GAP (PAC) Q3 2026 Earnings Call Transcript

DATE

Tuesday, Oct. 20, 2026

CALL PARTICIPANTS

• Investor Relations – Maria Barona
• Chief Executive Officer – Raul Revuelta
• Chief Financial Officer – Saul Villarreal

TAKEAWAYS

• Passenger Traffic — 18.4 million, representing a 1.4% year-over-year decline driven by weakness in international leisure destinations.
• Revenue (Ex-Construction) — up 13.2% year over year, supported by the consolidation of Cross Border Xpress and growth in directly operated businesses.
• EBITDA — MXN 6.1 billion, representing 19.2% year-over-year growth.
• EBITDA Margin — 67.8%, representing an expansion of 3.6 percentage points from 64.2% in the same period last year.
• Domestic Passenger Traffic — up 0.6% year over year, with Guadalajara performing as a primary driver.
• International Passenger Traffic — down 4.5% year over year, reflecting inconsistent recovery across leisure markets.
• Guadalajara Passenger Traffic — up 8% year over year, supported by a 13.1% increase in international volume.
• Puerto Vallarta Passenger Traffic — down 11% year over year, primarily due to a 24.8% decline in international traffic following security concerns in the region.
• Los Cabos Passenger Traffic — down 6.8% year over year, reflecting softer leisure demand.
• Montego Bay Passenger Traffic — down 23% year over year, due to the impact of Hurricane Melissa on hotel capacity and connectivity.
• CBX Revenue — MXN 775 million, supported by approximately 1 million passengers using the facility in both directions.
• CBX Capture Rate — 32.4%, up from 29.7% in the third quarter of 2025.
• Mexico Aeronautical Revenue — up 5.3% year over year, driven by the implementation of approved maximum tariffs for the 2025 to 2029 period.
• Jamaica Aeronautical Revenue — down 12.7% year over year, reflecting lower traffic volumes and the translation effect of a stronger Mexican peso.
• Nonaeronautical Revenue — up 37% year over year, supported by the integration of Cross Border Xpress and directly operated business lines.
• Cargo and Bonded Warehouse Revenue — MXN 674 million, representing 20.7% growth driven by electronics and artificial intelligence manufacturing in Guadalajara.
• Operating Expenses — up 3.8% year over year (excluding IFRIC-12), driven by higher personnel and maintenance costs.
• Technical Assistance Fees — significantly reduced following the internalization of services, providing a structural benefit to the cost base.
• Master Development Program Investment — MXN 8.6 billion during the first nine months of 2026, representing the company’s largest infrastructure expansion cycle.
• Dividend — MXN 20.80 per share, to be distributed in a single installment following an update to the outstanding share count.
• 2026 Passenger Traffic Guidance — reiterated at a range of negative 3% to 0%, requiring improved performance in the fourth quarter.
• Projected Maximum Tariff Fulfillment — approximately 95% for 2027, following a compound tariff increase of 7% planned for the first week of Jan. 2027.
• CBX Average Revenue Per Passenger — $43, compared to $42.80 in the second quarter of 2026.
• CBX EBITDA Margin Target — 72% to 73% in the long term, supported by commercial synergies and pricing strategies.
• Passenger Capacity Expansion — planned 60% increase in total terminal square meters across the network by the end of 2029.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• Revuelta stated, “we do not view this stabilization as a sign of broader base recovery across all our markets as of yet,” regarding the slowing decline in passenger traffic.
• Revuelta warned that “international leisure traffic is recovering at an inconsistent pace due to several external factors,” citing ongoing volatility in demand.
• Revuelta noted that “airlines capacity limits and weak leisure demand may persist longer,” impacting the timeline for traffic normalization.
• Management reported that international traffic in Puerto Vallarta declined by 24.8% due to “security concerns following events in Jalisco in February.”

SUMMARY

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC +7.05%) reported third quarter results that showed the contribution of business diversification to offset a 1.4% year-over-year decline in passenger traffic. Management stated that the consolidation of Cross Border Xpress and the internalization of technical assistance services provided a structural benefit to margins despite softer demand in international leisure markets. The company confirmed its full-year passenger traffic guidance and reported progress on its 2025 to 2029 Master Development Program. Management indicated that revenue growth was supported by the implementation of maximum tariffs in Mexico and performance in directly operated business lines such as cargo, advertising, and VIP lounges.

