Grupo Aeroportuario del Sureste SAB CV (NYSE:ASR), or ASUR, delivered another consecutive quarter of passenger traffic growth, due primarily to its concession to operate the Cancun airport in Mexico. Driving that growth was the recently completed expansion of that airport's Terminal 3, which not only increased the terminal's annual capacity from 6 million to 10 million passengers, but added in several new commercial revenue generators. Those two factors proved to be a powerful combination, which propelled ASUR's earnings this quarter.

ASUR's results: The raw numbers


Q1 2017

Q1 2016

Year-Over-Year Change

Total passenger traffic

7.8 million

7.1 million


Total commercial revenue per passenger




Earnings per share




Data source: Grupo Aeroportuario del Sureste, S.A.B. de C.V.

Close-up of Cancun on a map.

Image source: Getty Images.

What happened with ASUR this quarter? 

The Cancun capacity expansion is paying big dividends:

  • Domestic traffic continues to grow at all but two of the company's airports, with Cozumel and Minatitlan once again the only weak spots. That said, Cancun drove the bulk of the passenger gains again this quarter. Overall, traffic at that airport was up 15.2% to 1.5 million passengers, which helped propel domestic traffic up 12% to 3.1 million passengers.
  • Cancun, meanwhile, remains the primary driver of international passenger traffic growth. Thanks to the capacity expansion of Terminal 3, Cancun's international traffic rose 6.4% to 4.4 million passengers, which was 93% of the company's international traffic.
  • ASUR's primarily fixed-cost operating model enables the company to leverage this traffic growth and accelerate profitability because it spreads costs across more passengers as it grows traffic. Because of that, the company's adjusted operating margin rose to 68.7% last quarter, up from 66.5% in the year-ago quarter. One of the drivers of this growth was an 18.5% increase in total commercial revenue per passenger, which was more than double the rise in traffic.

What's driving this growth?

ASUR's expansions have not only increased traffic, it also fueled an impressive jump in commercial revenue, which surged 28.3% over the past year. Driving this growth is the addition of new retail and other commercial space across its airports. In Cancun, for example, the company added nine new areas over the past year, including seven retail locations. These new locations helped propel a 19% year-over-year increase in revenue from its retail operations. Meanwhile, the company opened four duty-free locations across its airports, which drove 37% growth in duty-free revenue.

Looking forward 

ASUR still has several expansion projects underway. The biggest is the construction of Terminal 4 at Cancun, with the first phase expected to be open by the end of this year. Once it finishes all phases early next decade, that terminal should boost the airport's capacity by 9 million passengers.

Meanwhile, the company recently announced the acquisition of a controlling interest in two airport operators in Colombia. ASUR will pay $262 million for the companies, which combine to operate a dozen airports in the South American country. Those airports served more than 15 million passengers last year, and the operators hold long-term concessions to continue running those airports until at least 2032. ASUR plans to pay for the transactions with cash on hand and new financings, so the deal should provide an immediate boost to earnings.

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