Mexican airlines and airport groups report MXN$22 billion drop

Airlines and airport groups listed on the Mexican Stock Exchange were most affected by the cancellation of NAIM

Mexican airlines and airport groups report MXN$22 billion drop
Companies such as Aeroméxico, the Pacific Airport Group (GAP), the North-Central Airport Group (OMA), Volaris, and the South-East Airport Group (ASUR), were most affected by the stock market - Photo: File photo/EL UNIVERSAL
English 01/11/2018 14:07 Miguel Pallares Mexico City Actualizada 15:07
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Airlines and airport groups listed on the Mexican Stock Exchange were most affected by the cancellation of the Texcoco airport, recording a drop of 22 billion pesos (USD$1.09 billion as per the existing rate) in their stock market value between Monday and Tuesday.

Last Monday, shortly after a public consultation led to a decision to cancel the current International Airport construction and expand the Santa Lucía airport instead, the President-elect Andrés Manuel López Obrador confirmed that the construction of the new airport in Texcoco would be cancelled.

Companies such as Aeroméxico, the Pacific Airport Group (GAP), the North-Central Airport Group (OMA), Volaris, and the South-East Airport Group (ASUR), were most affected in the stock market.

The Index of Prices and Quotations (IPC), which shows the most actively traded companies in the Mexican Stock Exchange, registered a second drop last Tuesday with cumulated losses of 4.9% with regard to the week before.

On the other hand, GAP dropped 10.9 billion pesos (USD$541.5 million) in their market cap. While the company reported a market cap of 102.3 billion pesos last Friday, before the results of the public consultation were made public, by the close of Tuesday, its value dropped to 91.3 billion, representing a 10.7% loss.

In a comparative way, GAP generated more than 4.7 billion pesos in net earnings in 2017, which is why the recent drop in their market cap represents more than twice their net annual profit.

However, the stock market capitalization is only a financial indicator, and does not represent actual losses in a company’s productivity, meaning that it only measures the size of a company in terms of shares.

“What causes a loss in the value of assets is mainly a reduction in cash flow. Since the company will receive less direct income, the company’s value is affected, as well as its attractiveness to investment,” explained Raymundo Tenorio, dean of the Monterrey Institute of Technology (ITESM).

For its part, OMA went from 46.4 billion pesos worth of shares to 41.5 billion, which represented a 4.9 billion loss in just two days.

ASUR showed a market cap loss of 3.9 billion pesos, representing a 3.9% drop, while Volaris suffered a drop of 9.4%.

Aeroméxico fell 6.4% in the stock exchange, going from a value of 16.5 billion pesos to 15.4 billion in two days.

According to Marisol Huerta, a financial analyst from “Ve por Más,” the decision to cancel the new international airport in Texcoco generates uncertainty in the stock market and raises questions regarding the energy reform, among other things, which could ultimately cause a decrease in investment.

Grupo Carso (owned by billionaire Carlos Slim) was also affected by the decision, with a drop of 1.9 billion pesos last Monday. Yesterday, however, the company showed a recovery of 3.3%.

Some of the companies that were also affected by the cancellation of NAIM were Ienova, Banorte, ICA, Grupo Hermes, GIA, and the Ángeles Business Group.
 

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