• Integration of Cross Border Xpress: Revuelta noted that “this is still the early stage of CBX integration,” with plans to expand commercial offerings such as food and beverage by late 2027.
• Internalization of Technical Assistance: The company eliminated technical assistance fees by internalizing services, a shift management expects to support long-term profitability by retaining more operating value.
• FIBRA GAP Establishment: Management reported that the process for establishing FIBRA GAP is advancing and expected to be completed during Nov. 2026 to broaden funding alternatives.
• Airline Industry Dynamics: Revuelta indicated that 2027 traffic expectations of mid-single-digit growth already account for the potential impact of airline mergers and capacity adjustments.
• Future Capital Expenditure: Revuelta stated that the next Master Development Program cycle starting in 2030 will likely focus on “reposition of equipment rather than additional capacity” following the current infrastructure expansion.
• Jamaica Capacity Recovery: Management reported that seat capacity in Jamaica is expected to recover to approximately 90% of original levels for the upcoming winter season.
• Cargo Strategy: Revuelta noted that the growth in cargo revenue is driven by an “increase on semiconductors” and AI-related manufacturing in the Guadalajara region.

INDUSTRY GLOSSARY

• Cross Border Xpress (CBX): A pedestrian bridge connecting the Tijuana International Airport and a terminal in San Diego, California.
• IFRIC-12: An accounting standard for service concession arrangements where the infrastructure remains the property of the grantor.
• Master Development Program (MDP): A five-year regulated investment plan agreed upon with the Mexican government that defines capital requirements and maximum tariffs.
• FIBRA: Fideicomiso de Inversión y Bienes Raíces, a Mexican real estate investment trust designed for financing real estate and infrastructure.
• Technical Assistance (TEA): Fees paid to a strategic partner for management and operating expertise.
• Capture Rate: The percentage of total airport passengers that utilize a specific facility or service, such as CBX.
• Maximum Tariff: The regulated upper limit of revenue per workload unit that an airport operator can charge for aeronautical services.
• VFR: Visiting Friends and Relatives, a specific passenger segment distinct from business or leisure travel.

Full Conference Call Transcript

Operator: Good morning, and welcome to GAP’s Third Quarter 2026 Conference Call. [Operator Instructions] Now it’s my pleasure to turn the call over to GAP’s Investor Relations team. Please go ahead.

Maria Barona: Thank you, and welcome to GAP’s Third Quarter 2026 Conference Call. Prior to introducing the management team, I would like to take a few moments to mention forward-looking statements as described in the financial report. Please be advised that any comments made today may not account for future economic circumstances, industry conditions, the company’s performance or financial results. As such, any information discussed is based on several assumptions and factors that could change causing actual results to materially differ from current expectations. For a complete note on forward-looking statements, please refer to the quarterly release issued yesterday. Thank you for your attention.

It is my pleasure to introduce our speakers from GAP who will be discussing with you the operational and financial results for the third quarter of 2026. They are Mr. Raul Revuelta, Chief Executive Officer; and Mr. Saul Villarreal, Chief Financial Officer. Mr. Revuelta, please proceed with your opening remarks.

Raul Musalem: Thank you, Maria. Good morning, everyone, and thank you for joining us today. I want to start with the fact that GAP delivered a solid financial performance in the third quarter of 2026. Despite persistent challenges across our airport network, demonstrating the valuable and increasing contribution of our diversified business model. Passenger traffic declined by 1.4% compared to the third quarter of 2025, which was a significant improvement versus the 5.6% decline experienced in the second quarter of 2026. At the same time, revenues, excluding construction services, increased by 13.2%, EBITDA grew by 19.2%, reaching MXN 6.1 billion, and the EBITDA margins expanded by 350 basis points to 67.8%.

These results are the result of 3 distinct drivers: First, the consolidation of Cross Border Xpress; second, the structural benefit from the internal — internalizing of GAP technical assistance services; and thirdly, the growth in directly operated business together with the gradual implementation of the approved maximum tariff. Excluding CBX, revenues from aeronautical and non-aeronautical services increased by 3.4%, while EBITDA grew by approximately 8.3%. While these figures highlight the strength of our operating model, they also indicate that underlying passenger demand remains challenging. We are prioritizing working on the factors we can control such as strengthening our airport network, while at the same time building complementary business that diversify earnings and expand our capacity to create long-term value.

