does the economics of it work? If you increase it 20%, that would probably have a hit on maybe on your traffic assumption, but wouldn't it offset it?
Ian Spice: Just along those same lines.
Ian Spice: Just wanted to understand the 50% increase you mentioned for March.
Ian Spice: So.
Ian Spice: Why not 20% and.
Ian Spice: What's the thought process there you already mentioned some like.
Ian Spice: Marketing campaigns for your routes and stuff like that but I guess.
Ian Spice: I mean, how does the economics of it work serving you agree that to 20%.
Ian Spice: I would probably have a hit on your maybe on your traffic assumption, but wouldnt it offset it.
Ian Spice: Just if you could walk us through the thought process of choosing that 15%.
Ian Spice: Okay.
Speaker Change: Hi, and this is.
Ian Spice: This is <unk>.
Ian Spice: Well.
Ian Spice: The reserve increase.
Ian Spice: According to the trends.
Ian Spice: And the market.
Ian Spice: The expectation obviously, there is some effect into into the performance of the passenger traffic.
Ian Spice: We increased more than <unk>.
Ian Spice: <unk>.
Ian Spice: Supported by the market will be.
Ian Spice: More complicated too to positive traffic increase so.
Ian Spice: We made some analyses in those scenarios, where about we will have kind of increased it depends on the airport is not up 15% in Asia, but it depends on.
Ian Spice: On the market of the titles of the book.
Ian Spice: So.
Ian Spice: In general.
Ian Spice: This increase considering that just to trying to incentivize the market or not.
Ian Spice: In the <unk>.
Ian Spice: <unk>.
Ian Spice: The future growth.
Ian Spice: We have.
Ian Spice: I assume.
Ian Spice: Consensus internally.
Ian Spice: With every stakeholder to test to see what is the.
Ian Spice: This approach so that three times increase.
Ian Spice: We'll be in that.
Ian Spice: In the future.
Ian Spice: Our target is to raise the 100% of the announcement that it has been in 2006.
Ian Spice: In terms of demand.
Ian Spice: Sorry, just to complement in terms of the marketing.
Ian Spice: The board analysis that we do and all that.
Ian Spice: Our marketing team.
Ian Spice: That work that they do with the airlines internationally.
Speaker Change: Mr Berry to try to bring in the spend more frequencies and being more more more routes into our airports.
Ian Spice: Understood.
Ian Spice: Just one follow up on your guidance for traffic for this year, you mentioned that it's basically based on on the slots that you have been negotiating so basically.
Capacity.
Ian Spice: But <unk> has been mentioning that base.
Ian Spice: Basically you protect the Pratt and Whitney will issue will extend for basically at sometime in 2007.
Ian Spice: So that they are seeing some VFR cross border weakness in demand.
Ian Spice: Which I guess after three airports, maybe you were one of the most exposed so do you see any risk of <unk>.
Ian Spice: Attention to Lee like lower load factors that could put some risk to your traffic guidance or do you feel very comfortable with that level. Thank you.
Ian Spice: I would have said that we are comfortable with the level of the traffic and let me put it this way.
Ian Spice: For sure we are beginning to see.
Ian Spice: A softer.
Ian Spice: I would say growth in the economy of Mexico.
Ian Spice: The GDP data has already delivered by the government.
Ian Spice: We will begin to see.
Ian Spice: Software increase.
Ian Spice: On the increase of the economy of the GDP for sure we will have some kind of direct impact on.
Ian Spice: On the demand for for the passengers, but the other hand, we.
Ian Spice: We are still having.
Ian Spice: A big decrease or lack of capacity just for the PNW.
Ian Spice: Pmw engaging in the market.
Ian Spice: For our view.
Ian Spice: Even if we.
Ian Spice: With a softer demand.
Ian Spice: So beacon lack of passengers.
Ian Spice: Sure.
Ian Spice: On capacity that could be absorbed.
Ian Spice: The demand that we have right now.
Ian Spice: Another words.
Ian Spice: We are at the moment with the data that we have today, we are really comfortable with.
Ian Spice: With our guidance.
Speaker Change: Perfect I appreciate the additional color. Thank you.
