GAP's Resilient Domestic Growth Amid Mixed International Trends: A Strategic Buy Opportunity?

In the dynamic aviation sector, Grupo Aeroportuario del Pacífico (GAP) has emerged as a standout performer, leveraging its strategic positioning in Mexico and the Caribbean to navigate shifting travel dynamics. As of Q3 2025, the company has demonstrated robust domestic growth while grappling with international headwinds, raising the question: Is GAP a strategic buy opportunity for long-term investors?

Domestic Resilience: A Pillar of Strength

GAP’s domestic operations have been a cornerstone of its success. In Q1 2025, domestic passenger traffic surged by 9.1%, outpacing the 0.7% decline in international traffic [2]. This resilience is attributed to the company’s focus on secondary airports like Mexicali, Morelia, and Los Mochis, which saw passenger traffic increases of 22–27% year-over-year [5]. The expansion of domestic routes, such as Mexicali to Culiacan, has further solidified its domestic footprint.

Financially, GAP’s capital investment plan—MXN 43,185 million allocated for 2025–2029—targets infrastructure upgrades at key hubs like Guadalajara, Tijuana, and Los Cabos [1]. These investments not only enhance terminal capacity but also position GAP to capitalize on Mexico’s growing middle class and internal tourism. According to a report by Bloomberg, non-aeronautical revenues, which include cargo operations and mixed-use developments like Guadalajara’s hotel and commercial complex, surged by 41.8% YoY in Q3 2025 [5]. This diversification mitigates reliance on volatile aeronautical income and strengthens margins.

Navigating International Challenges

While domestic growth is promising, international expansion presents mixed results. U.S. immigration policies have dampened VFR (Visiting Friends and Relatives) travel, a critical segment for cross-border routes. However, GAP has offset this by adding 21 new international routes in 2025, including connections to Toronto, Montreal, and Jamaica [5]. For instance, Montego Bay Airport reported a 15.2% passenger traffic increase in July 2025 compared to the prior year [4], underscoring the potential of Caribbean operations.

That said, operational costs have risen by 41% year-over-year, squeezing EBITDA margins from 54.7% to 50.9% in Q1 2025 [2]. While EBITDA grew by 21.1% to MXP 5.6 billion in Q1 2025 [1], net financial expenses increased by 56.5%, reflecting the burden of debt from capital expenditures. Investors must weigh these costs against the long-term value of infrastructure upgrades and international diversification.

Strategic Positioning and Liquidity

GAP’s liquidity profile remains strong, with MXN 9.7 billion in cash reserves and a net debt-to-EBITDA ratio of 1.8x [3]. This financial flexibility supports its acquisition strategy, including a 51.5% stake in GWTC, which is projected to add MXP 699.7 million in annual revenues [1]. Additionally, the company is preparing for tariff reviews in Mexico (2025–2029) and Jamaica (2026–2030), which could stabilize future revenue streams [1].

Is This a Strategic Buy?

GAP’s ability to pivot toward non-aeronautical revenues and expand secondary airports demonstrates operational agility. However, investors should monitor international risks, including U.S. policy shifts and economic uncertainties. The company’s strong liquidity and disciplined capital allocation—evidenced by its MXN 43,185 million investment plan—suggest a long-term growth trajectory.

For those with a 5–10 year horizon, GAP’s strategic focus on regional diversification and infrastructure modernization positions it as a compelling buy, particularly if international challenges are mitigated by Caribbean and Canadian route expansions.

Source:
[1] Grupo Aeroportuario del Pacifico Q1 2025 slides: Revenue Surges 26% Amid Expansion [https://www.investing.com/news/company-news/grupo-aeroportuario-del-pacifico-q1-2025-slides-revenue-surges-26-amid-expansion-93CH-4123214]
[2] Grupo Aeroportuario del Pacífico Reports 30.1% Revenue Growth in Q1 2025 [https://www.quiverquant.com/news/Grupo+Aeroportuario+del+Pac%C3%ADfico+Reports+30.1%25+Revenue+Growth+in+Q1+2025]
[3] Earnings call transcript: Grupo Aeroportuario del Pacífico Reports Strong Q3 2025 Growth [https://www.investing.com/news/transcripts/earnings-call-transcript-grupo-aeroportuario-del-pacifico-reports-strong-q3-2025-growth-93CH-4148838]
[4] Grupo Aeroportuario del Pacifico Reports a Passenger Traffic Increase in July 2025 [https://finance.yahoo.com/news/grupo-aeroportuario-del-pacifico-reports-010500140.html]
[5] GAP's Strategic Airport Diversification and Route Expansion [https://www.ainvest.com/news/gap-strategic-airport-diversification-route-expansion-catalyst-long-term-growth-competitive-market-2508/]