GRUPO AEROPORTUARIO DEL CENTRO NORTE, S.A.B. DE C.V. (OMAB) Q4 2020 Earnings Call Transcript

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GRUPO AEROPORTUARIO DEL CENTRO NORTE, S.A.B. DE C.V. (OMAB -0.70%)
Q4 2020 Earnings Call
Feb 16, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, my name is Emma, and I will be your conference operator. All lines have been placed on mute to prevent any background noise. This is OMA's Fourth Quarter 2020 Conference Call. There will be a question-and-answer session, after the speakers' opening remarks, and instructions will be given at that time.

If you did not receive the report, please contact OMA's IR department, and they will email it to you. Please note that this call is for investors and analysts only, and questions from the media will not be taken, nor should the call be reported on.

I would now like to turn the call over to Emmanuel Camacho, OMA's Investor Relations Officer.

Luis Emmanuel Camacho Thierry -- Investor Relations Officer

Thank you, Emma. Good morning, everyone. Thank you for standing by, and welcome to OMA's fourth quarter 2020 earnings conference call. Ricardo Duenas, OMA's CEO; and Ruffo Perez Pliego, CFO, will be joining this morning and will discuss OMA's fourth quarter 2020 results.

Please be reminded that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on current management expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our control, which include the impact of COVID-19.

I will now turn the call over to Ricardo Duenas.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you, Emmanuel. Good morning to everyone, and thank you for joining us today. I hope that all of you and your families are safe and healthy. Today, we look back at an abnormal year, 2020, in which COVID-19 impacted significantly our traffic levels and result of operations.

In 2020, we served 11 million passengers in all our airports. This is equivalent to the number of passengers handled in our Monterrey airport alone during 2019. I am proud to say that our actions taken to mitigate the impact of COVID-19 resulted in resilient and remarkable results for the year, even with half the passengers we were used to handle. In order to cope with the pandemic effects in 2020, we implemented initiatives to optimize the utilization of our terminal buildings to be temporary partial closures, as well as to reduce cleaning and security costs and electricity consumption.

We also reduced headcount across various levels of the organization. As a result, even with passenger traffic declined 52%, we reached an adjusted EBITDA of MXN2.5 billion, implying a margin of 62%. Additionally, during the year, we implemented a number of standards regarding safe travel for the benefit of our employees, customers and passengers in order to increase our confidence when visiting our airports. All of our airports were granted the safe travels certification given by the World Travel and Tourism Council, and our Monterrey airport was granted the airport health accreditation from Airports Council International.

Turning to our fourth quarter, while our overall results were stronger than during the second and third quarters, we started experiencing the slowdown in our passenger recovery in December. We attribute this to the uncertainties related to the second week of contagious from COVID-19 and the increased health alert levels in most regions of the country toward the end of 2020 and early 2021, including Nuevo Leon [Phonetic] and Mexico City. Beginning in February, the level of contagious had begun to recede, and the health alert levels have been reduced accordingly. Currently, of the nine states where OMA has operations, one state is in red status, four states are in orange, and four are in yellow.

We expect passenger traffic to resume its recovery path in the following months, as contagion levels decrease and the health alert levels in the states where we operate, and those of our main destinations allow for an increased mobility and economic activity. At the end of December, a total of 140 origin destination routes were in operation, compared to 117 at the end of September 2020, and 183 routes in operation at the end of December 2019. Today, this number is 137 routes.

We continue to apply the health and safety protocols that were implemented in previous quarters and maintain a class -- a close continued dialog with aeronautical and health authorities. In addition, in response to the new measures implemented by United States' January 26, in which all inbound passengers are required to provide a negative test for COVID-19, we have installed modules for antigen test application at the 11 airports in which international flights operate.

On the cost and expense side, our actions taken in previous quarters resulted in an important decline in cost of airport services, and general and administrative expenses of 18%. At December 31, our cash position was MXN3 billion, which allow us to meet our investment and operating obligations for 2021, along with our cash generated from operations. Additionally, we started the process for the refinancing of our bond maturing in June 2021. The refinancing is expected through the issuance of a new bond in the local markets as it would. The terms and conditions are still being worked out, and we expect the issuance to close toward the end of March or beginning of April.

