Good day, ladies and gentlemen, and welcome to ASUR's Second Quarter 2024 Results Conference Call. My name is Ezequiel and I'll be your operator. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of today’s conference. [Operator Instructions] As a reminder, today's call is being recorded. Now I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

Thank you, Ezequiel, and good morning, everyone. Before I begin discussing our results, let me remind you that certain statements made during this call may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to several risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. Additional details about our quarterly results can be found in our press release, which was issued yesterday after market closed and is available on our website in Investor Relations section. Following my presentation, I will be available for Q&A. Before moving on to our performance for the quarter, let me provide an update on recent developments on the sustainability front. Beginning with -- we have compliance with [indiscernible] ESG reporting requirements, including the Mexican Stock Exchange, the United Nations Global Compact and the Mexican Register of carbon emissions. We are also implementing a data collection process that will allow us to calculate our scope-3 carbon emissions. This process is approximately at 90% complete as of the end of the second quarter for the Mexican airports. We also renewed our social project with Pronatura, which supports local fishing communities and promote sector tourism in the Yucatan Peninsula. The [indiscernible] project will include four additional direct beneficiaries and approximately 100 indirect beneficiaries. Additionally, we have been in conversation to strengthen ASUR alliance with the UNICEF and extend the activities of this agency to all airports across our group. Lastly, we are also in the final stages of establishing a strategic alliance with [indiscernible], a nongovernmental organization that aims to prevent human trafficking. We look forward to providing more updates as we continue to advance in our sustainability journey. Now starting with a review of ASUR's operational and financial performance for…

[Operator Instructions] Our first question is from Rodolfo Ramos from Bradesco BBI. Please go ahead.

Just a couple from my side. The first one is on traffic. I wanted to get your sense of where we stand in the -- in this in the recall on Pratt & Whitney. You're one of the least exposed. Just wanted to get your thoughts on where we stand there. And on traffic as well, if you would expect, given the rhetoric that we've seen so far from the U.S. election campaign, whether we can expect a similar impact from what we saw last time around in terms of the U.S. international bond traffic. So that's my first one on traffic. And secondly, if you can just give us a sense of pricing of where you currently stand. You had mentioned in the previous call that you increased prices in April. So just wanted to see where do you stand versus your maximum tariffs and what to expect there going forward?

Well, in the case of Pratt & Whitney, of course, I do not have the exact and precise data. But what I understand the most affected is blades, they sent 19 airplanes during the fourth quarter and 26 during the first quarter. And you know the time of the recall is around 300 days. So, we will see those planes coming back to production, I would say, at the end of September this year. So from now until September, the planes are not going to improve and after that, I will -- I believe they will stabilize up to first quarter next year, and then they should improve. In the case of what you have mentioned, because of the elections in the U.S., yes, I do expect and you can see that very clear, that Mexico -- the Mexican situation will be there in all the candidates. And they will be blaming all the problems we have here, and that may affect traffic during the fourth quarter. In terms of pricing, we have adjusted our prices. So, we are working towards to have a maximum tied compliance of close to 99% for the year.

The next question is from Guilherme Mendes from JPMorgan. Please go ahead.

I was wondering in terms of the commercial revenues. As has been surprising to the upside on a per passenger basis. And you mentioned about opening a bunch of new commercial spaces in the three regions. How should we think about this segment going forward, meaning in addition to the investments that you're going to make in Cancun Airport, should we expect additional openings or ramp-ups on the commercial front? And my second question is on traffic, following up on the previous one, but I think about Puerto Rico and Colombia. You mentioned in the past conference call about a normalization on the trends of both Colombia and Puerto Rico accelerating and decelerating. Just wanted to double check if that's still your base case expectation?

Well, in the case of commercial revenues, what you saw for the quarter, it was parking and also car rental, those were the two winners for the quarter. I have to say that, of course, in the case of Mexico, which has reached a record high of MXN154 per passenger. We were positively affected by the Mexican peso depreciation. In the case of the traffic of Puerto Rico and Colombia, yes, I do believe that Puerto Rico should normalize during the remaining of the year. And in the case of Colombia, what I do expect is the recovery process towards the end of the year of what we have lost last year with the ground of these two airlines that represent 20% of the traffic during 2022.

