Grupo Aeroportuario del Pacifico(US:PAC)2025-11-04 15:02Summary of Grupo Aeroportuario del Pacífico (GAP) Conference Call Company Overview - Company: Grupo Aeroportuario del Pacífico (GAP) - Ticker: NYSE:PAC - Date of Call: November 04, 2025 Key Industry and Company Insights Industry Context - The call discusses the integration of Cross Border Express (CBX) with Tijuana Airport, which is GAP's second-largest and fastest-growing airport, highlighting the strategic importance of cross-border travel between the U.S. and Mexico. Core Transaction Details - Transaction Overview: GAP is integrating CBX and internalizing a technical assistance agreement, which is seen as a pivotal milestone for the company [4][5][12]. - Ownership Structure: The transaction involves merging five intermediate holding entities into GAP, simplifying its ownership structure [8][12]. - Financial Metrics: The enterprise value to estimated 2026 EBITDA multiple is projected at 12.2x pre-synergies, and the transaction is expected to be immediately accretive on a free cash flow per share basis [12][36]. Financial Implications - EBITDA Growth: GAP anticipates mid-teens annual EBITDA growth over the next several years, driven by strong traffic and revenue growth, along with margin expansion [13][15]. - Cost Savings: The internalization of the technical assistance agreement is expected to yield annual savings of approximately $50.8 million, which is about 5% of the Mexican airport EBITDA [7][27][45]. - Revenue Diversification: The integration of CBX is expected to increase GAP's U.S. dollar-denominated revenues from 20% to 27% on a pro forma basis for 2024 [37]. CBX Specifics - Passenger Traffic: CBX has served over 20 million passengers since its inauguration in December 2015, with a significant portion of users coming from the U.S. [17][19]. - Revenue Streams: CBX's revenue mix includes 69% from ticket sales, 21% from parking, and 10% from ancillary services, all of which are unregulated [17][26]. - Operational Efficiency: CBX offers a fast crossing time of approximately 20 minutes, significantly lower than traditional border crossings, enhancing its attractiveness to travelers [22][32]. Strategic Growth Opportunities - Future Development: GAP plans to utilize approximately 60 acres of adjacent undeveloped land for future projects, including hospitality and parking facilities [42][43]. - Market Expansion: The company aims to capture traffic from alternative border crossings and expand its footprint through new infrastructure projects [41]. Shareholder Considerations - Shareholder Meeting: An extraordinary general shareholders meeting is anticipated in December to approve the transaction, requiring a majority vote [11][12]. - Share Issuance: GAP will issue approximately 90 million new Series B shares, increasing total shares outstanding by about 18% [9][78]. Additional Insights - Technical Assistance Agreement: The internalization of this agreement is expected to improve operational agility and control, aligning with global best practices [45][46]. - Market Resilience: Despite challenges such as the Pratt and Whitney engine issues affecting airlines, GAP remains optimistic about the recovery and growth potential of Tijuana Airport and CBX [96]. Conclusion The integration of CBX and the internalization of the technical assistance agreement represent a significant strategic move for GAP, aimed at enhancing growth, diversifying revenue streams, and simplifying its ownership structure. The anticipated financial benefits and operational efficiencies position GAP favorably for future growth in the cross-border travel market.