Healthy Traffic And Excellent Cost Control Still The Story For Grupo Aeroportuario Del Centro Norte

Mexican air travel passenger numbers have remained healthier than expected through 2019, despite a weaker, more uncertain economy, and that has certainly helped Grupo Aeroportuario del Centro Norte (OMAB) (“OMAB”). So too has expense control, has management has done an exemplary job of containing and reducing expenses across the business.

With peer Grupo Aeroportuario del Pacífico (PAC) having recently announced a very successful outcome to its Master Development Plan negotiations, OMAB shares have jumped on expectations that there is less risk (and/or actual upside) as OMAB looks to negotiate its own extension in 2020. Traffic growth is slowing, though, most notably at the Monterrey airport that generates close to 50% of revenue, and I don’t know how much further OMAB management can go with cost cutting, though there is still growth potential from non-aero sources of revenue like parking and hotels. OMAB shares look pretty fairly valued to me here, but a pullback toward the mid-to-low $50’s would certainly be an opportunity to reconsider.

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Healthy Traffic And Excellent Cost Control Still The Story For Grupo Aeroportuario Del Centro Norte