The next question is from Jens Spiess with Morgan Stanley Investment. Please go ahead.

I just wanted to ask on the realized tariff. I think you reported MXN326. And doing some math here, we get that it represents around 95% of your maximum tariff, if we rate it by traffic of the individual airports. Does it sound about right? Or are we missing anything? And a follow-up to that, are you worried about the depreciation in the Mexican vessel? Or I think, that being said, a further depreciation in the Mexican peso, which could maybe result in a high-end risk of you exceeding the maximum tariffs and potentially having to give some discounts towards the end of the year?

Well, in the case of the maximum tariff, there's a key part in the Mexican section that says what was the weighted average maximum rate obtained -- well, implicate obtained during the quarter. What I was saying last year, yes, we reached 95% and what we are expecting -- it's close to 99%. Of course, that will depend on what you just mentioned in terms of the Mexican peso. Mexican peso devaluation will help us to get these objectives as the tariffs for the international plants are based in U.S. dollars. So that -- remember that maximum rate is in pesos. So that will help us to reach the objective.

Okay. Perfect. And if I may, just one follow-up. In terms of traffic -- I mean, comparing it to what you forecasted within your tariff review, I mean, we're not even close to getting to the 3% clawback, aren’t we? Or any color on that?

Well, in terms of traffic, what I would say is what we were expecting from Pratt & Whitney and the decrease in the international traffic has been higher in comparison with what we were expecting at the end of last year.

A bit higher, okay.

They've not been dramatic.

Okay. higher but not close to 3% clawback?

Higher in terms of more negative. So today, the current traffic is more negative as we were expecting.

The next question is from Fernanda Recchia with BTG. Please go ahead. Fernanda Recchia may we ask you to unmute your line, and please go ahead with your question. As there is no response, may I request that we move to the next participant. The next question is from Jay Singh with Citibank. Please go ahead.

I guess the first thing I wanted to ask is, you mentioned earlier that Colombia and Puerto Rico traffic strength you've seen moderating a little bit. But I also want to ask the JetBlue has been raising capacity into Puerto Rico's market. So, considering that, do you still see some degree of moderation? Or do you just see it sticking around a little bit higher?

Jay, I cannot hear you well. Could you speak louder.

Sure. So, you mentioned Colombia and Puerto Rico's traffic strengthened potentially moderating in the coming quarters. But a JetBlue has been raising their capacity into Puerto Rico's market. So do you see that sticking around? Or do you still see it normalizing?

The most important effect in Puerto Rico last year was the entrance of from PS. They are expanding and creating a base in Puerto Rico. Of course, when you reach the comparables year-over-year, then it will not be easier to reach the 18% growth we got last year. So that's why I'm saying that it should normalize once we reach the 12 months rollover with the entrance of [indiscernible].

And for my second question, I wanted to ask how much CapEx can we expect on a consolidated basis? And what would the split look like between the MDP and the non-MDP?

Again, I cannot hear you.

Okay. How much CapEx can we expect on a consolidated basis? And what would the split look like between the MDP and the non-MDP?

The MDPs for this year is around MXN3.8 billion. That, of course, will be -- will have to be adjusted with the construction price index. And that's what we have to comply with. I have to say that at the beginning of the five-year period, once the projects have been approved at the end of last year, we have to wait until we develop the projects, make the billing process and buying the contractors, and then they can start constructing. So that's why you are seeing a very slow between brackets number for the first half of the year, the MXN800-and-something million comparable with the MXN3.8 billion that we have to spend during the year.

The next question is from the line of Pablo Monsivais with Barclays. Please go ahead.

May I just ask if you can provide some color on the -- on your perspective for U.S. traffic to Cancun? We have seen some weakness and U.S. carriers are saying that they are taking out capacity. But what are your thoughts on this? And especially how deep or how prolonged can this be? That's number one. And number two, I would like to have more detail on your commercial revenues plans for Colombia and Puerto Rico going forward?