Ian Spice: Okay.
Ian Spice: And we'll move next to Jorge Barghest with GBM.
Jorge Barghest: Hi, Good morning, Thank you for taking my questions.
Jorge Barghest: I would like to know what are your views on the pace of domestic traffic recovery, especially considering capacity deployment from airlines and a second question if I may.
Jorge Barghest: What additional opportunities are you considering for expanding non aeronautical revenues changed thank you.
Jorge Barghest: Okay.
Jorge Barghest: Yes.
Jorge Barghest: Perhaps on what the first part of the plan is more important with our forecasting.
Jorge Barghest: Four tenths of traffic is the capacity and awards that we already know and database.
Jorge Barghest: But the one of the key factors that we are expecting for this year is at Wawa recovery.
Speaker Change: Megan will come from some additional capacity additional hit that with a rightful varieties and available.
And we are expecting that some some of the rent gains from BMW will come back in the in the coming months and will give us additional capacity.
Speaker Change: <unk>.
Speaker Change: With me.
Speaker Change: In our airports.
Speaker Change: So that is why we are expecting this 4% to 6% in terms of our of our guidance.
Speaker Change: For sure this guy does not consider any menu.
Speaker Change: Say.
Speaker Change: Turning to critical change on the trend of the economics.
Speaker Change: <unk> trend so any other kind of therapy.
Speaker Change: <unk> of facility possible topic that change in our main way the way that the passengers fly.
Speaker Change: <unk>.
Speaker Change: We are comfortable with that with our guidance in the other hand in terms of.
Speaker Change: The investment to stand the commercial revenues.
Speaker Change: We need to end.
Speaker Change: <unk> Chen of the wireless backing up.
Speaker Change: It is.
Speaker Change: Importantly investment in the island.
The first stage of increase we will reopen additional as possible the parking spots.
Speaker Change: For the summer it's on Brilinta.
Speaker Change: Really important.
Speaker Change: <unk> it.
Speaker Change: Designate for specific commercial loan.
Speaker Change: It is we also have some.
Speaker Change: The additional investment for VIP lounges.
Speaker Change: We have some additional or the final investment for the opening for the full opening of the all our offer for <unk>.
Speaker Change: For rental space for offices.
Speaker Change: So thats, mainly our our key.
Speaker Change: And also shortly.
Speaker Change: The expansion of commerciality areas on Kingston Airport that will be the main <unk>.
Speaker Change: Yeah.
Speaker Change: <unk>.
Speaker Change: Investments on.
Speaker Change: On the nine months to get sites. It is important to remember that.
Speaker Change: On the all the <unk> <unk> period.
Speaker Change: We'll have a future state.
Speaker Change: Expansion on the total square meters in our terminal buildings.
We are saying that we will increase around 50%.
Speaker Change: Our total capacity for the end of the period 2029.
Speaker Change: The biggest part of the expansion will begin.
Speaker Change: To open in <unk> 'twenty through 'twenty six <unk> six we will have I got that.
Speaker Change: Around 28, whatever so gradually during the next four years, we will have.
Speaker Change: Openings on a big expansion in terms of terminal buildings that will give us.
Speaker Change: Profitability for expands our commercial spaces in the commercial area update of their portfolio.
Speaker Change: All of these substantial will be gradually so but I'll.
Speaker Change: Trying to keep refreshing our layouts refreshing the brands on the commercial side and brings with it possible offer.
Speaker Change: Commercial.
Speaker Change: Passengers.
Speaker Change: That will be the idea for only the next five years.
Speaker Change: Thank you.
Jason: Well move next to Jason <unk> with Citi.
Hello, Thanks for taking my question, it's Jason <unk> on from Stephen Trumps team.
Speaker Change: First question I wanted to ask is on a longer term basis do you see any possibility that the government might extend the airport concessions exploration beyond 2048.
Thank you.
In terms of our contracts and in terms of the LOE of airports.
Speaker Change: There is a cloud that gives us a chance for an extension of our additional.
Speaker Change: And a second period of 50 50 year bulk.
Speaker Change: I would say that will be in.
Speaker Change: The red negotiation with them.
