Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q4 2021 Earnings Conference Call February 25, 2022 10:00 AM ET Company Participants Adolfo Castro - Chief Executive Officer Conference Call Participants Guilherme Mendes - JPMorgan Rodolfo Ramos - Bradesco BBI Pablo Monsivais - Barclays Diego Serrano - Credit Suisse Juan Macedo - GBM. Gabriel Himelfarb - Scotiabank Operator Good day, ladies and gentlemen and welcome to ASUR's Fourth Quarter 2021 Results Conference Call. My name is April and I wil ...

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE:ASR) Q3 2021 Results Conference Call October 26, 2021 10:00 AM ET Company Participants Adolfo Castro Rivas - CEO Conference Call Participants Guilherme Mendes - JP Morgan Alejandro Zamacona - Credit Suisse Stephen Trent - Citi Rodolfo Ramos - Bredesco Pablo Monsiváis - Barclays Gabriel Himelfarb - Scotiabank Andressa Varotto - UBS Operator Good day, ladies and gentlemen, and welcome to ASUR's Third Quarter 2021 Results Conference Call. My name is Ally, a ...

Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q2 2021 Earnings Conference Call July 23, 2021 10:00 AM ET Company Participants Adolfo Castro - CEO Conference Call Participants Alejandro Zamacona - Credit Suisse Guilherme Mendes - JPMorgan Rodolfo Ramos - Bradesco BBI Pablo Monsivais - Barclays Javier Gayol - GBM Anton Mortenkotter - GBM Gabriel Himelfarb – Scotiabank Operator Good day, ladies and gentlemen, and welcome to ASUR’s Second Quarter 2021 Results Conference Call. My name is Sandy, a ...

Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q1 2021 Earnings Conference Call April 23, 2021 10:00 AM ET Company Participants Adolfo Castro - Chief Executive Officer Conference Call Participants Alejandro Zamacona - Credit Suisse Alan Macias - Bank of America Guilherme Mendes - JPMorgan Andressa Varotto - UBS Gabriel Himelfarb - Scotiabank Operator Good day, ladies and gentlemen, and welcome to ASUR's First Quarter 2021 Results Conference Call. My name is Christina, and I'll be your operato ...

Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q3 2020 Earnings Conference Call October 23, 2020 10:00 AM ET Company Participants Adolfo Castro - Chief Executive Officer Conference Call Participants Mauricio Martínez - Grupo Bursátil Mexicano Pablo Monsiváis - Barclays Operator Please stand by. Good day, ladies and gentlemen, and welcome to ASUR's Third Quarter 2020 Results Conference Call. My name is Rachel and I'll be your operator. [Operator Instructions] As a reminder, today's call is bei ...

Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) Q2 2020 Earnings Conference Call July 23, 2020 10:00 AM ET Company Participants Adolfo Castro - Chief Executive Officer Conference Call Participants Alejandro Zamacona - Credit Suisse Mauricio Martínez - Grupo Bursátil Mexicano Rodolfo Ramos - Bradesco BBI Alan Macias - Bank of America Pablo Monsiváis - Barclays Operator Good day, ladies and gentlemen, and welcome to ASUR's Second Quarter 2020 Results Conference Call. My name is Hannah and I'll b ...

[Item 1. Identity of Directors, Senior Management and Advisers](index=2&type=section&id=Item%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) This section indicates that information on directors, senior management, and advisers is not applicable here, suggesting it may be covered elsewhere - The 'Identity of Directors, Senior Management and Advisers' section is marked as **Not applicable**[6](index=6&type=chunk) [Item 2. Offer Statistics and Expected Timetable](index=3&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section indicates that information on offer statistics and expected timetable is **not applicable** - The 'Offer Statistics and Expected Timetable' section is marked as **Not applicable**[6](index=6&type=chunk) [Item 3. Key Information](index=3&type=section&id=Item%203.%20Key%20Information) This section provides selected financial data, outlines key risk factors, and clarifies the nature of forward-looking statements within the report [Selected Financial Data](index=5&type=section&id=Selected%20Financial%20Data) ASUR presents IFRS-compliant financial statements in Mexican pesos, with U.S. dollar translations, summarizing consolidated financial and operating data from 2015-2019, significantly impacted by 2017-2018 acquisitions - ASUR's financial statements are prepared in **Mexican pesos (Ps.)** and conform to **International Financial Reporting Standards (IFRS)**[6](index=6&type=chunk) - U.S. dollar amounts are translated at an exchange rate of **Ps.18.860 to U.S.$1.00** as of December 31, 2019[7](index=7&type=chunk) - The company acquired an additional **10.0% interest in Aerostar** (LMM Airport operator) on May 26, 2017, increasing participation to **60.0%** and consolidating results from June 1, 2017[10](index=10&type=chunk) - ASUR acquired **92.42% of Airplan** (Colombian airport operator) on October 19, 2017, consolidating results from that date, and increasing ownership to **100%** on May 25, 2018[10](index=10&type=chunk) Consolidated Income Statement Data (2015-2019) | Indicator | 2015 (Mexican Pesos (thousands)) | 2016 (Mexican Pesos (thousands)) | 2017 (Mexican Pesos (thousands)) | 2018 (Mexican Pesos (thousands)) | 2019 (Mexican Pesos (thousands)) | 2019 (U.S. Dollars (thousands)) | |:---|:---|:---|:---|:---|:---|:---|\ | **Revenue:** | | | | | | |\ | Aeronautical services | 3,921,949 | 4,532,194 | 6,484,219 | 8,942,910 | 9,596,975 | 508,853 |\ | Non-aeronautical services | 2,491,941 | 3,104,343 | 4,261,383 | 5,531,557 | 5,988,470 | 317,522 |\ | Construction services | 2,580,707 | 2,116,954 | 1,844,216 | 935,774 | 1,236,193 | 65,546 |\ | **Total revenue** | **8,994,597** | **9,753,491** | **12,589,818** | **15,410,241** | **16,821,638** | **891,921** |\ | **Operating Profit** | **4,072,897** | **4,932,599** | **1,476,833** | **7,778,969** | **8,481,295** | **449,698** |\ | **Net income** | **2,913,735** | **3,629,262** | **6,750,165** | **5,119,806** | **5,683,635** | **301,359** |\ | Basic and diluted earnings per share | 9.71 | 12.10 | 19.45 | 16.63 | 18.22 | 0.97 |\ | Dividends per share | Ps.5.10 | 5.60 | 6.16 | 6.78 | 10.00 | 0.53 | Consolidated Balance Sheet Data (2015-2019) | Indicator | 2015 (Mexican Pesos (thousands)) | 2016 (Mexican Pesos (thousands)) | 2017 (Mexican Pesos (thousands)) | 2018 (Mexican Pesos (thousands)) | 2019 (Mexican Pesos (thousands)) | 2019 (U.S. Dollars (thousands)) | |:---|:---|:---|:---|:---|:---|:---|\ | Cash and cash equivalents | 2,084,160 | 3,497,635 | 4,677,454 | 4,584,507 | 6,192,679 | 328,350 |\ | Total assets | 26,125,884 | 29,216,091 | 56,614,103 | 56,181,821 | 57,515,881 | 3,049,623 |\ | Total liabilities | 5,717,833 | 6,462,137 | 22,925,802 | 19,500,432 | 18,744,704 | 993,887 |\ | Net equity/stockholders' equity | 20,408,051 | 22,753,954 | 33,688,301 | 36,681,389 | 38,771,177 | 2,055,736 | Consolidated Cash Flow Data (2015-2019) | Indicator | 2015 (Mexican Pesos (thousands)) | 2016 (Mexican Pesos (thousands)) | 2017 (Mexican Pesos (thousands)) | 2018 (Mexican Pesos (thousands)) | 2019 (Mexican Pesos (thousands)) | 2019 (U.S. Dollars (thousands)) | |:---|:---|:---|:---|:---|:---|:---|\ | Cash flow provided by operating activities | 3,653,577 | 4,509,387 | 6,031,135 | 7,696,320 | 8,501,692 | 450,779 |\ | Cash flow generated (used) in financing activities | (1,627,017) | (1,789,873) | 81,533 | (6,476,664) | (4,427,870) | (234,776) |\ | Cash flows used in investing activities | (2,816,554) | (1,366,696) | (4,961,153) | (1,311,957) | (2,390,173) | (126,732) |\ | (Decrease) Increase in cash and cash equivalents | (789,994) | 1,352,818 | 1,151,515 | (92,301) | 1,683,649 | 89,271 | Other Operating Data (2015-2019) | Indicator | 2015 | 2016 | 2017 | 2018 | 2019 | |:---|:---|:---|:---|:---|:---|\ | Total passengers (thousands) | 26,140.99 | 28,407.05 | 37,534 | 52,269 | 55,662 |\ | - Colombia | — | — | 1,906 | 10,648 | 12,052 |\ | - Mexico | 26,140.99 | 28,407.05 | 31,053 | 33,247 | 34,192 |\ | - Puerto Rico | — | — | 4,575 | 8,374 | 9,448 |\ | Total air traffic movements (thousands) | 302.90 | 316.24 | 328.8 | 342.1 | 335.5 | [Risk Factors](index=8&type=section&id=Risk%20Factors) This section outlines diverse risks, including international events, natural disasters, economic downturns, regulatory changes, and operational challenges, that could adversely affect ASUR's business and financial condition [Risks Related to Our Operations](index=8&type=section&id=Risks%20Related%20to%20Our%20Operations) Operational risks encompass international