Executive Summary / Key Takeaways

• Grupo Aeroportuario del Pacífico (PAC) is demonstrating robust financial performance, with Q2 2025 revenues growing 30.6% and EBITDA increasing 31.1% year-over-year, driven by strategic tariff adjustments, a depreciating Peso, and significant non-aeronautical revenue expansion.
• The company's core investment thesis is anchored in its diversified operating and commercial ecosystem, moving beyond traditional flight management to maximize commercial revenues through infrastructure development and new business lines like cargo and hotels.
• PAC is executing an ambitious MXN 43.2 billion Master Development Plan (2025-2029), focusing on substantial capacity expansion in key airports like Guadalajara, Tijuana, and Los Cabos, which is expected to drive future commercial revenue growth.
• Despite headwinds from U.S. migration policies and the ongoing Pratt & Whitney engine inspections impacting passenger traffic, PAC maintains a cautiously optimistic outlook, projecting passenger growth close to 5% for 2026 and a normalized EBITDA margin of approximately 68% for 2025.
• PAC maintains a healthy balance sheet with a net debt-to-EBITDA ratio of 1.8x and a commitment to shareholder value through consistent dividend distributions, while actively pursuing inorganic growth opportunities in the Caribbean and Latin America.

A Diversified Gateway to Growth: PAC's Strategic Evolution

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC), a leading airport operator, has strategically positioned itself as a vital gateway in Mexico's Pacific region and the Caribbean. Since its incorporation in 1998 and subsequent NYSE listing in 2006, PAC has evolved from a regional Mexican operator into a diversified infrastructure play, managing 12 airports in Mexico and two international airports in Jamaica. This expansion, notably the acquisition of Montego Bay's Sangster International Airport in 2015 and Kingston's Norman Manley International Airport in 2019, underscores a deliberate strategy to build a resilient, multi-market operating ecosystem.

The company's overarching strategy transcends mere flight management, focusing instead on cultivating a comprehensive commercial environment within its airports. This approach aims to generate sustained growth and profitability through a blend of aeronautical and, increasingly, non-aeronautical services. This strategic pivot is particularly pertinent in an industry facing dynamic shifts, including macroeconomic volatility, evolving passenger demands, and airline operational challenges.

The broader industry landscape sees PAC competing directly with other Mexican airport groups like Grupo Aeroportuario del Centro Norte (OMA) and Grupo Aeroportario del Sureste (ASUR), each with distinct geographic focuses. OMA primarily serves northern and central Mexico, catering to industrial and business travel, while ASUR dominates the southeastern tourist hubs. PAC differentiates itself by leveraging its strategic locations in Mexico's Pacific region, which serve both high-growth tourism corridors and crucial trade gateways, offering a qualitative edge in markets driven by leisure and cross-border commerce. Indirectly, global operators like Aena S.M.E., S.A. (AENA) also influence the competitive dynamics through their scale and technological advancements.

Operational Excellence and Technological Differentiators

PAC's competitive advantage is significantly bolstered by its continuous investment in operational technology and infrastructure development. The company's Master Development Plan (MDP) is a testament to this commitment, aiming to enhance capacity, efficiency, and the overall passenger experience. The recently approved 2025-2029 MDP for its 12 Mexican airports commits MXN 43.2 billion (in December 2022 pesos, adjusted for inflation) to capital expenditures. This substantial investment will result in an additional 54% in terminal building square meters, a 37% increase in security checkpoints, and 26% more aircraft parking positions across its network.

Key projects under this plan include the construction of a second terminal at Guadalajara, additional aprons, taxiways, and new vehicle access. Guadalajara Airport's second runway, opened in July 2024, is a significant operational upgrade, offering the capacity for an additional 50% to 70% of long-term operations and enhancing flexibility for connectivity. A brand-new Terminal 2 for Guadalajara is proposed, expected to operate by the end of 2028, which management anticipates will lead to an "important jump on revenue per -- commercial revenue per passenger". Similarly, Tijuana will see the development of a new terminal facility for domestic departing passengers, and Los Cabos will undergo apron and international terminal building expansions. Puerto Vallarta's second terminal building is slated for completion by the end of 2026, with the new terminal building opening in Q1 2027, promising "great potential for an increase on commercial revenues per passenger".

