Jamaica Observer: KINGSTON – Jamaica’s two largest airports brought in a combined MX$3.56 billion (US$200.28 million) or estimated $30.76 billion in revenue for concession operator Grupo Aeroportuario del Pacífico, SAB de C.V (Pacific Airport Group) during 2023 amid a record 6.96 million passengers passing through the Kingston and Montego Bay facilities.

The bulk of these earnings were derived from MBJ Airports Limited, operator of the Sangster International Airport (SIA), which saw its total revenue rise 13 per cent to MX$2.81 billion (US$158.23 million) as its core aeronautical revenue jumped seven per cent to MX$1.80 billion with non-aeronautical revenue at MX$800.06 million. However, MBJ’s operating profit dipped 20 per cent to MX$895.30 million (US$50.39 million) due to an increase in concession taxes and cost of improvement to the concession assets. Earnings before interest, tax, depreciation and amortisation (EBITDA) had a similar contraction of 16 percent to MX$1.36 billion.

Pacific Airport Group’s (PAC) aeronautical revenue in Jamaica is derived largely from passenger charges paid by American Airlines at SIA and from JetBlue Airways at the Norman Manley International Airport (NMIA). The non-aeronautical revenue in Jamaica comes from airport services and facilities through different commercial spaces with the largest spenders being Dufry Jamaica Limited, Express Catering Limited and VIP Attractions Limited.

SIA saw a 20 per cent increase in terminal passengers to the tune of 5.21 million passengers, a new record figure above 2019’s performance of 4.71 million passengers. NMIA’s passenger traffic grew 12 per cent to 1.75 million passengers during the year. The Pacific Airport Group owns a 74.5 per cent stake in MBJ and 100 per cent interest in PAC Kingston Airport Limited (PACKAL) which operates the NMIA.

SIA added an additional four airline routes in late 2023 which likely has been a positive contributor to passenger traffic rising by eight per cent to 934,500 passengers in the first two months of 2024. However, PAC CEO Raul Revuelta Musalem highlighted in a February 28 earnings call that labour costs at Sangster International are expected to be 40 per cent higher than 2023, double that of the 12 airports it manages in Mexico. This could be further impacted by the recent minimum wage hike set to take effect on June 1.

“Well, we are continuing with conversations with Jamaican authorities. We have a barrel agreement, but the process in Jamaica is very long. They will have to pass through the parliament for different approvals. So, we wait. We are expecting to have this rebalancing process to conclude at the end of this year,” said PAC Chief Financial Officer Saúl Villarreal García on the potential concession adjustments for its Jamaican operations.

MBJ is currently operating on a 30-year concession agreement related to the SIA since April 2003 while PACKAL is under a 25-year concession agreement for NMIA since October 2019. PAC’s 2022 annual report revealed that it had had filed a petition in 2023 to review the tariffs, capital expenditures and terms and conditions of the concession agreement for both airports due to the airport traffic impact from the COVID-19 pandemic. Aeronautical revenue in Jamaica is subject to a cap set by the Jamaica Civil Aviation Authority (JCAA) and is fixed for five-year periods. The current five-year window is set to expire this year for both airports with the Kingston facility capped at US$29.41 and Montego Bay at US$16.47.

“They announced that probably in the second half of this year, the second half could be from July to December. So, we don’t have any certainty about this. So, we will have to wait and to see if it’s possible to pass through these approvals pass through the Parliament,” García added in response to an analyst.

It was also mentioned during the earnings call that PAC plans to buy around MX$1.5 billion (US$84.43 million) in projects related to the Jamaican airports under the terms of its concession. Sangster International is currently benefiting from numerous US multimillion-dollar investments related to the extension of the runway, expansion of the facilities including the roadways and immigration hall and overall modernisation plan. The full impact of the recent USA travel advisory is yet to be noticed based on the delayed impact mentioned by some hotel operators like Playa Hotel & Resorts NV.

The latest change for the Jamaican operations will be Sitara English-Byfield taking over as CEO of PACKAL on April 1 from Fernando Vistrain Lorence. Shane Munroe is the current CEO of MBJ.

PAC’s total revenue improved by 21 per cent to MX$33.22 billion with operating profit coming in 10 per cent higher at MX$15.14 billion. Consolidated net profit improved six per cent to MX$9.69 billion with net profit attributable to shareholders at MX$9.54 billion.

Total assets increased 12 per cent to MX$67.44 billion largely due to the improvements in concession assets, with cash and cash equivalents ending 2023 at MX$10.06 billion. Total liabilities increased to MX$46.50 billion while equity attributable to shareholders rose six per cent to MX$19.78 billion.

PAC is currently one of the five companies that have been shortlisted for a public private partnership agreement to operate the Howard Hamilton International Airport in the Turks and Caicos Islands. The full 20-F form/annual report should be submitted to the US Securities and Exchange Commission in mid-April, the same time Express Catering’s third quarter report will be due.

MBJ’s profitability declined in Mexican pesos (MXN) due to the appreciation of the currency against the United States dollar (USD) from an average 20.12254 to 17.7665. The statement of equity revealed that MBJ’s profitability declined 15 per cent from MX$689.31 million to MX$586.75 million. A dividend of MX$380.54 million was declared in 2023 with Vantage Airport Group Limited collecting MX$93.14 million as the other 25.5 per cent owner of MBJ.

PAC’s stock price on the New York Stock Exchange is down nine percent in 2024 to US$158.83 which translates to a market capitalisation of US$8.03 billion. PAC will hold its ordinary and extraordinary shareholder meeting on April 25 at 2:00 pm in Jalisco, Mexico. Some of the key agenda items also include approving a new MX$2.5 billion share repurchase programme and amendments to the company’s by-laws.