Brazil & Argentina turbulence hit pax at Corporación América Airports in Q3

By Luke Barras-hill |

Aeroparque-Jorge-Newbery-Corporacion-Americas

Aeroparque International Jorge Newbery in Buenos Aires, Argentina. Source: Corporación América Airports.

Corporación América Airports recorded consolidated revenues of $417.1m (+19% yoy) in the third quarter of this year against lean passenger traffic gains of +1.4%.

The private sector operator, which runs 52 airports in seven countries (Argentina, Brazil, Uruguay, Peru, Ecuador, Armenia and Italy) increased its passenger volumes to 22.5m.

Adjusted EBITDA declined by 18.5% yoy to $99.9m.

Operating income dived 29% yoy to $61.8m, mainly impacted by a bad debt provision in Argentina and the impact of IAS 29.

AVIANCA BRASIL IMPACT

Martín Eurnekian, CEO of Corporación América Airports said: “We continue to navigate unfavourable market conditions, particularly in Argentina, our largest market, and to a lesser extent in Brazil, which impacted our performance in this quarter.

“Over 22 million passengers travelled through our 52 airports in 3Q19, up over 1% year-on-year, reflecting 4% and 3% growth in domestic and international traffic, respectively, partially offset by a double-digit decline in transit passengers. Traffic at our Brazilian airports continued to be impacted by the cessation of operations of Avianca Brasil.

Corporacion-Americas-resultsQ3

Click to enlarge. Source: Business Wire.

“In Argentina, we continue to experience a mix shift towards more affordable domestic traffic and weaker commercial revenues. Profitability in this market was also impacted by a $23.1 million bad debt provision recorded this quarter related to past due commercial revenues and aircraft fees accumulated for over a year from a local airline.”

Looking forward, Corporación América Airports says it will continue to invest to stimulate growth in Argentina once the economy picks up.

The addition of new domestic and international routes is designed to plug the capacity gap at Brasilia Airport after carrier Avianca Brasil ceased its operations earlier this year.

BREXIT MONITORING

Meanwhile in Italy, Corporación América Airports expects positive traffic returns. It says works have begun at Pisa Airport and the operator will continue to monitor Alitalia and Brexit developments.

“In sum, while in the near term we continue to face several headwinds, principally in Argentina and Brazil, we have a successful track record of operating in Argentina for over two decades in different macro cycles,” added Eurnekian.

“Our resilient business model with over 80% of revenues generated in US dollars is further supported by a solid balance sheet. This provides flexibility as we move ahead in the execution of our investment projects to further expand and modernise our airport network to meet growing demand when the macro environment improves.”

Avianca-BR

Traffic at Corporación América Airports’ Brazilian locations has been eroded by the cessation of Avianca Brasil flights. Source: Wikimedia/Laurent Errera.

Corporación América Airports served 81.3 million passengers in 2018.

Aside airports, Argentinian parent company Corporación América operates across a number of verticals, including in agroindustry, services, energy, infrastructure and technology, with duty paid shop chain ShopGallery counting among its business units.

Earlier this year, the company specialising in duty paid, virtual ‘e-lockers’ and convenience concepts expanded its footprint at Cataratas del Iguazú International Airport on the Argentina border with Brazil and at several other airports.

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