However, we are aware that international leisure traffic is recovering at an inconsistent pace due to several external factors. Let me begin with the passenger traffic. During the third quarter, GAP’s 14 airports handled approximately 18.4 million passengers, representing a 1.4% decrease compared to the same period last year. Although our overall traffic stayed below 2025 levels, the third quarter decline slowed compared to the previous quarter. However, we do not view this stabilization as a sign of broader base recovery across all our markets as of yet. Domestic traffic increased by 0.6%, while international traffic declined by 4.5%, primarily reflecting the continued weakness at certain leisure destinations throughout Mexico and Jamaica.

Guadalajara, on the other hand, remained as a primary performance driver with an 8% passenger traffic increase, supported by growth in both domestic and international volume. It is worth noting that international passengers in Guadalajara grew by 13.1%, reflecting the resilience of the airport diversified passenger mix across visiting friends and relatives, business and leisure segments. During the quarter, traffic in Guadalajara declined slightly by 0.5%, while CBX users increased by 8.4%, reaching approximately 1 million passengers during this period. Additionally, CBX capture rate improved from 29.7% in the third quarter of ’25 to 32.4% in the third quarter of ’26.

These results highlight the growing importance of cross-border connectivity and the strategic benefits of integration of CBX into GAP’s airport network. Puerto Vallarta, Los Cabos, however, continued to experience softer demand with passenger traffic declining by 11% and 6.8%, respectively. International traffic at Puerto Vallarta remained weak, declining by 24.8%, primarily due to the security concerns following events in Jalisco in February. To counter this, we are actively co-working with airlines, tourism stakeholders to promote connectivity and passenger demand in the region. Montego Bay continues to navigate the aftermath of Hurricane Melissa with a 23% decline in passenger traffic during the quarter.

While hotel capacity and tourist activity is recovering, the normalization trend remains tied to the hotels reopening and international airline connectivity. Looking ahead, we remain cautious about how quickly traffic will recover. We anticipate that airlines capacity, passenger demand and the restoration of tourist infrastructure will return at different speeds across our destinations. The traffic disruption caused by Hurricane Melissa should lessen as conditions normalize. However, airlines capacity limits and weak leisure demand may persist longer. We are addressing this challenge by working closely with airline partners and touristic stakeholders to strengthen existing routes, enhance connectivity and support sustainable traffic growth. Turning now to our financial performance. Aeronautical services increased by 2.6% compared to the third quarter of 2025.

At our Mexican airports, aeronautical revenue grew by 5.3%, primarily due to the gradual implementation of the maximum tariff approved for the 2025-2029 regulatory period. This growth was partially offset by the 7.5% appreciation of the Mexican peso versus the U.S. dollar, which negatively affect dollar-denominated international tariffs. In Jamaica, aeronautical revenues declined by 12.7%, reflecting lower passenger traffic and the negative translation effect resulting from the stronger Mexican peso. GAP regulated tariff framework contributes to the revenue resilience during periods of softer passenger traffic. However, it does not completely offset the impact from lower volumes or exchange rate movements. Non-aeronautical revenues increased by 37% compared to the third quarter of last year.

This performance was largely supported by the consolidation of CBX as well as the continued growth in the several business lines operated directly by GAP. Excluding CBX, revenues from directly operated business increased by approximately 13.7%. Cargo operations and bonded warehouse business grew by 20.7% reaching approximately MXN 674 million in quarterly revenues. This performance deserves particular attention because cargo and logistics represents an important growth platform beyond passenger-related activities. Advertising grew 18.2%, convenience stores 11.6% and VIP lounges by 5.6%. The results show that our diversification strategy is producing measurable contribution. We see opportunities to expand our logistic services and our directly operated businesses subject to disciplined investment decisions and execution.

Meanwhile, third-party business faced a more challenging environment, particularly those categories exposed to the international tourists and foreign exchange fluctuations. For example, duty free revenues declined by 12.3%, reflecting the continued international passenger traffic weakness, especially at certain destinations. Despite a temporary setback, we anticipate that business lines will benefit from the gradual recovery of international traffic. Let me now provide an update on the Cross Border Xpress. During the third quarter, CBX generated revenues of MXN 775 million, with approximately 1 million passengers using the facility in both directions. Average revenue per passenger reached $43 compared to the $42.8 during the second quarter of ’26. Therefore, CBX contributed MXN 558 million to our consolidated EBITDA during the quarter.

