Good day, ladies and gentlemen, and welcome to ASUR's second quarter 2022 results conference call. My name is Anna, 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. If you would like to ask a question, please press star followed by one. If you would want to withdraw your question at any time, please press star followed by two. If you are using a speakerphone, please lift the handset before making a selection. As a reminder, today's call is being recorded. Now I'd like to turn the call over to Mr. Adolfo Castro Rivas, Chief Executive Officer. Please go ahead, sir.
Thank you, Anna, and good morning, everyone. Before we get started covering the highlights from the quarter and then taking your questions, let me remind you that certain statements made during the call may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to several risks and uncertainties that may cause actual results to differ materially, including factors that may be beyond our company's control, including the impact from COVID-19. As usual, additional details about our quarterly results can be found in our press release, which was issued yesterday after market close and is available on our website Investor Relations section. Now moving on to a review of passenger traffic and travel demand during the quarter.
Total traffic was over 39% year-on-year and exceeded second quarter 2019 levels by 19% to a record of 16.7 million passengers in the quarter. We continued to see steady growth throughout the quarter across the three geographies. Now looking at recovery trends by region against pre-pandemic levels of the second quarter 2019. Once again, Colombia posted the strongest recovery of 43%, with domestic travel increasing in the low 40s and international travel in the low 50s. Puerto Rico saw a 15% increase in traffic, mainly driven by domestic traffic that was up in the high teens, although relatively flat sequentially. In turn, international travel continued its travel recovery, reaching 88% of the second quarter 2019 levels.
Traffic in Mexico surpassed second quarter 2019 levels by nearly 13%, with international travel up in the high teens despite higher airfares, driven by strong leisure travel demand from all key regions. With the exception of Canada, which remains at 57% of the last twelve months, 2019. This has been more than offset by strong U.S. traffic, while last twelve months European tourism is just 8% below pre-pandemic levels. Looking ahead, staying with Mexico, we expect traffic from Canada to resume during the winter season, mainly November through April next year. While we expect to see steady performance from the U.S. and Europe, we also anticipate domestic travel to continue its travel recovery. As I have mentioned before, business travel is expected to continue to lag leisure.
As a result, we believe that traffic at Veracruz, Minatitlan, and Villahermosa airports, which this quarter were on average 7% below second quarter 2019 levels, will continue to recover at a slower pace. In Puerto Rico, we are seeing domestic traffic trending to normalize after a very strong performance over the last several quarters. Lastly, traffic in Colombia remains surprisingly strong, and we expect this to continue throughout the year, driven by addition of routes and investments in tourism, which have driven a structural shift in demand. Traffic trends remain solid, underscored by pent-up demand. We believe that any deceleration resulting from the increasingly inflationary global macro environment could be mitigated with the recovery expected to come from some markets like Canada. Now turning to the P&L, starting with our top line.
Note that all reference to revenues and costs exclude construction revenues and that all comparisons are against pre-pandemic levels of second quarter 2019. Revenues increased in the mid-40s%, reaching MXN 5.7 billion, a record high for any given quarter. This good performance was driven by growth in both aeronautical and non-aeronautical revenues. All geographies boosted sustained revenue growth, with Mexico accounting for 70% of the total revenues in the quarter, Puerto Rico 17% and Colombia 12%. Commercial revenues were up 44%, driven mainly by passenger traffic growth, with increases of 39% in Mexico, 60% in Puerto Rico and nearly 41% in Colombia. Commercial revenues per passenger amounted nearly MXN 120, above the MXN 100 reported in the second quarter 2019 and slightly above the level achieved in the prior quarter.
By geography, commercial revenues in the quarter were in the range of MXN 143-149 in Mexico and Puerto Rico. In Colombia, commercial revenues per passenger reached COP 40, fairly in line with second quarter 2019 levels. Note that 12-month level more than doubled those achieved over the same period of 2019. In terms of traffic mix, the share of domestic passengers remains at 2019 levels. We continue to see growth in the U.S. have a share of higher spending Europeans back to pre-pandemic levels. The number of Canadian travelers remain at 56% of 2019 levels. Now moving on to costs. Total operating expenses increased by high single digits, excluding MXN 175 million expense reinvestment in Puerto Rico. Operating costs and expenses, which have increased 18%.
Nonetheless, these are significantly lower than the 45% growth in revenues. In Mexico, costs were up 27% and still below the 48% increase in revenues. This reflects higher technical assistance and concession fees resulting from higher revenues and EBITDA, together with higher cost of services, including the cost of sales from directly operated stores that continue to see a strong activity. Puerto Rico, in turn, benefited from MXN 175 million expense reinvestment under the American Rescue Plan Act. Excluding these benefits, costs would have increased 10%, while revenues were up 33%. Finally, costs in Colombia declined 26%, while revenues were up 37%.