These infrastructure enhancements are PAC's core technological differentiators, enabling superior operational efficiency, increased capacity, and a platform for expanded commercial offerings. For instance, the redesign and modernization of terminal spaces, coupled with new tariff strategies for parking lots, have yielded positive revenue results even with flat passenger traffic. The company's direct operation of jet bridges and Airbuses, now mandated by new regulations, further highlights its commitment to controlling service quality and operational standards.

Financial Performance: Resilience Amidst Headwinds

PAC's financial performance in the second quarter of 2025 showcased remarkable resilience, with continued growth in revenue, EBITDA, and net income despite prevailing macroeconomic challenges and foreign exchange volatility. Total passenger traffic for Q2 2025 reached 15.8 million, marking a 4.1% increase compared to the same period in 2024.

Revenues, excluding IFRIC-12, surged by 30.6% year-over-year in Q2 2025, reaching MXN 8.2 billion. This robust top-line growth was primarily driven by the implementation of new tariffs in March 2025, the continued depreciation of the Mexican Peso (averaging around 13.6% versus Q2 2024), and the overall increase in passenger traffic across its 14 airports.

Non-aeronautical revenues were a standout performer, increasing by 41.8% in Q2 2025. Excluding the significant acquisition of the cargo facility, this segment still demonstrated a solid 14% increase. Revenues from business lines directly operated by PAC, such as the consolidated cargo and bonded warehouse business, saw a substantial 113% increase. Third-party operated businesses also contributed significantly, growing by 10.7% with strong contributions from food and beverage, retail, duty-free, ground transportation, and timeshares. This diversification strategy is clearly bearing fruit, with non-aeronautical revenues per passenger reaching MXN 120 during the first nine months of 2024.

EBITDA for Q2 2025 increased by 31.1%, reaching MXN 5.5 billion, with an EBITDA margin of 67.1% (excluding IFRIC-12). While the integration of new businesses like the bonded warehouse and hotel, which have lower individual margins, slightly impacted the overall margin, management noted that the positive absolute contribution of these ventures offsets the effect of increased concession fees. The cargo facility (GWTC) is expected to achieve an EBITDA margin of around 55% and contribute approximately 25% higher revenues in 2024 compared to the previous year.

PAC maintains a healthy financial position, holding MXN 9.7 billion in cash and cash equivalents as of June 30, 2025. The company actively manages its liabilities, demonstrated by the refinancing of a USD 40 million credit line with Banamex for a five-year term in September 2025, with principal due in September 2030. A net debt-to-EBITDA ratio of 1.8x as of June 30, 2025, underscores its disciplined approach to leverage. The approval of a MXN 16.84 per share dividend for 2025 further reinforces PAC's commitment to delivering shareholder value.

Strategic Outlook and Addressing Challenges

PAC's forward-looking strategy is characterized by cautious optimism and a clear roadmap for sustained growth. Management expects to maintain its initial annual guidance for 2025, confident that its diversified portfolio and resilient domestic markets will enable a strong finish to the year.

A key aspect of the outlook involves tariff adjustments. The new tariff, based on a weighted average cost of capital, is being gradually implemented, with the first adjustment in March 2025 and full implementation anticipated by January 2026. Management aims to achieve approximately 90% fulfillment of the maximum tariff for 2025, targeting double-digit increases in passenger fees for some airports while others may see inflationary adjustments. The double-digit growth trend in non-aeronautical revenues is expected to be sustainable in the coming years, closely tied to traffic performance and the opening of new commercial areas. A normalized EBITDA margin of approximately 68% is targeted for 2025, signaling a recovery from the more complex operating environment of 2024.

