Business Context and Reporting Period
Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.), trading as OMA (NASDAQ: OMAB).
Reporting Period: Second Quarter 2020 (ended June 30, 2020).
Context: OMA operates 13 international airports in central and northern Mexico. The quarter was significantly impacted by the COVID-19 health emergency, resulting in government-mandated suspensions of non-essential activities and a drastic reduction in airline seat supply and travel demand.
Key Financial Metrics
| Metric | 2Q20 Value | Notes |
|---|---|---|
| Passenger Traffic | 583,000 | Decreased 90.2% year-over-year. |
| Operating Loss | Ps. 150 million | Operating margin of -23.6%. |
| Adjusted EBITDA | Ps. 25 million | Adjusted EBITDA margin of 7.3%. |
| Net Loss | Ps. 181 million | Loss per share: Ps. 0.46; ADS loss: US $0.16. |
| Operating Cash Flow | (Ps. 414 million) | Cash used, compared to Ps. 614 million generated in 2Q19. |
| Cash Balance | Ps. 3,146 million | As of June 30, 2020 (decreased Ps. 992 million during the quarter). |
| Capital Investments | Ps. 376 million | Includes MDP improvements, major maintenance, and strategic investments. |
Material Changes vs. Prior Period
- Revenue Decline: Aeronautical revenues fell 89.7% and non-aeronautical revenues fell 57.5%. Commercial revenues dropped 57.8%, driven by an 88.6% decline in parking and significant drops in restaurants, car rentals, and retail.
- Traffic Collapse: Total passenger traffic dropped 90.2%. Domestic traffic fell 89.7% and international traffic fell 94.8%. Seat supply decreased 85.0% due to route suspensions.
- Cost Reductions: Total operating costs and expenses decreased 11.9%, aided by lower maintenance, subcontracted services, and electricity costs. The airport concession tax decreased 79.6% due to lower revenues.
- Hotel Operations: The NH Collection Terminal 2 Hotel occupancy dropped 70.5 percentage points to 12.9%. The Hilton Garden Inn suspended operations from April 6 to July 6, 2020.
- Cargo: OMA Carga revenues decreased 23.1% and total tonnage handled fell 40.6% to 4,782 metric tons.
Outlook, Risks, and Management Commentary
- Recovery Signs: Management noted that activity began to recover in June and improved in early July. Passenger traffic from July 1 to July 20 decreased 73.3% year-over-year, a significant improvement compared to declines of 92.8% (April), 93.5% (May), and 84.6% (June).
- Regulatory Environment: Operations are subject to Mexico's epidemiological risk traffic light system, which dictates authorized activities by region. Health security protocols have been implemented across all airports.
- Subsequent Events: On July 7, 2020, shareholders approved the cancellation of 3,659,417 Series "B" shares, leaving 390,111,556 shares outstanding. The Hilton Garden Inn restarted operations on July 6, 2020.
- Risks: The filing highlights risks related to the unpredictability of the pandemic, government restrictions, and airline seat supply. Forward-looking statements are subject to uncertainties that could cause actual results to differ materially.
Investor Verification Checklist
- Verify the sustainability of the passenger traffic recovery trend observed in early July 2020.
- Monitor the impact of the Mexican government's regional epidemiological traffic light system on specific airport operations.
- Assess the liquidity position given the shift from positive to negative operating cash flow (Ps. 414 million used).
- Review the timeline for full resumption of international routes and airline seat capacity.
- Confirm the status of the Hilton Garden Inn and NH Collection Hotel occupancy rates post-reopening.