Good morning, everyone, and welcome to GAP's first quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions, and at that time, instructions will be given if you would like to ask a question. Now it's my pleasure to turn the call over to GAP's Investor Relations team. Please go ahead.
Thank you, and welcome to GAP's first quarter 2026 conference call. Prior to introducing GAP's management team, I'd like to take a few moments to mention the forward-looking statements as described in the financial disclosure statements. Please be advised that any statements made today may not account for future economic circumstances, industry conditions, the company's future performance, or financial results. As such, any information discussed is based on several assumptions and factors that could change, causing actual results to materially differ from current expectations. For a complete note on forward-looking statements, please refer to the quarterly report issued on Monday. Thank you for your attention. Our speakers today from GAP are Mr. Raul Revuelta, Chief Executive Officer, and Mr. Saul Villarreal, Chief Financial Officer. At this time, I'll turn the call over to Mr. Revuelta for his opening remarks.
Thank you, Maria. Good morning, everyone, and thank you for joining us today. I'm here to report that GAP delivered a solid start to the year with results as I discuss the company's operational and financial highlights for the first quarter of 2026. Despite the challenging traffic environment, our performance remains strong, supported by the resilience of our aeronautical revenues, as well as the continued growth of the non-aeronautical revenues, which helped to offset the more complex traffic environment. Let me begin by discussing passenger traffic. Total passenger traffic across GAP's 14 airports decreased by 5.5% in the first quarter compared to the same period of 2025. These decreases reflect various factors that impacted the Mexican as well as the Jamaican operations. In the Jamaican operations, we continue to face headwinds from the Hurricane Melissa.
Despite this, the recovery of hotel capacity has been better than expected along the main tourist corridor. It is important to note that as of today, passenger volume has not yet reached pre-storm levels. Trends indicate that we will regain these levels by the fourth quarter of this year. Traffic declines in Mexico were largely driven by temporary disruptions, such as the security incident in Jalisco during the last week of February. This event negatively affected the perception of safety and key leisure destinations in Mexico, such as Puerto Vallarta and Cancún, thereby softening demand at these airports. These dynamics extended to the typical high season month of March, affecting the spring break traffic and causing demand to decline. Tijuana was also impacted given its strong reliance on cross-border travel, as roughly 75% of CBX users are U.S.-based passengers accessing domestic flights to Mexican tourist destinations.
Additionally, global macroeconomic volatility impacts operations. This included geopolitical tension and fuel prices, which pressures airlines operating costs, prompting a realignment of capacity to maintain efficiency, as well as the possibility of economic downturn. Now moving on to the revenues. Total revenues increased by 2.8% compared to the first quarter of 2025. Aeronautical revenues for the group grew by 3.9%, but the Mexican increase was 9.3%, primarily driven by the implementation of the maximum tariff for the 2025-2029 regulatory period in Mexico, which is linked to the highest level of the CapEx investments in the history of the company. Non-aeronautical revenues increase by 6.1%, supported by strong performance in our Mexican operations, reaching 10.7%, particularly in businesses operated directly by GAP. This includes the bonded warehouse business, which represents around 21% of total non-aeronautical revenues.
This performance underscores the resilience of our business model and the continued success of our increasingly diversified revenue base. Cost of service increased by 6.5% compared to the same period last year, mainly due to the higher personnel cost, increased security and maintenance expenses, and expansion of operational areas. We work hard to offset this pressure but maintain a rigorous cost control throughout the organization. As a result, EBITDA increased by 6.4%, reaching MXN 6 billion, with an EBITDA margin of 68.3%, reflecting both revenue growth and operational efficiency. This despite the reduction of additional concession fee in Montego Bay Airport due to the decrease in passenger traffic and revenues, which is a temporary effect.
Regarding our financial position, GAP maintains a strong liquidity position with cash and cash equivalents of MXN 23.2 billion during the first quarter of 2025, mainly due to the historic bond issuance of MXN 10.7 billion on March 31. The proceeds we allocate towards our strategic acquisition of 25% of CBX, as well as capital expenditures. Furthermore, during the quarter, we refinanced existing debt, optimizing our balance sheet and strengthening our overall financial flexibility. In terms of CapEx, we continue to advance our investment program under the current master development plan, deploying the required MXN 1.8 billion, focusing on enhancing capacity as well as the passenger experience across all our airports. I would like to briefly update you on our strategic initiatives. As you know, in December 2025, our shareholders approved the business combination related to the CBX, as well as internalization of the technical assistance services.