Speaker Change: Government is.
Speaker Change: Not to do which could be the concessions.
Speaker Change: The conditions for that negotiation, but let me say that in terms of our contract.
Speaker Change: Very possible.
Speaker Change: In addition, our period of 50 years.
Speaker Change: That.
Speaker Change: And that is included in all in all the legislation and the contracts of the of the competition.
Speaker Change: Thank you and as a follow up I know you spoke a bit before on Turks and Caicos, maybe you could you talk about where you stand regarding other potential investments mainly in the Caribbean or some of the other regions. Thank you.
Speaker Change: For the moment that we said that we are.
Speaker Change: Analyzing different process some of them are not public yet, but we will still analyzing and for sure we will make easier and some we will have made it public at the moment that we made the decision to biopsy based on some of these some of these but I would say for the moment.
And different price none of them are public yet.
Speaker Change: That will be I mean the.
The most important buyer.
Speaker Change: As Amy on GAAP, we will always try to analyze different options that deep.
Speaker Change: While we have great value to our company. So that is a continuous effort on the company.
Speaker Change: Thank you I appreciate it.
Speaker Change: Our next.
<unk> will come from Pablo recall day with <unk>.
Speaker Change: Hi, Good morning, I have two questions. The first one I don't know if you have already answered. It is on the Capex guidance, just trying to double check that that $13 billion guide. It you have already deployed a corporate type billion related to the MVP capex.
Speaker Change: And the other one it's on the second installment of the implementation do you think it's fair to assume something around September.
Speaker Change: You can accelerate the second implementation.
Speaker Change: Okay.
Speaker Change: Hi, Pablo this is Lisa so yes, we have some in.
Speaker Change: So on the Asian business already made basically the acquisition of the land in Guadalajara airports, but we have a lot of things to do.
Speaker Change: With that we have.
Speaker Change: More than 42 billion pesos.
Speaker Change: James.
Speaker Change: Of 2022.
Speaker Change: The current peso will be more than that we are speaking to.
Speaker Change: To deploy around 50 52 billion pesos during the following five years. So we will have a very strong is on capex. So we release and try to split.
Speaker Change: The tougher type of investment.
Speaker Change: The way that we are trying to be more clear, while our four MVP, what our firm for commercial purposes, where our Jamaica and also the continued to be of the opinion of building in peripheral ISR, which is why.
Speaker Change: We have a waiver from the authority to concur.
Speaker Change: Concluding the forward two years. So in general terms, we tried to split it in to be basically more fleet on that but you are correct. So there are similar in Brazil that we already made.
Speaker Change: And regarding the second question and I will take it.
Speaker Change: The second tranche of the tariff increase.
Speaker Change: It will depend on the trends of traffic.
Speaker Change: I would say that we will follow.
Speaker Change: We closed the trends of the profit, but our our main plan or our original plan will be to change it from January of the coming on the coming year.
Speaker Change: And the last one of these changes.
Speaker Change: The myth I will say some moment on this summer of 'twenty sick with IV, our fulfillment of 100% off of.
The maximum tariff at the end of 2026.
Speaker Change: Perfect. So just double checking and 100% maximum tariffs by December 2026.
Speaker Change: Basically yes.
Speaker Change: Now correct perfect and that was very clear, thanks, I will as well.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: And we will move next to Anton Morton Cotter with GBM.
Speaker Change: Hi, guys. Thank you for taking my question I was just a quick one to clarify the 15% increase you mentioned is in a real time horizon.
Speaker Change: He is not real term says no Moreno.
Speaker Change: Okay, Let me now over the current products.
Speaker Change: Okay. Thank you.
Alan Macias: And we'll move next to Alan Macias with Bank of America.
Speaker Change: Yes.
Alan Macias: Hi, Good morning. Thank you for the call just two questions first if you could provide GDP growth assumption for your traffic guidance.
Speaker Change: The second question.
Speaker Change: Is on Gap's total EBITA margin.
Speaker Change: Is it expansion is limited by the consolidation of the cargo business.
Speaker Change: We would be expecting a higher expansion.
Speaker Change: Due to the higher traffic in Paris that you are guiding thank you.
