Grupo Aeroportuario del Pacifico Announces Results for the Fourth Quarter of 2020


Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reported its consolidated results for the fourth quarter ended December 31, 2020 (4Q20). Figures are unaudited and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

COVID-19 Impact

During the fourth quarter of the year, the COVID-19 pandemic continued to affect the Company’s results, mainly due to the decrease in international and domestic passenger traffic compared to 4Q19. Beginning in mid-2020, non-essential activities in Mexico began to reactivate and the airports began to demonstrate improvements in passenger traffic. However, the general population was encouraged to remain at home. With respect to operations in the Jamaican airports, beginning June 15, 2020, the number of flights at these airports began to increase, but 4Q20 had much lower passenger traffic levels compared to 4Q19.

The level of recovery in the Company’s operations and results will depend on the duration and containment of the pandemic by the Mexican, Jamaican and U.S. governments, as the main origin-destination. Due to the nature of the pandemic, the Company cannot completely estimate its impact on the financial situation or the operating results of the Company for the short, medium, or long term.

4Q20 Company Measures:

    The Company continued to offer support to the airlines and its commercial clients. The Company granted discounts for commercial contracts, with regards to the guaranteed minimum rent amounts, in accordance with the percentage of passenger traffic decrease at each airport, thereby maintaining percentage of participation over revenues. With regards to the airlines, the Company continued its incentive program in accordance with the reactivation of routes and frequencies that were held prior to the pandemic.

    Operating cost control measures were maintained throughout most of the various expense line items; however, these began to steadily increase in line with the gradual re-opening of the operating areas per the higher passenger traffic at each airport.

    The Company concluded the extraordinary review of the Master Development Program with the Mexican Aeronautical Authority for the current 5-year period, deferring investments for a period of 20 months. The Company also presented the Jamaican government certain rebalancing proposals for the Montego Bay and Kingston airports, which will be reviewed in 2021.

Impact of COVID-19 on the Company’s Financial Position:

While the pandemic-related effects caused a significant decline for 4Q20 results, the Company generated a positive EBITDA. Controlling cost of services, the decrease in the rights to concession taxes and the technical assistance fees, allowed the Company to mitigate the impact of COVID-19 on revenues.

During 4Q20, the Company generated a positive cash flow in operating activities, even though it was significantly lower than the cash flow for 4Q19. The Company reported a solid financial position for the close of 4Q20, cash and cash equivalents on December 31, 2020 reached Ps. 14.5 billion (92.6% superior to the balance at 2019). During 4Q20, the Company refinanced US$ 191.0 million in debt matured during the first quarter of 2021.

During 4Q20, the Company carried out an evaluation covering the possible adverse impacts of the pandemic on the Company’s financial condition and operating results, as well as a review of the indicators and deterioration of the larger long-term assets, expected credit losses and recovery of assets due to deferred taxes. In this evaluation, the Company reviewed financial results for the short, medium, and long term, concluding that a significant deterioration of the Company’s assets is not expected. As such, the Company does not foresee business interruption or closing of operations at any of its airports. However, the Company cannot ensure that the negative effect of the pandemic will be lower in the coming quarter than in 4Q20, nor can it ensure that local and global economic conditions will improve. The Company can also not predict the availability of financing, or what general credit conditions will be.

The Company will continue to monitor the pandemic’s adverse effects on the results of the operations, including the monitoring of key indicators, deterioration tests, projections, budgets, fair values, future cash flow related to the recovery of the financial and non-financial assets, as well as possible contingencies.

During 4Q20, the Company carried out the risk valuation that represented the accounts receivables of airlines and commercial clients in terms of liquidity. As a result, the Company was able to recover the accounts receivables reserves of some of its clients, as such, the reserve for expected credit losses declined by Ps. 26.5 million; this effect is recognized in the operating cost.

In accordance with the 2020 annual results, the Company expects an asset recovery for deferred taxes recognized in the statement of cash position, even though the results declined with respect to 2019.

The Company will continue informing the market in a timely manner regarding future material updates to the airport operations, as well as measures that are adopted for preserving liquidity and business continuity.

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