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, 2007







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)




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




Name
      of each exchangeTitle of each
      class:
            
            on which
      registeredAmerican
      Depositary Shares each representing 8 Series B shares
            
            The
      NASDAQ Stock Market LLCSeries
      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
      SharesSeries
      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
þNo o




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 þ     
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
      þ




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


Item 17
oItem 18
þ




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
oNo þ












TABLE OF CONTENTS




PageITEM
      1.
            
            IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
      ADVISERS
            
            1ITEM
      2.
            
            OFFER STATISTICS AND EXPECTED TIMETABLE
            
            1ITEM
      3.
            
            KEY INFORMATION
            
            1Selected Financial Data
            
            1Exchange Rates
            
            4Risk Factors
            
            5Forward-Looking Statements
            
            23ITEM
      4.
            
            INFORMATION ON THE COMPANY
            
            23History and Development of the Company
            
            23Business Overview
            
            29Regulatory Framework
            
            60Organizational Structure
            
            79Property, Plant and Equipment
            
            80ITEM
      4A.
            
            UNRESOLVED STAFF COMMENTS
            
            80ITEM
      5.
            
            OPERATING AND FINANCIAL REVIEW AND PROSPECTS
            
            80ITEM
      6.
            
            DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
            
            104ITEM
      7.
            
            MAJOR SHAREHOLDERS AND RELATED PARTY
      TRANSACTIONS
            
            119Major Shareholders
            
            119Related Party Transactions
            
            122ITEM
      8.
            
            FINANCIAL INFORMATION
            
            124Legal Proceedings
            
            124Dividends
            
            126ITEM
      9.
            
            THE OFFER AND LISTING
            
            129Stock Price History
            
            129Trading on the Mexican Stock Exchange
            
            129ITEM
      10.
            
            ADDITIONAL INFORMATION
            
            130Corporate Governance
            
            130Material Contracts
            
            146Exchange Controls
            
            147Taxation
            
            147Documents On Display
            
            150ITEM
      11.
            
            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
            
            150




i




TABLE
OF CONTENTS






PageITEM
      12.
            
            DESCRIPTION OF SECURITIES OTHER THAN EQUITY
      SECURITIES
            
            151ITEM
      13.
            
            DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES
            
            152ITEM
      14.
            
            MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
      USE OF PROCEEDS
            
            152ITEM
      15.
            
            CONTROLS AND PROCEDURES
            
            152ITEM
      16.
            
            [RESERVED]
            
            154ITEM
      16A.
            
            AUDIT COMMITTEE FINANCIAL EXPERT
            
            154ITEM
      16B.
            
            CODE OF ETHICS
            
            154ITEM
      16C.
            
            PRINCIPAL ACCOUNTANT FEES AND SERVICES
            
            155ITEM
      16D.
            
            EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
      COMMITTEES
            
            155ITEM
      16E.
            
            PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS
            
            155ITEM
      17.
            
            FINANCIAL STATEMENTS
            
            157ITEM
      18.
            
            FINANCIAL STATEMENTS
            
            158ITEM
      19.
            
            EXHIBITS
            
            159





ii
 Table of Contents





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




SELECTEDFINANCIAL DATA




We
publish our financial statements in Mexican pesos.  Pursuant to
Mexican Financial Reporting Standards accepted in Mexico (Normas de Información
Financiera), or Mexican FRS, financial data for all periods 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.




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. 10.92 to U.S.$1.00, the exchange rate for pesos on December 31, 2007, as
published by Banco de
Mexico, the Mexican Central Bank.  On May 30, 2008 the Federal
Reserve Bank of New York’s noon buying rate for Mexican pesos was Ps. 10.33 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 FRS, which differs in certain
significant respects from generally accepted accounting principles in the United
States, or U.S. GAAP.  Information under U.S. GAAP is also
provided in this summary financial data.  Mexican FRS varies in
certain significant respects from U.S. GAAP. Information relating to the
nature and effect of such differences is presented in Note 21 to the
consolidated financial statements.




Mexican
FRS provides 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.  Mexican FRS requires 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 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 Mexican FRS
and their interpretations (INIFs). In particular as per NIF B-10, “Effects of
Inflation”, the effects of inflation will no longer be recognized in 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
too or greater than 26%. As a result of this change, we expect our financial
statements in 2008 and subsequent periods to be expressed in nominal
pesos.




1
 Table of Contents





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, 2003.





Year
      ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007(in
      thousands of constant Mexican pesos as of December 31,
    2007)
            
            
            (thousandsof
      dollars)(1)Statement
      of Income data:Mexican
      FRS:Revenues:Aeronautical
      services(2)
            
            
            1,006,085
            
            
            
            1,083,709
            
            
            
            1,192,249
            
            
            
            1,370,968
            
            
            
            1,549,827
            
            
            
            141,926Non-aeronautical
      services(3)
            
            
            198,246
            
            
            
            250,719
            
            
            
            287,628
            
            
            
            316,343
            
            
            
            347,526
            
            
            
            31,825Total
      revenues
            
            
            1,204,331
            
            
            
            1,334,428
            
            
            
            1,479,877
            
            
            
            1,687,311
            
            
            
            1,897,353
            
            
            
            173,751Operating
      costs:Costs
      of services
            
            
            341,134
            
            
            
            358,555
            
            
            
            389,037
            
            
            
            397,465
            
            
            
            420,777
            
            
            
            38,533General
      and administrative expenses
            
            
            255,559
            
            
            
            242,066
            
            
            
            244,707
            
            
            
            237,475
            
            
            
            256,730
            
            
            
            23,510Technical
      assistance fee(4)
            
            
            39,533
            
            
            
            40,215
            
            
            
            40,016
            
            
            
            49,541
            
            
            
            57,416
            
            
            
            5,258Concession
      tax(5)
            
            
            59,128
            
            
            
            64,882
            
            
            
            72,643
            
            
            
            84,635
            
            
            
            98,307
            
            
            
            9,002Depreciation
      and amortization:Depreciation(6)
            
            
            183,225
            
            
            
            198,076
            
            
            
            209,093
            
            
            
            262,530
            
            
            
            263,569
            
            
            
            24,136Amortization(7)
            
            
            17,772
            
            
            
            17,771
            
            
            
            18,712
            
            
            
            29,566
            
            
            
            72,633
            
            
            
            6,652Total
      depreciation and amortization
            
            
            200,997
            
            
            
            215,847
            
            
            
            227,805
            
            
            
            292,096
            
            
            
            336,202
            
            
            
            30,788Total
      operating costs
            
            
            896,351
            
            
            
            921,565
            
            
            
            974,208
            
            
            
            1,061,212
            
            
            
            1,169,432
            
            
            
            107,091Income
      from operations
            
            
            307,980
            
            
            
            412,863
            
            
            
            505,669
            
            
            
            626,099
            
            
            
            727,921
            
            
            
            66,659Other
      income (expenses) net
            
            
            2,790
            
            
            
            4,607
            
            
            
            3,853
            
            
            
            (30,679
            )
            
            
            (7,584
            )
            
            
            (695
            )Net
      comprehensive financing income (expense)
            
            
            25,909
            
            
            
            (15,343
            )
            
            
            29,613
            
            
            
            70,328
            
            
            
            96,218
            
            
            
            8,811Income
      before income taxes
            
            
            336,680
            
            
            
            402,129
            
            
            
            539,135
            
            
            
            665,748
            
            
            
            816,555
            
            
            
            74,776Income
      tax expense(15)
            
            
            145,471
            
            
            
            93,858
            
            
            
            158,029
            
            
            
            196,511
            
            
            
            785,363
            
            
            
            71,920Consolidated
      net income
            
            
            191,208
            
            
            
            308,269
            
            
            
            381,106
            
            
            
            469,237
            
            
            
            31,192
            
            
            
            2,856Basic
      and diluted earnings per share(8)
            
            
            0.4878
            
            
            
            0.7864
            
            
            
            0.9722
            
            
            
            1.1874
            
            
            
            0.0781
            
            
            
            0.0072Basic
      and diluted earnings per ADS(8)
            
            
            3.9023
            
            
            
            6.2911
            
            
            
            7.7778
            
            
            
            9.3848
            
            
            
            0.6248
            
            
            
            0.0572U.S.
      GAAP:Revenues
            
            
            
            
            
            
            1,334,429
            
            
            
            1,479,878
            
            
            
            1,687,311
            
            
            
            1,897,353
            
            
            
            173,750Income
      from operations
            
            
            
            
            
            
            486,374
            
            
            
            600,249
            
            
            
            697,879
            
            
            
            811,103,
            
            
            
            74,277Consolidated
      net income
            
            
            
            
            
            
            184,107
            
            
            
            445,812
            
            
            
            548,798
            
            
            
            (118,318
            )
            
            
            (10,835
            )Basic
      (loss) earnings per share(8)
            
            
            
            
            
            
            0.4732
            
            
            
            1.1459
            
            
            
            1.4014
            
            
            
            (0.2961
            )
            
            
            (0.0271
            )Diluted
      (loss) earnings per share(9)
            
            
            
            
            
            
            0.4696
            
            
            
            1.1372
            
            
            
            1.3909
            
            
            
            (0.2961
            )
            
            
            (0.0271
            )Basic
      (loss) earnings per ADS(8)
            
            
            
            
            
            
            3.7860
            
            
            
            9.1673
            
            
            
            11.2110
            
            
            
            (2.3688
            )
            
            
            (0.2169
            )Diluted
      (loss) earnings per ADS(9)
            
            
            
            
            
            
            3.7569
            
            
            
            9.0976
            
            
            
            11.1271
            
            
            
            (2.3688
            )
            
            
            (0.2169
            )Other
      operating data:Total
      terminal passengers (thousands of passengers)(10)
            
            
            8,853
            
            
            
            9,739
            
            
            
            10,599
            
            
            
            11,784
            
            
            
            12,705
            
            
            
            12,705Total
      air traffic movements (thousands of movements)
            
            
            333
            
            
            
            346
            
            
            
            362
            
            
            
            383
            
            
            
            424
            
            
            
            424Total
      revenues per terminal passenger(11)
            
            
            136
            
            
            
            137
            
            
            
            139
            
            
            
            143
            
            
            
            149
            
            
            
            14Other
      data:EBITDA:Consolidated
      net income under Mexican FRS
            
            
            191,209
            
            
            
            308,270
            
            
            
            381,106
            
            
            
            469,237
            
            
            
            31,192
            
            
            
            2,856Minus:Net
      comprehensive financing income (expense)
            
            
            25,909
            
            
            
            (15,343
            )
            
            
            29,613
            
            
            
            70,328
            
            
            
            96,218
            
            
            
            8,811Plus:Income
      tax expense
            
            
            145,471
            
            
            
            93,858
            
            
            
            158,029
            
            
            
            196,511
            
            
            
            785,363
            
            
            
            71,920Depreciation
      and amortization
            
            
            200,997
            
            
            
            215,847
            
            
            
            227,805
            
            
            
            292,096
            
            
            
            336,202
            
            
            
            30,788EBITDA(12)
            
            
            511,768
            
            
            
            633,318
            
            
            
            737,327
            
            
            
            887,516
            
            
            
            1,056,539
            
            
            
            96,753





2
 Table of Contents




As
      of and for the year ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007(in
      thousands of constant Mexican pesos as of December 31, 2007)(1)
            
            
            (thousands
      of dollars)(2)Balance
      sheet data:Mexican
      FRS:Cash
      and cash equivalents
            
            
            966,666
            
            
            
            1,298,715
            
            
            
            1,706,604
            
            
            
            1,672,994
            
            
            
            1,756,704
            
            
            
            160,870Total
      current assets
            
            
            1,237,951
            
            
            
            1,541,683
            
            
            
            2,009,260
            
            
            
            2,143,271
            
            
            
            2,084,057
            
            
            
            190,848Airport
      concessions—net
            
            
            817,511
            
            
            
            799,743
            
            
            
            781,971
            
            
            
            764,198
            
            
            
            746,426
            
            
            
            68,354Rights
      to use airport facilities—net
            
            
            4,503,665
            
            
            
            4,377,906
            
            
            
            4,252,072
            
            
            
            4,126,235
            
            
            
            4,000,390
            
            
            
            366,336Total
      assets
            
            
            7,687,610
            
            
            
            8,054,256
            
            
            
            8,591,575
            
            
            
            8,873,950
            
            
            
            9,134,388
            
            
            
            836,482Current
      liabilities
            
            
            130,122
            
            
            
            152,587
            
            
            
            155,331
            
            
            
            184,236
            
            
            
            407,096
            
            
            
            37,280Total
      liabilities
            
            
            529,932
            
            
            
            588,307
            
            
            
            744,522
            
            
            
            891,999
            
            
            
            1,660,046
            
            
            
            152,019Total
      stockholders’ equity(13)
            
            
            7,157,678
            
            
            
            7,465,949
            
            
            
            7,847,053
            
            
            
            7,981,951
            
            
            
            7,474,342
            
            
            
            684,464U.S.
      GAAP:Cash
      and cash equivalents
            
            
            
            
            
            
            1,298,715
            
            
            
            1,706,604
            
            
            
            1,672,994
            
            
            
            1,756,704
            
            
            
            160,870Total
      current assets
            
            
            
            
            
            
            1,561,685
            
            
            
            2,009,260
            
            
            
            2,143,271
            
            
            
            2,084,057
            
            
            
            190,848Assets
      under concession (“Rights to use airport facilities” under Mexican
      FRS)
            
            
            
            
            
            
            997,631
            
            
            
            957,456
            
            
            
            917,497
            
            
            
            877,388
            
            
            
            80,347Total
      assets
            
            
            
            
            
            
            4,731,229
            
            
            
            5,220,539
            
            
            
            5,495,086
            
            
            
            5,263,692
            
            
            
            482,023Current
      liabilities
            
            
            
            
            
            
            154,429
            
            
            
            184,870
            
            
            
            203,844
            
            
            
            421,398
            
            
            
            38,590Total
      liabilities
            
            
            
            
            
            
            204,683
            
            
            
            240,789
            
            
            
            264,653
            
            
            
            680,277
            
            
            
            42,787Total
      stockholders’ equity(13)
            
            
            
            
            
            
            4,526,547
            
            
            
            4,979,750
            
            
            
            5,230,433
            
            
            
            4,583,415
            
            
            
            62,296Dividend
      per share
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.1167
            
            
            
            1.1103
            
            
            
            0.1017Other
      data:Mexican
      FRS:Net
      resources generated by operating activities
            
            
            523,870
            
            
            
            610,987
            
            
            
            701,405
            
            
            
            729,090
            
            
            
            1,070,588
            
            
            
            98,039Net
      resources used in financing activities
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (322,465
            )
            
            
            (328,868
            )
            
            
            (30,116
            )Net
      resources used in investing activities
            
            
            (389,151
            )
            
            
            (278,938
            )
            
            
            (293,516
            )
            
            
            (440,235
            )
            
            
            (658,010
            )
            
            
            (60,257
            )Increase
      in cash and cash equivalents
            
            
            134,719
            
            
            
            332,049
            
            
            
            407,889
            
            
            
            (33,610
            )
            
            
            83,710
            
            
            
            7,666U.S. GAAP:(14)Net
      cash provided by operating activities
            
            
            
            
            
            
            606,224
            
            
            
            692,739
            
            
            
            694,103
            
            
            
            1,036,011
            
            
            
            94,873Net
      cash used in investing activities
            
            
            
            
            
            
            (278,819
            )
            
            
            (286,083
            )
            
            
            (458,262
            )
            
            
            (657,018
            )
            
            
            (60,166
            )Net
      cash used in financing activities
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            (322,465
            )
            
            
            (328,868
            )
            
            
            (30,116
            )Effect
      of inflation accounting
            
            
            
            
            
            
            4,645
            
            
            
            1,234
            
            
            
            53,014
            
            
            
            33,585
            
            
            
            3,075Increase
      (decrease) in cash and cash equivalents
            
            
            
            
            
            
            332,049
            
            
            
            407,889
            
            
            
            (33,610
            )
            
            
            83,710
            
            
            
            7,666





_______________________





(1)
            Translated
      into dollars at the rate of Ps.10.92 per U.S. dollar, the U.S. Federal
      Reserve noon buying rate for Mexican pesos at December 31, 2007. 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
      Mexican FRS purposes, based on 392,000,000 weighted average common shares
      outstanding in 2003 through 2005, 395,173,149 weighted average common
      shares outstanding in 2006 and 399,611,578 weighted average common shares
      outstanding in 2007. For U.S. GAAP purposes, based on 389,060,000 weighted
      average common shares outstanding in 2005, 391,624,384 weighted average
      common shares outstanding in 2006 and 399,611,578 weighted average common
      shares outstanding in 2007. Earnings per ADS are based on the ratio of 8
      Series B shares per ADS.


(9)
            Based
      on 392,022,615, 394,564,384 and 402,551,578 weighted average common shares
      and common share equivalents outstanding for the year ended December 31,
      2005, 2006 and 2007, respectively. Earnings per ADS is 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)
            EBITDA
      represents net income minus net comprehensive financing income plus income
      tax expense and depreciation and amortization. EBITDA should not be
      considered as an alternative to net income, as an indicator of our
      operating performance, or as an alternative to cash flow as an indicator
      of liquidity. Our management believes that EBITDA provides a useful
      measure of our performance that is widely used by investors to evaluate
      our performance and compare it with other companies.  In making
      such comparisons, however, investors should bear in mind that EBITDA is
      not defined and is not a recognized financial measure under Mexican FRS or
      U.S. GAAP, and that EBITDA may be calculated differently by different
      companies.  EBITDA as presented in this table is not equivalent
      to our operating income (prior to deducting depreciation and amortization
      and the technical assistance fee), which is used as the basis for
      calculation of our technical assistance
fee.


(13)
            Total
      stockholders’ equity under Mexican FRS reflects the value assigned to our
      concessions. Under U.S. GAAP, no value has been assigned to our
      concessions.


(14)
            U.S.
      GAAP cash flow data is expressed in nominal Mexican
  pesos.(15)
            2007 balances
      include the effects of the new Mexican Flat Tax.  (Please refer
      to Income Tax, Item 5. Operating
      and Financial Review and Prospects) In accordance with Mexican FRS as
      required by INIF 4, “ Presentation of Employee Statutory Profit-Sharing in
      the Income Statement”, beginning on January 1, 2007, employee statutory
      profit-sharing is presented in other expense, net. For comparability
      purposes, the financial information for the previous years in the table
      above also reflects statutory employee profit-sharing in other
      income-net.







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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.  We have not restated the rates in
constant currency units.  All amounts are stated in
pesos.  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
      RateYear
      Ended December 31,
            
            High
            
            
            Low
            
            
            Period
      End
            
            
            Average(1)2003
            
            11.40
            
            
            10.11
            
            
            11.24
            
            
            10.792004
            
            11.64
            
            
            10.81
            
            
            11.15
            
            
            11.312005
            
            11.41
            
            
            10.41
            
            
            10.63
            
            
            10.882006
            
            11.46
            
            
            10.43
            
            
            10.80
            
            
            10.912007
            
            11.27
            
            
            10.67
            
            
            10.92
            
            
            10.93December
      2007
            
            10.92
            
            
            10.80
            
            
            10.92
            
            
            10.852008:January
      2008
            
            10.97
            
            
            10.82
            
            
            10.82
            
            
            10.91February
      2008
            
            10.82
            
            
            10.67
            
            
            10.73
            
            
            10.77March
      2008
            
            10.85
            
            
            10.63
            
            
            10.63
            
            
            10.73April
      2008
            
            10.60
            
            
            10.44
            
            
            10.51
            
            
            10.51May
      2008
            
            10.57
            
            
            10.31
            
            
            10.33
            
            
            10.44





(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, 2007, the Federal Reserve noon buying rate was Ps. 10.92 per
U.S.$1.00.  On May 30, 2008, the Federal Reserve noon buying rate was
Ps. 10.33 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.”




4
 Table of Contents




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 2005, 2006 and 2007, approximately
80.6%, 81.3% and 81.7%, 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 law, 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 lobbied
significantly by different entities (such as, for example, the Mexican
Competition Commission and the carriers operating at our airports) to impose
rates that reduce 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 the Mexican Federal Competition Commission
(Comisión Federal de
Competencia, or the “Competition Commission” or COFECO) released an
independent report on the competitiveness of Mexico’s airports relative to each
other and to international airports.  The Competition Commission
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;




5
 Table of Contents





·
            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.




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.  The maximum rates for our airports have been
determined by the Ministry of Communications and Transportation for each year
through December 31, 2010.  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 2007, our revenues subject
to maximum rate regulation represented approximately 86.3% 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 collectsubstantiallyall 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) 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.







6
 Table of Contents





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.




7
 Table of Contents





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 also 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 flights.  The state of NuevoLeonhas approached the Ministry of
Communications and Transportation to discuss the possibility of amending
Aeropuerto del Norte’s concession to allow it to serve commercial aviation
flights.  We understand that Aeropuerto del Norte is not capable of
accommodating commercial traffic with its current infrastructure.  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, or that the Mexican government will not issue additional
concessions to other airports in the state of Nuevo Leon in the
future.




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




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 economic conditions in Mexico and the United States, 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 and 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.




8
 Table of Contents





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 2005, 2006 and 2007, passenger charges represented 56.6%,
59.4% and 61.2%, 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 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 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 inMexico, 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) onApril 14, 2008provides information forU.S.citizens on security issues inMexico. According to such report, violent
criminal activity fueled by a war between criminal organizations struggling for
control of the lucrative narcotics trade continues along the U.S.-Mexico border.
Although attacks are aimed primarily at members of drug trafficking
organizations and Mexican police forces, foreign visitors and residents,
includingU.S.citizens, have been among the victims
of homicides and kidnappings in the border region.  Violence by
criminal elements affects many parts of the country, both urban and rural,
including border areas.  Though there is no evidence thatU.S.citizens are specifically targeted,
Mexican and foreign bystanders have been injured or killed in some violent
attacks, demonstrating the heightened risk in public places. 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 reduce demand for air travel.




International
prices of fuel, which represent a significant cost for airlines using our
airports, have increased in recent years have reached record highs in the first
quarter of 2008 and 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.  Such increases in airlines’ costs have resulted in higher
airline ticket prices and may decrease demand for air travel, thereby having an
adverse effect on our revenues and results of operations.  High fuel
prices are likely to have a material adverse impact the operations of carriers,
particularly those using older, less fuel-efficient fleets.




9
 Table of Contents





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.  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.




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 are also
likely to be affected by perceptions of travelers as to the safety and political
and social stability of Mexico.  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.




In
addition, our tourist destination airports depend substantially on charter
airlines serving those destinations.  If charter carriers were to
suspend or cancel their operations (either entirely or with respect to one or
more of our airports), there could be a material adverse effect on our revenues
from tourist destination airports.




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




In 2007,
approximately 67.3%of our
revenues were generated from four of our 13 airports.  In particular, theMonterreyInternationalAirportgenerates the most significant portion
of our revenues.The following table lists the percentage of
total revenues generated at our airports:




10
 Table of Contents




Airport
            
            For
      year ended December 31, 2007Monterrey
      International Airport
            
            44.4%Acapulco
      International Airport
            
            7.8Mazatlán
      International Airport
            
            7.5Culiacán
      International Airport
            
            7.6Nine
      other airports
            
            32.7Total
            
            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 58%of our total employees
as of December 31, 2007), 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 58%of our total employees
as of December 31, 2007) 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 operations.




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 2007, Aeroméxico and its affiliates
accounted for 25.1%, Mexicana and its affiliates accounted for 14.0% and Aviacsa
and its affiliates represented 9.4%.  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 2007, passengers traveling on discount, charter and
low-cost carriers, such as VivaAerobus, Interjet, Alma, Volaris, Avolar, and
Aladia accounted for approximately 26.6% of our commercial aviation passenger
traffic.  Due to increased competition and higher fuel prices, many
airlines, especially the low-cost carriers, are operating at break-even levels,
experiencing losses from their operations or becoming insolvent. Further
increases in fuel prices or other adverse economic developments could cause one
or more of our principal carriers to become insolvent, which could have a
material adverse effect on us.




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.




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Aviacsa
has cancelled routes and decreased operations as a result of the high fuel
prices.  At the end of 2007, Aviacsa cut back its operations with us
by 3.2% and experienced a 2.8% decrease in passenger traffic.  This
represents a 3.8% decrease in revenues of about Ps. 6 million. During the first
quarter of 2008, Aviacsa has continued to cut back on its flight
schedule.




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.  On March 26, 2007, the Mexican regulatory authorities
announced an immediate suspension of Líneas Aéreas Azteca S.A. de C.V. or Azteca, which accounted for
approximately 3.6% of our revenues in 2006, due to safety concerns and financial
problems.  As a result of such suspension, Azteca accounted for only
0.4% of our revenues in 2007.  As of May 2008, Azteca has not resumed
its operations.  We cannot guarantee whether or not Azteca will resume
operations at the end of such suspension period or whether the suspension will
have a material effect on our results from operations for 2008. Any similar
suspension affecting our principal airline customers or leading to cancellation
of their routes could have a material adverse effect on our results of
operations.




Due to
increased competition and higher fuel prices, many airlines are operating at
break-even levels or experiencing losses from their operations. Further
increases in fuel prices or other adverse economic developments could cause one
or more of our principal carriers to become insolvent, which could have a
material adverse effect on us.




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.  Our revenues
from passenger and other charges from our principal airline customers are not
secured by a 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.




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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 offers incentives,
including discounts, for the establishment of new routes and other measures
expected to increase passenger traffic volume at our airports.  This
agreement will expire in December 2008, and we cannot assure that the agreement
will be renewed or that any airlines will continue to adhere to the terms of the
agreement after this expiration.




Although
passenger traffic volume (and therefore overall revenue) may increase, these
incentives and 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.




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 and
airlines.  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 and immigration and customs services for our
international passengers.  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 the largest provider 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.




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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 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 2008, 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 2007, the Ciudad Juárez International Airport
represented 5.8% 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, Mazatlán 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 and Tampico (which amounted to Ps.25.3 million and Ps.1.02 million
respectively) were dismissed on April 11, 2008 and May 9, 2008,
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, Zihuatanejo and Ciudad
Juarez are Ps.59.5 million, Ps.1.6 million and Ps.1.8 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, 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.




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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 Mexican FRS.




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.




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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.  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.




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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 recently 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 purchase, install and
operate new screening equipment and 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.




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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 51.6% of our capital
stock.  Aeroinvest directly owns Series B shares representing 39.10%
of our outstanding 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.  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 39.17% of our capital stock
entitles it to elect three members of our Board of Directors. SETA and
Aeroinvest are each subsidiaries of Empresas ICA.




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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 provide 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
representing 3.87% 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 39.32% 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.”




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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 2005,
2006 and 2007, domestic terminal passengers have represented approximately
76.6%, 78.6% and 82.6%, 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.  We
cannot assume that such conditions will not return or that such conditions will
not have a material adverse effect on our business, financial condition or
results of operations.




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%.




Mexico
also has, and is expected to continue to have, high real and nominal interest
rates.  The annualized interest rates on 28 day Cetes averaged
approximately 6.2%, 6.8%, 9.2%, 7.2% and 7.2% for 2003, 2004, 2005, 2006 and
2007, respectively.  To the extent that we incur Peso-denominated debt
in the future, it could be at high interest rates.




If the
Mexican economy falls into a recession, if inflation or interest rates increase
significantly or if the Mexican economy is otherwise 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.




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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.  Any future depreciation of the peso
could reduce our domestic passenger traffic volume, which may have a material
adverse effect on our results of operations.




As of
December 31, 2007, we had no significant indebtedness. Although we currently
intend to fund the investments required by our business strategy through cash
flow from operations, we may incur dollar-denominated debt to finance all or a
portion of these investments. A devaluation of the peso would increase the debt
service cost of any dollar-denominated indebtedness that we may incur and result
in foreign exchange losses.




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. 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, adverse economic conditions in the United States
could have a significant adverse effect on the Mexican economy.  There
can be no assurance that the market value of our securities will not be
adversely affected by events elsewhere.




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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.




In 2007,
17.4% of the terminal passengers served by our airports arrived and departed on
international flights, with the United States being the principal international
destination and point of origin.  As is the case with other Mexican
companies, our business is dependent on the condition of the U.S. economy, and
is particularly influenced by trends in the United States relating to leisure
travel, consumer spending and international tourism.  Events and
conditions negatively affecting the U.S. economy will likely have a material
adverse effect on our business, results of operations, prospects and financial
condition. For example, the recent U.S. “credit crunch” in connection with the
sub-prime mortgages crisis and other liquidity issues has had a negative impact
on the U.S. economy. This crisis in the U.S. could lead to a decrease in
international travel to and from our destinations and in particular to our
tourist destinations served by our Acapulco, Mazatlán and Zihuatanejo airports.
We cannot assure that our results from operations would not be significantly
affected from such crisis.




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.  An economic downturn in the United States may negatively
affect our results of operations and a prolonged economic crisis in the United
States will likely have a 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
Mexican FRS are not eliminated in such reconciliation in our annual financial
statements.  For this and other reasons, the presentation of Mexican
FRS consolidated financial statements and reported earnings may differ from that
of U.S. companies in this and other important respects.  For further
information about the differences between Mexican FRS and US GAAP please see
Note 21 to our financial statements.




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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




HISTORYAND 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, Mexico, 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.




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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., 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 39.32% 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
      3.9% 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 86.4 million passengers in
      2007.  Aéroports de Paris is listed on the Eurolist Market of
      Euronext Paris S.A.




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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 36.04% 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
through May 27, 2008, Aeroinvest purchased additional Series B shares
representing 0.14% 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 2007 amounted to approximately Ps. 57.4 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.




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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.  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
      31,2005
            
            
            2006(1)
            
            
            2007
            
            
            Total
                2005-2007(thousands
      of pesos)Acapulco
            
            10,276
            
            
            94,845
            
            
            41,213
            
            
            146,335Ciudad
      Juárez
            
            25,001
            
            
            45,419
            
            
            33,969
            
            
            104,389Culiacán
            
            7,595
            
            
            60,438
            
            
            13,322
            
            
            81,354Chihuahua
            
            31,840
            
            
            69,985
            
            
            8,544
            
            
            110,369Durango
            
            7,161
            
            
            16,800
            
            
            26,010
            
            
            49,971Mazatlán
            
            5,152
            
            
            87,827
            
            
            25,412
            
            
            118,390Monterrey
            
            49,759
            
            
            306,530
            
            
            242,140
            
            
            598,429Reynosa
            
            16,716
            
            
            18,088
            
            
            17,747
            
            
            52,551San
      Luis Potosí
            
            5,784
            
            
            24,422
            
            
            11,979
            
            
            42,184Tampico
            
            2,520
            
            
            39,231
            
            
            21,195
            
            
            62,946Torreón
            
            38,363
            
            
            17,024
            
            
            9,547
            
            
            64,933Zacatecas
            
            3,569
            
            
            16,417
            
            
            12,547
            
            
            32,533Zihuatanejo
            
            43,530
            
            
            70,872
            
            
            13,198
            
            
            127,600Total
            
            239,186
            
            
            867,898
            
            
            476,823
            
            
            1,583,904





(1)           Amounts
listed for 2006 include committed investments relating to the purchase,
installation and operation of new baggage screening equipment, which are
currently under discussion with the airlines that operate at our airports and
the Mexican government.  We expect to undertake these investments upon
reaching an agreement with our principal airline customers and the Ministry of
Communications and Transportation.




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.