[indiscernible] financial contribution, CBX is an important cross-border mobility platform, user grew by 8.4% despite a slight contraction in traffic at Tijuana Airport, driving the capture rate up from 29.7% in third quarter of ’25 to 32.4% in the third quarter of ’26. These positive trends underscore clear opportunities to deepen customer penetration, advance the commercial integration, optimized pricing strategies and expand complementary passenger services. This is still the early stage of CBX integration. As such, our priority is to convert these opportunities into sustainable revenue growth while maintaining the operational discipline and strong passenger experience that we value at GAP. Moving on to the operating costs and profitability.

Excluding the effect of the IFRIC-12, total operating expenses increased by 3.8% compared to the third quarter of 2025. Cost of service increased by 12.6%, excluding the contribution from CBX operation, primarily driven by personnel, maintenance and security experience across our airport network. Personnel expenses increased mainly due to additional operating staff, the integration of technical assistance employees, salary adjustments and benefits. This increase, together with the consolidation of CBX were partially offset by a significant reduction in technical assistance fees following the internalization of the services as well as lower concession fees in Jamaica. Internalized technical assistance services represent a structural change in our cost base, allowing GAP to retain more of the value generated by its operations.

As a result, consolidated EBITDA increased by 19.2%, reaching MXN 6.1 billion, while the EBITDA margin excluding IFRIC-12 expanded from 64.2% in the third quarter of ’25 to 67.8% in this quarter. At the net income level, the stronger operating performance was partially offset by higher financial expenses associated with our investment program and the CBX transaction. That said, we continue to closely monitor our cost of debt, maintaining our financial flexibility and cash flow generation while executing our capital program.

Regarding our investment program and financial position, we remain committed to executing the infrastructure projects included in our 2025-2029 Master Development Program in Mexico and the capital development programs in Jamaica with a total expenditure of MXN 8.6 billion during the first 9 months of 2026. Our current investment cycle represents the largest infrastructure expansion program undertaken by GAP’s concession framework. These projects are designed to increase airport capacity, increase operational efficiency and support the long-term development of our network. Although traffic was below our initial 2026 expectation, our regulated infrastructure commitments address long-term capacity and service requirements. For discretionary growth projects, we continue to evaluate expected returns, execution risk and capital needs before committing resources.

The expansion of the Guadalajara, Puerto Vallarta and Tijuana airports along with additional infrastructure improvements across our network will position GAP to accommodate future growth while improving passenger experience and service quality. We expect that these expansion projects will generate continued commercial opportunity as new terminal capacity comes online over the next few years. Our focus remains on disciplined capital allocation, distinguishing between nondiscretionary concession commitments and strategic growth opportunities. In this manner, we effectively balance our infrastructure demand, financial structures and shareholder distributions. Regarding dividends, as approved at our annual shareholders meeting in April 2026, we intend to distribute a cash dividend of MXN 20.80 per share in a single installment.

We are currently in the final stage of updating our outstanding share count within the bank. Once this process is completed, we will formally announce the payment date. Regarding our full year 2026 guidance, we are maintaining our previously announced passenger traffic range of negative 3 to 0. Achieving this range requires a meaningful improvement in fourth quarter traffic relative to the year-to-date trend. And it goes without saying that our outlook remains subject to capacity, demand conditions and the pace of recovery in our leisure markets. Before concluding, I would also like to provide an update on FIBRA GAP. We continue advancing through the process required for the establishment of FIBRA GAP.

Based on the current progress, we expect that transaction to be completed during November. FIBRA GAP is part of the long-term capital strategy. We view it as a potential tool to broaden funding alternatives, improve capital efficiency and preserve flexibility to finance our airport investment programs. The transaction remains subject to the applicable process and conditions, and we will communicate in definitive terms when appropriate. We will continue to keep the market informed as the process advances. Before opening the line for questions, I would like to emphasize 3 key messages: First, our third quarter results demonstrate financial resilience even while passenger traffic remains under pressure.

We are not assuming that recovery will be uniform or immediate, and we remain focused on improving connectivity and competitiveness across our airport network. Second, diversification is delivering measurable results. CBX cargo and logistics directly operated business and the internalization of technical assistance are contributing to a broader and more profitable earnings base. Third, our long-term vision remains unchanged. We continue to execute airport infrastructure investment, expanding our commercial capabilities and strengthening our position in cross-border mobility, all while maintaining disciplined capital allocation. Passenger traffic is fundamental to GAP. At the same time, our third quarter performance illustrates how a more diversified infrastructure and mobility platform is able to strengthen profitability and reduce reliance on any single growth driver.