Well, in the case of the traffic of Cancun, as you have seen in the first half of the year, in terms of [indiscernible] basically affected by the domestic situation of Pratt & Whitney and the reduction of the air traffic movements at Mexico City Airport from 52 to 43. I don't think that these two things will change. So that those two things will continue affecting with traffic during the second half of the year. And also, the new negative effect is reduction in the traffic from the U.S., as I have mentioned in my initial remarks. As it was mentioned during the call, during 2018 -- at the end of 2018 because of the elections of the U.S. where there was someone saying every single day that Mexico was a bad place to be. Probably, we will be affected from this traffic from the U.S. So not very high hopes on the track for Cancun over the year.

The next question is from Andressa Varotto with UBS. Please go ahead.

Actually, it's Alberto Valerio from UBS team. Adolfo, I would like to know about the new airline in Mexico, Mexicana de Aviación what we should expect from them if you have talked to them for some new routes to your airport? And also, what should we expect from the industry of airlines in Mexico, if you see any additional capacity. We know that we both Viva and Volaris [indiscernible] with [indiscernible] issue. But for next year in 2026, what should we expect from the domestic industry?

Well, in the case of Mexicana de Aviación when I have heard or what I have read in the news and the numbers that have been provided by the Mexican government is they have transported around 100,000 passengers during the first five months of the year. So, if we compare that with the 8 million from Volaris, 9 million from Viva, and probably another 8 million from Aeromexico doesn't mean too much. As we have seen, Viva, Volaris and Aeromexico have been adding some additional plans to their fleets. This is also in the case of Volaris and Viva mitigating -- partially mitigating the effect of Pratt & Whitney. And remember that this Pratt & Whitney situation is a temporary situation. So, we should see a strong recovery from these three next year.

The next question comes from Isabela Salazar with GBM. Please go ahead.

I was wondering if you could give us any update on Punta Cana?

We don't have any updates. The legal projects have been established, and that will take time, as I have said during my previous earnings conference call, the project [indiscernible] call for one year at least.

The next question comes from [Andres Aguilar with GBM]. Please go ahead.

I was wondering if you could provide an overview of expected traffic mix, I think you're not in domestic passengers for the remainder of the year?

Well, as I have mentioned, traffic -- domestic traffic for remaining of the year, it's going to be affected by these two things, starting with in Mexico City. So, we should expect these to be negative in the whole system, not just in the case of [indiscernible].

The next question comes from Anton Mortenkotter with GBM. Please go ahead.

Adolfo, congrats on the results. I have two quick questions. One is related on your cash balance. I was wondering if you can tell us how much of that is dollarized? And the second one is, considering the cash flow generation that you have right now and with the CapEx commitments, even though they are really high for the next coming -- the next five years, seems like you will end up with a significant cash balance of around MXN20 billion. I was just wondering what are your thoughts on the possible use of that cash?

Well, basically, all -- you can see the numbers, Puerto Rico is U.S. Colombian pesos and in the case of Mexico, some of this is U.S. dollars. Roughly speaking, in Mexico, we should be around $400-and-something million of -- in dollars and the rest in pesos. In terms of the cash flow generation, yes, of course, we have a lot of CapEx in front, very high numbers in the coming years. But as always, we will review this at the end of every year in terms of the tax situation, the cash balance, the CapEx commitments, and we will propose the dividend to the Board of Directors and then to the shareholders of [indiscernible]. As I had mentioned, during May and June, we have paid MXN6.3 billion in dividends. And it was an ordinary dividend of MXN10.926, an extraordinary dividend of MXN10 as it was done last year.

Ladies and gentlemen, that concludes the question-and-answer portion for today's conference call. I would like to turn it back over to Mr. Castro for closing remarks.

Thank you, Ezequiel, and thank you all of you again for joining us today for the second quarter 2024 conference call. We wish you a good day and goodbye. Now you may disconnect.

Thank you. Ladies and gentlemen, that concludes ASUR's second quarter 2024 results conference call. We would like to thank you again for your participation. You may now disconnect.