Pacific Airport Group (GAP) - Q3 2021 Financial Summary
Business Context and Reporting Period
This Form 6-K filing covers the consolidated results for the third quarter ended September 30, 2021 (3Q21), and the first nine months of 2021 (9M21). Pacific Airport Group (GAP) operates 14 airports across Mexico and Jamaica. The reporting period reflects a significant recovery in passenger traffic compared to the pandemic lows of 2020, though volumes remain below 2019 pre-pandemic levels. The company continues to navigate international travel restrictions, including recent reopenings of the Canadian and U.S. borders for vaccinated travelers.
Key Financial Metrics (3Q21)
- Revenue: Total revenues increased 72.5% year-over-year (YoY) to Ps. 5,292.8 million. Aeronautical services rose 117.2% to Ps. 3,316.2 million, and non-aeronautical services surged 133.6% to Ps. 1,037.4 million.
- Profitability: Operating income jumped 340.2% to Ps. 2,580.4 million. Net income increased 405.0% to Ps. 1,779.7 million. Comprehensive income attributable to controlling interest rose 502.1% to Ps. 1,968.9 million.
- EBITDA: EBITDA increased 183.4% to Ps. 3,098.4 million. The EBITDA margin (excluding IFRIC-12 effects) expanded to 71.3% from 55.6% in 3Q20.
- Cash Flow: Net cash provided by operating activities was Ps. 3,231.7 million, a 1,873.5% increase from 3Q20.
- Liquidity: Cash and cash equivalents stood at Ps. 10,650.8 million as of September 30, 2021, a 30.0% decrease from the prior year due to capital reductions and debt repayments.
- Debt: The company issued Ps. 2,500.0 million in long-term debt securities in October 2021. Long-term liabilities increased by Ps. 5,060.2 million compared to the prior year, driven by new bond issuances.
Material Changes vs. Prior Period
- Passenger Traffic: Total passengers increased 105.1% YoY to 11.73 million in 3Q21. However, this remains 1.1% below 3Q19 levels. International traffic grew 172.4% YoY but is still down 22.8% compared to 9M19.
- Cost Structure: Total operating costs rose 9.3% YoY to Ps. 2,712.4 million. This increase was driven by higher concession taxes (+100.6%) and technical assistance fees (+151.8%), partially offset by a decrease in IFRIC-12 related costs.
- Shareholder Returns: The company executed a capital reduction of Ps. 4,014.7 million and repurchased shares totaling Ps. 1,151.3 million during the quarter.
- Exchange Rate Impact: The appreciation of the Mexican peso against the U.S. dollar (from Ps. 22.10 in 3Q20 to Ps. 20.01 in 3Q21) partially offset revenue growth from Jamaican airports (Montego Bay and Kingston).
Outlook, Risks, and Management Commentary
- Recovery Trend: Management notes a "better-than-expected recovery" in passenger traffic despite ongoing international travel restrictions. New routes were opened in Mexico and the U.S. (Spirit Airlines to Puerto Vallarta).
- Operational Adjustments: The company is gradually increasing operational costs (maintenance, security, personnel) to match rising passenger volumes and improve the passenger experience. Discounts to commercial tenants are being phased out as traffic recovers.
- Risks: The filing highlights uncertainty regarding the duration of the pandemic, the availability of financing, and general credit conditions. The company cannot ensure that negative effects will continue to decrease or that economic conditions will improve.
- Asset Impairment: Management reviewed long-term assets and concluded that no significant deterioration is expected, with no business interruption or airport closures foreseen.
Investor Verification Checklist
- Verify the sustainability of the 105% YoY passenger growth given the 16.1% deficit compared to 2019 levels.
- Monitor the impact of the Mexican peso's appreciation on revenue from Jamaican operations (Montego Bay and Kingston).
- Assess the cash burn rate relative to the Ps. 10.65 billion cash balance following significant capital reductions and debt maturities.
- Review the phase-out of tenant discounts and its effect on non-aeronautical revenue margins in future quarters.
- Confirm the terms and interest rate exposure of the new Ps. 2.5 billion debt issuance completed in October 2021.