form20f.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008

Commission File Number: 1-33168

Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.
(Exact name of registrant as specified in its charter)

Central North Airport Group
United Mexican States
(Translation of registrant’s name into English)
(Jurisdiction of incorporation or organization)

Aeropuerto Internacional de Monterrey
Zona de Carga
Carretera Miguel Alemán, Km. 24 s/n
66600 Apodaca, Nuevo León, Mexico
(Address of principal executive offices)

Victor Bravo
Aeropuerto International de Monterrey
Zona de Carga
Carretera Miguel Aleman, Km. 24 s/n
66600 Apodaca Nuevo Leon, Mexico
+ 52 81 8625 4327
vbravo@oma.aero
(Name, Telephone, E-mail and/or facsimile number and address of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

InterAction Web Client.Ink
Title of each class:
Name of each exchange
on which registered
American Depositary Shares each representing 8 Series B shares
The NASDAQ Stock Market LLC
Series B shares
The NASDAQ Stock Market LLC*

 
*
Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

N/A

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Title of each class:
Number of Shares
Series B Shares
341,200,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   £        No   T

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   £        No   T

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes T No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer T Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP           o           IFRS           o           Other T

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o Item 18 T

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes o No T
 


 
 

 

TABLE OF CONTENTS

   
Page
     
ITEM 1.
1
ITEM 2.
1
ITEM 3.
1
 
1
 
5
 
6
 
26
ITEM 4.
27
 
27
 
33
 
64
 
82
 
83
ITEM 4A.
84
ITEM 5.
84
ITEM 6.
108
ITEM 7.
123
 
123
 
125
ITEM 8.
127
 
127
 
130
ITEM 9.
132
 
132
 
134
ITEM 10.
134
 
134
 
150
 
150
 
150
 
153
ITEM 11.
153


TABLE OF CONTENTS
(continued)

   
Page
     
ITEM 12.
154
ITEM 13.
155
ITEM 14.
155
ITEM 15.
155
ITEM 16.
157
ITEM 16A.
157
ITEM 16B.
158
ITEM 16C.
158
ITEM 16D.
158
ITEM 16E.
158
ITEM 17.
160
ITEM 18.
160
ITEM 19.
161


PART I

Item 1.
Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.
Offer Statistics and Expected Timetable

Not applicable.

Item 3.
Key Information

SELECTED FINANCIAL DATA

We publish our financial statements in Mexican pesos.  Pursuant to Mexican Financial Reporting Standards accepted in Mexico (Normas de Información Financiera), or MFRS, financial data for all periods up through December 31, 2007 in the financial statements included in Items 3, 5 and 8 and, unless otherwise indicated, throughout this Form 20-F have been restated in constant pesos as of December 31, 2007, and financial data for all periods from and after January 1, 2008 in the financial statements included in Items 3, 5 and 8 and unless otherwise indicated, throughout this Form 20-F are expressed in nominal pesos.

This Form 20-F contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader.  These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.  Unless otherwise indicated, U.S. dollar amounts have been translated from Mexican pesos at an exchange rate of Ps. 13.83 to U.S.$1.00, the noon buying rate for Mexican pesos on December 31, 2008, as published by the Federal Reserve Bank of New York.  On May 29, 2009 the Federal Reserve Bank of New York’s noon buying rate for Mexican pesos was Ps.13.18 to U.S.$1.00.

The following tables present a summary of our audited consolidated financial information and that of our subsidiaries for each of the periods indicated.  This information should be read in conjunction with, and is qualified in its entirety by reference to, our consolidated financial statements, including the notes thereto.  Our consolidated financial statements are prepared in accordance with Mexican Financial Reporting Standards (“MFRS”, individually referred to as Normas de Información Financiera or “NIFs”), which differ in certain significant respects from generally accepted accounting principles in the United States, or U.S. GAAP.  A reconciliation to U.S. GAAP to our net income and total stockholders’ equity is also provided in this summary financial data.  Information relating to the nature and effect of the principal differences between MFRS and U.S. GAAP is presented in Note 22 to the consolidated financial statements.

Through December 31, 2007, MFRS provided for the recognition of certain effects of inflation by restating non-monetary assets and non-monetary liabilities using the Mexican National Consumer Price Index, or NCPI, restating the components of stockholders’ equity using the NCPI and recording gains or losses in purchasing power from holding monetary liabilities or assets.  Through December 31, 2007, MFRS required the restatement of all financial statements to constant Mexican pesos as of the date of the most recent balance sheet presented.  Our audited financial statements and all other financial information through December 31, 2007 contained herein are accordingly presented in constant pesos with purchasing power as of December 31, 2007, unless otherwise noted.


Effective January 1, 2008, we adopted several accounting changes pursuant to MFRS and their interpretations (INIFs).  In particular as per NIF B-10, “Effects of Inflation”, the effects of inflation will no longer be recognized in our financial statements, effective January 1, 2008, in a non-inflationary environment.  From such date on, the recording of inflation effects will only be required in an environment where cumulative inflation over the three preceding years is equal to or greater than 26%.  As a result of this change, our financial statements starting January 1, 2008 and for all subsequent periods are expressed in nominal pesos.

References in this annual report on Form 20-F to “dollars,” “U.S. dollars” or “U.S.$” are to the lawful currency of the United States of America.  References in this annual report on Form 20-F to “pesos” or “Ps.” are to the lawful currency of Mexico.  We publish our financial statements in pesos.

This annual report on Form 20-F contains references to “workload units,” which are units measuring an airport’s passenger traffic volume and cargo volume.  A workload unit currently is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo.


The summary financial and other information set forth below reflects our financial condition, results of operations and certain operating data since the year ended December 31, 2004.

   
Year ended December 31,
 
   
2004
   
2005
   
2006
   
2007
   
2008
 
   
(in thousands of Mexican pesos)
   
(thousands of dollars) (1)
 
Statement of Income data:
                                   
MFRS:
                                   
Revenues:
                                   
Aeronautical services(2)
    1,083,709       1,192,249       1,370,968       1,549,827       1,617,195       116,934  
Non-aeronautical services(3)
    250,719       287,628       316,343       347,526       371,281       26,846  
Total revenues
    1,334,428       1,479,877       1,687,311       1,897,353       1,988,476       143,780  
Operating costs:
                                               
Costs of services
    358,555       389,037       397,465       420,777       458,820       33,176  
General and administrative expenses
    242,066       244,707       237,475       256,730       318,323       23,017  
Technical assistance fee(4)
    40,215       40,016       49,541       57,416       55,604       4,020  
Concession tax(5)
    64,882       72,643       84,635       98,307       101,642       7,349  
Depreciation and amortization:
                                               
Depreciation(6)
    31,990       22,560       28,257       32,872       39,306       2,842  
Amortization(7)
    183,857       205,246       263,839       303,330       327,413       23,674  
Total depreciation and amortization
    215,847       227,805       292,096       336,202       366,719       26,516  
Total operating costs
    921,565       974,208       1,061,212       1,169,432       1,301,108       94,078  
Income from operations
    412,863       505,669       626,099       727,921       687,368       49,702  
Other income (expenses) net
    4,607       3,853       (30,679 )     (7,584 )     104,792       7,577  
Net comprehensive financing income (expense)
    (15,343 )     29,613       70,328       96,218       (11,451 )     (828 )
Income before income taxes
    402,129       539,135       665,748       816,555       780,709       56,451  
Income tax expense
    93,858       158,029       196,511       785,363       238,906       17,275  
Consolidated net income
    308,269       381,106       469,237       31,192       541,803       39,176  
Basic and diluted earnings per share(8)
    0.7864       0.9722       1.1874       0.0781       1.3672       0.0989  
Basic and diluted earnings per ADS(8)
    6.2911       7.7778       9.4992       0.6248       10.9376       0.7904  
                                                 
U.S. GAAP:
                                               
Revenues
    1,334,429       1,479,878       1,687,311       1,897,353       1,988,476       143,780  
Income from operations
    486,374       600,249       697,879       811,103       804,380       58,162  
Consolidated net income
    184,107       445,812       548,798       (118,318 )     1,013,454       73,279  
Basic (loss) earnings per share(8)
    0.4732       1.1459       1.4013       (0.2961 )     2.5574       0.1849  
Diluted (loss) earnings per share(9)
    0.4696       1.1372       1.3909       (0.2961 )     2.5386       0.1836  
Basic (loss) earnings per ADS(8)
    3.7860       9.1673       11.2110       (2.3688 )     20.4592       1.4793  
Diluted (loss) earnings per ADS(9)
    3.7569       9.0976       11.1271       (2.3688 )     20.3088       1.4685  
                                                 
Other operating data:
                                               
Total terminal passengers (thousands of passengers)(10)
    9,739       10,599       11,784       14,212       14,061       14,061  
Total air traffic movements (thousands of movements)
    346       362       383       424       387       387  
Total revenues per terminal passenger(11)
    137       139       143       134       141       11  

 
   
As of and for the year ended December 31,
 
   
2004
   
2005
   
2006
   
2007
   
2008
       
   
(in thousands of Mexican pesos)
   
(thousands of dollars)(1)
 
Balance sheet data:
                                   
MFRS:
                                   
Cash and cash equivalents
    1,298,715       1,706,604       1,672,994       1,756,704       257,420       18,613  
Total current assets
    1,541,683       2,009,260       2,143,271       2,084,057       929,695       67,223  
Airport concessions—net
    799,743       781,971       764,198       746,426       728,655       52,687  
Rights to use airport facilities—net
    4,377,906       4,252,072       4,126,235       4,000,390       3,874,510       280,153  
Total assets
    8,054,256       8,591,575       8,873,950       9,134,388       9,863,282       713,180  
Current liabilities
    152,587       155,331       184,236       407,096       1,149,243       83,097  
Total liabilities
    588,307       744,522       891,999       1,660,046       2,333,522       168,728  
Total stockholders’ equity(12)
    7,465,949       7,847,053       7,981,951       7,474,342       7,529,760       544,452  
U.S. GAAP:
                                               
Cash and cash equivalents
    1,298,715       1,706,604       1,672,994       1,756,704       257,420       18,613  
Total current assets
    1,561,685       2,009,260       2,143,271       2,084,057       929,695       67,223  
Assets under concession (“Rights to use airport facilities” under MFRS)
    997,631       957,456       917,497       877,388       837,291       60,542  
Total assets
    4,731,229       5,220,539       5,495,086       5,263,692       6,292,200       454,967  
Current liabilities
    154,429       184,870       203,844       421,398       1,158,298       83,753  
Total liabilities
    204,683       240,789       264,653       680,277       1,204,791       87,114  
Total stockholders’ equity
    4,526,547       4,979,750       5,230,433       4,583,415       5,087,409       367,853  
Dividend per share
                    1.1167       1.1103       1.0856       0.0785  
Other data:
                                               
MFRS:
                                               
Net cash flows from operating activities
                                    735,464       53,178  
Net cash flows from financing activities
                                    (352,146 )     (25,461 )
Net cash flows from investing activities
                                    (1,882,602 )     (136,124 )
Net decrease in cash and cash equivalents
                                    (1,499,284 )     (108,407 )
Net resources generated by operating activities
    610,987       701,405       729,090       1,070,588                  
Net resources used in financing activities
                    (322,465 )     (328,868 )                
Net resources used in investing activities
    (278,938 )     (293,516 )     (440,235 )     (658,010 )                
Increase in cash and cash equivalents
    332,049       407,889       (33,610 )     83,710                  
U.S. GAAP:(13)
                                               
Net cash provided by operating activities
    606,224       692,739       694,103       1,036,011       799,809       57,831  
Net cash used in investing activities
    (278,819 )     (286,083 )     (458,262 )     (657,018 )     (1,948,393 )     (140,882 )
Net cash used in financing activities
    -       -       (322,465 )     (328,868 )     (350,700 )     (25,358 )
Effect of inflation accounting
    4,645       1,234       53,014       33,585       -       -  
Increase (decrease) in cash and cash equivalents
    332,049       407,889       (33,610 )     83,710       (1,499,284 )     (108,408 )
_______________________

(1)
Translated into dollars at the rate of Ps.13.83 per U.S. dollar, the U.S. Federal Reserve noon buying rate for Mexican pesos at December 31, 2008.  Per share dollar amounts are expressed in dollars (not thousands of dollars). Operating data is expressed in units indicated.
(2)
Revenues from aeronautical services principally consist of a fee for each departing passenger, aircraft landing fees based on the aircraft’s weight and arrival time, an aircraft parking fee, a fee for the transfer of passengers from the aircraft to the terminal building, a security charge for each departing passenger and other sources of revenues subject to regulation under our maximum rates.
(3)
Revenues from non-aeronautical services consist of sources of revenues not subject to regulation under our maximum rates, and consist of revenues from car parking charges, leasing of commercial space to tenants, advertising, taxis and other ground transportation providers and other miscellaneous sources of revenues.  Pursuant to our concessions and to the Airport Law and the regulations thereunder, parking services are currently excluded from aeronautical services under our maximum rates, although the Ministry of Communications and Transportation could decide to regulate such rates, and such rates may be regulated by other authorities.
(4)
On January 1, 2001, we began paying SETA a technical assistance fee under the technical assistance agreement entered into in connection with SETA’s purchase of its Series BB shares.  This fee is described in “Item 7.  Major Shareholders and Related Party Transaction – Related Party Transactions – Arrangements with SETA.”
(5)
Each of our subsidiary concession holders is required to pay a concession tax to the Mexican government under the Mexican Federal Duties Law for the use of public domain assets pursuant to the terms of its concession.  The concession tax is currently equal to 5% of each concession holder’s gross annual revenues.
(6)
Reflects depreciation of fixed assets.
(7)
Reflects amortization of airport concessions and rights to use airport facilities.
(8)
For MFRS purposes, based on 392,000,000 weighted average common shares outstanding from 2004 through 2005, 395,173,149 weighted average common shares outstanding in 2006, 399,611,578 weighted average common shares outstanding in 2007 and 396,284,313 weighted average common shares outstanding in 2008.  For U.S. GAAP purposes, based on 391,624,384 weighted average common shares outstanding in 2006, 399,611,578 weighted average common shares outstanding in 2007 and 396,284,313 weighted average common shares outstanding in 2008.  Earnings per ADS are based on the ratio of 8 Series B shares per ADS.
(9)
Based on 394,564,384, 399,611,578 and 399,224,413 weighted average common shares and common share equivalents outstanding for the year ended December 31, 2006, 2007 and 2008, respectively.  Earnings per ADS are based on the ratio of 8 Series B shares per ADS.
(10)
Includes arriving and departing passengers as well as transfer passengers (passengers who arrive at our airports on one aircraft and depart on a different aircraft).  Excludes transit passengers (passengers who arrive at our airports but generally depart without changing aircraft).
(11)
Total revenues for the period divided by terminal passengers for the period.  Expressed in pesos (not thousands of pesos).
(12)
Total stockholders’ equity under MFRS reflects the value assigned to our concessions.  Under U.S. GAAP, no value has been assigned to our concessions.
(13)
U.S. GAAP cash flow data is expressed in nominal Mexican pesos.
 

EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and period-end, free-market exchange rate expressed in pesos per U.S. dollar.  The average annual rates presented in the following table were calculated using the average of the exchange rates on the last day of each month during the relevant period.  The data provided in this table is based on noon buying rates published by the Federal Reserve Bank of New York for cable transfers in Mexican pesos.  All amounts are stated in pesos and have not been restated in constant currency units. We make no representation that the Mexican peso amounts referred to in this annual report could have been or could be converted into U.S. dollars at any particular rate or at all.