We have already filed with the National Banking and Securities Commission, our request for authorization of a new support program. As part of this process, the CNBV require us to made some minor non-material modifications to prior annual and quarterly information. This minor modifications are expected to be filed later today, and no changes to previously reported financial information were made as a result of this process. Most of those changes were informed, but no substance.

Turning to our fourth quarter operational results. Total passenger traffic reached 3.3 million in the quarter, resulting in a decline of 44% versus the fourth quarter of 2019, and a sequential increase of 43% when compared to the third quarter of 2020. The number of seats offered by airlines in our airports in the fourth quarter grew 38% relative to the third quarter. The best performing airports, which had the lowest decline in passenger in percentage terms, compared to 4Q '19 were Mazatlan, Culiacan, Reynosa, San Luis Potosi and Zacatecas. Conversely, from a route perspective, the routes that experienced the greatest negative impact of total passenger traffic during the quarter due to the reduction of frequencies or suspension of flights were Monterrey, Chihuahua and Acapulco under Mexico City route.

Adjusted EBITDA reached MXN853 million [Phonetic] in the quarter with a margin of 69.6%, reflecting our efforts to control and optimize our cost and expense structure. On the commercial front, revenues decreased 38% with the largest impact on parking, restaurants and retail. Occupancy rate for commercial space in our terminal was 90% at the end of the quarter. During the quarter, we continued with our support program of our tenants through which we offered discounts based on passenger traffic performance. The program was applied from July to December 2020.

Diversification revenues decreased 33%, mainly due to the lower revenues from hotel services. During the fourth quarter of 2020, the occupancy rate at our Terminal 2 NH Collection Hotel was 42%, while the Hilton Garden Inn Hotel at the Monterrey airport had an occupancy rate of 25% during the quarter. OMA Carga delivered a solid performance during the fourth quarter with an increase in tonnage handled of 4%, which resulted in a revenue increase of 6%. Air import cargo operations contributed most to this growth in the quarter.

Total investments in the quarter, including MDP investments, major maintenance and strategic investments, were MXN472 million. Some of our major projects under way include the expansion and remodeling of the Monterrey airport Terminal A, the expansion and remodeling of the Tampico terminal building, the modernization of the Zihuatanejo terminal building, and works on runways, taxiways, and aviation platforms in several airports. I will also like to announce that we're about to open the Reynosa terminal next week.

Finally, I would like to highlight that we received approval from the Federal Civil Aviation Agency of our Master Development Program for the '21-'25 period. The expected investment level for the next five years is approximately MXN12 billion, expressed in pesos of December 2019. Our new investment program includes important improvements and capacity increases in our largest airports in terms of passenger traffic contribution. Some projects worth mentioning include, Monterrey Terminal A project, which will increase its annual capacity by 39% to 16.3 million passengers in 2025; Culiacan terminal expansion and remodeling, which will result in an increase in annual passenger capacity of 74% to 3.3 million passengers by 2024; Ciudad Juarez terminal expansion and remodeling with an increase in annual passenger capacity of 113% to 1.9 million passengers by 2022.

I would like now to turn the call over to Ruffo Perez Pliego, who will discuss our financial highlights for the quarter.

Ruffo Perez Pliego -- Chief Financial Officer

Thank you, Ricardo. Good morning, everyone. I will briefly review our financial results, and then we will open the call for our questions.

Turning to OMA's fourth quarter financial results. Aeronautical revenues decreased 36.3% driven by the 44.5% decrease in passenger traffic. Non-aero revenues decreased 35.1% with commercial revenues having the largest impacts. Commercial revenues decreased 37.7%, and the categories with the largest impact were parking, restaurants and retail. Parking revenues declined 53%. The decrease is mostly driven by slower traffic recovery in the Monterrey airport relative to the average of other airports. Restaurants and retail decreased 37.2% and 38.8% respectively, due to a decrease in the fixed rents and participation on sales, as well as some discounts that were applied during the quarter.

