Executive Summary / Key Takeaways

• Grupo Aeroportuario del Pacífico (GPAEF) demonstrated robust financial and operational growth in Q2 2025, with significant increases in revenue and EBITDA, driven by strategic infrastructure investments and diversified commercial initiatives.
• The company's substantial MXN 43.2 billion Master Development Plan (2025-2029) is poised to enhance capacity and passenger experience, with key projects like Guadalajara's second terminal and runway expansion, reinforcing its long-term growth trajectory.
• GPAEF is strategically expanding its non-aeronautical revenue streams through new ventures in cargo and hotel operations, alongside optimizing existing commercial spaces, which is contributing to resilient profitability and a more diversified business model.
• Despite facing headwinds from U.S. migration policies impacting VFR traffic and ongoing airline capacity constraints due to Pratt & Whitney engine inspections, management maintains an optimistic outlook for traffic recovery and sustained growth.
• GPAEF maintains a healthy balance sheet with a net debt-to-EBITDA ratio of 1.8x and a commitment to shareholder value through consistent dividends, while actively pursuing accretive inorganic growth opportunities in the Caribbean and Latin America.

A Gateway to Growth and Diversification

Grupo Aeroportuario del Pacífico (GPAEF) stands as a pivotal player in the aviation infrastructure sector, operating 12 airports across Mexico's dynamic Pacific region, including major hubs like Guadalajara and Tijuana, alongside key tourist destinations such as Puerto Vallarta and Los Cabos. Its strategic footprint extends internationally, encompassing Sangster International Airport in Montego Bay and Norman Manley International Airport in Kingston, Jamaica. GPAEF's overarching strategy is built on a foundation of continuous infrastructure development, aggressive commercial revenue diversification, and calculated international expansion, positioning it as more than just an airport manager but a developer of comprehensive aviation ecosystems.

The company's history reflects a consistent drive for growth and value creation. Since its NYSE listing in 2006, GPAEF has strategically expanded its reach, notably acquiring a majority stake in MBJ Airports Limited in 2015 and securing the Kingston concession in 2018. This journey has shaped its current strategic responses to market dynamics, emphasizing resilience and adaptability in a constantly evolving industry.

Strategic Pillars: Infrastructure Modernization and Operational Acuity

GPAEF's commitment to modern infrastructure and operational excellence forms a core competitive advantage. The company's Master Development Plan (MDP) for 2025-2029 outlines a substantial capital expenditure commitment of MXN 43.2 billion (measured in December 2022 pesos) across its 12 Mexican airports. This ambitious plan is designed to significantly boost capacity and enhance the passenger experience. Key projects include the construction of a second terminal in Guadalajara, a new terminal facility for domestic departing passengers in Tijuana, and expansions of both international and domestic terminals in Los Cabos. These investments are projected to result in an additional 54% in terminal square meters, 37% more security checkpoints, and a 26% increase in operational areas across the network. The second terminal building in Puerto Vallarta, for instance, is expected to be finalized by the end of 2026.

A significant operational milestone was achieved on July 18, 2024, with the opening of the second runway at Guadalajara Airport. This expansion is critical, offering the capacity for an additional 50% to 70% of operations in the long term and providing greater flexibility to develop new routes and connectivity throughout the region. These infrastructure enhancements are not merely expansions; they represent GPAEF's strategic "technological differentiator." By investing in advanced airport design and integrated operational systems, the company aims to streamline passenger flow, improve aircraft turnaround times, and optimize commercial space utilization. This approach, coupled with data-driven commercial strategies, directly translates into quantifiable benefits such as increased operational capacity, an enhanced passenger experience, and ultimately, higher non-aeronautical revenue generation. The company also maintains a whistleblower program, reflecting its commitment to robust governance.

Diversifying Revenue Streams: The Commercial Ecosystem

GPAEF's strategic pivot towards a diversified commercial ecosystem is a key driver of its investment thesis. The non-aeronautical segment, encompassing retail, food and beverage (F&B), car rentals, VIP lounges, parking, ground transportation, duty-free, and timeshares, is designed to maximize passenger spending and enhance the overall airport experience. This segment has shown remarkable growth, with non-aeronautical revenues increasing by 41.8% year-over-year in Q2 2025. Excluding the significant impact of the cargo facility acquisition, this segment still posted a solid 14% increase. This strong performance was supported by strategic expansion and business acquisitions, along with new partnerships and renegotiated tenant contracts. In Q1 2024, non-aeronautical revenue per passenger reached MXN 109 for the first time in the company's history, further climbing to MXN 120 during the first nine months of 2024.

