Airport operator delays Mexico investments over COVID-19

Falling passenger traffic and consequent downgrading of infrastructure companies by ratings agencies led Mexico's Grupo Aeroportuario del Pacífico (GAP) to delay “non-mandatory capital investments” for this year. 

Being among the country's most important airport operators, GAP said in its Q1 report “the change in the demand has lowered the growth capacity needs in the airports, therefore, the investments are expected to decrease.”

At end-2019, GAP announced a five-year 24bn-peso (US$1.2bn) investment plan, under which 7bn pesos would go to expansions for its 12 airports in 2020.

Part of these investments were included in the first stage of the government's 2020-24 national infrastructure program (PNI) that was presented in November.

“The company is reviewing with the authorities the deferral of investments that were included in the master development program and were scheduled to take place this year,” GAP said.

One highlight was the expansion of Guadalajara's international airport in Jalisco state, for which 12bn pesos were planned to turn the airport into a hub. 

Works, which reportedly already began in February, included a new platform, a new terminal and a second runway.

While quarterly results were solid, with a plus of 1.3bn pesos over 1Q19, the pandemic is causing uncertainty about financial stability, the group said.

FINANCIAL CRISIS

Peter Cerdá, president of the International Transport Association (IATA), was quoted by daily El Universal as saying that airlines in Latin America face losses over US$18bn because of restrictions resulting from COVID-19.

Earlier in April, Cerdá criticized the government's decision to continue construction at the Felipe Ángeles International Airport (AIFA) in Mexico state while airport groups suffered a decline in demand, daily El Economista reported.

He estimated airlines in Mexico would lose revenues of up to 5bn pesos between March and May.

During a webcast by S&P Global on Latin American markets on Tuesday, analysts highlighted that transport and infrastructure companies in Latin America have received most downgrades since the coronavirus outbreak.

They also pointed out that airports are most prone to revenue declines due to the pandemic.

AIRPORT INVESTMENT 

Three private-owned airport groups that control 29 airports in Mexico confirmed investments over 29bn pesos as part of the PNI. 

In addition to GAP's 12bn pesos, Grupo Aeroportuario del Sureste (ASUR) and Grupo Aeroportuario Centro Norte (OMA) promised 14bn pesos and 3bn pesos, respectively. 

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