Thus, our focus remains on execution, operational efficiency and the creation of long-term value for our shareholders. Thank you again for your time. Operator, please open the line for questions.

Operator: [Operator Instructions] Our first question over the phone today comes from Rodolfo Ramos of Bradesco BBI.

Rodolfo Ramos: Congrats on the results. I have a couple, if I may. The first one is on traffic. I mean, you talked about the challenges that the industry is facing. Just wanted to get a little bit more sense, a little bit more color on how you feel within that guidance range that you just reiterated since as you mentioned, this implies an important uptick in traffic in the coming months. So just if you can talk a little bit about how you see perhaps the winter season shaping up this time around. And the second question is a bit on CBX.

When you think about the pricing actions that you’ve taken there since taking control of the asset, how much more uplift you think you could see to the current $43 per user especially since you’re also targeting to increase that capture rate. So it will be useful to see how you see that panning out in 2027.

Raul Musalem: Talking about the traffic, what we are expecting for the winter season is, for sure, a really important increase on seats for the case of Jamaica, I think that just on the last week of October, it was 1 year ago, Jamaica was hit by the hurricane. So the recovery of the hotel infrastructure has been pretty good. We are seeing an important comeback of seats for this winter season. So what we want to have for Jamaica is on one hand, a really important recovery, I would say, almost 90% of the total original seats that we used to have 1 year ago, will be in place for the winter.

But sure also, you will have like a softer compare base as soon as you get on the last week of October. So that is one key driver for the recovery of the fourth quarter. And on the other hand, we are seeing that for Puerto Vallarta and for the case of Cabos, an increase of number of seats that are offering for the winter season just after the Thanksgiving Day. So we are really optimistic about — for the good or really good winter season for the case of these both airports. Other airports will be interesting to talk about the new openings of routes of international routes on Guadalajara, mainly from Volaris.

We just begin the — just began the operation of Washington and Nashville. So it’s the beginning of something that would look like a really interesting winter season also for Guadalajara Airport. Going to CBX, we are still working on the pricing actions here. We are continually increasing the capture rate through marketing efforts in some specific routes. But also what we are seeing is that we will begin to work with different pricing strategies in terms of the low season and high season in the infrastructure, we know that all the services and the big difference that is crossing to the U.S. to CBX has a really important value for our passengers.

And we also understand that in particularly high seasons, the demand will be more, I would say, we will have the chance to increase on strong dollars on that specific tariffs for the season. So what we are expecting is for the coming year, an increase on the revenue per passenger on CBX that will come for sure mainly from pricing actions, but also for commercial development. We are working in a new food and beverage area for CBX that it would be in place at the end of the coming year. But I will say that we are already working on that.

So in general terms, we are seeing like high potential on the increase on the revenues for CBX, bringing some of the new developments on the commercial side, the food and beverage mainly, but also in the price strategy.

Operator: Thank you, next question comes from Fernanda Recchia with BTG Pactual.

Fernanda Recchia: Just 2 follow-up here from my side. The first, talking about traffic, so maybe if you could elaborate a little bit further on the outlook for next year. You had provided an outlook for the winter season. But looking for next year, can we work with maybe mid-single digits of year-over-year growth? Is this feasible. And the second on the CBX, looking at the 9 months figure, we already saw that the division is running with close to 70% of EBITDA margin, which is above the high 60 when you announced the transaction.

So we already see some synergies from the integration, but maybe looking forward with this commercial activity that you mentioned, what is a running EBITDA margin that is feasible for us to assume looking to the medium to long term in CBX.

Raul Musalem: Thank you, Fernanda. This is Raul. I mean, talking about the 2027, we don’t have like all the visibility because some of the — I mean, the airlines are still putting for sale. But I would say like in a first glance, we’re expecting somewhere in the middle of mid-single digit for sure, and the numbers we’re going to have like some effects on weaker comps. When we talk about the February of ’26, for instance, for all the security matters of Mexico. And on the other hand, we’re also going to have, we say, easy comps on Jamaica for almost all the year.

