Grupo Aeroportuario del Pacífico - Q2 2024

Transcript

Operator (participant)

Good morning and welcome to GAP's second quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions, and at that time, instructions will be given if you would like to ask a question. It is now my pleasure to turn the conference over to GAP's Investor Relations team. Please go ahead.

María Barona (Founding Partner)

Thank you, and welcome to the Grupo Aeroportuario del Pacífico second quarter 2024 conference call. Presenting from the company today, we welcome Mr. Raúl Revuelta, GAP's Chief Executive Officer, and Mr. Saúl Villarreal, Chief Financial Officer. Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's performance, or financial results. As such, statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report. At this point, I'd like to turn the call over to Mr. Revuelta for his opening remarks. Please begin, sir.

Raúl Revuelta Musalem (CEO)

Thank you, María, and thank you to our audience for joining us today. As always, we appreciate your continued support and interest in GAP. I will briefly review operational and financial figures before taking your questions. During this quarter, the total number of passengers reached 15.3 million, which was a 3.9% decrease compared to 2023. The continued passenger traffic deceleration was due to the preventive inspection carried out on the A320neo and A321neo airplane engines. This is a process that began in September of last year and is expected to continue for the remainder of this year into 2025. Despite this setback, we have continued to expand our strength of our network. During the second quarter, we added 3 international and 2 domestic routes, bringing the total number of routes added to our network to 13 just during the first half of this year.

We anticipate adding around 11 international routes during the second half of the year, including the recently resumed Tijuana to Beijing route, which will start on July 12. These efforts align with our air development and strategies. As you're probably aware, last Friday morning, on July 19, air travel all over the world experienced disruption related to a Microsoft product for customers of the 365 app, which includes many major airlines. While GAP's airport had no internal system complications as a result of the airline system outage, we had 274 delays and 23 cancellations in our Mexican network. Moving on to the financial performance, we experienced a combined revenue decrease for aeronautical and non-aeronautical services of MXN 213 million, or 3.3% lower compared to last year. Lower aeronautical revenues were attributed to the decline of passenger traffic, which is only 95% of the maximum target.

However, there was an almost 11% increase in commercial revenues, driven mainly by the food and beverage, car rentals, and VIP lounges. A little further detail of these commercial revenues, as just mentioned, in terms of the car rental increase, these were mainly driven by the new bidding process carried out in Guadalajara and Los Cabos. Food and beverage stood out at the Guadalajara airport, mainly due to the opening of the new terrace and the layout renovation carried out that resulted in a better brand mix offer. Furthermore, the Priority Pass fees for the use of the VIP lounges increased, leading to a rise in the business line, specifically in the Guadalajara and Los Cabos airports, which experienced the best performance related to the VIP lounge revenues. On July 9, we opened a second VIP lounge at the Guadalajara airport.

This will help us in more adequately meeting the high demand in this airport. Additionally, the hotel at the Guadalajara airport during this quarter generated MXN 18.6 million with an occupancy rate of 51% as of June. We are expecting to close the year with an approximately 62% occupancy. New commercial opportunities and partnerships to drive the further commercial revenue growth are always top in demand for us, and we continue exploring options. Regarding the acquisition of the cargo company GWTC, we expect to begin to consolidate the results starting in the third quarter of 2024. In 2023, GWTC generated revenue above MXN 1 billion, with an EBITDA margin of around 40% and without financial debt. On the other hand, the purchase price allocation will be done in the second half of the year.

As for the cost of service, this increased by MXN 179 million, or 17.3%, mainly due to the higher operational expenses such as employee costs, security, insurance, and maintenance. While these rising costs do bring challenges, they also indicate our continued dedication to upholding high service standards and operational excellence. Despite the enforcing strict cost controls, we do anticipate higher expenses related to expansion and inflationary effects to continue. EBITDA decreased MXN 378.7 million, or 8.3%, as a result of the higher costs and slightly lower revenues. Looking ahead, we remain committed to driving growth and delivering value to our stakeholders. Our focus will continue to be on enhancing operational efficiency while, at the same time, optimizing our services to meet the evolving needs of our customers. Moving on to the balance sheet, cash and cash equivalents decreased by 15.7%, reaching MXN 12.6 billion.