   
Exchange Rate
 
Year Ended December 31,
 
High
   
Low
   
Period End
   
Average(1)
 
2004
    11.64       10.81       11.15       11.31  
2005
    11.41       10.41       10.63       10.88  
2006
    11.46       10.43       10.80       10.91  
2007
    11.27       10.67       10.92       10.93  
2008
    13.94       9.92       13.83       11.14  
December 2008
    13.83       13.09       13.83       11.14  
2009:
                               
January 2009
    14.33       13.33       14.33       13.88  
February 2009
    15.09       14.13       15.09       14.61  
March 2009
    15.41       14.02       14.21       14.65  
April 2009
  13.89       13.05       13.80       13.39  
    May 2009   13.82       12.88       13.18       13.19  
______________
(1)           Average of month-end rates or daily rates, as applicable.
Source:  Federal Reserve noon buying rate.

Except for the period from September through December 1982, during a liquidity crisis, the Mexican Central Bank has consistently made foreign currency available to Mexican private-sector entities (such as us) to meet their foreign currency obligations.  Nevertheless, in the event of renewed shortages of foreign currency, there can be no assurance that foreign currency would continue to be available to private-sector companies or that foreign currency needed by us to service foreign currency obligations or to import goods could be purchased in the open market without substantial additional cost.

Fluctuations in the exchange rate between the peso and the U.S. dollar will affect the U.S. dollar value of securities traded on the Mexican Stock Exchange, and, as a result, will likely affect the market price of the ADSs.  Such fluctuations will also affect the U.S. dollar conversion by the depositary of any cash dividends paid in pesos.

On December 31, 2008, the Federal Reserve noon buying rate was Ps. 13.83 per U.S.$1.00. On May 29, 2009, the Federal Reserve noon buying rate was Ps. 13.18 per U.S. $1.00.

For a discussion of the effects of fluctuations in the exchange rates between the peso and the U.S. dollar, see “Item 10.  Additional Information—Exchange Controls.”


RISK FACTORS

Risks Related to the Regulation of Our Business

We provide a public service regulated by the Mexican government, and our flexibility in managing our aeronautical activities is limited by the regulatory environment in which we operate.

Our aeronautical fees charged to airlines and passengers are regulated, like most airports in other countries.  In 2006, 2007 and 2008, approximately 81.3%, 81.7% and 81.3%, respectively, of our total revenues were earned from regulated services, which are subject to price regulation under our maximum rates.  These regulations may limit our flexibility in operating our aeronautical activities, which could have a material adverse effect on our business, results of operations, prospects and financial condition.  In addition, several of the regulations applicable to our operations that affect our profitability are authorized (as in the case of our master development programs) or established (as in the case of our maximum rates) by the Ministry of Communications and Transportation for five-year terms.  Except under limited circumstances, we generally do not have the ability to unilaterally change our obligations (such as the investment obligations under our master development programs or the obligation under our concessions to provide a public service) or increase our maximum rates applicable under those regulations should the passenger traffic or other assumptions on which the regulations were based change during the applicable term.  In addition, there can be no assurance that this price regulation system will not be amended in a manner that would cause additional sources of our revenues to be regulated.

We cannot predict how the regulations governing our business will be applied.

Many of the laws, regulations and instruments that regulate our business were adopted or became effective in 1999, and there is only a limited history that would allow us to predict the impact of these legal requirements on our future operations.  In addition, although Mexican law establishes ranges of sanctions that might be imposed should we fail to comply with the terms of one of our concessions, the Mexican Airport Law (Ley de Aeropuertos) and its regulations or other applicable laws, we cannot predict the sanctions that are likely to be assessed for a given violation within these ranges.  We cannot assure that we will not encounter difficulties in complying with these laws, regulations and instruments.

Moreover, when determining our maximum rates for the next five-year period (from 2011 to 2015), the Ministry of Communications and Transportations may be solicited by different entities (such as, for example, the Mexican Federal Competition Commission (Comisón Federal de Competencia or the “Competition Comission” or COFECO) and the carriers operating at our airports) to modify our maximum rates, thus reducing our profitability.  Therefore, there can be no assurance that the laws and regulations governing our business, including the rate-setting process and the Mexican Airport Law, will not change in the future or be applied or interpreted in a way that could have a material adverse effect on our results of operations.

On October 1, 2007, the Chairman of COFECO released an independent report on the competitiveness of Mexico’s airports relative to each other and to international airports.  The Chairman’s report made the following recommendations as ways to increase efficiency at Mexican airports:

 
·
make economic efficiency a basis of tariff regulation for new concessions;

 
·
include income from commercial services as one of the factors in determining tariffs for new concessions;


 
·
strengthen the independence of the regulatory agency and increase the transparency of airport regulation;

 
·
promote greater efficiency in scheduling at airports with heavy volumes of passenger traffic;

 
·
promote greater competition between airports;

 
·
eliminate Aeropuertos y Servicios Auxiliares’ (“ASA”) role as exclusive fuel service provider;

 
·
eliminate barriers to entry for taxi providers at airports; and

 
·
be mindful of vertical integration among airports and airlines.

On February 26, 2009, a legislative initiative was filed with the Chamber of Representatives (Cámara de Diputados) of the Congress of the Mexican Union (Congreso de la Union) by representatives of PRD (Partido de la Revolución Democrática), PT (Partido del Trabajo) and CONVERGENCIA, leaded by Deputy Cuauhtémoc Velasco.

This initiative seeks to reform almost 65% of the current Mexican Airport Law, which regulates airport-related matters. The initiative was sent to the Transport and Communications Commissions of the Congress to be analyzed and, if each Commission determines that such initiative includes all the elements necessary to reform the law, then the initiative will be submitted to the Congress for their approval in first instance.

Currently, the actual members of the Congress and the Commission need to be replaced and have not approved such initiative at this time. Although we cannot assure that the new members of the Transport and Communication Commissions will approve such initiative and continue with the legislative process to approve the initiative mentioned in the foregoing paragraph, or suggest changes, amendments or dismiss it, there can be no assurance that changes to the airport regulatory framework will not occur in the future.

The regulations pursuant to which the maximum rates applicable to our aeronautical revenues are established do not guarantee that our consolidated results of operations, or that the results of operations of any airport, will be profitable.

The regulations applicable to our aeronautical activities establish an annual maximum rate for each airport, which is the maximum annual amount of revenues per workload unit (which is equal to one terminal passenger or 100 kilograms (220 pounds) of cargo) that we may earn at that airport from services subject to price regulation.  In December 2005, the Ministry of Communications and Transportation determined, based on the terms of our concessions, the maximum rates for our airports from January 1, 2006 through December 31, 2010.  Under the terms of our concessions, there is no guarantee that the results of operations of any airport will be profitable.

Our concessions provide that an airport’s maximum rates will be adjusted periodically for inflation (determined by reference to the Mexican producer price index, excluding fuel).  Although we are entitled to request additional adjustments to an airport’s maximum rates under certain circumstances including, among others, required capital investments not foreseen in the master development programs, decreases in capital investments attributable to Mexican economy-related passenger traffic decreases or modifications of the concession tax payable by us to the Mexican government, our concessions provide that such a request will be approved only if the Ministry of Communications and Transportation determines that certain limited events specified in our concessions have occurred.  Therefore, there can be no assurance that any such request would be granted.  If a request to increase an airport’s maximum rates is not granted, our results of operations and financial condition could be adversely affected, and the value of Series B shares and ADSs could decline.


If we exceed the maximum rate at any airport at the end of any year, we could be subject to sanctions.

Historically, we have set the prices we charge for aeronautical services at each airport in order to come as close as possible to its authorized maximum rate for that airport in any given year.  For example, in 2008, our revenues subject to maximum rate regulation represented approximately 88.2% of the amounts we were entitled to earn under the maximum rates for all of our airports.  There can be no assurance that we will be able to establish prices in the future that allow us to collect substantially all of the revenue we are entitled to earn from services subject to price regulation.

The specific prices we charge for aeronautical services are determined based on various factors, including projections of passenger traffic volumes, the Mexican producer price index (excluding fuel), the Mexican Consumer Price Index and the value of the peso relative to the U.S. dollar.  These variables are outside of our control.  Our projections could differ from the applicable actual data, and, if these differences occur at the end of any year, they could cause us to exceed the maximum rate at any one or more of ours airports during that year.

If we exceed the maximum rate at any airport at the end of any year, the Ministry of Communications and Transportation may assess a fine and may reduce the maximum rate at that airport in the subsequent year.  The imposition of sanctions for violations of certain terms of a concession, including for exceeding an airport’s maximum rate, can result in termination of the concession if the relevant term has been violated and sanctions have been imposed at least three times.  In the event that any one of our concessions is terminated, our other concessions may also be terminated.  As of today, no sanctions have been imposed for any reason with respect to any of our concessions.

The Mexican government may terminate or reacquire our concessions under various circumstances, some of which are beyond our control.

Our concessions are our principal assets, and we would be unable to continue operations without them.  A concession may be revoked by the Mexican government for certain prescribed reasons, including failure to comply with our master development programs, a temporary or permanent halt in our operations, actions affecting the operations of other concession holders in Mexico, failure to pay damages resulting from our operations, exceeding our maximum rates or failure to comply with any other material term of our concessions.  Violations of certain terms of a concession (including violations for exceeding the applicable maximum rate) can result in revocation of a concession only if sanctions have been imposed for violations of the relevant term at least three times.  Violations of other terms of a concession can result in the immediate termination of the concession.  Our concessions may also be terminated upon our bankruptcy or insolvency.  Violations of the Mexican Airport Law or its regulation could result in similar sanctions.  In the event that any one of our concessions is terminated, our other concessions may also be terminated.  For a discussion of events that may lead to a termination of a concession, see “Item 4. Information on the Company—Regulatory Framework—Penalties and Termination and Revocation of Concessions and Concession Assets.”

Under applicable Mexican law and the terms of our concessions, our concessions may also be made subject to additional conditions, including under our renewed master development programs, which we may be unable to meet.  Failure to meet these conditions may also result in fines, other sanctions and the termination of the concessions.


The Mexican government may also terminate one or more of our concessions at any time through reversion, if, in accordance with applicable Mexican law, it determines that it is in the public interest to do so.  The Mexican government may also assume the operation of any airport in the event of war, public disturbance or a threat to national security.  In addition, in the case of a force majeure event, the Mexican government may require us to implement certain changes in our operations.  In the event of a reversion of the public domain assets that are the subject of our concessions, the Mexican government under Mexican law is required to compensate us for the value of the concessions or added costs based on the results of an audit performed by appraisers or, in the case of a mandated change in our operations, the cost of that change.  Similarly, in the event of an assumption of our operations, other than in the event of war, the government is required to compensate us and any other affected parties for any resulting damages.  There can be no assurance that we would receive compensation equivalent to the value of our investment in or any additional damages related to our concessions and related assets in the event of such action.

In the event that any one of our concessions is terminated, whether through revocation or otherwise, our other concessions may also be terminated.  Thus, the loss of any concession would have a material adverse effect on our business and results of operations.

The Mexican government could grant new concessions that compete with our airports.

The Mexican government could grant additional concessions to operate existing government-managed airports or authorize the construction of new airports, which could compete directly with our airports.

In the future, we may face competition from Aeropuerto del Norte, an airport near Monterrey operated by a third party pursuant to a concession.  Historically, Aeropuerto del Norte has been used solely for general aviation operations.  Recently, the state of Nuevo Leon has requested that the Ministry of Communications and Transportation amend Aeropuerto del Norte’s concession to allow it to serve commercial aviation operations.  To date, the Ministry of Communications and Transportation has not amended Aeropuerto del Norte’s concession.  However, there can be no assurance that the Ministry of Communications and Transportation will not authorize such an amendment and that commercial aviation flights will not operate from Aeropuerto del Norte in the future.  In addition, we understand that Aeropuerto del Norte is not capable of accommodating commercial passenger traffic with its current infrastructure.

Any competition from other such airports could have a material adverse effect on our business and results of operations.  Under certain circumstances, the grant of a concession for a new or existing airport must be made pursuant to a public bidding process.  In the event that a competing concession is offered in a public bidding process, we cannot assure that we would participate in such process, or that we would be successful if we were to participate.  Please see “Item 4. Information on the Company—Regulatory Framework—Grants of New Concessions” below.

Risks Related to Our Operations

The current global economic and financial crisis is likely to adversely affect our business.

The current global economic and financial crisis has led to high volatility and lack of liquidity in the global credit and other financial markets.  Such recent downturns in the U.S. and global economies have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, decreased market valuations and liquidity, increased market volatility and a widespread reduction of business activity generally.  These conditions have also limited the availability of credit and increased financial costs for companies around the world, including in Mexico and the United States.  The volatility of the credit and capital markets can significantly affect our ability to access credit to finance our future projects, therefore adversely affecting our business.


If the global economy continues to deteriorate and falls into an even deeper and longer lasting recession, or even a depression, our business and results of operations will continue to be adversely affected. (See also “Risks Related to Mexico – Our business is significantly dependent upon the volume of air passenger traffic in Mexico, and negative economic developments in Mexico will adversely affect our business and results of operations” and “Risks Related to Mexico – Our business could be adversely affected by a downturn in the U.S. economy”).

Our revenues are highly dependent on levels of air traffic, which depend on factors beyond our control.

Our revenues are closely linked to passenger and cargo traffic volumes and the number of air traffic movements at our airports.  These factors directly determine our revenues from aeronautical services and indirectly determine our revenues from non-aeronautical services.  Passenger and cargo traffic volumes and air traffic movements depend on many factors beyond our control, including the current economic downturn in Mexico, the United States and the world, the political situation in Mexico and elsewhere in the world, the attractiveness of our airports relative to that of other competing airports, fluctuations in fuel prices (which can have a negative impact on traffic as a result of fuel surcharges or other measures adopted by airlines in response to increased fuel costs) and changes in regulatory policies applicable to the aviation industry.  Any decreases in air traffic to or from our airports as a result of factors such as these could adversely affect our business, results of operations, prospects and financial condition.

International events could adversely affect our business

·
Terrorist attacks have had a severe impact on the international air travel industry, have adversely affected our business and may continue to do so in the future.

As with all airport operators, we are subject to the threat of terrorist attacks.  The terrorist attacks on the United States on September 11, 2001 had a severe adverse impact on the air travel industry, particularly on U.S. carriers and on carriers operating international service to and from the United States.  Airline traffic in the United States fell precipitously after the attacks.  Our terminal passenger volumes declined 5.8% in 2002 as compared to 2001.  In the event of a terrorist attack involving one of our airports directly, airport operations would be disrupted or suspended during the time necessary to conduct rescue operations, investigate the incident and repair or rebuild damaged or destroyed facilities, and our future insurance premiums would likely increase.  In addition, our insurance policies do not cover all losses and liabilities resulting from terrorism.  Any future terrorist attacks, whether or not involving aircraft, will likely adversely affect our business, results of operations, prospects and financial condition.

Because a substantial majority of our international flights involve travel to the United States, we may be required to comply with security directives of the U.S. Federal Aviation Authority in addition to the directives of Mexican aviation authorities.  Security measures taken to comply with future security directives or in response to a terrorist attack or threat could reduce passenger capacity at our airports due to increased passenger screening and slower security checkpoints and increase our operating costs, which would have an adverse effect on our results of operations.


·
International events could have a negative impact on international air travel.