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 Table of Contents





Historical
Capital Expenditures by Airport




Year
      ended December 31,2005
            
            
            2006
            
            
            2007(thousands
      of pesos)Acapulco
            
            13,620
            
            
            28,872
            
            
            42,917Ciudad
      Juárez
            
            26,356
            
            
            21,561
            
            
            21,421Culiacán
            
            7,227
            
            
            26,438
            
            
            12,517Chihuahua
            
            28,131
            
            
            52,252
            
            
            16,431Durango
            
            7,736
            
            
            9,657
            
            
            53,786Mazatlán
            
            9,097
            
            
            25,204
            
            
            22,550Monterrey
            
            64,922
            
            
            166,483
            
            
            396,142Reynosa
            
            17,278
            
            
            10,596
            
            
            17,130San
      Luis Potosí
            
            39,948
            
            
            16,019
            
            
            15,825Tampico
            
            2,744
            
            
            26,090
            
            
            20,845Torreón
            
            39,369
            
            
            22,073
            
            
            7,229Zacatecas
            
            3,522
            
            
            10,315
            
            
            9,230Zihuatanejo
            
            30,016
            
            
            22,777
            
            
            14,900Other
            
            3,550
            
            
            1,898
            
            
            7,087Total
            
            293,516
            
            
            440,235
            
            
            658,010





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 31,2005
            
            
            2006
            
            
            2007(thousands
      of pesos)Terminals
            
            100,284
            
            
            172,670
            
            
            407,928Runways
      and aprons
            
            134,398
            
            
            230,585
            
            
            159,888Machinery
      and equipment
            
            50,950
            
            
            26,479
            
            
            44,310Other
            
            7,884
            
            
            10,501
            
            
            45,884Total
            
            293,516
            
            
            440,235
            
            
            658,010





Our
capital expenditures from 2005 through 2007 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.




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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
            
            94,845
            
            
            41,213
            
            
            28,195
            
            
            13,149
            
            
            13,332
            
            
            190,736Ciudad
      Juárez
            
            45,419
            
            
            33,969
            
            
            19,933
            
            
            17,278
            
            
            10,820
            
            
            127,419Culiacán
            
            60,438
            
            
            13,322
            
            
            7,524
            
            
            20,091
            
            
            2,151
            
            
            103,524Chihuahua
            
            69,985
            
            
            8,544
            
            
            27,251
            
            
            6,843
            
            
            9,282
            
            
            121,905Durango
            
            16,800
            
            
            26,010
            
            
            18,034
            
            
            21,347
            
            
            8,214
            
            
            90,405Mazatlán
            
            87,827
            
            
            25,412
            
            
            9,078
            
            
            16,888
            
            
            1,999
            
            
            141,204Monterrey
            
            306,530
            
            
            242,140
            
            
            232,919
            
            
            75,059
            
            
            21,283
            
            
            877,931Reynosa
            
            18,088
            
            
            17,747
            
            
            10,185
            
            
            8,354
            
            
            1,559
            
            
            55,934San
      Luis Potosí
            
            24,422
            
            
            11,979
            
            
            18,351
            
            
            21,890
            
            
            2,760
            
            
            79,402Tampico
            
            39,231
            
            
            21,195
            
            
            11,066
            
            
            13,899
            
            
            4,003
            
            
            89,393Torreón
            
            17,024
            
            
            9,547
            
            
            27,316
            
            
            5,586
            
            
            7,245
            
            
            66,718Zacatecas
            
            16,417
            
            
            12,547
            
            
            4,021
            
            
            21,738
            
            
            6,940
            
            
            61,661Zihuatanejo
            
            70,872
            
            
            13,198
            
            
            19,162
            
            
            24,731
            
            
            11,594
            
            
            139,557Total
            
            867,898
            
            
            476,823
            
            
            433,035
            
            
            266,853
            
            
            101,182
            
            
            2,145,789





(1)           Amounts
listed for 2006 include committed investments relating to the purchase,
installation and operation of new baggage screening equipment, which are
currently under discussion with the airlines that operate at our airports and
the Mexican government.  We expect to undertake these investments upon
reaching an agreement with our principal airline customers and the Ministry of
Communications and Transportation. 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
            
            105,982
            
            
            104,101
            
            
            209,557
            
            
            57,017
            
            
            14,179
            
            
            490,835Runways
      and aprons
            
            257,297
            
            
            219,752
            
            
            170,512
            
            
            154,748
            
            
            62,516
            
            
            864,826Machinery
      and equipment
            
            64,590
            
            
            79,163
            
            
            43,749
            
            
            48,983
            
            
            24,490
            
            
            260,975Baggage
      screening system – investments
            
            433,316
            
            
            60,887
            
            
            0
            
            
            0
            
            
            0
            
            
            494,203Other
            
            6,711
            
            
            12,918
            
            
            9,215
            
            
            6,103
            
            
            0
            
            
            34,948Total
            
            867,896
            
            
            476,821
            
            
            433,033
            
            
            266,851
            
            
            101,185
            
            
            2,145,787





(1)           Amounts
listed for 2006 include committed investments relating to the purchase,
installation and operation of new baggage screening equipment, which are
currently under discussion with the airlines that operate at our airports and
the Mexican government.  We expect to undertake these investments upon
reaching an agreement with our principal airline customers and the Ministry of
Communications and Transportation. 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.





28
 Table of Contents





For the
year ended December 31, 2007, our capital expenditures totaled Ps.658
million.  Our capital expenditures for 2007 were devoted primarily to
our committed investments and secondarily to the construction of a new passenger
terminal.




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.




BUSINESSOVERVIEW




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) andborder 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 24million according to the
Mexican National Institute of Statistics, Geography and Computer Science (Instituto Nacional de Estadística,
Geografía e Informática)and the Mexican National
PopulationCouncil.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 21.0% of all arriving and
departing commercial aviation passengers in Mexico in 2007.




In 2007,
we recorded revenues of Ps.1,897.4million (U.S.$173.8
million) and net income of Ps.31.2million (U.S.$2.9million).  In
2007 our airports handled approximately 14.2 million terminal passengers, an
increase of 20.3% with respect to the 11.8 million terminal passengers in
2006.




Our
airports serve several major international routes, including Monterrey-Houston,
Monterrey-Dallas, Monterrey-Las Vegas, Monterrey-Atlanta and
Monterrey-Chicago.  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 2007,
with approximately 2.6 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 618.1
thousand, 375.4 thousand and 316.1 thousand total passengers, respectively, in
2007 according to the Mexican Bureau of Civil Aviation.




29
 Table of Contents





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 2007, according to data published by the Mexican
Bureau of Civil Aviation. Our MonterreyInternationalAirportaccounted for approximately 44.6% and
46.2% of our terminal
passenger traffic in 2006 and 2007, 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 tenth largest international
tourist destination and Mazatlán the eighth largest in terms of visitors in
2007, according to the Mexican National Institute of
Immigration.  Acapulco is a principal port of call for cruise
ships.  In 2007, the Acapulco International Airport, Mazatlán
International Airport and Zihuatanejo International Airport collectively
accounted for 18.5% of our aggregate terminal passengers and 20.5% of our total
revenues.




Mexico
was the eighth largest tourist destination in the world in 2007 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 2007 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 2007, these seven regional
airports collectively accounted for 27.6% of our aggregate terminal passengers
and 27.9% 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 2007, the Ciudad Juárez International
Airport and the Reynosa International Airport collectively accounted for 7.7% of
our aggregate terminal passengers and 7.3% of our total revenues.




30
 Table of Contents





The
following table provides summary data for each of our 13 airports for the year
ended December 31, 2006 and 2007:




Year
      ended December 31, 2006
            
            
            Year
      ended December 31, 2007Airport
            
            Terminal
                Passengers
            
            
            Revenues
            
            
            Revenues
      per terminal passenger(1)
            
            
            Terminal
                passengers
            
            
            Revenues
            
            
            Revenues
      per terminal passenger(1)Number
      (in millions)
            
            
            %
            
            
            (millions
      of pesos)
            
            
            %
            
            
            (pesos)
            
            
            Number
      (in millions)
            
            
            %
            
            
            (millions
      of pesos)
            
            
            %
            
            
            (pesos)Metropolitan
      area:Monterrey
      International Airport
            
            
            5.3
            
            
            
            44.6
            
            
            
            746.9
            
            
            
            43.9
            %
            
            
            140.9
            
            
            
            6.6
            
            
            
            46.2
            
            
            
            847.8
            
            
            
            44.4
            
            
            
            128.5Tourist
      destinations:Acapulco
      International Airport
            
            
            1.0
            
            
            
            8.4
            
            
            
            144.9
            
            
            
            8.5
            %
            
            
            144.9
            
            
            
            1.1
            
            
            
            7.4
            
            
            
            148.4
            
            
            
            7.8
            
            
            
            134.9Mazatlán
      International Airport
            
            
            0.8
            
            
            
            7.0
            
            
            
            128.4
            
            
            
            7.5
            %
            
            
            160.4
            
            
            
            0.9
            
            
            
            6.4
            
            
            
            143.4
            
            
            
            7.5
            
            
            
            159.4Zihuatanejo
      International Airport
            
            
            0.7
            
            
            
            5.8
            
            
            
            94.3
            
            
            
            5.5
            %
            
            
            134.7
            
            
            
            0.7
            
            
            
            4.7
            
            
            
            96.2
            
            
            
            5.0
            
            
            
            137.4Total
      tourist destinations
            
            
            2.5
            
            
            
            21.2
            
            
            
            367.5
            
            
            
            21.6
            %
            
            
            147.0
            
            
            
            2.6
            
            
            
            18.5
            
            
            
            388.0
            
            
            
            20.3
            
            
            
            143.7Regional
      cities:Chihuahua
      International Airport
            
            
            0.7
            
            
            
            5.6
            
            
            
            99.6
            
            
            
            5.9
            %
            
            
            142.1
            
            
            
            0.9
            
            
            
            6.0
            
            
            
            116.7
            
            
            
            6.1
            
            
            
            129.7Culiacán
      International Airport
            
            
            0.8
            
            
            
            7.2
            
            
            
            115.2
            
            
            
            6.8
            %
            
            
            144.0
            
            
            
            1.1
            
            
            
            8.0
            
            
            
            145.2
            
            
            
            7.6
            
            
            
            132.0Durango
      International Airport
            
            
            0.2
            
            
            
            2.0
            
            
            
            37.4
            
            
            
            2.2
            %
            
            
            187.0
            
            
            
            0.3
            
            
            
            2.0
            
            
            
            38.2
            
            
            
            2.0
            
            
            
            127.3San
      Luis Potosí International Airport
            
            
            0.2
            
            
            
            1.9
            
            
            
            42.1
            
            
            
            2.5
            %
            
            
            210.5
            
            
            
            0.3
            
            
            
            1.9
            
            
            
            46.3
            
            
            
            2.4
            
            
            
            154.3Tampico
      International Airport
            
            
            0.5
            
            
            
            4.1
            
            
            
            67.3
            
            
            
            4.0
            %
            
            
            134.6
            
            
            
            0.6
            
            
            
            4.1
            
            
            
            72.5
            
            
            
            3.8
            
            
            
            120.8Torreón
      International Airport
            
            
            0.4
            
            
            
            3.5
            
            
            
            59.6
            
            
            
            3.5
            %
            
            
            149.0
            
            
            
            0.5
            
            
            
            3.7
            
            
            
            75.0
            
            
            
            3.9
            
            
            
            149.8Zacatecas
      International Airport
            
            
            0.3
            
            
            
            2.8
            
            
            
            48.8
            
            
            
            2.9
            %
            
            
            162.7
            
            
            
            0.3
            
            
            
            2.0
            
            
            
            39.2
            
            
            
            2.1
            
            
            
            130.7Total
      regional destinations
            
            
            3.2
            
            
            
            27.1
            
            
            
            470.0
            
            
            
            27.6
            %
            
            
            146.8
            
            
            
            3.9
            
            
            
            27.6
            
            
            
            533.0
            
            
            
            27.9
            
            
            
            133.3Border
      cities:Ciudad
      Juárez International Airport
            
            
            0.7
            
            
            
            5.9
            
            
            
            91.0
            
            
            
            5.3
            %
            
            
            130.0
            
            
            
            0.9
            
            
            
            6.4
            
            
            
            109.6
            
            
            
            5.7
            
            
            
            121.8Reynosa
      International Airport
            
            
            0.1
            
            
            
            1.2
            
            
            
            25.8
            
            
            
            1.5
            %
            
            
            258.0
            
            
            
            0.2
            
            
            
            1.3
            
            
            
            30.4
            
            
            
            1.6
            
            
            
            152.0Total
      border city destinations
            
            
            0.8
            
            
            
            7.1
            
            
            
            116.8
            
            
            
            6.9
            %
            
            
            146.0
            
            
            
            1.1
            
            
            
            7.7
            
            
            
            140.1
            
            
            
            7.3
            
            
            
            127.3TOTAL:
            
            
            11.8
            
            
            
            100.0
            
            
            
            1,701.3
            
            
            
            100.0
            %
            
            
            144.4
            
            
            
            14.2
            
            
            
            100
            
            
            
            1,908.8
            
            
            
            100
            
            
            
            132.6





(1)
            Revenues
      per terminal passenger are calculated by dividing the total revenues for
      each airport by the number of terminal passengers for each
      airport.




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 2005, 2006 and
2007, aeronautical services revenues represented approximately 80.6%, 81.3% and
81.7%, respectively, of our total revenues.




31
 Table of Contents





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 2007, the weighted average term of payment was 103
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
2005, 2006 and 2007, passenger charges represented approximately 70.2%, 73.2%
and 75.0%, respectively, of our aeronautical services revenues and approximately
56.6%, 59.4% and 61.2%, 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 2005, 2006 and 2007, these charges represented
approximately 9.5%, 8.3% and 7.7%, respectively, of our aeronautical services
revenues and approximately 7.6%, 6.8% and 6.3%, 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.




32
 Table of Contents





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 2005, 2006 and 2007, these charges represented
approximately 7.6%, 6.7% and 6.2%, respectively, of our aeronautical services
revenues and 6.1%, 5.5% and 5.1%, 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 2005, 2006 and 2007, these charges represented
approximately 2.3%, 1.8% and 1.5%, respectively, of our aeronautical services
revenues and approximately 1.9%, 1.5% 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 2005, 2006
and 2007, these charges represented approximately 1.5%, 1.4% and 1.5%,
respectively, of our aeronautical services revenues and approximately 1.2%, 1.1%
and 1.2%, 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;




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 Table of Contents





·
            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 recently 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 purchase, install and
operate new screening equipment and 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, currently provides the majority 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.




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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 2005,
2006 and 2007, our 13 airports handled approximately 80, 81 and 82 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 withcargo
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
2005, 2006 and 2007,
revenue from non-aeronautical services accounted for approximately 19.4%, 18.7%
and 18.3%, respectively,
of total revenue. In light of our substantial completion of our remodeling
efforts at most of our airports and the fixed nature of a portion of our
non-aeronautical revenues, we expect non-aeronautical revenue per terminal
passenger to remain relatively stable in the coming years.




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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 18.3% of
revenues in 2007, 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 2007, 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, 2007, 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.




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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 Hermes, Mont Blanc, Swatch, Christian Dior, Lancôme, L’Oreal,
      Swarovski and Lacoste.  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, which we anticipate will increase our revenues from the leasing
      of space to car rental companies.




·
            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.




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 Table of Contents





·
            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 2005,
2006 and 2007, our airports served a total of approximately 10.6 million, 11.8
million and 14.2 million terminal passengers, respectively.  Monterrey
International Airport accounted for approximately 44.0%, 44.6% and 46.2% of our
terminal passenger traffic in 2005, 2006 and 2007,
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 21.5%, 21.2% and 18.6% of our terminal passenger
traffic in 2005, 2006 and 2007, respectively.  Ciudad Juárez International
Airport, our largest airport servicing a border city, accounted for
approximately 5.6%, 5.9% and 6.4% of our terminal passenger traffic in 2005,
2006 and 2007, 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.




38
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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 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Terminal(1)
            
            
            Transit(2)
            
            
            Total
            
            
            Terminal(1)
            
            
            Transit(2)
            
            
            Total
            
            
            Terminal(1)
            
            
            Transit(2)
            
            
            Total
            
            
            Terminal(1)
            
            
            Transit(2)
            
            
            Total
            
            
            Terminal(1)
            
            
            Transit(2)
            
            
            TotalTotal
      passengers:Acapulco
            
            
            774,349
            
            
            
            34,704
            
            
            
            809,053
            
            
            
            821,301
            
            
            
            35,353
            
            
            
            856,654
            
            
            
            880,190
            
            
            
            39,291
            
            
            
            919,481
            
            
            
            994,286
            
            
            
            45,445
            
            
            
            1,039,731
            
            
            
            1,057,347
            
            
            
            49,444
            
            
            
            1,106,791Chihuahua
            
            
            541,531
            
            
            
            88,885
            
            
            
            630,416
            
            
            
            556,074
            
            
            
            95,271
            
            
            
            651,345
            
            
            
            599,977
            
            
            
            79,932
            
            
            
            679,909
            
            
            
            664,392
            
            
            
            80,257
            
            
            
            744,649
            
            
            
            854,757
            
            
            
            60,231
            
            
            
            914,988Ciudad
      Juárez
            
            
            549,476
            
            
            
            3,643
            
            
            
            553,119
            
            
            
            570,923
            
            
            
            5,596
            
            
            
            576,519
            
            
            
            611,942
            
            
            
            31,032
            
            
            
            642,974
            
            
            
            698,765
            
            
            
            44,856
            
            
            
            743,621
            
            
            
            908,938
            
            
            
            26,033
            
            
            
            934,868Culiacán
            
            
            620,511
            
            
            
            137,669
            
            
            
            758,180
            
            
            
            673,002
            
            
            
            100,189
            
            
            
            773,191
            
            
            
            769,118
            
            
            
            118,238
            
            
            
            887,356
            
            
            
            843,989
            
            
            
            138,637
            
            
            
            982,626
            
            
            
            1,137,571
            
            
            
            167,684
            
            
            
            1,305,255Durango
            
            
            188,212
            
            
            
            37,944
            
            
            
            226,156
            
            
            
            210,774
            
            
            
            44,885
            
            
            
            255,659
            
            
            
            214,920
            
            
            
            47,334
            
            
            
            262,254
            
            
            
            236,200
            
            
            
            24,933
            
            
            
            261,133
            
            
            
            279,310
            
            
            
            36,405
            
            
            
            315,715Mazatlán
            
            
            703,320
            
            
            
            87,535
            
            
            
            790,855
            
            
            
            741,267
            
            
            
            89,918
            
            
            
            831,185
            
            
            
            799,801
            
            
            
            106,125
            
            
            
            905,926
            
            
            
            819,214
            
            
            
            91,839
            
            
            
            911,053
            
            
            
            905,010
            
            
            
            120,261
            
            
            
            1,025,271Monterrey
            
            
            3,703,288
            
            
            
            266,386
            
            
            
            3,969,674
            
            
            
            4,293,816
            
            
            
            289,813
            
            
            
            4,583,629
            
            
            
            4,660,138
            
            
            
            360,213
            
            
            
            5,020,351
            
            
            
            5,253,600
            
            
            
            300,737
            
            
            
            5,554,337
            
            
            
            6,559,613
            
            
            
            304,195
            
            
            
            6,863,808Reynosa
            
            
            150,059
            
            
            
            2,049
            
            
            
            152,108
            
            
            
            145,075
            
            
            
            2,508
            
            
            
            147,583
            
            
            
            146,250
            
            
            
            1,777
            
            
            
            148,027
            
            
            
            136,991
            
            
            
            1,417
            
            
            
            138,408
            
            
            
            191,326
            
            
            
            1,208
            
            
            
            192,534San
      Luis Potosí
            
            
            173,073
            
            
            
            3,281
            
            
            
            176,354
            
            
            
            195,700
            
            
            
            3,875
            
            
            
            199,575
            
            
            
            233,610
            
            
            
            832
            
            
            
            234,442
            
            
            
            227,102
            
            
            
            1,160
            
            
            
            228,262
            
            
            
            264,349
            
            
            
            1,973
            
            
            
            266,322Tampico
            
            
            331,124
            
            
            
            15,784
            
            
            
            346,908
            
            
            
            333,696
            
            
            
            12,687
            
            
            
            346,383
            
            
            
            402,122
            
            
            
            13,292
            
            
            
            415,414
            
            
            
            485,125
            
            
            
            12,570
            
            
            
            497,695
            
            
            
            580,117
            
            
            
            14,880
            
            
            
            594,997Torreón
            
            
            333,166
            
            
            
            95,247
            
            
            
            428,413
            
            
            
            361,400
            
            
            
            109,324
            
            
            
            470,724
            
            
            
            374,559
            
            
            
            91,188
            
            
            
            465,747
            
            
            
            410,124
            
            
            
            52,479
            
            
            
            462,603
            
            
            
            522,295
            
            
            
            80,903
            
            
            
            603,198Zacatecas
            
            
            230,241
            
            
            
            64,433
            
            
            
            294,674
            
            
            
            236,692
            
            
            
            57,040
            
            
            
            293,732
            
            
            
            297,137
            
            
            
            72,469
            
            
            
            369,606
            
            
            
            332,224
            
            
            
            122,865
            
            
            
            455,089
            
            
            
            277,339
            
            
            
            57,191
            
            
            
            334,530Zihuatanejo
            
            
            554,516
            
            
            
            6,508
            
            
            
            561,024
            
            
            
            599,720
            
            
            
            5,104
            
            
            
            604,824
            
            
            
            608,897
            
            
            
            4,062
            
            
            
            612,959
            
            
            
            681,581
            
            
            
            4,150
            
            
            
            685,731
            
            
            
            674,612
            
            
            
            8,352
            
            
            
            682,964Total
            
            
            8,852,866
            
            
            
            844,068
            
            
            
            9,696,934
            
            
            
            9,739,440
            
            
            
            851,563
            
            
            
            10,591,003
            
            
            
            10,598,661
            
            
            
            965,785
            
            
            
            11,564,446
            
            
            
            11,783,593
            
            
            
            921,345
            
            
            
            12,704,938
            
            
            
            14,212,481
            
            
            
            928,760
            
            
            
            15,141,241





(1)
            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).


(2)
            Terminal
      passengers who arrive at our airports but generally depart without
      changing aircraft.







Year
      Ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            TotalTerminal
      departing passengers:Acapulco
            
            
            244,661
            
            
            
            152,996
            
            
            
            397,657
            
            
            
            251,552
            
            
            
            168,251
            
            
            
            419,803
            
            
            
            256,715
            
            
            
            192,531
            
            
            
            449,246
            
            
            
            296,841
            
            
            
            207,896
            
            
            
            504,737
            
            
            
            348,822
            
            
            
            189,869
            
            
            
            538,691Chihuahua
            
            
            241,902
            
            
            
            27,887
            
            
            
            269,789
            
            
            
            248,329
            
            
            
            28,232
            
            
            
            276,561
            
            
            
            261,361
            
            
            
            36,808
            
            
            
            298,169
            
            
            
            290,516
            
            
            
            41,988
            
            
            
            332,504
            
            
            
            380,161
            
            
            
            46,424
            
            
            
            426,585Ciudad
      Juárez
            
            
            248,468
            
            
            
            832
            
            
            
            249,300
            
            
            
            256,713
            
            
            
            795
            
            
            
            257,508
            
            
            
            272,641
            
            
            
            878
            
            
            
            273,519
            
            
            
            314,698
            
            
            
            552
            
            
            
            315,250
            
            
            
            424,456
            
            
            
            794
            
            
            
            425,250Culiacán
            
            
            294,465
            
            
            
            22,257
            
            
            
            316,722
            
            
            
            313,146
            
            
            
            26,754
            
            
            
            339,900
            
            
            
            365,805
            
            
            
            25,748
            
            
            
            391,553
            
            
            
            407,618
            
            
            
            20,651
            
            
            
            428,269
            
            
            
            549,967
            
            
            
            28,322
            
            
            
            578,289Durango
            
            
            74,893
            
            
            
            19,090
            
            
            
            93,983
            
            
            
            78,977
            
            
            
            25,809
            
            
            
            104,786
            
            
            
            82,656
            
            
            
            24,293
            
            
            
            106,949
            
            
            
            91,989
            
            
            
            26,132
            
            
            
            118,121
            
            
            
            121,291
            
            
            
            18,695
            
            
            
            139,986Mazatlán
            
            
            172,148
            
            
            
            180,203
            
            
            
            352,351
            
            
            
            182,168
            
            
            
            189,010
            
            
            
            371,178
            
            
            
            178,758
            
            
            
            222,324
            
            
            
            401,082
            
            
            
            173,150
            
            
            
            237,725
            
            
            
            410,875
            
            
            
            221,627
            
            
            
            233,579
            
            
            
            455,206Monterrey
            
            
            1,463,479
            
            
            
            402,700
            
            
            
            1,866,179
            
            
            
            1,692,546
            
            
            
            463,357
            
            
            
            2,155,903
            
            
            
            1,779,871
            
            
            
            515,697
            
            
            
            2,295,568
            
            
            
            2,042,616
            
            
            
            497,271
            
            
            
            2,539,887
            
            
            
            2,668,059
            
            
            
            509,709
            
            
            
            3,177,768Reynosa
            
            
            70,912
            
            
            
            214
            
            
            
            71,126
            
            
            
            66,985
            
            
            
            104
            
            
            
            67,089
            
            
            
            65,674
            
            
            
            117
            
            
            
            65,791
            
            
            
            65,008
            
            
            
            68
            
            
            
            65,076
            
            
            
            90,877
            
            
            
            488
            
            
            
            91,365San
      Luis Potosí
            
            
            66,400
            
            
            
            21,597
            
            
            
            87,997
            
            
            
            71,675
            
            
            
            27,177
            
            
            
            98,852
            
            
            
            77,923
            
            
            
            39,514
            
            
            
            117,437
            
            
            
            70,550
            
            
            
            42,681
            
            
            
            113,231
            
            
            
            87,299
            
            
            
            45,123
            
            
            
            132,422Tampico
            
            
            144,964
            
            
            
            20,069
            
            
            
            165,033
            
            
            
            144,887
            
            
            
            21,609
            
            
            
            166,496
            
            
            
            171,153
            
            
            
            30,307
            
            
            
            201,460
            
            
            
            208,718
            
            
            
            33,604
            
            
            
            242,322
            
            
            
            259,532
            
            
            
            30,346
            
            
            
            289,878Torreón
            
            
            143,867
            
            
            
            22,397
            
            
            
            166,264
            
            
            
            152,230
            
            
            
            28,154
            
            
            
            180,384
            
            
            
            149,345
            
            
            
            36,911
            
            
            
            186,256
            
            
            
            162,828
            
            
            
            42,378
            
            
            
            205,206
            
            
            
            216,027
            
            
            
            46,060
            
            
            
            262,087Zacatecas
            
            
            71,685
            
            
            
            46,055
            
            
            
            117,740
            
            
            
            72,025
            
            
            
            49,529
            
            
            
            121,554
            
            
            
            99,691
            
            
            
            52,973
            
            
            
            152,664
            
            
            
            118,673
            
            
            
            52,517
            
            
            
            171,190
            
            
            
            91,539
            
            
            
            50,736
            
            
            
            142,275Zihuatanejo
            
            
            161,781
            
            
            
            117,901
            
            
            
            279,682
            
            
            
            155,386
            
            
            
            146,818
            
            
            
            302,204
            
            
            
            143,963
            
            
            
            161,763
            
            
            
            305,726
            
            
            
            165,047
            
            
            
            176,772
            
            
            
            341,819
            
            
            
            176,019
            
            
            
            164,000
            
            
            
            340,019Total
            
            
            3,399,625
            
            
            
            1,034,198
            
            
            
            4,433,823
            
            
            
            3,686,619
            
            
            
            1,175,599
            
            
            
            4,862,218
            
            
            
            3,905,556
            
            
            
            1,339,864
            
            
            
            5,245,420
            
            
            
            4,408,252
            
            
            
            1,380,235
            
            
            
            5,788,487
            
            
            
            5,635,676
            
            
            
            1,364,145
            
            
            
            6,999,821





39
 Table of Contents





Year
      ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            Total
            
            
            Domestic
            
            
            International
            
            
            TotalTerminal
      arriving passengers:Acapulco
            
            
            282,547
            
            
            
            94,145
            
            
            
            376,692
            
            
            
            290,885
            
            
            
            110,613
            
            
            
            401,498
            
            
            
            298,273
            
            
            
            132,671
            
            
            
            430,944
            
            
            
            341,685
            
            
            
            147,864
            
            
            
            489,549
            
            
            
            391,401
            
            
            
            127,255
            
            
            
            518,656Chihuahua
            
            
            251,017
            
            
            
            20,725
            
            
            
            271,742
            
            
            
            258,468
            
            
            
            21,045
            
            
            
            279,513
            
            
            
            271,814
            
            
            
            29,994
            
            
            
            301,808
            
            
            
            297,980
            
            
            
            33,908
            
            
            
            331,888
            
            
            
            392,448
            
            
            
            35,724
            
            
            
            428,172Ciudad
      Juárez
            
            
            299,313
            
            
            
            863
            
            
            
            300,176
            
            
            
            312,392
            
            
            
            1,023
            
            
            
            313,415
            
            
            
            337,558
            
            
            
            865
            
            
            
            338,423
            
            
            
            382,757
            
            
            
            758
            
            
            
            383,515
            
            
            
            482,572
            
            
            
            1,013
            
            
            
            483,585Culiacán
            
            
            293,227
            
            
            
            10,562
            
            
            
            303,789
            
            
            
            320,278
            
            
            
            12,824
            
            
            
            333,102
            
            
            
            366,652
            
            
            
            10,913
            
            
            
            377,565
            
            
            
            410,628
            
            
            
            5,092
            
            
            
            415,720
            
            
            
            547,829
            
            
            
            11,453
            
            
            
            559,282Durango
            
            
            80,385
            
            
            
            13,844
            
            
            
            94,229
            
            
            
            85,366
            
            
            
            20,622
            
            
            
            105,988
            
            
            
            89,741
            
            
            
            18,230
            
            
            
            107,971
            
            
            
            99,989
            
            
            
            18,090
            
            
            
            118,079
            
            
            
            127,370
            
            
            
            11,954
            
            
            
            139,324Mazatlán
            
            
            198,606
            
            
            
            152,363
            
            
            
            350,969
            
            
            
            204,671
            
            
            
            165,418
            
            
            
            370,089
            
            
            
            201,781
            
            
            
            196,938
            
            
            
            398,719
            
            
            
            191,529
            
            
            
            216,810
            
            
            
            408,339
            
            
            
            234,667
            
            
            
            215,137
            
            
            
            449,804Monterrey
            
            
            1,478,648
            
            
            
            358,461
            
            
            
            1,837,109
            
            
            
            1,697,834
            
            
            
            440,079
            
            
            
            2,137,913
            
            
            
            1,867,610
            
            
            
            496,960
            
            
            
            2,364,570
            
            
            
            2,271,885
            
            
            
            441,828
            
            
            
            2,713,713
            
            
            
            2,948,821
            
            
            
            433,024
            
            
            
            3,381,845Reynosa
            
            
            78,801
            
            
            
            132
            
            
            
            78,933
            
            
            
            77,905
            
            
            
            81
            
            
            
            77,986
            
            
            
            80,190
            
            
            
            269
            
            
            
            80,459
            
            
            
            71,903
            
            
            
            12
            
            
            
            71,915
            
            
            
            99,822
            
            
            
            139
            
            
            
            99,961San
      Luis Potosí
            
            
            68,155
            
            
            
            16,921
            
            
            
            85,076
            
            
            
            76,923
            
            
            
            19,925
            
            
            
            96,848
            
            
            
            85,549
            
            
            
            30,624
            
            
            
            116,173
            
            
            
            80,207
            
            
            
            33,664
            
            
            
            113,871
            
            
            
            96,062
            
            
            
            35,865
            
            
            
            131,927Tampico
            
            
            153,369
            
            
            
            12,722
            
            
            
            166,091
            
            
            
            153,234
            
            
            
            13,966
            
            
            
            167,200
            
            
            
            185,451
            
            
            
            15,211
            
            
            
            200,662
            
            
            
            223,699
            
            
            
            19,104
            
            
            
            242,803
            
            
            
            272,511
            
            
            
            17,728
            
            
            
            290,239Torreón
            
            
            152,775
            
            
            
            14,127
            
            
            
            166,902
            
            
            
            161,310
            
            
            
            19,706
            
            
            
            181,016
            
            
            
            160,898
            
            
            
            27,405
            
            
            
            188,303
            
            
            
            173,396
            
            
            
            31,522
            
            
            
            204,918
            
            
            
            225,526
            
            
            
            34,682
            
            
            
            260,208Zacatecas
            
            
            67,488
            
            
            
            45,013
            
            
            
            112,501
            
            
            
            68,770
            
            
            
            46,368
            
            
            
            115,138
            
            
            
            98,085
            
            
            
            46,388
            
            
            
            144,473
            
            
            
            116,784
            
            
            
            44,250
            
            
            
            161,034
            
            
            
            93,788
            
            
            
            41,276
            
            
            
            135,064Zihuatanejo
            
            
            177,801
            
            
            
            97,033
            
            
            
            274,834
            
            
            
            174,133
            
            
            
            123,383
            
            
            
            297,516
            
            
            
            169,731
            
            
            
            133,440
            
            
            
            303,171
            
            
            
            187,620
            
            
            
            152,142
            
            
            
            339,762
            
            
            
            192,041
            
            
            
            142,552
            
            
            
            334,593Total
            
            
            3,582,132
            
            
            
            836,911
            
            
            
            4,419,043
            
            
            
            3,882,169
            
            
            
            995,053
            
            
            
            4,877,222
            
            
            
            4,213,333
            
            
            
            1,139,908
            
            
            
            5,353,241
            
            
            
            4,850,062
            
            
            
            1,145,044
            
            
            
            5,995,106
            
            
            
            6,104,858
            
            
            
            1,107,802
            
            
            
            7,212,660





40
 Table of Contents





The
following table sets forth the air traffic movement capacity of each of our
airports as of December 31, 2007.