New ventures are also contributing significantly. The consolidation of the cargo and bonded warehouse business (GWTC) in Q2 2025 drove a 113% increase in revenues from businesses directly operated by GPAEF. This acquisition, which contributed MXN 354 million to non-aeronautical revenue in Q3 2024, is viewed as a platform to generate new logistics-related businesses, with an expected EBITDA margin for GWTC of 50% to 55%. Hotel operations represent another growth avenue; the Guadalajara hotel, in its first year of operation, achieved an impressive 80% occupancy rate with average tariffs around MXN 2,500. While these new businesses may have lower individual margins, they contribute positively in absolute terms, reducing reliance on aeronautical fees and creating a more resilient business model.

Financial Strength Amidst Headwinds

GPAEF's financial performance in Q2 2025 underscores its operational resilience. Total revenue, excluding IFRIC-12, surged by 30.6% year-over-year to MXN 8.2 billion. This robust top-line growth was propelled by a 26.4% increase in aeronautical revenues and the aforementioned 41.8% rise in non-aeronautical revenues. Key drivers for aeronautical revenue included tariff implementations in March 2025 and a 13.6% depreciation of the Peso against the dollar compared to Q2 2024.

Profitability metrics also remained strong, with EBITDA increasing by 31.1% to MXN 5.5 billion, resulting in an EBITDA margin of 67.1% (excluding IFRIC-12). Operating income grew by 30.4%, and net income by 17.9%, reflecting solid underlying fundamentals. Despite higher operational expenses, including a 57.3% increase in maintenance related to airfield improvements and new operational areas, the company's focus on cost control remains paramount.

GPAEF maintains a healthy liquidity position, holding MXN 9.7 billion in cash and cash equivalents as of June 30, 2025. The company actively manages its liabilities, having refinanced a USD 40 million credit line for a five-year term with Banamex in September 2025 and securing an MXN 3.4 billion credit facility to consolidate short-term debt. Its net debt-to-EBITDA ratio stands at a manageable 1.8x, well within debt covenants. This financial discipline supports significant capital investments, with MXN 12.8 billion executed in the first half of 2025, in line with the annual plan of MXN 13.3 billion. Furthermore, GPAEF reinforces its commitment to shareholders, having approved a dividend of MXN 16.84 per share for payment throughout 2025.

Competitive Arena: Strategic Positioning and Market Dynamics

GPAEF operates within a competitive landscape dominated by other publicly traded airport operators in Mexico and with international players. Its primary direct competitors include Grupo Aeroportario del Sureste (ASUR) and Grupo Aeroportuario del Centro Norte (OMA) in Mexico, and globally, Aena S.M.E., S.A. (AENA).

ASUR, with its strong presence in tourism-heavy markets like Cancún, often exhibits high profitability margins driven by leisure travel. GPAEF, in contrast, benefits from a more diversified portfolio across western Mexico, balancing tourism with business and cross-border traffic, particularly in Tijuana. This diversification provides GPAEF with greater resilience during economic shifts compared to ASUR's tourism-centric model. GPAEF's operational execution in mixed-use airports, integrating passenger and cargo operations, also provides a distinct advantage.

OMA focuses on industrial and freight activities in northern and central Mexico, leveraging its position in manufacturing hubs. GPAEF's recent acquisition of GWTC and its strategic intent to develop a logistics platform directly addresses this segment, positioning it to compete more effectively in cargo and freight. While OMA may have an edge in specialized logistics capabilities, GPAEF's broader regional network offers a more adaptable market positioning.

Globally, Aena, with its vast network and advanced operational systems, represents a benchmark for technological integration and scale. GPAEF's strength lies in its deep understanding of local regulatory environments and regional adaptability, fostering stronger customer relationships and potentially more stable cash flow in niche markets. However, GPAEF may lag Aena in the speed of technological innovation and the efficiency derived from global scale.