Historically, a substantial majority of our revenues have been derived from aeronautical services, and our principal source of aeronautical services revenues is passenger charges.  Passenger charges are payable for each passenger (other than diplomats, infants, transfer and transit passengers) departing from the airport terminals we operate, collected by the airlines and paid to us.  In 2006, 2007 and 2008, passenger charges represented 59.4%, 61.2% and 62.0%, respectively, of our total revenues.  Events such as the war in Iraq and public health crises such as the Severe Acute Respiratory Syndrome, or SARS, crisis and the Influenza A(H1N1) crisis have negatively affected the frequency and pattern of air travel worldwide.  Because our revenues are largely dependent on the level of passenger traffic in our airports, any general increase of hostilities relating to reprisals against terrorist organizations, further conflict in the Middle East, outbreaks of health epidemics such as SARS, Influenza A(H1N1) or other events of general international concern (and any related economic impact of such events) could result in decreased passenger traffic and increased costs to the air travel industry and, as a result, could cause a material adverse effect on our business, results of operations, prospects and financial condition.

High incidences of crime in Mexico, and drug trafficking in particular, could adversely affect our business.

A recent travel alert issued by the U.S. Department of State (Bureau of Consular Affairs) on February 20, 2009 (the “Travel Alert”), provides information for U.S. citizens on security issues in Mexico.  According to the Travel Alert, violent criminal activity fueled by an increasingly violent conflict (both among Mexican drug cartels and between such cartels and Mexican security services) for control of narcotics trafficking routes continues along the U.S.-Mexico border and throughout other pars of Mexico.  The Travel Alert reports that large firefights, involving the Mexican army, police and the drug cartels, have taken place in many towns and cities across Mexico and most recently in northern Mexico, including Tijuana, Chihuahua and Ciudad Juarez. Although attacks are aimed primarily at members of drug trafficking organizations and Mexican police forces, Mexican and foreign bystanders, including U.S. citizens, have been among the victims of violent attacks, homicides and kidnappings across Mexico.  According to the Travel Alert, moreover, a number of areas along the border are experiencing rapid growth in the rates of many types of crime such as robberies, homicides, petty thefts, and carjackings.  While most crime victims are Mexican citizens, the Travel Alert warns that the uncertain security situation of the border region poses serious risks for U.S. citizens as well. Higher incidences of crime throughout Mexico, and drug trafficking in particular, could have an adverse affect on our business as it may decrease the passenger-traffic directed to Mexico from abroad.

Increases in international fuel prices could adversely affect our business and results from operations.

International prices of fuel, which represent a significant cost for airlines using our airports, have increased in recent years, reaching record highs in the second quarter of 2008.  Such increases in airlines’ costs were among the factors leading to cancellations of routes, decreases in frequencies of flights, and in some cases even contributed to filings for bankruptcy by some airlines (such as Alma and Aladia). For other airlines, such as Avolar and Aerocalifornia, such increased costs may have contributed to the denial of extensions of their concessions by the Mexican regulatory authorities for failure to satisfy security, service, coverage and quality requirement.  Although, fuel prices have decreased since the third quarter of 2008, they may be subject to further increases resulting from any future terrorist attacks, a general increase in international hostilities or a reduction in output of fuel, voluntary or otherwise, by oil-producing countries, and there can be no assurances that future air business would not be further affected by increased fuel prices.


Our revenues and profitability may not increase if we fail in our business strategy.

Our ability to increase revenue and profitability will depend in part on our business strategy, which consists of increasing passenger and cargo traffic at our airports and increasing revenue from commercial activities.

Our ability to increase commercial revenue is, among other factors, significantly dependent upon increasing passenger traffic at our airports and the profitability from other non-aeronautical commercial businesses, such as our Terminal 2 hotel and commercial project at the Mexico City International Airport.  We cannot assure investors that we will be successful in implementing our strategy of increasing our passenger traffic or revenues from commercial activities.  The passenger traffic volume in our airports depends on factors beyond our control, such as the attractiveness of the commercial, industrial and tourist centers that the airports serve.  Accordingly, there can be no assurance that the passenger traffic volume in our airports will increase.

We may not fully recover our investment for the acquisition of the Terminal 2 commercial project.

In October 2008, we acquired 90% of the shares of Consorcio Grupo Hotelero T2, S.A. de C.V., which has the rights to develop and operate a 287-room, 5-star hotel and approximately 5,000 square meters of commercial space inside the new Terminal 2 of the Mexico City International Airport, under a 20-year contract with the Mexico City International Airport.  The Spanish company NH Hoteles, S.A. owns the other 10% and will operate the hotel.  The commercial areas included in this project, excluding the hotel, are expected to increase by approximately 40% the total commercial space operated by OMA. As of May 29, 2009, the construction of the hotel was approximately 93% completed, and we expect the hotel to start operations in the third quarter of 2009.  The first stage of the commercial area is expected to begin operations in 2010.

Part of the attractiveness of our investment in Terminal 2 of the Mexico City International Airport is that the Mexico City International Airport is currently the only airport in the proximity of Mexico City with an infrastructure capable of having a hotel within the airport facilities.  If a new airport were to be built near to Mexico City, the Mexico City International Airport would be closed and we would therefore have no assurance of our ability to continue operating the hotel and the commercial areas or of our ability to recover our investment.  In addition, under certain circumstances, the lease agreement with the Mexico City International Airport can be terminated early by the Mexico City International Airport with partial or no compensation for us.  Should a new Mexico City airport be constructed or the Mexico City International Airport terminate the lease agreement other than in accordance with the terms thereof, there could be no assurances as to our ability to fully recover our investment in the Terminal 2 project.

Competition from other tourist destinations could adversely affect our business.

The principal factor affecting our results of operations and business is the number of passengers using our airports.  The number of passengers using our airports (particularly our Acapulco, Mazatlán and Zihuatanejo airports) may vary as a result of factors beyond our control, including the level of tourism in Mexico.  In addition, our passenger traffic volume may be adversely affected by the attractiveness, affordability and accessibility of competing tourist destinations in Mexico, such as Cancún, Puerto Vallarta and Los Cabos, or elsewhere, such as Puerto Rico, Florida, Cuba, Jamaica, the Dominican Republic and other Caribbean islands and destinations in Central America.  The attractiveness of the destinations we serve is also likely to be affected by perceptions of travelers as to the safety and political and social stability of Mexico.  Furthermore, the current global economic crisis affected our international passenger traffic, with particular reference to our tourist destinations airports.  There can be no assurance that tourism levels, and therefore the number of passengers using our airports, in the future will match or exceed current levels, which could have a direct and indirect impact on our aeronautical and non-aeronautical revenues.


Our business is highly dependent upon revenues from four of our airports and could be adversely impacted by any condition affecting those airports.

In 2008, approximately 68.4% of our revenues were generated from four of our 13 airports.  In particular, the Monterrey International Airport generates the most significant portion of our revenues.  The following table lists the percentage of total revenues generated at our airports:

Airport
 
For year ended December 31, 2008
 
Monterrey International Airport
    46.4 %
Acapulco International Airport
    7.9 %
Culiacán International Airport
    7.1 %
Mazatlán International Airport
    7.0 %
Nine other airports
    31.6 %
Total
    100.0 %

As a result of the substantial contribution to our revenues from these four airports, any event or condition affecting these principal airports could have a material adverse effect on our business, results of operations, prospects and financial condition.

If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.

Although we believe we currently maintain good relations with our labor force, if any conflicts with our employees were to arise in the future, including with our unionized employees (which accounted for 57% of our total employees as of December 31, 2008), resulting events such as strikes or other disruptions that could arise with respect to our workforce could have a negative impact on our results of operations.

Our operations may be affected by union activities.

Our unionized employees (which accounted for 57% of our total employees as of December 31, 2008) are represented by a national union of airport workers that operates throughout Mexico.  To the extent that any unionized airport workers throughout the country successfully negotiate different employment terms than those we offer at our airports, our operations could be adversely affected by union activities, including organized strikes or other work stoppages.  In addition, we could be required to increase our labor expenses to match the terms agreed by the union with other Mexican airport operators.

Our operations depend on certain key airline customers, and the loss of or suspension of operations of one or more of them could result in a loss of a significant amount of our revenues.

Of the total revenues generated at our airports in 2008, Aeroméxico and its affiliates accounted for 24.6%, Mexicana and its affiliates accounted for 14.6%, Interjet represented 9.2%, VivaAerobus represented 8.5% and Aviacsa and its affiliates represented 6.9%.  In recent years, discount carriers, charter carriers, low-cost carriers and other new market entrants have represented a growing proportion of the Mexican commercial airline market.  In 2008, passengers traveling on discount, charter and low-cost carriers, such as VivaAerobus, Interjet, Alma, Volaris, Avolar and Aladia accounted for approximately 32.8% of our commercial aviation passenger traffic.  Of these carriers, Avolar, Alma and Aladia, which accounted for 4.7% of our commercial aviation passenger traffic in 2008, ceased to operate during the last quarter of 2008 as a result of a denied extension of its concession by Mexican regulatory authorities either for not satisfying security, service, coverage and quality requirements (in the case of Avolar), or because of bankruptcy (in the case of Alma and Aladia).


None of our contracts with our airline customers obligate them to continue providing service to our airports, and we can offer no assurance that, if any of our key customers reduced their use of our airports, competing airlines would add flights to their schedules to replace any flights no longer handled by our principal airline customers.  Through December 2005, Cintra owned Aeroméxico, Mexicana and their respective affiliates, a Mexican holding company controlled by the Mexican government.  In December 2005, Cintra sold its interest in Mexicana and its affiliates to Grupo Posadas, S.A. de C.V.  Subsequent to this sale, Cintra was renamed Consorcio Aeroméxico, S.A. de C.V., or Consorcio Aeroméxico.  In addition, in November 2007, the Mexican Government, through Nacional Financiera, S.N.C., or NAFIN (a Mexican national credit institution and development bank owned and controlled by the Mexican Government), and IPAB (Instituto para la Protección al Ahorro Bancario) sold all of its remaining ownership interest in Aeroméxico and its affiliates to a group of investors lead by Banamex, a subsidiary of Citigroup.  As of today these airlines continue to use our airports, however we can offer no assurances that any of these airlines will continue to do so in the future.  Our business and results of operations could be adversely affected if we do not continue to generate comparable portions of our revenue from our key customers.

Aviacsa has cancelled routes and decreased operations as a result of the high fuel prices.  At the end of 2008, Aviacsa cut back its operations with us by 40.6% and experienced a 33.1% decrease in passenger traffic.  This represents a 21.4% decrease in our aeronautical revenues of about Ps. 30 million.  Furthermore, during the first quarter of 2009, Aviacsa further reduced its flight schedules at our airports. On June 2, 2009, the Transport and Communication Commissions (SCT) through the General Board of Civil Aviation (DGAC) ordered the temporary suspension of operations of 25 aircraft of Aviacsa, as a result of an investigation conducted by the DGAC with respect to Aviacsa. Aviacsa has a period of 60 days from the date of such suspension to correct DGACs observations. On June 5, 2009, the Fifth Federal Court in Ciudad Valles granted a temporary suspension pursuant to a constitutional proceeding (juicio de amparo) and ordered the revocation of the decision of the SCT to suspend temporarily the operation of the 25 Aviacsa aircraft.

In recent years, some airlines have had their operations suspended by regulatory authorities in different countries or have cancelled flights for safety reasons, for example, in the U.S., American Airlines recently cancelled thousands of flights in response to questions raised by the U.S. Federal Aviation Administration about safety concerns on certain aircrafts.  As far as Mexican airlines are concerned, in April 2006, Mexican regulatory authorities suspended the operations of Aerocalifornia, S.A. de C.V. or Aerocalifornia, which accounted for approximately 7.1% of our revenues in 2005, due to safety concerns relating to the carrier’s fleet of aircraft.  Although Aerocalifornia resumed limited operations in August 2006, it accounted for only 2.6% of our revenues in 2006 as a result of such suspension and for 3.6% in 2007.  Mexican regulatory authorities again suspended Aerocalifornia’s operations effective July 24, 2008, and as a result Aerocalifornia accounted for only 1.5% of our aeronautical revenues in 2008.  To date, they have not resumed any part of their operations.

On August 5, 2008 the Mexican regulatory authorities announced the temporary suspension of Avolar.  This suspension was effective for 2 days.  Avolar resumed its operations on August 8, 2008.  On October 24, 2008, the Mexican regulatory authorities denied Avolar’s extension of its concession due to Avolar’s financial problems.  Avolar was operating in four OMA airports during 2008 overall (Acapulco, Culiacán, Durango and Zacatecas).  This airline represented 0.6% of OMA’s terminal passengers as of the end of August 2008.

On October 21, 2008, the charter airline Aladia announced the suspension of its operations.  We cannot predict whether Aladia will resume it operations with us in the future.  This airline accounted for 1.4% of OMA’s total passenger traffic for the first 10 months of 2008.  The main airports served by Aladia were Monterrey, Chihuahua, Mazatlán and Ciudad Juárez.


On November 7, 2008, Aerolíneas Mesoamericanas, S.A. de C.V. (Alma de México or Alma) announced the suspension of its operations and filed for bankruptcy. Alma was operating in nine of OMA airports:  Chihuahua, Mazatlán, Monterrey, San Luis Potosí, Tampico, Zihuatanejo, Reynosa, Torreón, and Ciudad Juárez.  The airline accounted for 3.5% of total passenger traffic during the first ten months of 2008 and for 3.3% of OMA’s total passenger traffic in October 2008.

Due to increased competition, higher fuel prices and the general decrease in the demand consequent to the global volatility in the financial and exchange markets and economic crisis, many airlines are operating in adverse conditions.  Further increases in fuel prices or other adverse economic developments could cause one or more of our principal carriers to become insolvent, cancel routes, suspend operations or file for bankruptcy.  All such events could have a material adverse effect on our results from operations.

Revenues from passenger and other charges are not secured, and we may not be able to collect amounts invoiced in the event of the insolvency of one of our principal airline customers.

In recent years, many airlines have reported substantial losses.  In a few cases, our revenues from passenger charges and other aeronautical services are secured by a performance bond or other types of guarantees.  The rest of our revenues from passenger and other charges from other airline customers are not secured by a performance bond or any other collateral.  Thus, in the event of the insolvency of any of these airlines, we would not be assured of collecting any amounts invoiced to that airline in respect of passenger charges.

The principal domestic airlines operating at our airports have in the past refused to pay certain increases in our specific prices for regulated aeronautical services and could refuse to pay additional increases in the future.

From January 2002 to November 2002, several domestic airlines operating at our 13 airports —Aeroméxico, Mexicana, Aeromar and Aeroméxico Connect (formerly Aerolitoral) — refused to pay certain increases in our airport service charges.  As of December 2002, the amount of invoiced fees subject to dispute was Ps.3.7 million.  As part of this dispute, these airlines brought proceedings challenging the privatization of the Mexican airport sector and the methodology for calculating the maximum rate system applicable under the privatization of all of the airport groups in Mexico.

Subsequently, we entered into an agreement with the National Air Transportation Board (Cámara Nacional de Aerotransportes) and the Ministry of Communications and Transportation pursuant to which we settled existing disputes with our principal airline customers and established specific prices for regulated aeronautical services applicable to those airlines.  Under the agreement, the National Air Transportation Board agreed to cause our principal airline customers to enter into (a) contracts governing charges for certain aeronautical services and (b) lease contracts for property used by the airlines.  Although our agreement with the National Air Transportation Board expired in December 2005, we continued to charge our principal airline customers in accordance with the terms of the agreement until October 31, 2006, at which time we entered into a new agreement with the National Air Transportation Board that offered incentives, including discounts, for the establishment of new routes and other measures expected to increase passenger traffic volume at our airports.  This agreement expired in December of 2008 and we are currently negotiating its renewal.  We continue to charge our principal airline customers in accordance with the terms of this agreement during the pending of the negotiations.  However, we cannot assure that the agreement will be actually renewed or that any airlines will adhere to the terms of such new agreement.