Capacity
by Airport(1)




Airport
            
            Peak
      air traffic movements per hour
            
            
            Runway
      Capacity(2)Acapulco
            
            9
            
            
            40Chihuahua
            
            10
            
            
            40Ciudad
      Juárez
            
            10
            
            
            20Culiacán
            
            10
            
            
            20Durango
            
            4
            
            
            40Mazatlán
            
            10
            
            
            22Monterrey
            
            32
            
            
            38Reynosa
            
            5
            
            
            18San
      Luis Potosí
            
            6
            
            
            20Tampico
            
            9
            
            
            22Torreón
            
            9
            
            
            20Zacatecas
            
            4
            
            
            20Zihuatanejo
            
            8
            
            
            20





(1)
            2007
      figures.


(2)
            Air
      traffic movements per hour.




41
 Table of Contents





The
following table sets forth the air traffic movements for each of our airports
for the periods indicated.




Air
Traffic Movements by Airport(1)




Year
      ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Acapulco
            
            
            23,778
            
            
            
            23,288
            
            
            
            26,336
            
            
            
            28,015
            
            
            
            30,016Chihuahua
            
            
            36,205
            
            
            
            35,205
            
            
            
            36,614
            
            
            
            36,681
            
            
            
            23,567Ciudad
      Juárez
            
            
            16,069
            
            
            
            17,565
            
            
            
            20,424
            
            
            
            19,612
            
            
            
            61,675Culiacán
            
            
            48,048
            
            
            
            46,404
            
            
            
            50,648
            
            
            
            55,691
            
            
            
            37,992Durango
            
            
            14,021
            
            
            
            15,075
            
            
            
            15,599
            
            
            
            15,672
            
            
            
            17,112Mazatlán
            
            
            20,532
            
            
            
            21,984
            
            
            
            23,965
            
            
            
            24,046
            
            
            
            25,292Monterrey
            
            
            84,154
            
            
            
            95,027
            
            
            
            94,292
            
            
            
            101,736
            
            
            
            116,826Reynosa
            
            
            6,603
            
            
            
            6,386
            
            
            
            6,513
            
            
            
            7,877
            
            
            
            9,483San
      Luis Potosí
            
            
            19,222
            
            
            
            20,361
            
            
            
            22,102
            
            
            
            22,150
            
            
            
            23,696Tampico
            
            
            21,211
            
            
            
            19,512
            
            
            
            21,299
            
            
            
            22,730
            
            
            
            27,938Torreón
            
            
            20,673
            
            
            
            22,344
            
            
            
            21,523
            
            
            
            21,546
            
            
            
            25,101Zacatecas
            
            
            7,602
            
            
            
            7,942
            
            
            
            9,112
            
            
            
            10,381
            
            
            
            9,169Zihuatanejo
            
            
            15,086
            
            
            
            14,923
            
            
            
            13,899
            
            
            
            16,474
            
            
            
            16,190Total
            
            
            333,204
            
            
            
            346,016
            
            
            
            362,326
            
            
            
            382,611
            
            
            
            424,057





(1)
            Includes
      departures and landings.




42
 Table of Contents





The
following table sets forth the average number of passengers per air traffic
movement for each of our airports for the periods indicated:




Average
Passengers per Air Traffic Movements by Airport(1)




Year
      ended December 31,2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Acapulco
            
            
            32.6
            
            
            
            35.3
            
            
            
            33.4
            
            
            
            35.5
            
            
            
            35.2Chihuahua
            
            
            15.0
            
            
            
            15.8
            
            
            
            16.4
            
            
            
            18.1
            
            
            
            22.5Ciudad
      Juárez
            
            
            34.2
            
            
            
            32.5
            
            
            
            30.0
            
            
            
            35.6
            
            
            
            38.6Culiacán
            
            
            12.9
            
            
            
            14.5
            
            
            
            15.2
            
            
            
            15.2
            
            
            
            18.4Durango
            
            
            13.4
            
            
            
            14.0
            
            
            
            13.8
            
            
            
            15.1
            
            
            
            16.3Mazatlán
            
            
            34.3
            
            
            
            33.7
            
            
            
            33.4
            
            
            
            34.1
            
            
            
            35.8Monterrey
            
            
            44.0
            
            
            
            45.2
            
            
            
            49.4
            
            
            
            51.6
            
            
            
            56.1Reynosa
            
            
            22.7
            
            
            
            22.7
            
            
            
            22.5
            
            
            
            17.4
            
            
            
            20.2San
      Luis Potosí
            
            
            9.0
            
            
            
            9.6
            
            
            
            10.6
            
            
            
            10.3
            
            
            
            11.2Tampico
            
            
            15.6
            
            
            
            17.1
            
            
            
            18.9
            
            
            
            21.3
            
            
            
            20.8Torreón
            
            
            16.1
            
            
            
            16.2
            
            
            
            17.4
            
            
            
            19.0
            
            
            
            20.8Zacatecas
            
            
            30.3
            
            
            
            29.8
            
            
            
            32.6
            
            
            
            32.0
            
            
            
            30.2Zihuatanejo
            
            
            36.8
            
            
            
            40.2
            
            
            
            43.8
            
            
            
            41.4
            
            
            
            41.7Average
      of all airports
            
            
            26.6
            
            
            
            28.1
            
            
            
            29.3
            
            
            
            30.8
            
            
            
            33.5





(1)
            Includes
      total passengers divided by total air traffic
  movements.




Metropolitan
Area




Monterrey
International Airport




Monterrey
International Airport is our most important airport in terms of passenger
traffic (including both domestic and international passengers), air traffic
movements and contribution to revenues. According to the Mexican Bureau of Civil
Aviation, Monterrey International Airport was the fourth busiest airport in
Mexico in 2007, in terms of commercial aviation passenger traffic. In 2005, 2006
and 2007, it accounted for approximately 44.0%, 44.6% and 46.2%, respectively,
of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 4.7 million terminal passengers, 5.3 million terminal
passengers and 6.6 million terminal passengers, respectively, were served by
Monterrey International Airport.  Of the terminal passengers in 2005, 78.3%
were domestic and 21.7% were international passengers.  Of the
terminal passengers in 2006, 82.1% were domestic and 17.9% were international
passengers.  In 2007, 85.6% were domestic and 14.4% were international
passengers.  This airport serves primarily business travelers and is also a
hub for the transportation of goods.




A total
of 16 commercial airlines operate at the airport, the principal ones of which
are Aeroméxico, Aviacsa, Aeroméxico Connect (formerly Aerolitoral), VivaAerobus,
Mexicana and Interjet.  The airport is an important hub for Aviacsa, a
maintenance center for Aeroméxico Connect (formerly Aerolitoral) and the
headquarters of VivaAerobus. The principal non-Mexican airlines operating at the
airport are American and Continental.  Airlines operating at this airport
serve 53 direct destinations, of which 39 are domestic and 14 are
international.  Of these destinations, Mexico City, Toluca, Guadalajara,
Tijuana, Houston, Cancún, Dallas, Ciudad Juárez, Hermosillo, Mérida, Los
Angeles, Las Vegas, Chicago and Madrid are the principal direct
routes.  Since 2005, we have entered into agreements with five new
Mexican carriers for the operation of various additional routes to and from the
airport.  In addition, two such carriers, the principal one of which
is VivaAerobus, have elected to establish their operations headquarters at our
airport.  As a consequence of the amended bilateral aviation agreement
entered into between Mexico and the United States in December 2005, we
anticipate that additional U.S. carriers will commence service to and from the
airport in 2008.




43
 Table of Contents





Monterrey
International Airport is located approximately 21 kilometers (13 miles) from the
city of Monterrey, which has a population (including its suburbs) of
approximately 4.3 million.  Monterrey is Mexico’s third largest city in
terms of population and is one of Mexico’s most productive industrial
centers.  It is home to many of Mexico’s largest companies in a wide
variety of industries, as well as several major
universities.  Monterrey is the capital of the state of Nuevo León,
the third highest contributor to Mexico’s gross domestic product (GDP).  As
home to most of Nuevo León’s industry, Monterrey generates roughly 80% of the
state’s GDP.




Monterrey
International Airport operates 24 hours daily.  The airport currently has
two operating runways, one with a length of 3,000 meters (9,842 feet), and the
other with a length of 1,800 meters (5,905 feet).  The airport’s runway
capacity is 38 air traffic movements per hour.  The airport also has an
instrument landing system (ILS).  The airport occupies a total area of
821 hectares (88,371,705 square feet).  The airport’s facilities
include a commercial passenger terminal building with a total area of
approximately 28,966 square meters (311,787 square feet), of which 4,592 square
meters (49,429 square feet) is commercial space, a 29-position apron for
commercial aviation, a two-position apron for air freight, a ten-position apron
for general aviation, five taxiways, nine air bridges, an ample boarding lounge
for passengers making connections with other flights, and other boarding
lounges.  Currently, the airport has 11 gates for international or domestic
flights.




In
November 2006 we completed construction of a new temporary passenger terminal
building with a total area of approximately 4,800 square meters (51,668 square
feet) to handle additional traffic from the new airlines serving the
airport.  This new terminal, which commenced operation at year-end
2006, is mainly used by the low cost carrier VivaAerobus.  The
temporary terminal has four boarding gates and serves five aircraft positions.
In October 2007, in response to the demand of low cost carrier VivaAerobus, we
started an expansion for a temporary passenger terminal. In particular, this
expansion would lead to a development of a commercial area with 5 leased spaces
for duty free, snacks, and boutiques, an enlargement of the waiting lounge and
the construction of an additional baggage claim area with space for the
principal customs and migration authorities. The aggregate expansion would
amount to additional 2,794 square meters (or 30,075 square feet).




On June
4, 2007, construction began on Terminal B of the Monterrey International
Airport, which is expected to begin operations in the first quarter of
2009.  Terminal B is expected to have the capacity to service 2.0
million passengers per year.  The 21,000 square meter (226,049 square
feet) facility is expected have two levels plus a mezzanine, and include six
passenger jetways (four of which are completed), seven contact positions for
regional planes and four remote parking positions.  Our affiliate ICA
has been engaged to construct the foundation, procure, fabricate and assemble
the metallic structure and install the three-dimensional roofing structure for
the facility. The relevant agreement was approved, in accordance with our
Related Party Guidelines, by our Board of Directors upon the recommendation of
our Corporate Practices Committee, which concluded that the contract is on terms
that the Committee believes are arm’s length.




With an
area of 60,000 square meters (645,840 square feet) for freight operations,
Monterrey International Airport is the leading air-cargo terminal in northern
Mexico.  The airport offers one of Mexico’s most attractive air shipping
options, both as a final destination and as a logistical hub.  Its
current infrastructure servicing air cargo operations includes, among other
facilities, terminal warehouses (including a 4,000 square meter (43,056 square
foot) terminal warehouse occupied by United Parcel Service, Federal Express, and
since 2004, OMA Carga, which we operate directly), merchandise checkpoint
platforms (which can service nine trailers simultaneously), and parking for 359
cars and 32 trailers.  Roadways suitable for trailers and cars that
serve the terminal and x-ray facilities are available.




44
 Table of Contents





In 2004,
we completed a remodeling of the Monterrey International Airport Terminal
A.  Among the upgraded facilities introduced to the public were
automatic check-in kiosks, internet access points, new VIP lounges, and lounge
areas for passengers awaiting connecting or regional flights.




Within
our plans for future expansion of the Monterrey International Airport, on
February and June 2007 and on March 2008 we completed the acquisition of land
surrounding the airport for an aggregate surface of 835.78 hectares (89,962,610
square feet) at an aggregate price of Ps. 1,056,100,000 (US$
126,660,000).




As part
of our strategy of offering incentives to carriers to encourage them to operate
new routes and take other measures expected to increase passenger traffic at our
airports, on November 22, 2006, we delivered a notice to the Mexican National
Air Transportation Board setting forth certain criteria that carriers operating
at the Monterrey International Airport must meet in order to receive a discount
equal to Ps.75.00 per terminal passenger on passenger charges (representing
approximately a 40% discount from our usual passenger charge).




VivaAerobus
is the only airline that took advantage of these incentives. VivaAerobus has
begun operating its maintenance facilities at the Monterrey International
Airport and has also established its corporate and operational headquarters at
the Monterrey International Airport.  In December 2006, VivaAerobus
commenced operations with two aircrafts operating nine routes. By December 2007,
VivaAerobus had 18 destinations with five aircrafts operating in their fleet and
serving 10 of our airports from Monterrey. VivaAerobus received its sixth
aircraft in March 2008. By the end of 2008 VivaAerobus expects to have a
nine-plane fleet and an increment in its routes. The principal routes served by
VivaAerobus at the Monterrey International Airport are Cancún, Veracruz, Ciudad
Juárez, Chihuahua, Culiacán and Mérida. VivaAerobus has also announced the
opening of the first international route to Austin, Texas, which it expects to
commence operations in the summer of 2008.




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 to amend
Aeropuerto del Norte’s concession to allow it to serve commercial aviation
operations.  We understand that Aeropuerto del Norte is not capable of
accommodating commercial passenger traffic with its current infrastructure. 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.




Tourist
Destinations




Acapulco
International Airport




Acapulco
International Airport is our third most important airport in terms of passenger
traffic, air traffic movements and contribution to revenues.  According to
the Mexican Bureau of Civil Aviation, Acapulco International Airport was the
thirteenth busiest airport in Mexico in 2007, in terms of commercial aviation
passenger traffic.  In 2005, 2006 and 2007, it accounted for approximately
8.3%, 8.4% and 7.4%, respectively, of our terminal passenger
traffic.




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In 2005,
2006 and 2007, a total of 880,190 terminal passengers, 994,286 terminal
passengers and 1,057,347 terminal passengers, respectively, were served by
Acapulco International Airport.  Of the terminal passengers in 2005, 63.1%
were domestic and 36.9% were international passengers.  Of the
terminal passengers in 2006, 64.2% were domestic and 35.8% were international
passengers.  In 2007, 70.0% were domestic and 30.0% were international
passengers.  Because the airport’s passengers are predominantly
tourists, the airport’s passenger traffic and results of operations are highly
seasonal and affected by Mexican and international economic
conditions.




A total
of twelve commercial airlines operate at the airport, the principal ones of
which are Mexicana, Aeroméxico, Interjet, Aviacsa and
VivaAerobus.  The principal non-Mexican airlines operating at the
airport are American and Continental.  Airlines operating at this
airport serve 11 direct destinations.  Of these destinations, Mexico
City, Toluca, Houston, Monterrey and Tijuana are the most popular.  In
2005 we entered into agreements with two new low-cost Mexican carriers for the
operation of two additional routes: Acapulco-Toluca and
Puebla-Acapulco-Tijuana.  In addition, VivaAerobus began operating a
Monterrey-Acapulco route in December 2006, and other low-cost carriers have
expressed an interest in commencing operations at this airport.




Acapulco
International Airport is located approximately 15 kilometers (9 miles) from the
city of Acapulco, which has a population (including its suburbs) of
approximately 915,000.  Acapulco is Mexico’s twelfth largest city in terms
of population and is one of Mexico’s most recognized tourist destinations, of
particular importance as a port of embarkation and disembarkation for cruise
ships.  We believe that these cruise ship passengers could represent a
significant portion of the airport’s terminal passengers.




Acapulco
International Airport operates 24 hours daily.  The airport has two
operating runways and 6 taxiways.  The principal runway has a length
of 3,300 meters (10,827 feet) and the auxiliary runway has a length of 1,700
meters (5,577 feet).  The apron servicing commercial aviation
accommodates 15 airplanes.  Two of these spaces accommodate a B-737
model or equivalent, another two accommodate a B-747-400 model or equivalent,
and the remaining eleven accommodate a B-757 model or
equivalent.  Three of the 15 spaces have mechanical boarding bridges
and 13 of the spaces have oil pumps.  The apron servicing general
aviation accommodates 24 aircraft.




The
runway capacity at Acapulco International airport is 40 air traffic movements
per hour.  The airport also has an instrument landing system (ILS),
which provides precise guidance to assist aircraft during
landing.  The airport occupies a total area of 448.7 hectares
(48,297,666 square feet) and has two buildings, one for commercial aviation and
the other one for executive or general aviation.  The building for
commercial aviation has four floors and occupies a total area of 19,943 square
meters (214,666 square feet), of which 1,732 square meters (18,646 square feet)
is commercial space.




Due to
its technical and geographic characteristics, Acapulco International Airport is
the primary alternate airport of Mexico City.  The length of the
airport’s runway as well as its elevation and average temperature makes it
possible to operate airplanes at their maximum passenger, freight, and fuel
capacities.  There is currently no airport in closer proximity to the
airport of Mexico City with better air traffic conditions than those of the
Acapulco International Airport.




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Mazatlán
International Airport




Mazatlán
International Airport is our fifth most important airport in terms of passenger
traffic.  According to the Mexican Bureau of Civil Aviation, Mazatlán
International Airport was the sixteenthbusiest airport inMexicoin 2007, in terms of commercial aviation passenger
traffic.  In 2005, 2006 and 2007, it accounted for approximately 7.5%,
7.0% and 6.4%,
respectively, of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 799,801 terminal passengers, 819,214 terminal
passengers and 905,010 terminal passengers, respectively, were served by
Mazatlán International Airport.  Of the terminal passengers in 2005, 52.4%
were domestic and 47.6% were international passengers.  Of the
terminal passengers in 2006, 44.5% were domestic and 55.5% were international
passengers.  In 2007, 50.4% were domestic and 49.6% were international
passengers.  The airport’s passengers are predominantly domestic tourists
who come from Mexico City, Durango and La Paz, among other cities, and
international tourists who come primarily from the United States and Canada.
Because the airport’s passengers are predominantly tourists, the airport’s
passenger traffic and results of operations are highly seasonal and affected by
Mexican and international economic conditions.




A total
of twelve commercial airlines operate at the airport, the principal Mexican ones
of which are Mexicana, Aeroméxico, VivaAerobus, Aerocalifornia, Alma and
Magnicharter.  The principal non-Mexican airlines operating at the airport
are Alaska Airlines, America West and Continental.  Airlines operating at
this airport serve 14 direct destinations.  Of these destinations, Mexico
City, Guadalajara, Los Cabos, La Paz, Durango, Torreón, Tijuana and Los Mochis
are the national routes.  The international routes are Denver, Phoenix, Los
Angeles, Houston, Minneapolis and Salt Lake City, under the amended bilateral
aviation agreement entered into between Mexico and the United States in December
2005.




Mazatlán
International Airport is located approximately 18 kilometers (11 miles) from the
city of Mazatlán, which has a population of approximately 600,000. 
Mazatlán is the principal tourist destination of the Sinaloa region, with about
9,600 hotel rooms, according to the Mexican Ministry of Tourism.  Mazatlán
offers attractive beaches and is also a major producer of shrimp, sardines and
tuna.




Mazatlán
International Airport operates 24 hours daily.  Its runway capacity is 22
air traffic movements per hour.  The airport occupies approximately 467
hectares (50,267,461 square feet) of land.  The airport’s facilities
include a terminal building with a total area of 16,300 square meters (175,453
square feet), of which 1,378 square meters (14,835 square feet) is commercial
space.  The airport has a 68,980-square-meter (742,500-square-foot)
commercial aviation apron with ten positions and a 33,515-square-meter
(360,752-square-foot) general aviation apron with 60 positions.  In
addition, the airport has four air bridges, multiple boarding lounges, and a
public parking facility that accommodates 154 vehicles.  The airport’s
runway is 2,700 meters (8,858 feet) long, with four taxiways that connect the
commercial and general aviation platforms.




Mazatlán
International Airport has been extensively remodeled and upgraded since 2000 in
order to improve its operational efficiency and appearance.  Its platform
for general aviation was completely renovated in 2003 and its runway system was
completely replaced in 2001.  The terminal building was also remodeled to
include, among other amenities, tourist information services and new charter
flight check-in counters.  The remodeling project was completed in
2003. Recent improvements to the airport include the separation of the arrival
and departure areas, general improvements to the international boarding area and
a helicopter-landing platform.




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Zihuatanejo
International Airport




Zihuatanejo
International Airport is our seventh most important airport in terms of
passenger traffic. According to the Mexican Bureau of Civil Aviation,
Zihuatanejo International Airport was the twentieth busiest airport in Mexico in
2007, in terms of commercial aviation passenger traffic.  In 2005, 2006 and
2007, it accounted for approximately 5.7%, 5.8% and 4.7%, respectively, of our
terminal passenger traffic.




In 2005,
2006 and 2007, a total of 608,897 terminal passengers,
681,581 terminal passengers and 674,612 terminal passengers, respectively, were
served by Zihuatanejo International Airport.  Of the terminal passengers in
2005, 51.5% were domestic and 48.5% were international passengers.  Of
the terminal passengers in 2006, 51.7% were domestic and 48.3%were international
passengers.  In 2007, 54.6% were domestic and 45.4% were
international.  Because the airport’s passengers are predominantly
tourists, the airport’s passenger traffic and results of operations are seasonal
and are affected by Mexican economic conditions.




A total
of fifteen commercial airlines operate at the airport, the principal ones of
which are Aeroméxico, Alaska Airlines, Interjet and Click Mexicana.  Other
non-Mexican airlines operating at the airport include Alaska Airlines, Airline
Charter Enterprises, Continental, and Frontier Airlines. VivaAerobus and Alma
began to service to Zihuatanejo in May and July of 2007, respectively.
 Airlines operating at this airport serve 11 destinations.  Of these
destinations, Mexico City, Toluca, Dallas, Houston, Phoenix and Los Angeles are
the principal direct routes.   In 2005 we entered into agreements
with three new low-cost Mexican carriers for the operation of four additional
routes to and from the airport and the United States under the amended bilateral
aviation agreement entered into between Mexico and the United States in December
2005.




Zihuatanejo
International Airport is located approximately 12 kilometers (7 miles) from the
city of Zihuatanejo.  Situated in the state of Guerrero and with a
population of approximately 100,000 people, the city of Zihuatanejo is one of
Mexico’s most attractive tourist destinations, with approximately 6,004 hotel
rooms according to Mexican Ministry of Tourism, a marina, world-class golf
courses and a growing residential real estate market.




Zihuatanejo
International Airport operates 14 hours daily, from 7:00 a.m. to
9:00 p.m., with an extended schedule from 5:00 a.m. to 12:00
a.m.  The airport has one runway, which is 2,500 meters (8,202 feet)
long with a runway capacity of 20 air traffic movements per hour.  The
airport’s facilities include a terminal building encompassing an area of 6,905
square meters (74,325 square feet), including 983 square meters (10,583 square
feet) of commercial space.  It has a five-position commercial aviation
apron, a 30-position general aviation apron and two taxiways.  The
airport has four gates for international or domestic flights.




The
quality of services offered at the Zihuatanejo International Airport has
improved as a result of the recent the expansion and renovation of the baggage
claim, passenger waiting and commercial areas.




Regional
Cities




Chihuahua
International Airport




Chihuahua
International Airport is our sixth most important airport in terms of passenger
traffic, air traffic movements and contribution to
revenues.  According to the Mexican Bureau of Civil Aviation,
Chihuahua International Airport was the eighteenth busiest airport in Mexico in
2007, in terms of commercial aviation passenger traffic.  In 2005, 2006 and
2007, it accounted for approximately 5.7%, 5.6% and 6.0%, respectively, of our
terminal passenger traffic.




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In 2005,
2006 and 2007, a total of 599,977 terminal passengers, 664,392 terminal
passengers and 854,757 terminal passengers, respectively, were served by
Chihuahua International Airport.  Of the terminal passengers in 2005, 88.9%
were domestic and 11.1% were international passengers.  Of the
terminal passengers in 2006, 88.6% were domestic and 11.4% were international
passengers.  In 2007, 90.4% were domestic and 9.6% were
international.  Because the airport’s passengers are predominantly
domestic, the airport’s passenger traffic and results of operations are affected
by Mexican economic conditions.




A total
of nine commercial airlines operate at the airport, of which the principal ones
are Aeroméxico, Aeroméxico Connect (formerly Aerolitoral), VivaAerobus and
Interjet.  Airlines operating at this airport serve 11 destinations.
The principal routes are Mexico City, Monterrey, Toluca, Houston and Dallas. On
March 26, 2007, Mexican regulatory authorities announced an immediate
suspension of Azteca, which accounted for approximately 7.1% of our revenue at
the airport in 2006, due to safety concerns and financial problems. As of May,
2008, Azteca had not resumed its operation. As a result of the suspension,
Azteca accounted for only 0.4% of our total revenue at the airport in 2007.




Chihuahua
International Airport is located approximately 18 kilometers (11 miles) from the
City of Chihuahua, which is the capital of the state of
Chihuahua.  The city’s population is approximately
748,518.  The state of Chihuahua ranks fifth largest in terms of
GDP.  Chihuahua’s close proximity to the United States and its highly
developed maquiladora
industry account for the majority the airport’s incoming and outgoing
traffic.




Chihuahua
International Airport operates 14 hours daily, from 7:00 a.m. to 9:00 p.m.
(local time), with an extended schedule from 5:00 a.m. to 12:00
a.m.  The airport has two runways, with lengths of 2,620 meters (8,596
feet), and 1,100 meters (3,609 feet), respectively.  The runway system has
a capacity of 40 air traffic movements per hour.  The airport occupies a
total area of approximately 921.4 hectares (99,178,670 square
feet).  The airport’s facilities include a terminal building with a
total area of approximately 6,292 square meters (67,724 square feet), including
807 square meters (8,686 square feet) of commercial space, a four-position apron
for commercial aviation, a 34-position apron for general aviation, four
taxiways, a two-position apron for air freight and one air bridge.  The
airport has four gates for international or domestic flights.




To
accommodate growing demand for air freight services and an expanding local
economy, we recently completed construction of a cargo area, which includes a
warehouse, a customs office, x-ray zones, storage areas and packaging
offices.  We currently operate all international cargo operations at
this airport directly.




Culiacán
International Airport




Culiacán
International Airport is our second most important airport in terms of passenger
traffic, air traffic movements and contribution to
revenues.  According to the Mexican Bureau for Civil Aviation,
Culiacán International Airport was the twelfth busiest airport in Mexico in
2007, in terms of commercial aviation passenger traffic.  In 2005, 2006 and
2007, it accounted for approximately 7.3%, 7.2% and 8.0%, respectively, of our
terminal passenger traffic.




In 2005,
2006 and 2007, a total of 769,118 terminal passengers, 843,989 terminal
passengers and 1,137,571 terminal passengers, respectively, were served by
Culiacán International Airport.  Of the terminal passengers in 2005, 95.2%
were domestic and 4.8% were international passengers.  Of the terminal
passengers in 2006, 96.9% were domestic and 3.1% were international
passengers.  In 2007, 96.5% were domestic and 3.5% were international.
 Because the airport’s passengers are predominantly domestic, the airport’s
passenger traffic and results of operations are highly affected by Mexican
economic conditions.




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The
airport’s terminal passenger traffic consists predominantly of commercial
aviation.  In 2005, 2006 and 2007, commercial aviation accounted for
approximately 92.2%, 92.9% and 94.9%,  respectively, and general
aviation accounted for approximately 7.8%, 7.1% and 5.1%, respectively, of the
airport’s terminal passenger traffic.




A total
of nine commercial airlines regularly operate at the airport, the principal ones
of which are Aeroméxico, Aeroméxico Connect (formerly Aerolitoral),
Aerocalifornia, Aviacsa, Delta, Mexicana, Avolar, Volaris and
VivaAerobus.  In April 2006, Mexican regulatory authorities suspended
the operations of Aerocalifornia, due to safety concerns relating to the
carrier’s fleet of aircraft.  Aerocalifornia resumed limited
operations in August 2006.  To date, Aerocalifornia has recovered its
domestic market share that it lost as a result of the suspension of its
operations in 2006. Aerocalifornia, however, has not yet recovered its
international market share, and in 2007 it represented only 3.6% of our total
terminal passenger traffic. On April 2007, the Mexican Bureau of Civil Aviation
grounded the fleet of Azteca, which operated regularly in the Culiacán
International Airport. Since its suspension, Azteca’s passenger portion has been
absorbed by other airlines, mainly Volaris and VivaAerobus in the segment to
Tijuana, and Aerocalifornia on the route to Guadalajara.




Airlines
operating at this airport serve 9 direct destinations, which are Tijuana, Mexico
City, Monterrey, Guadalajara, Toluca, Mexicali, Hermosillo, La Paz and Los
Angeles.  Delta began servicing routes to the airport in January
2007.




Culiacán
International Airport is located approximately 12 kilometers (7 miles) from the
city of Culiacán, whose population is approximately
837,000.   Culiacán is the capital of the state of Sinaloa, an
important producer of beef and agricultural products.  The potential
for growth of exports to the United States could generate an increase cargo
operations at this airport, though we can offer no assurances that such growth
will in fact occur or that cargo operations would increase as a result
thereof.




Although
Culiacán International Airport operates 16 hours daily, from 6:00 a.m. to 10:00
p.m. (local time), it frequently extends its hours of operation until 11:30 p.m.
to service cargo operations.  Its runway capacity is 20 air traffic
movements per hour.  The airport occupies a total area of 289.9 hectares
(31,204,576 square feet) and has two air bridges.




Within
the development of the Culiacán International Airport, on May 2008 we completed
the acquisition of land surrounding the airport for an aggregate surface of 32.5
hectares (3,498,270 square feet) at an aggregate price of Ps. 32.5 million (US$
3.1 million).




In 2002,
in order to improve efficiency, we completed construction of a new 8,046-square
meter (86,607-square foot) terminal that includes 1,138 square meters (12,247
square feet) of commercial space, a boarding lounge, 15 commercial
establishments, a 238-space public parking area, and a 73-space parking area for
employees and authorities, a five-position apron for commercial aviation and two
air bridges.




Culiacán
International Airport also includes military installations.  The
presence of these installations does not currently limit the airport’s runway
capacity or otherwise affect its civil aviation operations, and we have no
reason to anticipate that it will do so in the future.




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Durango
International Airport




In each
of 2005, 2006 and 2007, Durango International Airport accounted for
approximately 2.0% of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 214,920 terminal passengers, 236,200 terminal
passengers and 279,310 terminal passengers, respectively, were served by Durango
International Airport.  Of the terminal passengers in 2005, 80.5% were
domestic and 19.5% were international passengers.  Of the terminal
passengers in 2006, 81.3% were domestic and 18.7% were international
passengers.  In 2007, 89.0% were domestic and 11.0% were international.
 Because the airport’s passengers are predominantly domestic, the airport’s
passenger traffic and results of operations are affected by Mexican economic
conditions.