So in our really first view, we will see something on the mid-single digits, for sure for coming years. For the case of CBX margin, yes, we are beginning to see some of the synergies that the group is bringing. What we are looking for the long term is something will be close to the 72% to 73% is what we think that it would be on the pretty first moment achievable for CBX. For sure, it will be even higher if we could deploy some of our commercial efforts in a really quick time. But I will say that this number between 72% to 73% will be like the natural number that we are expecting for CBX.

Operator: From JPMorgan, we have Guilherme Mendes.

Guilherme Mendes: I have a follow-up on the traffic for next year. Just wanted to understand how are you guys thinking about the Volaris and Viva potential M&A conclusion. If this is concluded by later this year, this mid-single-digit traffic that you were projecting at this point should be impacted by this? Or is it something that you already take into account when think about traffic into next year? And the second one is a follow-up on the initial remarks, Raul, you mentioned about the investments and the CapEx plan. You mentioned that you continue to evaluate the expected returns, execution risks.

Just wondering if you have any flexibility on the investments, given the traffic has been relatively weaker than what it was expected when you signed the MDP plan.

Raul Musalem: Thank you, Guilherme. In terms of the traffic, the traffic and the possible merger on the new group of Viva and Volaris, it was already taken into account on the numbers that we say. Let me put it this way. At least from the summer of this year with the beginning of different — the price of the oil, and they were in year-end, what we have looked is a really important change on the offer of seats from Viva and Volaris. So what we are seeing is that part of the possible effect on decrease on the offer, it’s already happening.

So on the number that — on the single digit that we are expecting, we have already taken into account some of that effect of the possible merge. In terms of the CapEx plan, I will say that we have flexibility for the case of not committed investment as it could be on commercial new services or a new hotel or these kind of things that we are, I would say, reviewing the correct moment and the correct profitability. But for the case of the committed investment we don’t have, at least for the moment any change on the plan.

Seeing that for instance, our concession contracts in Mexico, it gives us a chance to open the master plan for some cases, but one of that is a decrease of the GDP of Mexico of at least 5%. We are far, far away from that. So for the moment, we don’t have like, I would say, any kind of option for change in the original plan from — of CapEx for the committed area of the master plan in Mexico.

Operator: Next, we have Jens Spiess of Morgan Stanley.

Jens Spiess: Yes. So my first question is on tariff increases in Mexico. So when do you expect to do the next implementation of an increase and by what amount? And what’s — your compliance versus maximum tariff would increase to what level after such an increase?

Raul Musalem: Thank you, Jens. Well, we are expecting this to increase the tariff on the first week of January in the coming year. We are expecting around — I mean each airport will change in different ways because the fulfillment of the tariff is — it’s airport by airport, but I will say that we will have a compound increase around 7% is what we are expecting. With that put in place we are expecting a 95% fulfillment of the tariff for the coming year. But what is important to have in mind that the appreciation or the depreciation of the peso has really — a really important weight on the final fulfillment on the maximum tariff.

But at least what we are foreseeing today is that the coming year, we will be around 95% of fulfillment on the maximum tariff.

Jens Spiess: Okay. Perfect. And on your full year traffic guide, do you still feel comfortable with the minus 3% to 0% growth or is there some downside to that number, given like the year-to-date performance and how flight schedules are looking like?

Raul Musalem: Yes. Now we are still in the same guidance for this year. For sure, there is like a lot of noise and a lot of adjustments on the offer from offer seats of the airline. But at the moment, we are still comfortable with the same guidance on traffic.

Jens Spiess: Okay. Perfect. And just one last question, if I may. On the internalization of the technical assistance fee, I mean, all else equal, when you’re negotiating your MDP with the regulator, this results in a lower cost, right? So would it, all else equal, result in a lower tariff? Just keeping everything else equal?

Saúl García: Hi, Jens. This is — okay. This is Saul. Jens, you are correct. We have already the internalization of the TEA and is already included in the calculation of the maximum tariff in our — if they don’t change and I’m referring to the authority, if they don’t change the basis for tariff regulation, we will continue including the TEA as part of the calculation of the maximum tariff. So obviously, if this is not included, we won’t be able to include it as part of the of the maximum tariff and won’t be recovered through the maximum tariff. It doesn’t represent that we won’t be able to collect because we will continue providing the service.

So probably it won’t be as part of the TEA, but it will be part of the operational expenses of the airports and will be included as an operating expense.