events, natural disasters, economic downturns in key markets, fuel price volatility, reliance on major airline customers, and dependence on critical airports like Cancún - International events such as terrorist attacks (e.g., 9/11) and public health crises (e.g., Influenza A/H1N1, COVID-19) have severely impacted air travel and could adversely affect the business[15](index=15&type=chunk)[16](index=16&type=chunk)[19](index=19&type=chunk) - Passenger charges represented **41.6%** of consolidated revenues in 2019, making the company highly dependent on passenger traffic levels[17](index=17&type=chunk) - COVID-19 outbreak led to significant travel restrictions and a **6.3%** decrease in total passenger traffic in Q1 2020, with severe impacts expected in April and May 2020[21](index=21&type=chunk) - Hurricanes (e.g., Wilma in 2005, Maria in 2017) and earthquakes have caused significant damage and reduced passenger traffic, particularly in Cancún and Puerto Rico[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company does not have insurance covering losses due to business interruption from natural disasters[23](index=23&type=chunk) - Economic downturns in the United States, Mexico, or Colombia could adversely affect passenger traffic, especially international passengers to Mexican airports (**55.7%** from US in 2019)[30](index=30&type=chunk)[31](index=31&type=chunk) - Fluctuations in international petroleum prices can increase airline costs, leading to higher ticket prices and decreased demand for air travel[43](index=43&type=chunk) - The company is highly dependent on a few key airline customers; American Airlines, United Airlines, and Interjet accounted for significant portions of Mexican regulated revenue in 2019[46](index=46&type=chunk) Key Airline Customers' Contribution to Mexican Regulated Revenue (2017-2019) | Customer | 2017 (%) | 2018 (%) | 2019 (%) | |:---|:---|:---|:---|\ | American Airlines | 10.9% | 9.9% | 9.4% |\ | United Airlines, Inc. | 10.5% | 9.3% | 9.0% |\ | ABC Aerolíneas S.A. de C.V. (Interjet) | 8.7% | 10.4% | 10.6% | - Cancún International Airport is critical, generating **52.5%** of total revenues in 2019 and representing **74.6%** of Mexican passenger traffic[59](index=59&type=chunk) - Increases in prevailing interest rates could adversely affect financial condition, as **U.S.$366.2 million** of outstanding indebtedness as of December 31, 2019, was floating rate[62](index=62&type=chunk) - The company is exposed to risks related to construction projects, including delays, cost overruns, and potential fines or loss of concessions for non-compliance with master development programs[95](index=95&type=chunk) - The LMM Airport business is conducted through Aerostar, a joint venture with a minority shareholder (PSP Investments), where major decisions require supermajority approval, potentially leading to deadlocks[105](index=105&type=chunk)[106](index=106&type=chunk) [Risks Related to the Regulation of Our Business](index=26&type=section&id=Risks%20Related%20to%20the%20Regulation%20of%20Our%20Business) Regulatory risks include price control systems that do not guarantee profitability, efficiency adjustments, potential changes in laws, and the risk of concession termination or new competing concessions, limiting operational flexibility - The price regulatory system for Mexican airports imposes annual maximum rates per workload unit, which do not guarantee profitability[111](index=111&type=chunk)[112](index=112&type=chunk) - Mexican maximum rates are subject to annual efficiency adjustments (**0.70%** for 2019-2023), which reduce rates and may impact operating income if efficiency improvements are not met[116](index=116&type=chunk) - Changes to Mexican laws, such as the Federal Economic Competition Law, could lead to regulation of services as 'essential facilities,' requiring significant business changes[118](index=118&type=chunk)[119](index=119&type=chunk) - Mexican concessions can be terminated for various reasons, including failure to make committed investments, exceeding maximum rates, or government requisition, potentially affecting all concessions[125](index=125&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) - The Mexican government could grant new concessions that compete with existing airports, including Cancún International Airport[132](index=132&type=chunk) - Depreciation of the Mexican peso, especially late in the year, could cause the company to exceed maximum rates, leading to fines or concession termination[145](index=145&type=chunk) - Colombian airport tariffs are regulated by Aerocivil and adjusted annually based on the Colombian consumer price index (IPC), but profitability is not guaranteed[148](index=148&type=chunk) - Colombian concessions can be terminated for non-compliance, dissolution/bankruptcy of Airplan, or if required by national security or public interest, with potential penalties up to **U.S.$20 million**[149](index=149&type=chunk)[150](index=150&type=chunk) - Increased environmental regulation in Mexico and Puerto Rico could impose significant compliance costs and adversely affect financial condition[153](index=153&type=chunk)[154](index=154&type=chunk) [Risks Related to Mexico](index=33&type=section&id=Risks%20Related%20to%20Mexico) Mexican risks involve peso-dollar fluctuations impacting revenues and debt, adverse economic conditions, political developments affecting infrastructure projects, and U.S.-Mexico relations, all potentially affecting operations and ADS value - Appreciation or depreciation of the Mexican peso relative to the U.S. dollar can adversely affect results of operations and financial condition, impacting passenger charges, commercial contracts, and debt service costs[155](index=155&type=chunk)[156](index=156&type=chunk)[159](index=159&type=chunk) Mexican Peso Depreciation (Appreciation) vs. U.S. Dollar (2017-2019) | Year | Depreciation (Appreciation) (%) | |:---|:---|\ | 2017 | (4.7)% |\ | 2018 | (0.1)% |\ | 2019 | (3.9)% | - Mexican economic conditions, including past crises characterized by exchange rate instability, high inflation, and economic contraction, could recur and adversely affect the business[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) Mexican Economic Indicators (2017-2019) | Indicator | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Mexican Inflation Rate (%) | 6.8% | 4.8% | 2.8% |\ | Mexican GDP Growth (%) | 2.3% | 2.0% | (0.1)% | - Political developments, such as the 2018 presidential election and subsequent referendums (e.g., cancellation of new Mexico City airport, Mayan Train project), create economic uncertainty and could impact operations[166](index=166&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - U.S.-Mexico relations, including trade policies (NAFTA/USMCA renegotiation) and immigration policies, could materially impact Mexico's aviation sector and passenger traffic[179](index=179&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Differences in corporate disclosure requirements and legal protections for minority shareholders between Mexico and the United States may make it difficult for U.S. investors to enforce rights[185](index=185&type=chunk)[187](index=187&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) [Risks Related to Colombia](index=39&type=section&id=Risks%20Related%20to%20Colombia) Colombian risks include government policy impacts, historical violence, political instability, and recent civic unrest, all of which can adversely affect tourism, economic growth, and airport operations - Colombian government policies can significantly affect the economy, and changes in laws, public policies, or regulations may cause instability and volatility[194](index=194&type=chunk)[195](index=195&type=chunk) Colombian Economic Indicators (2017-2019) | Indicator | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Colombian Inflation Rate (%) | 4.3% | 3.2% | 3.8% |\ | Colombian GDP Growth (%) | 1.7% | 2.8% | 3.3% | - Colombia has experienced periods of criminal violence (guerrilla, paramilitary groups, drug cartels) and political instability, which could negatively impact the economy, tourism, and airport operations[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Recent civic unrest and anti-government protests in Colombia (starting November 2019) create uncertainty and could adversely impact Colombian operations[202](index=202&type=chunk) [Risks Related to Our ADSs](index=40&type=section&id=Risks%20Related%20to%20Our%20ADSs) ADS risks include potential dilution from preemptive