Still short Mexican airports / Breaking up is hard to do, but in this case it's good
July 09, 2008
– Comments (11) |
RELATED TICKERS: OMAB
, PAC
, GE
The trend of slowing passenger traffic growth at Mexican airports continued in June. OMAB reported its lowest year-over-year increase yet last month, up only 3.1%.
Its international traffic rose only 1.2% during the month. In its press release, the company stated that its airports in Culiacan, Mazatlan, Zihuatanejo, and Zacatecas reported lower traffic than a year ago "as a result of a cancellation of routes by U.S. carriers and a reduction in frequencies on some scheduled international routes." It went on to add, "The continued increase in international oil prices has caused the cancellation of routes, reduction in flight frequencies, tariff adjustments, and other actions by the airlines, all of which affects traffic growth." A reduction in flights by airlines that are getting crushed by the high price of oil has been one of my main concerns about Mexican airports.
Here's an updated table that I have been updating on my own, which includes the latest data:
OMAB Passenger Traffic Growth by Month
June 2008: +3.1%
May 2008: +5.8%
April 2008: +5.9%
March 2008: +7.7%
February 2008: +16.4%
January 2008: +11.3%
December 2007: +12.9%
November 2007: +20.6%
October 2007: +20.9%
September 2007: +23.8%
August 2007: +27.1%
July 2007: +31.0%
June 2007: +24.5%
May 2007: +25.8%
April 2007: +17.8%
March 2007: +16.8%
February 2007: +12.1%
January 2007: +14.1%
December 2006: +17.8%
All of 2006: +11.2%
OMA's June 2008 Total Passenger Traffic Increases 3.1 Percent
Traffic at PAC is even worse than it is a OMAB. PAC's June passenger traffic dropped 4.8% (see press release: Grupo Aeroportuario del Pacifico Reports Passenger Traffic Decrease of 4.8% for June 2008). At the bottom of PAC's press release is the following ominous statement: "Considering the above, the Company is in the process of adjusting its original guidance for 2008 and will report updated guidance in the second quarter press release." It sounds like it may lower its guidance for the year...not good. I should have shorted these things even harder and sooner than I did, I saw this mess coming from a mile away. At least I saved myself a lot of pain by selling my long positions in them a while ago.
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OK here's today's piece of positive news. I was hesitant to mention General Electric (GE) this morning because I continue to be interested in adding more shares, but I have a feeling that this weakness in the market is going to last for a while so I'll have time to stay quiet about it for ten days after this and buy more if it continues to fall. I've been planning on adding more shares to my portfolio if its dividend yield rises over the 5% level (it's currently at an extremely attractive 4.6%).
digression --- I loooooove dividends. Companies that share their profits with me rather then hogging them for themselves and leaving me to wish for Mr. Market to eventually show me love in the form of a higher share price are OK with me. --- End digression.
Anyhow, I came across an interesting Reuters article this morning stating that GE may be looking to spin-off or sell part of its NBC / Universal division (see article: GE NBC's Zucker looking at spin-offs, deals -NY Post). If this is true, to me it is fantastic news. I always love a good spin-off, because on average they historically have outperformed the overall market. Even if GE just sells some of NBC / Universal's assets such as television stations, theme parks, Ion TV network, or Shop NBC, it can plow the proceeds into its more profitable sectors, like infrastructure. I am becoming more and more convinced that breaking up GE, or at least divesting a number of its assets is the best way for it to unlock its true value and improve the performance of its stock.
I am extremely curious to see what GE's earnings look like on Friday. It better start producing some good numbers soon or its CEO Jeff Immelt could be in trouble.
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Speaking of NBC, apparently the high price of gas and food are causing Americans to stay home and watch television. According to the Neilsen ratings agency, Americans Watching More TV Than Ever, In May Americans watched a record 127 hours and 15 minutes of television. That's over four hours per day! Who in the heck has that much time to watch TV? I certainly don't. The only way that I would come even close to that is if it counted having CNBC or Bloomberg on in the background. The May numbers were up 4% from a year ago.
Unfortunately for companies that rely on advertising for revenue, this number includes a 56% increase in "time-shifted TV" aka stuff that people watch on their DVRs. As someone with multiple jobs, a four year-old, and another child on the way I know that I never watch anything without taping it and I never watch commercials. Media companies are going to have to continue to look for ways above and beyond traditional commercials, like the Internet and product placement to generate revenue because this trend will continue to grow.
The fact that my family had a TV made out of wood when I grew up makes me feel old :)
Deej
Short OMAB & PAC
Long GE
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