A total
of five commercial airlines operate at the airport, which are Aeroméxico,
Aeroméxico Connect (formerly Aerolitoral), Avolar, Aerocalifornia and
Continental.  In April 2006, Mexican regulatory authorities suspended the
operations of Aerocalifornia, due to safety concerns relating to the carrier’s
fleet of aircraft.  Aerocalifornia resumed limited operations in
August 2006. Aerocalifornia recovered a portion of the market share that it lost
as a result of the suspension of its operations in 2006. The operations of
Aerocalifornia on the international routes were absorbed by Avolar, Aeroméxico
and Continental.  As soon as Aerocalifornia resumed its operations in
September 2006, it resumed its national flights from the airport.




Airlines
operating at this airport service 8 direct destinations.  Of these,
Chicago, Mexico City, Tijuana, Houston, and Los Angeles are the most important
routes.




Durango
International Airport is located approximately 16 kilometers (10 miles) from the
City of Durango, which has a population of approximately 527,000
people.  The state of Durango is rich in natural resources and is
Mexico’s leading producer of wood, gold and bentonite, and the second leading
producer of silver.




Durango
International Airport operates 14 hours daily, from 6:00 a.m. to 8:00 p.m.
(local time).  The airport’s runway is 2,900 meters (9,514 feet)
long.  The runway has five taxiways and a capacity of 40 air traffic
movements per hour.




The
airport’s total area is 552.2 hectares (59,438,313 square feet).  Its
facilities include a 4,000 square meters (43,056 square feet) terminal building
with 178 square meters (1,921 square feet) of commercial space.  It
has a three-position commercial aviation apron, a 26-position general aviation
apron, and a 140-space public parking area.  The airport has two gates
for international or domestic flights.




Recent
improvements to the airport include the improvement of the boarding lounge for
international and domestic flights, the expansion of the concourse, the
expansion of the check-in area, improvement of commercial spaces, the expansion
of the public parking lots and the separation of the arrival and departure
areas.




San
Luis Potosí International Airport




In 2005,
2006 and 2007, San Luis Potosí International Airport accounted for approximately
2.2%, 1.9% and 1.9%, respectively, of our terminal passenger
traffic.




In 2005,
2006 and 2007, a total of 233,610 terminal passengers, 227,102 terminal
passengers and 264,349 terminal passengers, respectively, were served by San
Luis Potosí International Airport.  Of the terminal passengers in 2005,
70.0% were domestic and 30.0% were international passengers.  Of the
terminal passengers in 2006, 66.4% were domestic and 33.6% were international
passengers.  In 2007, 69.4% were domestic and 30.6% were
international.  Because the airport’s passengers are predominantly
domestic, the airport’s passenger traffic and results of operations are affected
by Mexican economic conditions.







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A total
of five commercial airlines operate at the airport, which are Aeroméxico Connect
(formerly Aerolitoral), Click Mexicana, Aeromar, Continental and American
Eagle.  Airlines operating at this airport serve five destinations. 
VivaAerobus began to service to the airport on January 2007.  Of these
destinations, the airport’s most important direct routes are Mexico City,
Houston, Dallas and Monterrey.




San Luis
Potosí International Airport is located approximately 15 kilometers (9 miles)
from the city of San Luis Potosí, which is the capital of the state of San Luis
Potosí and has a population of approximately 730,950.  The city of San
Luis Potosí is equidistant (300 kilometers) from three of the most important
cities in Mexico (Mexico City, Guadalajara and Monterrey).  It is
located within an area that represents 80%, in the aggregate, of Mexico’s total
economic consumption, making it a natural distribution center for packing and
shipping companies.  We are developing efforts to take advantage of
this potential for cargo activities. For example, in 2005, in collaboration with
Estafeta Mexicana S.A. de C.V., a major Mexican airfreight company, we completed
the construction of an international cargo facility at this airport, which
Estafeta Mexicana now occupies.  Estafeta Mexicana distributes
approximately 100,000 shipments to over 2,500 destinations daily, has a network
of 415 offices and several concessionaires, operates Boeing 737-300F aircrafts
flying daily to 12 domestic and 2 international destinations and maintains 1,500
vehicles for urban and interstate transportation.




The
airport operates 24 hours daily and can serve as an alternate airport for Mexico
City.  The airport has two runways and main runway capacity of 20 air
traffic movements per hour.  The principal runway is 3,000 meters
(9,843 feet) long and the secondary runway is 1,000 meters (3,281 feet)
long.  With a total area of 527.7 hectares (56,801,155 square feet),
the airport’s facilities include a terminal building with approximately 2,613
square meters (28,126 square feet), including 293 square meters (3,152 square
feet) of commercial space, a three-position platform for commercial aviation, a
26-position platform for general aviation, three taxiways and a boarding
lounge.




The
terminal building was remodeled in 2003.




Tampico
International Airport




According
to the Mexican Bureau of Civil Aviation, Tampico International Airport was the
twenty-fourth busiest airport in Mexico in 2007, in terms of commercial aviation
passenger traffic.  In 2005, 2006 and 2007, it accounted for
approximately 3.8%, 4.1% and 4.1%, respectively, of our terminal passenger
traffic.




In 2005,
2006 and 2007, a total of 402,122 terminal passengers, 485,125 terminal
passengers and 580,117 terminal passengers, respectively, were served by Tampico
International Airport.  Of the terminal passengers in 2005, 88.7% were
domestic and 11.3% were international passengers.  Of the terminal
passengers in 2006, 89.1% were domestic and10.9% were international
passengers.  In 2007, 91.7% were domestic and8.3% were
international.  Because the airport’s passengers are predominantly
domestic, the airport’s passenger traffic and results of operations are affected
by Mexican economic conditions.




Seven
commercial airlines operate at the airport, the principal ones of which are
Mexicana, Aeroméxico Connect (formerly Aerolitoral), Aviacsa, Interjet,
Continental, VivaAerobus and Alma.  Airlines operating at this airport
serve eleven destinations.  Of these destinations, the airport’s principal
routes are Mexico City, Toluca, Monterrey, Houston, Veracruz, Guadalajara,
Dallas, and Reynosa.




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Tampico
International Airport serves the industrial zone of Tampico, Ciudad Madero and
Altamira, which have a combined population of approximately 1.0 million. 
This industrial zone is home to companies in the petroleum and chemical
industries.




Tampico
International Airport operates daily from 6:30 a.m. to 9:30 p.m.  The
airport has two runways in operation.  The principal runway is 2,550
meters (8,366 feet) long with a capacity of 22 air traffic movements per hour
and includes an instrument landing system (ILS), which provides precise guidance
to assist aircraft during landing.  The secondary runway is 1,300
meters (4,265 feet) in length.




The
airport’s total area is 391.7 hectares (42,162,237 square feet).  Its
facilities include a 6,250 square meter (67,275 square feet) terminal building,
of which 538 square meters (5,789 square feet) are commercial
space.  It has a four-position apron for commercial aviation, a
36-position apron for general aviation, two taxiways and a boarding
lounge.




The
Tampico International Airport terminal was recently remodeled to include
additional commercial space and an exhibition area.




Torreón
International Airport




In 2005,
2006 and 2007, Torreón International Airport accounted for approximately 3.5%,
3.5% and 3.7%, respectively, of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 374,559 terminal passengers, 410,124 terminal
passengers and 522,295 terminal passengers, respectively, were served by Torreón
International Airport. Of the terminal passengers in 2005, 82.8% were domestic
and 17.2% were international passengers.  Of the terminal passengers
in 2006, 82.0% were domestic and 18% were international passengers.  In
2007, 84.5% were domestic and 15.5% were international.  Because the
airport’s passengers are predominantly domestic, the airport’s passenger traffic
and results of operations are affected by Mexican economic
conditions.




A total
of eight commercial airlines operate at the airport, serving 9
destinations.  Of these destinations, the airport’s principal direct
routes are Ciudad Juárez, Los Angeles, Mexico City, Guadalajara, Monterrey and
Houston.




The
principal commercial airlines are Aeroméxico, Aeroméxico Connect (formerly
Aerolitoral), Click Mexicana, Alma, Continental and American
Airlines.  VivaAerobus and Delta also recently established service to
the airport. In April 2006, Mexican regulatory authorities suspended the
operations of Aerocalifornia, due to safety concerns relating to the carrier’s
fleet of aircraft.  Although Aerocalifornia resumed limited operations
in August 2006, as of May 2008, Aerocalifornia has not recommenced service at
the airport. We believe that Click Mexicana, which established routes to and
from this airport in June 2006 similar to those historically served by
Aerocalifornia, has absorbed a substantial portion of the passenger traffic
previously served by Aerocalifornia.




Torreón
International Airport is located in the city of Torreón, which is part of the La
Laguna region, which is Mexico’s top dairy-producing region and an important
industrial and commercial region, with nearly 300 maquiladoras.  Approximately
530,000 people live in the city of Torreón and about one million live in La
Laguna region.




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Torreón
International Airport operates 14 hours daily, from 7:00 a.m. to 9:00 p.m.
(local time).  The airport has two runways.  The principal runway
measures 2,750 meters (9,022 feet) in length and the secondary runway measures
1,740 meters (5,709 feet) in length. The airport has a runway capacity of 20 air
traffic movements per hour.




The
airport’s total area is 460 hectares (49,513,987 square feet).  Its
facilities include a terminal building, a seven-position apron for commercial
aviation, a 14-position apron for general aviation, two taxiways, two boarding
lounges, several VIP lounges, one air bridge and one boarding bridge. The
terminal building occupies approximately 5,275 square meters (56,780 square
feet), including 498 square meters (5,361 square feet) of commercial
space.




Zacatecas
International Airport




In 2005,
2006 and 2007, Zacatecas International Airport accounted for approximately 2.8%,
2.8% and 2.0%, respectively, of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 297,137 terminal passengers, 332,224 terminal
passengers and 277,339 terminal passengers, respectively, were served by
Zacatecas International Airport.  Of the terminal passengers in 2005,
66.6% were domestic and 33.4% were international passengers.  Of the
terminal passengers in 2006, 70.9% were domestic and 29.1% were international
passengers. In 2007, 66.8% were domestic and 33.2% were
international.  Because the airport’s passengers are predominantly
domestic, the airport’s passenger traffic and results of operations are affected
by Mexican economic conditions.




Currently,
the three Mexican commercial airlines that operate at the airport are Mexicana,
Avolar and Transportes Aeromar, which serve seven destinations. Delta also
established service to the airport on March 8, 2007.  The airport’s
principal national routes are Tijuana, Bajío and connecting flights via Mexico
City.  Airlines serving the airport recently added service to the
United States cities of Chicago, Los Angeles and Oakland.  On
March 26, 2007, Mexican regulatory authorities announced an immediate
suspension of Azteca, which accounted for approximately 13.7% of our revenue at
the airport in 2006, due to safety concerns and financial
problems.  As of May 2008 Azteca has not resumed operations. As a
result of the suspension, Azteca accounted for only 2.9% of our revenues at the
airport for 2007. We cannot guarantee whether or not Azteca will resume
operations at the end of the suspension period or whether the suspension will
have a material effect on our results from operations for 2008.




Located
in the center of Mexico, the state of Zacatecas (of which the city of Zacatecas
is the capital) is Mexico’s leading silver producer and second leading producer
of lead, copper, zinc and gold.  The state of Zacatecas has a
population of approximately 1.4 million.




The
airport currently operates 24 hours daily.The airport has one runway,
which measures 3,000 meters (9,843 feet) in length.  The runway
capacity is 20 air traffic movements per hour.




The
airport’s total area is 218 hectares (23,465,324 square feet).  The
terminal building is 3,700 square meters (39,827 square feet), of which 192
square meters (2,068 square feet) is commercial area.  It has a
three-position apron for commercial aviation, a 12-position apron for general
aviation, a boarding lounge, and a parking lot with 128 parking
spaces.




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Border
Cities




Ciudad
Juárez International Airport




In 2005,
2006 and 2007, Ciudad Juárez International Airport accounted for approximately
5.8%, 5.9% and 6.4%, respectively, of our terminal passenger
traffic.




In 2005,
2006 and 2007, a total of 611,942 terminal passengers, 698,765 terminal
passengers and 908,838 terminal passengers, respectively, were served by Ciudad
Juárez International Airport.  Of the terminal passengers in 2005, 99.7%
were domestic.  Of the terminal passengers in 2006, 99.8% were
domestic. In 2007, 99.8% were domestic.




Eight
commercial airlines operate at the airport, serving eight destinations. 
The airport’s principal direct routes are Mexico City, Torreón, Monterrey,
Guadalajara, Chihuahua, Toluca and Mazatlán.




The
airport is located in the city of Ciudad Juárez, which is near the U.S. border
and has a population of approximately 1.3 million people.  The city is
a major center of the maquiladora industry, with
about 400 automobile, electric and textile plants.  Countries such as
Singapore, Germany, France, Taiwan and the United States, as well as
international companies such as Delphi, Lear, Toshiba, Johnson & Johnson,
Ford and Motorola, have made investments in Ciudad Juárez.  In
addition, because Ciudad Juárez is a popular entry point to the United States
many of the airport’s passengers consist of Mexican migrant workers traveling to
Ciudad Juárez in order to seek work in the United
States.  Accordingly, although the airport’s passengers are
predominantly domestic, its passenger traffic and results of operations are
affected by economic conditions in both Mexico and the United
States.




Ciudad
Juárez International Airport operates 14 hours daily, from 7:00 a.m. to 9:00
p.m. (local time).  The airport has two runways.  The
principal runway measures 2,700 meters (8,858 feet) in length with a capacity of
20 air traffic movements per hour, and the secondary runway measures 1,750
meters (5,741 feet) in length.




The
airport’s total area is 921.4 hectares (99,178,670 square feet).  Its
facilities include a terminal building of 4,275 square meters (46,016 square
feet), consisting of 479 square meters (5,157 square feet) of commercial space,
a boarding lounge and two air bridges.  The airport has a
seven-position commercial aviation apron, a nine-position general aviation
apron, a one-position freight services apron and three taxiways.  The
airport has four gates for international and domestic flights.




A new
international cargo terminal was completed in 2005, which we anticipate will
allow the airport to grow as a center for the shipment and distribution of goods
in Mexico’s northern region. The new terminal includes a cargo apron, a
warehouse, customs offices and public parking facilities.




Reynosa
International Airport




In 2005,
2006 and 2007, Reynosa International Airport accounted for approximately 1.4%,
1.2% and 1.3%, respectively, of our terminal passenger traffic.




In 2005,
2006 and 2007, a total of 146,250 terminal passengers, 136,991 terminal
passengers and 191,326 terminal passengers, respectively, were served by Reynosa
International Airport.  Of the terminal passengers in 2005 and 2006, 99.9%
were domestic. Of the passengers in 2007, 99.7% were domestic. Because the
airport’s passengers are predominantly domestic, the airport’s passenger traffic
and results of operations are affected by Mexican economic
conditions.




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Five
commercial airlines operate at the airport, serving Mexico City, Poza Rica,
Villahermosa, Tampico, Guadalajara and Toluca.




The
airport is located in Reynosa, a city of 800,000 inhabitants bordering the
United States near the Gulf of Mexico.  The city is a major maquiladora center,
particularly for the electricity sector.  We believe that Reynosa’s
robust industrial economic activity and proximity to the United States create
the potential for growth in air cargo services at the Reynosa International
Airport, and we recently completed the construction of a new international cargo
facility at the airport. In addition, because Reynosa is a popular entry point
to the United States many of the airport’s passengers consist of Mexican migrant
workers traveling to Reynosa in order to seek work in the United
States.  Accordingly, although the airport’s passengers are
predominantly domestic, its passenger traffic and results of operations are
affected by economic conditions in both Mexico and the United
States.




Reynosa
International Airport operates 12 hours daily, from 7:00 a.m. to 7:00 p.m.
(local time).  The airport has one runway, which is 1,900 meters
(6,234 feet) in length and has a runway capacity of 18 air traffic movements per
hour.




The
airport’s total area is approximately 418 hectares (44,993,146 square
feet).  The terminal building is 1,212 square meters (13,046 square
feet), which includes 120 square meters (1,290 square feet) of commercial
area.  It has a three-position apron for commercial aviation, a
15-position apron for general aviation, two taxiways, two private hangars, a
boarding lounge, and a public parking area with 144 spaces.




Principal
Customers




Principal
Aeronautical Services Customers




Airline
Customers




As of
December 31, 2007, over 20 international airlines and 14 Mexican airlines
operated flights at our 13 airports.  Aeroméxico and Aviacsa operate
the most flights at our airports, followed by VivaAerobus, Mexicana and
Aeroméxico Connect (formerly Aerolitoral).  In 2007, revenues from
Aeroméxico and its affiliates totaled Ps.379.0 million (U.S.$ 34.7 million),
while revenues from Mexicana and its affiliates were Ps.212.6 million (U.S.$
19.5 million) and revenues from Aviacsa were Ps.142.9 million (U.S.$ 13.1
million), representing 25.0%, 14.0% and 9.4%, respectively, of our aeronautical
revenues from airline customers for 2007.  These revenues were earned
from passenger charges, landing charges, aircraft parking charges and the
leasing of space to these airlines.




Historically,
traditional carriers such as Aeroméxico and Mexicana have represented a
substantial majority of the Mexican commercial airline market.  In
recent years, however, international carriers, discount carriers, low-cost
carriers and other new market entrants have represented a growing proportion of
the Mexican commercial airline market.  In 2007, passengers traveling
on discount and low-cost carriers, such as VivaAerobus, Interjet, Alma, Volaris,
Avolar, and Aladia accounted for approximately 26.6% of our commercial aviation
passenger traffic.  Since air transportation historically has been
affordable only to the higher income segments of Mexico’s population, resulting
in a comparatively low level of air travel, we believe that the entry of
low-cost and discount carriers into the Mexican commercial airline market has
the potential to significantly increase the use of air transportation in
Mexico.




Aeroméxico
was owned by the Mexican federal government.  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.




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Until
recently the Mexican government also owned Grupo Mexicana, whose subsidiaries
include Mexicana and Click Mexicana (formerly known as
Aerocaribe).  In December 2005, the Mexican government sold Grupo
Mexicana to Grupo Posadas, S.A de C.V., the largest hotel operator in
Mexico.  Grupo Aeroméxico and Grupo Mexicana also control other
airlines operating in our airports, including Aeroméxico Connect (formerly
Aerolitoral) and Click Mexicana, as well as the largest provider of baggage and
ramp handling services at our airports SEAT, a joint venture between Grupo
Aeroméxico and Grupo Mexicana.




Aeroméxico
and Mexicana, along with Aeromar and Aeroméxico Connect (formerly Aerolitoral),
have in the past refused to pay certain increases in our airport service
charges.  In December 2001, we entered into an agreement with the
National Air Transportation Board and the Ministry of Communications and
Transportation pursuant to which we resolved existing disputes with our
principal airline customers and established specific prices for aeronautical
services applicable to those airlines.  The National Air
Transportation Board agreed to cause our principal airline customers to enter
into (a) contracts governing charges for aeronautical services and (b) lease
contracts for property used by the airlines.  Although this agreement
expired in December 2005, we continued to charge its principal airline customers
in accordance with the terms of the agreement until October 31, 2006, when we
entered into a new agreement with the National Air Transportation Board that
offers incentives, including discounts on airport charges, for the establishment
of new routes and other measures expected to increase passenger traffic volume
at our airports.  This agreement will expire in December 2008 and we
cannot assure that the agreement will be renewed or that any of the airlines
will continue to adhere to the terms of the agreement after its
expiration.




In April
2006, Mexican regulatory authorities suspended the operations of Aerocalifornia
due to safety concerns relating to the carrier’s fleet of
aircraft.  Services provided to Aerocalifornia accounted for
approximately 6.0% of our revenues in 2005, primarily at our Culiacán, Durango
and Torreón International Airports.  Aerocalifornia resumed limited
operations in August 2006, however, as a result of the suspension, the airline
accounted for only 2.6% of our revenues in 2006. Aerocalifornia accounted for
approximately 3.6% of our revenues in 2007 after regaining much of its market
share post-suspension. On March 26, 2007, Mexican regulatory authorities
announced an immediate suspension of Azteca, which accounted for approximately
3.6% of our revenue in 2006, due to safety concerns and financial problems. As
of May 2008, Azteca had not resumed operations. As a result of the suspension,
the airline accounted only 0.4% of our total revenues in 2007. We cannot
guarantee whether Azteca will resume operations at the end of the suspension
period or whether the suspension will have a material effect on our results from
operations for 2008.  In 2007, domestic air traffic at the Zacatecas
airport decreased 21.3% as compared to 2006 due to such
suspension.  Any similar suspension affecting our principal airline
customers could have a material adverse effect on out results of
operations.




The
following chart sets forth our principal air traffic customers as of December
31, 2007.




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Principal
      Air Traffic Customers
            
            
            Percentage
      of 2006 Revenues
            
            
            Percentage
      of 2007 RevenuesDomestic:Grupo Aeroméxico (Aeroméxico and Aeroméxico
    Connect)
            
            
            28.6
            %
            
            
            25.1
            %Grupo Mexicana (Mexicana
      and Click
      Mexicana)
            
            
            14.3
            %
            
            
            14.0
            %Aviacsa
            
            
            11.2
            %
            
            
            9.4
            %VivaAerobus
            
            
            0.0
            %
            
            
            7.6
            %Interjet
            
            
            4.8
            %
            
            
            4.6
            %Aerocalifornia(1)
            
            
            2.6
            %
            
            
            3.6
            %Alma
            
            
            0.0
            %
            
            
            2.7
            %Volaris
            
            
            0.0
            %
            
            
            2.6
            %Grupo
      Aeromonterrey
            
            
            3.1
            %
            
            
            2.5
            %Líneas Aéreas Azteca
            
            
            3.6
            %
            
            
            0.5
            %Other
            
            
            13.2
            %
            
            
            9.2
            %Total Domestic
            
            
            81.4
            %
            
            
            81.8
            %International:Continental
            
            
            6.8
            %
            
            
            5.7
            %American Airlines (including
      American Eagle)
            
            
            4.1
            %
            
            
            3.7
            %AlaskaAirlines
            
            
            1.7
            %
            
            
            1.8
            %Delta
            
            
            0.0
            %
            
            
            1.5
            %America West (including Mesa
      Airlines)
            
            
            1.1
            %
            
            
            0.8
            %Charters
            
            
            2.3
            %
            
            
            3.0
            %Other
            
            
            2.6
            %
            
            
            1.7
            %Total International
            
            
            18.6
            %
            
            
            18.2
            %Total
            
            
            100.0
            %
            
            
            100
            %





Complementary
Services Customers




Our
principal complementary services clients are two principal providers of ramp
handling and baggage handling services, Menzies Aviation and SEAT, which
provided Ps.8.8 million of revenues in the form of access fees in
2007.  Although SEAT is the primary provider of complementary services
in our airports we earn only nominal portion of this revenue from
SEAT.




Our
primary catering clients are Comisariato Gotre, S.A. de C.V. and Aerococina,
S.A. de C.V., which provided Ps. 2.6 million in revenues in the form of access
fees in 2007.




Principal
Non-aeronautical Services Customers




At
December 31, 2007, we were party to approximately 714 contracts with providers
of commercial services in the commercial space in our airports, including retail
store operators, duty free store operators, food and beverage providers,
financial services providers, car rental companies, telecommunications
providers, VIP lounges, advertising, travel agencies, time-share sales and
promotions services and tourist information and promotion
services.  As a result, our revenues from non-aeronautical services
commercial customers are spread across a large number of customers and are,
therefore, not dependent on a limited number of principal
customers.  In 2007, our largest commercial customers were Publitop
(advertising), Aeroboutiques (duty free and duty paid stores), Aerocomidas (food
and beverage), Cenca (magazines), Aeroméxico, Aeroméxico Connect (formerly
Aerolitoral), Mexicana and the American Express Company (VIP
lounges).




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Seasonality




Our
business is subject to seasonal fluctuations.  In general, demand for
air travel is typically higher during the summer months and during the winter
holiday season, particularly in international markets because there is more
vacation travel during these periods.  Our results of operations
generally reflect this seasonality, but have also been impacted by numerous
other factors that are not necessarily seasonal, including economic conditions,
war or threat of war, weather, air traffic control delays and general economic
conditions, as well as the other factors discussed above.  As a
result, our operating results for a quarterly period are not necessarily
indicative of operating results for an entire year, and historical operating
results are not necessarily indicative of future operating results.




Competition




Excluding
our airports servicing tourist destinations, our airports currently are the only
major airports in the geographic areas that they serve and generally do not face
significant competition.




However,
since the Acapulco, Mazatlán and Zihuatanejo International Airports are
substantially dependent on tourists, these airports face competition from
competing tourist destinations.  We believe that the main competitors
to these airports are those airports serving vacation destinations in Mexico,
such as Los Cabos, Cancún and Puerto Vallarta, and abroad, such as in Puerto
Rico, Florida, Cuba, Jamaica, the Dominican Republic, other Caribbean islands
and Central America.




The
relative attractiveness of the locations we serve is dependent on many factors,
some of which are beyond our control.  These factors include the
general state of the Mexican economy and the attractiveness of other commercial
and industrial centers in Mexico that may affect the attractiveness of Monterrey
and other growing population centers in our airport group, such as Ciudad Juárez
and San Luis Potosí.  In addition, with respect to Acapulco, Mazatlán
and Zihuatanejo, these factors include promotional activities and pricing
policies of hotel and resort operators, weather conditions, natural disasters
(such as hurricanes and earthquakes) and the development of new resorts that may
be considered more attractive.  There can be no assurance that the
locations we serve will continue to attract the same level of passenger traffic
in the future.




The
Mexican Airport and Auxiliary Services Agency currently operates 19 small
airports in Mexico’s central and northern regions.  The Mexican
Airport and Auxiliary Services Agency estimates that its airports collectively
account for less than 34.0% of the passenger traffic in this region. This
traffic was the result of the increase in the passenger traffic transported to
and from the Toluca International Airport.




In the
future, we may also 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 approached the Ministry of Communications and Transportation to discuss the
amendment of Aeropuerto del Norte’s concession to allow it to serve commercial
aviation operations.  We understand that Aeropuerto del Norte is not
capable of accommodating commercial traffic with its current
infrastructure.  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.




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In
addition, the Mexican government could grant new concessions to operate existing
government-managed airports or authorize the construction of new airports, which
could compete directly with our airports.  Any competition from other
such airports could have a material adverse effect on our business and results
of operations.




REGULATORYFRAMEWORK




Sources
of Regulation




The
following are the principal laws, regulations and instruments that govern our
business and the operation of our airports:




·
            the
      Mexican Airport Law (Ley
      de Aeropuertos), enacted December 22,
  1995;




·
            the
      regulations under the Mexican Airport Law (Reglamento del la Ley de
      Aeropuertos), enacted February 17,
  2000;




·
            the
      Mexican Communications Law (Ley de Vias Generales de
      Comunicación), enacted February 19,
  1940;




·
            the
      Mexican Civil Aviation Law (Ley de Aviación Civil),
      enacted May 12, 1995;




·
            the
      regulations under the Mexican Civil Aviation Law (Reglamento de la Ley de
      Aviación Civil),enacted December 7,
  1998;




·
            the
      Mexican Federal Duties Law (Ley Federal de
      Derechos), enacted December 31, 1981, which may be revised on an
      annual basis and stipulates the applicable basis and rate for calculating
      the concession fee and duties payable under the current
      budget;




·
            the
      Mexican National Assets Law (Ley  de Bienes
      Nacionales), enacted May 20,
2004;




·
            the
      concessions that entitle our subsidiaries to operate our 13 airports for a
      term of fifty years beginning on November 1,
  1998;




·
            the
      Mexican Federal Economic Competition Law (Ley Federal de Competencia
      Económica), enacted December 24, 1992;
  and




·
            the
      regulations under the Mexican Federal Economic Competition Law (Reglamento de la Ley Federal
      de Competencia Económica), enacted October 12,
  2007.




The
Mexican Airport Law and the regulations under the Mexican Airport Law establish
the general framework regulating the construction, operation, maintenance and
development of Mexican airport facilities.  The Mexican Airport Law’s
stated intent is to promote the expansion, development and modernization of
Mexico’s airport infrastructure by encouraging investment and
competition.




Under the
Mexican Airport Law, the holder of a concession granted by the Ministry of
Communications and Transportation is required to construct, operate, maintain
and develop a public service airport in Mexico.  A concession
generally must be granted pursuant to a public bidding process, except
for:  (i) concessions granted to (a) entities considered
part of “the federal public administration” as defined under Mexican law and
(b) private companies whose principal stockholder may be a state or
municipal government; (ii) concessions granted to operators of private
airports (who have operated privately for five or more years) wishing to begin
operating their facilities as public service airports; and
(iii) complementary concessions granted to existing concession
holders.  Complementary concessions may be granted only under certain
limited circumstances, such as where an existing concession holder can
demonstrate, among other things, that the award of the complementary concession
is necessary to satisfy passenger demand.  On June 29, 1998, the
Ministry of Communications and Transportation granted 13 concessions to operate,
maintain and develop the 13 principal airports in Mexico’s Central North region
to our subsidiaries.  Because our subsidiaries were considered
entities of the federal public administration at the time the concessions were
granted, the concessions were awarded without a public bidding
process.  However, the process of selling Series BB shares currently
representing 14.7% of our capital stock to our strategic stockholder pursuant to
the privatization process was conducted through a public bidding
process.  Each of our concessions was amended on September 12, 2000 in
order, among other things, to incorporate each airport’s maximum rates and
certain other terms as part of the concession.




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On
February 17, 2000, the regulations under the Mexican Airport Law were
issued, and we believe we are currently complying in all material respects with
the requirements of the Mexican Airport Law and its
regulations.  Noncompliance with these regulations could result in
fines or other sanctions being assessed by the Ministry of Communications and
Transportation, and are among the violations that could result in termination of
a concession if they occur three or more times.




On May
20, 2004, a new Mexican National Assets Law was adopted and published in the
Official Gazette of the Federation (Diario Oficial de la
Federación) which, among other things, establishes regulations relating
to concessions on real property held in the public domain, including the
airports that we operate.  The new Mexican National Assets Law
establishes new grounds for revocation of concessions for failure to pay the
applicable taxes, but does not specify which taxed must be paid, including
whether certain taxes to municipalities must be paid by the
concessionaire.




To the
best of our knowledge as of the date hereof, the constitutionality of the new
Mexican National Assets Law has not been challenged in Mexico’s court
system.  If challenged in the future, a court could declare the tax
void or determine an alternate amount.




Role
of the Ministry of Communications and Transportation




The
Ministry of Communications and Transportation is the principal regulator of
airports in Mexico and is authorized by the Mexican Airport Law to perform the
following functions:




·
            plan,
      formulate and establish the policies and programs for the development of
      the national airport system;




·
            construct,
      administer and operate airports and airport-related services for the
      public interest;




·
            grant,
      modify and revoke concessions for the operation of
    airports;




·
            establish
      air transit rules and rules regulating take-off and landing schedules
      through the Mexican air traffic control
  authority;




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·
            take
      all necessary action to create an efficient, competitive and
      non-discriminatory market for airport-related services, and set forth the
      minimum operating conditions for
airports;




·
            establish
      safety regulations;




·
            close
      airports entirely or partially when safety requirements are not being
      satisfied;




·
            monitor
      airport facilities to determine their compliance with the Mexican Airport
      Law, other applicable laws and the terms of the
    concessions;




·
            maintain
      the Mexican aeronautical registry for registrations relating to
      airports;




·
            impose
      penalties for failure to observe and perform the rules under the Mexican
      Airport Law, the regulations thereunder and the
    concessions;




·
            approve
      any transaction or transactions that directly or indirectly may result in
      a change of control of a concession
holder;




·
            approve
      the master development programs prepared by each concession holder every
      five years;




·
            determine
      each airport’s maximum rates;




·
            approve
      any agreements entered into between a concession holder and a third party
      providing airport or complementary services at its airport;
      and




·
            perform
      any other function specified by the Mexican Airport
  Law.




In
addition, under the Mexican Organic Law of the Federal Public Administration
(Ley Orgánica de la
Administración Pública Federal), the Mexican Airport Law and the Mexican
Civil Aviation Law, the Ministry of Communications and Transportation is
required to provide air traffic control, radio assistance and aeronautical
communications at Mexico’s airports.  The Ministry of Communications
and Transportation provides these services through Services for Navigation in
Mexican Air Space, the Mexican air traffic control authority, which is a
division of the Ministry of Communications and Transportation.  Since
1978, the Mexican air traffic control authority has provided air traffic control
for Mexico’s airports.