Diversification activities decreased 33.3%, mostly driven by lower revenues from the hotel services. Total aeronautical and non-aeronautical revenues were MXN1,226 million. Construction revenue increased 13.9%. As you know, this is a non-cash item that is required under applicable accounting standards, which is equal to construction cost of improvements to concessioned assets, so it has no impact on earnings.

The cost of airport services and G&A expense decreased 17.7%. During the quarter, our payroll decreased 12.5% as a result of reduction of headcount during the third quarter. We recorded savings on electricity and subcontracted services, as we have maintained a strict cost control despite the sequential increase in the level of passengers. Additionally, minor maintenance cost decreased 18.6% as a consequence of deferrals of non-essential works. As a result, OMA's fourth quarter adjusted EBITDA was MXN853 million and the adjusted EBITDA margin was 69.6%.

During the quarter, we recorded an increase in the major maintenance provision of 55% to MXN208 million. This reflects the approval of the major maintenance projects in the new MDP that was approved by the aeronautical authorities in November. The recording of this provision also had an impact in deferred taxes, which reduced the effective tax rate for the quarter. The effective tax rate for future quarters is expected to go back to normalized levels of around 30%.

During the quarter, our financing expense was MXN270 million, and consolidated net income was MXN239 million. The cash generating from operating activities in the quarter amounted to MXN602 million pesos, mainly due to a lower operational results. Cash at the end of the quarter stood at MXN3 billion.

This concludes our prepared remarks. Emma, please open the call for questions.

Questions and Answers:

Operator

Thank you. We will now conduct a Q&A session. [Operator Instructions] Our first question comes from the line of Alejandro Zamacona. Please state your company name and ask your question. Thank you.

Alejandro Zamacona -- Credit Suisse -- Analyst

Thank you. This is Alejandro Zamacona from Credit Suisse. Ricardo, Ruffo, Emmanuel, thank you for the call. My first question is on the commercial business and the discounts we have been seeing in the MAX [Phonetic] contracts. So what can we expect for 2021? Is it fair to say, you will continue to run these kind of discounts to simulate demand [Phonetic] based traffic decline? And my second question is on the airport fees. We understand that since last last week, you're now charging a failure fees. So relative to the maximum tariffs, how close you are now with these recent increase? And is there is some additional room to increase a fees in some airports? Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you, Alejandro, for your question. For the first point, we don't have a policy for this year. We will see how things evolve with traffic. So far the only discounts that we'll be granting to our tenants were the ones we have mentioned in the past from July to December, which was variable on passenger traffic. But we -- so far we haven't planned to extend that for the first quarter of this year. But as the epidemic evolves, we will evaluate. And for airport fees, our plan has been to make the pass through to the maximum tariff in one year. You're correct, we implemented the first increase a week ago, the beginning of this month. And we will implement the second increase somewhere around January next year to reach the 100% maximum rate.

Alejandro Zamacona -- Credit Suisse -- Analyst

Well, could we expect another similar increase in airport fees, similar to what we saw last week?

Ricardo Duenas Espriu -- Chief Executive Officer

Not for this year. You will experience it probably somewhere in January next year.

Alejandro Zamacona -- Credit Suisse -- Analyst

Okay. The increase for next year would be similar to increase...?

Ricardo Duenas Espriu -- Chief Executive Officer

Yes. Yes, it will be around, yeah -- half of the increase is this year, half of the increase will be in January, one year pass-through.

Alejandro Zamacona -- Credit Suisse -- Analyst

That applies speaking over, I mean, general terms for all airports, right?

Ricardo Duenas Espriu -- Chief Executive Officer

Correct.

Alejandro Zamacona -- Credit Suisse -- Analyst

Okay. Thank you.

Ruffo Perez Pliego -- Chief Financial Officer

Thank you, Alejandro.

