Executive Summary / Key Takeaways

• Resilient Diversification Amidst Mexican Softness: Grupo Aeroportuario del Sureste (ASUR) demonstrates robust performance in its Colombian and Puerto Rican operations, effectively offsetting passenger traffic and revenue softness in Mexico, particularly at Cancun due to the ramp-up of Tulum Airport and domestic capacity constraints.
• Strategic Infrastructure Investments Drive Future Growth: Significant capital expenditures are directed towards modernizing and expanding key Mexican airports, notably Cancun's Terminal 1 and Terminal 4, aiming to alleviate capacity pressures and unlock substantial non-aeronautical revenue potential by 2026 and 2028, respectively.
• Strong Financial Health and Shareholder Returns: ASUR maintains a healthy balance sheet with substantial cash reserves and a low net debt-to-EBITDA ratio, supporting a generous dividend policy, including ordinary and extraordinary cash dividends totaling MXN 24 billion for 2025.
• Operational Enhancements and Commercial Innovation: The company's strategy includes continuous expansion of commercial spaces and optimization of passenger flow, particularly in Colombia and Puerto Rico, contributing to strong commercial revenue per passenger growth despite currency fluctuations.
• Navigating Macro and Competitive Pressures: While facing challenges from a cautious demand environment, U.S. political rhetoric, and direct competition from new airports like Tulum, ASUR's long-term growth thesis is underpinned by its strategic positioning in high-demand tourist and business regions and its proactive investment in infrastructure.

A Global Gateway with Regional Strength

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR), founded in 1996, has evolved into a prominent international airport operator across the Americas. Headquartered in Mexico City, ASUR manages a diversified portfolio of 16 airports, including nine in southeast Mexico, six in northern Colombia, and a 60% joint venture in Puerto Rico's Luis Muñoz Marín International Airport. This strategic geographic spread has been a cornerstone of its resilience, allowing the company to leverage growth opportunities across varied economic landscapes.

ASUR's overarching strategy centers on enhancing the passenger experience, expanding commercial opportunities, and driving sustainable long-term growth through continuous infrastructure investment. The company's history, marked by its Initial Public Offering around 2000, has seen it navigate various market dynamics, from U.S. economic recessions in the early 1990s, where international traffic demonstrated resilience, to more recent challenges like airline suspensions in Colombia and capacity constraints in Mexico. These experiences have forged a robust operational framework, enabling ASUR to adapt and maintain its competitive edge.

The airport operations industry is characterized by high capital requirements, stringent regulatory approvals, and established concessions, forming significant barriers to entry. ASUR's exclusive concessions and strategic locations provide a stable revenue base and pricing power, particularly in high-demand tourist destinations like Cancun. This qualitative advantage in non-aeronautical revenue streams, such as retail and ground services, is a key differentiator.

Operational and Commercial Differentiators: Building the Future of Air Travel

While ASUR does not disclose proprietary "technology" in the traditional sense, its competitive differentiation stems from its strategic approach to infrastructure modernization and operational enhancements, which are critical for improving passenger experience and commercial performance. The company's significant capital expenditure program is a testament to this, focusing on projects that directly translate into tangible benefits for both travelers and the bottom line.

A prime example is the ongoing reconstruction and expansion of Terminal 1 at Cancun Airport, slated for completion in 2026, with Terminal 4 scheduled for 2028. These projects are designed to alleviate existing capacity pressures, particularly in Terminal 2, which currently limits commercial opportunities. Once Terminal 1 is operational, planned upgrades at Terminal 2 will streamline traffic flows, especially from South America, and unlock additional promotional revenue potential. This strategic investment aims to enhance operational efficiency, reduce bottlenecks, and ultimately boost commercial revenue per passenger.

ASUR's commitment to expanding its commercial offerings is evident in the opening of 47 new commercial spaces over the last 12 months, with 35 in Colombia, 7 in Mexico, and 5 in Puerto Rico. This expansion directly supports growth in commercial revenues, as seen in Colombia and Puerto Rico's strong performance. The company's focus on optimizing the mix of retail, food and beverage, and services within its terminals, coupled with efficient space utilization, serves as a continuous operational differentiator. These initiatives, while not "technology" in the digital sense, represent a sophisticated, data-driven approach to airport management that directly impacts financial performance and market positioning.