rights, limited voting rights, price depression from future share sales, and adverse U.S. tax consequences if classified as a Passive Foreign Investment Company (PFIC) - Holders of ADSs may not be entitled to participate in future preemptive rights offerings, potentially leading to dilution of their equity interest[203](index=203&type=chunk)[204](index=204&type=chunk)[207](index=207&type=chunk) - ADS holders cannot attend shareholders' meetings directly and can only vote through the depositary, limiting direct participation[208](index=208&type=chunk)[209](index=209&type=chunk) - Future sales of substantial amounts of common stock by the company or its stockholders could depress the price of Series B shares and ADSs[210](index=210&type=chunk)[211](index=211&type=chunk) - The company could be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which would subject U.S. investors to adverse tax consequences, including higher tax rates on distributions and gains[213](index=213&type=chunk)[214](index=214&type=chunk) [Forward Looking Statements](index=43&type=section&id=Forward%20Looking%20Statements) This section clarifies that the report contains forward-looking statements, subject to inherent risks and uncertainties, and actual results may differ materially due to various factors, with no obligation for updates - The report contains forward-looking statements identified by words like 'believe,' 'anticipate,' 'plan,' 'expect,' 'intend,' 'target,' 'estimate,' 'project,' 'predict,' 'forecast,' 'guideline,' 'should' and similar expressions[216](index=216&type=chunk)[217](index=217&type=chunk) - Actual results may differ materially from forward-looking statements due to inherent risks and uncertainties, including changes in concessions, legal proceedings, economic/political conditions, inflation, exchange rates, regulatory developments, customer demand, and competition[218](index=218&type=chunk) - The company does not undertake any obligation to update forward-looking statements in light of new information or future developments[219](index=219&type=chunk) [Item 4. Information on the Company](index=44&type=section&id=Item%204.%20Information%20on%20the%20Company) This section provides an overview of ASUR's history, business operations across Mexico, Puerto Rico, and Colombia, regulatory frameworks, organizational structure, and property, plant, and equipment [History and Development of the Company](index=44&type=section&id=HISTORY%20AND%20DEVELOPMENT%20OF%20THE%20COMPANY) ASUR, incorporated in 1998 during Mexico's airport privatization, details its history, including ITA's management services, 2017-2018 acquisitions of Aerostar and Airplan, and committed master development investments through 2023 - ASUR was incorporated in 1998 as part of the Mexican government's program to open airports to private-sector investment[221](index=221&type=chunk) - ITA (Inversiones y Técnicas Aeroportuarias, S.A.P.I. de C.V.) acquired a **15.0%** equity interest in ASUR in 1998, providing management and consulting services under a technical assistance agreement[222](index=222&type=chunk) - The technical assistance fee paid to ITA is the greater of **U.S.$2.0 million** (adjusted for inflation) or **5.0%** of ASUR's annual consolidated earnings before certain deductions[224](index=224&type=chunk) Technical Assistance Fees (2017-2019) | Year | Technical Assistance Fee (Mexican Pesos (millions)) | Fixed Costs (Mexican Pesos (millions)) | |:---|:---|:---|\ | 2017 | 346.5 | 58.3 |\ | 2018 | 386.2 | 59.4 |\ | 2019 | 404.1 | 58.4 | - ASUR acquired a controlling **60.0%** interest in Aerostar (operator of Luis Muñoz Marín International Airport, Puerto Rico) on May 26, 2017, and began consolidating its results[231](index=231&type=chunk) - ASUR acquired a **92.42%** stake in Airplan (operator of six Colombian airports) in October 2017, increasing to **100%** on May 25, 2018, and began consolidating its results[233](index=233&type=chunk) - Mexican master development plans, approved in June 2018, are in effect from January 1, 2019, to December 31, 2023, outlining committed investments for regulated business[235](index=235&type=chunk) Committed Investments for Mexican Airports (2019-2023) | Airport | 2019 (Mexican Pesos (millions)) | 2020 (Mexican Pesos (millions)) | 2021 (Mexican Pesos (millions)) | 2022 (Mexican Pesos (millions)) | 2023 (Mexican Pesos (millions)) | Totals (Mexican Pesos (millions)) | |:---|:---|:---|:---|:---|:---|:---|\ | Cancún | 1,183.4 | 2,677.7 | 1,521.2 | 1,155.0 | 465.5 | 7,002.8 |\ | Cozumel | 35.1 | 167.0 | 77.0 | 27.0 | 22.2 | 328.3 |\ | Huatulco | 200.0 | 186.0 | 116.2 | 73.4 | 83.4 | 659.0 |\ | Mérida | 406.2 | 892.3 | 648.0 | 316.6 | 100.0 | 2,363.1 |\ | Minatitlán | 35.6 | 59.4 | 49.1 | 17.2 | 8.0 | 169.3 |\ | Oaxaca | 85.6 | 490.2 | 240.4 | 70.8 | 25.7 | 912.7 |\ | Tapachula | 13.2 | 51.7 | 34.8 | 45.4 | 32.6 | 177.7 |\ | Veracruz | 99.8 | 260.5 | 109.6 | 69.6 | 50.6 | 590.1 |\ | Villahermosa | 113.5 | 321.0 | 219.0 | 40.8 | 61.2 | 755.5 |\ | **Total** | **2,172.4** | **5,105.8** | **3,015.3** | **1,815.8** | **849.2** | **12,958.5** | [Business Overview](index=50&type=section&id=BUSINESS%20OVERVIEW) ASUR operates airports in Mexico, Colombia, and Puerto Rico, generating revenue from aeronautical, non-aeronautical, and construction services, with Cancún being a key contributor, and a strategic focus on growing unregulated commercial revenues - ASUR holds concessions to operate, maintain, and develop nine airports in Mexico for **50 years** from November 1, 1998[242](index=242&type=chunk) - Cancún International Airport is the second busiest in Mexico and a principal tourist destination, representing **74.6%** of Mexican passenger traffic and **77.1%** of Mexican revenues in 2019[242](index=242&type=chunk)[246](index=246&type=chunk) - ASUR owns a controlling interest in Airplan, operating six airports in Colombia, and holds a **40-year** lease for the LMM Airport in Puerto Rico[243](index=243&type=chunk)[244](index=244&type=chunk) - Aeronautical services are the most significant revenue source, regulated under a 'dual-till' system in Mexico and Colombia, and limited by agreements in Puerto Rico[251](index=251&type=chunk)[252](index=252&type=chunk) Mexican Operations Revenue (2017-2019) | Revenues | 2017 (Mexican Pesos (thousands)) | 2018 (Mexican Pesos (thousands)) | 2019 (Mexican Pesos (thousands)) | |:---|:---|:---|:---|\ | Aeronautical Services | 5,319,484 | 5,965,545 | 6,334,890 |\ | Non-Aeronautical Services | 3,709,722 | 4,170,319 | 4,380,821 |\ | Construction Services | 1,580,997 | 263,395 | 725,047 |\ | **Total** | **10,610,203** | **10,399,259** | **11,440,758** | - Non-aeronautical services, primarily commercial activities like leasing space to retailers and restaurants, are largely unregulated and a key focus for revenue growth[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) - Construction services revenue is recognized for capital improvements to concessioned assets and is not subject to price regulation[273](index=273&type=chunk) [Mexico](index=50&type=section&id=Mexico) Mexico, a major tourist destination, saw ASUR's airports serve **34.2 million passengers** in 2019, with Cancún as a critical hub, generating revenue from regulated aeronautical and unregulated non-aeronautical services, with a focus on commercial expansion - Mexico ranked first in Latin America and the Caribbean in 2019 for foreign visitors and tourism income, with Cancún being the most visited international destination[245](index=245&type=chunk)[246](index=246&type=chunk) - Mexican airports served **34.2 million** passengers in 2019, with **51.2%** being international passengers[274](index=274&type=chunk) - In 2019, **55.7%** of international passengers in Mexican airports traveled on flights to or from the United States[248](index=248&type=chunk) Mexican Airports Passenger Traffic by Region (2015-2019, thousands) | Region | 2015 | 2016 | 2017 | 2018 | 2019 | Percentage of Total 2019 | |:---|:---|:---|:---|:---|:---|:---|\ | Mexico | 12,061 | 13,330 | 14,755 | 16,269 | 17,112 | 50.1% |\ | United States | 8,836 | 9,441 | 10,087 | 10,165 | 9,741 | 28.5% |\ | Canada | 1,995 | 2,071 | 2,244 | 2,449 | 2,701 | 7.9% |\ | Europe | 1,690 | 1,764 | 1,912 | 2,043 | 2,102 | 6.2% |\ | Latin America | 1,559 | 1,801 | 2,055 | 2,321 | 2,506 | 7.3% |\ | **Total** | **26,141** | **28,407** | **31,053** | **33,247** | **34,162** | **100%** | Mexican Airports Total Passenger Traffic and Air Traffic Movements (2015-2019, thousands) | Indicator | 