Operator

Thank you. Our next question comes from Mauricio Martinez. Please state your company name and ask your question.

Mauricio Martinez -- GBM -- Analyst

Hi, good morning. This is Mauricio from GBM. My question -- I have two questions. Thanks, firstly, for taking my question. My first question is regarding the debt refinancing. I would like to know if you expect the current interest rate levels to aid your financial costs comparing with the current debt that -- the bond that is maturing in June. And if you can give us any color on the -- which level should be comfortable for you in terms of net debt to EBITDA going forward, that would be my first question. And the second question is on the cost reductions that we saw this quarter. We saw impressive cost cutting results. How sustainable do you expect these cost reductions to be in the next quarters? And as the traffic level starts to recover, do you expect this cost levels to maintain? That would be my two questions. Thank you.

Ruffo Perez Pliego -- Chief Financial Officer

Thank you, Mauricio. I'll answer the first part. For the bond issuance, the specific terms of the bond are still being analyzed. But we would expect an issuance of about MXN3,500 million, of which MXN3,000 million would be used to refinance the bond, and MXN500 million to fund the additional capex under the MDP. We expect interest rates to be very similar to the ones we currently have.

Ricardo Duenas Espriu -- Chief Executive Officer

And regarding the second question on sustainability of our cost reduction measures, in the first quarter of this year we will be having annual reviews on some of our contracts such as cleaning, security and labor contracts. So certainly, you should expect at least an inflationary increase in many of those line items. However, so in terms of headcount, we believe the level of headcounts should be maintained irrespective of the traffic recovery expected in the -- in 2021 versus 2020. And regarding electricity, certainly, in terms of gigawatt consumption last year on an annual basis, our consumption was reduced around 33% year-on-year relative to 2029 -- 2019. Some of that consumption will be lost when traffic recovers. But we have made a lot of investments in substituting, for example, LED lights in many of our airports, in runways, and in terminal lighting. So we should get back to the 2019 levels anytime soon.

Mauricio Martinez -- GBM -- Analyst

Wonderful. Thanks for you -- I think it was very clear, thanks.

Operator

Thank you. Our next question comes from Rodolfo Ramos Sergios [Phonetic]. Please state your company name and ask your question. Thank you.

Rodolfo Ramos -- Bradesco BBI -- Analyst

Hi, good morning, gentlemen. My name is Rodolfo Ramos from Bradesco BBI. Most of my questions have been answered to this point, but just maybe if you can elaborate a little bit on the -- on this restatement or these modifications to previous statements, that would be very much appreciated. Thank you.

Ruffo Perez Pliego -- Chief Financial Officer

Sure. As Ricardo mentioned during the call, those were non-foreign [Phonetic] substantial changes, specifically to the [Indecipherable] files that have been filed with the CNBV and the Bolsa, and many other changes, if not most, referred to making cross references to certain sections of the same file. So it's basically that. There is no change in any financial numbers, and certainly there is no substantial changes at all.

Rodolfo Ramos -- Bradesco BBI -- Analyst

Thank you and congratulations on the results.

Ruffo Perez Pliego -- Chief Financial Officer

Yeah. Thank you.

Operator

Our next question comes from Muria [Phonetic]. Please state your full name, and company name and ask your question. Thank you.

Muria -- Analyst

Hi, good morning. Do you do listen?

Ruffo Perez Pliego -- Chief Financial Officer

Yes.

Muria -- Analyst

Okay, thank you. I am actually Muria from [Indecipherable]. I have two questions. The first one is related to the tender offer from Fintech. Because I was reviewing the amendment filing to the Security Exchange Commission, and it says that even in our report some -- they [Indecipherable] they probably had comply all the regulatory elements in the first week or the last week of January or first week of February, if I correct. So I was wondering you can give us more color about, if it's still ongoing or it's going to be on hold? And the second one is regarding to, what are your expectations for passenger traffic recovery, not only for 2021, I mean, what are your expectations to be at the same level before the pandemic, because many analysts says that probably is going to take more time than we will expect. Thank you.