GPAEF's competitive advantages, or moats, stem from its established network of regulatory concessions and profound regional expertise. These translate into stronger customer loyalty and stable revenue streams. Its diversified revenue strategy, particularly the expansion into non-aeronautical services, helps mitigate dependence on any single traffic segment, enhancing its financial stability.

However, vulnerabilities exist. The company remains susceptible to broader economic cycles and external shocks, such as the ongoing Pratt & Whitney engine inspections affecting airline capacity. The U.S. Department of Transportation's claims regarding Mexico's alleged anticompetitive behavior, while currently seen as part of a broader bilateral discussion, could pose long-term risks to U.S.-Mexico routes. Customer and supplier dynamics, such as airline pushback on tariff increases, are a constant factor, though management notes this is a normal industry trend. GPAEF's strategic response involves continuous route development, adapting to airline capacity adjustments, and leveraging its unique assets like the Tijuana CBX facility to serve cross-border demand even amidst regulatory challenges.

Outlook and Growth Trajectory

GPAEF's management maintains a cautiously optimistic outlook, anticipating sustained growth despite prevailing headwinds. The company expects to maintain its initial annual guidance for passenger traffic in 2025, projecting a growth rate close to 5% for the year. This confidence is underpinned by the planned addition of new routes and frequencies in the latter half of 2025, particularly to Canada, which is an increasingly relevant market for leisure and VFR traffic.

Tariff adjustments are a key component of future revenue growth. The first authorized tariff increase was implemented in March 2025, with another expected in January 2026. GPAEF aims to achieve approximately 90% fulfillment of the maximum tariff for the current year, acknowledging that Peso volatility and fixed rates can influence this target. For some airports, a double-digit increase in passenger fees is anticipated, while others will see adjustments closer to inflation.

Inorganic growth remains a strategic priority. GPAEF is actively evaluating participation in the Turks and Caicos airports tender process and the potential acquisition of CCR Airports (CCR) assets. Management emphasizes that its healthy balance sheet provides sufficient capacity to fund such transactions without requiring new equity injections. Long-term optimism for Montego Bay, Jamaica, is driven by announcements of new hotel developments and proactive efforts by the Tourist Minister to attract diverse markets. The company targets a normalized EBITDA margin of approximately 68% (+/- 1%) for 2025, reflecting the integration of new businesses and ongoing operational efficiencies.

Risks to the Investment Thesis

While GPAEF's growth trajectory appears robust, several risks warrant investor attention. Restricted U.S. migration and enforcement policies pose a significant concern, as the VFR segment accounts for an estimated 38% of GPAEF's international traffic. Such policies could discourage travel, particularly on U.S.-Mexico routes. The ongoing preventive inspections of Pratt & Whitney (RTX) engines, which have led to grounded aircraft for major airlines like Volaris (VLRS), continue to constrain capacity. Management expects the full recovery of capacity to extend until mid-2026, impacting traffic trends throughout 2025.

Furthermore, Peso volatility and broader U.S. macroeconomic conditions could impact discretionary travel. The company also faces rising operational costs due to changes in labor laws in both Mexico and Jamaica, as well as inflationary pressures on expenses like security, maintenance, and electricity tariffs. The broader bilateral relationship between the U.S. and Mexico, beyond specific aviation policies, presents an overarching geopolitical risk.

Conclusion

Grupo Aeroportuario del Pacífico (GPAEF) is executing a compelling investment narrative, characterized by strategic infrastructure expansion, aggressive commercial diversification, and disciplined financial management. The company's substantial Master Development Plan and the recent operational enhancements, such as Guadalajara's second runway, underscore its commitment to building a robust and high-capacity aviation network. This focus on modern infrastructure and operational acuity serves as a foundational technological differentiator, enabling enhanced passenger experience and driving non-aeronautical revenue growth.

Despite facing industry-wide challenges like airline capacity constraints and potential impacts from U.S. migration policies, GPAEF's diversified revenue streams, particularly from its expanding cargo and hotel operations, provide a strong buffer. The company's healthy financial position, marked by a manageable debt profile and consistent shareholder distributions, further strengthens its investment appeal. As GPAEF continues to leverage its regional expertise and pursue accretive inorganic growth opportunities, its strategic positioning and commitment to long-term value creation present a compelling case for discerning investors.