Competitive Landscape: Navigating a Dynamic Market

ASUR operates within a competitive environment, facing both direct and indirect rivals. Its primary direct competitors in Mexico include Grupo Aeroportuario del Pacífico (PAC) and Grupo Aeroportuario del Centro Norte (OMA), along with global players like VINCI Airports (VINCY), which has a presence in Latin America.

ASUR's market positioning in tourist-heavy regions, particularly Cancun, provides a qualitative edge in non-aeronautical revenue streams compared to PAC, which also has a strong Mexican footprint but with a different geographic spread. ASUR's diversified portfolio, including operations in Puerto Rico and Colombia, offers greater geographic diversification than PAC's more Mexico-centric approach, potentially leading to more stable cash flow generation. However, PAC has demonstrated trends of robust financial performance through efficient capital allocation, potentially achieving stronger profitability margins.

Against OMA, which focuses on industrial and business travel markets in northern and central Mexico, ASUR differentiates itself through its emphasis on international gateways and a broader mix of services appealing to global travelers. While OMA might offer more consistent, albeit less dynamic, growth from its industrial hubs, ASUR's focus on high-growth tourism areas could capture emerging demand. ASUR's TTM Gross Profit Margin of 71.98% and EBITDA Margin of 71.27% are strong indicators of its operational efficiency, though direct, recent TTM comparisons for competitors are not publicly detailed.

VINCI Airports, with its global portfolio, brings extensive international experience and advanced project management capabilities. While VINCI may lead in technological integration and global scale, ASUR's regional focus provides a qualitative advantage in localized expertise and customer loyalty, potentially enhancing its pricing power in non-aeronautical services within its core markets.

Indirect competition stems from alternative transportation modes, such as high-speed rail networks expanding in Mexico, and emerging urban air mobility solutions. These could divert short-haul passenger traffic, impacting ASUR's aeronautical revenues. The company's strategic response involves continuous investment in infrastructure and commercial offerings to maintain the attractiveness and efficiency of its airports, ensuring they remain preferred gateways.

Financial Performance: Resilience and Strategic Investment

ASUR's financial performance in the first half of 2025 reflects a mixed but ultimately resilient picture, driven by its diversified portfolio. In Q2 2025, total revenues increased 5% year-on-year to MXN 7.4 billion, with consolidated EBITDA rising slightly by 2% to MXN 5 billion. The adjusted EBITDA margin stood at nearly 68%, a slight contraction from 69% in the prior year, primarily due to a 170 basis point decline in Mexico. This was largely offset by double-digit EBITDA growth in Puerto Rico (20%) and Colombia (15%).

Mexico, accounting for 72% of total revenues, posted a low single-digit revenue increase of 0.7% in Q2 2025. Passenger traffic in Mexico declined nearly 2%, with international travel down 4.5% and domestic traffic up 1.2%. A significant portion (approximately 38%) of this international traffic decline is attributed to the ramp-up of the new Tulum Airport, which is drawing passengers previously concentrated in Cancun. Costs in Mexico rose 7%, primarily due to a 12% increase in the minimum wage.

Conversely, Puerto Rico was the best-performing market in Q2 2025, posting 3% passenger traffic growth and high teens revenue growth, contributing 17.7% to total revenues. Colombia, representing 12% of total revenues, saw 15.4% top-line growth and 1% passenger traffic growth, benefiting from the continued recovery in domestic and international traffic and the opening of 35 new commercial spaces. Both Puerto Rico and Colombia demonstrated strong commercial revenue per passenger growth, with Colombia leading at a 22% increase and Puerto Rico at 12%.