Operator: Next, we have Pablo Ricalde of Itau Unibanco.

Pablo Ricalde Martinez: Maybe thinking about the synergies on the CBX. I don’t know if you can provide an update on how much — now that you have consolidated it, how much do you expect to achieve from synergies coming from the CBX and when do you think synergies will be tangible on the P&L.

Raul Musalem: Thank you, Pablo. I mean the synergies have begun to pass through CBX. It will be gradually, I would say, for instance, the maintenance of the elevators, we have like a common contract for all the network of GAP and will be included in that contract. But it will be gradually because you need to wait until the finalization of the contract that has in place today CBX. But what we are expecting is to fully implement all the possible synergies on the coming 24 months. It will be like when we are thinking that everything will be — I would say all the plans will be in place in the specific case of the synergies.

Operator: Next, we have Anton Mortenkotter of GBM.

Ernst Mortenkotter: Just a quick one. It’s related to the removal of restrictions from the U.S. in the Mexico City Airport and the AIFA. I mean, does this have any spillover effect on your operations? Maybe this will negatively impact because they capture some routes or maybe it improves because of more connectivity, if you could give us your take on this.

Raul Musalem: Thank you, Anton. No, for the moment, we have not seen really any change or any impact on our net. I mean I think that it’s a really good news for all the industry in Mexico, but we really don’t see any kind of impact. We — our capture areas and the different airports of GAP are really strong. The economies around, for instance, Jalisco are doing pretty good. So we really think that we will not have any kind of impact for this renewal of route restrictions.

Operator: Also from GBM, we have Enrique Cantu.

Enrique Cantú Garza M.: Duty-free car rentals and several other commercial categories remained weak this quarter. Beyond lower international traffic and currency effects, are you seeing weaker spending per passenger?

Raul Musalem: At the moment, we are not seeing like a change of the trend of the spending. But for sure, the volumes on this kind of business line like could be duty free or car rental are really important. So when you see an airport that is purely leisure has to be Vallarta and even Cabos, the effect on those — on these specific lines that could be duty-free and car rental are really deep and really related with the volume for sure.

And in the second half, we have some effect on, as you say, of the appreciation of the peso because all the contracts of duty-free are based in dollars and also in some of the cases, for leisure, [indiscernible] the Vallarta and Cabos are the car rentals also denominated in dollars. So we have the 2 effects, but I would say that the biggest effect is the volume of — the volume decrease on international traffic, mainly for Vallarta.

Operator: From UBS, we have Alberto Valerio.

Alberto Valerio: I had a couple here. The first one about the potential downgrade for Category 2. We had the good news this month that Mexico was downgraded, but FAA asked some measures to authorities, and we should have a new appraisal in December. How is your expectation for this new appraisal in December? You see that it’s possible to do what U.S. are asking for Mexico? And how is your expectation again? And the second one about the — I know it’s far away from now, but the next MDP, how should we see CapEx for the next one? We should see more maintenance CapEx or you think there’s still some room for a small growth CapEx?

If you can give some numbers per passenger, MXN 60 per passenger or MXN 90 per passenger or MXN 120 like the other one would be very helpful.

Raul Musalem: I mean related with the potential downgrade of Mexico. Last week, the U.S. government communicated to Mexican government that they have some results from the audit process. And it gives 90 days to the authority to fix those specific observations from the audit process. The Mexican government and the Civil Aviation Authority has made like really strong work on the last month, they [presented] changes on the aviation law, on the airports law. They are trying to modernize all the legal framework from security, safety process and operational process. So at least in my view, I think that Mexico or the Mexican government are deploying a really great effort to avoid any kind of potential downgrade in the coming year.

So in my personal view, I think that there will not be a problem, the downgrade on coming year. In the other question related of how could look the CapEx on the new master plan? For sure, it’s really early to think on that, but I will say that for 2029 on the last year of this master plan, we will put in place an expansion of 60%, the number of square meters in our terminals in Mexico. Saying that, I will say that the capacity will not be a problem on the coming master plan.

So for sure, we think that it will be a master plan much more related with [indiscernible] or reposition of equipment rather than additional capacity in our airports. We are just ending the biggest or this master plan ’25-’29 will be the biggest master plan in all our concessions, the biggest one in terms of the expansion of all the facilities, all the square meters on the terminal building and for sure, all the capacity. We are doubling the capacity of Guadalajara. We are doubling the capacity of the terminal building on Cabos. We are increasing almost 45% of the capacity of terminal building in Cabos. We are almost increasing 40% of the capacity in Tijuana.