Although passenger traffic volume (and therefore overall revenue) may increase, any agreed incentives and/or discounts could reduce our aeronautical revenues per terminal passenger in the future.  In addition, should any of our principal airline customers refuse to continue to make payment to us, or should they refuse to pay increases in our charges for aeronautical services in future years, our results of operations could be adversely impacted by decreased cash flows from operations.

Our operations could be adversely affected by additional costs we may incur in the collection of passenger charges.

The passenger charges are collected by the airlines and then paid to OMA on the basis of contracts entered into with each airline operating at our airports.  We cannot guarantee that all the airlines will continue collecting the passenger charges for us.  Should one or more airlines stop collecting passenger charges for us, we would have to collect these charges directly ourselves, which would result in higher costs for us.  The incurrence of higher costs in connection with the collection of passenger charges could have an adverse effect on our operations.

The operations of our airports may be affected by the actions of third parties, which are beyond our control.

As is the case with most airports, the operation of our airports is largely dependent on the services of third parties, such as air traffic control authorities, airlines and ground transportation providers.  We also depend upon the Mexican government or entities of the government for provision of services, such as electricity, supply of fuel to aircraft, air traffic control by immigration and customs services for our international passengers.  The disruption or stoppage of taxi or bus services at one or more of our airports could also adversely affect our operations.  We are not responsible for and cannot control the services provided by these parties.  Any disruption in, or adverse consequence resulting from, their services, including a work stoppage or other similar event, may have a material adverse effect on the operation of our airports and on our results of operations.

In addition, we depend on third-party providers of certain complementary services such as catering and baggage handling.  For example, Grupo Aeroméxico and Grupo Mexicana together formerly controlled Servicios de Apoyo en Tierra, or SEAT, pursuant to a joint venture.  Consorcio Aeroméxico, which owns Grupo Aeroméxico and until recently owned Grupo Mexicana, sold its remaining ownership interests in SEAT and in Aeroméxico pursuant to a public offering in November of 2007 to a group of investors lead by Banamex, a subsidiary of Citigroup.  SEAT is currently one of the providers of baggage and handling services at our airports.  If SEAT or any of its affiliates or shareholders encounters financial difficulties, SEAT’s ability to provide services at our airports could be negatively affected.  If any service providers, including SEAT, were to halt operations at any of our airports, we would be required to seek a new provider of these services or provide these services ourselves, either of which is likely to result in increased costs and have an adverse impact on our results of operations.

Actions by parties purporting to be former owners of land comprising a portion of the Ciudad Juárez International Airport could cause our concession to operate the airport to be terminated.

Parties purporting to be former owners of land comprising a portion of the Ciudad Juárez International Airport initiated legal proceedings against the airport to reclaim the land, alleging that it was improperly transferred to the Mexican government.  As an alternative to recovery of this land, the claimants also sought monetary damages in the amount of U.S.$120 million.  On May 18, 2005 a Mexican court ordered us to return the disputed land to the plaintiffs.  However that decision and three subsequent constitutional claims (juicios de amparo) permitted the case to be reconsidered, and as a result of such constitutional claims, the original claimants must now include the Ministry of Communications and Transportation as a party to the litigation since the Ministry of Communications and Transportation is the grantor of the concession title to the Ciudad Juarez Airport.  As of May 29, 2009, the Court has not yet notified the Federal Government the order to appear in the proceeding.  In the event that any subsequent action results in a decision substantially similar to the May 18, 2005 court order or that is otherwise adverse to us, and the Mexican government does not subsequently exercise its power of eminent domain to retake possession of the land for our use, which we believe the terms of our concessions would require, our concession to operate the Ciudad Juárez International Airport would terminate.  In 2008, the Ciudad Juárez International Airport represented 5.9% of our revenue.  Although we believe and have been advised by the Ministry of Communications and Transportation that under the terms of our concessions the termination of our Ciudad Juárez concession would not affect the validity of our remaining airport concessions and that the Mexican federal government would be obligated to indemnify us against any monetary or other damages resulting from the termination of our Ciudad Juárez concession or a definitive resolution of the matter in favor of the plaintiffs, there can be no assurance that we would be so indemnified.


We may be liable for property taxes as a result of claims asserted against us by certain municipalities.

Administrative law proceedings were asserted against us by the municipalities of Chihuahua, Ciudad Juárez, Reynosa, Tampico and Zihuatanejo for the payment of property taxes with respect to the real property on which we operate our airports in those cities.  The claims of the municipalities of Chihuahua, Tampico and Ciudad Juárez (which amounted to Ps.25.3 million, Ps.1.02 million and Ps. 1.8 million respectively) were dismissed on April 11, 2008, May 9, 2008 and March 6, 2009, respectively.  The total amount of the property-tax claims outstanding, as recently updated to reflect additional amounts claimed since the proceedings were first asserted, in each of Reynosa and Zihuatanejo are Ps.59.5 million and Ps.2.8 million, respectively, although any of these amounts could increase if the underlying claims are not resolved in our favor.  Moreover, other municipalities where we operate our airports could assert similar claims.

We do not believe that liabilities related to any claims or proceedings against us are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition or results of operations; should a court determine that these taxes must be paid in response to any future proceedings, we believe that only the owner of the land should be responsible for paying these taxes directly, and the obligation to pay these taxes is not otherwise contemplated in the terms of our concessions.  The Mexican government has not acknowledged any obligation to pay such taxes, however, and any changes to the Mexican Constitution and other applicable laws could render us liable to municipalities for property taxes in the future.

Other Mexican airport operators contesting the assessment of similar property tax claims have been required to post surety bonds in connection with their challenge of those assessments.  If we are required to post similar surety bonds in the future, the terms of the surety bonds may restrict our ability to pay dividends or otherwise limit our flexibility.

Future changes in applicable laws with respect to property taxes could have an adverse effect on us.

Changes to the Mexican Constitution and other laws on property taxes may be enacted in the future that could affect our business and results of operations.  We cannot predict the amount of any future property tax liabilities or the criteria that would be used to determine them.  If such changes were to take effect, and any amounts owed were substantial, these tax liabilities could have a materially adverse effect on our financial condition or results of operations.  If we believe that there is a substantial likelihood of an adverse result in a pending case, we will establish reserves to meet such liabilities consistent with MFRS.


Natural disasters could adversely affect our business.

From time to time, the Northern and Central regions of Mexico experience torrential rains, hurricanes (particularly during the months of July through September) and, depending on the region, earthquakes.  In addition, the Mazatlán, Culiacán and Acapulco International Airports are susceptible to occasional flooding due to torrential rainfall.  Natural disasters may impede operations, damage infrastructure necessary to our operations or adversely affect the destinations served by our airports.  Any of these events could reduce our passenger and cargo traffic volume.  The occurrence of natural disasters in the destinations we serve could adversely affect our business, results of operations, prospects and financial condition.  We have insured the physical facilities at our airports against damage caused by natural disasters, accidents or other similar events, but do not have insurance covering losses due to resulting business interruption.  Moreover, should losses occur, there can be no assurance that losses caused by damages to the physical facilities will not exceed the pre-established limits on any of our insurance policies.

Our operations are at greater risk of disruption due to the dependence of several of our airports on a single commercial runway.

As is the case with many other domestic and international airports around the world, several of our airports, including the Mazatlán and Zihuatanejo International Airports, have only one commercial aviation runway.  While we seek to keep our runways in good working order and to conduct scheduled maintenance during off peak hours, we cannot assure investors that the operation of our runways will not be disrupted due to required maintenance or repairs.  In addition, our runways may require unscheduled repair or maintenance due to natural disasters, aircraft accidents and other factors that are beyond our control.  The closure of any runway for a significant period of time could have a material adverse effect on our business, results of operations, prospects and financial condition.

We are exposed to risk related to construction projects.

The building requirements under our master development programs could encounter delays or cause us to exceed our budgeted costs for such projects, which could limit our ability to expand capacity at our airports, increase our operating or capital expenses and could adversely affect our business, results of operations, prospects and financial condition.  Such delays or budgetary overruns also could limit our ability to comply with our master development programs, which are established as a necessary requirement to our concessions.

We are exposed to certain risks inherently associated with the rental of real property.

We are exposed to risks generally associated with ownership of properties rented to third parties, such as a decline in rental market demand, occupancy rates or rent levels, non-payment by tenants or a weakening of the real estate market.  Moreover, our real estate assets are located on or adjacent to our airports and serve a particular sector of the rental market, thus exposing us to fluctuations in this specific market.  Any of these risks could adversely affect the profitability of our real estate development activities and, consequently, our business results of operations, prospects and financial position.

We are exposed to the risk of non-performance by our subcontractors.

We subcontract certain services (including security and surveillance services, ramp handling and baggage handling services and checked baggage services) necessary to conduct our operations.  The airport is obligated to provide some specific services, like ramp handling services.  In the event that our subcontractors fail to perform their obligations under our agreements, we could incur extra costs in providing replacements and could be exposed to liability for operations that we may have to provide directly, which could adversely affect our results of operations.


Our ability to expand certain of our airports and to comply with applicable safety guidelines could be limited by difficulties we encounter in acquiring additional land on which to operate our airports.

Certain guidelines established by the International Civil Aviation Organization require the maintenance of a perimeter surrounding the land used for airport operations.  At several of our airports, we do not control portions of the land within the required perimeters.  If portions of such land adjacent to certain of our airports are developed by third parties in a manner that encroaches on the required perimeters, our ability to comply with applicable guidelines of the International Civil Aviation Organization or to expand our airport operations could be adversely affected.  Also, the growth of certain cities in the proximity of our airports could limit our ability to expand our airports.

Our future profitability and growth will depend upon our ability to expand our airports in the future. Potential limitations on our possibility of expansion, such as the ones described above, could restrict any such expansion and thus have a material adverse effect on the future profitability and growth of our business.

We are exposed to risks inherent to the operation of airports.

We are obligated to protect the public at our airports and to reduce the risk of accidents at our airports.  As with any company dealing with members of the public, we must implement certain measures for the protection of the public, such as fire safety in public spaces, design and maintenance of car parking facilities and access routes to meet road safety rules.  We are also obligated to take certain measures related to aviation activities, such as maintenance, management and supervision of aviation facilities, rescue and fire-fighting services for aircraft, measurement of runway friction coefficients, flood control at the Acapulco International Airport and measures to control the threat from birds and other wildlife on airport sites.  These obligations may require us to incur additional costs and could increase our exposure to liability to third parties for personal injury or property damage resulting from our operations.

Our insurance policies may not provide sufficient coverage against all liabilities.

While we seek to insure all reasonable risks, we can offer no assurance that our insurance policies would cover all of our liabilities in the event of an accident, terrorist attack or other incident.  The markets for airport insurance and construction insurance are limited, and a change in coverage policy by the insurance companies involved could reduce our ability to obtain and maintain adequate or cost-effective coverage.  A certain number of our assets cannot, by their nature, be covered by property insurance (notably aircraft movement areas, and certain civil engineering works and infrastructure).  In addition, we do not currently carry business interruption insurance.

Changes in Mexican environmental regulations could limit the growth of certain of our airports.

Several of our airports, such as the Ciudad Juárez, Tampico and Torreón International Airports, are located in densely populated urban areas, which are subject to more restrictive environmental regulations than less populated areas of Mexico.  Should environmental regulators adopt a more restrictive regulatory framework in any of these areas (such as limitations on noise pollution), our ability to expand these airports to meet growth in demand could be limited, which could adversely affect our results of operations.  Furthermore, compliance with future environmental regulations may require us to incur additional costs in order to bring our airports into compliance, and if we fail to comply with current or future environmental regulations, we may be subject to fines and other sanctions.


We are liable under Mexican Law for inspection of passengers and their carry-on luggage.

Under Mexican Airport Law (Ley de Aeropuertos) we are currently responsible for inspecting passengers and their carry-on luggage before they board aircraft.  Under Mexican law, we may be liable to third parties for personal injury or property damage resulting from the performance of such inspection.  In addition, we may be required to adopt additional security measures in the future or undertake capital expenditures if security measures for carry-on luggage are required to be enhanced, which could increase our liability or adversely affect our operating results.

We may be subject to potential liability for screening checked baggage.

The International Civil Aviation Organization established security guidelines requiring checked baggage on all international commercial flights as of January 2006, and all domestic commercial flights as of July 2006, to undergo a comprehensive screening process for the detection of explosives.  We are currently negotiating with our principal airline customers to enter into service agreements pursuant to which we expect to agree to operate new screening equipment that we would purchase, install and to implement other security measures to facilitate our airline customers’ compliance with the new baggage screening guidelines.  Until we agree on the contractual terms with the airlines and the new screening equipment becomes operational, checked baggage will continue to be screened by hand by each airline in order to comply with the new screening guidelines.  In some countries, such as the United States of America, the federal government (in the case of the United States, through the Transportation Security Administration) is responsible for screening checked baggage.  Under Mexican law, however, airlines are responsible for screening checked baggage.  Although Mexican law holds airlines liable for screening checked baggage, the purchase, installation and operation of the new equipment could increase our exposure to liability as a result of our involvement in the screening process.  In addition, although we are not currently obligated to screen checked baggage, we could become obligated to do so, and thus subject to potential liability, if Mexican law changes in the future.

Enforcing civil liabilities against us or our directors, officers and controlling persons may be difficult.

We are organized under the laws of Mexico, and all of our directors, officers and controlling persons reside in Mexico.  In addition, a substantial portion of our assets and the assets of our directors, officers and controlling persons are located in Mexico.  As a result, it may be difficult for investors to effect service of process on such persons within the United States or elsewhere outside of Mexico or to enforce judgments against us or our directors, officers and controlling persons, including in any action based on civil liabilities under U.S. federal securities laws.  There is doubt as to the enforceability in Mexico, whether in original actions or in actions to enforce judgments of U.S. courts or other courts outside of Mexico, of liabilities based solely on U.S. federal securities laws.

Risks Related to Our Stockholders

Aeroinvest and SETA control our management, and their interests may differ from those of other stockholders.

Aeroinvest, S.A. de C.V. (Aeroinvest) is the beneficial owner of 54.4% of our total capital stock.  Aeroinvest directly owns Series B shares representing 41.95% of our total capital stock and Series A shares of SETA representing 74.5% of its capital stock.  SETA in turn owns Series BB shares and Series B shares that collectively represent 16.7% of our capital stock.  Pursuant to our bylaws, SETA (as holder of our Series BB shares) has the right to present to the Board of Directors the name or names of the candidates for appointment as our chief executive officer, to appoint and remove half of our executive officers, which currently include our chief financial officer, our chief operating officer and our commercial director, and to elect three members of our Board of Directors.  SETA (as holder of our Series BB shares) also has the right pursuant to our bylaws to veto certain actions requiring approval of our stockholders (including the payment of dividends, the amendment of our bylaws and the amendment of its right to appoint certain members of our senior management).  Additionally, most matters voted on by our Board of Directors require the affirmative vote of the directors appointed by our Series BB shareholders.  In the event of the termination of the Technical Assistance Agreement, the Series BB shares would be converted into Series B shares, resulting in the termination of all of SETA's special rights. If at any time before June 14, 2015 SETA were to hold less than 7.65% of our capital stock in the form of Series BB shares, it would lose its veto rights (but its other special rights would be unaffected).  If at any time after June 14, 2015 SETA were to hold less than 7.65% of our capital stock in the form of Series BB shares, such shares must be converted into Series B shares, which would cause SETA to lose all of its special rights.  As long as SETA retains at least 7.65% of our capital stock in the form of Series BB shares, whether before or after June 14, 2015, all of its special rights will remain in place.  Pursuant to our bylaws, the Technical Assistance Agreement, the Participation Agreement and the Bancomext Trust, SETA was required to retain at least 51% of its Series BB shares until June 14, 2007, after which it became entitled to transfer up to one eighth of such 51% during each year thereafter. As of  May 29, 2009 SETA has not executed its right to transfer its Series BB shares.  The rights and obligations of SETA in our management are explained in “Item 7. Major Shareholders and Related Party Transactions – Major Shareholders.”