Ruffo Perez Pliego -- Chief Financial Officer

Thank you, Muria, for your question. Regarding the first part, the tender offer our information is the same that we reported on December. Our understanding is that they were going through the regulatory approvals. But if this goes through, we expect no relevant changes in OMA operations where decision may begin. Before the transaction, Fintech had in direct control of OMA through ICA and SETA. So the sale to SETA shares to Fintech is mainly an administrative matter, but the information we currently have is the one we mentioned in December.

Muria -- Analyst

Okay.

Ruffo Perez Pliego -- Chief Financial Officer

And for the second part...

Ricardo Duenas Espriu -- Chief Executive Officer

For this year, certainly, we experienced a slowdown in the recovery levels in January as already been reported. We do expect traffic to pick up toward the second half of the year once the health alert levels are further reduced and the vaccination program is fully rolled out. We expect traffic this year to be between 35% to 30% lower than 2019, and more longer-term vision is that we would expect traffic to reach 2019 levels toward the end of 2022, or beginning of 2023.

Muria -- Analyst

Okay. Thank you so much. It was really helpful.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Stephen Trent. Please state your company name, before asking your question. Thank you.

Stephen Trent -- Citi -- Analyst

Hi, good morning. This is Steve Trent from Citi. Can you hear me?

Ruffo Perez Pliego -- Chief Financial Officer

Yes, we can.

Stephen Trent -- Citi -- Analyst

Okay. Thanks very much guys. I was just curious if you could maybe provide some longer term color on what OMA might be thinking about outside investments? So it seems, for example, that airport in Tulum might or might not be coming out of nowhere again. And tenders here and there in the Caribbean Basin, in the past, you guys had maybe talked about minority stakes in some of these projects and just curious to get your thoughts going forward.

Ricardo Duenas Espriu -- Chief Executive Officer

Yes. Hi Trent, thank you for your question. No, for the Tulum airport, there is not much information. That's the information that we have. I mean our information is from the regular press, where the government has mentioned, they have the intention to build the Tulum airport that will have joint military and commercial operations. But that's what so far we know. It's not of interest of OMA to get involved in that airport. And I believe it's not the intention of the government to have private operators in that airport.

Stephen Trent -- Citi -- Analyst

And then more broadly in the Caribbean Basin or Central America, any interest at all or?

Ricardo Duenas Espriu -- Chief Executive Officer

Yes. We mentioned in the past, we were involved in the Barbados airport process. We are currently part of their pre-qualified bidders for the concession processes. However, the press has been delayed. And we understand it will resume after April this year.

Stephen Trent -- Citi -- Analyst

Okay, very helpful. Let me leave it there. Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you, Stephen.

Operator

Very much. [Operator Instructions] Our next question comes from the telephone line, ending 811. Please state your full name and your company name, before asking your question. Thank you. You may need to unmute yourself before asking your question. [Operator Instructions] Okay. We'll come back to the question from the phone line later. And we'll now take a question from Alan Macias. Alan, please state your company name and ask your question. Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

We can't hear you Alan.

Alan Macias -- Bank of America -- Analyst

Can you hear me now?

Ricardo Duenas Espriu -- Chief Executive Officer

Yes.

Alan Macias -- Bank of America -- Analyst

My question is quickly on business traffic. If you can tell us what percentage 2020 represented versus 2019? And what are you looking there in terms of recovery for the business traffic? Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

We don't have a specific figure of how much relative traffic change year-over-year. Certainly, we know that one of our most affected routes last year was the Mexico to Monterrey route, which is our main route in the OMA system. And the traffic in that route is primarily business related. We still see that the leisure destinations and some VFR markets, specifically like from our Culiacan airports are recovering faster than our Monterrey airport. We would expect the business traffic starts to recover more quickly toward the end of the year once the economic activity is ramped up in the country overall, and travel restrictions from international companies are lifted. We do know that a lot of corporates in the Monterrey that have operations in Monterrey are now taking place because of restrictions to corporate travel from the international companies. But once those companies lift those restrictions, we should see also a pickup in travel in Monterrey airport.