This transaction is still in the process of being formalized. Once completed, it will be consolidated in our financial statements, and we expect the conclusion of this process to take place during the second quarter of this year. We believe this initiative will strengthen our long-term growth platform, specifically by promoting our market cross-border passenger profile, as well as unlocking additional commercial opportunities. As we move into the rest of the year, we remain mindful of the macroeconomic environment and short-term traffic volatility. Despite this, we believe structural demand remains strong, supported by the solid fundamentals of our market. We remain confident that our diversified asset portfolio, strong financial position, and disciplined execution to strategy position GAP well to navigate near-term challenge while continuing to generate long-term shareholder value.
Later today, we will hold our ordinary shareholders meeting, in which we will propose a dividend payment of MXN 20.8 per outstanding share during the following 12 months, among other items. Thank you again for your time. Operator, please open the line for questions.
Yes, if you'd like to ask a question, please press star one on your telephone now, and you'll be placed into the queue in the order received. You may remove yourself at any time by pressing pound one. As a reminder, participants joining via the webcast may submit questions at any time using the Q&A function. We'll pause for a moment to form our queue. Our first question over the telephone comes from Rodolfo Ramos of Bradesco BBI.
Thank you, Raul Revuelta, Saul Villarreal, Ale, and team for taking my question. My question is on the aeronautical part of the business because it's a two-parter here. After this tariff implementation, can you let us know what your current maximum tariff compliance is, and how should we think about it towards year-end? Secondly, on the traffic outlook that you have, there's a host of domestic global factors at play negatively impacting demand for air travel. Just can you frame it a little bit in terms of your 2%-6% guidance? How you think about it, and when do you think we could see a more meaningful recovery there? Thank you.
Thank you, Rodolfo. First, related with maximum tariff, we are between 92%-93% of the fulfillment. We are still having to implement additional air passenger fee changes for the summer in two of our airports, Vallarta and Cabos. We're still on track of what we said originally, a bit close to 95% for the end of the year. For sure, what is related with maximum tariff, we need to take in account the exchange rate, that at the end of the day, an important part of the revenues are denominated in dollars for the case of passenger TUA. The other part related with traffic, I would say that today is difficult to recall what could happen on the traffic in terms of the Iran war and the fuel prices.
I would say that it's difficult to have today a more clear view of what could happen on coming months, and how big could be the decrease or the possible decrease of the adjustment on offer of seats in the market. The other part that, at least we are still seeing, is a summer that will come, at least on the leisure, with some additional seats. What we are expecting that on past years, during some of this kind of geopolitical crisis, the U.S. passengers tend to fly more to the neighbor, the area of the neighbors could be Cabos or Vallarta, rather than go to Europe or other kind of more long-haul travel. What we are expecting in some way is some additional seats for the summer on those markets.
In general terms, for the moment, we keep without variance what we saw on the very first moment as our guidance for the year. We think that some of the temporary effect that the security could bring in terms of decrease of passengers will be completely behind for the summer. Also, we are seeing better than we expect the recovery of Montego Bay hotel capacity. For sure, for the second quarter, we will review, if that is the case, our guidance for the traffic.
Thank you, Raul.
Next we'll move on to Alan Macias with Bank of America.
Hi, good morning, and thank you for the call, Raul. Just a question on the CBX and TA transaction. What is pending for it to be completed? I guess, should we expect it to be consolidated in May or in June? Thank you.
Thank you, Alan. We are doing our best to consolidate the results during May. Yeah, we are just in the middle of that. Yeah, that will be our target.
Thank you.
Next, we have Guilherme Mendes of J.P. Morgan.
Yes. Good morning. Thanks. How are you, Saul? Thanks for taking the question. 2 questions. The first one on the commercial front. First of all, congrats on the strong results during the first quarter of the year. Just wondering what is behind the very strong cargo performance, if there's anything particular to GWTC or something else. If we can assume these numbers as sustainable going forward. The second question is on capital allocation. So now, following the upcoming conclusion of the CBX transaction, I understand the Turks and Caicos was put on hold as well. If there's anything else that you'll be evaluating on the inorganic side of growth opportunities. Thank you.
Thank you, Guilherme. Related to the results, specifically for the bonded warehouse business, it is important to have in mind that this business is mainly moved by the cargo. In the case of Guadalajara and all the central area of México, we are seeing a really important, more than 20% increase of cargo of high value on the area, related mainly by electronics. Foxconn, for instance, has a really big movement on Guadalajara for an initial plant. What we are seeing for the last year is after the announcement of specific tariffs for China and for some different countries of Asia, we see a shift on production on some electronic parts from Asia to Guadalajara area mainly. We are seeing this really important increase in volumes of cargo, but not only of volumes, but high value of the cargo.
For this bonded warehouse business, you need to take into account that revenue comes from a mix of volume and value of the cargo that you are moving. What we are seeing is that, at the end of the day, all these change of tariffs bring some, or shift some of the production from Asia to central Mexico, and mainly to Jalisco and Guadalajara area.