In summary, the significant efficiency measures during the pandemic levels have allowed us to maintain the costs that are under our control at 95% of the second quarter 2019 levels and 39% on a per passenger basis, even with higher revenue levels than in the second quarter of 2019. These numbers include total cost minus construction, depreciation and amortization, technical and concession fees. We achieved record high profitability this quarter with consolidated adjusted EBITDA up 47% to MXN 4 billion. Passenger traffic growth increased commercial revenues per passenger. High tariffs and operating leverage contributed to this performance. Mexico leads this growth with adjusted EBITDA up 57% to MXN 3 billion.
Puerto Rico, in turn, posted a 7% increase in EBITDA to MXN 580 million, while profitability in Colombia continued to recover, with EBITDA up 62%, reaching just over MXN 400 million. Adjusted EBITDA margin, ex-Q3 2012, increased 100 basis points nearly to 71% this quarter. By geographical region, adjusted EBITDA margin improved over 4 percentage points in Mexico and Colombia to nearly 76% and 58% respectively, while the margin in Puerto Rico was close to 59% this quarter, compared with the 73% in the second quarter of 2019. All in all, we delivered solid set of results with traffic and revenues at record high levels.
These, together with operating leverage, have contributed to more than doubling net majority income to MXN 2.6 billion in the quarter, up from MXN 1.2 billion in the second quarter of 2021 and MXN 1.4 billion in the second quarter of 2019. Turning now to capital investments. We invested nearly MXN 440 million during the quarter, of which 79% was allocated to Mexico, 20% to Puerto Rico and 1% to Colombia. In Mexico, we completed the expansion of the Tapachula terminal as anticipated. We also remain on track with expansion of the terminal building in Mérida, with the third phase of the project to be completed by the year end.
At Cancún Airport, we are making steady headway to finalize by year-end the first phase of the Terminal 4 expansion, which consists of adding two boarding gates in the international front. In Puerto Rico, we continue to advance with the remodeling of Terminal B and major maintenance required to runways and taxiways. Now, a few comments on the balance sheet. We maintain a robust financial position with cash and cash equivalents of MXN 7.3 billion at quarter-end. This follows a dividend payment of MXN 4.5 billion paid last June as we return additional value to our shareholders. In turn, net debt last twelve months EBITDA was just 0.4 times at June 30, with interest coverage at 10.5 times.
Only less than 1% of our debt matures in the second half of the year, with the next major maturity taking place in 2025. Finally, accounts receivables were flat, practically flat year on year. Before moving into the Q&A portion of the call, a quick recap. We welcome a record number of passengers in the second quarter, surpassing second quarter 2019 levels with robust growth across our markets that was driven by a strong recovery demand. Although Canadian traffic remained low versus pre-pandemic levels despite higher, whereas in the US traffic, this was particularly strong, with European traffic has nearly recovered. We expect Canadian traffic to normalize this peak season, which would help offset any potential slowdown in the traffic that could eventually arise from the still inflationary environment across the world.
On the west, today we're seeing healthy traffic trends supported by a strong pent-up demand. Also gratifying was our record profitability this quarter, thanks to the effective efficiency measures, and especially expenses control that drove our cost levels well below the pandemic levels. Operating leverage kicked in strongly on the traffic growth. I will leave there. Operator, please open the floor for question.
Thank you. Again, audience, it is star then one for questions. Again, please ensure your mute function is turned off or the handset is picked up before pressing the corresponding digit. We ask that you please limit yourself to one question and one follow-up. If you have any additional questions, we ask that you rejoin the queue to allow everyone an opportunity to cycle. We'll now take a question from Alejandro Zamacona with Credit Suisse.
Yeah, thank you. Hi, Alejandro from Credit Suisse. A quick question on the profit margins. We have seen strong cost control even despite the traffic normalization. In this context, what could we expect going forward, especially what you just mentioned concerning the high inflation environment? When we look at the profit margins, the working capital, even excluding the reimbursement that you described in terms of about 55%, while in 2019 that was 70%. Just wondering if you can give us some color on what can we expect really.
Alejandro, thank you and good morning. Yes. We have been facing a very difficult times with the high inflation in all the geographies. As you have seen, that is the case of Puerto Rico with a very strong increase in the cost side, you know. In the Mexico side, we have been able to manage some of these increases. Of course, going forward, we will see some additional impact if this level of inflation continues, you know. The best case in terms of control has been Colombia, where things are or have been better than expected.
Okay. Thank you. My second question is on the regulatory journey, but I believe you will talk about most of the progress during the year. Can you give any color on the standpoint for this during the session? Thank you.
As you know, we are working to construct that proposal that we have to deliver by the year end to the government. Today we cannot say anything about it yet.
Okay. Thank you, Adolfo.
You're welcome.