2015 | 2016 | 2017 | 2018 | 2019 | |:---|:---|:---|:---|:---|:---|\ | Total Passengers | 26,141.0 | 28,407.0 | 31,052.6 | 33,247.3 | 34,161.9 |\ | Total Air Traffic Movements | 302.9 | 316.2 | 328.8 | 342.1 | 335.5 | Mexican Airports Passenger Traffic by Airport (2015-2019, thousands) | Airport | 2015 | 2016 | 2017 | 2018 | 2019 | |:---|:---|:---|:---|:---|:---|\ | Cancún | 19,596.5 | 21,415.8 | 23,601.5 | 25,202.0 | 25,482.0 |\ | Mérida | 1,663.6 | 1,944.8 | 2,148.5 | 2,451.6 | 2,790.7 |\ | Villahermosa | 1,273.1 | 1,240.8 | 1,260.3 | 1,227.7 | 1,245.0 |\ | Veracruz | 1,249.9 | 1,315.9 | 1,368.0 | 1,488.6 | 1,475.6 |\ | Oaxaca | 663.2 | 746.9 | 862.3 | 951.0 | 1,196.3 |\ | Huatulco | 618.8 | 662.8 | 776.6 | 819.3 | 892.3 |\ | Cozumel | 553.8 | 538.1 | 541.6 | 579.7 | 546.4 |\ | Minatitlán | 256.4 | 233.2 | 201.2 | 196.8 | 148.2 |\ | Tapachula | 265.7 | 308.8 | 292.6 | 330.6 | 385.5 |\ | **Total** | **26,141.0** | **28,407.1** | **31,052.6** | **33,247.3** | **34,162.0** | Mexican Airports Air Traffic Movements by Aviation Category (2015-2019) | Category | 2015 | 2016 | 2017 | 2018 | 2019 | |:---|:---|:---|:---|:---|:---|\ | Commercial Aviation | 248,213 | 264,293 | 277,504 | 285,163 | 280,635 |\ | Charter Aviation | 8,142 | 5,895 | 3,323 | 3,606 | 2,534 |\ | General Aviation | 46,544 | 46,050 | 48,021 | 53,283 | 52,295 |\ | **Total** | **302,899** | **316,238** | **328,848** | **342,052** | **335,464** | - Passenger charges for international passengers are dollar-denominated (e.g., **U.S.$22.52** for Cancún in Jan 2020), while domestic charges are peso-denominated (e.g., **Ps.153.45** for Cancún in Jan 2020)[253](index=253&type=chunk) - In 2019, passenger charges at Mexican airports represented **53.1%** of aeronautical revenues and **30.3%** of total consolidated revenues[253](index=253&type=chunk) - ASUR opened **7** commercial spaces in Cancún in 2019, contributing to non-aeronautical revenue growth[258](index=258&type=chunk) - The company is appealing a **Ps.73 million** fine from COFECE for alleged monopolistic practices related to ground transport access fees at Cancún Airport[264](index=264&type=chunk) - Key airline customers in Mexico include Interjet (**10.6%** of regulated revenues in 2019), American Airlines (**9.4%**), and United Airlines (**9.0%**)[327](index=327&type=chunk)[329](index=329&type=chunk) [Luis Muñoz Marín International Airport](index=67&type=section&id=Luis%20Mu%C3%B1oz%20Mar%C3%ADn%20International%20Airport) ASUR's 60% owned Aerostar operates Puerto Rico's LMM Airport under a 40-year lease, serving over 55 destinations, primarily the U.S. mainland, with operations requiring supermajority votes for major decisions and showing passenger traffic recovery post-Hurricane Maria - ASUR, through its Cancún airport subsidiary, owns a **60.0%** interest in Aerostar, which holds a **40-year** lease for the LMM Airport in San Juan, Puerto Rico[338](index=338&type=chunk) - LMM Airport is the Caribbean's largest and busiest, serving over **55** destinations, with **89%** of its 2019 passenger traffic traveling to and from the mainland United States[338](index=338&type=chunk)[346](index=346&type=chunk) - Passenger traffic at LMM Airport increased by **12.8%** in 2019 relative to 2018, recovering from the impact of Hurricane Maria in 2017[345](index=345&type=chunk) - Key airline customers at LMM Airport in 2019 included JetBlue Airways (**30%** of regulated revenues), American Airlines (**11%**), and Southwest Airlines (**8%**)[345](index=345&type=chunk) - Aerostar's operating board manages daily decisions, but major decisions (e.g., capital contributions, annual budget, distributions) require a supermajority vote, involving both ASUR and minority shareholder PSP Investments[356](index=356&type=chunk)[357](index=357&type=chunk) [Our Colombian Airports](index=71&type=section&id=Our%20Colombian%20Airports) ASUR's Airplan operates six Colombian airports under a concession, with José María Córdova International Airport as the busiest, generating revenue from regulated aeronautical and unregulated non-aeronautical services, and Avianca as the primary airline customer - ASUR's subsidiary Airplan operates six airports in Colombia under a concession agreement, with a term potentially extending until 2048, depending on regulated revenues[361](index=361&type=chunk) - Colombian airports served **12.1 million** passengers in 2019, with **84.9%** being domestic and **15.1%** international[376](index=376&type=chunk)[636](index=636&type=chunk) - Aeronautical services in Colombia are regulated by Aerocivil, with tariffs adjusted annually based on the Colombian consumer price index (IPC)[364](index=364&type=chunk) - José María Córdova International Airport is the second-busiest in Colombia, accounting for **76.6%** of ASUR's Colombian passenger traffic and **83.5%** of revenues in 2019[376](index=376&type=chunk)[379](index=379&type=chunk) José María Córdova International Airport International Passengers by Origin/Destination (2017-2019, thousands) | City | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Panama City | 497.0 | 557.1 | 552.5 |\ | Miami | 279.7 | 316.6 | 336.9 |\ | Fort Lauderdale | 159.6 | 191.1 | 202.3 |\ | Madrid | 105.0 | 140.9 | 183.6 |\ | Lima | 47.0 | 93.8 | 153.0 |\ | Mexico City | 72.2 | 94.9 | 151.0 |\ | Other | 145.0 | 189.1 | 241.4 |\ | **Total** | **1,305.5** | **1,583.5** | **1,820.7** | José María Córdova International Airport Domestic Passengers by Origin/Destination (2017-2019, thousands) | City | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Bogotá | 3,555.4 | 4,042.8 | 4,501.8 |\ | Cartagena | 714.2 | 841.3 | 922.3 |\ | Cali | 429.5 | 369.5 | 428.2 |\ | San Andrés | 334.5 | 367.1 | 388.1 |\ | Barranquilla | 299.6 | 306.9 | 368.8 |\ | Santa Marta | 257.4 | 240.4 | 521.5 |\ | Other | 302.5 | 280.6 | 278.7 |\ | **Total** | **5,893.1** | **6,448.6** | **7,409.4** | - Non-aeronautical services, including commercial activities and parking, are unregulated in Colombia, with **1,037** commercial premises leased across six airports as of December 31, 2019[368](index=368&type=chunk)[369](index=369&type=chunk) - Avianca is the leading airline customer at Colombian airports, accounting for **25.4%** of ASUR Colombia's revenues in 2019[409](index=409&type=chunk)[412](index=412&type=chunk) [Mexican Regulatory Framework](index=81&type=section&id=Mexican%20Regulatory%20Framework) ASUR's Mexican operations are governed by the Mexican Airport Law and SCT, dictating 50-year concession terms, dual-till price regulation, master development plans, and ownership restrictions, with strict compliance required to avoid fines or termination - Mexican airport operations are primarily governed by the Mexican Airport Law and its regulations, with concessions granted for **50-year** terms from November 1, 1998[416](index=416&type=chunk)[417](index=417&type=chunk)[419](index=419&type=chunk)[430](index=430&type=chunk) - The Ministry of Communications and Transportation (SCT) is the principal regulator, responsible for granting/modifying concessions, establishing air transit rules, approving master development plans, and determining maximum rates[427](index=427&type=chunk) - A concession fee of **5.0%** of gross annual regulated revenues from public domain assets is paid to the Mexican government, subject to annual revision by Congress[435](index=435&type=chunk) - The 'dual-till' price regulation system regulates aeronautical services and certain non-aeronautical access fees, while commercial activities are largely unregulated[461](index=461&type=chunk)[462](index=462&type=chunk) Mexican Airport Maximum Rates (2019-2023, adjusted Mexican pesos) | Airport | 2019 | 2020 | 2021 | 2022 | 2023 | |:---|:---|:---|:---|:---|:---|\ | Cozumel | 273.69 | 271.77 | 269.86 | 267.97 | 266.10 |\ | Tapachula | 258.05 | 256.25 | 254.45 | 252.67 | 250.89 |\ | Minatitlán | 254.77 | 252.49 | 250.72 | 248.97 | 247.23 |\ | Villahermosa | 211.92 | 210.44 | 208.96 | 207.51 | 206.06 |\ | Veracruz | 211.38 | 209.90 | 208.43 | 206.97 | 205.52 |\ | Mérida | 202.99 | 201.57 | 200.16 | 198.75 | 197.36 |\ | Huatulco | 197.44 | 196.06 | 194.69 | 193.33 | 191.97 |\ | Oaxaca | 187.10 | 185.79 | 184.49 | 183.20 | 181.92 |\ | Cancún | 185.26 | 183.96 | 182.67 | 181.39 | 180.12 | - Master development plans, updated every five years, include binding investment commitments for **15-year** periods, with current plans effective from 2019 to 2023[451](index=451&type=chunk)[454](index=454&type=chunk) Mexican Airport Committed Investments (2019-2023, millions of constant Mexican pesos) | Airport | 2019 | 2020 | 2021 | 2022 | 2023 | Totals | |:---|:---|:---|:---|:---|:---|:---|\ | Cancún | 1,183.4 | 2,677.7 | 1,521.2 | 1,155.0 | 465.5 | 7,002.8 |\ | Cozumel | 35.1 | 167.0 | 77.0 | 27.0 | 22.2 | 328.3 |\ | Huatulco | 200.0 | 186.0 | 116.2 | 73.4 | 83.4 | 659.0 |\ | Mérida | 406.2 | 892.3 | 648.0 | 316.6 | 100.0 | 2,363.1 |\ | Minatitlán | 35.6 | 59.4 | 49.1 | 17.2 | 8.0 | 169.3 |\ | Oaxaca | 85.6 | 490.2 | 240.4 | 70.8 | 25.7 | 912.7 |\ | Tapachula | 13.2 | 51.7 | 34.8 | 45.4 | 32.6 | 177.7 |\ | Veracruz | 99.8 | 260.5 | 109.6 | 69.6 | 50.6 | 590.1 |\ | Villahermosa | 113.5 | 321.0 | 219.0 | 40.8 | 61.2 | 755.5 |\ | **Total** | **2,172.4** | **5,105.8** | **3,015.3** | **1,815.8** | **849.2** | **12,958.5** | - Violations of concession terms, such as exceeding maximum rates or failing to meet investment commitments, can result in fines or termination of concessions[476](index=476&type=chunk)[481](index=481&type=chunk)[482](index=482&type=chunk)[490](index=490&type=chunk) - Environmental regulations in Mexico have become more stringent, requiring compliance with federal, state, and municipal laws, and potentially leading to significant investments[505](index=505&type=chunk)[510](index=510&type=chunk)[511](index=511&type=chunk) [Puerto Rican Regulatory Framework](index=100&type=section&id=Puerto%20Rican%20Regulatory%20Framework) Aerostar's LMM Airport operations in Puerto Rico are governed by U.S. federal and Puerto Rico laws, including a 40-year lease with PRPA, outlining obligations for revenue-sharing, capital investments, and compliance with safety, security, and environmental standards - LMM Airport operations are governed by U.S. federal laws (Federal Aviation Act of 1958, FAA's Airport Privatization Program) and Puerto Rico's Public Private Partnership Act (Act No. 29)[514](index=514&type=chunk)[515](index=515&type=chunk)[516](index=516&type=chunk)[521](index=521&type=chunk) - Aerostar holds a **40-year** lease for LMM Airport from the Puerto Rico Ports Authority (PRPA), with annual revenue-sharing payments starting at **U.S.$2.5 million** for the first five years, then **5.0%** of gross airport revenues[527](index=527&type=chunk) - Aerostar is required to comply with nine key statutory and regulatory conditions under the FAA's Airport Privatization Program, including non-discrimination, uninterrupted operations, and capital investments[530](index=530&type=chunk) - Aerostar must complete initial capital projects to bring LMM Airport to high operating standards, with an aggregate cost of at least **U.S.$34.0 million**[547](index=547&type=chunk) - Events of default under the Lease Agreement include failure to comply with material obligations, non-payment, repeated failure to meet performance requirements, or insolvency, which can lead to termination or penalties[558](index=558&type=chunk)[561](index=561&type=chunk) - Environmental regulations in Puerto Rico, including federal and local laws, require compliance with permits and may involve investigation and remediation of contamination, with PRPA retaining responsibility for pre-lease contamination[563](index=563&type=chunk)[565](index=565&type=chunk)[566](index=566&type=chunk) [Colombian Regulatory Framework](index=111&type=section&id=Colombian%20Regulatory%20Framework) Airplan's Colombian operations are governed by an ANI and Aerocivil concession, with a term up to 40 years, requiring **19.0%** concession fees, investment commitments, and environmental compliance, with non-compliance risking penalties or termination - Colombian airport operations are governed by a concession agreement granted by the National Infrastructure Agency (ANI) and Aerocivil[568](index=568&type=chunk)[569](index=569&type=chunk)[577](index=577&type=chunk) - The concession term depends on regulated revenues, remaining in effect until expected revenues are met (after at least **24 years**) or for a maximum of **40 years**, with management projecting a term until 2032[579](index=579&type=chunk) - Airplan is required to pay a fixed concession fee of **19.0%** of its gross regulated and non-regulated revenues to the ANI[581](index=581&type=chunk)[1344](index=1344&type=chunk) - Investment commitments for Colombian airports include **U.S.$13.5 million** for José María Córdova International Airport in 2018 and **U.S.$9.1 million** in 2019[584](index=584&type=chunk) Committed Investments at Colombian Airports (as of Dec 31, 2019) | Airport | Project Description | Amount Invested (Colombian Pesos (millions)) | Status as of December 31, 2019 | |:---|:---|:---|:---|\ | Montería | Runway renovation | 10,762.2 | Completed |\ | Corozal | Runway renovation | 5,757.5 | Completed |\ | Medellín (Rionegro) | Runway renovation | 28,304.3 | Completed |\ | Medellín | Runway renovation | 8,321.3 | Completed |\ | Quibdó | Runway renovation | 16,322.1 | Completed |\ | Carepa | Runway renovation Expansion of domestic departures | 13,622.5 | Completed |\ | Medellín (Rionegro) | passenger terminal Expansion of international | 22,588.6 | Completed |\ | Medellín (Rionegro) | departures passenger terminal | 25,492.5 | Completed |\ | Medellín (Rionegro) | Connections building Expansion of international | 23,456.5 | Completed |\ | Medellín (Rionegro) | platform | 37,749.4 | Completed |\ | Medellín (Rionegro) | Expansion of cargo terminal | 99,262.9 | In progress |\ | Quibdó | Expansion of passenger terminal Construction of shopping center, | 10,727.7 | Completed |\ | Quibdó | hotel and library | 75,509.5 | Completed |\ | Quibdó | Expansion of runway and platform | 86,041.8 | Completed |\ | Montería | Expansion of passenger terminal | 29,288.8 | Completed | - Non-compliance with the concession agreement can lead to rescission and penalties, with a maximum penalty of **U.S.$20 million** during the adaptation and modernization stage[595](index=595&type=chunk) - Environmental laws and regulations in Colombia require licenses for construction activities with potential environmental impact, and compliance is subject to oversight by the ANI[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk) [Organizational Structure](index=118&type=section&id=Organizational%20Structure) ASUR operates as a holding company through wholly-owned Mexican airport subsidiaries, administrative service entities, and controlling interests in Aerostar (Puerto Rico) and Airplan (Colombia) - ASUR is a holding company that conducts all operations through its subsidiaries[221](index=221&type=chunk) Material Consolidated Subsidiaries (as of Dec 31, 2019) | Subsidiary | Ownership Interest | Place of Organization | |:---|:---|:---|\ | Aeropuerto de Cancún, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Cozumel, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Mérida, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Huatulco, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Oaxaca, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Veracruz, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Villahermosa, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Tapachula, S.A. de C.V. | 100% | Mexico |\ | Aeropuerto de Minatitlán, S.A. de C.V. | 100% | Mexico |\ | Aerostar Airport Holdings, LLC | 60% | Commonwealth of Puerto Rico |\ | Sociedad Operadora de Aeropuertos Centro Norte S.A. | 100% | Colombia |\ | Servicios Aeroportuarios del Sureste, S.A. de C.V. | 100% | Mexico |\ | RH Asur, S.A. de C.V. | 100% | Mexico | [Property, Plant, And Equipment](index=119&type=section&id=Property%2C%20Plant%2C%20And%20Equipment) ASUR's property, plant, and equipment primarily comprise government-owned airport assets in Mexico and Colombia, reverting upon concession expiration, alongside company-owned land in Huatulco and corporate headquarters, covered by physical insurance but not business interruption - All real estate and fixtures in Mexican airports are owned by the Mexican nation and revert to the government upon concession termination (scheduled for 2048)[611](index=611&type=chunk) - Similarly, all real estate and fixtures in Colombian airports are owned by the Colombian government and revert upon concession termination (projected for 2032, extendable to 2048)[612](index=612&type=chunk) - ASUR owns **130 hectares** of land in Huatulco for tourism development, with an indefinite extension on construction obligations[614](index=614&type=chunk) - The company maintains comprehensive insurance coverage for physical facilities against natural disasters and accidents but does not carry business interruption insurance[614](index=614&type=chunk) [Item 4A. Unresolved Staff Comments](index=120&type=section&id=Item%204A.