So long as the technical assistance agreement remains in effect and SETA continues to hold any Series BB shares, SETA also has the obligation to appoint and nominate the same directors and officers that it currently is entitled to appoint under our bylaws.  The technical assistance agreement sets forth certain qualifications that members of our management appointed by SETA must have.  The technical assistance agreement will remain in effect until June 14, 2015, after which it will be automatically extended for successive five-year periods unless any party thereto elects otherwise.

SETA's continuing veto rights as holder of at least 7.65% of our capital stock in the form of Series BB shares, and its right to nominate and appoint certain directors and officers as holder of Series BB shares until June 14, 2015, will continue for so long as it owns at least one Series BB share and the technical assistance agreement remains in effect, could adversely impact our operations and constitute an obstacle for us to bring in a new strategic stockholder and/or operator.  Through the right to nominate, appoint and remove certain members of our senior management, SETA directs the actions of our management in areas such as business strategy, financing, distributions, acquisitions and dispositions of assets or businesses.

In addition to these special rights of SETA, Aeroinvest is entitled under Mexican law to elect one director to our board for each 10% of our capital stock that it owns.  Thus, Aeroinvest's ownership of at least 41.95% of our capital stock entitles it to elect four members of our Board of Directors. SETA and Aeroinvest are each subsidiaries of Empresas ICA.

The interests of SETA and Aeroinvest may differ from those of our other stockholders and be contrary to the preferences and expectations of our other stockholders and we can offer no assurance that SETA and Aeroinvest and the officers nominated or appointed by SETA and Aeroinvest would exercise their rights in ways that favor the interests of our other stockholders.

If SETA or Aeroinvest, our principal stockholders, should sell or otherwise transfer all or a portion of their remaining interests in us, our operations could be adversely affected.

SETA and Aeroinvest currently exercise a substantial influence over our management, as described above.  Our bylaws and certain of the agreements executed in connection with the privatization process provided that SETA was required to retain at least 51% of its Series BB shares until June 14, 2007, after which it became entitled to transfer up to one eighth of such 51% during each year thereafter. SETA, as holder of the Series BB shares, is entitled to present to the Board of Directors the name or names of the candidates for appointment as our chief executive officer and to appoint and remove half of our executive officers, which currently includes our chief financial officer, our chief operating officer and our commercial director, and to elect three of our board members.  Elimination of these rights from our bylaws would require the consent of SETA for so long as it owns Series BB shares representing at least 7.65% of our capital stock. Should SETA fall below this threshold, our management could change significantly and our operations could be adversely affected as a result. In the event of termination of the technical assistance agreement, SETA would cease to have the special rights of the Series BB shares, which may adversely affect and disrupt our operations.


In addition, in December 2005, our parent company Aeroinvest entered into certain credit facilities to finance Aeroinvest’s acquisition from the Mexican government of the Series B shares currently representing 35.3% of our capital stock and to finance an additional loan to SETA for SETA’s exercise of the option to acquire 2% of our Series B shares.  These credit facilities were amended and restated to, among other things, increase the amount of the facility and the amount borrowed thereunder in October 2006 and again in April 2007.  Aeroinvest subsequently purchased additional Series B shares currently representing 6.32% of our capital stock in connection with our initial public offering in November 2006.  Aeroinvest entered into agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated to refinance its existing credit facilities in June 2007.  If Aeroinvest were to default on its obligations under the refinancing agreements, Aeroinvest could lose its ability to vote its shares of our capital stock as well as its shares of SETA, and trustee could in certain circumstances foreclose on the Series B shares and is SETA shares held in trust.  The terms of the refinancing documents are described in “Item 5.  Operating and Financial Review and Prospects – Liquidity and Capital Resources.”  If Aeroinvest were to sell its Series B shares or lose its ability to vote its Series B shares, SETA and Aeroinvest may no longer control us, which could adversely affect our operations and result in a decrease in the price of our Series B shares and ADSs.

Our ability to make certain business decisions could be limited if Aeroinvest defaults on certain obligations under its refinancing facility.

As mentioned above, Aeroinvest entered into agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated to refinance its existing credit facilities in June 2007.  In connection therewith, Aeroinvest has assigned its economic interests (including its right to receive dividends) in its Series B Shares representing 41.95% of our capital stock as well as 74.5% of the Series A shares of SETA.  Under the refinancing agreements, Aeroinvest is required to cause us to comply with numerous covenants, which include certain restrictions on our ability to create liens, incur indebtedness, sell, transfer or encumber assets, engage in merger transactions or otherwise change our business or make investments or capital expenditures outside of the master development plans.  In addition, Aeroinvest is required to cause us to distribute all of our available cash, subject to certain limitations, as quarterly dividends in accordance with our dividend policy, and is required to restrict us from making certain changes to the divided policy.  If we do not distribute a minimum required amount of dividends on each dividend payment date, Aeroinvest will be in default under the refinancing documents.  If Aeroinvest defaults on its obligations under the refinancing documents, we would be further restricted in our ability create liens, incur indebtedness, sell, transfer or encumber assets, engage in merger transactions or otherwise change our business or make investments or capital expenditures outside of the master development plans, which could restrict our flexibility to capitalize on business opportunities or otherwise adversely affect our business and results of operations.  In addition, Aeroinvest could lose its ability to vote its shares of our capital stock as well as its shares of SETA, and trustee could in certain circumstances foreclose on the Series B shares and is SETA shares held in trust.  The terms of the refinancing documents are described in “Item 5.  Operating and Financial Review and Prospects – Liquidity and Capital Resources.”


Risks Related to Mexico

Our business is significantly dependent upon the volume of air passenger traffic in Mexico, and negative economic developments in Mexico will adversely affect our business and results of operations.

In 2006, 2007 and 2008, domestic terminal passengers have represented approximately 78.6% 82.6% and 83.4% respectively, of the passenger traffic volume in our airports.  In addition, all of our assets are located, and all of our operations are conducted, in Mexico.  Accordingly, our financial conditions and results of operations are substantially dependent on economic conditions prevailing from time to time in Mexico.  As a result, our business, financial condition and results of operations could be adversely affected by the general condition of the Mexican economy, by a devaluation of the peso, by inflation and high interest rates in Mexico, or by political, social and economic developments in Mexico.

In the past, Mexico has experienced economic crises, caused by internal and external factors, characterized by exchange rate instability (including large devaluations), high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates.

Mexico experienced a period of slow growth from 2001 through 2003, primarily as a result of the downturn in the U.S. economy.  In 2001, Mexico’s GDP declined by 0.2%, while inflation reached 4.4%.  In 2002, GDP grew by 0.8% and inflation reached 5.7%.  In 2003, GDP grew by 1.4% and inflation was 4.0%.  In 2004, GDP grew by 4.2% and inflation increased to 5.2%.  In 2005, GDP grew by approximately 2.8% and inflation decreased to 3.3%.  In 2006, GDP grew by approximately 4.8% and inflation reached 4.1%.  In 2007, GDP grew by approximately 1.8% and inflation declined to 3.8%.  In 2008, GDP grew by approximately 1.3% and inflation increased to 6.5%.

Mexico also has, and is expected to continue to have, high real and nominal interest rates.  The annualized interest rates on 28 day Cetes (Certificados de la Tesoreria de la Federación) averaged approximately 6.8%, 9.2%, 7.2%, 7.2% and 7.7% for 2004, 2005, 2006, 2007 and 2008, respectively.  To the extent that we incur Peso-denominated debt in the future, it could be at high interest rates.

The Mexican economy is currently undergoing an economic crisis that began in 2008 as a result of the impact of the global financial crisis, which affected many emerging economies during the second half of last year.  The Mexican economy’s link with the U.S. economy remains very important, and therefore, any downside to the economic outlook of the U.S. may hinder any recovery in Mexico.  Such economic crisis has adversely impacted our business and may have an even greater impact going forward to the extent that the global economy falls into an even deeper and longer lasting recession.  According to the Mexican National Statistical, Geographic and Information Institute (INEGI), the Mexican gross domestic product decreased at an annualized rate of 3.4% during the fourth quarter of 2008.

In Mexico, the economic and financial crisis had some impact on domestic traffic for the full year 2008, which decreased slightly as compared to 2007, despite the exit from the market of four airlines during the year and significant reductions in capacity by several other carriers.  Five airports increased domestic passenger traffic, with the main increases at the Acapulco, Reynosa, and Monterrey airports.  However, although domestic passenger traffic increased by 4.0% during the first three quarters of 2008 (as compared to the first three quarters of 2007), domestic passenger traffic fell 11.9% in the fourth quarter (when compared to the fourth quarter of 2007).  Such decreases are principally due to reductions in the volume of passengers carried by Aviacsa and VivaAerobus; the suspension of operations by Aerocalifornia in July 2008; and the exit from the market of Aladia, Alma, and Avolar in the fourth quarter of 2008.  The airports with the largest decreases during 2008 were Monterrey, Ciudad Juárez, Culiacán, Mazatlán and Chihuahua.  The Zacatecas, Acapulco, and Reynosa airports recorded increases in domestic traffic, in large part as a result of the performance of Volaris, Interjet, and Click Mexicana.  We expect that domestic passenger traffic levels will continue to decrease until economic conditions improve in Mexico.


Moreover, if inflation or interest rates increase significantly or if the Mexican economy is otherwise further adversely impacted, our business, financial condition and results of operations could be materially and adversely affected because, among other things, demand for transportation services may decrease.  We cannot assure our investors that similar events may not occur, or that any recurrence of these or similar events will not adversely affect our business, results of operations, prospects and financial condition.

Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and our financial condition.

Following the devaluation of the peso and the economic crisis beginning in 1994, the aggregate passenger traffic volume in our airports in 1995 (then operated by our predecessor) decreased as compared to prior years, reflecting a decrease in Mexican passenger traffic volume.  From September 30, 2008 to May 29, 2009, the peso depreciated by approximately 20.1%, from 10.97 pesos per U.S. dollar on September 30, 2008 to 13.18 pesos per U.S. dollar on May 29, 2009.  This depreciation has affected our business in the following ways: (i) international passengers and international flights pay tariffs denominated in U.S. dollars, while these tariffs are generally collected in Mexican pesos 60-115 days following the date of each flight, thus the depreciation of the Mexican peso had a positive impact on our results from operations which are denominated in Mexican pesos; and  (ii) as of December 31, 2008, we had 22.8 million of liabilities denominated in U.S. dollars, causing foreign exchange rate losses.  Any depreciation in the peso may cause additional foreign exchange losses. Moreover, the depreciation of the peso also affected some of our airline customers having transactions in U.S. dollars, including the purchases or leases of equipment, maintenance and fuel.

Severe devaluation or depreciation of the peso may also result in the disruption of the international foreign exchange markets and may limit our ability to transfer or to convert pesos into U.S. dollars and other currencies.

Changes to Mexican laws, regulations and decrees applicable to us could have a material adverse impact on our results of operations.

The Mexican government has in recent years implemented changes to the tax laws applicable to Mexican companies, including us.  The terms of our concessions do not exempt us from any changes to the Mexican tax laws.  Should the Mexican government implement changes to the tax laws that result in our having significantly higher income or asset tax liability, we will be required to pay the higher amounts due pursuant to any such changes, which could have a material adverse impact on our results of operations. For example the issuance of the new “Impuesto Empresarial a Tasa Unica” or “Business Flat Tax”, which was published on October 1, 2007, adversely impacted our results of operations in 2007 and 2008. See Item 5 “Operating and Financial Review and Prospects – Taxation”.  In addition, changes to the Mexican constitution or to any other Mexican laws could also have a material adverse impact on our results of operations.


Developments in other countries may affect us.

The market value of securities of Mexican companies may be, to varying degrees, affected by economic and market conditions in other countries.  Although economic conditions in these countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers.  In past years, prices of both Mexican debt and equity securities have been adversely affected by the sharp drop in Asian securities markets and the economic crises in Russia, Brazil, Argentina and Venezuela.

In addition, in recent years, economic conditions in Mexico have become increasingly correlated to economic conditions in the United States.  Therefore, the current economic downturn in the United States significantly adversely impacted the Mexican economy.  There can be no assurance that the market value of our securities will not be adversely affected by events elsewhere.

Delays in the process of obtaining necessary governmental approvals could affect our ability to expand our airports

The expansion, development and growth of our airports from time to time may require governmental approvals, administrative proceedings or some other governmental action.  Any delay or inability to obtain such approvals or favorable outcomes of such proceedings could have a negative impact on the expansion, development and growth of our airports.

Our business could be adversely affected by a downturn in the U.S. economy.

The U.S. economy is currently affected by a recession, which has had a direct impact on our business and results of operations, and may have an even greater impact going forward to the extent that the global economy falls into an even deeper and longer lasting recession.

The current global economic crisis has had a direct impact on our business and results of operations, and may have an even greater impact going forward to the extent that the global economy falls into an even deeper and longer lasting recession.  In the third and fourth quarters of 2008, according to the U.S. Bureau of Economic Analysis, the U.S. gross domestic product decreased at annualized rates of 0.5% and 6.2%, respectively.  Likewise, according to the Mexican National Statistical, Geographic and Information Institute (INEGI), the Mexican gross domestic product decreased at an annualized rate of 3.4% during the fourth quarter of 2008.  The air travel industry, and as a result, our results of operations, are substantially influenced by economic conditions in Mexico and the United States.  In 2008, approximately 81% of the international passengers in our airports arrived or departed on flights originating in or departing to the United States and approximately 10% of our revenues in 2008 were derived from passengers charges imposed on departures from or arriving in the United States.  Similarly, in 2008, approximately 83% of our passengers traveled on domestic flights, and approximately 48% of our revenues in 2008 was derived from domestic passenger charges.

Our international traffic in 2008 decreased 5.8% compared to 2007, principally as a result of the cancellation of routes, and the reduction of frequencies on scheduled international flights, largely on part of U.S. carriers.  The airports where these factors had the greatest impact include Monterrey and our tourist destination airports (Acapulco, Mazatlán and Zihuatanejo).  In the fourth quarter of 2008, international passenger traffic decreased 17.6% compared to the fourth quarter of 2007.  The reduction in frequencies of some scheduled international flights and the cancellation of routes, principally by Continental, Delta, Aviacsa, American, Frontier, and Alaska, affected international traffic in the majority of OMA’s airports. Monterrey, Zihuatanejo, Mazatlán, Acapulco, and Culiacán were the airports most affected.


In addition, we cannot predict what effect any future terrorist attacks or threatened attacks on the United States or any retaliatory measures taken by the United States in response to these events may have on the U.S. economy.  The current economic downturn in the United States negatively affected our results of operations and a prolonged economic recession in the United States will likely have a further material adverse effect on our results of operations.

Minority shareholders may be less able to enforce their rights against us, our directors, or our controlling shareholders in Mexico.

