Grupo Aeroportuario del Pacífico Balances Growth and Headwinds

Grupo Aeroportuario Del Pacifico ((PAC)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Grupo Aeroportuario del Pacífico’s latest earnings call struck a cautiously upbeat tone, as management balanced solid profitability and diversification gains against clear volume and FX headwinds. Investors heard a story of expanding margins, stronger liquidity, and the early benefits of the CBX acquisition, even as weaker passenger traffic and specific market shocks tempered near‑term growth expectations.

Revenue and EBITDA Growth

Revenue excluding construction services rose 4.9% year on year in the second quarter of 2026, underscoring GAP’s ability to grow its core business despite softer traffic. EBITDA increased 8.4% to MXN 6.0 billion, lifting the margin by 230 basis points to 69.3% and highlighting tighter cost control and richer revenue mix.

Strong Non-Aeronautical Performance

Non‑aeronautical revenues jumped 23.9% year on year, with GAP-operated businesses up 17% even without CBX. Cargo and bonded warehouses grew 22%, advertising surged 58%, hotel operations rose 27%, convenience stores advanced 11%, and parking revenue climbed 9%, underscoring the importance of commercial streams.

Cross Border Xpress (CBX) Initial Contribution

The consolidation of Cross Border Xpress from May 1 is already visible in the numbers, with CBX generating MXN 168 million in revenue over May and June. The facility served more than 626,000 passengers in both directions, averaged about $42.8 in revenue per traveler, and delivered MXN 216 million in EBITDA in just two months.

Diversification and Commercial Momentum

Management emphasized ongoing expansion of directly operated commercial platforms and international technical assistance as key strategic pillars. Nineteen new routes launched during the quarter and additional frequencies came on stream in June, laying groundwork for future traffic recovery beyond the current demand softness.

Revised 2026 Financial Guidance (Upward on Profitability)

GAP nudged profitability expectations higher, now seeing aeronautical revenue up 1% to 4% and non‑aeronautical revenue advancing 21% to 24% for 2026. EBITDA is projected to rise 10% to 12%, with an EBITDA margin around 67% plus or minus one percentage point, signaling confidence in maintaining robust earnings.

Tariff Implementation Progress

The company reported that maximum tariff fulfillment reached about 90% in the first half of 2026, with management targeting roughly 95% by year‑end. Additional domestic passenger fee increases took effect July 1, including a 7% uplift on domestic seats in Cabos and Puerto Vallarta, supporting revenue per passenger.

Liquidity and Balance Sheet Strength

The recent business combination significantly bolstered GAP’s financial flexibility, adding MXN 5.4 billion in cash and cash equivalents. This enlarged liquidity cushion gives the company more room to fund investments and navigate volatility while maintaining a solid balance sheet profile.

Operational Execution Highlight: Guadalajara

Guadalajara Airport was a bright operational spot, successfully handling four World Cup matches and the associated surge in traffic. June traffic at Guadalajara grew 6%, demonstrating the network’s ability to manage higher demand and tighter security protocols without compromising service.

Dividend Policy Continuity

Shareholders approved a cash distribution of MXN 0.2080 per ordinary share, reaffirming GAP’s commitment to returning capital. Management signaled expectations for two distributions during the year, one in the current quarter and another in the final quarter, maintaining income visibility for investors.

Passenger Traffic Decline

Despite these positives, total passenger traffic across GAP’s 14‑airport system fell 5.6% year on year in the second quarter of 2026. The company reset its full‑year passenger guidance to a range of minus 3% to flat, acknowledging persistent headwinds and assuming a gradual recovery rather than a sharp rebound.

Aeronautical Revenue Pressure

Aeronautical revenues dropped 3.2% year on year in the quarter, reflecting the combination of lower passenger volumes and FX translation effects. This weakness underscores how dependent aeronautical income remains on international flows and currency dynamics, even as non‑aeronautical lines grow.

Puerto Vallarta International Passenger Drop

International traffic at Puerto Vallarta was particularly hard hit, with passenger numbers down about 27% year on year. Management linked the sharp decline to a prior security incident and travel advisories, which have weighed heavily on international leisure demand in that market.

FX Headwind from Mexican Peso Appreciation

A 10.9% appreciation of the Mexican peso versus the prior year created a notable FX translation drag on reported results. Dollar‑denominated revenues and international passenger charges translated into fewer pesos, reducing aeronautical revenues even where underlying dollar trends were more resilient.

Operational Cost Pressures

Operating expenses, excluding one‑off items, rose around 3% year on year as GAP absorbed higher personnel, maintenance, and security costs. The quarter also included merger‑related expenses and two months of CBX operating costs, which added to the cost base but are expected to support longer‑term growth.

Hurricane Impact in Jamaica

Operations in Jamaica remained under pressure after Hurricane Melissa, which materially disrupted capacity and demand. July seat capacity was still roughly 20% below July 2025 levels, though management expects seats to be close to fully recovered for the upcoming winter season.

Categories Still Under Pressure

Certain commercial lines tied closely to international leisure travel and foreign currency remained soft, notably duty‑free and VIP lounges. Management acknowledged that these segments will likely recover only as international traffic normalizes and FX headwinds ease, leaving some earnings upside deferred.

CapEx Guidance and Communication Inconsistency

GAP guided to capital expenditures “around MXN 4 billion” for 2026 yet detailed committed investments far above that level. These include MXN 9 billion under the Mexican master development plan, MXN 2 billion in Jamaica, and MXN 1 billion in commercial projects, creating some ambiguity around the timing and pace of spending.

Uncertainty for 2027 and External Risks

Management flagged a high degree of uncertainty for 2027, citing oil prices, geopolitical risks, and potential macro softness in Mexico as key variables. The possible impact of airline consolidation, including a planned merger in the low‑cost segment, was highlighted as both a risk and a potential source of future upside.

Forward-Looking Guidance and Outlook

For 2026, GAP is guiding to total passenger traffic between a 3% decline and flat, with aeronautical revenue up 1% to 4% and non‑aeronautical revenue up 21% to 24%. The company expects EBITDA growth of 10% to 12% with margins near 67%, assumes around MXN 4 billion of capex, and bakes in CBX’s contribution, steady tax rates, and moderate FX levels in the second half.

GAP’s earnings call painted the picture of an operator leaning on diversification, tariffs, and CBX to offset softer traffic and FX pressure. While near‑term risks from security events, hurricanes, and macro uncertainty remain, expanding margins, strong non‑aeronautical growth, and a reinforced balance sheet suggest the company is positioned to weather volatility and capture upside when demand normalizes.