On the debt front, this figure reached MXN 41.8 billion. We continue keeping healthy leverage levels, reaching a net debt-to-EBITDA ratio of 1.7 times for the trailing 12 months, thereby complying with all our debt covenants. CapEx continued to follow the Master Development Program, reaching approximately MXN 3.1 billion in the first half of the year. This position owes well to complying with the current and challenging MDP goals we have in place. I want to mention that yesterday, we opened the second runway at the Guadalajara airport, which was one of the key projects for this quinquennial. This second runway will offer us the capacity to have between 50%-70% of additional operations in the long term and give us more flexibility to continue developing routes and connectivity throughout the region.

This is another important step in meeting the growing needs of this airport, as I mentioned before. Regarding distributions, yesterday, GAP paid the first portion of the capital reduction for a total of MXN 3.5 billion per the resolution made and that were extraordinary shareholders' meetings. The second portion will be paid later in this year. Now, just an update on the Turks and Caicos Airport bidding process. As you know, we are committing to exploring new markets and revenue streams in an effort to further diversify our network. Therefore, as we announced before, we were pre-qualified to bid for the Turks and Caicos Airports, an airport mainly focused on international leisure traffic, which handled 1.4 million passengers in 2023. Most of the revenues come from the aeronautical side, but there is room for improvements in terms of non-aeronautical activity.

At this point in the bidding process, we are analyzing capital investment needs. The criteria for the valuation of the offers will be 70% for technical proposal and investment plan and 30% financial evaluation based on proposed revenue share. The tender submission deadline is October 23, 2024, and the process is expected to be concluded in December of this year. Before I finish, I want to provide revised guidance for 2024. Passenger traffic and aeronautical revenue remain as was originally stated at the beginning of the year, whereas non-aeronautical revenues are updated with the performance of the commercial activities and the consolidation of GWTC. On the other hand, the EBITDA and EBITDA margin, considering the aforementioned issue and the capitalization of the 4% of the concession fee to be paid over Mexican airports due to the recent change in law.

With that, I conclude my comments and ask the operator to open the call for your questions.

Operator (participant)

At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question by pressing the pound key. Once again, to ask a question, please press the star and one on your telephone keypad. I will take our first question from Guillermo Mendez with JPMorgan. Please go ahead. Your line is open.

Guillermo Mendez (Analyst)

Good morning, Raúl, Saúl. Thanks for taking my question. First question is on the MDP negotiation. What is the latest there? So post-elections, if there's any changes on when do we expect it for it to be announced? It's more towards the end of the year or could potentially be announced in the near term. And if the assumptions that you guys mentioned on the previous calls and on the investor day, it's still valid in terms of tariffs and CapEx. And just one follow-up on the commercial side, the upward revision on the guidance, it's only related to the GWTC or there's something else that has been surprising to the upside? Thank you.

Raúl Revuelta Musalem (CEO)

Hi, Guillermo. This is Raúl. In terms of the MDP negotiation, we are in the, I would say, in the same timeline that we expect. We are trying to close the new MDP with this administration. So in that way, we expect to have the authorization of the MDP in September of this year. For the moment, we don't see, or we are, at the moment, we are not seeing any kind of change on that, and we are aligned with the government to try to get the authorization in this administration.

Saúl Villarreal (CFO)

Yes. Well, hi, Guillermo. This is Saúl. Regarding your questions about the new guidance, yes, it is only GWTC. As we mentioned last year, we had MXN 1 billion of revenues with 40% EBITDA margin, and we are expecting to improve a little the EBITDA margin for this year, but at the end, it's already included in the guidance. Also, as we mentioned, the commercial performing and also the capitalization of the 4% of the concession fee for the Mexican airports, that was at 9 in the guidance released in January this year. So those are only the three issues that were included in this new guidance.

Guillermo Mendez (Analyst)

Very clear. Thank you both. Just one follow-up on the MDP. If the assumptions that you guys mentioned about the 0% to mid-single-digit % increase on tariffs and MXN 110, roughly, CapEx per passenger, if that's still the base case or there's something different?