Alan Macias -- Bank of America -- Analyst

Thank you. And just last question, do you have a percentage of traffic coming from Canada? What percentage represents of your total traffic? Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Sure. In 2019, it was 0.9% of our total traffic. In 2020, it was 1.1% of our total consolidated traffic. However, for the airports of Zihuatanejo and Mazatlan, Canadian traffic represented about 15% and 9% respectively last year. So that is one of the reasons why the numbers reported from these two airports in January traffics were lower than expected because of the reduction of Canadian travel.

Alan Macias -- Bank of America -- Analyst

Great, thank you.

Operator

Thank you. Our next question comes from Gabriel Himelfarb. Please state your company name, before asking your question. Thank you.

Gabriel Himelfarb -- Scotiabank -- Analyst

Hi, thanks for the call. It's Gabriel from Scotiabank. Just a quick question. Have you seen or do you think that you might that either capacity coming from international carriers might be allocated into more frequent routes or even in new route origination? Thanks.

Ricardo Duenas Espriu -- Chief Executive Officer

I think at this time, carriers both international and domestic are working toward rebuilding their networks that were already in place prior to COVID. So we should expect to recover those first -- those routes that have been in operation prior to the pandemic, and afterwards new routes that were not in operation before the pandemic. That behavior is more applicable for international, as well as domestic carriers.

Gabriel Himelfarb -- Scotiabank -- Analyst

Okay, thanks.

Operator

Thank you. We will now return to the question from the phone line ending 811. Please state your full name, and company name before asking your question. [Operator Instructions]

Unidentified Participant

Hello.

Ricardo Duenas Espriu -- Chief Executive Officer

Yes, we hear you.

Unidentified Participant

Can you hear me?

Ricardo Duenas Espriu -- Chief Executive Officer

Yes, we can now.

Unidentified Participant

Okay. Just one quick question. Thinking that corporate passenger, that market can be reduced structurally going forward. Are you right now, thinking about any potential changes on your commercial strategy for Monterrey because you have perhaps less corporate passengers and more VFR? Or how should we think about non-aeronautical revenue per passenger in Monterrey by 2022 or 2023, if you have reduction in corporate travelers? Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you for the question. I think that's important to remember that most of the business travel of the Monterrey airport or in OMA in general is mostly industrial business related. We expect that kind of business traffic not have the same impact as other kind of business traffic. Monterrey for the near term has been focused on a big percentage for low cost carriers. We expect that trend -- and we expect that trend to continue. Ruffo, you have anything else to add there?

Ruffo Perez Pliego -- Chief Financial Officer

No, I think at this time is very speculative to try to assess the structural change if any in our passenger type, in Monterrey. But we will -- like Ricardo said about, our traffic being more industrial than purely corporate or consultant type of traffic. So that should recover as the economy picks up as well, and the benefits from the new TMAC agreements are also being felt more evidently.

Ricardo Duenas Espriu -- Chief Executive Officer

And if anything, most of the -- for the non-aero revenues, what I believe will have the most impact in the next few years, will be the new square footage for the new terminal. We mentioned before, we're building the new Terminal A, which will include a lot of new area for potential non-aeronautical revenue.

Unidentified Participant

Okay, thank you. And kind of a follow-up. How do you think like then your investment team in the hotels that you have in Monterrey and Mexico City, how do you think they will perform going forward because of this?

Ricardo Duenas Espriu -- Chief Executive Officer

We have seen the NH Hotel performing better than the Hilton Monterrey airport. Main reason is the broader diversified base of clients. In the case of the NH, you have crews, you have -- passengers are seeing over night for connecting flights. You -- it's in the middle of the city, so you also have some clients that are use the hotel as location for their visits to Mexico City. In the case of Monterrey, the main -- in 2019, the client base for the Hilton hotel was mostly International Hilton awards program clients. Since that settlement has declined significantly over the year, now the hotel is also looking for domestic type of travelers and groups. And we are in the process of marketing the services of the hotel to those new segments. So -- but in any case we would expect yet to see the NH to outperform the Hilton Garden this year in terms of occupancy.