Our next question comes from Lucila Gomez with Compass Group.
Hi, good morning. My question is more about, well, the inflation effect during this quarter. I believe that there were a contract that were going to be adjusted for inflation during this quarter. Have you faced any problems so far with the tenants?
No. If you're talking about contracts in terms of the cost side, which is not the tenant, some of them have been adjusted, and they are adjusted. Normally we have annual contracts and when they mature, those are adjusted with inflation. So far we have done that as of today. No major things are going in front.
Okay. Thank you.
We have a question from Stephen Trent with Citi.
Good morning, Adolfo, and thanks very much for taking my question. I have two for you. The first, I know that the Federal Aviation Administration did lower Mexico to Category 2 aviation safety rating. In that regard, can you tell us whether there are any specific items that ASUR may or may not have to change? Or is this something that really doesn't affect you and it's all happening in the eyes of the regulator?
Hello, Steve. Good morning. Thank you for your question. A year ago when this happened, if you remember, we published a 6-K, where we basically said that 0.5% of our traffic in 2019 to and from the United States was in domestic carriers. For the year 2020, it was 0.3%. Why is all of this? It's because what we have is destination airports. Basically Cancún is a destination airport. The people is coming from the U.S. to Mexico, and basically, they are coming in U.S. airlines. They are not coming in domestic airlines. That is why we do not see, and we do not have a major impact from this Category 2 situation.
Okay. That's helpful. And my follow-up question, you know, we've seen in the U.S. and places like London Heathrow and what have you know, difficulties in airports and ground staff, you know, is it fair to say that's not the case with any of your airports? You guys feel good about your throughput of ground staff at your various installations inside and outside Mexico?
Well, Max, that's a good question. Why this happened in Europe, basically, is because they basically fired 50 or 60% of their people. Once the traffic came back again, they were not able, and they have not been able to recover all the people that was fired. In our case, since day one, we decided to not fire anyone in the company because of this COVID-19 situation. Today, we have no problems when the traffic has returned. No. We are working without the difficulty that you are seeing in the case of the European airports.
Okay. Very helpful. I'll let someone else ask a question. Thanks, Adolfo.
We'll take our next question from Rodolfo Ramos with Bradesco BBI.
Thank you. Good morning, Adolfo. Thanks for taking this question. I have one also a follow-up to your initial remarks. I just wanted to clarify, in the case of Canada and Europe, how much is the percentage back from 2019 levels? And if you can tell us how much is the percent from the total international Mexican traffic?
Rodolfo, hi, good morning. In the case of the European traffic, last few months passenger traffic compared with 2019, Europe is 92%. We are below 8% of the pre-pandemic levels. In the case of Canada, it's 56%. Why has Canada not come back in that sense? Because normally, the Canadian traffic has a very strong seasonality, which is November through April, you know. If you remember the last season, the last November to April, it was lost because of Omicron, you know? That's why we've been saying that we're expecting to see the recovery up to this winter season. In the case of Canada, the other 44% that is pending to be recovered will be or should be recovered in the next winter season.
Okay. Just to put it in perspective, this demand, how many million passengers would this represent if you were to look at how much is the percent?
Yes. In the case of Canadians, the maximum they had in 2019 was 2.7 million passengers. In the case of Europe in 2019 was 2.1 million.
Okay. Thank you. Again, a follow-up, if that didn't count as my follow-up. Just wanted to get your thoughts on the Mexico City system. You know, we've seen a lot of news around slot restrictions and airlines starting to move to Toluca and Felipe Ángeles. You know, given how important it is for your system, what are your thoughts there as far as, you know, it being an opportunity or a bottleneck for developing domestic traffic?
Well, the good news there is that we have a new complementary airport, which is the Felipe Ángeles, you know. The other good news is that some of the airlines that were extremely reluctant to operate in Toluca, they're back again. So in that sense, what we are seeing is that we have additional capacity from these two airports, you know. Of course, flights there will start growing as we speak, and I'm expecting to see a very nice level of traffic in those within the next two years.
Thank you, Adolfo.
You're welcome.
We'll take our next question from Anton Mortenkotter with GBM.
Hello, Adolfo. Thank you for taking my question, and also congrats on your results. I have two quick questions. One is related to the non-aeronautical revenues. I just was wondering if you could provide some color regarding how that front is behaving with the tenants in the sense of how much of the revenues you're getting are coming from the fixed part of your rental and how much of it is variable given that you're already returned to pre-pandemic traffic levels?
Hi, good morning. In the case of the fixed and variable things, if you remember in the second quarter 2020, we saw a huge increase in the case of Colombia. That was because. Well, the passengers were almost zero, and we had a fixed revenue and the amount on a per passenger basis jumped up to COP 4,600 and something pesos, you know. The case of Colombia is the one that has more fixed revenues per passenger, you know. It's not the case in Mexico. It's not the case in Puerto Rico. That is why you are seeing this number coming down from the COP 4,600 and something to the 39 point something during the quarter, you know.