Concession
Tax




Under
Article 232-A of the Mexican Federal Duties Law, holders of airport concessions
must pay a tax for the use of state-owned assets.  As such, each of
our subsidiary concession holders is required to pay a concession tax based on
its gross annual revenues from the use of public domain assets pursuant to the
terms of its concession.  Currently, this concession tax is set at a
rate of 5% and may be revised at any time by the Mexican
government.  Our concessions provide that we may request an amendment
of our maximum rates if there is a change in this concession tax, although there
can be no assurance that this request will be honored.




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Scope
of Concessions




We hold
(through subsidiary holding companies) concessions granted to us by the Mexican
government to use, operate, maintain and develop 13 airports in the Central
North region of Mexico in accordance with the Mexican Airport Law.  As
authorized under the Mexican Airport Law, each of the concessions is held by one
of our subsidiaries for an initial 50-year term beginning on November 1,
1998.  This initial term of each of our concessions may be renewed in
one or more terms for up to an additional 50 years, subject to our
acceptance of any new conditions imposed by the Ministry of Communications and
Transportation and to our compliance with the terms of our
concession.




The
concessions held by our subsidiary concession holders allow the relevant
concession holder, during the term of the concession,
to:  (i) operate, maintain and develop its airport and carry out
any necessary construction in order to render airport, complementary and
commercial services as provided under the Mexican Airport Law and the Mexican
Airport Law regulations; and (ii) use and develop the assets that comprise
the airport that is the subject of the concession (consisting of the airport’s
real estate and improvements but excluding assets used in connection with fuel
supply and storage).  These assets are government-owned assets,
subject to the Mexican National Assets Law.  Upon expiration of a
concession, the use of these assets, together with any improvements thereto,
automatically revert to the Mexican government.




Concession
holders are required to provide airport security, which must include contingent
and emergency plans in accordance with the regulations under the Mexican Airport
Law.  The security regulations shall be implemented in accordance with
the requirements set forth in the National Program for Airport
Security.  In addition, the regulations pertaining to the Mexican
Airport Law specify that an airport concession holder is responsible for the
inspection of passengers and carry-on luggage prior to approaching the departure
gates, and specify that the transporting airline is responsible for the
inspection of checked-in luggage and cargo.  If public order or
national security is endangered, the competent federal authorities are
authorized to act to protect the safety of aircraft, passengers, cargo, mail,
installations and equipment.




The
International Civil Aviation Organization recently 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 purchase, install and
operate new screening equipment and 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.




The
shares of a concession holder and the rights under a concession may be subject
to a lien only with the approval of the Ministry of Communications and
Transportation.  No agreement documenting liens approved by the
Ministry of Communications and Transportation may allow the beneficiary of a
pledge to become a concession holder under any circumstances.




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A
concession holder may not assign any of its rights or obligations under its
concession without the authorization of the Ministry of Communications and
Transportation.  The Ministry of Communications and Transportation is
authorized to consent to an assignment only if the proposed assignee satisfies
the requirements to be a concession holder under the Mexican Airport Law,
undertakes to comply with the obligations under the relevant concession and
agrees to any other conditions that the Ministry of Communications and
Transportation may require.




General
Obligations of Concession Holders




The
concessions impose certain obligations on the concession holders, including,
among others, (i) the obligation to pay the concession tax described above,
(ii) the obligation to deliver concession services in a continuous, public
and non-discriminatory manner, (iii) the obligation to maintain the
airports in good working condition and (iv) the obligation to make
investments with respect to the infrastructure and equipment in accordance with
the master development programs and the concessions.




Each
concession holder and any third party providing services at an airport is
required to carry specified insurance in amounts and covering specified risks,
such as damage to persons and property at the airport, in each case as specified
by the Ministry of Communications and Transportation.  To date the
Ministry of Communications and Transportation has not specified the required
amounts of insurance.  We may be required to obtain additional
insurance once these amounts are specified.




We,
together with our subsidiary concession holders, are jointly and severally
liable to the Ministry of Communications and Transportation for the performance
of all obligations under the concessions held by our
subsidiaries.  Each of our subsidiary concession holders is
responsible for the performance of the obligations set forth in its concession
and in the master development programs, including the obligations arising from
third-party contracts, as well as for any damages to the Mexican
government-owned assets that they use and to third-party airport
users.  In the event of a breach of one concession, the Ministry of
Communications and Transportation is entitled to revoke all of the concessions
held by our subsidiaries.




Substantially
all of the contracts entered into prior to the grant of our concessions by the
Mexican Airport and Auxiliary Services Agency with respect to each of our
airports were assigned to the relevant concession holder for each
airport.  As part of this assignment, each concession holder agreed to
indemnify the Mexican Airport and Auxiliary Services Agency for any loss
suffered by the Mexican Airport and Auxiliary Services Agency due to the
concession holder’s breach of its obligations under an assigned
agreement.




Classification
of Services Provided at Airports




The
Mexican Airport Law and the Mexican Airport Law regulations classify the
services that may be rendered at an airport into the following three
categories:




·
            Airport
      Services.  Airport services may be rendered only by the
      holder of a concession or a third party that has entered into an agreement
      with the concession holder to provide such services.  These
      services include the following:




·
            the
      use of airport runways, taxiways and aprons for landing, aircraft parking
      and departure;




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·
            the
      use of hangars, passenger walkways, transport buses and car parking
      facilities;




·
            the
      provision of airport security services, rescue and firefighting services,
      ground traffic control, lighting and visual
  aids;




·
            the
      general use of terminal space and other infrastructure by aircraft,
      passengers and cargo; and




·
            the
      provision of access to an airport to third parties providing complementary
      services (as defined in the Mexican Airport Law) and third parties
      providing permanent ground transportation services (such as
      taxis).




·
            Complementary
      Services.Complementary services for which the airlines
      are responsible may be rendered by an airline, by the airport operator or
      by a third party under agreements with airlines and the airport
      operator.  These services include:  ramp and handling
      services, checked baggage screening, aircraft security, catering,
      cleaning, maintenance, repair and fuel supply (provided exclusively by the
      Mexican government's
      Aeropuertos y Servicios Auxiliares, or ASA) and related activities
      that provide support to air
carriers.




·
            Commercial
      Services.Commercial services involve services that are
      not considered essential to the operation of an airport or aircraft, and
      include, among other things, the leasing of space to retailers,
      restaurants and banks, and
advertising.




Third
parties rendering airport, complementary or commercial services are required to
do so pursuant to a written agreement with the relevant concession
holder.  We have entered into agreements with third parties for
security and surveillance services, ramp handling and baggage handling services
and checked baggage services only.  We provide all other airport,
complementary and commercial services ourselves.  All agreements
relating to airport or complementary services are required to be approved by the
Ministry of Communications and Transportation.  The Mexican Airport
Law provides that the concession holder is jointly liable with these third
parties for compliance with the terms of the relevant concession with respect to
the services provided by such third parties.  All third-party service
providers are required to be corporations incorporated under Mexican
law.




Airport
and complementary services are required to be provided to all users in a uniform
and regular manner, without discrimination as to quality, access or
price.  Concession holders are required to provide airport and
complementary services on a priority basis to military aircraft, disaster
support aircraft and aircraft experiencing emergencies.  Airport and
complementary services are required to be provided at no cost to military
aircraft and aircraft performing national security activities.  The
concession holders have not and do not provide complementary services as these
services are provided by third parties.




In the
event of force majeure,
the Ministry of Communications and Transportation may impose additional
regulations governing the provision of services at airports, but only to the
extent necessary to address the force majeure
event.  The Mexican Airport Law allows the airport administrator
appointed by a concession holder to suspend the provision of airport services in
the event of force
majeure.




A
concession holder is also required to allow for a competitive market for
complementary services.  A concession holder may only limit the number
of providers of complementary services in its airport due to space, efficiency
and safety considerations.  If the number of complementary service
providers must be limited due to these considerations, contracts for the
provision of complementary services must be awarded through a competitive
bidding process.




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Master
Development Programs




Concession
holders are also required to submit to the Ministry of Communications and
Transportation a master development program describing, among other things, the
concession holder’s construction and maintenance plans.




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 strategy, traffic forecasts,
and expansion, modernization and maintenance plans for the following 15
years.  Each master development program is required to be updated
every five years and resubmitted for approval to the Ministry of Communications
and Transportation.  Upon such approval, the master development
program is deemed to constitute a part of the relevant
concession.  Any major construction, renovation or expansion of an
airport may only be made pursuant to a concession holder’s master development
program or upon approval by the Ministry of Communications and
Transportation.  Information required to be presented in the master
development program includes:




·
            airport
      growth and development
expectations;




·
              15-year
      projections for air traffic demand (including passenger, cargo and
      operations);




·
              construction,
      conservation, maintenance, expansion and modernization programs for
      infrastructure, facilities and
equipment;




·
              a
      binding five-year detailed investment program and planned major
      investments for the following ten
years;




·
              descriptive
      airport plans specifying the distinct uses for the corresponding airport
      areas;




·
              any
      financing sources; and




·
              environmental
      protection measures.




The
concessions require the concession holder to provide for a 24-month period to
prepare and submit the concession holder’s master development program and
consider the necessary requirements of the airport users in the preparation of
the master development program, and shall consider the opinions of air carriers
and operations and timetable’s committee.  The concession holder must
submit a draft of the master development program to such committee and air
carriers for their review and comments six months prior to its submission for
approval to the Ministry of Communications and
Transportation.  Further, the concession holder must submit, six
months prior to the expiration of the five-year term, the new master development
program to the Ministry of Communications and Transportation.  The
Ministry of Communications and Transportation may request additional information
or clarification as well as seek further comments from airport
users.  The Ministry of Defense may also opine on the master
development programs.




A
concession holder may only undertake a major construction project, renovation or
expansion relating to an airport pursuant to its master development program or
with the approval of the Ministry of Communications and
Transportation.  We are required to spend the full amounts set forth
in each investment program under its master development programs.




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Changes
to a master development program and investment program require the approval of
the Ministry of Communications and Transportation, except for emergency repairs
and minor works that do not adversely affect an airport’s
operations.




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.




Pursuant
to the terms of our concessions, we are required to comply with the investment
obligations under the master development programs on a year-by-year basis and
the Ministry of Communications and Transportation is entitled to review out
compliance thereunder (and apply sanctions accordingly) on a year-by-year
basis.  Although historically the Ministry of Communications and
Transportation has indicated its intent to review our compliance with these
obligations on an aggregate five-year basis, we understand that the Ministry may
also conduct more limited reviews of our compliance with our obligations on a
year-by-year basis going forward.




Revenue
Regulation




The
Mexican Airport Law provides for the Ministry of Communications and
Transportation to establish price regulations for services for which the
Antitrust Commission determines that a competitive market does not
exist.  In 1999, the Antitrust Commission issued a ruling stating that
competitive markets generally do not exist for airport services and airport
access provided to third parties rendering complementary
services.  This ruling authorized the Ministry of Communications and
Transportation to establish regulations governing the prices that may be charged
for airport services and access fees that may be charged to third parties
rendering complementary services in our airports.  On September 12,
2000, a new regulation, the Rate Regulation, was incorporated within the terms
of each of our concessions.  This regulation provides a framework for
the setting by the Ministry of Communications and Transportation of five-year
maximum rates.




Regulated
Revenues




The
majority of our revenues are derived from providing aeronautical services, which
generally are related to the use of airport facilities by airlines and
passengers and 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 and a security charge for each departing
passenger.




Since
January 1, 2000, all of our revenues from aeronautical services have been
subject to a price regulation system established by the Ministry of
Communications and Transportation.  This price regulation system
establishes a “maximum rate” for each airport for every year in a five-year
period.  The “maximum rate” is the maximum amount of revenues per
“workload unit” that may be earned at an airport each year from regulated
revenue sources.  Under this regulation, a workload unit is equivalent
to one terminal passenger or 100 kilograms (220 pounds) of cargo.  We
are able to set the specific
prices for regulated
services, other than complementary services and leasing of space to airlines,for each of our airports, every six months (or more frequently if
accumulated inflation since the last adjustment exceeds 5%), as long as the
combined revenue from regulated services at an airport does not exceed the
maximum rate per workload unit at that airport on an annual
basis.  Since our aggregate revenues resulting from regulated services
are not otherwise restricted, increases in passenger and cargo traffic increase
the workload units permit greater revenues overall within each five-year period
for which maximum rates are established.




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In 2007,
approximately 86.3% of our total revenues were earned from aeronautical services
subject to price regulation under the maximum rates.




Each
airport’s maximum rate is to be determined for each year by the Ministry of
Communications and Transportation based on a general framework established in
our concessions.  This framework reflects, among other factors,
projections of an airport’s revenues, operating costs and capital expenditures,
as well as the estimated cost of capital related to regulated services and
projected annual efficiency adjustments determined by the Ministry of
Communications and Transportation.  The schedule of maximum rates for
each airport is to be established every five years.




Our
revenues from non-aeronautical services, including revenues that we earn from
most commercial activities in our terminals, are not subject to this
maximum-rate price regulation system and are therefore not subject to a
ceiling.




Historical
Maximum Rates and Maximum Rates for 2006 through 2010




In 2000,
the Ministry of Communications and Transportation set each airport’s maximum
rates for the period from January 1, 2001 through December 31, 2005 in
connection with the process for the opening of Mexico’s airports to private
investment.  These initial maximum rates are set forth in the
concession for each airport.  In December 2005, the Ministry of
Communications and Transportation set new airport maximum rates for the period
from January 1, 2006 through December 31, 2010.




The
following tables set forth the maximum rates for each of our airports for the
periods indicated under our 2001 to 2005 master development programs and under
the master development programs that went into effect as of January 1,
2006.  These maximum rates are subject to adjustment only under the
limited circumstances described below under “Special Adjustments to Maximum
Rates.”




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Historical Maximum Rates(1)




Year
      Ended December 31,2001
            
            
            2002
            
            
            2003
            
            
            2004
            
            
            2005Acapulco
            
            132.52
            
            
            128.48
            
            
            127.20
            
            
            125.93
            
            
            124.68Ciudad
      Juárez
            
            108.29
            
            
            101.29
            
            
            100.26
            
            
            99.27
            
            
            98.27Culiacán
            
            124.19
            
            
            117.35
            
            
            116.19
            
            
            115.03
            
            
            113.87Chihuahua
            
            130.25
            
            
            112.90
            
            
            111.77
            
            
            110.65
            
            
            109.55Durango
            
            137.82
            
            
            133.54
            
            
            132.19
            
            
            130.87
            
            
            129.57Mazatlán
            
            122.67
            
            
            116.23
            
            
            115.07
            
            
            113.93
            
            
            112.78Monterrey
            
            127.22
            
            
            114.98
            
            
            113.83
            
            
            112.70
            
            
            111.57Reynosa
            
            135.55
            
            
            127.70
            
            
            126.41
            
            
            125.13
            
            
            123.90San
      Luis Potosí
            
            144.64
            
            
            96.74
            
            
            95.77
            
            
            94.82
            
            
            93.87Tampico
            
            137.07
            
            
            131.24
            
            
            129.93
            
            
            128.63
            
            
            127.34Torreón
            
            128.73
            
            
            123.45
            
            
            122.22
            
            
            121.00
            
            
            119.78Zacatecas
            
            134.04
            
            
            129.06
            
            
            127.75
            
            
            126.48
            
            
            125.22Zihuatanejo
            
            115.10
            
            
            112.29
            
            
            111.17
            
            
            110.06
            
            
            108.95




(1)
            Expressed
      in constant pesos as of December 31,
2007.




Current
Maximum Rates(1)




Year
      ended December 31,2006
            
            
            2007
            
            
            2008
            
            
            2009
            
            
            2010Acapulco
            
            139.84
            
            
            138.78
            
            
            137.74
            
            
            136.70
            
            
            135.68Ciudad
      Juárez
            
            109.26
            
            
            108.44
            
            
            107.63
            
            
            106.82
            
            
            106.02Culiacán
            
            120.92
            
            
            120.02
            
            
            119.13
            
            
            118.22
            
            
            117.33Chihuahua
            
            118.51
            
            
            117.63
            
            
            116.74
            
            
            115.87
            
            
            115.00Durango
            
            135.04
            
            
            134.03
            
            
            133.02
            
            
            132.02
            
            
            131.04Mazatlán
            
            138.79
            
            
            137.75
            
            
            136.71
            
            
            135.69
            
            
            134.68Monterrey
            
            111.84
            
            
            111.00
            
            
            110.17
            
            
            109.35
            
            
            108.53Reynosa
            
            126.66
            
            
            125.71
            
            
            124.77
            
            
            123.84
            
            
            122.90San
      Luis Potosí
            
            94.56
            
            
            93.85
            
            
            93.14
            
            
            92.45
            
            
            91.75Tampico
            
            133.96
            
            
            132.96
            
            
            131.97
            
            
            130.98
            
            
            129.99Torreón
            
            136.72
            
            
            135.69
            
            
            134.68
            
            
            133.66
            
            
            132.67Zacatecas
            
            141.68
            
            
            140.62
            
            
            139.57
            
            
            138.52
            
            
            137.48Zihuatanejo
            
            142.74
            
            
            141.67
            
            
            140.60
            
            
            139.56
            
            
            138.51





(1)
            Expressed
      in constant pesos as of December 31,
2007.




Methodology
for Determining Future Maximum Rates




The Rate
Regulation provides that each airport’s annual maximum rates are to be
determined in five-year intervals based on the following variables:




·
            Projections
      for the following fifteen years of workload units (each of which is
      equivalent to one terminal passenger or 100 kilograms (220 pounds) of
      commercial cargo), operating costs and expenses related to services
      subject to price regulation and pre-tax earnings from services subject to
      price regulation.  The concessions provide that projections for
      workload units and expenses related to regulated services are to be
      derived from the terms of the relevant concession holder’s master
      development program for the following fifteen
  years.




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·
            Projections
      for the following fifteen years of capital expenditures related to
      regulated services, based on air traffic forecasts and quality of
      standards for services to be derived from the master development
      programs.




·
            Reference
      values, which initially were established in the concessions and are
      designed to reflect the net present value of the regulated revenues minus
      the corresponding regulated operating costs and expenses (excluding
      amortization and depreciation), and capital expenditures related to the
      provision of regulated services plus a terminal
  value.




·
            A
      discount rate to be determined by the Ministry of Communications and
      Transportation.  The concessions provide that the discount rate
      shall reflect the cost of capital to Mexican and international companies
      in the airport industry (on a pre-tax basis), as well as Mexican economic
      conditions.  The concessions provide that the discount rate
      shall be at least equal to the average yield of long-term Mexican
      government debt securities quoted in the international markets during the
      prior 24 months plus a risk premium to be determined by the Ministry
      of Communications and Transportation based on the inherent risk of the
      airport business in Mexico.




·
            An
      efficiency factor to be determined by the Ministry of Communications and
      Transportation.  For the five-year period ending
      December 31, 2005, the maximum rates applicable to our airports
      reflect a projected annual efficiency improvement of 1.0%.  For
      the five-year period ending December 31, 2010, the maximum rates
      applicable to our airports reflect a projected annual efficiency
      improvement of 0.75%.




Our
concessions specify a discounted cash flow formula to be used by the Ministry of
Communications and Transportation to determine the maximum rates that, given the
projected pre-tax earnings, the efficiency adjustment, capital expenditures and
discount rate, would result in a net present value equal to the reference values
established in connection with the last determination of maximum
rates.  In connection with the preparation of the current master
development programs, we prepared a proposal to submit to the Ministry of
Communications and Transportation establishing the values we believe should be
used with respect to each variable included in the determination of maximum
rates, including the efficiency factor, projected capital expenditures and the
discount rate.  The maximum rates ultimately established by the
Ministry of Communications and Transportation reflect a negotiation between the
Ministry and us regarding these variables.




The
concessions provide that each airport’s reference values, discount rate and the
other variables used in calculating the maximum rates do not represent an
undertaking by the Ministry of Communications and Transportation or the Mexican
government as to the profitability of any concession
holder.  Therefore, whether or not the maximum rates (or the amounts
up to the maximum rates that we have been able to collect) multiplied by
workload units at any airport generate a profit or exceed our profit estimates,
or reflect the actual profitability, discount rates, capital expenditures or
productivity gains at that airport over the five-year period, we are not
entitled to any adjustment to compensate for this shortfall.




To the
extent that such aggregate revenues per workload unit exceed the relevant
maximum rate, the Ministry of Communications and Transportation may
proportionately reduce the maximum rate in the immediately subsequent year and
assess penalties equivalent to 1,000 to 50,000 times the general minimum wage in
the Federal District (Mexico City).  On December 31, 2007, the
daily minimum wage in Mexico City was Ps.50.57.  As a result, the
maximum penalty at such date could have been Ps.2.5 million (U.S.$0.2 million)
per airport.




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Our
concessions provide that, during 2000 and 2001 the calculation of workload units
included only terminal passengers.  Beginning January 1, 2002,
the Ministry of Communications and Transportation established that the
calculation of workload units would also include commercial cargo for subsequent
years.  The current workload unit calculation is therefore equal to
one terminal passenger or 100 kilograms (220 pounds) of commercial
cargo.




Special
Adjustments to Maximum Rates




Once
determined, each airport’s maximum rates are subject to special adjustment only
under the following circumstances:




·
            Change in law or natural
      disasters.A concession holder may request an adjustment
      in its maximum rates if a change in law with respect to quality standards
      or safety and environmental protection results in operating costs or
      capital expenditures that were not contemplated when its maximum rates
      were determined.  In addition, a concession holder may also
      request an adjustment in its maximum rates if a natural disaster affects
      demand or requires unanticipated capital expenditures.  There
      can be no assurance that any request on these grounds would be
      approved.




·
            Macroeconomic
      conditions.A concession holder may also request an
      adjustment in its maximum rates if, as a result of a decrease of at least
      5% in Mexican gross domestic product in a 12-month period, the workload
      units processed in the concession holder’s airport are less than that
      projected when its master development program was approved.  To
      grant an adjustment under these circumstances, the Ministry of
      Communications and Transportation under the master development program
      must have already allowed the concession holder to decrease its projected
      capital improvements as a result of the decline in passenger traffic
      volume.  There can be no assurance that any request on these
      grounds would be approved.




·
            Increase in concession tax
      under Mexican Federal Duties Law.An increase in duty
      payable by a concession holder under the Mexican Federal Duties Law
      entitles the concession holder to request an adjustment in its maximum
      rates.  There can be no assurance that any request on these
      grounds would be approved.




·
            Failure to make required
      investments or improvements.The Ministry of
      Communications and Transportation annually is required to review each
      concession holder’s compliance with its master development program
      (including the provision of services and the making of capital
      investments).  If a concession holder fails to satisfy any of
      the investment commitments contained in its master development program,
      the Ministry of Communications and Transportation is entitled to decrease
      the concession holder’s maximum rates and assess
  penalties.




·
            Excess
      revenues.In the event that revenues subject to price
      regulation per workload unit in any year exceed the applicable maximum
      rate, the maximum rate for the following year will be decreased to
      compensate airport users for overpayment in the previous
      year.  Under these circumstances, the Ministry of Communications
      and Transportation is also entitled to assess penalties against the
      concession holder.




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Ownership
Commitments and Restrictions




The
concessions require us to retain a 51% direct ownership interest in each of its
13 concession holders throughout the term of these concessions.  Any
acquisition by us or one of our concession holders of any additional airport
concessions or of a beneficial interest of 30% or more of another concession
holder requires the consent of the Antitrust Commission.  In addition,
the concessions prohibit us and our concession holders, collectively or
individually, from acquiring more than one concession for the operation of an
airport along each of Mexico’s southern and northern borders.




Air
carriers are prohibited under the Mexican Airport Law from controlling or
beneficially owning 5% or more of the shares of a holder of an airport
concession.  We, and each of our subsidiaries, are similarly
restricted from owning 5% or more of the shares of any air carrier.




Foreign
governments acting in a sovereign capacity are prohibited from owning any direct
or indirect equity interest in a holder of an airport concession.




Reporting,
Information and Consent Requirements




Concession
holders and third parties providing services at airports are required to provide
the Ministry of Communications and Transportation access to all airport
facilities and information relating to an airport’s construction, operation,
maintenance and development.  Each concession holder is obligated to
maintain statistical records of operations and air traffic movements in its
airport and to provide the Ministry of Communications and Transportation with
any information that it may request.  Each concession holder is also
required to publish its annual audited consolidated financial statements in a
principal Mexican newspaper within the first four months of each
year.




The
Mexican Airport Law provides that any person or group directly or indirectly
acquiring control of a concession holder is required to obtain the consent of
the Ministry of Communications and Transportation to such control
acquisition.  For purposes of this requirement, control is deemed to
be acquired in the following circumstances:




·
            if
      a person acquires 35% or more of the shares of a concession
      holder;




·
            if
      a person has the ability to control the outcome of meetings of the
      stockholders of a concession
holder;




·
            if
      a person has the ability to appoint a majority of the members of the Board
      of Directors of a concession holder;
or




·
            if
      a person by any other means acquires control of an
  airport.




Under the
regulations to the Mexican Airport Law, any company acquiring control of a
concession holder is deemed to be jointly and severally liable with the
concession holder for the performance of the terms and conditions of the
concession.




The
Ministry of Communications and Transportation is required to be notified upon
any change in a concession holder’s chief executive officer, Board of Directors
or management.  A concession holder is also required to notify the
Ministry of Communications and Transportation at least 90 days prior to the
adoption of any amendment to its bylaws concerning the dissolution, corporate
purpose, merger, transformation or spin-off of the concession
holder.




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Penalties
and Termination and Revocation of Concessions and Concession Assets




Termination
of Concessions




Under the
Mexican Airport Law and the terms of the concessions, a concession may be
terminated upon any of the following events:




·
            the
      expiration of its term;




·
            the
      surrender by the concession holder;




·
            the
      revocation of the concession by the Ministry of Communications and
      Transportation;




·
            the
      reversion of the Mexican government-owned assets that are the subject of
      the concession (principally real estate, improvements and other
      infrastructure);




·
            the
      inability to achieve the purpose of the concession, except in the event of
      force
      majeure;




·
            the
      dissolution, liquidation or bankruptcy of the concession holder;
      or




·
            the
      failure by the concession holder to satisfy the shareholding obligations
      set forth in the concession.




Following
a concession’s termination, the concession holder remains liable for the
performance of its obligations during the term of the concession.




Revocation
of Concessions




A
concession may be revoked by the Ministry of Communications and Transportation
under certain conditions, including:




·
            the
      failure by a concession holder to begin operating, maintaining and
      developing an airport pursuant to the terms established in the
      concession;




·
            the
      failure by a concession holder to maintain insurance as required under the
      Mexican Airport Law;




·
            the
      assignment, encumbrance, transfer or sale of a concession, any of the
      rights thereunder or the assets underlying the concession in violation of
      the Mexican Airport Law;




·
            any
      alteration of the nature or condition of an airport’s facilities without
      the authorization of the Ministry of Communications and
      Transportation;




·
            use,
      with a concession holder’s consent or without the approval of air traffic
      control authorities, of an airport by any aircraft that does not comply
      with the requirements of the Mexican Civil Aviation Law, that has not been
      authorized by the Mexican air traffic control authority, or that is
      involved in the commission of a
felony;




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·
            knowingly
      appointing a chief executive officer or board member of a concession
      holder that is not qualified to perform his functions under the law as a
      result of having violated criminal
laws;




·
            the
      failure by the concession holder to pay the Mexican government the
      concession tax;




·
            our
      failure to beneficially own at least 51% of the capital stock of its
      subsidiary concession holders;




·
            a
      violation of the safety regulations established in the Mexican Airport Law
      and other applicable laws;




·
            a
      total or partial interruption of the operation of an airport or its
      airport or complementary services without justified
  cause;




·
              the
      failure to maintain the airport’s
facilities;




·
            the
      provision of unauthorized services;




·
            the
      failure to indemnify a third party for damages caused by the provision of
      services by the concession holder or a third-party service
      provider;




·
            charging
      prices higher than those registered with the Ministry of Communications
      and Transportation for regulated services or exceeding the applicable
      maximum rate;




·
            any
      act or omission that impedes the ability of other service providers or
      authorities to carry out their functions within the airport;
      or




·
            any
      other failure to comply with the Mexican Airport Law, its regulations and
      the terms of a concession.




The
Ministry of Communications and Transportation is entitled to revoke a concession
without prior notice as a result of the first six events described
above.  In the case of other violations, a concession may be revoked
as a result of a violation only if sanctions have been imposed at least three
times with respect to the same violation.




Pursuant
to the terms of our concessions, in the event the Ministry of Communications and
Transportation revokes one of our concessions, it is entitled to revoke all of
our other concessions.




According
to the Mexican National Assets Law, Mexico’s national patrimony consists of
private and government-owned assets of Mexico.  The surface area of
our airports and improvements on such space are considered government-owned
assets.  A concession concerning government-owned assets may be
“rescued”, or revert to the Mexican government prior to the concession’s
expiration, when considered necessary for the public interest.  In
exchange, the Mexican government is required to pay compensation as determined
by expert appraisers.  Following a declaration of “rescue,” or
reversion, the assets that were subject to the concession are automatically
returned to the Mexican government.




In the
event of war, public disturbances or threats to national security, the Mexican
government may assume the operations (through a process known as requisa) of any airport,
airport and complementary services as well as any other airport
assets.  Such government action may exist only during the duration of
the emergency.  Except in the case of war, the Mexican federal
government is required to compensate all affected parties for any damages or
losses suffered as a result of such government action.  If the Mexican
government and a concession holder cannot agree as to the appropriate amount of
damages or losses, the amount of damages shall be determined by experts jointly
appointed by both parties and the amount of losses shall be determined based on
the average net income of the concession holder during the previous
year.




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The
Mexican Airport Law provides that sanctions of up to 200,000 times the minimum
daily wage in the Federal District (Mexico City) may be assessed for failures to
comply with the terms of a concession.  On December 31, 2007, the
daily minimum wage in Mexico City was Ps.50.57.  As a result, the
maximum penalty at such date could have been Ps.2.5 million (U.S.$0.2
million).




Consequences
of Termination or Revocation of a Concession




Upon
termination, whether as a result of expiration or revocation, the real estate
and fixtures that were the subject of the concession automatically revert to the
Mexican government.  In addition, upon termination the Mexican federal
government has a preemptive right to acquire all other assets used by the
concession holder to provide services under the concession at prices determined
by expert appraisers appointed by the Ministry of Communications and
Transportation.  Alternatively, the Mexican government may elect to
lease these assets for up to five years at fair market rates as determined by
expert appraisers appointed by the Mexican government and the concession
holder.  In the event of a discrepancy between appraisals, a third
expert appraiser must be jointly appointed by the Mexican government and the
concession holder.  If the concession holder does not appoint an
expert appraiser, or if such appraiser fails to determine a price, the
determination of the appraiser appointed by the Mexican government will be
conclusive.  If the Mexican government chooses to lease the assets, it
may thereafter purchase the assets at their fair market value, as determined by
an expert appraiser appointed by the Mexican government.




The
Mexican Communications Law, however, provides that upon expiration, termination
or revocation of a concession, all assets necessary to operate the airports will
revert to the Mexican government, at no cost, and free of any liens or other
encumbrances.  There is substantial doubt as to whether the provisions
of our concessions would prevail over those of the Mexican Communications
Law.  Accordingly, there can be no assurance that upon expiration or
termination of our concessions the assets used by our subsidiary concession
holders to provide services at our airports will not revert to the Mexican
government, free of charge, together with government-owned assets and
improvements permanently attached thereto.




