Grupo Aeroportuario del Pacifico: A High-Margin Airport Operator Building Long-Term Value Through Strategic Expansion and Revenue Diversification

In the second quarter of 2025, Grupo Aeroportuario del Pacífico (GAP) delivered a compelling performance, underscoring its position as a high-margin airport operator with a clear strategy for long-term value creation. With revenues surging 49.9% year-over-year to Ps. 10.9 billion and EBITDA margin improvement to 67.1%, GAP's results reflect a disciplined approach to revenue diversification, infrastructure investment, and passenger growth. For investors, the company's financial and operational momentum—coupled with its strategic expansion plans—presents a compelling case for sustained growth in the global airport infrastructure sector.

Revenue Diversification: Aeronautical and Non-Aeronautical Synergies

GAP's revenue growth in Q2 2025 was driven by a 26.4% increase in aeronautical services and a 41.8% rise in non-aeronautical services. The aeronautical segment benefited from higher passenger fees and newly approved maximum tariffs for the 2025–2029 regulatory period, while the non-aeronautical segment saw a dramatic 116.7% increase in cargo and bonded warehouse operations. This diversification is critical: while aeronautical revenues are tied to passenger traffic, non-aeronautical streams—such as retail, cargo, and concessions—are less cyclical and offer higher margins.

Notably, the company's recent acquisition and consolidation of the cargo and bonded warehouse business added Ps. 477.1 million in non-aeronautical revenue in Q2 2025. This shift toward ancillary services mirrors the strategies of global airport operators like Heathrow and Dallas/Fort Worth, where non-aeronautical revenue now exceeds 50% of total income. For GAP, this trend positions it to generate stable cash flows even during periods of slower passenger growth.

Infrastructure Investment: Fueling Future Growth

GAP's capital expenditures are a cornerstone of its long-term value proposition. Under its 2025–2029 Master Development Program, the company is investing heavily in infrastructure upgrades, including terminal expansions, airfield modernization, and safety enhancements. These projects are funded through a combination of IFRIC-12 accounting (which allows the company to recognize revenue from concession asset improvements) and operational cash flow.

In Q2 2025 alone, revenues from infrastructure improvements surged 174.4% year-over-year to Ps. 1.7 billion. While these investments temporarily inflate operating costs (up 68.2% YoY in Q2 2025), they are essential for accommodating rising passenger demand. For example, the opening of new routes—such as Viva's flights from Hermosillo to Tijuana and World2Fly's Montego Bay to Lisbon service—has already driven a 4.1% increase in total passenger traffic to 15.9 million. These projects also align with regulatory requirements, ensuring that GAP's airports remain compliant and competitive in the Pacific region.

Passenger Growth: A Catalyst for Margin Expansion

Passenger traffic growth remains a key driver of GAP's profitability. While Q2 2025 saw a modest 4.1% increase in total passengers, the company's route expansion strategy—adding seven new domestic and international routes in the quarter—positions it for stronger growth in 2026. Notably, Guadalajara and Tijuana airports outperformed, with passenger traffic rising 6.2% and 3.6%, respectively, driven by cross-border connectivity and tourism.

The Cross Border Xpress (CBX) at Tijuana, which saw a 6.8% increase in users, exemplifies GAP's ability to leverage infrastructure for traffic generation. By investing in seamless cross-border travel solutions, the company is not only boosting passenger numbers but also enhancing the customer experience—a critical differentiator in a competitive market.

Risks and Mitigants: Currency Exposure and Capital Allocation

Despite its strengths, GAP faces challenges, particularly currency translation losses. The depreciation of the Mexican peso against the U.S. dollar in Q2 2025 reduced comprehensive income by 22.8%, a risk that could persist amid global macroeconomic uncertainty. However, the company has proactively managed this exposure through debt refinancing and a robust cash position of Ps. 9.7 billion.

Capital allocation discipline is another mitigant. While infrastructure costs (including IFRIC-12-related expenses) rose sharply in Q2 2025, the company's EBITDA margin remained resilient at 67.1%. This suggests that the investments are translating into operational efficiency and pricing power, two hallmarks of a durable high-margin business.

Investment Thesis: A High-Conviction Buy

For long-term investors, GAP offers a rare combination of strong cash flow generation, strategic reinvestment, and exposure to the growing Pacific airport corridor. Its focus on non-aeronautical diversification and infrastructure modernization aligns with global trends, while its disciplined capital structure (low debt-to-EBITDA ratio) ensures financial flexibility.

Recommendation: Buy. GAP's strategic expansion, margin resilience, and ability to convert capital into long-term value make it an attractive play in the infrastructure sector. Investors should monitor currency risks and regulatory developments in Mexico and Jamaica but remain confident in the company's operational execution.