%20Unresolved%20Staff%20Comments) This section confirms the absence of any unresolved staff comments - The section on 'Unresolved Staff Comments' is marked as **Not applicable**[615](index=615&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=120&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section provides an overview of ASUR's operations, recent developments, passenger traffic, revenue classification, operating costs, taxation, and liquidity, along with critical accounting policies and new accounting standards [Overview](index=120&type=section&id=Overview) ASUR operates airports in Mexico, Colombia, and Puerto Rico, with aeronautical services as the primary regulated revenue source, and non-aeronautical commercial services targeted for faster, unregulated growth - ASUR operates **9** airports in Mexico, **6** in Colombia, and the LMM Airport in Puerto Rico[617](index=617&type=chunk) - Aeronautical services are the primary revenue source, accounting for **57.1%** of total revenues in 2019, driven by passenger and cargo volume and regulated maximum rates[617](index=617&type=chunk) - Non-aeronautical revenues, mainly from commercial services, are largely unregulated in Mexican airports and are expected to grow faster than aeronautical revenues[618](index=618&type=chunk) [Recent Developments](index=121&type=section&id=Recent%20Developments) Recent developments include ASUR's full consolidation of Airplan and Aerostar, a new Mexico-U.S. aviation agreement, a Mexican tax amnesty program, and the significant adverse impact of the COVID-19 pandemic on passenger traffic and operations - ASUR acquired a **92.42%** stake in Airplan (Colombian airports) in October 2017, increasing to **100%** in May 2018, consolidating its results[620](index=620&type=chunk) - ASUR acquired an additional **10%** interest in Aerostar in May 2017, increasing its equity to **60%** and fully consolidating Aerostar's results from June 1, 2017[622](index=622&type=chunk) - A new Mexico-U.S. Air Transport Agreement, effective August 21, 2016, aims to increase competition and passenger traffic by eliminating route limits[625](index=625&type=chunk) - ASUR participated in a Mexican tax amnesty program in May 2013, paying **Ps.128.3 million** to settle an income tax claim, but an appeal regarding employee statutory profit sharing is still pending[626](index=626&type=chunk) - The COVID-19 pandemic, declared a public health emergency in January 2020, led to widespread travel restrictions and flight suspensions, significantly reducing passenger traffic across all ASUR's operating regions[627](index=627&type=chunk) - Total passenger traffic decreased **6.3%** in Q1 2020 compared to Q1 2019, with severe impacts expected in April and May 2020[629](index=629&type=chunk) [Passenger Traffic Volume and Composition](index=123&type=section&id=Passenger%20Traffic%20Volume%20and%20Composition) Passenger charges, representing **41.6% of 2019 consolidated revenues**, are the main driver, with Mexican, Puerto Rican, and Colombian airports showing distinct domestic and international passenger compositions, all highly sensitive to economic and external factors - Passenger charges are the principal source of revenues, accounting for **41.6%** of consolidated revenues in 2019[630](index=630&type=chunk) - In 2019, Mexican airports had **48.8%** domestic and **51.2%** international passengers, with **55.7%** of international passengers traveling to/from the U.S[631](index=631&type=chunk)[632](index=632&type=chunk) - LMM Airport in Puerto Rico had **89.5%** domestic passengers (from mainland U.S.) and **10.5%** international passengers in 2019[635](index=635&type=chunk) - Colombian airports had **84.9%** domestic and **15.1%** international passengers in 2019, with **35.2%** of international traffic to/from the U.S[636](index=636&type=chunk) - Total passengers for LMM Airport were **9.4 million** in 2019, and for Colombian airports, **12.1 million** in 2019[635](index=635&type=chunk)[637](index=637&type=chunk) [Classification of Revenues and Price Regulation](index=125&type=section&id=Classification%20of%20Revenues%20and%20Price%20Regulation) ASUR classifies revenues into aeronautical, non-aeronautical, and construction services, with Mexican and Colombian airports using a 'dual-till' price regulation system for aeronautical services, while LMM Airport's revenues are agreement-limited, and unregulated commercial revenues are a key growth focus - Revenues are classified into aeronautical services, non-aeronautical services, and construction services[639](index=639&type=chunk) - Mexican and Colombian airports use a 'dual-till' price regulation system, where aeronautical services and certain non-aeronautical fees are regulated[640](index=640&type=chunk) - LMM Airport's aeronautical revenues are limited by the Airport Use Agreement, with an annual contribution of **U.S.$62 million** for the first five years, adjusted for inflation thereafter[641](index=641&type=chunk) Consolidated Revenue by Type (2017-2019, millions of Mexican pesos) | Category | 2017 Amount | 2017 Percent | 2018 Amount | 2018 Percent | 2019 Amount | 2019 Percent | |:---|:---|:---|:---|:---|:---|:---|\ | **Regulated Revenues:** | | | | | | |\ | Airport Services | 6,743.8 | 53.6% | 9,222.6 | 59.8% | 9,890.2 | 58.8% |\ | **Non-regulated Revenues:** | | | | | | |\ | Access fees from nonpermanent ground transportation | 47.8 | 0.3% | 57.9 | 0.4% | 65.9 | 0.4% |\ | Car parking and related access fees | 184.0 | 1.5% | 298.5 | 1.9% | 319.2 | 1.9% |\ | Other fees | 11.1 | 0.1% | 18.8 | 0.1% | 17.1 | 0.1% |\ | Commercial Services | 3,877.5 | 29.0% | 4,743.6 | 30.8% | 5,158.5 | 30.7% |\ | Other Services | 113.1 | 0.9% | 133.0 | 0.9% | 134.5 | 0.8% |\ | **Other Revenues:** | | | | | | |\ | Construction Services | 1,844.2 | 14.6% | 935.8 | 6.1% | 1,236.2 | 7.3% |\ | **Total** | **12,589.8** | **100.0%** | **15,410.2** | **100%** | **16,821.6** | **100%** | Consolidated Aeronautical Revenue (2017-2019, millions of Mexican pesos) | Category | 2017 Amount | 2017 Percent | 2018 Amount | 2018 Percent | 2019 Amount | 2019 Percent | |:---|:---|:---|:---|:---|:---|:---|\ | Passenger charges | 4,908.7 | 75.7% | 6,547.7 | 73.2% | 7,005.0 | 73.0% |\ | Landing charges | 593.6 | 9.2% | 1,047.8 | 11.7% | 1,148.8 | 12.0% |\ | Aircraft parking charges | 608.7 | 9.4% | 745.9 | 8.3% | 765.6 | 8.0% |\ | Airport security charges | 72.4 | 1.1% | 92.0 | 1.0% | 102.2 | 1.0% |\ | Passenger walkway charges | 300.8 | 4.6% | 509.5 | 5.7% | 575.4 | 6.0% |\ | **Total Aeronautical Revenue** | **6,484.2** | **100.0%** | **8,942.9** | **100.0%** | **9,597.0** | **100.0%** | Mexican Aeronautical Revenue per Workload Unit (2017-2019, Mexican pesos) | Indicator | 2017 Amount | 2018 Amount | 2019 Amount | Change (2018-2019) | |:---|:---|:---|:---|:---|\ | Total workload units (millions) | 31.7 | 33.9 | 34.9 | 2.7% |\ | Aeronautical revenue (millions) | 5,319.5 | 5,965.5 | 6,334.9 | 6.2% |\ | Aeronautical revenue per workload unit | 167.8 | 175.8 | 181.7 | 3.4% | Passengers Paying Passenger Charges by Airport (2017-2019, thousands) | Airport | 2017 | 2018 | 2019 | % change 2018-2019 | |:---|:---|:---|:---|:---|\ | Cancún | 11,639.0 | 12,419.0 | 12,569.9 | 1.0% |\ | Mérida | 1,045.1 | 1,195.2 | 1,364.4 | 14.0% |\ | Villahermosa | 630.8 | 616.7 | 620.4 | 1.0% |\ | Other Mexican Airports | 2,015.3 | 2,176.3 | 2,310.5 | 6.0% |\ | San Juan | 8,247.0 | 8,250.0 | 9,386.0 | 14.0% |\ | Colombia | 4,999.9 | 5,287.9 | 6,007.1 | 14.0% |\ | **Total** | **28,577.1** | **29,945.1** | **32,258.3** | **8.0%** | Consolidated Non-Aeronautical Revenue (2017-2019, millions of Mexican pesos) | Category | 2017 Amount | 2017 Percent | 2018 Amount | 2018 Percent | 2019 Amount | 2019 Percent | |:---|:---|:---|:---|:---|:---|:---|\ | Commercial space | 3,578.9 | 84.0% | 4,431.4 | 80.1% | 4,830.8 | 80.7% |\ | Access fees from nonpermanent ground transportation | 47.9 | 1.1% | 57.9 | 1.0% | 65.9 | 1.1% |\ | Car parking and related access fees | 66.7 | 1.6% | 289.6 | 5.2% | 302.9 | 5.1% |\ | Other services | 567.9 | 13.3% | 752.6 | 13.6% | 788.9 | 13.2% |\ | **Total Non-aeronautical Revenue** | **4,261.4** | **100.0%** | **5,531.5** | **100%** | **5,988.5** | **100%** | Consolidated Commercial Revenues (2017-2019, millions of Mexican pesos) | Category | 2017 Amount | 2018 Amount | 2019 Amount | Change (2018-2019) | |:---|:---|:---|:---|:---|\ | Duty-Free