Grants
of New Concessions




The
Mexican government may grant new concessions to manage, operate, develop and
construct airports. Such concessions may be granted through a public bidding
process in which bidders must demonstrate their technical, legal, managerial and
financial capabilities.  In addition, the government may grant
concessions without a public bidding process to the following
entities:




·
            parties
      who hold permits to operate civil aerodromes and intend to transform the
      aerodrome into an airport so long as (i) the proposed change is consistent
      with the national airport development programs and policies, (ii) the
      civil aerodrome has been in continuous operation for the previous 5 years
      and (iii) the permit holder complies with all requirements of the
      concession;




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·
            current
      concession holders when necessary to meet increased demand so long as (i)
      a new airport is necessary to increase existing capacity, (ii) the
      operation of both airports by a single concession holder is more efficient
      than other options, and (iii) the concession holder complies with all
      requirements of the concession;




·
            current
      concession holders when it is in the public interest for their airport to
      be relocated;




·
            entities
      in the federal public administration;
and




·
            commercial
      entities in which local or municipal governments have a majority equity
      interest if the entities’ corporate purpose is to manage, operate, develop
      and/or construct airports.




Environmental
Matters




Regulation




Our
operations are subject to Mexican federal, state and municipal laws and
regulations relating to the protection of the environment.  The major
federal environmental laws applicable to our operations are: (i) the General Law
of Ecological Balance and Environmental Protection (LeyGeneral del Equilibrio Ecológico y
la Protección al Ambiente)or the General Environmental Law,
and its regulations, which are administered by the Ministry of the Environment
and Natural Resources (Secretaría de Medio Ambiente y
Recursos Naturales) and enforced by the Ministry’s enforcement branch,
the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección
al Ambiente); (ii) the General Law for the Prevention and Integral
Management of Waste (LeyGeneral para la Prevención y
Gestión Integral de los Residuos), or the Law on Waste, which is also
administered by the Ministry of the Environment and Natural Resources and
enforced by the Federal Office for the Protection of the Environment; and (iii)
the National Waters Law (Ley
de Aguas Nacionales) and its regulations, which are administered and
enforced by the National Waters Commission, (Comisión Nacional del Agua),
also a branch of the Ministry of the Environment and Natural
Resources.




Under the
General Environmental Law, regulations have been enacted concerning air
pollution, environmental impact, noise control, hazardous waste, environmental
audits and natural protected areas.  The General Environmental Law
also regulates, among other things, vibrations, thermal energy, soil
contamination and visual pollution, although the Mexican government has not yet
issued enforceable regulation on the majority of these matters.  The
General Environmental Law also provides that companies that contaminate soils
are responsible for their clean-up.  Further, according to the Law on
Waste, which was enacted in January 2004, owners and/or possessors of real
property with soil contamination are jointly and severally liable for the
remediation of such contaminated sites, irrespective of any recourse or other
actions such owners and/or possessors may have against the contaminating party,
and aside from the criminal or administrative liability to which the
contaminating party may be subject.  Restrictions on the transfer of
contaminated sites also exist.  The Law on Waste also regulates the
generation, handling and final disposal of hazardous waste.  The
Mexican government is in the process of developing regulations under the Law on
Waste, which we anticipate may be adopted in the near future.




Pursuant
to the National Waters Law, companies that discharge waste waters into national
water bodies must comply, among others, with maximum permissible contaminant
levels in order to preserve water quality.  Periodic reports on water
quality must be provided to competent authorities.  Liability may
result from the contamination of underground waters or recipient water
bodies.  The use of underground waters is subject to restrictions
pursuant to our concessions and the National Waters Commission.




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In
addition to the foregoing, Mexican Official Norms (Normas Oficiales Mexicanas),
which are technical standards issued by competent regulatory authorities
pursuant to the General Normalization Law (Ley General de Metrología y
Normalización) and to other laws that include the environmental laws
described above, establish standards relating to air emissions, waste water
discharges, the generation, handling and disposal of hazardous waste and noise
control, among others.  Mexican Official Norms on soil contamination
and waste management are currently being developed and may also soon be
enacted.  Although not enforceable, the internal administrative
criteria on soil contamination of the Federal Office for the Protection of the
Environment are widely used as guidance in cases where soil remediation,
restoration or clean-up is required.




The
Federal Office for the Protection of the Environment can bring administrative,
civil and criminal proceedings against companies that violate environmental
laws, and it also has the power to close non-complying facilities and impose a
variety of sanctions.  Companies in Mexico are required to obtain
proper authorizations, licenses, concessions or permits from competent
environmental authorities for the performance of activities that may have an
impact on the environment or that may constitute a source of
contamination.  Companies in Mexico are also required to comply with a
variety of reporting obligations that include, among others, providing the
Federal Office for the Protection of the Environment and the National Waters
Commission, as applicable, with periodic reports regarding compliance with
various environmental laws.




Prior to
the opening of Mexico’s airports to private investment, the Federal Office for
the Protection of the Environment required that environmental audits be
performed at each of our airports.  Based on the results of these
audits, the Federal Office for the Protection of the Environment issued
recommendations for improvements and corrective actions to be taken at each of
our airports.  In connection with the transfer of the management of
our airports from our predecessor, we entered into environmental compliance
agreements with the Federal Office for the Protection of the Environment on
January 1, 1999 and July 12, 2000 pursuant to which we agreed to
comply with a specific action plan and adopt specific actions within a
determined time frame.




The
Federal Office for the Protection of the Environment has confirmed that we have
complied with all of the relevant environmental requirements derived from the
aforementioned environmental audits at of, and has issued compliance
certificates for, all of our airports.  These certificates, which are
known as Environmental Compliance Certificates (Certificados de Cumplimiento
Ambiental), certify compliance with applicable Mexican environmental
laws, regulations and applicable Mexican Official Norms and must be renewed on
an annual basis.  In addition, all of our airports, including the
Monterrey International Airport, have received ISO 9000 service and quality
certification; and as of April 24, 2007, ISO 9001:2000 service and quality
certification.




Liability
for Environmental Noncompliance




The legal
framework of environmental liability applicable to our operations is generally
outlined above.  Under the terms of our concessions, the Mexican
government has agreed to indemnify us for any environmental liabilities arising
prior to November 1, 1998 and for any failure by the Mexican Airport and
Auxiliary Services Agency prior to November 1, 1998 to comply with applicable
environmental laws and with its agreements with Mexican environmental
authorities.  Although there can be no assurance, we believe that we
are entitled to indemnification for any liabilities related to the actions our
predecessor was required to perform or refrain from performing under applicable
environmental laws and under their agreements with environmental
authorities.




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The level
of environmental regulation in Mexico has significantly increased in recent
years, and the enforcement of environmental laws is becoming substantially more
stringent.  We expect this trend to continue and expect additional
norms to be imposed by the North American Agreement on Environmental Cooperation
entered into by Canada, the United States and Mexico in the context of the North
American Free Trade Agreement, as well as by other international treaties on
environmental matters.  We do not expect that compliance with Mexican
federal, state or municipal environmental laws currently in effect will have a
material adverse effect on our financial condition or results of
operations.  However, there can be no assurance that environmental
regulations or the enforcement thereof will not change in a manner that could
have a material adverse effect on our business, results of operations, prospects
or financial condition.




On April
18, 2008, we were notified about an administrative investigation by the Mexican
Federal Environmental Protection Agency (Procuraduría Federal de Protección
al Ambienteor PROFEPA) with respect to potential violations of
environmental regulations in connection with the construction of Terminal B at
the Monterrey International Airport. For more information about this proceeding,
please see Item 8 – Legal Proceedings.




Regulatory
Changes Proposed by Mexico’s Antitrust Commission




On
October 1, 2007, the Chairman of the Mexican Federal Competition Commission
(Comisión Federal de
Competencia or the “Competition Commission” or COFECO) released an
independent report on the competitiveness of Mexico’s airports relative to each
other and to international airports.  The Competition Commission
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.




The
Ministry of Communications and Transportation issued a response to the
Competition Commission Chairman’s report that noted, among other matters, that
according to its own calculations, Mexico’s airport charges were lower than 36
of the 50 international airports against which they were compared.  We
also issued a joint press release along with the other two Mexican airport
groups, Grupo Aeroportuario del Pacifico and Aeropuertos del Sureste,
questioning the calculations and the comparisons drawn in the Competition
Commission Chairman’s report, and stating that we are committed to participate
in a comprehensive review of the report in order to demonstrate our commitment
to the efficient development of the airport sector.  In addition,
after the Competition Commission Chairman’s report was released, on October 2007
an initiative was introduced in Mexico’s Congress by Mr. Cuauhtémoc Velasco
Oliva to make certain reforms to the Mexican Airports Law that, if enacted,
could have a material adverse effect on us.  Although we do not expect
that the Competition Commission Chairman’s report or the congressional
initiative will result in any regulatory changes in the short term, there can be
no assurance that changes to the airport regulatory framework will not occur in
the future.





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ORGANIZATIONALSTRUCTURE




The
following table sets forth our consolidated subsidiaries as of December 31,
2007, including our direct and indirect ownership interest in each:




Name
      of Company
            
            Jurisdiction
      of Establishment
            
            Percentage
                Owned
            
            DescriptionAeropuerto
      de Acapulco, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Acapulco International AirportAeropuerto
      de Ciudad Juárez, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Ciudad Juárez International AirportAeropuerto
      de Culiacán, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Culiacán
              International
      AirportAeropuerto
      de Chihuahua, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Chihuahua International AirportAeropuerto
      de Durango, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Durango
              International
      AirportAeropuerto
      de Mazatlán, S.A. de C.V
            
            Mexico
            
            100
            
            Holds
      concession for Mazatlán
              International
      AirportAeropuerto
      de Monterrey, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Monterrey
              International
      AirportAeropuerto
      de Reynosa, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Reynosa
              International
      AirportAeropuerto
      de San Luis Potosí, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for San Luis Potosí International AirportAeropuerto
      de Tampico, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Tampico
              International
      AirportAeropuerto
      de Torreón, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Torreón International AirportAeropuerto
      de Zacatecas, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for Zacatecas
              International
      AirportAeropuerto
      de Zihuatanejo, S.A. de C.V.
            
            Mexico
            
            100
            
            Holds
      concession for
              Zihuatanejo
      International AirportServicios
      Aeroportuarios del Centro Norte, S.A. de C.V.
            
            Mexico
            
            100
            
            Provider
      of administrative and other services at certain of our
      airports.




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PROPERTY, PLANT AND EQUIPMENT




Pursuant
to the Mexican General Law of National Assets, all real estate and fixtures in
our airports are owned by the Mexican nation.  Each of our concessions
is scheduled to terminate in 2048, although each concession may be extended one
or more times for up to an aggregate of an additional fifty
years.  The option to extend a concession is subject to our acceptance
of any changes to such concession that may be imposed by the Ministry of
Communications and Transportation and our compliance with the terms of our
current concessions.  Upon expiration of our concessions, these assets
automatically revert to the Mexican nation, including improvements we may have
made during the terms of the concessions, free and clear of any liens and/or
encumbrances, and we will be required to indemnify the Mexican government for
damages to these assets, including any improvements thereon, except for those
caused by normal wear and tear.




We use
the property constituting our airports pursuant to our
concessions.  Our corporate headquarters are located on the property
of our Monterrey International Airport.




We
maintain comprehensive insurance coverage that covers the principal assets of
our airports and other property, subject to customary limits, against damage due
to natural disasters, accidents, terrorism or similar events.  We also
maintain general liability insurance, but do not maintain business interruption
insurance.  Among other insurance policies, we carry a U.S. $50
million insurance policy covering damages to our property resulting from certain
terrorist acts and a U.S. $1 billion policy covering personal and property
damages to third parties.  We also carry a U.S. $200 million insurance
policy covering damage to our assets and infrastructure generally.




Item
      4A.
            Unresolved
      Staff Comments




None.




Item5.
            Operating
      and Financial Review and Prospects




The
following discussion should be read in conjunction with, and is qualified in its
entirety by reference to, our consolidated financial statements and the notes to
those consolidated financial statements.  It does not include all of
the information included in our consolidated financial
statements.  You should read our consolidated financial statements to
gain a better understanding of our business and our historical results of
operations.




Our
consolidated financial statements were prepared in accordance with Mexican FRS,
which differs in certain significant respects from U.S.
GAAP.  Information relating to the nature and effect of such
differences is presented in Note 21 to our consolidated financial
statements.




Overview




We hold
concessions to operate, maintain and develop 13 airports in Mexico, many of
which are located in the northern and central regions of the country, pursuant
to concessions granted by the Mexican government.  The substantial
majority of our revenues are derived from providing aeronautical services, which
generally are related to the use of our airport facilities by airlines and
passengers.  For example, approximately  81.7% of our total
revenues in 2007 were earned from aeronautical services.  Changes in
our revenues from aeronautical services are principally driven by the passenger
and cargo volume at our airports.  Our revenues from aeronautical
services are also affected by the maximum rates we are allowed to charge under
the price regulation system established by the Ministry of Communications and
Transportation and the specific prices we negotiate with airlines for the
provision of aeronautical services.  The maximum rate system of price
regulation that applies to our aeronautical revenues is linked to the traffic
volume (measured in workload units) at each airport; thus, increases in
passenger and cargo volume generally permit greater revenues from aeronautical
services.  In evaluating our aeronautical revenue, we focus
principally on workload units, which measure volume, and aeronautical revenue
per workload unit, which measures the contribution to aeronautical revenue from
each workload unit.




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We also
derive revenue from non-aeronautical activities, which principally relate to the
commercial activities carried out at our airports such as the operation of
parking facilities, advertising and the leasing of space to restaurants and
retailers.  Our revenues from non-aeronautical activities are not
subject to the system of price regulation established by the Ministry of
Communications and Transportation (though they may be subject to regulation by
other authorities).  Thus, our non-aeronautical revenues are
principally affected by the passenger volume at our airports and the mix of
commercial activities carried out at our airports.  We evaluate our
non-aeronautical revenue by analyzing changes in overall non-aeronautical
revenue and changes in non-aeronautical revenue per terminal
passenger.




Passenger
and Cargo Volumes




The
substantial majority of the passenger traffic volume in our airports is made up
of domestic passengers, which in 2007 grew at a faster rate than our volume of
international traffic.  In 2007, for example, approximately 82.6% of
the terminal passengers using our airports were domestic, an increase of 26.8%
as compared to 2006.  In addition, of the international passengers
traveling through our airports, a majority has historically traveled on flights
originating in or departing to the United States.  Accordingly, our
results of operations are influenced strongly by changes to Mexican economic
conditions and to a lesser extent influenced by U.S. economic and other
conditions, particularly trends and events affecting leisure travel and consumer
spending.  Many factors affecting our passenger traffic volume and the
mix of passenger traffic in our airports are beyond our control.




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The
following table sets forth certain operating and financial data relating to our
revenues and passenger and cargo volume for the periods indicated.




Year
      ended December 31,2005
            
            
            2006
            
            
            2007Domestic
      terminal passengers(1)
            
            
            8,118.9
            
            
            
            9,258.0
            
            
            
            11,740.5International
      terminal passengers(1)
            
            
            2.479.8
            
            
            
            2,525.0
            
            
            
            2,471.9Total
      terminal passengers(1)
            
            
            10,598.7
            
            
            
            11,783.6
            
            
            
            14,212.5Cargo(1)
            
            
            808.6
            
            
            
            810.9
            
            
            
            818.3Total
      workload units(1)
            
            
            11,407.3
            
            
            
            12,594.5
            
            
            
            15,030.8Change
      in total terminal passengers(2)
            
            
            8.8
            %
            
            
            11.2
            %
            
            
            20.6
            %Change
      in workload units(2)
            
            
            8.3
            %
            
            
            10.4
            %
            
            
            19.3
            %Aeronautical
      revenue(3)
            
            
            1,192.3
            
            
            
            1,371.0
            
            
            
            1,549.8Change
      in aeronautical revenue(2)
            
            
            10.0
            %
            
            
            15.0
            %
            
            
            13.0
            %Aeronautical
      revenue per workload unit
            
            
            104.5
            
            
            
            108.9
            
            
            
            103.1Change
      in aeronautical revenue per workload unit(1)(2)
            
            
            1.6
            %
            
            
            4.2
            %
            
            
            (5.3
            )%Non-aeronautical
      revenue(3)
            
            
            287.6
            
            
            
            316.3
            
            
            
            347.5Change
      in non-aeronautical revenue(2)
            
            
            14.7
            %
            
            
            10.0
            %
            
            
            9.9
            %Non-aeronautical
      revenue per terminal passenger
            
            
            27.1
            
            
            
            26.9
            
            
            
            24.5Change
      in non-aeronautical revenue per terminal passenger(2)
            
            
            5.4
            %
            
            
            (0.7
            )%
            
            
            (8.9
            )%





(1)
            In
      thousands.  One cargo unit is equivalent to 100 kilograms (220
      pounds) of cargo.  Under the regulation applicable to our
      aeronautical revenues, one workload unit is equivalent to one terminal
      passenger or 100 kilograms (220 pounds) of
  cargo.


(2)
            In
      each case, as compared to previous
period.


(3)
            In
      millions of constant pesos.




In 2007,
we served 14.2 million terminal passengers (11.7 million domestic and 2.5
million international) and approximately 0.9 transit passengers.




Classification
of Revenues




We
classify our revenues into two categories:  revenues from aeronautical
services and revenues from non-aeronautical services.  Historically, a
substantial majority of our revenues have been derived from aeronautical
services.  For example, in 2007, 81.7% of our revenues were derived
from aeronautical services, and the remainder of our revenues were derived from
non-aeronautical services.




Our
revenues from aeronautical services are subject to price regulation under the
applicable maximum rate at each of our airports, and principally consist of
passenger charges, aircraft landing and parking charges, airport security
charges, passenger walkway charges, leasing of space in our airports to airlines
(other than first class/VIP lounges and other similar activities not directly
related to essential airport operations) and complementary services (i.e., fees
from handling and catering providers, permanent ground transportation operators
and access fees from fuel providers at our airports).




Our
revenue from non-aeronautical services is not subject to price regulation under
our maximum rates and generally includes revenues earned from car parking (which
may be subject to certain municipal regulations, but not to our maximum rates),
leasing of space in our airports to airlines (for first class/VIP lounges and
similar activities not directly related to essential airport operations), rental
and royalty payments from third parties operating stores and providing
commercial services at our airports, such as car rental agencies, food and
beverage providers and retail and duty-free store operators, as well as
advertising and fees collected from other miscellaneous sources, such as vending
machines and timeshare companies.




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For a
detailed description of the components of our aeronautical and non-aeronautical
revenue categories, see “Item 4. Information on the Company – Business Overview-
Our Sources of Revenues.”




Aeronautical
Revenue




The
system of price regulation applicable to our aeronautical revenues establishes a
maximum rate in pesos for each airport for each year in a five-year period,
which is the maximum annual amount of revenue per workload unit (a workload unit
is equal to one terminal passenger or 100 kilograms (220 pounds) of cargo) that
we may earn at that airport from aeronautical services.  See “Item 4.
Regulatory Framework – Aeronautical Service Regulation” for a description of our
maximum rates and the rate setting procedures for future periods.  The
maximum rates for our airports have been determined for each year through
December 31, 2010.




The
following table sets forth our revenue from aeronautical services for the
periods indicated.




Aeronautical
Revenue




Year ended December
      31,2005
            
            
            2006
            
            
            2007Amount
            
            
            Percent
            
            
            Amount
            
            
            Percent
            
            
            Amount
            
            
            Percent(millions of pesos, except
      percentages)AeronauticalRevenue:Passenger
      charges
            
            
            837.3
            
            
            
            70.2
            %
            
            
            1,003.0
            
            
            
            73.2
            %
            
            
            1,162.0
            
            
            
            75.0
            %Landing
    charges
            
            
            113.1
            
            
            
            9.5
            
            
            
            114.1
            
            
            
            8.3
            
            
            
            119.6
            
            
            
            7.7Aircraft parking
      charges
            
            
            90.7
            
            
            
            7.6
            
            
            
            92.6
            
            
            
            6.7
            
            
            
            96.1
            
            
            
            6.2Airport security
      charges
            
            
            17.6
            
            
            
            1.5
            
            
            
            19.3
            
            
            
            1.4
            
            
            
            22.6
            
            
            
            1.5Passengerwalkway
      charges
            
            
            27.6
            
            
            
            2.3
            
            
            
            24.8
            
            
            
            1.8
            
            
            
            23.1
            
            
            
            1.5Leasing of space to
      airlines
            
            
            105.3
            
            
            
            8.8
            
            
            
            117.2
            
            
            
            8.6
            
            
            
            126.4
            
            
            
            8.2Revenues from complementary
      service providers(1)
            
            
            0.5
            
            
            
            0.1
            
            
            
            0.0
            
            
            
            0.0
            
            
            
            0.0
            
            
            
            0.0TotalAeronauticalRevenue
            
            
            1,192.1
            
            
            
            100.0
            %
            
            
            1,371.0
            
            
            
            100.0
            %
            
            
            1,549.8
            
            
            
            100
            %





(1)
            Revenues
      from complementary service providers consist of access and other fees
      charged to third parties providing handling, catering and other services
      at our airports.




Under the
regulatory system applicable to our aeronautical revenues, we can set the
specific price for each category of aeronautical services, other than
complementary services and leasing of space to airlines, every three months (or
more frequently if accumulated inflation since the last adjustment exceeds 5%),
as long as the total aeronautical revenue per workload unit each year at each of
our airports does not exceed the maximum rate at that airport for that
year.  We currently set the specific price for these categories of
aeronautical services after negotiating with our principal airline
customers.  Historically our specific prices have been structured such
that the substantial majority of our aeronautical revenues are derived from
passenger charges, and we expect this to continue to be the case in future
agreements with our principal airline customers.  In 2007, passenger
charges represented 75.0% of our aeronautical services revenues.  In
2007, aeronautical services represented 81.7% of our total
revenues.




We seek
to offer incentives, including significant discounts on charges for aeronautical
services, to encourage carriers to establish new routes and take other measures
expected to increase passenger traffic at our airports.  The Mexican
Airport Law prevents discriminatory pricing, so incentives we offer must be
available to any carrier meeting the conditions specified for those
incentives.







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On
November 22, 2006, we delivered a notice to the Mexican National Air
Transportation Board and the Mexican Directorate General of Civil Aviation
(Dirección
General de Aeronáutica Civil)setting forth the following criteria that carriers operating at the
Monterrey International Airport must meet in order to qualify for an incentive
package that includes a discount equal to Ps.75.00 per departing terminal
passenger on passenger charges (representing approximately 40% of our usual
passenger charge):




1.
            The
      carrier must sign a binding agreement with us pursuant to which it agrees
      to meet criteria 2 through 4 below;




2.
            The
      carrier must generate additional traffic levels of 1 million and 2.5
      million terminal passengers at the Monterrey International Airport in each
      of the first and second years, respectively, during which it receives the
      discount and 3 million terminal passengers in each subsequent
      year.  Such additional passengers may not be as a result of an
      alliance, agreement, merger or similar transaction.  These
      targets relate only to passengers using Monterrey International Airport
      and do not include transit
passengers;




3.
            The
      carrier must establish or construct its administrative and operation
      offices and maintenance, operations and traffic facilities on the
      Monterrey International Airport property;
and




4.
            The
      carrier must use the terminal building and/or platforms assigned to it by
      us for its operations.




We
offered this incentive only to airlines meeting the criteria set forth above
that notified us in writing of their intent to take advantage of the incentive
program within 180 days from the delivery of the notice on November 22,
2006.




VivaAerobus
is the only airline that took advantage of these incentives. VivaAerobus has
began operating its maintenance facilities at the Monterrey International
Airport and has also established its corporate and operational headquarters at
the Monterrey International Airport.  In December 2006, VivaAerobus
commenced operations with two aircrafts operating nine routes. By December 2007,
VivaAerobus had 18 destinations with five aircrafts operating in their fleet and
serving 10 of our airports from Monterrey. VivaAerobus received its sixth
aircraft in March 2008. By the end of 2008 VivaAerobus expects to have a
nine-plane fleet and an increment in its routes. The principal routes served by
VivaAerobus at the Monterrey International Airport are Cancún, Veracruz, Ciudad
Juárez, Chihuahua, Culiacán and Mérida. VivaAerobus has also announced the
opening of the first international route to Austin, Texas, which it expects to
commence operations in the summer of 2008.




We
believe that over time the agreement with VivaAerobus should contribute to
growth of aeronautical revenues at our airports, although there can be no
assurance that the incentive will have the intended effect.  Although
we expect passenger traffic to increase overall, this incentive is likely to
result in decreases in aeronautical revenues per terminal passenger with respect
to VivaAerobus, and may result in an overall decrease in aeronautical revenues
per terminal passenger.  In addition, there can be no assurance that
this discount will not create pressure from other carriers for discounts on
prices charged to them.




In
October 2005, the Mexican government, together with Mexico’s main airport groups
(including us), entered into an agreement aimed at reducing passenger and
aircraft congestion at the Mexico City International Airport.  The
agreement is intended to encourage the use of alternative airports, including
the Monterrey International Airport, as air transportation hubs for passengers
connecting to other final destinations.  In addition, the agreement
provides financial incentives to airlines, including discounts on airport
charges, for the development of new connecting routes using the four alternate
airports serving Mexico City’s greater metropolitan area (Puebla, Toluca,
Querétaro and Cuernavaca), and for the development of new routes between each of
these four airports and other Mexican airports, including our 13
airports.  We believe that our participation in this agreement
resulted in a decrease in our aeronautical revenues per terminal passenger in
2007, and on October 31, 2007 we terminated this agreement.




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In
December 2001, we entered into an agreement with the National Air Transportation
Board and the Ministry of Communications and Transportation pursuant to which we
resolved existing disputes with our principal airline customers and established
specific prices for regulated aeronautical services applicable to those
airlines.  Although this agreement expired in December 2005, we
continued to charge our principal airline customers in accordance with the terms
of the agreement until October 31, 2006, when we entered into a new agreement
with the National Air Transportation Board.  This new agreement offers
certain incentives and discounts for the development of new routes and other
measures expected to increase passenger traffic volume at our
airports.  This agreement will expire in December 2008 and we cannot
guarantee that the agreement will be renewed or that any airline will continue
to adhere to the terms of the agreement after its expiration.




Although
we are optimistic about these developments, there can be no assurance that any
of these initiatives will be carried out or will increase our passenger traffic
volume or our revenues.




In 2007,
our aeronautical revenues represented approximately 86.3% of the amount we were
entitled to earn under the maximum rates applicable to all of our
airports.  To the extent that we offer incentives to carriers to
establish routes serving our airports in the future, or other changes to our
sources of aeronautical revenue, this percentage could
decrease.  There can be no assurance that we will be able to collect
substantially all of the revenue we are entitled to earn from services subject
to price regulation in the future.




Non-aeronautical
Revenue




Non-aeronautical
services historically have generated a significantly smallerportion of our total
revenues as compared to aeronautical services.  The contribution to
our total revenues from non-aeronautical services was 18.3% in
2007.  Since 2005, our non-aeronautical revenue per terminal passenger
decreased from Ps.27.1 in 2005 to Ps.24.5 in 2007, due primarily to increases in
passenger traffic from low-cost aviation companies. Passengers on such aviation
companies typically are most cost-conscious and as a result make fewer purchases
at our airports.




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The
following table sets forth our revenue from non-aeronautical activities for the
periods indicated.




Non-aeronautical
Revenue




Year ended December
      31,2005
            
            
            2006
            
            
            2007Amount
            
            
            Percent
            
            
            Amount
            
            
            Percent
            
            
            Amount
            
            
            Percent(millions
      of pesos, except percentages)Non-aeronauticalRevenue:Commercial
      Activities:Car parking
      charges
            
            Ps.81.8
            
            
            
            28.4
            %
            
            Ps.90.8
            
            
            
            28.7
            %
            
            Ps.105.5
            
            
            
            30.4
            %Advertising
            
            
            32.8
            
            
            
            11.4
            
            
            
            36.0
            
            
            
            11.4
            
            
            
            36.9
            
            
            
            10.6Leasing of space(1)
            
            
            34.3
            
            
            
            11.9
            
            
            
            36.2
            
            
            
            11.4
            
            
            
            39.9
            
            
            
            11.5Car rentals
            
            
            20.9
            
            
            
            7.3
            
            
            
            23.8
            
            
            
            7.5
            
            
            
            29.6
            
            
            
            8.5Food and beverage
      operations
            
            
            18.5
            
            
            
            6.4
            
            
            
            24.7
            
            
            
            7.8
            
            
            
            31.6
            
            
            
            9.1Retail
      operations
            
            
            29.1
            
            
            
            10.1
            
            
            
            30.6
            
            
            
            9.7
            
            
            
            34.6
            
            
            
            9.9Duty-free
      operations
            
            
            16.8
            
            
            
            5.8
            
            
            
            16.0
            
            
            
            5.1
            
            
            
            14.3
            
            
            
            4.1Communications
            
            
            3.6
            
            
            
            1.3
            
            
            
            3.9
            
            
            
            1.2
            
            
            
            4.0
            
            
            
            1.1Financial
      services
            
            
            2.1
            
            
            
            0.7
            
            
            
            1.5
            
            
            
            0.5
            
            
            
            1.8
            
            
            
            0.5Timeshare
            
            
            16.8
            
            
            
            5.8
            
            
            
            17.1
            
            
            
            5.4
            
            
            
            18.0
            
            
            
            5.2Other
            
            
            18.1
            
            
            
            6.4
            
            
            
            21.8
            
            
            
            6.9
            
            
            
            16.1
            
            
            
            4.6Total commercial
      activities
            
            
            274.8
            
            
            
            95.5
            
            
            
            302.5
            
            
            
            95.6
            
            
            
            332.3
            
            
            
            95.6Recovery of costs(2)
            
            
            12.8
            
            
            
            4.5
            
            
            
            13.8
            
            
            
            4.4
            
            
            
            15.2
            
            
            
            4.4Total Non-aeronauticalRevenue
            
            Ps.
    287.6
            
            
            
            100.0
            %
            
            Ps.
    316.3
            
            
            
            100.0
            %
            
            Ps.
    347.5
            
            
            
            100.0
            %





(1)
            Includes
      leasing of space in our airports to airlines and complementary service
      providers (for first class/VIP lounges and other similar non-essential
      activities).


(2)
            Recovery
      of costs consists of utility and maintenance charges that are transferred
      to airlines and other tenants in our
airports.




The
majority of our revenue from non-aeronautical services is derived from car
parking (which may be subject to government regulation, but not to our maximum
rates), leasing of space in our airports to airlines and complementary service
providers (for first class/VIP lounges and similar activities not directly
related to essential airport operations), rental and royalty payments from third
parties operating stores and providing commercial services at our airports, such
as car rental agencies, food and beverage providers, retail and duty free store
operators, advertising and fees collected from other miscellaneous sources, such
as timeshare companies, vending machines and telecommunications
providers.




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Operating
Costs




The
following table sets forth our operating costs and certain other related
information for the periods indicated.




Operating
Costs




Year ended December
      31,2005
            
            
            2006
            
            
            2007Amount
            
            
            % change
            
            
            Amount
            
            
            % change
            
            
            Amount
            
            
            % change(In millions of Pesos except
      percentages)Operating
      Costs:Cost of
      services:Employee
    costs
            
            
            127.3
            
            
            
            6.70
            %
            
            
            140.3
            
            
            
            10.20
            %
            
            
            143.1
            
            
            
            2.0
            %Maintenance
            
            
            54.0
            
            
            
            13.2
            
            
            
            54.8
            
            
            
            1.5
            
            
            
            53.9
            
            
            
            (1.6
            )Safety, security &
      insurance
            
            
            71.7
            
            
            
            8.5
            
            
            
            68.9
            
            
            
            (3.9
            )
            
            
            74.9
            
            
            
            8.7Utilities
            
            
            86.7
            
            
            
            7
            
            
            
            92.2
            
            
            
            6.3
            
            
            
            94.4
            
            
            
            2.4Other
            
            
            49.3
            
            
            
            11.0
            
            
            
            41.3
            
            
            
            (16.2
            )
            
            
            54.5
            
            
            
            32.0Total cost of
      services
            
            
            389.0
            
            
            
            8.5
            
            
            
            397.5
            
            
            
            2.2
            
            
            
            420.8
            
            
            
            5.9General and administrative
      expenses
            
            
            244.7
            
            
            
            1.1
            
            
            
            237.5
            
            
            
            (2.9
            )
            
            
            256.7
            
            
            
            8.1Technical assistance
      fees
            
            
            40.1
            
            
            
            (0.2
            )
            
            
            49.5
            
            
            
            23.4
            
            
            
            57.4
            
            
            
            16.0Concession
      taxes
            
            
            72.6
            
            
            
            12.0
            
            
            
            84.6
            
            
            
            16.5
            
            
            
            98.3
            
            
            
            16.2Depreciation and
      amortization:Depreciation(1)
            
            
            209.1
            
            
            
            5.6
            
            
            
            262.5
            
            
            
            25.5
            
            
            
            263.6
            
            
            
            0.4Amortization(2)
            
            
            18.7
            
            
            
            5.6
            
            
            
            29.6
            
            
            
            58.3
            
            
            
            72.6
            
            
            
            145.3Total depreciation and
      amortization
            
            
            227.8
            
            
            
            5.6
            
            
            
            292.1
            
            
            
            28.2
            
            
            
            336.2
            
            
            
            15.1Total operating
      costs
            
            
            974.2
            
            
            
            5.7
            %
            
            
            1,061.2
            
            
            
            8.9
            %
            
            
            1,169.4
            
            
            
            10.2
            %





(1)
            Reflects
      depreciation of fixed assets.