Well, hi, Guilherme. In terms of capitalization, as you know, we are looking for some opportunities all the time. Far, we don't have nothing more important or relevant than CBX conclusion and integration to the consolidated financial statements. For now, we don't have any other project or major project. We will let you know to the market as soon as we have something on the table. Turks and Caicos was canceled by the government, so we will not continue on that anymore.
So far, we don't have any other relevant project.
Complementing just the comments of Saul, for sure, we have an important focus on the development of new business in our airports. I will say, we are working in two different projects for hotels in airports of Mexico, of our airports in our net. For sure, the big focus on continued work, working on the efficiency of the margins in all of our directly operated by us business. For sure, we will continue to see and review different kind of opportunities to M&A, but also we have a big focus on how to improve the efficiency of our directly operated by us business.
Amazing. Very clear. Thank you both.
From Itaú BBA, we have Pablo Ricalde.
Hi, good morning, everyone. I have one question on the cost side. We saw depreciation expense remain flattish year-over-year. I just want to understand why, despite all the CapEx you made last year, depreciation remains stable year-over-year.
Well, hi, Pablo. This is Saul. Well, basically we are aligned. We don't have any other major project capitalized and depreciated. Also, as you may know, we have more than 25 years of concession. The major projects that were capitalized and were depreciated during the last years were interrupted due to the term of the depreciation period. The net effect of the offset of the increase in depreciation, net of those assets that were already 100% depreciated.
Okay, Saul. Thanks a lot.
Next we have Gabriel Himelfarb of Scotiabank.
Two quick questions. First, are you seeing any meaningful capacity movements from airlines, mainly domestic or perhaps low-cost U.S. airlines, given the rise of fuel prices and perhaps what happened in Jalisco in the past month? My second question is about the CBX. I think it was financed 25% in Mexican pesos. Why was the logic of doing financing in pesos rather than in U.S. dollars? Thank you very much.
Thank you, Gabriel. First, from the side of the seat capacity of airlines, it is important to separate the two possible effects. The first one related with the security concerns, I would say that we are not seeing any kind of structural change on the seat capacity on that area. Related on the fuel cost, on what would be the possible reaction or capacity movement of airlines, for sure it's something that's still on the table in some way. For the moment, we are seeing some decrease in capacity, at least not so relevant today. We are seeing the cut of some services. For instance, uncertain just announced the cut of some services on Guadalajara. We are seeing some decrease on services on Tijuana also, in Cancún.
I would say that it's early to have a perfect view of what could happen on this level of close to $110 per barrel of oil. I would say that if you see, for instance, the price in 2022, it was just close to the same level, and we don't see at that moment a decrease in capacity. What's still happening is the openings of different routes. For instance, Volaris announced the new routes to Guadalajara to Mazatlán or Guadalajara to Zacatecas, Guadalajara to San Luis. We are still seeing additional capacity. For sure, if the movement of decrease of capacity due to the cost of the fuel is still on the table, we need to, in some way, understand how long it could take to, in some way, normalize the price of the fuel.
On the other hand, how important could be the resilience in the demand for the pass-through of the price of this peak in fuel into the ticket to the airport. At least for the moment, we are not seeing an important decrease in capacity. I would say that we are still seeing an increase due to the fact of new routes. Related to your second question, we decide to take advantage of the level of the exchange rate. As you may know, we are in the lowest levels in the exchange rate. The appreciation of the peso is playing out in our favor. The idea is to take a long-term debt, and trying to finance this asset in Mexican pesos. That avoids some volatility in our balance sheet in the long-term view. As you may know, the effects of this exchange rate will be affecting our P&L.
In this way, we have a little higher interest rate, but we have certainty about our long-term view balance sheet.
Okay, very clear. Thank you very much.
From Barclays, we have Pablo Monsivais.
Hi, Saul, Raul, Ale, Keith. Good morning. Just one question. In terms of traffic expectations for next year, I know we're very early, but have you had any contact or new information of Viva Aerobus-Allegiant? Any color on that, or how the potential merger will shape the domestic travel, and especially on the routes they overlap? Any intel there or something that you would like to share? Thank you.
Thank you, Pablo. I would say in terms of the merger or the new group of airlines with Viva and Volaris, for the moment, we are not seeing any particular change. We still talk with them and having direct communication with both airlines. They still talk about there will be two different companies, and for the moment, they are not talking about the overlapping. Once COFECE has a specific view about the transaction, we could have more color about how could be this transaction in some way authorized. At least with the communication that we are having with the airlines, at least for the moment, they are not communicating anything related with overlapping, and they are just talking about the operation of these two different companies would still as it is today.
Okay, fair enough.
Thank you. We'll move on to Andres Aguirre of GBM.
Hi, guys. Thanks for the call and congrats on the results. We noticed that accounts payable increased sharply to around MXN 2 billion in the cash flow statement. Could you please elaborate on what is driving this increase? Thank you.