Speaker Change: Thank you outlined in terms of the GDP growth, we are assuming for one one to one 3% of increase from GDP for <unk> for the top.
Speaker Change: Yes.
Speaker Change: And in France.
Speaker Change: This is <unk>.
Speaker Change: This is strong and so while we don't believe we'll be in that range will be very complicated to see the previews years with us.
Speaker Change: This margin because.
Speaker Change: The fixation from tight demand, we're seeing from the consumer should be is very relevant probably when we have 100% of the maximum studies implemented early we could see 1% more than we are.
Speaker Change: The planning for this year, but it is complicated.
Speaker Change: The cargo facility another a good frame, maybe the margin close to 55% to 60.
Speaker Change: In the future, but it's not significant.
Speaker Change: It's around 5% of the total revenues, but is the maintenance of patient comes from the consistency in Mexico.
Speaker Change: Yes.
Speaker Change: Thank you understood. Thank you.
Speaker Change: And as a reminder, if you'd like to ask a question. Please press star one at this time.
Speaker Change: And our next question will come from Jeremy Mendez with J P. Morgan.
Jeremy Mendez: Hi, <unk>. Thanks for taking my question a quick one on Mexico City Airport. There was some news on the Goldman potentially increasing the number of our slots being operating on the airport.
Speaker Change: So any views on the likelihood and timing for each Jonathan Thank you.
Jeremy Mendez: Yeah.
Jeremy Mendez: Thank you Jeremy.
Jeremy Mendez: Derek I would say.
Speaker Change: Some public information out there that the Mexican authority or the government is.
Jeremy Mendez: Pretending to increase the capacity of.
Speaker Change: Of the Mexico City Airport.
Speaker Change: <unk>.
I think that is a good news for for all the environment of of airports in Mexico at the end of the day is the biggest airport in Mexico, So additional capacity or.
Speaker Change: As far as what's for Mexico City always a converted in the profitable additional operations on more efficient turnarounds for dental and calibrate in Mexico, CD that gave us a ton for get some additional turnarounds in our airports. So.
Speaker Change: I would say for the industry and the whole could be a good news to have the increase in capacity of Mexico City Airport.
Speaker Change: Okay.
Speaker Change: Great. Thanks.
Speaker Change: Okay.
Speaker Change: Once again, if you'd like to ask a question. Please signal by pressing star one at this time.
Speaker Change: Well, we have some questions from the webcast.
Speaker Change: The first one is from <unk> <unk> from a cap and he's asking regarding the <unk> growth guidance.
Speaker Change: As mentioned in therefore acquire <unk> call that they are expecting to have 30 aircraft grounded during claims any facts, how will impact our traffic guidance.
Speaker Change: There will not be impacting our guidance.
Speaker Change: The guidance already consider that.
Speaker Change: The number of ground.
Speaker Change: Thanks for Herbalife.
Speaker Change: And the second question I'm from Exxon as well what is the timeline for <unk> definitely a terminal to be finished.
Speaker Change: December 2026.
Speaker Change: Perfect.
Speaker Change: And we have and then last one is from Bernardo multi cap from Santander.
Speaker Change: If I'm, making direct hit there sorry, I didn't manage to hear well is a 15% tariff increase real R&M and how does it include inflation and discount with ourselves.
Speaker Change: It will be 15% nominal.
For the for the guidance that we have on December of 2004, I would say.
Speaker Change: Let's say that in the middle.
Speaker Change: A simple way.
Speaker Change: <unk> that we are there specific tires that we are applying it.
Speaker Change: Right now our Revpar will increase 15%.
Speaker Change: From March one.
Perfect. Thank you Mark out there is no further questions on the webcast.
Speaker Change: Thank you and there are no further questions over the phone either I'd now like to turn the conference back to our presenters for closing remarks.
Speaker Change: Okay.
Speaker Change: Thank you again, everyone for joining us today at our third quarter results conference.
Speaker Change: On <unk>, we wish you a great day.
Speaker Change: Yeah.
Speaker Change: Thank you. This does conclude <unk> conference call. Thank you for your participation you may disconnect.