The company's bottom line in Q2 2025 was negatively impacted by a foreign exchange loss of MXN 1,200 million due to the appreciation of the Mexican peso against the U.S. dollar, a reversal from a gain in the prior year. Despite this, ASUR maintains a strong cash position, closing Q2 2025 with nearly MXN 20 billion in cash and cash equivalents, up 32% year-on-year. The net debt-to-EBITDA ratio remains healthy at 0.1x, reflecting a MXN 9.5 billion loan drawdown to fund taxes and expenses at Cancun Airport and ensure dividend payments.

For the full year 2024, ASUR reported total revenue of MXN 31.33 billion and net income of MXN 13.55 billion. The company's TTM Gross Profit Margin stands at 71.98%, Operating Profit Margin at 53.26%, and Net Profit Margin at 36.63%, indicating strong profitability. Its TTM Debt/Equity ratio is a low 0.25, highlighting a conservative capital structure.

Outlook and Strategic Trajectory

ASUR anticipates a gradual stabilization of traffic in Mexico over the next year. Management expects the impact of Pratt & Whitney engine-related aircraft groundings to have largely bottomed out, leading to an increase in domestic traffic. The Tulum Airport, projected to handle approximately 2.9 million passengers in 2025, is expected to reach normalized operations, at which point its impact on Cancun's traffic should subside.

The company's capital expenditure for 2025 is projected to be around MXN 7 billion (adjusted for inflation), primarily focused on the modernization and expansion of Mexican airports, with most spending concentrated in the fourth quarter. The reconstruction and expansion of Terminal 1 at Cancun Airport is slated for completion by Q3 2026, which is expected to significantly alleviate capacity pressures and enhance commercial opportunities in Terminal 2.

ASUR's commitment to shareholder returns is evident in its dividend policy. Following a MXN 50 per share cash dividend paid in May 2025, two extraordinary dividends of MXN 15 per share are scheduled for September and November 2025, totaling MXN 24 billion for the year. Future dividend proposals will be evaluated based on annual financial performance.

While the global macroeconomic environment remains fluid, ASUR's management believes that travel disruptions, particularly those tied to U.S. and Mexico demand, have historically been temporary. The company expects to capture some positive traffic effects from Canada and Europe next year, as tourism to the U.S. diminishes.

Risks and Challenges

Despite a robust outlook, ASUR faces several pertinent risks. The ongoing ramp-up of Tulum Airport continues to draw passenger traffic away from Cancun, impacting international volumes in Mexico. While management expects this to normalize, the precise timeline remains a factor to monitor. The broader softness in international traffic reflects a cautious demand environment, influenced by global macroeconomic conditions and U.S. migration policies.

Domestic traffic in Mexico remains affected by capacity limitations at Mexico City Airport and the persistent Pratt & Whitney engine issues, which Volaris (VLRS) expects to impact its fleet through 2027. Although ASUR's exposure to U.S. Department of Transportation restrictions on Mexican carriers is minimal, any broader regulatory changes or political rhetoric, especially from U.S. election campaigns, could negatively influence travel demand to Mexico. Environmental factors, such as the "worst ever" sargassum situation in the Caribbean during 2025, also pose a risk to tourism, particularly during the peak summer season.

Conclusion

Grupo Aeroportuario del Sureste (ASUR) stands as a compelling investment opportunity, underpinned by its strategically diversified airport portfolio and a proactive approach to infrastructure development. Despite facing near-term headwinds in its Mexican operations from the Tulum Airport ramp-up and domestic capacity constraints, the robust performance of its Colombian and Puerto Rican assets provides a strong counterbalance. The company's significant capital expenditure program, focused on modernizing and expanding key terminals in Cancun, is poised to unlock substantial long-term revenue potential and enhance operational efficiency.

ASUR's strong financial health, characterized by ample cash reserves and a conservative debt profile, supports its commitment to delivering shareholder value through consistent dividends. While the competitive landscape is dynamic, ASUR's established concessions, strategic locations, and continuous investment in commercial offerings provide a durable competitive moat. Investors should recognize ASUR's resilience in navigating macro and competitive pressures, with its strategic investments and operational enhancements positioning it for sustained growth as market conditions normalize and its infrastructure projects come to fruition. The company's ability to adapt to evolving market dynamics and capitalize on its diversified asset base reinforces its long-term investment thesis.