(2)
            Reflects
      amortization of our concessions and rights to use airport
      facilities.




Cost
of Services




Our cost
of services consists primarily of employee, maintenance, safety, security and
insurance costs, utilities (a portion of which we recover from our tenants) and
other miscellaneous expenses.  In recent years, our cost of services
has increased from Ps.389.0 million in 2005 to Ps.420.8 million in 2007. These
proportionally smaller increases in cost of services relative to the increases
in revenue in recent years have contributed to the increase in our operating
margins (defined as income from operations divided by total revenue) from 34.2%
in 2005 to 38.3% in 2007.




General
and Administrative Expenses




Our
general and administrative expenses consist primarily of administrative overhead
costs, fees and expenses paid to consultants and other providers of professional
services and other miscellaneous expenses.  In recent years, our
general and administrative expenses have increased from Ps.244.7
millionin 2005 to Ps.256.7
million in 2007.  The
increase is principally the result of costs (such as professional fees
and IT services) associated with being a public reporting company in Mexico and
the United States.




Technical
Assistance Fee and Concession Tax




Under the
Technical Assistance Agreement, SETA provides management and consulting services
and transfers technical assistance and technological and industry knowledge and
experience to us in exchange for a fee.  The technical assistance fee
for each of 2001 and 2002 was fixed at U.S.$5.0 million (adjusted annually for
U.S. inflation).  For the remainder of the contract term, the fee is
equal to the greater of U.S.$3.0 million adjusted annually for inflation
(measured by the U.S. consumer price index) or 5% of our annual consolidated
operating income (calculated prior to deducting the technical assistance fee,
taxes and depreciation and amortization, in each case determined in accordance
with Mexican FRS).




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Beginning
November 1, 1998, we became subject to Article 232-A of the Mexican Federal
Duties Law, which requires that the holders of concessions pay a tax for the use
of state-owned assets.  This tax is currently equal to 5% of the gross
annual revenues of each concession holder obtained from the use of public domain
assets pursuant to the terms of its concession.  The concession tax
may be revised at any time by the Mexican government, and there can be no
assurance that this tax may not increase in the future.  If the
Mexican government increases the concession tax, we are entitled to request an
increase in its maximum rates from the Ministry of Communications and
Transportation; however, there can be no assurance that the Ministry of
Communications and Transportation would honor any such request.




Depreciation
and Amortization




Our
depreciation and amortization expenses primarily reflect the amortization of our
investment in our 13 concessions. The value of our concessions was determined in
June 2000, when SETA won the bid to acquire Series BB shares currently
representing 14.7% of our capital stock, based on the value assigned by the
independent company INGENIAL.  In addition, we depreciate the value of
certain fixed assets we acquire or build at our airports pursuant to the
investment requirements under our master development programs.




Taxation




Mexican
companies were generally required to pay the greater of their income tax
liability or their asset tax liability (determined at a rate of 1.25% of the
average tax value of virtually all of their assets (including, in our case, our
concessions), less the average tax value of certain liabilities (basically
liabilities owed to Mexican residents excluding those with financial
institutions or their intermediaries)).  In December 2006, the Mexican
authorities approved a change in the methodology used to calculated asset tax
liabilities and reduced the tax rates to 1.25% from 1.8% applicable to the
average tax value of virtually all of the company’s assets without reducing the
average tax value of certain liabilities. As a result of changes in the Mexican
tax law, the asset tax balance may be recovered through rebates over the
following ten years of up to 10% of the total asset tax paid out and pending
recovery, provided that this sum does not exceed the difference between
the income tax paid during the period and the asset tax paid during the three
previous years, whichever is lower, when the income tax exceeds asset tax in any
of those years.




In
addition, we amortize our investment in our concessions for tax purposes at a
rate of 15% per year.  This depreciation reduces our current income
tax payments.  Because we are required under Mexican FRS to amortize
our investment in our concession over a longer period for financial reporting
purposes, we will continue to record a deferred tax liability and to include a
provision in our financial statements with respect to the difference between the
amount of amortization for tax and financial reporting purposes.




On
October 1, 2007, the Business Flat Tax Law (“IETU Law”) was enacted and provided
for a new flat rate business tax (Impuesto Empresarial a Tasa
Única or “IETU”). The IETU Law went into effect on January 1,
2008.  IETU applies to the sale of goods, the provision of independent
services and the granting of use or enjoyment of goods, according to the terms
of the IETU Law, less certain authorized deductions.  IETU payable is
calculated by subtracting certain tax credits from the tax
determined.  Revenues, as well as deductions and certain tax credits,
are determined based on cash flows generated beginning January 1,
2008.  IETU Law establishes that the IETU rate will be 16.5% in 2008,
17% in 2009, and 17.5% as of 2010.  Based on our financial
projections, which were performed over a four-year period and according to INIF
8, “Effects of the Business Flat Tax”, we determined that our subsidiaries would
essentially pay IETU.  Therefore, as of December 31, 2007, the Company
recorded a deferred IETU liability of Ps. 1,073,859, and cancelled the deferred
regular income tax (“ISR”) liability of Ps. 597,506, recognizing the effect net
in the statement of income of Ps. 476,353. The impact of the IETU on the
Company’s deferred tax balances did not affect the Company’s cash flows in
2007.




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In
addition, the Tax Benefits Decree and the Third Omnibus Tax Bill were published
on November 5 and December 31, 2007, respectively, clarifying or expanding the
transitory application of the law regarding transactions carried out in 2007
that will have an impact in 2008.




We
regularly review our deferred tax assets for recoverability and, if necessary,
establish a valuation allowance based on historical taxable income, projected
future taxable income and the expected timing of the reversals of existing
temporary differences.




Our
effective tax rate in 2005, 2006 and 2007 was 29.3%, 29.5%, and 96.2%,
respectively.  Our relatively low effective tax rate prior to 2007 was
the result on the effect on deferred taxes resulting from decreases in statutory
income tax rates (from 30% in 2005 to 29% in 2006 and 28% thereafter). The
substantial increase in our effective tax rate in 2007 was principally due to
the deferred tax effects from the adoption of the IETU Law.




We are
subject to the statutory employee profit sharing regime established under the
Mexican Federal Labor Law.  Under this regime, 10% of each
unconsolidated company’s annual profits (as calculated for tax purposes) must be
distributed among its employees, if any, other than its chief executive
officer.







Effects
of Devaluation and Inflation




The
following table sets forth, for the periods indicated:




·
            the
      percentage that the Mexican peso devalued or appreciated against the U.S.
      dollar;




·
            the
      Mexican inflation rate;




·
            the
      U.S. inflation rate; and




·
            the
      percentage that Mexican gross domestic product, or GDP, changed as
      compared to the previous period.




89
 Table of Contents




Year ended
      December 31,2005
            
            
            2006
            
            
            2007Depreciation
      (appreciation) of the Mexican peso as computed to the U.S. dollar(1)
            
            
            (4.6
            )%
            
            
            1.6
            %
            
            
            1.1
            %Mexican
      inflation rate(2)
            
            
            3.3
            %
            
            
            4.1
            %
            
            
            3.8
            %U.S.
      inflation rate(3)
            
            
            3.4
            %
            
            
            2.5
            %
            
            
            4.1
            %Increase
      (decrease) in Mexican gross domestic product(4)
            
            
            3.0
            %
            
            
            4.8
            %
            
            
            3.3
            %





(1)
            Based
      on changes in the rates for calculating foreign exchange liabilities, as
      reported by Banco de
      Mexico, or the Mexican Central Bank, at the end of each period,
      which were as follows:  Ps.10.6344 per U.S. dollar as of
      December 31, 2005, Ps.10.80 per U.S. dollar as of December 30, 2006,
      and Ps.10.92 per U.S. dollar as of December 31,
  2007.


(2)
            Based
      on changes in the Mexican Consumer Price Index from the previous period,
      as reported by the Mexican Central Bank.  The Mexican Consumer
      Price Index at period-end was 116.301in 2005, 121.015 in 2006 and125.564in
      2007.


(3)
            As
      reported by the U.S. Department of Labor, Bureau of Labor
      Statistics.


(4)
            In
      real terms, as reported by the Mexican Central
  Bank.




Due to
the relatively low rate of inflation in Mexico in recent years, inflation has
not had a material impact on our revenues or results of operations during the
past three years.  However, the general condition of the Mexican
economy, the devaluation of the peso as compared to the dollar, inflation and
high interest rates have in the past adversely affected, and may in the future
adversely affect, the following:




·
            Depreciation and amortization
      expense.  Through the end of 2007, Mexican FRS required
      us to restate our non-monetary assets to give effect to
      inflation.  The restatement of these assets in periods of high
      inflation increases the carrying value of these assets in pesos, which in
      turn increases the related depreciation expense and risk of
      impairments.




·
            Passenger
      charges.  Passenger charges for international passengers
      are currently denominated in U.S. dollars (although invoiced and paid in
      Mexican pesos), while passenger charges for domestic passengers are
      denominated in pesos.  Because Mexican FRS requires Mexican
      companies to restate their results of operations for prior periods in
      constant pesos as of the most recent balance sheet date, when the rate of
      inflation in a period exceeds the depreciation of the peso as compared to
      the dollar for that period, the peso value of dollar-denominated or
      dollar-linked revenues in the prior period will be higher than those of
      the current period.  This effect may occur despite the fact that
      the amount of such revenues in dollar terms may have been the same or
      greater in the current period.




·
            Comprehensive financing
      cost.  As required by Mexican FRS, our comprehensive
      financing cost reflects gains or losses from foreign exchange transactions
      and gains or losses from monetary position and, as a result, is impacted
      by both inflation and devaluations.




·
            Maximum rates in
      pesos.Our passenger charges for international
      passengers are denominated in U.S. dollars, but are invoiced and paid in
      Mexican pesos based on the average exchange rate for the month prior to
      each flight.




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Operating
Results by Airport




The
following table sets forth our results of operations for the periods indicated
for each of our principal airports.




Airport
Operating Results




Year
      ended December 31,2005
            
            
            2006
            
            
            2007(millions
      of pesos, except percentages)Monterrey:Revenues:Aeronautical
      services
            
            
            499.3
            
            
            
            587.2
            
            
            
            667.9Non-aeronautical
      services
            
            
            142.3
            
            
            
            159.8
            
            
            
            179.9Total
      revenues
            
            
            641.6
            
            
            
            747.0
            
            
            
            847.8Operating
      costs
            
            
            306.7
            
            
            
            655.2
            
            
            
            816.9Costs of
      services
            
            
            103.7
            
            
            
            103.8
            
            
            
            117.6General and administrative
      expenses
            
            
            89.3
            
            
            
            437.8
            
            
            
            570.1Depreciation and
      amortization
            
            
            65.7
            
            
            
            76.1
            
            
            
            84.5Income
      from operations
            
            
            334.9
            
            
            
            91.8
            
            
            
            30.8Operating
      margin(1)
            
            
            52.2
            %
            
            
            12.3
            %
            
            
            3.6
            %Acapulco:Revenues:Aeronautical
      services
            
            
            107.4
            
            
            
            123.5
            
            
            
            125.9Non-aeronautical
      services
            
            
            19.3
            
            
            
            21.4
            
            
            
            22.5Total
      revenues
            
            
            126.6
            
            
            
            144.9
            
            
            
            148.4Operating
      costs
            
            
            114.5
            
            
            
            124.8
            
            
            
            150.2Costs of
      services
            
            
            49.3
            
            
            
            50.1
            
            
            
            51.1General and administrative
      expenses
            
            
            25.3
            
            
            
            29.3
            
            
            
            49.3Depreciation and
      amortization
            
            
            30.4
            
            
            
            38.3
            
            
            
            42.2Income
      from operations
            
            
            12.1
            
            
            
            20.1
            
            
            
            (1.8
            )Operating
      margin(1)
            
            
            9.6
            %
            
            
            13.9
            %
            
            
            (1.2
            )%Mazatlán:Revenues:Aeronautical
      services
            
            
            90.5
            
            
            
            97.1
            
            
            
            111.0Non-aeronautical
      services
            
            
            30.8
            
            
            
            31.2
            
            
            
            32.5Total
      revenues
            
            
            121.3
            
            
            
            128.3
            
            
            
            143.5Operating
      costs
            
            
            92.8
            
            
            
            112.6
            
            
            
            141.9Costs of
      services
            
            
            33.2
            
            
            
            35.6
            
            
            
            34.5General and administrative
      expenses
            
            
            27.2
            
            
            
            44.2
            
            
            
            71.1Depreciation and
      amortization
            
            
            23.2
            
            
            
            26.3
            
            
            
            29.3Income
      from operations
            
            
            28.5
            
            
            
            15.7
            
            
            
            1.5Operating
      margin(1)
            
            
            23.6
            %
            
            
            12.2
            %
            
            
            1.1
            %Culiacán:Revenues:Aeronautical
      services
            
            
            88.5
            
            
            
            98.8
            
            
            
            127.1Non-aeronautical
      services
            
            
            14.0
            
            
            
            16.4
            
            
            
            18.1Total
      revenues
            
            
            102.5
            
            
            
            115.2
            
            
            
            145.2Operating
      costs
            
            
            70.5
            
            
            
            101.1
            
            
            
            137.2Costs of
      services
            
            
            25.5
            
            
            
            26.6
            
            
            
            26.4General and administrative
      expenses
            
            
            18.1
            
            
            
            48.4
            
            
            
            79.8Depreciation and
      amortization
            
            
            18.8
            
            
            
            20.3
            
            
            
            23.7Income
      from operations
            
            
            32.0
            
            
            
            14.1
            
            
            
            8.0Operating
      margin(1)
            
            
            31.3
            %
            
            
            12.2
            %
            
            
            5.5
            %Chihuahua:Revenues:Aeronautical
      services
            
            
            72.2
            
            
            
            82.8
            
            
            
            98.0Non-aeronautical
      services
            
            
            14.3
            
            
            
            16.7
            
            
            
            18.7Total
      revenues
            
            
            86.5
            
            
            
            99.5
            
            
            
            116.7Operating
      costs
            
            
            65.0
            
            
            
            87.3
            
            
            
            104.3Costs of
      services
            
            
            24.3
            
            
            
            26.7
            
            
            
            27.8General and administrative
      expenses
            
            
            20.9
            
            
            
            40.0
            
            
            
            49.3Depreciation and
      amortization
            
            
            13.2
            
            
            
            15.6
            
            
            
            21.2Income
      from operations
            
            
            21.5
            
            
            
            12.2
            
            
            
            12.4Operating
      margin(1)
            
            
            25.1
            %
            
            
            12.3
            %
            
            
            10.6
            %




91
 Table of Contents




Year
      ended December 31,2005
            
            
            2006
            
            
            2007(millions
      of pesos, except percentages)Zihuatanejo:Revenues:Aeronautical
      services
            
            
            65.4
            
            
            
            77.6
            
            
            
            79.6Non-aeronautical
      services
            
            
            14.8
            
            
            
            16.7
            
            
            
            16.6Total
      revenues
            
            
            80.2
            
            
            
            94.3
            
            
            
            96.2Operating
      costs
            
            
            65.2
            
            
            
            82.7
            
            
            
            92.5Costs of
      services
            
            
            24.7
            
            
            
            26.1
            
            
            
            26.7General and administrative
      expenses
            
            
            16.9
            
            
            
            32.8
            
            
            
            35.5Depreciation and
      amortization
            
            
            17.2
            
            
            
            19.1
            
            
            
            25.3Income
      from operations
            
            
            15.0
            
            
            
            11.6
            
            
            
            3.7Operating
      margin(1)
            
            
            18.7
            %
            
            
            12.3
            %
            
            
            3.9
            %Other:(2)Revenues:Aeronautical
      services
            
            
            269.0
            
            
            
            304.0
            
            
            
            340.3Non-aeronautical
      services
            
            
            52.0
            
            
            
            67.9
            
            
            
            70.8Total
      revenues
            
            
            321.0
            
            
            
            371.9
            
            
            
            411.1Operating
      costs
            
            
            268.8
            
            
            
            326.3
            
            
            
            397.3Costs of
      services
            
            
            123.3
            
            
            
            127.5
            
            
            
            136.5General and administrative
      expenses
            
            
            65.2
            
            
            
            95.6
            
            
            
            141.7Depreciation and
      amortization
            
            
            55.8
            
            
            
            85.1
            
            
            
            98.4Income
      from operations
            
            
            52.2
            
            
            
            45.6
            
            
            
            13.8Operating
      margin(1)
            
            
            16.2
            %
            
            
            12.3
            %
            
            
            3.4
            %Total:(3)Revenues:Aeronautical
      services
            
            
            1,192.3
            
            
            
            1,371.0
            
            
            
            1,549.8Non-aeronautical
      services
            
            
            287.6
            
            
            
            330.1
            
            
            
            359.1Total
      revenues
            
            
            1,479.9
            
            
            
            1,701.1
            
            
            
            1,908.9Operating
      costs
            
            
            983.4
            
            
            
            1,490.0
            
            
            
            1,840.3Costs of
      services
            
            
            384.0
            
            
            
            396.4
            
            
            
            420.6General and administrative
      expenses
            
            
            262.8
            
            
            
            728.1
            
            
            
            996.8Depreciation and
      amortization
            
            
            224.4
            
            
            
            280.8
            
            
            
            324.6Income
      from operations
            
            
            496.5
            
            
            
            211.1
            
            
            
            68.6Operating
      margin(1)
            
            
            33.5
            %
            
            
            12.4
            %
            
            
            3.6
            %





(1)
            We
      determine operating margin per airport by dividing income from operations
      at each airport or group of airports by total revenues for that airport or
      group of airports.


(2)
            Reflects
      the results of operations of our airports located in Ciudad Juárez,
      Durango, Reynosa, San Luis Potosí, Tampico, Torreón and
      Zacatecas.


(3)
            Includes
      intercompany transactions between us and our subsidiaries and among our
      subsidiaries. In 2006 we implemented a new method for allocating revenues
      among our airports, treated as one single integrated economic entity. Such
      method consists of intercompany charges and credits for corporate expense
      that were designed to help less profitable airports in meeting their
      financial obligations.  The implementation of this method
      affects the operating income results reported by the individual airports
      but does not affect our consolidated
results.




Historically,
our most profitable airport has been our Monterrey International Airport, which
handles the majority of our international passengers.  We determine
profitability per airport by dividing income from operations in each airport by
total revenues for that airport.




92
 Table of Contents





Summary
Historical Results of Operations




The
following table sets forth a summary of our consolidated results of operations
for the years indicated.




Summary
      Consolidated Operating Results
                Year
      ended December 31,2005
            
            
            2006
            
            
            2007(thousands
      of pesos, except percentages)Amount
            
            
            % change
            
            
            Amount
            
            
            %
      change
            
            
            Amount
            
            
            %
      changeRevenues:Aeronautical
      services
            
            
            1,192,249
            
            
            
            10.0
            %
            
            
            1,370,968
            
            
            
            15.0
            %
            
            
            1,549,827
            
            
            
            13.0
            %Non-aeronautical
      services
            
            
            287,628
            
            
            
            14.7
            %
            
            
            316,343
            
            
            
            10.0
            %
            
            
            347,526
            
            
            
            9.9
            %Total
      revenues
            
            
            1,479,877
            
            
            
            10.9
            %
            
            
            1,687,311
            
            
            
            14.0
            %
            
            
            1,897,353
            
            
            
            12.4
            %Operating
      costs:Cost
      of services
            
            
            389,037
            
            
            
            8.5
            %
            
            
            397,465
            
            
            
            2.2
            %
            
            
            420,777
            
            
            
            5.9
            %General
      and administrative expenses
            
            
            244,707
            
            
            
            1.1
            %
            
            
            237,475
            
            
            
            (3.0
            )%
            
            
            256,730
            
            
            
            8.1
            %Technical
      assistance fees
            
            
            40,016
            
            
            
            (0.5
            )%
            
            
            49,541
            
            
            
            23.8
            %
            
            
            57,416
            
            
            
            15.9
            %Concession
      taxes
            
            
            72,643
            
            
            
            12.0
            %
            
            
            84,635
            
            
            
            16.5
            %
            
            
            98,307
            
            
            
            16.2
            %Depreciation
      and amortization
            
            
            227,805
            
            
            
            5.5
            %
            
            
            292,096
            
            
            
            28.2
            %
            
            
            336,202
            
            
            
            15.1
            %Total
      operating costs
            
            
            974,208
            
            
            
            5.7
            %
            
            
            1,061,212
            
            
            
            8.9
            %
            
            
            1,169,432
            
            
            
            10.2
            %Income
      from operations
            
            
            505,669
            
            
            
            22.5
            %
            
            
            626,099
            
            
            
            23.8
            %
            
            
            727,921
            
            
            
            16.3
            %Net
      comprehensive financing income:Interest
      income, net
            
            
            109,131
            
            
            
            109.7
            %
            
            
            133,449
            
            
            
            22.3
            %
            
            
            126,660
            
            
            
            (5.1
            )%Exchange
      gain (loss), net
            
            
            (26,444
            )
            
            
            459.6
            %
            
            
            12,446
            
            
            
            (147.1
            )%
            
            
            11,905
            
            
            
            (4.3
            )%Monetary
      position loss
            
            
            (53,074
            )
            
            
            (15.3
            )%
            
            
            (75,567
            )
            
            
            42.4
            %
            
            
            (42,347
            )
            
            
            (44
            )%Net
      comprehensive financing income
            
            
            29,613
            
            
            
            (293.0
            )%
            
            
            70,328
            
            
            
            137.5
            %
            
            
            96,218
            
            
            
            36.8
            %Other
      income (expense)
            
            
            3,853
            
            
            
            (16.4
            )%
            
            
            (30,679
            )
            
            
            (896.2
            )%
            
            
            (7,584
            )
            
            
            (75.3
            )%Income
      before income taxes
            
            
            539,135
            
            
            
            34.1
            %
            
            
            665,748
            
            
            
            23.5
            %
            
            
            816,555
            
            
            
            22.7
            %Income
      taxes
            
            
            158,029
            
            
            
            68.4
            %
            
            
            196,511
            
            
            
            24.4
            %
            
            
            785,363
            
            
            
            299.7
            %Consolidated
      net income
            
            
            381,106
            
            
            
            23.6
            %
            
            
            469,237
            
            
            
            23.1
            %
            
            
            31,192
            
            
            
            (93.4
            )%Other operating data
      (unaudited):Operating
      margin(1)
            
            
            34.2
            %
            
            
            
            
            
            
            37.1
            %
            
            
            
            
            
            
            38.4
            %Net
      margin(2)
            
            
            25.8
            %
            
            
            
            
            
            
            27.8
            %
            
            
            
            
            
            
            1.6
            %





(1)
            Income
      from operations divided by total revenue, expressed as a
      percentage.


(2)
            Net
      income divided by total revenues, expressed as a
    percentage.




Results
of operations for the year ended December 31, 2007 compared to the year ended
December 31, 2006.




Revenues




Total
revenues for 2007 were Ps.1,897.4 million, 12.4% higher than the Ps.1,687.3
million recorded in 2006, as a result of increases in both aeronautical and
non-aeronautical revenue.




Aeronautical
revenue increased 13.0% in 2007, as compared to 2006, due primarily to an
overall 15.8% increase in passengers paying passenger charges and an 8.6%
increase in air traffic movements, which resulted in increases in revenues from
passenger charges, landing charges and aircraft parking charges of Ps.159.0
million, Ps.5.5 million and Ps.3.5 million, respectively.  Reflecting
these volume increases, total workload units increased 19.3% in 2007 as compared
to 2006.  Aeronautical revenue per workload unit in 2007 was Ps.103.1
compared to Ps.108.9 in 2006, a decrease of 5.3%, which was primarily
attributable to incentives and discounts offered to carriers participating in
the Mexico City airports decongestion plan and an increase in passenger traffic
from low-cost carriers. As part of our strategy of increasing passenger traffic
at our airports, we sometimes offer discounts and other incentives to carriers
that meet certain passenger traffic and other criteria. To date, low cost
carriers have been the airlines availing themselves of these discounts and
incentives.




93
 Table of Contents





Non-aeronautical
revenue increased 9.9% from Ps.316.3 million in 2006 to Ps.347.5 million in
2007, principally due to increases in revenue from car parking, which increased
16.2%, food and beverage operations, which increased 27.9%, as well as increases
in other categories of non-aeronautical revenues.  These increases
were driven by the increase in passenger traffic at our
airports.  Non-aeronautical revenue per terminal passenger decreased
by 8.9%, from Ps.26.9 in 2006 to Ps.24.5 in 2007 primarily due to increases in
passenger traffic from low-cost carriers. Passengers on such carriers typically
are most cost-conscious and as a result make fewer purchases at our
airports.




Operating
Results




Cost
of Services




Cost of
services increased 5.9% in 2007 as compared to 2006, mainly as a result of
increases in various categories of expenses, including security expenses (from
Ps.68.9 million to Ps.74.9 million), payroll expenses (from Ps.140.3 million to
Ps.143.1 million) and other expenses (from Ps.41.3 million to Ps.54.5
million).  As a percentage of total revenues, cost of services
decreased from 23.6% of revenues in 2006 to 22.2% of revenues in 2007, mainly
reflecting the increase in costs and decrease in revenues from 14% to
12.4%.




General
and Administrative Expenses




Our
general and administrative expenses consist primarily of administrative overhead
costs, fees and expenses paid to consultants and other providers of professional
services and other miscellaneous expenses.  General and administrative
expenses increasedfrom
Ps.237.5 millionin 2006 to
Ps.256.7 million in 2007, mainly due to higher professional fees, IT
services and other costs associated with being a public reporting company in
Mexico and the U.S.




Technical
Assistance Fee and Concession Tax




Our
technical assistance fee increased 15.9% to Ps.57.4 million in 2007, as compared
to Ps.49.5 million in 2006, reflecting our improved profitability in
2007.  Our concession tax increased 16.2% from Ps.84.6 million in 2006
to Ps.98.3 million in 2007, reflecting our increase in revenues in
2007.




Depreciation
and Amortization




Our 15.1%
increase in depreciation and amortization, from Ps.292.1 million in 2006 to
Ps.336.2 million in 2007, was principally due to the increase in improvements to
our concession properties during 2007.




Income
from Operations




On a
consolidated basis, operating income increased 16.3% to Ps.727.9 million in
2007, as compared to Ps.626.1 million during 2006.  This increase
primarily reflected the 12.4% increase in our total revenues in 2007, which was
offset in part by a proportionately smaller increase in total operating
costs.  Our operating margin increased from 37.1% in 2006 to 38.4% in
2007.




On an
airport-by-airport basis, the principal contributors to operating income in 2007
were the Monterrey International Airport (Ps. 30.8 million), the Chihuahua
International Airport (Ps. 12.4 million), the Culiacán International Airport
(Ps. 8.0 million) and the Zihuatanejo International Airport (Ps. 3.7
million).




94
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Comprehensive
Financing Result




Our net
comprehensive financing result in 2007 generated income of Ps.96.2 million, as
compared to income of Ps.70.3 million in 2006.  This increase in
income resulted primarily from a 44% decline in losses from monetary position,
from a loss of Ps.75.6 million in 2006 to a loss of Ps.42.3 million in
2007.  Monetary position loss represents the erosion of the purchasing
power of monetary items caused by inflation and is calculated by applying
Mexican National Consumer Price Index (INPC) factors to monthly net monetary
position. Losses result from maintaining a net monetary asset
position.




Income
Taxes




For 2007,
income tax expense was Ps. 785.3 million, an increase of 299.7% as compared to
Ps. 196.5 million in 2006. The increase in income taxes was principally the net
result of an increase in current income tax expense of Ps. 74.5 million as a
result of an increase in taxable profit, a decrease of Ps. 559.5 million in
deferred regular income tax and an increase of Ps. 1,073.9 million related to
the deferred tax effects of the new IETU Law.  The impact of the IETU
on the Company’s deferred tax balances did not affect the Company’s cash flows
in 2007.  The Company created a valuation allowance for the entire
amount of tax loss carry-forwards and recoverable asset taxes that can be offset
against ISR taxable income in the calculation of the 2007 deferred
taxes.




Our
effective tax rate in 2006 and 2007 was 29.5% and 96.2%,
respectively.  Our relatively low effective tax rate prior to 2007 was
the result on the effect on deferred taxes resulting from decreases in statutory
income tax rates (from 30% in 2005 to 29% in 2006 and 28% thereafter). The
substantial increase in our effective tax rate in 2007 was principally due to
the deferred tax effects from the adoption of the IETU Law.




Net
Income




Principally
as a result of the effects of the tax reform, net income in 2007 was Ps. 31.2
million, a decrease of 93.4% as compared to the prior year period. Earnings per
share were Ps. 0.08, and earnings per ADS were U.S.$0.06. Each ADS represents
eight Series B shares.




Results
of operations for the year ended December 31, 2006 compared to the year ended
December 31, 2005.




Revenues




Total
revenues for 2006 were Ps.1,687.4 million, 14.0% higher than the Ps.1,479.9
million recorded in 2005, as a result of increases in both aeronautical and
non-aeronautical revenue.




Aeronautical
revenue increased 15.0% in 2006, as compared to 2005, due primarily to a 19.8%
increase in passengers paying passenger charges, a 3.0% increase in air traffic
movements, which resulted in increases in revenues from passenger charges,
landing charges and aircraft parking charges of Ps.165.7 million, Ps.1.0 million
and Ps.1.9 million, respectively.  Reflecting these volume increases,
total workload units increased 10.4% in 2006 as compared to
2005.  Aeronautical revenue per workload unit in 2006 was Ps.108.9
compared to Ps.104.5 in 2005, an increase of 4.2%.




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Non-aeronautical
revenue increased 10.0% from Ps.287.6 million in 2005 to Ps.316.3 million in
2006, principally due to increases in revenue from car parking which increased
11%, food and beverage operations, which increased 33.8% as well as increases in
other categories of non-aeronautical revenues.  These increases were
driven by the increase in passenger traffic at our
airports.  Non-aeronautical revenue per terminal passenger remained
substantially the same in 2006, decreasing by 0.7%, from Ps.27.1 in 2005 to
Ps.26.9 in 2006.




Operating
Results




Cost
of Services




Cost of
services increased 2.2% in 2006 as compared to 2005, mainly as a result of
increases in various categories of expenses, including employee costs (from
Ps.127.3 million to Ps.140.3 million) and utilities (from Ps.86.7 million to
Ps.92.2 million).  Offsetting these sources of increases, safety,
security and insurance expenses decreased 3.9%, from Ps.71.7 million in 2005 to
Ps.68.9 million in 2006.  As a percentage of total revenues, cost of
services decreased from 26.3% of revenues in 2005 to 23.5% of revenues in 2006,
reflecting the increase in revenues.




General
and Administrative Expenses




Our
general and administrative expenses consist primarily of administrative overhead
costs, fees and expenses paid to consultants and other providers of professional
services and other miscellaneous expenses.  General and administrative
expenses decreased modestlyfrom
Ps.244.7 millionin 2005 to
Ps.237.5 million in 2006.




