Mexico tariff increases to affect airport group ASUR's finances by year-end: CEO (updated)

Grupo Aeroportuario del Pacifico SAB de CV

24/10/2023 15:43

(Updates with background, adds detail on Volaris)
    By Kylie Madry
       MEXICO CITY, Oct 24 (Reuters) - Tariff increases for
Mexican non-government airport operators will likely affect
group Aeroportuario del Sureste's (ASUR) finances by the end of
the year, the firm's chief executive said on Tuesday, adding
that it is too early to provide specifics.
    The changes, disclosed by airport operators last week,
affect how they determine their five-year plans.
    Mexican authorities have said that some tariffs would nearly
double, requiring operators to pay 9% of their gross revenue,
compared to the previous 5%. However, this change has only been
passed by Mexico's lower house, and still requires approval in
the senate.
    If passed, the increased tariffs could require operators to
pay around $140 million more a year, based on last year's
revenues from ASUR and competitors OMA  OMAB.MX  and GAP
 GAPB.MX .
    ASUR includes nine airports in southeast Mexico, including
Cancun and Cozumel.
    "We will have to wait and see until these new (rules) and
regulations are applied to the numbers of the company, and that
I believe is going to come at the end of the year," Chief
Executive Adolfo Castro said on the company's quarterly earnings
call. 
    ASUR is not considering taking legal action against the
changes, Castro said.
    Mexico's military also runs some airports, including the
busiest, the Mexico City International Airport. They are not
subject to the changes.
    With a military-run commercial airline set to launch later
this year, analysts have said it and the military-run airports
could unfairly benefit.
    "The most relevant impact, in our view, (of the tariff
changes) is related to the increasing risk perception for the
sector," analysts at JP Morgan wrote last week.
    ASUR is also expecting a "major impact" to flights from
carrier Volaris, Castro added, as the airline will be forced to
ground planes due to engine inspections from manufacturer Pratt
& Whitney, controlled by RTX Corp  RTX.N . 
    About 60% of Volaris's fleet have that kind of engine,
Castro said, as hundreds of Airbus jets from carriers worldwide
are expected to be affected by inspections for a rare powder
metal defect.

 (Reporting by Kylie Madry; Editing by Sharon Singleton and Rod
Nickel)
 ((Kylie.Madry@thomsonreuters.com;))