However, PAC acknowledges several pertinent risks. Restricted U.S. migration and enforcement policies under the current administration pose a challenge, as they tend to discourage travel among the VFR (Visiting Friends and Relatives) international passenger base, which constitutes approximately 38% of PAC's international traffic. This could impact U.S.-Mexico routes, though the company's diversified portfolio, particularly Tijuana's ability to serve the Southern California market via the Cross Border Xpress (CBX), offers some mitigation.

The ongoing preventive inspections of Pratt & Whitney engines, which began in late 2023 and are expected to continue throughout 2025, have caused passenger traffic deceleration. Volaris (VLRS), a major airline for PAC, has been significantly impacted by grounded aircraft. The "worst part" of this capacity constraint is anticipated in the summer of 2025, with a gradual recovery expected from November/December 2025 and full capacity recovery by the first half of 2026. Despite this, PAC projects passenger growth close to 5% for 2026, reflecting underlying demand and anticipated fleet recovery. Increased operational expenses due to labor law changes in Mexico and Jamaica, higher maintenance costs, and rising electricity tariffs also present ongoing cost pressures.

PAC is actively pursuing strategic expansion opportunities, including the Turks and Caicos tender process and evaluating participation in the potential acquisition of CCR Airports assets. Management emphasizes a disciplined approach, seeking assets with "potential future growth on passengers" and "the correct level of possible profitability".

Competitive Positioning and Market Dynamics

PAC's competitive positioning is strengthened by its strategic focus on high-growth regions and its robust infrastructure development. While OMA excels in industrial logistics and ASUR dominates seasonal tourism, PAC's dual focus on leisure and trade in the Pacific region provides a balanced and resilient market presence. The company's significant investments in expanding terminals and adding runways, such as Guadalajara's second runway, directly enhance its capacity and operational efficiency, allowing it to attract new routes and carriers. For instance, new international routes to Canada, starting in November 2025, are expected to capture seasonal demand and strengthen PAC's position in key international markets.

The company's non-aeronautical revenue diversification, including the successful integration of the GWTC cargo facility, provides a competitive edge by creating new business lines related to logistics. This contrasts with more traditional airport operators and positions PAC for future growth in cargo handling, particularly in regions like Tijuana and Guanajuato, which are relevant to the automotive market.

In terms of airline relationships, PAC experiences the typical industry dynamic of airlines being "more vocal about any changes on the tariffs of an airport". However, this is seen as a normal international trend, and PAC's ability to gradually implement tariff adjustments, aiming for full implementation by January 2026, demonstrates its negotiating strength. The unbundling of airport fees by airlines is not viewed as a significant threat, as it has been a market practice for several years.

The company's financial health, characterized by strong cash flow generation and manageable debt levels, supports its ability to fund ambitious capital expenditure plans without requiring equity injections for potential acquisitions like CCR Airports. This financial flexibility is a key differentiator in a capital-intensive industry.

Conclusion

Grupo Aeroportuario del Pacífico stands as a compelling investment opportunity, demonstrating a clear strategic vision and robust execution in a dynamic industry. The company's commitment to diversifying its revenue streams, particularly through aggressive non-aeronautical expansion and strategic acquisitions like the GWTC cargo facility, positions it for sustained profitability. Its substantial investments in infrastructure, including new terminals and runways, are not merely capital outlays but foundational technological differentiators that enhance operational efficiency, expand capacity, and drive future commercial growth.

While macroeconomic headwinds, U.S. migration policies, and the lingering impact of Pratt & Whitney (RTX) engine inspections present near-term challenges, PAC's management has articulated a clear path forward, including gradual tariff adjustments and a focus on resilient domestic and growing international markets. The company's healthy balance sheet, consistent dividend policy, and proactive pursuit of inorganic growth opportunities further underscore its long-term value proposition. PAC's strategic positioning, operational excellence, and disciplined financial management create a compelling narrative for investors seeking exposure to a well-managed and expanding airport infrastructure leader.