Central North Airport Group (GACN/OMA) — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2020. The filing is an annual Form 20-F, not a standalone fourth-quarter report. Financial statements are prepared under IFRS and amounts are primarily in thousands of Mexican pesos unless otherwise stated.
Business context
GACN operates, maintains and develops 13 airports in central and northern Mexico under 50-year concessions beginning November 1, 1998. The business is primarily driven by passenger traffic and regulated aeronautical services, supplemented by commercial activities, cargo logistics, hotels and industrial real estate. ADSs and Series B shares trade under OMAB.
Key financial and operating metrics
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Total revenue | Ps.5,367,466 | Ps.8,527,101 | -37.1% |
| Aeronautical revenue | Ps.2,942,558 | Ps.5,752,662 | -48.8% |
| Non-aeronautical revenue | Ps.1,171,039 | Ps.1,819,605 | -35.6% |
| Construction-service revenue | Ps.1,253,869 | Ps.954,834 | +31.3% |
| Operating income | Ps.1,721,468 | Ps.4,855,306 | -64.5% |
| Operating margin | 32.1% | 56.9% | -24.8 points |
| Net income | Ps.1,097,879 | Ps.3,227,434 | -66.0% |
| Net margin | 20.5% | 37.8% | -17.3 points |
| Operating cash flow | Ps.1,303,478 | Ps.3,716,524 | -64.9% |
| Capital expenditures | Ps.1,401,483 | Ps.1,048,924 | +33.6% |
| Total indebtedness | Ps.4,510,388 | Ps.4,543,609 | -0.7% |
| Cash and cash equivalents | Ps.2,958,804 | Ps.3,429,873 | -13.7% |
Airports handled 11.1 million terminal passengers, down 52.3% from 23.2 million in 2019. Domestic traffic fell 51.6% and international traffic fell 56.9%. Total workload units declined 50.3%. Passenger traffic fell 92.8% in April and 93.5% in May year over year, then improved to a 41.5% decline in December.
Aeronautical revenue per workload unit increased 3.0% to Ps.245.3. Non-aeronautical revenue per terminal passenger increased 34.8% to Ps.105.9 because minimum guaranteed rents reduced the sensitivity of certain commercial contracts to passenger volumes.
Cash used in investing activities was Ps.1,324,430 thousand, while financing activities used Ps.528,888 thousand. Financing cash outflows included Ps.320,866 thousand of interest and Ps.150,000 thousand of share repurchases. No dividend was paid in 2020.
Material changes versus the prior comparable period
- COVID-19 caused a sharp reduction in passenger traffic, airline capacity, commercial activity and hotel occupancy.
- Operating costs declined only 0.7% overall, reflecting the largely fixed cost structure. Cost-of-services expense fell 19.7%, while the major maintenance provision increased 34.3% to Ps.392,531 thousand.
- Cost reductions included temporary terminal-area closures, lower electricity and maintenance spending, deferral of selected maintenance, discounts and payment extensions for customers, and a headcount reduction of approximately 100 positions. Total employees declined 13.5% to approximately 1,003.
- Hotel revenue declined 56.8% at the Terminal 2 NH Collection Hotel and 68.5% at the Hilton Garden Inn. Both hotels recorded operating losses in 2020; the Hilton Garden Inn was closed from April 6 to July 6, 2020.
- OMA Carga revenue declined 5.9%, while industrial park revenue increased 34.5% to Ps.56,454 thousand.
- The doubtful-account allowance increased 231% to Ps.20.8 million, primarily relating to commercial tenants.
- Net interest expense increased 50.7% to Ps.308,610 thousand. The company recorded a net foreign-exchange gain of Ps.79,522 thousand versus a Ps.50,878 thousand loss in 2019, mainly due to the peso’s depreciation and U.S.-dollar cash balances.
- SETA, controlled by Fintech, acquired its interest in 2020 and held 14.7% of total capital at the filing date, including 12.8% Series BB shares with special governance and veto rights.