Shops | 881.7 | 1,861.1 | 1,963.9 | 5.5% |\ | Food and Beverage | 609.3 | 738.4 | 820.0 | 11.1% |\ | Retail Stores | 1,194.7 | 621.8 | 717.2 | 15.3% |\ | Advertising Revenues | 139.5 | 161.2 | 187.2 | 16.1% |\ | Parking Lots | 184.0 | 298.5 | 319.2 | 6.9% |\ | Car Rental Companies | 379.2 | 611.8 | 674.0 | 10.1% |\ | Banking and Currency Exchange Services | 97.3 | 119.9 | 115.9 | (3.3)% |\ | Teleservices | 13.0 | 14.1 | 16.0 | 13.5% |\ | Ground Transportation and Access Fees | 53.5 | 134.0 | 98.0 | 28.8% |\ | Other Services | 325.3 | 539.0 | 632.2 | 5.9% |\ | **Total** | **3,877.5** | **5,100.0** | **5,543.6** | **8.7%** | [Operating Costs](index=132&type=section&id=Operating%20Costs) Operating costs are driven by fixed and variable factors, including employee, maintenance, and concession fees, with construction costs matching revenues, and the company subject to **10%** Mexican employee profit sharing, while depreciation reflects concessioned asset investments - Operating costs are influenced by fixed costs (e.g., depreciation, administrative expenses, maintenance, security, utilities, employee costs) and variable costs (e.g., technical assistance and concession fees, dependent on financial results/passenger traffic)[677](index=677&type=chunk) Consolidated Operating Costs (2017-2019, millions of Mexican pesos) | Category | 2017 Amount | 2018 Amount | 2019 Amount | % Change (2018-2019) | |:---|:---|:---|:---|:---|\ | **Cost of services:** | | | | |\ | Employee costs | 654.8 | 807.1 | 984.5 | 22.0% |\ | Maintenance | 400.7 | 672.5 | 698.4 | 3.9% |\ | Safety, security and insurance | 292.2 | 508.3 | 548.4 | 7.9% |\ | Utilities | 251.5 | 486.3 | 503.2 | 3.5% |\ | Other | 710.4 | 1,075.4 | 1,096.4 | 1.9% |\ | **Total cost of services** | **2,309.6** | **3,549.6** | **3,830.9** | **7.9%** |\ | Costs of construction | 1,898.5 | 935.8 | 1,236.2 | 32.1% |\ | Administrative expenses | 204.4 | 235.3 | 250.2 | 6.3% |\ | Technical assistance fee | 346.5 | 386.2 | 404.1 | 4.6% |\ | Government concession fee | 468.7 | 898.3 | 986.9 | 9.9% |\ | **Depreciation and amortization:** | | | | |\ | Depreciation | 22.9 | 44.3 | 66.3 | 49.7% |\ | Amortization | 1,143.2 | 1,716.4 | 1,770.6 | 3.2% |\ | Goodwill impairment | 4,719.1 | — | — | — |\ | **Total operating costs** | **11,113.0** | **7,765.9** | **8,545.1** | **10.0%** | - Mexican federal labor laws mandate a **10.0%** employee statutory profit sharing (PTU) from unconsolidated annual profits, applicable only in Mexico[682](index=682&type=chunk) - The technical assistance fee paid to ITA is the greater of **U.S.$2.0 million** (adjusted for inflation) or **5.0%** of consolidated earnings before certain deductions, considering only Mexican airport earnings[683](index=683&type=chunk) - Government concession fees include **5.0%** of gross annual regulated revenues for Mexican airports, fixed payments for LMM Airport (**U.S.$2.5 million** for first five years, then **5-10%** of gross revenues), and **19.0%** of regulated and non-regulated revenues for Colombian airports[684](index=684&type=chunk)[686](index=686&type=chunk)[687](index=687&type=chunk) - A **Ps.4,719.1 million** goodwill impairment was recognized in 2017 due to Hurricane Maria's effects in Puerto Rico[692](index=692&type=chunk) - Construction costs equal construction revenues because third-party vendors are hired for construction and upgrade services, with no premium recognized[693](index=693&type=chunk)[694](index=694&type=chunk) [Taxation](index=135&type=section&id=Taxation) ASUR's tax provision varies by region, with Mexico having a **30.0%** income tax and **10.0%** dividend withholding, Puerto Rico a **10.0%** income tax, and Colombia a **33.0%** income tax plus surcharge, with VAT rates of **16.0%** in Mexico and **19%** in Colombia - Mexico's income tax rate is **30.0%**, with a **10.0%** withholding tax on dividends paid to non-resident holders[696](index=696&type=chunk) - LMM Airport operations in Puerto Rico are subject to a **10.0%** income tax[699](index=699&type=chunk) - Colombia's income tax rate was **33.0%** in 2019 (reducing to **30.0%** by 2022), plus a **4.0%** surcharge for entities with taxable bases over **COP$800,000**[700](index=700&type=chunk) Overall Income Taxes (2017-2019, millions of Mexican pesos) | Category | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Current Income Tax | 1,928.2 | 1,746.0 | 1,975.7 |\ | Deferred Income Tax | (292.8) | 50.0 | 2.4 |\ | **Total Income Tax** | **1,635.4** | **1,796.0** | **1,978.1** |\ | Current Asset Tax | 0.9 | 0.9 | — |\ | **Total Income Tax** | **1,636.3** | **1,796.9** | **1,978.1** | - The VAT tax rate was **16.0%** in Mexico and **19%** in Colombia in 2019[704](index=704&type=chunk)[706](index=706&type=chunk) - The company does not file a consolidated income tax return, with taxes and deferred taxes determined on an individual airport-by-airport basis[703](index=703&type=chunk) [Effects of Inflation and Economic Changes](index=138&type=section&id=Effects%20of%20Inflation%20and%20Economic%20Changes) ASUR's business is sensitive to economic conditions, inflation, and interest rates in Mexico, Colombia, and the U.S., with varying GDP and inflation rates across regions significantly impacting financial performance Inflation and GDP Growth Rates (2017-2019) | Indicator | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | Mexican Inflation Rate (%) | 6.8% | 4.8% | 2.8% |\ | Colombian Inflation Rate (%) | 4.3% | 3.2% | 3.8% |\ | U.S. Inflation Rate (%) | 2.1% | 1.9% | 2.3% |\ | Mexican GDP Growth (%) | 2.3% | 2.0% | (0.1)% |\ | Colombian GDP Growth (%) | 1.7% | 2.8% | 3.3% | - The general condition of the Mexican economy, inflation, and high interest rates have historically and may in the future adversely affect business and operating results[716](index=716&type=chunk) [Effects of Fluctuation](index=138&type=section&id=Effects%20of%20Fluctuation) Mexican peso-U.S. dollar fluctuations significantly impact ASUR's dollar-denominated revenues and debt, with peso depreciation potentially increasing debt costs and risking fines or concession termination if maximum regulated rates are exceeded Mexican Peso Depreciation (Appreciation) vs. U.S. Dollar (2017-2019) | Year | Depreciation (Appreciation) of the Mexican peso as compared to the U.S. dollar (%) | |:---|:---|\ | 2017 | (4.7)% |\ | 2018 | (0.1)% |\ | 2019 | (3.9)% | - Changes in the peso's value against the U.S. dollar affect passenger charges (international are dollar-denominated), commercial service contracts (many are dollar-denominated), and comprehensive financing results (dollar-denominated indebtedness)[719](index=719&type=chunk)[720](index=720&type=chunk)[721](index=721&type=chunk) - Peso depreciation, especially late in the year, could cause the company to exceed maximum regulated rates at Mexican airports, potentially leading to fines or concession termination[722](index=722&type=chunk) [Operating Results by Airport](index=140&type=section&id=Operating%20Results%20by%20Airport) This section details individual airport and holding company operating results, including revenues, expenses, and net operating income for 2017-2019, highlighting intercompany agreement impacts that are eliminated in consolidated reporting Airport Operating Results (2017-2019, millions of Mexican pesos) | Airport/Entity | 2017 Revenues | 2017 Expenses | 2017 Net Operating Income | 2018 Revenues | 2018 Expenses | 2018 Net Operating Income | 2019 Revenues | 2019 Expenses | 2019 Net Operating Income | |:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|\ | Cancún | 8,786.4 | (3,838.4) | 4,723.3 | 8,465.6 | (3,037.0) | 5,206.9 | 8,823.7 | (3,248.1) | 5,355.8 |\ | Mérida | 538.2 | (283.7) | 264.0 | 591.9 | (276.6) | 297.4 | 843.3 | (438.4) | 384.1 |\ | Villahermosa | 263.7 | (136.2) | 119.7 | 276.8 | (155.8) | 112.3 | 366.9 | (205.8) | 152.0 |\ | Other Mexican Airports | 1,021.9 | (620.2) | 377.2 | 1,064.9 | (602.9) | 432.5 | 1,406.8 | (882.9) | 494.0 |\ | San Juan | 1,497.5 | (1,186.0) | 311.5 | 3,025.3 | (2,277.5) | 882.4 | 3,306.1 | (2,442.1) | 1,068.1 |\ | Colombian Airports | 482.1 | (481.3) | 0.8 | 1,985.7 | (1,745.8) | 239.9 | 2,074.8 | (1,633.3) | 441.4 |\ | Holding & Service Companies | 1,244.9 | (994.3) | 498.0 | 1,407.1 | (1,077.7) | 606.5 | 1,469.2 | (1,164.0) | 584.8 |\ | Consolidation Adjustment | (1,501.8) | 6,319.5 | N/A | (1,684.6) | 1,684.6 | N/A | (1,749.2) | 1,749.2 | N/A |\ | **Total** | **12,589.8** | **(11,113.0)** | **1,476.8** | **15,410.2** | **(7,765.9)** | **7,778.9** | **16,821.6** | **(8,545.0)** | **8,481.3** | - Intercompany