Raúl Revuelta Musalem (CEO)

Guillermo, we are in the process of that. As you may know, during this, we released our proposal to the authorities in June. We are now reviewing with them additional investments. We are revising different assumptions, and that's the hard part of the process. So right now, we are in that. We cannot provide more information, as you may know, but probably it will be a little bit higher, the CapEx because we have additional requests from the authority that we have to analyze and define. So for now, we cannot release more detail, but it's close to what we have been released and announced in the GAP Day.

Guillermo Mendez (Analyst)

Very clear. Thank you, Raúl.

Operator (participant)

Our next question comes from Rodolfo Ramos with Bradesco BBI. Please go ahead.

Rodolfo Ramos (Head of Mexico Research and Strategist)

Thank you, everybody. Thanks for taking my question. A couple from my side. The first one is, it doesn't seem that airports is a big priority for the upcoming administration, but wanted to get your thoughts on the new team that was announced for the Ministry of Transportation, if you have any thoughts there or had any approaches with members of the new elected president's team. And secondly, I wanted to get your thoughts on the Mexico City bottlenecks and just to see whether the bottlenecks that we're seeing there, how do those impact? And at the same time, how do you intend to benefit those to strengthen Guadalajara? How much traffic can it encompass from its geographical area of influence from Mexico City and kind of bypass Mexico City in terms of this bottleneck that it has seen because of the slot restrictions? Thank you.

Raúl Revuelta Musalem (CEO)

Thank you, Rodolfo. This is Raúl. I would say that in the first view, what we are seeing in the new government or in the new minister already announced is someone that comes from the construction industry, I would say, and it's clear that he has a well-recognized career in terms of the development of infrastructure in Mexico City. For the moment, we are focused on all the relationship with today's administration because we are just in the middle of the negotiation of the MDP. As soon as we have the results on the negotiation of the MDP, we will begin to have, I would say, a closer time or meetings with the new administration. But in general, I could tell you that today we are really focused on the MDP.

On the other hand, or one of the parts that say, how important are going to be the airports in the new administration? I would say that for the moment, the only infrastructure plans that we have already here are more focused on trains and passenger trains rather than other things. So I'm not pretty clear which is going to be the, I would say, the complete plan for the development of infrastructure around the country and specifically about the airports. But in general terms, at least what we are hearing is more related to passenger trains rather than airports. In terms of what is happening in Mexico City and the possible bottleneck, first of all, today, in the short term, it's difficult to analyze which could be the impact because there's a, I would say, a lack of enough seats related on the engines of the A320s.

So it's not pretty clear which could be the impact in the future. But in general terms, what we have experienced in the last years is an increase in the strength of Guadalajara Airport in terms of a hub. As you know, in the last, I would say, 2 years, we opened for the very first time direct routes to Canada, to Spain, to Colombia. So in general terms, what we are seeing is that Guadalajara is continuing to strengthen their capabilities to be a more important hub.

So in that, what I'm seeing is that in the coming years, depending for sure on how the economy of the central area of Mexico and the economy specifically of Jalisco, Guanajuato, or Aguascalientes, in terms of the general performance of the area, combined with the decision of allocation of the fleet of some specific airlines as it could be realized in Guadalajara, we will continue to see the strength of the capabilities of GAP on Guadalajara Airport.

Rodolfo Ramos (Head of Mexico Research and Strategist)

Perfect. Thank you, Raúl.

Raúl Revuelta Musalem (CEO)

Thank you, Rodolfo.

Operator (participant)

Our next question comes from Jens Spiess with Morgan Stanley. Please go ahead.

Jens Spiess (Executive Director)

Yes, hello. Congrats, on the results. Thank you for taking the time for the question. I guess very briefly on the EBITDA guidance you already alluded to. I think it's quite impressive the step change that it represents versus the first half growth, which I think is closer to -5%. And your guidance is implying that in the second half of the year, EBITDA would grow at around 5%, if I'm not mistaken. And the new acquisition, I think, will be around 2% of consolidated EBITDA. So how do we get from the -5 current run rates to the +5 in the second half of the year?

Raúl Revuelta Musalem (CEO)

Sorry, Jens. Sorry, Jens. Sorry to interrupt. The sound is not very good. It's cutting off. So I don't know if you can write down the question in the webcast, please. Because it sounds not.