The fixed amount or the fixed revenues are less important once the traffic has come back up. The case of Colombia today is 38% more than what we had or what we saw in the case of 2019, you know. Most of the revenues in the case of Mexico and Puerto Rico are coming from the variable side, and in the Colombia side is now I don't want to say levels, but basically the fixed amounts are less important than they were before during the pandemic level.
Okay. Thank you. That's pretty clear. Also, my other question is kind of a follow-up from Stephen's question. As you mentioned, lots of your traffic is serviced by international carriers. I was wondering, through your conversations with these international carriers, what's their thoughts on increasing capacity at your airport? What are they thinking? How much fleet are they ordering or how are you seeing those dynamics?
Well, it's too many airlines that are flying to Mexico from the U.S. Basically what is driving like a taxi is, it's basically the load factor. The load factor they have, it's very nice today. That is why they have increasing the seats offered to Mexico. That is why you see this increase in a very nice increase from the U.S. traffic.
Have they mentioned like maybe any specific on trying to increase like 10% their capacity on your airports or something like that?
No, I don't have any specific number to share with you, from the US.
Okay. Perfect. Thank you, Adolfo.
You're welcome.
Our next question will come from Pablo Monsivais with Barclays.
Hi, Adolfo. Thanks for taking my question. I just have a question on your outlook of the traffic in Colombia. Being very strong over the recent quarters, in your view, what should we expect going forward? Thank you.
Well, Pablo, as I said during the initial remarks, we are extremely surprised of the traffic level we have seen in Colombia, despite the fact that around 34% of this traffic is between Medellín and Bogotá, and this should be related to business traffic. Why is this so strong? Several things. One is of course some issues in the case of Bogotá. Some of the airlines have decided to start connecting in Medellín. Secondly, the fact that new airlines have come to Medellín, and they are starting very strong. The third probably is the effect of a country that was closed completely for six months, you know. I believe that this has created a lot of pent-up demand in the case of this country.
Okay. Thank you very much.
You're welcome.
I will now take the next question from Gabriel Limardo with Deutsche Bank.
Hi, Alfonso. Good morning. Just a quick question. Can you give us a bit of color on how the commercial discussions with Avianca and LATAM Airlines about receivables, and what do you expect in the coming months, and also about Aeroméxico? Thank you.
In the case of accounting, account receivables, the only problem we have is the case of Interjet that they didn't pay us around MXN 73 million, and all of this has been reserved in the previous quarters. That is the only real problem we have. The rest of the airlines are paying basically on time, so I don't have any problem with Avianca, LATAM, nor Aeroméxico.
Okay. Thank you.
You're welcome.
Once again, that is star one if you would like to ask a question. We'll now take a question from Diego Hernandez with JPMorgan.
Hi, Adolfo. Good morning, and thanks for taking my questions. Two questions actually. The first one in terms of capital allocation, and considering your low leverage close to net cash position, would it make sense for you to accelerate dividend payments going forward in addition to the one already approved? The second question is more a follow-up related to cost and margins. Can you explore a little bit better what are the main cost initiatives that have been achieving and if you should continue to expect margins above the 70% levels? Thank you.
In terms of dividend payment, we just paid a dividend in the first of June. This happened this quarter. It was around MXN 4.5 billion. This was divided in two pieces, an ordinary dividend of MXN 9.3 and an extraordinary of MXN 6. We just paid dividends, you know. Going forward, we will review as we have done for the last thirty something years every year, you know. In terms of margins, again, I don't like to talk about margins because the costs and the revenue are independent, as we have seen during the pandemic period. If we see high traffic and we are able to control the cost as we have done to date, of course, margins should be expanding. You know, that's very simple.
Okay. Got it. Thank you.
You're welcome.
I'll now take a follow-up from Juan Morazan with GBM.
Hi, Adolfo. Me again. I'm sorry, I don't know if you mentioned it in the initial remarks. It's just regarding the ARPA law. Are you expecting any more benefits going forward?
Well, there is something pending. I don't remember exactly the amount. It should not be so significant as it was in the past with the CARES Act. Not too much in front.
Okay. Thank you, Adolfo.
You're welcome.
As a final reminder, it is star one if you would like to ask a question, and we'll pause for just a moment. It appears there are no further telephone questions. That concludes the question and answer portion of today's conference call. I would like to turn it back over to Mr. Castro for closing remarks.
Thank you, Anna, and thank you again for participating in our second quarter results conference call. On behalf of ASUR, we wish you good day. Goodbye.
Ladies and gentlemen, that concludes ASUR's second quarter 2022 results conference call. We would like to thank you again for your participation. You may now disconnect.