So saying that what we are expecting for the coming master plan will be more reposition rather than capacity. I would say that for sure, it’s early, but it’s like the general view today.

Alberto Valerio: Very clear, very clear. So just a follow-up. We should expect something half what we did in the past, MDP in real terms. And remind me what is your exposure on international routes to the U.S. from local carriers?

Alejandra Soto Ayech: Sorry, Alberto, can you please repeat it?

Alberto Valerio: Sure, sure, sure. The first one was just a follow-up on the second question about the MDP. If you could expect half what we deploying CapEx of previous MDP 2025. Hopefully something close to MXN 20 billion for the next one in real terms. And the other one is if you could remind me of your exposure for the U.S. routes done by local carriers.

Operator: Raul, your line is open.

Raul Musalem: Sorry. Yes, I was saying that for the case of the master plan, again, it’s really early to talk about these numbers. I would say, ballparking with the information that we have today, something that goes between 50% or 60% of the master plan that we are doing today could be a number that makes sense. I mean there’s like a couple of years to see how would be the demand on that moment. And in some ways, it’s difficult to put in perspective what could be the size of investment.

But let me say that with all the capacity that we are putting right now on the airports, it sounds that the master plan would be — so the new master plan could be something like that could move on the half or a little more from the master plan that we are doing today. In terms of the exposure of the routes done by Mexican airlines, I mean, in general terms are big numbers, around 40% of the total passengers on the network on GAP comes from international traffic. I would say that from that, around 40% coming from Mexican airlines and are really focused on VFR markets, mainly in Guadalajara, [indiscernible], but going mainly to Southern California.

So that would be like the general numbers of the exposure to U.S. routes by Mexican airlines.

Operator: We have a follow-up question from Rodolfo Ramos. All right, hearing no response, we’ll mute the line. And we’ll proceed with the online questions. So I’ll turn it over to Maria.

Maria Barona: So the first question is from Gabriel. He asks, “how does the current interest rate environment effects GAP’s funding and capital allocation strategy?”

Saúl García: Gabriel, this is Saul. Well, obviously, we have seen rate increase in U.S. dollars. Our debt position in U.S. is pretty low, it’s around 10% of our total debt. So basically, in Mexico, the interest rates are stable. So we don’t foresee any kind of risk or affectation in terms of interest rates. Obviously, we have been increasing our debt for CapEx program and for the CBX acquisition. So we feel very comfortable with the rates and the debt strategy from that. In terms of the capital allocation, we will continue looking for future inorganic growth, but we will continue also delivering distributions to our shareholders according to our results and according to our growth of our results.

With the integration of CBX, obviously, we are expanding our debt, our — sorry, our net income. And obviously, we will be expanding our distributions. So that’s our position on that.

Maria Barona: Okay. Good. And then the second and final question is regarding cargo and free trade zone. “How much of the strong growth is coming from existing customers expanding versus new ones? And how long are the contracts typically?”

Raul Musalem: I mean in terms of the cargo facility the results come from Guadalajara Airport, the GWTC company — sorry, it’s an important increase that comes from electronic industry the AI industry is really going really, really fast on Guadalajara area. I would say the manufacturing — traditional maquila companies manufacturing in Guadalajara is bringing like a lot of additional manufacturing related with AI. So what we are seeing is 2 things happening in Guadalajara, an increase on the volume that goes around 6% on volume, but also — and the most important is the increase of the value of the cargo.

It is important to have in mind that the invoicing or the revenues from our cargo facility is directly related with the volume — the value of the cargo that we are moving. So as this increase on semiconductors continually — continues on the coming months and years to Guadalajara, we will see a continued increase on value and for sure, an increase on the revenue on this facility. There’s no like — I would say, the contract that we have with the government for cargo facility typically comes from 10 years plus an extension of additional 10 years. And that would be like the typical concession duration on this kind of business.

Operator: We have no further questions at this time. Raul, over to you for any additional or closing comments.

Raul Musalem: Thank you, everyone, for joining us today. Please contact our Investor Relations team with any additional questions you may have today and thank you for your attention.

Operator: That concludes today’s meeting. Thanks, everyone, for joining. You may now disconnect.