Grupo Aeropuerto del Pacifico, SAB de CV (Pacific Airport Group) has successfully negotiated new terms with the Airport Authority of Jamaica (AAJ) on operating the Sangster International Airport (SIA) and Norman Manley International Airport (NMIA).

The change involves the extension of MBJ Airport Limited’s 30-year concession period by one year from the original commencement date in April 2003. This means that MBJ will continue operating the Sangster International Airport until March 2034.

PAC Kingston Airport Limited (PACKAL), operators of NMIA, concession change will see its monthly fee to the AAJ cut from 62.01 per cent to 53.22 per cent from the effective date of September 11, 2023. The excess amounts paid since then to AAJ will be reimbursed to PACKAL once the 300-metre extension of the safety zone of the runway begins. This will occur with the handover of the site to the contractor, with this reimbursement to be recognised retroactively on PACKAL’s 2024 income statement. The runway extension is set to cost US$66 million (J$10.2 billion) and is set to be completed by the end of 2027.

These amended terms reflect the move by the Government to facilitate PACKAL’s undertaking to complete the runway extension and the significant impact that both airports would have faced during the COVID-19 pandemic during 2020 to 2021. PACKAL paid US$7.5 million in October 2018 for the right to operate NMIA for 25 years with a possible five-year extension. It began operating the airport in October 2019, six months before the COVID-19 pandemic decimated air travel.

As part of that original agreement, the company had to pay AAJ a 62.01 per cent concession fee based on the company’s total revenue (sum of aeronautical and non-aeronautical revenues). These fees would be used by AAJ to develop relevant airport assets, since the Government of Jamaica continues to own both airports. PACKAL paid US$41.3 million (MX$733.60 million) or J$6.34 billion in concession fees during 2023 when it earned MX$2.61 billion in revenue and paid US$34.7 million (MX$697.5 million) during 2022 to AAJ when it earned MX$2.38 billion in total revenue. The cut in the concession fee should effectively translate to about MX$103.99 million or US$5.85 million (J$899.14 million) less being paid by PACKAL to AAJ based on its MX$2.61 billion in revenue recorded for 2023.

NMIA is the seventh busiest airport in the Caribbean region in terms of commercial aviation passenger traffic, excluding Cuba, as it handled 1.7 million terminal passengers according to Airports Council International, as per GAP’s 20–F 2023 annual report. Sangster International is the third busiest airport in the Caribbean region, excluding Cuba, as it processed 5.2 million passengers in 2023 which represented about 70 per cent of tourist arrivals into the island. Shane Monroe and Sitara English-Byfield are the Jamaican CEOs of MBJ and PACKAL, respectively.

AAJ is a public body under the Ministry of Science, Energy, Telecommunications and Transport with the responsibilities of managing and operating Jamaica’s international airports and domestic aerodromes. It was estimated to have earned J$11.17 billion in total revenue for the 2023/2024 fiscal year (April 2023 to March 2024), with J$9.28 billion or 83 per cent of that figure originating from concession fees paid by MBJ and PACKAL. It generated profit before tax of J$7.36 billion and a net profit of J$6.60 billion during the period, a marginal decrease over the prior 2022/2023 fiscal year. AAJ is currently projected to earn J$16.43 billion in total revenue and $10.55 billion in net profit for the 2024/2025 fiscal year according to the Ministry of Finance public bodies estimates.

These developments occur just weeks after Hurricane Beryl’s passage across the Caribbean and parts of North America. Both airports were closed from Tuesday, July 2 through July 3 as a preventative measure. SIA resumed operations by 6 am on July 4 while NMIA was set to reopen by 5:00 am on July 5. This was due to NMIA having minor roof damage to the passenger boarding area.

A press release by the Pacific Airport Group noted, “The runways, aprons, and terminals did not suffer damage, enabling the reopening of the airports. GAP has property insurance that covers this type of natural disaster, so no significant economic effects are expected.”

During the month of June, SIA processed 447,400 terminal passengers which was a decline from 448,500 terminal passengers in June 2023. NMIA processed 144,500 passengers in June, a 2.2 per cent decline from 147,800 passengers. SIA has processed 2.74 million passengers or three per cent more traffic in the first half of 2024 while NMIA processed 811,800 passengers or 2.2 per cent less traffic in the same timeframe.

MBJ’s total revenue in the second quarter marginally dipped to MX$690.90 million but improved in United States dollar (USD) terms where it earns more than 70 per cent of its revenue. Despite higher operating expenses, MBJ’s operating income increased by 11 per cent to MX$250.21 million (US$14.54 million). Its EBITDA (earnings before interest, tax, depreciation and amortisation) was seven per cent lower at MX$321 million (US$18.65 million). It recorded a net profit of MX$136.56 million (US$7.93 million) or J$1.23 billion for the period with MX$101.74 million being attributed to MBJ and the other amount related to Vantage Airport Group Limited which owns the remaining 25.5 per cent stake in MBJ. MBJ declared a dividend of MX$390.14 million (US$22.67 million) during Q2 with MBJ collecting US$16.89 million during the period.

The Pacific Airport Group’s revenue was down 13 per cent in the second quarter to MX$7.26 billion with operating income down 11 per cent to MX$3.51 billion. Consolidated net profit was down ten per cent to MX$2.25 billion with MX$2.21 billion attributable to shareholders. For the six-month period, consolidated revenue was down six per cent to MX$15.75 billion with consolidated net profit decreasing seven per cent to MX$4.72 billion.

The company acquired 51.5 per cent of Guadalajara World Trade Center, SA of CV, a Mexican cargo handling company in the second quarter for MX$875.50 million (US$47.94 million). The business generated revenue above MX$1 billion in 2023 with an EBITDA margin of 40 per cent and no debt. It will be consolidated during the third quarter.

“In terms of other opportunities, as we just say, we are just going really, really deep in the Turks and Caicos opportunity. But for sure, we are reviewing always all the different options of a possibly opportunities of investment in airports. In the region, we are reviewing all the time, any kind of opportunity there. For the moment, the only one that we have in terms of airports that we in our pipeline is the one related with Turks and Caicos,” said Pacific Airport Group CEO Raul Revuelta during the company’s July 24 earnings call after the company missed analyst expectations.

Total assets were up ten per cent year over year to $73.32 billion (US$4.01 billion) with MX$14.92 billion in cash and cash equivalents. Total liabilities and equity attributable to shareholders were MX$54.42 billion and MX$17.71 billion, respectively.

Pacific Airport Group closed Tuesday at US$155.38 on the New York Stock Exchange (NYSE) which leaves it down 11 per cent in 2024 with a market capitalisation of US$8.13 billion. The company didn’t repurchase shares in the first half of 2024 but is set to pay a dividend on Friday to shareholders.