Under Mexican law, the protections afforded to minority shareholders are different from those afforded to minority shareholders in the United States.  For example, because provisions concerning fiduciary duties of directors have only recently been incorporated into the new Mexican Securities Market Law, it may be difficult for minority shareholders to bring an action against directors for breach of this duty and achieve the same results as in most jurisdictions in the United States.  The grounds for shareholder derivative actions under Mexican law are extremely limited, which effectively bars most of these kinds of suits in Mexico.  Procedures for class action lawsuits do not exist under applicable Mexican law.  Therefore, it may be more difficult for minority shareholders to enforce their rights against us, our directors, or our controlling shareholders than it would be for minority shareholders of a U.S. company.

We are subject to different corporate disclosure and accounting standards than U.S. companies.

A principal objective of the securities laws of the United States is to promote full and fair disclosure of all material corporate information.  However, there may be less publicly available information about foreign issuers of securities listed in the United States than is regularly published by or about U.S. issuers of listed securities.  While we are required to reconcile our net income and stockholders’ equity to those amounts that would be derived under U.S. GAAP in our annual financial statements, the effects of inflation accounting under MFRS through December 31, 2007 are not eliminated in such reconciliation in our annual financial statements.  For this and other reasons, the presentation of MFRS consolidated financial statements and reported earnings may differ from that of U.S. companies this and other important respects.  For further information about the differences between MFRS and US GAAP please see Note 22 to our financial statements.

FORWARD-LOOKING STATEMENTS

This Form 20-F contains forward-looking statements.  We may from time to time make forward-looking statements in our annual and periodic reports to the Securities and Exchange Commission on Forms 20-F and 6-K, in our annual report to shareholders, in offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to analysts, institutional investors, representatives of the media and others.  Examples of such forward-looking statements include:

 
·
projections of operating revenues, net income (loss), net income (loss) per share, capital expenditures, dividends, capital structure or other financial items or ratios,

 
·
statements of our plans, objectives or goals,


 
·
statements about our future economic performance or that of Mexico, and

 
·
statements of assumptions underlying such statements.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve inherent risks and uncertainties.  We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.  These factors, some of which are discussed above under “Risk Factors,” include material changes in the performance or terms of our concessions, developments in legal proceedings, economic and political conditions and government policies in Mexico or elsewhere, inflation rates, exchange rates, regulatory developments, customer demand and competition.  We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments.

Item 4.
Information on the Company

HISTORY AND DEVELOPMENT OF THE COMPANY

Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., which we refer to by the acronym “OMA”, is a corporation (sociedad anonima bursatil de capital variable) organized under the laws of Mexico.  We were incorporated in 1998 as part of the Mexican government’s program for the opening of Mexico’s airports to private investment.  The duration of our corporate existence is indefinite.  We are a holding company and conduct substantially all of our operations through our subsidiaries.  The terms “OMA”, “we” and “our” in this annual report refer to Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. together with its subsidiaries, and to properties and assets that we own or operate, unless otherwise specified.  Our registered office is located at Aeropuerto Internacional de Monterrey, Zona de Carga, Carretera Miguel Alemán, Km. 24 s/n, 66600 Apodaca, Nuevo León, México, telephone +52.81.8625.4300.  Our U.S. agent is Puglisi & Associates.  Our U.S. agent’s address is 850 Library Avenue, Suite 204, Newark, Delaware 19711.

Investment by Servicios de Tecnología Aeroportuaria, S.A. de C.V. and its Affiliates

In 2000, as part of the first stage of our privatization, the Mexican government sold Series BB shares currently representing 14.7% of our capital stock to Servicios de Tecnología Aeroportuaria, S.A. de C.V., or SETA (formerly Operadora Mexicana de Aeropuertos, S.A. de C.V.), in a public bidding process.  Pursuant to this transaction, SETA paid the Mexican government a total of Ps. 864,055,578 (nominal pesos, excluding interest) (U.S. $76 million based on the exchange rate in effect on the date of SETA’s bid) in exchange for:

 
·
all of our Series BB shares, which currently represent 14.7% of our outstanding capital stock;

 
·
an option to acquire from the Mexican government shares currently representing 35.3% of our capital stock (which subsequently was assigned to and exercised by Aeroinvest, S.A. de C.V., a principal shareholder of SETA);


 
·
an option to subscribe for up to 3% of newly issued Series B shares (1% of which expired unexercised on June 14, 2005 and 2% of which was subscribed for in September 2006); and

 
·
the right and obligation to enter into various agreements with us and the Mexican government, including a participation agreement setting forth the rights and obligations of each of the parties involved in the privatization (including SETA), a 15-year technical assistance agreement setting forth SETA’s right and obligation to provide technical assistance to us in exchange for an annual fee, and a shareholders’ agreement under terms established during the public bidding process.  These agreements are described in greater detail under “Item 7. Principal Stockholders and Selling Stockholder” and “Related Party Transactions.”

SETA’s current stockholders are:

 
·
Aeroinvest, S.A. de C.V. (“Aeroinvest”), which owns 74.5% of SETA.  Aeroinvest is a wholly owned subsidiary of Empresas ICA, S.A.B. de C.V.  Aeroinvest also directly owns 41.95% of our Series B shares as a result of its exercise of an option to acquire these shares from the Mexican government and its subsequent purchase of additional Series B shares representing 6.7% of our capital stock.  Aeroinvest’s Series B shares were acquired in December 2005 from the Mexican government at an aggregate cost of U.S. $203.3 million (determined based on an initial price per share of U.S. $1.28 plus an annual 5% premium, subject to decreases corresponding to dividends declared and paid by us).  Empresas ICA, the parent of Aeroinvest, is the largest engineering, construction and procurement company in Mexico.  Empresas ICA’s principal lines of business are construction and engineering, housing and infrastructure operations, including the operation of airports (through SETA), toll roads and municipal services.  Empresas ICA is listed on the Mexican Stock Exchange and the New York Stock Exchange.  Through Aeroinvest, Empresas ICA controls a majority of our capital stock.

 
·
Aéroports de Paris Management, S.A., which owns 25.5% of SETA.  Aéroports de Paris Management is a wholly owned subsidiary of Aéroports de Paris, S.A., a French company recognized as a leading European airport group.  Aéroports de Paris, S.A. was previously the direct owner of the 25.5% participation in SETA until August 2006 when it transferred its participation in SETA to Aéroports de Paris Management. For more than 40 years, Aéroports de Paris has operated the Charles de Gaulle and Orly airports in France, which processed 87.1 million passengers in 2008.  Aéroports de Paris is listed on the Eurolist Market of Euronext Paris S.A.

In December 2005, our parent company Aeroinvest entered into certain credit facilities to finance Aeroinvest’s acquisition from the Mexican government of the Series B shares currently representing 35.3% of our capital stock and to finance an additional loan to SETA for SETA’s exercise of the option to acquire 2% of our Series B shares.  These credit facilities were amended and restated to, among other things, increase the amount of the facility and the amount borrowed thereunder in October 2006 and again in April 2007.  In November 2006 Aeroinvest purchased additional Series B shares representing 0.75% of our capital stock.  Aeroinvest entered into agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated to refinance its existing credit facilities in June 2007.  In connection with the Merrill Lynch refinancing, Aeroinvest has assigned its economic interests (including its right to receive dividends) with respect to its Series B shares representing 41.95% of our capital stock as well as 74.5% of the Series A shares of SETA.  During 2007, Aeroinvest purchased additional Series B shares representing 3.14% of our capital stock, and from January 1, 2008 to December 31, 2008, Aeroinvest purchased additional Series B shares representing 2.43% of our capital stock.  Aeroinvest's economic interests with respect to these or any other additional Series B shares purchased by Aeroinvest may become subject to an assignment under the terms of the refinancing documents in certain circumstances, including any issuance of additional notes.  The terms of the refinancing documents are described in “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources.”  In addition, Aeroinvest and SETA have entered into an agreement with Nacional Financiera, S.N.C., or NAFIN, a Mexican national credit institution and development bank owned and controlled by the Mexican Government, pursuant to which Aeroinvest has agreed, if certain conditions to be agreed by the parties are met, on or after December 2010, to either (i) sell the Series B shares it owns representing 35.28% of our capital stock or (ii) deposit such Series B shares in a voting trust.  The terms of this obligation are described more fully under “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources.”


Under the technical assistance agreement, SETA provides management and consulting services and transfers industry expertise and technology to us in exchange for a fee, which in 2008 amounted to approximately Ps. 55.6 million.  This agreement is more fully described in “Item 7. Related Party Transactions.”

Initial Public Offering

On November 29, 2006, a Mexican trust established by NAFIN, or the NAFIN Trust, acting pursuant to the instructions of the Mexican Ministry of Communications and Transportation, sold 48.02% of our outstanding capital stock through a global public offering of shares in the form of American Despositary Shares, or ADSs, and Series B shares, concurrently in the United States and Mexico.  The net proceeds from the sale of the shares totaled approximately U.S.$432.2 million and were paid to the Mexican government.

Master Development Programs

Every five years, we are required to submit to the Ministry of Communications and Transportation for approval a master development program for each of our concessions describing, among other matters, our traffic forecasts for the following 15 years, expansion, modernization and maintenance plans, and detailed investment plan for the following five years.  Each master development program is required to be updated and resubmitted for approval to the Ministry of Communications and Transportation every five years.  Upon such approval, the master development program is binding for the following five years and deemed to constitute part of the relevant concession.  Any major construction, renovation or expansion of an airport generally may only be made pursuant to a concession holder’s master development program and upon approval by the Ministry of Communications and Transportation.  In December 2005, the Ministry of Communications and Transportation approved the master development programs for each of our subsidiary concession holders for the 2006 to 2010 period.  These five-year programs will be in effect from January 1, 2006 until December 31, 2010.

The following tables set forth our historical committed investments and capital expenditures for the periods indicated.  Our capital expenditures have historically exceeded our committed investments pursuant to our master development programs, primarily due to capital expenditures intended to complement the minimum amounts required under our master development programs or that are otherwise necessary to accommodate the growth of our business (such as our investments at Terminal 2 at the Mexico City International Airport).  In addition, our master development programs include some commitments that are expensed rather than capitalized; thus, not all of our committed investments will constitute capital expenditures.


Historical Committed Investments Under Master Development Programs

   
Year ended December 31,
 
   
2006(1)
   
2007
   
2008
   
Total 2006-2008
 
   
(thousands of pesos)
 
Acapulco
    109,834       47,726       32,651       190,211  
Ciudad Juárez
    52,597       39,337       23,083       115,017  
Culiacán
    69,990       15,427       8,713       94,130  
Chihuahua
    81,045       9,894       31,558       122,497  
Durango
    19,455       30,121       20,884       70,460  
Mazatlán
    101,707       29,428       10,513       141,648  
Monterrey
    354,974       280,408       269,730       905,112  
Reynosa
    20,947       20,552       11,795       53,294  
San Luis Potosí
    28,282       13,872       21,251       63,405  
Tampico
    45,431       24,545       12,815       82,791  
Torreón
    19,714       11,056       31,633       62,403  
Zacatecas
    19,012       14,530       4,656       38,198  
Zihuatanejo
    82,073       15,284       22,190       119,547  
Total
    1,005,061       552,180       501,472       2,058,713  
______________
(1)           Amounts listed for 2006 include committed investments relating to the purchase and installation and operation of new baggage screening equipment.  We expect to undertake these investments before the end of 2010 so as to comply with the master development program.

The following table sets forth our historical capital expenditures, which reflect our actual expenditures (as compared to its committed investments, which are presented above) by airport for the periods indicated.

Historical Capital Expenditures by Airport

   
Year ended December 31,
 
   
2006
   
2007
   
2008
 
   
(thousands of pesos)
 
Acapulco
    28,872       42,917       36,275  
Ciudad Juárez
    21,561       21,421       52,641  
Culiacán
    26,438       12,517       37,111  
Chihuahua
    52,252       16,431       23,102  
Durango
    9,657       53,786       30,548  
Mazatlán
    25,204       22,550       24,021  
Monterrey
    166,483       396,142       1,743,039  
Reynosa
    10,596       17,130       13,644  
San Luis Potosí
    16,019       15,825       23,050  
Tampico
    26,090       20,845       25,028  
Torreón
    22,073       7,229       24,516  
Zacatecas
    10,315       9,230       15,177  
Zihuatanejo
    22,777       14,900       22,613  
Other
    1,898       7,087       156,796  
Total
    440,235       658,010       2,227,561  


The following table sets forth our historical capital expenditures by type of investment across all of our airports for the periods indicated:

   
Year ended December 31,
 
   
2006
   
2007
   
2008
 
   
(thousands of pesos)
 
Terminals
    172,670       407,928       232,961  
Runways and aprons
    230,585       159,888       263,000  
Machinery and equipment
    26,479       44,310       35,796  
Other
    10,501       45,884       1,695,804  
Total
    440,235       658,010       2,227,561  

Our capital expenditures from 2006 through 2008 were allocated to the following types of investments at the majority of our airports:

 
·
Terminals.  We remodeled many of the terminals at our airports by expanding departure areas (concourses and lounges), baggage claim areas and arrival areas, by improving lighting systems, adding office space, adding taxi and other ground transportation waiting areas, and by increasing handicap services and remodeling restrooms.

 
·
Runways, access roads and aircraft parking.  We improved our runways and access roads (including their lighting systems), expanded aircraft parking areas, and made improvements and renovations to the fences on the outlying areas of our properties subject to our concessions.

 
·
Machinery and equipment.  We invested in machinery and equipment such as fire extinguishing vehicles, emergency back-up electricity generators, metal detectors and other security-related equipment, ambulances, moving walkways and public information systems.

 
·
Utility-related infrastructure.  We installed sewage treatment plants and systems at several of our airports, improved drainage systems, and installed underground electric wiring systems at several of our airports.

 
·
Developments at Mexico City International Airport.  In October 2008, we acquired 90% of the shares of Consorcio Grupo Hotelero Terminal 2, S.A. de C.V., which has the rights to develop and operate a 287-room, 5-star hotel and approximately 5,000 square meters of commercial space inside the new Terminal 2 of the Mexico City International Airport, under a 20-year contract with the Mexico City International Airport.  The Spanish company NH Hoteles, S.A. owns the other 10% and will operate the hotel.  The commercial areas included in this project, excluding the hotel, are expected to increase by approximately 40% the total commercial space operated by OMA. As of May 29, 2009, construction of the hotel was approximately 93% completed, and we expect the hotel to start operations in the third quarter of 2009.  The first stage of the commercial area is expected to begin operations in 2010.


The following table sets forth our committed investments approved by the Ministry of Communications and Transportation for each airport for 2006 through 2010.  We will be required to comply with the investment obligations under these programs on a year-by-year basis.