agreements, such as the 'Solidarity Agreement,' affect individual Mexican subsidiary revenues and costs but are eliminated in consolidated results[729](index=729&type=chunk) - A **Ps.4,719.1 million** goodwill impairment was recognized in 2017 due to Hurricane Maria's effects in Puerto Rico[728](index=728&type=chunk) [Summary Historical Results of Operations](index=143&type=section&id=Summary%20Historical%20Results%20of%20Operations) Consolidated results for 2017-2019 reflect full consolidation of LMM and Colombian airports, with 2019 total revenues increasing **9.2% to Ps.16,821.6 million**, operating expenses rising **10.0%**, operating income increasing **9.0%**, and net income growing **11.0% to Ps.5,683.3 million** - Consolidated financial and operating information for 2017 includes consolidation of LMM Airport from June 1, 2017, and Colombian airports from October 19, 2017[731](index=731&type=chunk) Consolidated Operating Results (2017-2019, thousands of Mexican pesos) | Category | 2017 | 2018 | 2019 | |:---|:---|:---|:---|\ | **Total revenue** | **12,589,818** | **15,410,241** | **16,821,638** |\ | Total operating costs and expenses | (11,112,985) | (7,765,909) | (8,545,062) |\ | Other income | — | 134,637 | 204,719 |\ | **Operating profit** | **1,476,833** | **7,778,969** | **8,481,295** |\ | Net comprehensive financing income result | (231,834) | (862,270) | (819,558) |\ | Gain from business combinations | 7,029,200 | — | — |\ | Income before taxes | 8,386,544 | 6,916,699 | 7,661,737 |\ | Provision for taxes | (1,636,379) | (1,796,893) | (1,978,102) |\ | **Net income** | **6,750,165** | **5,119,806** | **5,683,635** |\ | Operating margin | 11.7% | 50.5% | 50.4% |\ | Net margin | 53.6% | 33.2% | 33.8% | - Total consolidated revenues for 2019 were **Ps.16,821.6 million**, a **9.2%** increase from 2018, driven by increases in aeronautical (**7.3%**), non-aeronautical (**8.3%**), and construction services (**32.1%**)[735](index=735&type=chunk) - Total operating expenses increased by **10.0%** to **Ps.8,545.0 million** in 2019, primarily due to higher construction costs related to new Master Development Plan commitments in Mexico[748](index=748&type=chunk) - Operating income increased by **9.0%** to **Ps.8,481.3 million** in 2019, supported by revenue growth and non-recurring insurance recovery related to Hurricane Maria[761](index=761&type=chunk) - Net comprehensive financing result was a loss of **Ps.819.6 million** in 2019, a decrease from **Ps.862.3 million** loss in 2018, mainly due to lower interest expenses[769](index=769&type=chunk) - Net income increased **11.0%** to **Ps.5,683.3 million** in 2019 from **Ps.5,119.8 million** in 2018[774](index=774&type=chunk) [Liquidity and Capital Resources](index=150&type=section&id=Liquidity%20and%20Capital%20Resources) ASUR's liquidity, primarily from operating cash flow, supports expenses, dividends, and investments, with 2019 operating cash flow increasing **10.5% to Ps.8,501.7 million**, and consolidated indebtedness reaching **Ps.13,712.9 million** as of December 31, 2019, driven by master development plan capital expenditures - Cash flow from operations is the primary source of liquidity, used for operating expenses, dividend payments, and increasing cash balances[775](index=775&type=chunk) - Cash flow from operating activities increased by **10.5%** to **Ps.8,501.7 million** in 2019[777](index=777&type=chunk) - Cash flow used in financing activities decreased to **Ps.4,427.9 million** in 2019, including **Ps.3,000.0 million** in dividend payments[778](index=778&type=chunk) - Cash flow used in investing activities was **Ps.2,390.2 million** in 2019, primarily due to **Ps.2,614.9 million** in new investments in concessioned assets[779](index=779&type=chunk) - As of December 31, 2019, consolidated outstanding indebtedness was **Ps.13,712.9 million**[780](index=780&type=chunk) - Mexican indebtedness includes **Ps.2,000.0 million** loans from BBVA Bancomer and Banco Santander, with covenants requiring consolidated leverage ratio ≤ **3.50:1.00** and interest coverage ratio ≥ **3.00:1.00**[780](index=780&type=chunk)[781](index=781&type=chunk) - Puerto Rican indebtedness includes **U.S.$400.0 million** in senior secured notes and a **U.S.$10.0 million** revolving credit facility for Aerostar, with a debt service coverage ratio covenant of at least **1.50:1.00**[785](index=785&type=chunk)[786](index=786&type=chunk) - Colombian indebtedness includes a **COP$440,000.0 million** syndicated credit agreement for Airplan, with covenants on capital structure and debt coverage[787](index=787&type=chunk)[789](index=789&type=chunk)[1344](index=1344&type=chunk)[1345](index=1345&type=chunk) Historical Investments (2017-2019, thousands of Mexican pesos) | Year | Amount | |:---|:---|\ | 2017 | 1,288,006 |\ | 2018 | 1,099,606 |\ | 2019 | 2,676,610 | - In 2019, capital expenditures included **Ps.2,188.0 million** in Mexico (terminal extensions, taxiway, land purchases), **Ps.174.6 million** in Colombia (terminal construction, runway renovations), and **Ps.313.9 million** in Puerto Rico (taxiway, terminal reconstruction)[796](index=796&type=chunk)[797](index=797&type=chunk)[798](index=798&type=chunk) [Critical Accounting Policies](index=156&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant judgments in revenue recognition (IFRS 15), Airplan concession useful life determination (tied to revenue), and annual goodwill impairment testing using discounted cash flows, sensitive to passenger traffic and discount rate assumptions - Critical accounting policies require significant judgment, estimates, and assumptions, particularly for revenue recognition, useful life of the Airplan concession, and goodwill impairment[805](index=805&type=chunk)[806](index=806&type=chunk)[807](index=807&type=chunk)[819](index=819&type=chunk)[820](index=820&type=chunk) - Revenue recognition follows IFRS 15, classifying income based on performance obligations (at a point in time or over time) and adhering to maximum rate limits for regulated services in Mexico[808](index=808&type=chunk)[809](index=809&type=chunk)[810](index=810&type=chunk)[814](index=814&type=chunk) - The useful life of the Airplan concession is determined by the proportion of accumulated income to total expected income in the financial model, with sensitivity analysis showing a **3%** change in income growth could alter useful life by two years[817](index=817&type=chunk)[819](index=819&type=chunk) - Goodwill is evaluated annually for impairment using present value techniques (discounted cash flows), with key assumptions including projected passenger traffic, revenue/cost growth rates, and discount rates[820](index=820&type=chunk) [Application of New and Revised International Financing Reporting Standards](index=159&type=section&id=Application%20of%20New%20and%20Revised%20International%20Financing%20Reporting%20Standards) The Board of Directors, advised by the Audit Committee, approved accounting policies, fully adopting IFRS 16 (Leases) and IFRIC 23 (Uncertainty over Income Tax Treatments) as of January 1, 2019, with neither having a significant impact - The Board of Directors approves accounting policies, with advice from the Audit Committee[821](index=821&type=chunk) - ASUR fully adopted IFRS 16 (Leases) and IFRIC 23 (Uncertainty over Income Tax Treatments) as of January 1, 2019[821](index=821&type=chunk)[823](index=823&type=chunk)[825](index=825&type=chunk) - The adopti

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE:ASR) Q4 2019 Earnings Conference Call February 25, 2020 10:00 AM ET Company Participants Adolfo Castro - Chief Executive Officer Conference Call Participants Mauricio Martinez - GBM Alejandro Zamacona - Credit Suisse Rodolfo Ramos - Bradesco BBI Stephen Trent - Citi Gabriel Himelfarb - Scotiabank Alan Macias - Bank of America Andy Jones - AMP Capital Operator Good day, ladies and gentlemen and welcome to ASUR Fourth Quarter 2019 Results Conference Call. ...

Grupo Aeroportuario del Sureste SAB de CV (NYSE:ASR) Q2 2019 Earnings Conference Call July 25, 2019 10:00 AM ET Company Participants Adolfo Castro - CEO, Director of Finance, Chief Financial & Strategic Planning Officer Conference Call Participants Lucas Laghi - Citigroup Alan Macias - Bank of America Merrill Lynch Alejandro Zamacona - Crédit Suisse Mauricio Martinez - GBM Rodolfo Ramos - Bradesco BBI Joshua Milberg - Morgan Stanley Operator Good day, ladies and gentlemen, and welcome to the ASUR's Second Q ...