Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q3 2023 Earnings Call Transcript

Guilherme Mendes: Thank you, Adolfo.

Adolfo Castro: You’re welcome.

Operator: Thank you. Our next question comes from the line of Fernanda Recchia with BTG Pactual. Please go ahead.

Fernanda Recchia: Hey, Adolfo. Good morning. Thank you for taking my question. I have two. First, on the Pratt & Whitney issue that we saw that might impact Volaris’ and Viva’s [indiscernible]. Just wondering how are you expecting the impacts on ASUR? I know it maybe could be early, but we know that Cancun has a great exposure to the Volaris. So, if you could give us your preliminary thoughts, if you expect this capacity to be absorbed by other airlines, or it could impact ASUR? And second, on traffic evolution, as you mentioned on your remarks, Puerto Rico is doing very well. So, just wondering your forecast for Puerto Rico going forward. And Colombia, they are down by more than 10%, more or less. I think the last time we spoke, you mentioned a 20% fall that you were expecting. So just wondering if you’re still forecasting this number and when should we start to see growth pace normalize? Thank you.

Adolfo Castro: You’re welcome. Well, in the case of your first question, that has to do with the Pratt & Whitney engines. It is not just Viva and Volaris, this is all around the world. It’s 3,000 engines that must be recalled, that’s 1,500 airplanes. And that accounts for many other airlines. I know that JetBlue has some, Spirit has some, American Airlines, very few of them. So to be honest, today we do not have enough information to say what the implications are going to be in the traffic of the world. In the case of Viva and Volaris, Viva has said to us that they do not see a major implication with this situation. In the case of Volaris, what I understand is that around 60% of the fleet has this kind of engine, so we are expecting a major impact from Volaris.

And I agree with you that Cancun has a lot of flights with these airlines. So, the best way to evaluate this situation would be to hear Volaris and to see what they’re going to say during their conference. But yet, we do expect some effects of these next year. And that will, of course, depend on how fast and how the manufacturer recalls the engines of Volaris. That had to do with the cycles they have in their engines and it’s something that we don’t know yet. In the case of Colombia, the 20% was what we have said that these two airlines meant, 20% of our traffic last year. So, whatever number is better than the 20%, that means that the other two airlines, Avianca and LATAM, are recuperating from these two airlines that disappeared or that went in stop operations.

So, the number we have recently published is, in my opinion, a good number because it’s lower than the 20%. Remember that these airlines were out since February this year. So, as from February next year, we will see the traffic to start growing again.

Fernanda Recchia: Thank you. And just a follow-up on Puerto Rico. Do you expect to keep this double-digit growth rate going forward?

Adolfo Castro: The extraordinary growth we are seeing in Puerto Rico right now has to come with a new airline, an ultra-low-cost carrier, that started operations in Puerto Rico and they have increased our traffic substantially. So, this is good news for Puerto Rico. We don’t know how much or how long this is going to last, but for the moment we are very happy to see these 20%-something increase year-over-year.

Fernanda Recchia: Thank you, Adolfo. Have a good day.

Adolfo Castro: Thank you.

Operator: Thank you. Our next question comes from the line of Bruno Amorim with Goldman Sachs. Please go ahead.