Jens Spiess (Executive Director)

Oh, it's not there.

Raúl Revuelta Musalem (CEO)

Perfect.

Jens Spiess (Executive Director)

Is it not better? Okay, I'll turn the earbud. All right.

Raúl Revuelta Musalem (CEO)

Okay. Thanks, Jens. Sorry.

Operator (participant)

Our next question comes from Fernanda Recchia with BTG. Please go ahead.

Fernanda Recchia (Equity Research Executive Director)

Hello. Can you hear me?

Raúl Revuelta Musalem (CEO)

Yeah, perfect.

Fernanda Recchia (Equity Research Executive Director)

Perfect. Thank you for taking my question. Two from our side. The first, thinking on the commercial revenues, while it's been impressive, the top-line growth that you're targeting for this year, thinking regarding next year, could you comment if you think this growth is sustainable? How should we think about the commercial revenues per passenger going forward? And second, on capital allocation, could you give us some color if we should expect other airports to be under analysis? You already mentioned about the one that you were selected as a preferred bidder, but thinking of other airports, and also if we could expect other deals like the GWTC that you just announced. Thank you.

Raúl Revuelta Musalem (CEO)

Thank you, Fernanda. This is Raúl. In terms of the commercial revenue, we think that's going to be, in terms of the ratio, going to be sustainable in the long term. In the coming year, we will see the opening of some additional areas, and then the 100% of the resulting sum of the areas that has just opened in the midst of this year, for example. So in general terms, we think that the double-digit growth trend on commercial revenues will be sustainable in the coming years and years forward. For sure, it's related or highly related with the performance on traffic. So one of the key factors to really understand how it could be on the long term, the growth on commercial revenue, is related with the bringing back on the fleet of all the fleet that is down for the engines problem.

So as soon as we begin to see the coming back of the seats, we think that the results on commercial revenues could be even better. 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 possibility opportunities of investment in airports in the region. We are all reviewing all the times any kind of opportunity there. For the moment, the only one that we have in terms of airports that be in our pipeline is the one related with Turks and Caicos.

In terms of other similar acquisitions that could be GWTC, I would say that at all times our New Business Officer is looking for different opportunities that could be in some way aligned with the kind of profile that GAP needs for being accretive to value. It's, I would say, a continuous process that is happening in our business. That is in general terms.

Operator (participant)

Thank you. Our next question comes from Jay Singh with Citi. Please go ahead.

Jay Singh (VP of Markets Funding and Liquidity Management)

Thanks for taking my question. It's Jay Singh in for Stephen Trent. I guess you already answered my question on the Turks and Caicos situation, but I also wanted to ask, do you have a strong preference for the dual-till regulatory structure, or would you also consider single-till or inflation-based models? Thank you.

Raúl Revuelta Musalem (CEO)

Thank you, Jay. In general terms, the model for Turks and Caicos, in terms of regulatory model, it has only inflationary review for the next 30 years, mainly. You have some commitments on CapEx that happens on the first moment of your original proposal. And on the future, there's not reviews of master plans or review of tariffs. All the tariffs will be only reviewed in terms of inflation on the future on that specific model.

Saúl Villarreal (CFO)

Yes. I will add only that the upside or the potential upside in this airport is in the commercial revenue and also in the cost of operation that could have some efficiencies.

Raúl Revuelta Musalem (CEO)

Yeah. Just adding what I was saying, we are really comfortable about our knowledge in the Caribbean market, just for the experience of the two airports in Jamaica. We think that we could be really competitive on this bidding process, just taking into account all the experience that we already have operating in the region.

Jay Singh (VP of Markets Funding and Liquidity Management)

Great color. Thanks, guys.

Operator (participant)

Our next question comes from Gabriel Himelfarb with Scotiabank. Please go ahead.

Gabriel Himelfarb (Associate Director)

Hi. Thanks for the call. Just a quick follow-up question. Can you give us a bit of color about how the Pratt & Whitney engines have been affecting the network and the traffic? I mean, Volaris has shown a decrease in traffic. And also, what are your expectations on the new acquisitions on GWTC? What's the expected revenue payoff you're expecting to receive? Thank you.