Hi, Andres. Yes, we have a significant increase in the effective or cash position because the bond issuance on March 31st, the proceeds will be used for the acquisition of 25% of CBX, which will be in cash. And additionally, for CapEx committed into the MDP. That's basically why we have this significant increase. It was MXN 10.7 billion more in cash that will be used for the benefit of CBX and MDP committed.
Great. Thanks for the input.
We'll move on to Alberto Valerio of UBS.
Thank you. Good morning, Raul. Raul, AMAG. Thank you for taking my questions. The first one on a follow-up on topics, how should we be modeling the CapEx during the year? We know that seasonally, we start a little bit weaker, and then increase the CapEx during the year. How should we expect that? The second one about the jet fuel. Anything that concern you guys? We know that different airlines, if I'm not mistaken, have not hedged the fuel. I know that it's not our usual year, but how do you see the supply of seats for Mexico during 2026 with this current price of oil price? Thank you very much.
Hi, Alberto. Related with the seats in Mexico, I mean, for sure, as you say, different airlines have different levels of hedging. I would say the important thing to see what's gonna happen is, the resilience and the specific demand for the pass-through of the cost of this fuel into the airfare. That would be the first part, and second, it's gonna be the kilometers that a specific route could bring. Let me put it this way. I would say that in a first stage, we're gonna see some kind of more or additional decrease on seats on some specific routes that have more kilometers when you talk about, for instance, domestic market.
This is why we are expecting to see some kind of effect on Tijuana, for instance, where their shorter flight has 2.5 hours, and their average time in the plane for a Tijuana flight is more like three hours. On these kind of routes where the demand is not resilient enough to get the full impact of the fuel cost, we're gonna see some decrease of passengers. On the other hand, there are some specific routes that have less than two hours of flying. That could be Los Angeles to Cabo, 2.5 hours, Cabo to Vallarta. Vallarta to Los Angeles, for instance, or all the really short routes. That could be Mexico to Guadalajara, Mexico to Vallarta, Mexico to Cabo.
That will be interesting on the mix of the demand that we expect to be resilient to the increase in airfares, and in some way, short flights or short in terms of kilometer flight. The mix of both parts and the expected additional leisure passengers, not flying long haul from the U.S. and flying or switching to Mexico beaches. All these effects together make sense that our original guidance was still in place for the year. For sure, it is difficult today to have the complete crystal ball of what would happen in terms of the fuel. If in general terms, the conditions and the price of the barrel is still, we could say that we are still seeing the same level of guidance for the end of the year. Hi, Alberto. This is Raul. Related to your third question.
The CapEx will be deployed. Even in the following months, as you may know, our economic cycle in terms of CapEx is more concentrated in the last quarters of the year. In the first months, we are in the bidding process for all these projects. We are in the middle of that. We will be more intensive in terms of deployment during the following months.
Makes sense. Very helpful. Thank you very much.
As a reminder, everyone, participants joining via the webcast may submit questions at any time using the Q&A function, and we'll proceed with the phone questions. Next we have Abraham Fuentes of Santander.
Hi. Hello. Recently we have seen some pressure in terms of traffic in Tijuana. I wonder if you can give us more color about what's set going forward and maybe the main dynamics behind this expectation. Thanks.
I mean, in terms of Tijuana, what we are seeing, Abraham, is for sure we have a mix of different things happening over there. The first related that we are still with a lack of capacity related to the Pratt & Whitney engines in Tijuana, mainly from Volaris, are still being there. We think that for the summer, we will begin to see more of these planes flying. That is first part. Second, what is related, is what we thought that's going to be completely temporary, that was related with all these security matters after the El Mencho capture operation. That in some way are going to be in the past, and we will in some way recovering fully from that effect on the summer.
In general terms, what we are seeing for Tijuana is that in the summer we will see a more important revenue recovery of traffic related to first additional seats coming back to the airport. Second, I would say a softer base of comparison versus last year. In general terms, I will say that we're still optimistic that Tijuana, at the end of the year, is going to have a positive result, or it will grow in terms of passengers.
Thank you.
There are no further questions at this time. I'll turn the call back over to Mr. Raul Revuelta for closing remarks.
Thank you once again for joining us today. Before concluding, I would like to invite you all to join us on May 13th for GAP Day 2026. The event will start in San Diego at the CBX facilities and will continue at Tijuana International Airport, and will include a series of strategic management presentations, followed by a guided tour for our airports and the CBX facilities. We believe this is an excellent opportunity to learn more about our strategy, operations, and long-term growth outlook. For registration and further details, please reach out to our investor relations team. Thank you, and we look forward to seeing you there. Have a great day.
Thank you. This concludes GAP's conference call for today. Thank you for your participation, and you may disconnect. The host has ended this call. Goodbye.