Debt, liquidity and capital commitments
At December 31, 2020, current liabilities were Ps.4,225,565 thousand and non-current liabilities were Ps.3,139,768 thousand. Current long-term debt was Ps.3,013,502 thousand, primarily reflecting the Ps.3,000,000 thousand notes maturing in 2021; total debt before financing commissions was Ps.4,513,503 thousand. Approximately 99% of long-term debt carried fixed rates and approximately 1% carried variable rates.
The company reported Ps.650,000 thousand of unused short-term credit lines and stated that it remained current on debt obligations, had not used payment deferrals or forbearance, and did not access revolving credit or capital markets to address pandemic liquidity needs. Management concluded that liquidity and cash generation supported going-concern status.
Approved 2021–2025 Master Development Programs require Ps.12,586,901 thousand of investments, including Ps.2,565,502 thousand in 2021. The company expects to fund obligations through operating cash flow and additional debt as needed.
Subsequent to year-end, the company issued Ps.1,000,000 thousand of five-year variable-rate green notes and Ps.2,500,000 thousand of seven-year fixed-rate notes on April 16, 2021. Proceeds were used in part to repay the Ps.3,000,000 thousand notes due in 2021 and to finance eligible capital investments.
Guidance, outlook, commentary and risks
- Management expects COVID-19 to continue to severely affect air travel demand and company results during 2021, but does not foresee a business interruption or cancellation of airport operations.
- The company expects recovery in passenger demand in 2021 and subsequent years, but provides no quantified revenue, earnings or traffic guidance.
- Key uncertainties include vaccination effectiveness, new virus variants, testing and travel requirements, border restrictions, airline solvency and route reductions.
- Aeroméxico and affiliates, representing approximately 20.3% of 2020 passenger traffic, entered Chapter 11 proceedings but continued operating. Interjet, representing approximately 5.6% to 5.7% of traffic, stopped operating at the airports in December 2020.
- Revenue concentration remains significant: approximately 80.6% of aeronautical plus non-aeronautical revenue came from eight airports, and Monterrey represented 42.7% of that revenue measure.
- Regulated aeronautical services represented 54.8% of total revenue and 71.5% of aeronautical plus non-aeronautical revenue in 2020. Maximum rates decline by a 0.70% annual efficiency factor during the current regulatory period.
- Potential risks include concession revocation, failure to meet investment commitments, maximum-rate penalties, property-tax claims, regulatory changes, peso volatility, interest-rate benchmark changes, cybersecurity, labor disputes, natural disasters and limited business-interruption insurance.
- Pending matters include land-ownership disputes, municipal property-tax claims and an Acapulco tax credit. Management believes the contingencies are unlikely to have a material adverse effect and generally recorded no provisions, except for the Acapulco tax claim for which a provision was recorded.
- COVID-19 was an impairment indicator, but management’s impairment testing concluded that no impairment charge was required for airport concessions or the hotels.
Most important facts for investors to verify
- Passenger-volume recovery by month, airport and domestic versus international traffic during 2021 and later periods.
- Liquidity after the April 2021 debt refinancing, including cash balances, debt maturities, interest costs and covenant compliance.
- Actual progress and funding requirements for the Ps.12.6 billion 2021–2025 Master Development Programs.
- Exposure to Aeroméxico, Interjet and other airline customers, including receivable collections and credit-loss reserves.
- Whether minimum guaranteed commercial rents remain collectible as tenant financial conditions evolve.
- Impact of the 2021 debt issuance, variable-rate exposure and the transition away from LIBOR or other benchmark rates.
- Status and potential financial exposure of property-tax, land-ownership and Acapulco tax proceedings.
- Terms and implementation of the approved dividend of up to Ps.2,000 million authorized in April 2021.
- Continuing special rights of SETA and any potential Fintech tender offer, which had not commenced as of April 22, 2021.