Saúl Villarreal (CFO)

Thank you, Gabriel. As you know, the impact on the engines began in September of last year. What we think on this 2024, that the worst part will be on the third quarter of the year when we're going to see the full impact of all the fleet that we grounded for the engines problem. After that, for the fourth quarter, we're going to have a better comps. So in some way, we're going to begin to see some positive numbers related with two factors. One, better, easier comps. But second, there's some specific additional planes arriving mainly for Volaris and Viva Aerobus that in some ways helping to add some capacity. We think that gradually, all 2025, we're going to see a gradually recovery of the fleet from mainly the low-cost companies that be more affected, Volaris and Viva Aerobus.

So we think that at least all the 2025 will continue affected, and we will see a full comeback of total seats most close to the half of the year on 2026. But again, it depends on the times and delivery of the already working engines for Pratt & Whitney. But in general terms, we expect that for the first half of the 2026, we will recover the full capacity in our airports.

Gabriel Himelfarb (Associate Director)

Okay. Thank you.

Saúl Villarreal (CFO)

In terms of GWTC?

Gabriel Himelfarb (Associate Director)

Yes.

Raúl Revuelta Musalem (CEO)

Hi, Gabriel. This is Raúl. Regarding GWTC, we are having unexpected revenues above 2023, around 10%. Obviously, we are now taking control of this new asset, and we are reviewing the potential growth of this business. For now, our estimate is around 10% above 2023 in terms of revenues.

Gabriel Himelfarb (Associate Director)

Okay. Thank you.

Operator (participant)

Our next question comes from Andressa Varotto with UBS. Please go ahead.

Andressa Varotto (Equity Analyst)

Hi. Good morning. So Raúl, thank you for taking my question. I have two quick ones here on our side. First one, traffic as well. Right now, we see that capacity is being restricted by the impact of P&W engineering inspections. But we are also increasingly seeing worldwide concerns about weaker demand. So I'd like to know if you have any take on that. I know it's probably hard to tell right now, which could be the impact of demand considering the capacity constraints. And my second question is regarding costs. Since we've seen strong cost expansion in the quarter, so I just wanted to know what can we expect in the coming quarters regarding costs. Thank you.

Raúl Revuelta Musalem (CEO)

In terms of the traffic, as you perfectly say, I mean, the capacity constraint related with the Pratt & Whitney is clear in the market. And it's not, I would say, full transparency or full knowledge about which is going to be specific the time for the recovery of everything. It's like, I would say, a moving target of what we consider. But also, as you know, for instance, Airbus announced that the deliveries in the coming years are going to be lower than the original expectation of new deliveries. That will also bring some kind of pressure to the capacity of some of our major airlines as Volaris and Viva Aerobus. Because as you remember, a couple of years ago, both airlines announced big deliveries with Airbus.

So I think that at least the coming year, we will feel pressure about the capacity and the availability of additional seats that will come to the market, mainly related with what is happening with, for sure, Pratt & Whitney, but also what could happen and the times of deliveries in the future, mainly from Airbus. So in general terms, our expectation is going to be that the next year, in general terms, we will continually see some pressure in terms of capacity. But in some specific routes, there's still room for growing in terms of load factors on one hand. And on the other hand, we are seeing different airlines trying new routes in our network.

For instance, we have American Airlines that for the first time, a U.S. carrier operates in Tijuana Airport for the first time in history, and it's doing well with a daily service to Phoenix. But also, Alaska already announced the beginning of a route from La Paz to Los Angeles. That is, I would say, completely a brand new route. We also have the announcement of Aeroméxico for different international routes from our airport. So what I'm seeing for the moment is that it's more clear that at least on the international market, we will see some increases on capacity in the coming years, that the domestic market will be more pressured for all the capacity issues, at least in the coming year.

In general terms, I think there's still some room to grow that comes from new opportunities of new routes, and also some space on load factors that will bring us some growth. For sure, the easier comps in terms year to year. In general terms, it's what I'm seeing on the capacity possible growth in coming years.