Committed Investments by Airport

   
Year ended December 31,
 
   
2006(1)
   
2007
   
2008
   
2009
   
2010
   
Total 2006-2010
 
   
(thousands of pesos)
 
Acapulco
    109,834       47,726       32,651       15,227       15,439       220,877  
Ciudad Juárez
    52,597       39,337       23,083       20,009       12,530       147,556  
Culiacán
    69,990       15,427       8,713       23,266       2,491       119,887  
Chihuahua
    81,045       9,894       31,558       7,924       10,749       141,170  
Durango
    19,455       30,121       20,884       24,721       9,512       104,693  
Mazatlán
    101,707       29,428       10,513       19,557       2,315       163,520  
Monterrey
    354,974       280,408       269,730       86,921       24,651       1,016,684  
Reynosa
    20,947       20,552       11,795       9,674       1,805       64,773  
San Luis Potosí
    28,282       13,872       21,251       25,350       3,196       91,951  
Tampico
    45,431       24,545       12,815       16,096       4,636       103,523  
Torreón
    19,714       11,056       31,633       6,469       8,390       77,262  
Zacatecas
    19,012       14,530       4,656       25,173       8,037       71,408  
Zihuatanejo
    82,073       15,284       22,190       28,640       13,426       161,613  
Total
    1,005,061       552,180       501,472       309,027       117,177       2,484,917  
______________
(1)           Amounts listed for 2006 include committed investments relating to the purchase and installation of new baggage screening equipment.  We expect to undertake these investments before the end of 2010 so as to comply with the master development program. Under Mexican law, however, airlines are responsible for screening checked baggage.  Although Mexican law holds airlines liable for screening checked baggage, the purchase, installation and operation of the new equipment could increase our exposure to liability as a result of our involvement in the screening process.


The following table sets forth our committed investments for 2006 through 2010 by type of investment:

Committed Investments by Type

   
Year ended December 31,
 
   
2006(1)
   
2007
   
2008
   
2009
   
2010
   
Total 2006-2010
 
   
(thousands of pesos)
 
Terminals
    122,732       120,553       242,676       66,028       16,420       568,409  
Runways and aprons
    297,960       254,482       197,460       179,205       72,397       1,001,504  
Machinery and equipment
    74,798       91,674       50,663       56,724       28,360       302,219  
Baggage screening system – investments
    501,798       70,510       0       0       0       572,308  
Other
    7,773       14,961       10,673       7,070       0       40,477  
Total
    1,005,061       552,180       501,472       309,027       117,177       2,484,917  
______________
(1)           Amounts listed for 2006 include committed investments relating to the purchase and installation of new baggage screening equipment.  We expect to undertake these investments before the end of 2010 so as to comply with the master development program.  Under Mexican law, however, airlines are responsible for screening checked baggage.  Although Mexican law holds airlines liable for screening checked baggage, the purchase, installation and operation of the new equipment could increase our exposure to liability as a result of our involvement in the screening process.

For the year ended December 31, 2008, our capital expenditures totaled Ps. 2,227,562 million.  Our capital expenditures for 2008 were devoted primarily to our committed investments and secondarily to the construction of a new passenger terminal B in the Monterrey International Airport.

We plan to fund our operations and capital expenditures in the short-term and long-term through cash flows from operations and debt.  Our ability to incur debt may be restricted by the Merrill Lynch refinancing entered into by our parent company Aeroinvest.  See “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Returns.

BUSINESS OVERVIEW

Our Operations

Through our subsidiaries, we hold concessions to operate, maintain and develop 13 airports in Mexico, which are concentrated in the country’s central and northern regions.  Each of our concessions has a term of 50 years beginning on November 1, 1998.  The term of each of our concessions may be extended by the Ministry of Communications and Transportation under certain circumstances for up to 50 additional years.  The terms of our concessions also include the right to occupy, use and improve the land appurtenant to our airports, which we do not own and which will revert to the Mexican government upon the termination of our concession.  As operator of the 13 airports under our concessions, we charge fees to airlines, passengers and other users for the use of the airports’ facilities.  We also derive rental and other income from commercial activities conducted at our airports, such as the leasing of space to restaurants and retailers.

We operate 13 airports, which serve a major metropolitan area (Monterrey), three tourist destinations (Acapulco, Mazatlán and Zihuatanejo), regional centers (Chihuahua, Culiacán, Durango, San Luis Potosí, Tampico, Torreón and Zacatecas) and border cities (Ciudad Juárez and Reynosa). Our airports are located in nine of the 31 Mexican states, covering a territory of approximately 926,421 square kilometers (approximately 575,667 square miles), with a population of approximately 24 million according to the Mexican National Institute of Statistics, Geography and Computer Science (Instituto Nacional de Estadística, Geografía e Informática) and the Mexican National Population Council. All of our airports are designated as international airports under Mexican law, meaning that they are all equipped to receive international flights and to maintain customs and immigration services managed by the Mexican government, as well as refueling services.


According to figures published by the Mexican Bureau of Civil Aviation, our commercial aviation passenger traffic accounted for approximately 15.9 % of all arriving and departing commercial aviation passengers in Mexico in 2008.

In 2008, we recorded revenues of Ps. 1.988 million (U.S.$143.8 million) and net income of Ps. 542 million (U.S.$ 39.2 million).  In 2008 our airports handled approximately 14.1 million terminal passengers, a decrease of 1.1% with respect to the 14.2 million terminal passengers in 2007.

Our airports serve several major international routes, including Monterrey-Houston, Monterrey-Dallas, Monterrey-Las Vegas, Monterrey-Atlanta and Monterrey-Chicago.  Our airports began serving other routes, including Monterrey -New York and Monterrey-Austin started to be served in May 2008.  Our airports also serve several other major international destinations, including Houston, Los Angeles, Dallas and Phoenix.  In addition, our airports serve major resort destinations, such as Acapulco, Mazatlán and Zihuatanejo, which are popular destinations in Mexico frequented by tourists from Mexico, the United States and Canada.  Our airports also serve major domestic routes, including Monterrey-Mexico City, which was the country’s busiest domestic route in 2008, with approximately 2.7 million total passengers (including passengers flying directly to the nearby airport of Toluca, which are counted together with those flying to Mexico City), according to the Mexican Bureau of Civil Aviation.  Other major domestic routes served by our airports include Mexico City-Acapulco, Mexico City-Ciudad Juárez and Culiacán-Tijuana, with approximately 725.0 thousand, 448.1 thousand and 293.7 thousand total passengers, respectively, in 2008 according to the Mexican Bureau of Civil Aviation.

Monterrey is the third largest city in Mexico in terms of population, with a population of 4.3 million in the greater metropolitan area.  Monterrey ranks among Mexico’s most established urban and commercial centers and is the capital of the state of Nuevo León, Mexico’s ninth largest state in terms of population.  It is home to many of Mexico’s largest companies in a wide variety of industries, as well as several major universities.  Business travelers account for a substantial portion of passengers at the Monterrey International Airport.  The airport is our leading airport in terms of passenger traffic volume, air traffic movements and contribution to revenues, and ranked fourth busiest airport in Mexico based on passenger traffic volume in 2008, according to data published by the Mexican Bureau of Civil Aviation. Our Monterrey International Airport accounted for approximately 46.2% and 46.8 % of our terminal passenger traffic in 2007 and 2008, respectively.

Three of our airports, Acapulco International Airport, Mazatlán International Airport and Zihuatanejo International Airport, serve popular Mexican tourist destinations.  Of these tourist destinations, Acapulco and Mazatlán are the largest, with Acapulco constituting Mexico’s thirteenth largest international tourist destination and Mazatlán the eighteenth largest in terms of visitors in 2008, according to the Mexican National Institute of Immigration.  Acapulco is a principal port of call for cruise ships.  In 2008, the Acapulco International Airport, Mazatlán International Airport and Zihuatanejo International Airport collectively accounted for 18.2% of our aggregate terminal passengers and 19.7% of our total revenues.

Mexico was the tenth largest tourist destination in the world in 2008 in terms of international arriving tourists (21.4 million), according to the latest data published by the World Tourism Organization.  Within Latin America and the Caribbean, Mexico ranked first in 2008 in terms of number of foreign visitors and income from tourism, according to the World Tourism Organization.


Seven of our airports serve small and mid-sized cities that are important regional centers of economic activity, with such diverse economic activities as mining (Durango International Airport and Zacatecas International Airport), maquiladora manufacturing (Chihuahua International Airport and Torreón International Airport), petroleum and chemical production (Tampico International Airport), agriculture and livestock (Culiacán International Airport) and transportation and logistics (San Luis Potosí International Airport).  In 2008, these seven regional airports collectively accounted for 26.7% of our aggregate terminal passengers and 26.5% of our total revenues.

The remaining two airports in the group, Ciudad Juárez International Airport and Reynosa International Airport, serve cities situated along the border of Mexico and the United States.  Both Ciudad Juárez and Reynosa are popular entry points to the United States. In 2008, the Ciudad Juárez International Airport and the Reynosa International Airport collectively accounted for 8.2% of our aggregate terminal passengers and 7.5% of our total revenues.

In addition, OMA made a joint investment with the international hotel operator NH Hoteles to develop and operate a 287-room, 5-star hotel and more than 5,000 square meters of commercial space inside Terminal 2 of the Mexico City International Airport (the Mexico City International Airport), under a 20-year lease agreement with the Mexico City International Airport.

The Company will operate the commercial areas, and NH Hoteles will operate the hotel. The construction of the hotel is 93% completed as of May 29, 2009, and is expected to begin its activities at the end of the third quarter of 2009. The Consortium is currently carrying out market and feasibility studies for the development of the commercial areas, with an expected beginning of operations of the first phase of the commercial development in 2010.

This project provides us with the opportunity to participate in the operation of the Mexico City International Airport Terminal 2 passenger terminal, which according to the Mexico City International Airport, served more than 9.7million passengers in 2008.  Airlines based in Terminal 2 include Aeromar, Aeroméxico and Aeroméxico Connect, Continental, Copa, Delta and LAN Chile.  OMA considers this a key project within its efforts to increase its non-aeronautical revenues.


The following table provides summary data for each of our 13 airports for the years ended December 31, 2007 and 2008:

   
Year ended December 31, 2007
   
Year ended December 31, 2008
 
Airport
 
Terminal Passengers
   
Revenues(1)
   
Revenues per terminal passenger(1)
   
Terminal passengers
   
Revenues(1)
   
Revenues per terminal passenger(2)
 
   
Number (in millions)
   
%
   
(millions of pesos)
   
%
   
(pesos)
   
Number (in millions)
   
%
   
(millions of pesos)
   
%
   
(pesos)
 
Metropolitan area:
                                                           
Monterrey International Airport
    6.6       46.2       847.8       44.4       129.2       6.6       46.8       924.2       46.3       140.3  
Tourist destinations:
                                                                               
Acapulco International Airport
    1.1       7.4       148.4       7.8       140.3       1.1       7.7       157.5       7.9       144.8  
Mazatlán International Airport
    0.9       6.4       143.4       7.5       158.5       0.8       5.9       139.2       7.0       167.0  
Zihuatanejo International Airport
    0.7       4.7       96.2       5.0       142.6       0.6       4.6       96.6       4.8       150.0  
Total tourist destinations
    2.6       18.6       388.0       20.3       147.1       2.6       18.2       393.3       19.7       153.3  
Regional cities:
                                                                               
Chihuahua International Airport
    0.9       6.0       116.7       6.1       136.5       0.8       5.9       120.5       6.0       144.5  
Culiacán International Airport
    1.1       8.0       145.2       7.6       127.6       1.1       7.8       140.5       7.0       127.9  
Durango International Airport
    0.3       2.0       38.2       2.0       136.8       0.2       1.7       33.5       1.7       143.4  
San Luis Potosí International Airport
    0.3       1.9       46.3       2.4       175.1       0.3       1.9       46.7       2.3       178.9  
Tampico International Airport
    0.6       4.1       72.5       3.8       125.0       0.6       4.1       79.8       4.0       137.0  
Torreón International Airport
    0.5       3.7       75.0       3.9       143.5       0.5       3.4       70.4       3.5       146.2  
Zacatecas International Airport
    0.3       2.0       38.5       2.0       138.8       0.3       1.9       37.2       1.9       139.1  
Total regional destinations
    3.9       27.6       532.3       27.9       135.9       3.8       26.7       528.5       26.5       140.6  
Border cities:
                                                                               
Ciudad Juárez International Airport
    0.9       6.4       109.6       5.7       120.6       0.9       6.4       117.5       5.9       130.1  
Reynosa International Airport
    0.2       1.3       30.4       1.6       158.9       0.2       1.8       30.6       1.6       123.7  
Total border city destinations
    1.1       7.7       140.1       7.3       127.3       1.2       8.2       148.1       7.5       128.7  
TOTAL:
    14.2       100.0       1,908.2       100.0       134.3       14.1       100.0       1,994.2       100.00       141.8  
______________
(1)
Revenues do not include eliminations of transactions among our subsidiaries.

(2)
Revenues per terminal passenger are calculated by dividing the total revenues for each airport by the number of terminal passengers for each airport. The total numbers have been rounded to the decimal.


As of July 2006, Mexico and the United States are parties to an amended bilateral aviation agreement that increases, from two each to three each, the number of Mexican and U.S. carriers eligible to operate routes between certain pairs of cities, which may include any U.S. city and twelve specified cities in Mexico including Acapulco, Mazatlán and Zihuatanejo.  The agreement also provides for a future increase, from two each to three each, in the number of Mexican and U.S. carriers eligible to operate routes between U.S. cities and two specified additional Mexican cities, including Monterrey.  This subsequent increase took effect in October 2007.  To date, this bilateral agreement did not benefit our business as we expected, mainly because of the decrease in the tourism levels from the U.S. to Mexico connected with the U.S. economic recession.

Our Sources of Revenues

Aeronautical Services

Aeronautical services represent the most significant source of our revenues.  All of our revenues from aeronautical services are regulated under the maximum-rate price regulation system applicable to our airports.  In 2006, 2007 and 2008, aeronautical services revenues represented approximately 81.3%, 81.7% and 81.3% respectively, of our total revenues.

Our revenues from aeronautical services are derived principally from: passenger charges, landing charges, aircraft parking charges, charges for the use of passenger walkways and charges for the provision of airport security services.  Aeronautical services revenues are principally dependent on the following factors:  passenger traffic volume, the number of air traffic movements, the weight of the aircraft, the duration of an aircraft’s stay at the airport, the time of day the aircraft operates at the airport and the specific prices charged for the service.

Passenger Charges

We collect a passenger charge for each departing passenger on an aircraft (other than diplomats, infants and transfer and transit passengers) called the Tarifa de Uso de Aeropuerto.  We do not collect passenger charges from arriving passengers.  Passenger charges are automatically included in the cost of a passenger’s ticket and we issue invoices for those charges to each airline on a bi-weekly basis and record an account receivable for the invoice corresponding to a flight during the actual month of the flight.

Our principal airline customers are required to pay us no later than 152 days after the invoice delivery date. The actual term for payment is dependent upon interest rates on short-term Mexican treasury bills, or Cetes, with longer payment terms during periods of lower interest rates (within a defined range).  In 2008, the weighted average term of payment was 71 days.

International passenger charges are currently U.S. dollar-denominated, but are collected in pesos based on the average exchange rate during the month prior to the flight, and as such the value of our revenues from those charges is therefore affected by fluctuations in the value of the U.S. dollar as compared to the peso.  Domestic passenger charges are peso-denominated.  In 2006, 2007 and 2008, passenger charges represented approximately 73.2%, 75.0% and 76.3%, respectively, of our aeronautical services revenues and approximately 59.4%, 61.2% and 62.0%, respectively, of our total revenues.  Passenger charges vary at each airport and based on the destination of each flight.

Aircraft Landing Charges

We collect landing charges from carriers for their use of our runways and taxiways, illumination systems on the runways and taxiways and other visual landing assistance services.  Our landing charges are different for each of our airports and are based on each landing aircraft’s weight (determined as an average of the aircraft’s weight without fuel and maximum takeoff weight), the time of the landing, the origin of the flight and the nationality of the airline or client.  In 2006, 2007 and 2008, these charges represented approximately 8.3%, 7.7% and 6.9%, respectively, of our aeronautical services revenues and approximately 6.8%, 6.3% and 5.6%, respectively, of our total revenues.