Ruffo Perez Pliego -- Chief Financial Officer

And for new projects, we're constantly evaluating other airports to see if there is potential for a new airport. So far, we don't have any concrete project going forward.

Unidentified Participant

Okay. Perfect. Thank you very much.

Operator

Thank you. Our next question comes from Guilherme Mendes. Please state your company name and then go ahead with your question. Thank you.

Guilherme Mendes -- JPMorgan -- Analyst

Hi, gentlemen, good afternoon. This is Guilherme Mendes with JPMorgan. I have two questions. The first one, actually, is a follow-up. When you mentioned about the traffic recovery that you expect to be back to '19 levels by the end of 2022, or beginning 2023. Just wondering, I mean, how do you see the potential mix on your air traffic, meaning that if you could potentially see more leisure traffic when compared to the mix we had before the pandemic? And the second question is regarding your dividend policies. I recall that I think on the last call you mentioned that you'll be evaluating the dividend policy again by the beginning of 2021. Just want to double check if you have any updates on that? Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Well, in the case of the dividend policy, we still have -- are evaluating how the year is going to look like. But I mean we still do not have had our Board meetings that would be probably announced by late March, prior to the Annual Shareholder Meeting, which is expected to take place toward the end of April. And could you repeat, Guilherme, your question about the traffic recovery?

Guilherme Mendes -- JPMorgan -- Analyst

Yeah, sure. It's when mentioned about traffic to being back to 2019 levels by the end of 2022, I was just wondering, if -- how do you see the mix of the air traffic on your airports. If you could potentially see more VFR and leisure routes when compared to the pre-pandemic levels?

Ricardo Duenas Espriu -- Chief Executive Officer

So, of leisure, we only have three airports that are leisure, Acapulco, Zihuatanejo and Mazatlan. Certainly, we would expect strong recovery, especially in the next winter season. The one that starts December of this year, and then in April of next year for the Canadian and West Coast market in Zihuatanejo and Mazatlan. And we probably see the rate of growth in Culiacan performing better than the Monterrey, and Culiacn is primarily a VFR traffic. But given the size of our Monterrey airport, certainly, the recovery in absolute terms will have to be driven by business travel and domestic travel as well in our industrial airports such as, Monterrey, San Luis, Chihuahua, Juarez etc.

Ruffo Perez Pliego -- Chief Financial Officer

I think, once we returned to business as usual, I would expect the mix to be very similar to the one that we had pre-pandemic. I think what will be different is the path of recovery, some segments are recovering faster than others. For example, we know domestic travel is recovering faster than international, VFR and leisure is also recovering faster than business. But once we returned to business as usual, you should expect somewhere the similar mix that we had before.

Guilherme Mendes -- JPMorgan -- Analyst

No. That's very clear. Thank you.

Ricardo Duenas Espriu -- Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Ricardo Duenas for some closing remarks.

Ricardo Duenas Espriu -- Chief Executive Officer

I just want to thank all of you again for your participation in this call. Ruffo, Emmanuel and I are always available to answer your questions, and we hope to see you soon. Thank you and have a good day.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Luis Emmanuel Camacho Thierry -- Investor Relations Officer

Ricardo Duenas Espriu -- Chief Executive Officer

Ruffo Perez Pliego -- Chief Financial Officer

Alejandro Zamacona -- Credit Suisse -- Analyst

Mauricio Martinez -- GBM -- Analyst

Rodolfo Ramos -- Bradesco BBI -- Analyst

Muria -- Analyst

Stephen Trent -- Citi -- Analyst

Alan Macias -- Bank of America -- Analyst

Gabriel Himelfarb -- Scotiabank -- Analyst

Unidentified Participant

Guilherme Mendes -- JPMorgan -- Analyst

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