Saúl Villarreal (CFO)

Yes. Hi, Andressa. This is Saúl. Regarding your questions about the cost side, as we explained already, we have some affectation in terms of labor law, not only in Mexico, but also in Jamaica. And we are having additional costs and pressure in terms of inflation. Besides that, once we have more spaces and more areas operating, we have in Guadalajara Airport with the different expansions, the cost will be increasing. The operation of the hotel also implies a cost of operation. Just have in mind that the margin in the hotel is around 35%. So it depends on the margin that we have. So it dilutes the margin we have. And we have additional costs in maintenance and additional costs in terms of the electricity. So the tariffs are increasing in Mexico and also are increasing significantly in Jamaica.

So we have pressure for all the sites in terms of the operation. It will be normalized, let's say, once we close the year, once we finalize the tariff negotiation, and obviously, once we see that the revenue related with the expansions that we have in the different airports. So I think the point is it is an extraordinary quarter. It's not obviously the regular quarter that we just have. So it's an extraordinary and will be recovering in the next year.

Andressa Varotto (Equity Analyst)

Perfect. Thank you very much.

Operator (participant)

Your next question comes from Andressa Aguirre with GBM. Please go ahead. Andressa Aguirre, your line is open. Please check your mute function.

Andres Aguirre (Equity Research Associate)

Hi. Can you hear me? Thanks for taking the question. Can you clarify how GWTC will be consolidated in the financial statement? Will it be classified under aeronautical or another category? Thank you.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Andressa, this is Alejandra. I am so sorry, but your line is not really clear. Can you try to repeat it if we can understand better? Or write it in the webcast?

Andres Aguirre (Equity Research Associate)

I'm sorry about that. Can you hear me now?

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

A little better.

Andres Aguirre (Equity Research Associate)

Yeah. I'll write it in the webcast. Thank you.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Okay. Thank you, Andressa.

Operator (participant)

We'll move next with Pablo Monsivais with Barclays. Please go ahead.

Pablo Monsivais (Equity Research Analyst)

Hi, Tim. Thanks for taking my question. Just kind of a follow-up to previous questions. What is your take on Volaris' updated guidance on capacity? Have you talked to them? And if so, have they provided to you some insights on what could be the impact for the route that Volaris is operating with you? Because it seems that they are a bit more positive for capacity for the second half of the year. Thank you.

Raúl Revuelta Musalem (CEO)

Thank you, Pablo. This is Raúl. Yeah. We are, I mean, on a daily basis, we're in communication with Volaris about their operations. For sure, in the long term, the coming year, we're still seeing that there will not be the full recovery of the seats. But one of the parts that we are seeing that is in some way interesting to follow with Volaris, they have adapted some of their routes. They have, I would say, a better use of their fleet, some additional hours of flying. The available seats, their ASMs are, I mean, in some ways, expecting to be for the last quarter, growing a little bit. So in general terms, let me put it this way. Volaris has made the correct moves trying to support the most dense or bigger routes that have in some way the better possible demand.

And in general terms, that gives us a little better position on the last quarter of the years in terms of traffic. But again, on the long term, I mean, as soon as the P&W engine issue, it's fully solved, we will continue seeing some lack of capacity and for sure a decrease in general terms of the capacity in our airports for at least the coming year. But yeah, we are a little more positive for this second half of the year talking about specifics of Volaris.

Guillermo Mendez (Analyst)

Perfect. Thank you.

Operator (participant)

Our next question comes from Alan Macias with Bank of America. Please go ahead.

Saúl Villarreal (CFO)

Hi. Good morning. Thank you for the call. Just at this point, can you provide a long-term sustainable EBITDA margin target that you might be looking at? Thank you.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Hi, Alan. This is Raúl. Well, this year will be complicated. As you know, all the issues that we have ongoing, the discounts in passenger charges, the different issues related with the cost, the decrease in passenger traffic. But for 2025, and once we have the new tariff, we will be close to 68%. 68 plus less 1%. It will be the normalized EBITDA margin.

Guillermo Mendez (Analyst)

Thank you.

