>MEXICO CITY, MEXICO - Mexico's three airport operators are starting to suffer from the global airline crisis amid skyrocketing jet fuel prices, and investors have already dumped their stocks.
But some analysts believe the shares of Asur, GAP and OMA have been whipped too hard as passenger growth has remained largely positive to date and the fallout from one grounded carrier has been minimal.
Shares of Asur, GAP and OMA have dropped more than 20 per cent so far this year while global valuations for airport operators have only slipped about half that amount.
Santander Investment, which has a buy rating on all three operators, estimates there is an upside price potential of 35 per cent for Asur, 34 per cent for OMA and 40 per cent for GAP.
"Even though we still see some weakness in the sector near term from lower-than-expected traffic growth, we continue to see value due to high margins and strong cash flow generation," said Santander analyst Gonzalo Fernandez.
"We think the market has overly punished Mexican airport stocks," BBVA-Bancomer said in a note.
Yet passenger traffic growth has started to wane as airlines cancel flights and dump higher costs onto ticket prices with jet fuel prices up 46 per cent from the start of 2008 as world crude oil prices have doubled in a year.
GAP, which runs 12 airports in Mexico's Pacific region, had a 0.5 per cent decline in total passenger numbers in May.
Asur, which runs nine airports in southern Mexico, and OMA reported positive passenger traffic growth in May, up 13.2 per cent and 5.8 per cent respectively, largely because air travel is in its infancy in Mexico and airlines fight with long-distance buses for travellers.
But still, investors have started to cut outlooks for the entire sector given the uncertain times.
Santander has reduced its 2008 passenger growth for all three operators to an average of 6.8 per cent from a previous level of 10.7 per cent after years of high double-digit growth.
"We believe that airlines, particularly low-cost carriers, will continue to scale back their routes and frequency and delay their expansion plans," said BBVA-Bancomer.
"We also believe passengers, particularly tourists, may fly less because of rising ticket prices," it added.
Other analysts say that there could be further turbulence in the future for Mexican airport operators if other airlines stumble like Magnicharters, whose 16 domestic routes were suspended on June 10 on safety grounds.
The impact of its grounding was minimal. OMA said the airline accounted for only 1.8 per cent of its total passenger traffic. But if more or larger airlines get suspended that could increase the impact on airport operators.