Aircraft Parking, Boarding and Unloading Charges

We collect various charges from carriers for the use of our facilities by their aircraft and passengers after landing.  We collect aircraft parking charges based on the time an aircraft is at an airport’s gate or parking position.  Each of these charges varies based on the time of day or night that the relevant service is provided (with higher fees generally charged during peak usage periods and at night), the aircraft’s maximum takeoff weight, the origin and destination of the flight and the nationality of the airline or client.  We collect aircraft parking charges the entire time an aircraft is on our aprons.

Aircraft Long-Term Parking Charges

We collect charges from our carriers for the long-term use of facilities at our airports for aircraft long-term parking that does not involve the loading or unloading of passengers or cargo.  These charges are based on the time of day or night the aircraft is parked at our facilities, the length of time the aircraft is parked at our facilities and the nationality of the airline or client.  Together with our aircraft parking, boarding and unloading charges described above, in 2006, 2007 and 2008, these charges represented approximately 6.7%, 6.2% and 5.9%, respectively, of our aeronautical services revenues and 5.5%, 5.1% and 4.8%, respectively, of our total revenues.

Passenger Walkway Charges

Airlines are also assessed charges for the connection of their aircraft to our terminals through a passenger walkway and for the transportation of passengers between terminals and aircraft via buses and other vehicles.  These charges are generally based on the amount of time each service is used, the number of these services used, the time of day the services are used, the origin and destination of the flight and the nationality of the airline or client.  In 2006, 2007 and 2008, these charges represented approximately 1.8%, 1.5% and 1.5%, respectively, of our aeronautical services revenues and approximately 1.5%, 1.2% and 1.2%, respectively, of our total revenues.

Airport Security Charges

We also assess an airport security charge, which is collected from each airline, based on the number of its departing terminal passengers (excluding infants, diplomats and transit passengers), for use of our X-ray equipment, metal detectors and other security equipment and personnel.  These charges are based on the time of day the services are used, the number of departing passengers and the destination of the flight.  Airport security services at our airports are provided by independent subcontractors.  In 2006, 2007 and 2008, these charges represented approximately 1.4%, 1.5% and 1.4%, respectively, of our aeronautical services revenues and approximately 1.1%, 1.2% and 1.1%, respectively, of our total revenues.

The International Civil Aviation Organization, the General Office of Civil Aviation (Mexico’s federal authority on aviation) and the Office of Public Security issue guidelines for airport security in Mexico.  In response to the September 11, 2001 terrorist attacks in the United States, we have taken additional steps to increase security at our airports.  The International Civil Aviation Organization issued directives in October 2001 establishing new rules and procedures to be adopted at our airports.  Under these directives, these rules and procedures were to be implemented immediately and for an indefinite period of time.


To comply with these directives, we reinforced our security by:

 
·
updating and amending our emergency security and contingency plans and the responsibilities of security personnel relating thereto;

 
·
segregating flows of arriving and departing passengers;

 
·
improving security supervision committees at each of our airports, particularly those with significant international traffic;

 
·
updating our security screening technology, including increasing the sensitivity of metal detectors and introducing new procedures for x-ray inspection of luggage;

 
·
increasing and improving the training of security personnel;

 
·
coordinating security measures and emergency plans with operators of complementary and commercial services at our airports;

 
·
implementing a higher security employee identification system; and

 
·
increased collaboration with providers of security equipment installation services.

Certain of these improvements are expected to be expensed in our results of operations, while others are expected to require additional capital expenditures under our master development program.

Several of our airline customers have also contributed to the enhanced security at our airports as they have adopted new procedures and guidelines established by the International Civil Aviation Organization applicable to airlines.  Some measures adopted by the airlines include adding more points for verification of passenger identification, inspecting luggage prior to check-in and reinforcing controls over access to airplanes by various service providers (such as baggage handlers and food service providers).

The International Civil Aviation Organization established security guidelines requiring checked baggage on all international commercial flights as of January 2006, and all domestic commercial flights as of July 2006, to undergo a comprehensive screening process for the detection of explosives.  We are currently negotiating with our principal airline customers to enter into service agreements pursuant to which we expect to agree to operate new screening equipment that we would purchase and install and to implement other security measures to facilitate our airline customers’ compliance with the new baggage screening guidelines.  Until we agree on the contractual terms with the airlines and the new screening equipment becomes operational, checked baggage will continue to be screened by hand by each airline in order to comply with the new screening guidelines.  In some countries, such as the United States of America, the federal government (in the case of the United States, through the Transportation Security Administration) is responsible for screening checked baggage.  Under Mexican law, however, airlines are responsible for screening checked baggage.  Although Mexican law holds airlines liable for screening checked baggage, the purchase, installation and operation of the new equipment could increase our exposure to liability as a result of our involvement in the screening process.  In addition, although we are not currently obligated to screen checked baggage, we could become obligated to do so, and thus subject to potential liability, if Mexican law changes in the future.


Complementary Services

At each of our airports, we earn revenues from charging access and other fees from third-party providers of ramp handling and baggage handling services, catering services, aircraft security, aircraft maintenance and repair and fuel.  These access fees are included in the revenues that are regulated under our maximum-rate price regulation system and are determined for each third-party service provider based on a percentage of their total revenues.  We currently maintain contracts with thirteen companies that provide the majority of these complementary services at our 13 airports.

Under the Mexican Airport Law, we are required to provide complementary services at each of our airports if there is no third party providing such services.  For example, SEAT, which is controlled by Aeroméxico and Mexicana through a joint venture, is currently one of our providers of ramp handling and baggage handling services at our airports.  If the third parties currently providing these services cease to do so, we will be required to provide these services or find another third party to provide such services.

The Mexican Airport and Auxiliary Services Agency (Aeropuertos y Servicios Auxiliares) maintains an exclusive contract to sell fuel at all of our airports and we charge the Mexican Airport and Auxiliary Services Agency a nominal access fee.  The Mexican Airport and Auxiliary Services Agency in turn is required to purchase all of its fuel from Petróleos Mexicanos, or PEMEX.

Leasing of Space to Airlines

We derive aeronautical revenue from leasing space in our airports to airlines that is necessary for their operations, such as ticket counters and offices.  Our lease agreements with airline customers for the use of space in our airports are typically for terms of three years with provisions for periodic inflation adjustments to our rental fees.

Cargo Handling

In 2006, 2007 and 2008, our 13 airports handled approximately 81, 82, and 79 thousand metric tons of cargo, respectively.  Increases in our cargo volume are beneficial to us for purposes of the maximum rate calculations, as cargo increases the number of our workload units.

Cargo-related revenues include revenues from the leasing of space in our airports to handling agents and shippers, landing fees for each arriving aircraft carrying cargo and a portion of the revenues derived from other complementary services provided in connection with cargo services.  Cargo-related revenue is largely aeronautical and therefore subject to maximum rates applicable to aeronautical revenue sources.

Revenues from cargo handling in our airports historically have represented a negligible portion of our total revenues, but we believe that Mexico has significant potential for growth in the volume of cargo transported by air.

Permanent Ground Transportation

We receive revenues from ground transportation vehicles and taxi companies who pay an access fee to operate on our airport premises.  Our revenues from providers of ground transport services deemed “permanent” under applicable Mexican law, such as access fees charged to taxis, are subject to price regulation.


Non-aeronautical Services

General

Our revenues from non-aeronautical services are principally derived from commercial activities.  Non-aeronautical services historically have generated a significantly smaller portion of our revenues as compared to aeronautical services.  Our revenues from non-aeronautical services are derived from commercial activities, such as the leasing of space in our airports to retailers, restaurants, airlines and other commercial tenants.  In 2006, 2007 and 2008, revenue from non-aeronautical services accounted for approximately 18.7% 18.3%, and 18.7%, respectively, of total revenue.

None of our revenues from non-aeronautical services are regulated under our maximum-rate price regulation system, though they may be regulated by other authorities.  For example, our parking facilities may be subject to certain municipal regulations.

Revenues from Commercial Activities

As the main part of our business strategy we have made it a priority to increase our revenues from commercial activities in our airports and to develop and promote the “OMA” brand, including the “OMA Plaza” retail brand described below.  As a result of our efforts, our revenues from commercial activities have increased from approximately 7% of revenues in 2000 to 18.7% of revenues in 2008, primarily as a result of the following initiatives:

 
·
Expanding and reconfiguring the commercial space available in our airport terminals.  In order to increase our revenues from commercial activities, we have expanded and redesigned the layout of certain terminals in our airports to allow for the inclusion of more commercial businesses and larger individual commercial spaces, as well as to redirect the flow of passengers through our airports so as to increase our exposure to the commercial businesses operating in our airports.  As a result, between 2000 and 2008, we increased the total area available for commercial activity in our 13 airports by approximately 50%, and have more than doubled the commercial area in the Monterrey International Airport.

 
·
Renegotiating agreements with terminal tenants to be more consistent with market practice. We have also improved our lease arrangements with existing tenants by adopting a new type of contract that provides for royalty payments based on a percentage of revenues, subject to a minimum fixed amount based partly on square-footage, as opposed to the leases based solely on square footage that were used historically in Mexican airports.  We estimate, based on the nature of our tenant operations, that approximately half of our commercial space is suitable for royalty-based leasing arrangements.  As of December 31, 2008, substantially all of the eligible contracts were represented by royalty-based leasing arrangements.

 
·
Improving the quality of retail offerings in our airports.  Historically, commercial tenants in our terminals consisted of small, often similar, local businesses offering goods and services of limited variety.  We have leased redesigned space formerly occupied by such tenants, as well as newly available space, to more established, internationally recognized businesses in order to improve the quality, diversity and brand recognition of commercial goods and services available to our passengers, which we believe, based in part on market surveys conducted at several of our airports, will increase the sales revenues of our commercial tenants, thereby increasing our revenues from commercial activities.  As a result, our food and beverage service tenants currently offer internationally recognized brands such as Starbucks and Carl’s Jr.  In order to promote commercial development at all of our airports, we encourage commercial tenants to lease bundles of commercial spaces among multiple airports that we operate.


 
·
Development and promotion of “OMA Plaza” retail brand.  In order to enhance our passengers’ confidence in the retailers operating in our airports, we have developed the “OMA Plaza” brand for our commercial spaces.  As part of this initiative, we have begun to standardize certain merchandising and design elements of our commercial spaces in order to create a more uniform and elegant image that is more appealing to retail customers.  In addition, we have developed promotional programs focusing on the further development of the OMA Plaza brand that are intended to stimulate retail sales in our airports.  We believe that a recognizable brand and familiar aesthetic for our commercial spaces will make passengers more likely to take advantage of the commercial goods and services available in our airports.

 
·
Developments at Mexico City International Airport. In October 2008, we acquired 90% of the shares of Consorcio Grupo Hotelero Terminal 2, S.A. de C.V., which has the rights to develop and operate a 287-room, 5-star hotel and approximately 5,000 square meters of commercial space inside the new Terminal 2 of the Mexico City International Airport, under a 20-year contract with the Mexico City International Airport.  The Spanish company NH Hoteles, S.A. owns the other 10% and will operate the hotel.  The commercial areas included in this project, excluding the hotel, are expected to increase by approximately 40% the total commercial space operated by OMA. As of May 29, 2009, construction of the hotel was approximately 93% completed, and we expect the hotel to start operations in the third quarter of 2009.  The first stage of the commercial area is expected to begin operations in 2010.

An airport’s revenues from commercial activities are largely dependent on passenger traffic, its passengers’ level of spending, its terminal design, the mix of commercial tenants and how fees are charged to businesses operating in the commercial area of the airport.  Revenues from commercial activities depend substantially on the percentage of traffic represented by international passengers, who tend to spend greater amounts at our airports, particularly on duty-free items.  Revenues from commercial activities also depend on other factors, such as variations in the advertising budgets of Mexican companies in the case of advertising revenues.

Commercial activities in each of our airports currently consist of the following:

 
·
Parking facilities – Our concessions provide us the right to operate the car parking facilities at all of our airports.  Revenues from parking facilities at our airports currently are not regulated under our maximum rates, although they are subject to the regulatory oversight of the Ministry of Communications and Transportation.

 
·
Advertising – In 2002, we entered into a contract with a subsidiary of Corporación Interamericana de Entretenimiento, S.A. de C.V., or CIE, pursuant to which we have developed a greater number of and more strategically located billboards, screens (projection and plasma) and other advertising space at our airports.  Under the agreement, CIE places advertising in our airports and we collect a percentage of the revenues that CIE receives from individual advertisers.

 
·
Leasing of space – Revenues that we derive from leasing of space in our terminals to airlines and complementary service providers for certain activities that are not essential to airport operations, such as first class/VIP lounges, are not subject to price regulation under our maximum rates and are classified as non-regulated commercial activities.


 
·
Retail stores – We have completed several renovation projects as part of our overall effort, described above, to improve the product mix and brand recognition of retail stores in the commercial areas at our airports.  Our retailer tenants currently offer such internationally recognized product brands as Hermès, Mont Blanc, Swatch, Christian Dior, Lancôme, L’Oreal, Swarovski, Lacoste, Cartier, Bulgari and Hugo Boss.  We also have several duty-free retailers that cater to international passengers.

 
·
Car rentals – We recently increased the presence of internationally known name-brand car rental providers at our airports, and have encouraged car rental companies to establish on-site automobile pick-up and drop-off facilities at our airports.

 
·
Food and beverage services – In recent years, we have completed “clean-up” projects with respect to our restaurant and bar leases, in order to attract world-class providers of high-quality food and beverage services offering a wider variety of cuisine options and service concepts.

 
·
Communications – We have consolidated most of the telephone and internet service at our airports with one provider and offer internet access (either wireless internet access or internet service kiosks) at all of our airports.

 
·
Financial services – We lease space to financial services providers (such as currency exchange bureaus, banks and ATMs), at our airports, and we charge providers of these financial services fees based partly on a percentage of the revenues recorded by their operations.  ATM service is currently available at all of our airports.

 
·
Ground transportation – Our revenues from providers of ground transportation services deemed “non-permanent” under applicable Mexican law, such as access fees charged to charter buses, are not subject to price regulation under our maximum rates and are classified as non-regulated commercial activities.

 
·
Time-share marketing and sales – We receive revenues from time-share developers to whom we rent space in our airports for the purpose of marketing and sales of time-share units.

Our Airports

In 2006, 2007 and 2008, our airports served a total of approximately 11.8 million, 14.2 million, and 14.1 million terminal passengers, respectively.  Monterrey International Airport accounted for approximately 44.6%, 46.2% and 46.8% of our terminal passenger traffic in 2006, 2007 and 2008, respectively.   Acapulco International Airport, Mazatlán International Airport and Zihuatanejo International Airport, our main airports servicing the next most popular destinations in our airport group, collectively accounted for approximately 21.2%, 18.5% and 18.2% of our terminal passenger traffic in 2006, 2007 and 2008, respectively.  Ciudad Juárez International Airport, our largest airport servicing a border city, accounted for approximately 5.9%, 6.4% and 6.4% of our terminal passenger traffic in 2006, 2007 and 2008, respectively.  All of our airports are designated as international airports under applicable Mexican law, meaning that they are equipped to receive international flights and maintain customs and immigration facilities operated by the Mexican government.


The following tables set forth the passenger traffic volume presented in amounts of (1) total passengers, (2) terminal departing passengers and (3) terminal arriving passengers, for each of our airports for the periods indicated:

Passenger Traffic

   
Year Ended December 31,
 
   
2004
   
2005
   
2006
   
2007
   
2008
 
   
Terminal(1)
   
Transit(2)
   
Total