Operator (participant)

Thank you. And now I will turn the call over to management to take the webcast questions.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Thank you, Nicky. The first question we have is from Bernardo Malpica from Santander. He's asking if aeronautical revenues fell 7.7% while traffic fell 4.1%. Why was the fall in aeronautical revenues worse than traffic? What is the mix? Discounts? The first part is related, for sure, with it's a mix of things. The first one is the fulfillment of the maximum tariff that is related, on one hand, with discounts mainly. Also, we have, in general terms, a 95% of fulfillment on the maximum tariff. And that is the biggest part of the explanation of the difference between aeronautical revenues and passenger route. Also, as you remember, Puerto Vallarta and Los Cabos both airports have the biggest maximum tariff in our net. And both of these airports have zero increase.

Raúl Revuelta Musalem (CEO)

In general terms, it's a mix between the composition of the maximum tariff in our portfolio and also the 95% on the fulfillment of the maximum tariff. Thank you, Raúl. Then we have another one from David Cruz from Grupo Aval. Regarding the purchase of Guadalajara WTC, how do you expect that this will change the estimated results for 2024?

Saúl Villarreal (CFO)

Hi, David. This is Saúl. Well, it is already included this expected revenue in EBITDA for this new asset. And as we mentioned, will be consolidated and integrated to our figures starting on July 1st. So it is already included in the guidance. And as we mentioned, the total revenues will be around 10% above the revenues in 2023.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Thank you, Saúl. The third one is from Alina Serra from Capitolo. Will GAP pay concession fees and technical assistance fees over GWTC revenues?

Raúl Revuelta Musalem (CEO)

Thank you. I mean, in terms of GAP, we will not pay additional concession fee on technical assistance over the GWTC revenues. But it's important to remember that GWTC is a concession. So they already pay a concession fee for the authority. So GAP will not pay additional concession fee. But in the cost of GWTC, they are already paying a concession fee because it's a fiscal concession.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Yeah. Thank you, Raúl. Now we have the question from Jens Spiess from Morgan Stanley. Thank you, Jens, for writing this. It says, "My question was related to your new EBITDA growth guidance, which implies a roughly 5% year-over-year growth in the second half of 2024 versus -5% in the first half of 2024. The new acquisition adds around 2% of EBITDA growth, right? So what other variables do you see improving in second half versus first half that we need to consider?

Saúl Villarreal (CFO)

Hi, Jens. This is Saúl. We don't have any other major changes. GWTC consolidation is important. It's a new asset. It will be integrated. It wasn't included during the first half in the results of the company. So we don't have any other issue besides the effect of the capitalization of the 4% was already included in the first half. And I would say that probably the effect on the increase in the commercial revenues that was included in the new revised guidance.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Thank you, Saúl. Then we have Alina Serra from Capitolo. The midpoint of your guidance implies a growth of 5% year-over-year on EBITDA on the second half of the year. How exactly will this be achieved given the decreasing tariff impacts year-over-year?

Saúl Villarreal (CFO)

Hi, Ali. This is basically because the consolidation of the new cargo company, GWTC, that will represent around MXN 300 million of EBITDA that will be integrated into the figures of the company. That's the main reason. Obviously, the performance of the commercial is helping, but basically, it's the main reason of this increase.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Thank you, Saúl. The last one, it is from Mauricio Buitrago from AM Advisors. When do you expect to see the full benefit in revenues from the expansion in Guadalajara?

Raúl Revuelta Musalem (CEO)

Thank you, Mauricio. I mean, we already just opened some of the new commercial areas on Guadalajara Airport. So let me put it in this way. On August of this 2024, 100% of the new commercial spaces will be operating. So from that, we'll have the full year of operation of the new areas that happened in August of 2025. I mean, the first full year of all the concept operating.

Alejandra Soto Ayech (Director of Financial Planning and Investor Relations)

Perfect. Thank you, Raúl. With this, we end from the webcast questions. I will turn the call to Nicky.

Operator (participant)

Thank you. We show no further questions over the phone at this time. I will turn the call over to management for closing remarks.

Raúl Revuelta Musalem (CEO)

Thank you again, everyone, for joining us today at our second quarter results conference. On GAP's behalf, we wish you a great day. Thank you.

Operator (participant)

This does conclude today's program. Thank you for your participation. You may disconnect.