Technical
Assistance Fee and Concession Tax




Our
technical assistance fee increased 23.8% to Ps.49.5 million in 2006, as compared
to Ps.40.1 million in 2005, reflecting our improved profitability in
2006.  Our concession tax increased 16.5% from Ps.72.6 million in 2005
to Ps.84.6 million in 2006, reflecting our increase in revenues in
2006.




Depreciation
and Amortization




Our 28.2%
increase in depreciation and amortization, from Ps.227.8 million in 2005 to
Ps.292.1 million in 2006 was principally due to the increase in ourproperty, machinery, equipment and
improvements to concession properties, reflecting investments made pursuant to
our master development programs, during 2006.




Income
from Operations




On a
consolidated basis, operating income increased 23.8% to Ps.626.1 million in
2006, as compared to Ps.505.7 million during 2005.  This increase
primarily reflected the 14.0% increase in our total revenues in 2006, which was
offset in part by a proportionately smaller increase in total operating
costs.  Our operating margin increased from 34.2% in 2005 to 37.1% in
2006.




On an
airport-by-airport basis, the principal contributors to operating income in 2006
were the Monterrey International Airport (operating income decreased 72.8% and
operating margin decreased from 55.3% to 12.3%), the Acapulco International
Airport (operating income increased 64.8% and operating margin increased from
9.6% to 13.8%), the Mazatlán International Airport (operating income decreased
44.8% and operating margin decreased from 23.4% to 12.3%) and the Chihuahua
International Airport (operating income decreased 43.5% and operating margin
decreased from 25.0% to 12.3%).




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Comprehensive
Financing Result




Our net
comprehensive financing result in 2006 generated income of Ps.70.3 million, as
compared to income of Ps.29.6 million in 2005.  This increase resulted
primarily from the change from a foreign exchange loss of Ps.26.4 million in
2005 to a foreign exchange gain of Ps.12.4 million in 2006, as well as from an
increase in interest income from Ps.109.1 million in 2005 to Ps.133.4 million in
2006.  These increases were partially offset by a 42.4% increase in
losses from monetary position, from Ps.53.0 million in 2005 to Ps.75.6 million
in 2006.




Income
Taxes




The
provision for income taxes increased 24.4% to Ps.196.5 million in 2006, from
Ps.158.0 million in 2005.  This increase was attributable primarily to
increase in our pre-tax income.  Our effective rate decreased
marginally from 29.5% in 2005 to 29.3% in 2006.




Net
Income




Net
income increased 23.1% in 2006 to Ps.469.2 million, from Ps.381.1 million in
2005, reflecting the factors described above.




Liquidity
and Capital Resources




Historically,
our operations have been funded through cash flows from operations, and we have
not incurred any significant indebtedness.  The cash flow generated
from our operations has generally been used to fund operating costs and capital
expenditures, including expenditures under our master development programs, and
the excess of our cash flow has been added to our accumulated cash
balances.  As of December 31, 2006 and December 31, 2007, we had
Ps.1,672.9 million and Ps.1,756.7 million, respectively, of cash and cash
equivalents.  We believe that working capital is sufficient for the
company’s present requirements.




In 2007,
we generated Ps.1,070.6 million in resources from operating activities, as
compared to Ps.729.1 million in 2006, principally due to decreases in certain of
our working capital accounts such as trade accounts receivable, recoverable
taxes and other current assets, which increased our cash balances in 2007
compared to 2006.  Our resources used in financing activities during
2007 were Ps. 328.9 million for payments of dividends and share
repurchases.  Our resources used in investing activities were Ps.
658.0 million for purchases of capital assets as summarized below in the table
“Historical Capital Expenditures by Type.”




In 2006,
we generated Ps. 729.1 million in resources from operating activities, as
compared to Ps. 701.4 million in 2005, principally reflecting the improvement in
our income from operations discussed above.  We used no resources in
financing activities in 2005 but in 2006 we used Ps. 322.5 million, which was
represented by the dividend payment of Ps. 446.7 million net of Ps. 119.7
million received for the exercise of SETA’s share option mentioned
above.  Our resources used in investing activities were Ps.440.2
million, mainly for the purchase of capital assets as summarized below in the
table “Historical Capital Expenditures by Type.”




In 2005,
we generated Ps.701.4 million in resources from operating activities,
principally reflecting our increased net income generated from our operations
without considering non-cash items such as depreciation and amortization,
deferred income tax and the change in our working capital.  We used no
resources in financing activities in 2005.  Our resources used in
investing activities in 2005 were Ps.293.5 million, mainly for the purchase of
capital assets as summarized below in the table “Historical Capital Expenditures
by Type.”




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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
representing 0.74% of our capital stock.  Aeroinvest entered into
agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated to
refinance its existing credit facilities in June 2007.  The
refinancing consists of the issuance of the following series of notes by a
Mexican trust, payable in U.S. dollars:  (i) Ps. 2,125,000,000
aggregate principal amount of Series 2007-1 Class A Notes due 2017, (ii) Ps.
325,000,000 aggregate principal amount of Series 2007-1 Class B Notes due 2017,
and (iii) Ps. 355,000,000 aggregate principal amount of Series 2007-1 Class C
Notes due 2017.  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 39.32% of our
capital stock as well as 74.5% of the Series A shares of SETA.  The
refinancing was approved at the extraordinary shareholders meeting held January
31, 2007.




Under the refinancing
agreements, Aeroinvest is required to maintain at least its present ownership
interest in us and SETA, majority control over us and our subsidiaries and a
minimum interest expense to EBITDA ratio.  The terms of the
refinancing agreements require that Aeroinvest 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.  As a result,
Aeroinvest would be required to obtain a waiver or amendment under the
restructuring documents to permit us to undertake certain of these restricted
actions, including the incurrence of any material amount of indebtedness, and
there can be no assurances that such waivers or amendments would be
obtained.  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, Aeroinvest could lose its
ability to vote its shares of our capital stock as well as its shares of SETA,
and the trustee could in certain circumstances foreclose on the Series B shares
and is SETA shares held in trust.




Under the
terms of our concessions, each of our subsidiary concession holders is required
to present a master development program for approval by the Ministry of
Communications and Transportation every five years, which includes investment
commitments (including capital expenditures and improvements) applicable to us
as concession holder for the succeeding five-year period.  For more
information on our master development programs and historical and projected
committed investments and capital expenditures, please see “Item 4. History and
Development of the Company – Master Development Programs”.




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Share
Repurchase Program




On April
27, 2007, our shareholders approved the establishment of a share repurchase
reserve in the amount of Ps. 400,000,000 and allocated up to Ps. 100,000,000 for
share repurchases during the 2007 fiscal year.  Share repurchases
began in October of 2007.  As of May 27, 2008, the Company had used
Ps. 139,152,333 to repurchase a total of 3,985,700 Series B shares in accordance
with the share repurchase program. On April 3, 2008, our shareholders authorized
the use of an additional amount of Ps. 300,000,000 for repurchases of Series B
shares during 2008, for a total of Ps. 400,000,000.




Critical Accounting
Policies




We
prepare consolidated financial statements in conformity with Mexican
FRS.  As such, we are required to make estimates, judgments and
assumptions that affect (i) certain reported amounts of our assets and
liabilities, (ii) the disclosure of our contingent assets and liabilities at the
date of the financial statements, and (iii) certain reported amounts of revenues
and expenses during the reporting period.  We base estimates and
judgments on our historical experience and on various other reasonable factors
that together form the basis for making judgments about the carrying values of
our assets and liabilities.  Our actual results may differ from these
estimates under different assumptions or conditions.  We evaluate our
estimates and judgments on an ongoing basis.  Our significant
accounting policies are described in Note 3 to our consolidated financial
statements.  We believe our most critical accounting policies that
result in the application of estimates and/or judgments are the
following:




Income
Taxes




In
conformity with Bulletin D-4, Accounting for Income Tax, Asset Tax
and Employee Statutory Profit Sharing, of Mexican FRS, a provision or
benefit for income tax is recorded in the results of the year in which such tax
expense or benefit is incurred.  Deferred income tax assets and
liabilities are recognized for temporary differences derived from comparing the
accounting and tax values of assets and liabilities, plus any future benefits
resulting from tax loss carry-forwards or any other tax credit.  The
resulting deferred tax provision or benefit is reflected in our consolidated
statements of income. A deferred tax liability is recorded when there is a
charge to results, and a deferred tax asset is recorded in the event of a credit
to results.




Asset tax
paid may be recognized as an asset tax credit, reducing the deferred income tax
liability, if it is probable that we will generate sufficient taxable income to
compensate or to recover the tax.




Deferred
employee statutory profit sharing assets resulting from the temporary
differences between the accounting results and the taxable income from
operations are recognized as a deferred employees’ statutory profit sharing
asset or liability.  The asset is recorded when there is a high
probability that the asset will be realized and there is no evidence that such
situation will change.  On the balance sheet, the deferred employee
statutory profit sharing is shown net of the deferred income tax.




The
calculation and recognition of deferred taxes and the related valuation
allowance for deferred taxes and asset taxes requires the use of estimates,
which may be affected by the amount of our future taxable income, the
assumptions relied on by our management and our results of
operations.




We
periodically evaluate the fairness of deferred tax assets or liabilities based
on historical tax results and estimated tax profits, among others.  A
valuation allowance is recorded for any deferred tax assets that, in the opinion
of our management, are not likely to be realized.  Any change in our
estimates may have an effect on our financial condition and results of
operations.




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On
October 1, 2007, the Business Flat Tax Law (“IETU Law”) was enacted and provided
for a new flat rate business tax (Impuesto Empresarial a Tasa Única or ‘IETU”).
The IETU Law went into effect on January 1, 2008.  IETU applies to the
sale of goods, the provision of independent services and the granting of use or
enjoyment of goods, according to the terms of the IETU Law, less certain
authorized deductions.  IETU payable is calculated by subtracting
certain tax credits from the tax determined.  Revenues, as well as
deductions and certain tax credits, are determined based on cash flows generated
beginning January 1, 2008.  IETU Law establishes that the IETU rate
will be 16.5% in 2008, 17% in 2009, and 17.5% as of 2010.  Based on
our financial projections, which were performed over a four-year period and
according to INIF 8, “Effects of the Business Flat Tax”, we determined that our
subsidiaries would essentially pay IETU.  Therefore, as of December
31, 2007, the Company recorded a deferred IETU liability of Ps. 1,073,859, and
cancelled the deferred regular income tax (“ISR”) liability of Ps. 597,506,
recognizing the effect net in the statement of income of Ps. 476,353. The impact
of the IETU on the Company’s deferred tax balances did not affect the Company’s
cash flows in 2007.





Impairment
in the Value of Long-Lived Assets




We must
test for impairment in the value of long-lived assets when indicators of
potential impairment in the carrying amount of tangible and intangible
long-lived assets in use exist, unless there is conclusive evidence that the
indicators of impairment are temporary.  Impairment indicators
considered for these purposes are, among others, operating losses or negative
cash flows in the period if they are combined with a history of projections of
losses, depreciation and amortization charged to the results, which in
percentage terms in relation to revenues are substantially higher than that of
previous years, obsolescence, reduction of the installed capacity, physical
damages and other legal and economic factors.




An
impairment is recorded when the carrying amount of long-lived assets exceeds the
greater of the present value of future net cash flows provided by the assets or
the net sales price upon disposal.




Present
value of future net cash flows is based on management’s projections of future
cash flows generated by the asset, discounted using current interest
rates.




Our
management believes that we, together with our 13 airport subsidiaries, must be
considered as an independent cash-generating unit, as all were part of the
Central-North package included in the Mexican government’s bidding
process.  Under the privatization process, each airport concessionaire
must operate its airport, regardless of its individual results.  Our
evaluations throughout the year and up to the date of this filing did not reveal
any impairment of tangible and intangible long-lived assets. We can give no
assurance that our evaluations will not change as a result of new information or
developments, which may change our future projections of net cash flows or the
related discount rates and result in future impairment charges. The Company
performed its impairment analysis for the year ended December 31, 2007 and did
not record any impairment.




Principal
Differences Between Mexican FRS and U.S. GAAP




Our
consolidated financial statements are prepared in accordance with Mexican FRS,
which differs in certain respects from U.S. GAAP.




The
principal differences between Mexican FRS and U.S. GAAP as they relate to us are
the treatment of our investments in our concessions and the rights to use our
airport facilities, the treatment of SETA’s option and portion of shares held in
trust, which are forfeitable, and the effects of deferred taxes.  Each
of these differences affects both consolidated net income and stockholders’
equity.  See Note 21 to our audited financial statements for a
discussion of these differences and the effect on our consolidated financial
position and results of operation.




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Off-balance
Sheet Arrangements




We are
not party to any off-balance sheet arrangements.




Tabular
Disclosure of Contractual Obligations




Payments
      due by periodContractual
      Obligations
            
            Total
            
            
            Less
      than 1 year(2)
            
            
            1-3
      years
            
            
            3-5
      years
            
            
            More
      than 5 years(in
      millions of pesos)Master
      development programs
            
            Ps. 801.0
            
            
            Ps. 433.0
            
            
            Ps.368.0
            
            
            Ps.N/A(3)
            
            
            
            N/A
            (3)Purchase
      obligations(1)
            
            
            262.1
            
            
            
            32.8
            
            
            
            65.5
            
            
            
            65.5
            
            
            
            98.3Total
            
            Ps. 1,063.1
            
            
            Ps. 465.8
            
            
            Ps. 433.5
            
            
            Ps. 65.5
            
            
            Ps.98.3





(1)
            Reflects
      minimum fixed annual payment of U.S.$3 million required to be paid under
      our Technical Assistance Agreement, assuming an average exchange rate of
      Ps.10.92 per U.S. dollar and an annual U.S. inflation rate of
      3.8%.  The amount ultimately to be paid in any year will depend
      on our profitability.


(2)
            Amount
      for less than one year corresponds to obligations for the remainder of
      2008.


(3)
            In
      2010, the fifth year of our current master development program, a
      negotiation will take place with the Ministry of Communications and
      Transportation to determine the new master development program commitments
      for the subsequent five-year
period.




New
Accounting Pronouncements




Mexican
FRS




In 2007,
the Mexican Board for Research and Development of Financial Information
Standards (CINIF) issued the following NIFs and Interpretations of Financial
Reporting Standards (“INIF”), which became effective for fiscal years beginning
on January 1, 2008:




·
            NIF
      B-2, “Statement of Cash Flows”




·
            NIF
      B-10, “Effects of Inflation”




·
            NIF
      D-3, “Employee Benefits”




·
            NIF
      D-4, “Taxes on Income”




·
            INIF
      5, “Recognition of the Additional Consideration Agreed To at the Inception
      of a Derivative Financial Instrument to Adjust It to Fair
      Value”




·
            INIF
      6, “Timing of Formal Hedge
Designation”




·
            INIF
      7, “Application of Comprehensive Income or Loss Resulting From a Cash Flow
      Hedge on a Forecasted Purchase of a Non-Financial
  Asset”




Some of
the significant changes established by these standards are as
follows:




NIF B-2, “Statement of Cash
Flows”. This NIF establishes general rules for the presentation,
structure and preparation of a cash flow statement, as well as the disclosures
supplementing such statement, which replaces the statement of changes in
financial position.  NIF B-2 requires that the statement show a
company’s cash inflows and outflows during the period. Cash flows from financing
activities are now presented below those from investing activities (a departure
from the statement of changes in financial position).  In addition,
NIF B-2 allows entities to determine and present their cash flows from operating
activities using either the direct or the indirect method.




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NIF B-10, “Effects of
Inflation”.  CINIF defines two economic environments: (a)
inflationary environment, when cumulative inflation of the three preceding years
is 26% or more, in which case, the effects of inflation should be recognized
using the comprehensive method; and (b) non-inflationary environment, when
cumulative inflation of the three preceding years is less than 26%, in which
case, no inflationary effects should be recognized in the financial
statements.  Additionally, NIF B-10 eliminates the replacement cost
and specific indexation methods for inventories and fixed assets, respectively,
and requires that the cumulative gain or loss from holding non-monetary assets
be reclassified into retained earnings, if such gain or loss is realized; the
gain or loss that is not realized will be maintained in stockholders’ equity and
charged to current earnings of the period in which the originating item is
realized.




NIF D-3, “Employee Benefits”.
This NIF includes current and deferred PTU.  Deferred PTU should be
calculated using the same methodology established in NIF D-4, that is by
applying the corresponding rate to the applicable temporary differences
resulting from comparing the accounting and tax values of assets and
liabilities.  It also includes the career salary concept and the
amortization period of most items is reduced to five years, as
follows:




Items
will be amortized over a 5-year period, or less, if employees’ remaining labor
life is less than the:




·
            beginning
      balance of the transition liability for severance and retirement
      benefits;




·
            beginning
      balance of past service cost and changes to the
  plan;




·
            beginning
      balance of gains and losses from severance benefits, according to
      actuarial calculations, should be amortized against the results of
      2008;




·
            beginning
      balance of gains and losses from retirement benefits, according to
      actuarial calculations, should be amortized over a 5-year period (net of
      the transition liability), with the option to fully amortize such item
      against the results of 2008.




NIF D-4, “Income Taxes”. This
NIF relocates accounting for current and deferred PTU to NIF D-3, eliminates the
permanent difference concept, redefines and incorporates various definitions and
requires that the cumulative ISR effect be reclassified to retained earnings,
unless it is identified with some of the other comprehensive income items that
have not been applied against current earnings.




INIF 5, “Recognition of the
Additional Consideration Agreed To at the Inception of a Derivative Financial
Instrument to Adjust It to Fair Value”. INIF 5 states that any additional
consideration agreed to at the inception of a derivative financial instrument to
adjust it to its fair value at that time should be part of the instrument’s
initial fair value and not subject to amortization as established by paragraph
90 of Bulletin C-10.  INIF 5 also establishes that the effect of the
change should be prospectively recognized, affecting results of the period in
which this INIF becomes effective.  If the effect of the change is
material, it should be disclosed.




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INIF 6, “Timing of Formal Hedge
Designation”. INIF 6 states that hedge designations may be made as of the
date a derivative financial instrument is contracted, or at a later date,
provided its effects are prospectively recognized as of the date when formal
conditions are met and the instrument qualifies as a hedging
relationship.  Paragraph 51.a) of Bulletin C-10 only considered the
hedge designation at the inception of the transaction.




INIF 7, “Application of
Comprehensive Income or Loss Resulting From a Cash Flow Hedge on a Forecasted
Purchase of a Non-Financial Asset”. INIF 7 states that the effect of a
hedge reflected in other comprehensive income or loss resulting from a
forecasted purchase of a non-financial asset should be capitalized within the
cost of such asset, which price is set through a hedge, rather than
reclassifying the effect to the results of the period affected by the asset, as
required by Paragraph 105 of Bulletin C-10.  The effect of this change
should be recognized by applying any amounts recorded in other comprehensive
income or loss to the cost of the acquired asset, as of the effective date of
this INIF.




U.S.
GAAP




In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 provides
detailed guidance for the financial statement recognition, measurement and
disclosure of uncertain tax positions recognized in an enterprise’s financial
statements in accordance with Statement of Financial Accounting Standards
(“SFAS”) No. 109, Accounting for Income Taxes (“SFAS No. 109”). FIN 48 requires
an entity to recognize the financial statement impact of a tax position when it
is more likely than not that the position will be sustained upon examination. If
the tax position meets the more-likely-than-not recognition threshold, the tax
effect is recognized at the largest amount of the benefit that is greater than
50% likely of being realized upon ultimate settlement. Any difference between
the tax position taken in the tax return and the tax position recognized in the
financial statements using the criteria above results in the recognition of a
liability in the financial statements for the unrecognized
benefit.  Similarly, if a tax position fails to meet the
more-likely-than-not recognition threshold, the benefit taken in the tax return
will also result in the recognition of a liability in the financial statements
for the full amount of the unrecognized benefit. FIN 48 became effective for
fiscal years beginning after December 15, 2006 for public entities and their
subsidiaries. The Company adopted FIN 48 as of January 1, 2007, as
required.  The provisions of FIN 48 were applied to all tax positions
under SFAS No. 109 upon initial adoption. The impact of adopting this
interpretation was not material to the Company’s consolidated financial
position, results of operations or cash flows.




SFAS No.
157, ‘‘Fair Value Measurements’’, was issued in September 2006. This statement
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. SFAS No. 157 clarifies the definition of exchange price
as the price between market participants in an orderly transaction to sell an
asset or transfer a liability in the market in which the reporting entity would
transact for the asset or liability, that is, the principal or most advantageous
market for the asset or liability. The changes to current practice resulting
from the application of this statement relate to the definition of fair value,
the methods used to measure fair value, and the expanded disclosures about fair
value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. On February 12,
2008, the FASB issued FSP FAS 157-1 and FSP FAS 157-2, which remove leasing
transactions accounted for under SFAS No. 13, “Accounting for Leases” from the
scope of SFAS No. 157 and partially defer the effective date of SFAS No. 157 as
it relates all nonrecurring fair value measurements of nonfinancial assets and
nonfinancial liabilities until fiscal years beginning after November 15,
2008.  The Company is in the process of determining the impact of
adopting this new accounting principle on its consolidated financial position,
results of operations and cash flows.




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In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an Amendment of FASB Statement No.
115. SFAS No. 159 permits an entity to choose to measure many financial
instruments and certain other items at fair value. The objective is to expand
the use of fair value measurements in accounting for financial
instruments.  The fair value option permits a company to choose to
measure eligible items at fair value at specified election dates. A company will
report unrealized gains and losses on items for which the fair value option has
been elected in earnings after adoption. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. The Company does not anticipate the
adoption of this new accounting principle will have a material effect on its
consolidated financial position, results of operations and cash
flows.




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51. SFAS No. 160 (a)
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and the deconsolidation of a subsidiary;
(b) changes the way the consolidated income statement is presented; (c)
establishes a single method of accounting for changes in a parent’s ownership
interest in a subsidiary that do not result in deconsolidation; (d) requires
that a parent recognize a gain or loss in net income when a subsidiary is
deconsolidated; and (e) requires expanded disclosures in the consolidated
financial statements that clearly identify and distinguish between the interests
of the parent’s owners and the interests of the noncontrolling owners of a
subsidiary. SFAS No. 160 must be applied prospectively but to apply the
presentation and disclosure requirements must be applied retrospectively to
provide comparability in the financial statements.  Early adoption is
prohibited.   SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008.  The impact of this standard is dependant upon the level of
future acquisitions.




In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations—a
replacement of FASB No. 141. SFAS No. 141(R) requires (a) a company to recognize
the assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree at fair value as of the acquisition date; and (b) an acquirer in
preacquisition periods to expense all acquisition-related costs.  SFAS
No. 141(R) requires that any adjustments to an acquired entity’s deferred tax
asset and liability balance that occur after the measurement period be recorded
as a component of income tax expense.  This accounting treatment is
required for business combinations consummated before the effective date of SFAS
No. 141(R) (non-prospective), otherwise SFAS No. 141(R) must be applied
prospectively. The presentation and disclosure requirements must be applied
retrospectively to provide comparability in the financial
statements.  Early adoption is prohibited.   SFAS No.
141(R) is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. The impact of this standard is
dependant upon the level of future acquisitions.




Item6.
            Directors,
      Senior Management and Employees




Directors




Our Board
of Directors is responsible for the management of our
business.  Pursuant to our bylaws, our Board of Directors must consist
of an odd number of directors determined at an ordinary general meeting of
shareholders and is required to have at least 11 members.  Our Board
of Directors currently consists of 11 directors and one alternate director, each
of who is elected or ratified at the annual shareholders’
meeting.  Under the Mexican Securities Market Law and our by-laws, at
least 25% of our directors must be independent.




Our
bylaws provide that (i) each person (or group of persons acting together)
holding 10% of our capital stock in the form of Series B shares is entitled to
designate one director, (ii) the holders of Series BB shares are entitled to
elect three directors and their alternates pursuant to our bylaws, the
participation agreement and the technical assistance agreement and (iii) the
remaining members of the Board of Directors are to be elected by the holders of
our capital stock (both the Series BB and the Series B shares, including those
Series B holders that were entitled to elect a director by virtue of their
owning 10% of our capital stock).




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The
following table lists our current directors as of the date of this annual
report, their titles, dates of appointment and ages:




Name
            
            Title
            
            Director
      since
            
            AgeBernardo
      Quintana Isaac
            
            Chairman
      and Director
            
            December
      21, 2005
            
            66Alberto
      Felipe Mulás Alonso
            
            Independent
      Director
            
            October
      2, 2006
            
            47Salvador
      Alva Gómez
            
            Independent
      Director
            
            October
      2, 2006
            
            57Manuel
      Francisco Arce Rincón
            
            Independent
      Director
            
            October
      2, 2006
            
            66Luis
      Guillermo Zazueta Domínguez
            
            Independent
      Director
            
            October
      2, 2006
            
            62Fernando
      Flores Pérez
            
            Independent
      Director
            
            April
      29, 2007
            
            62Luis
      Fernando Zárate Rocha*
            
            Director
            
            September
      22, 2000
            
            64Alonso
      Quintana Kawage*
            
            Director
            
            March
      14, 2003
            
            34Sergio
      Fernando Montaño León
            
            Director
            
            December
      21, 2005
            
            60José
      Luis Guerrero Álvarez
            
            Director
            
            December
      21, 2005
            
            64Jean
      Marie Chevallier*
            
            Director
            
            December
      13, 2006
            
            63Jacques
      Follain*
            
            Alternate
      Director
            
            December
      13, 2006
            
            52__________________
                *  Appointed
      by SETA





Bernardo Quintana
Isaac.  Mr. Bernardo Quintana Isaac has been the Chairman of
our Board of Directors since December 2005. Mr. Quintana has been Chairman of
the Board of Directors of Empresas ICA, S.A.B. de C.V. since December 1994, and
was also the Chief Executive Officer of ICA from December 1994 through December
2006. Previously, Mr. Quintana served as Executive Vice President and Vice
President of ICA Tourism and Urban Development and as Director of Investments of
Banco del Atlántico. Mr. Quintana currently serves as a board member of several
Mexican companies, including CEMEX, S.A.B. de C.V. and GRUMA, S.A.B. de C.V. Mr.
Quintana is also a member of Mexico’s National Council of Businessmen and a
member of the boards of trustees of the Universidad Nacional Autónoma de México
and president of Fundación ICA, A.C. Mr. Quintana holds a degree in civil
engineering from the Universidad Nacional Autónoma de México and a Master’s
Degree in Business Administration from the University of California at Los
Angeles. Mr. Quintana is the father of fellow Director Mr. Alonso Quintana
Kawage.





Alberto Felipe
Mulás Alonso.  Mr. Alberto Felipe Mulás Alonso has been a
member of our Board of Directors since December 2006. Mr. Mulás currently serves
on the boards of directors of several companies, including: Empresas ICA, S.A.B.
de C.V., Acciones y Valores de México (Accival) S.A. de C.V., a broker dealer
subsidiary of Banamex Citigroup, Urbi Desarrollos Urbanos S.A.B. de C.V., one of
Mexico’s largest housing developers, Grupo Comex, Mexico’s largest paint
producer and Organización Ramirez, owner of Cinepolis, the country’s largest
movie theater chain. He is also a board member of government development banks:
Bancomext and Sociedad Hipotecaria Federal, S.N.C. He presently manages a
consulting firm that specializes in corporate finance, corporate governance and
strategic planning, which he opened in January 2003. In January 2001 former
President Vicente Fox appointed Mr. Mulás as national housing coordinator, in
this role, Mr. Mulás created Mexico’s National Housing Commission, where he
became its first Commissioner and a member of the Cabinet through December 2002.
From 1999 to 2001 Mr. Mulás was Mexico’s Managing Director at Donaldson, Lufkin
& Jenrette Securities Corp. He has also been Country Manager for Lehman
Brothers and a vice-president at JP Morgan. Mr. Mulás received a degree in
chemical engineering from the Universidad Iberoamericana and a master’s degree
in business administration from the Wharton School at the University of
Pennsylvania.





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Salvador Alva
Gómez.  Mr. Salvador Alva Gómez has been a member of our Board
of Directors since December  2006. Mr. Alva has been with Pepsico for
25 years and has served as President of PepsiCo Latin America and as a member of
PepsiCo Executive Committee since 2003. Mr. Alva currently serves as a member of
the Board of Directors of Group Porcelanite Lamosa, 7 eleven and Chapa
Distribution Group, and “EXEB” Business foundation for basic education. Mr. Alva
is also a member of the CEAL (“Latin America Businessmen Association”). Mr. Alva
serves on the Board Trustees of the John Langdon Down Foundation. Mr. Alva is
the former President of AMECE (“Mexican Association of Electronic Commerce”).
Mr. Alva has served as President of Gamesa-Quaker, General Manager for Latin
America of the Alegro International Division of PepsiCo and in several positions
at Cervecería Moctezuma. He holds a degree in Chemical Engineering and a
MBA.





Manuel F. Arce
Rincon.  Mr. Manuel F. Arce Rincon has been a member of our
Board of Directors since December 2006. Since 1995, Mr. Arce has been Managing
Director and Partner at Grupo Consultor ACM, S.C., where he advises a wide range
of clients in the public and private sectors. For more than 30 years he has also
served on the Board of Directors of many corporations both government or
privately owned, including a number of companies registered in the Mexican Stock
Exchange. He is also an independent Board of Directors member of more than 35
investment funds. In the public sector, Mr. Arce has worked at the Federal
Electricity Commission, the Coordinacion de Abastos y Distribucion and Servicios
Metropolitanos S.A. Since 1966, he has been a professor at the Universidad
Nacional Autonoma de Mexico. Mr. Arce graduated with honors from the Universidad
Nacional Autónoma de Mexico and holds a Master’s Degree in Business
Administration from Columbia University.





Luis Fernando
Zárate Rocha.  Mr. Luis Fernando Zárate Rocha has been a member
of our Board of Directors since September 2000. Mr. Zárate is also a member of
the Board of Directors and an Executive Vice President of Empresas ICA. Mr.
Zárate oversees housing operations and overseas business development for
Empresas ICA, as well as the operations of the airport operator SETA. Mr. Zárate
has been affiliated with Empresas ICA for over 36 years, during which time he
has worked in business development as well as heavy construction and
infrastructure projects. Mr. Zárate is also a member of the Board of Directors
of Fundacion ICA, S.C. Mr. Zárate holds a degree in civil engineering from the
Universidad Nacional Autonoma de Mexico, where he has been a professor of
engineering since 1978.





Luis Guillermo
Zazueta Dominguez.  Mr. Luis Guillermo Zazueta Dominguez has
been a member of our Board of Directors since December 2006. In 1971, Mr.
Zazueta founded Despacho Zazueta Hermanos, S.C., a professional accounting firm
advising a wide range of clients on accounting and tax matters. He is also on
the Board of Directors of Seguros Argos S.A. de C.V., ANA Automóvil Club de
México, A.C., Almacenadora Gómex and Astered Unión de Crédito. He is a member of
the Certified Public Accountants College and registered as a Fiscal Public
Accountant at the Ministry of Finance and Public Credit, the Mexican Social
Security Institute, INFONAVIT and the Federal District. Mr. Zazueta holds a
degree in public accounting from the Universidad Iberoamericana.





Alonso Quintana
Kawage.  Mr. Alonso Quintana Kawage has been a member of our
Board of Directors since March 2003. Mr. Quintana became the Chief Financial
Officer of Empresas ICA on January 1, 2007. Since joining ICA in 1994, he has
served the company in various capacities, including positions in its
construction, corporate finance and project finance areas. In the finance group,
Mr. Quintana has overseen various transactions, including those relating to the
financing of a bond and syndicated credit for the El Cajón Hydroelectric
Project, a bond for the Corredor Sur project in Panama and a long-term loan
financing for the Irapuato-La Piedad highway public-private partnership, as well
as various public offerings by Empresas ICA in the international capital markets
and Aeroinvest’s acquisition in 2005 of Series B shares currently representing
35.3% of our capital stock. Mr. Quintana received a degree in civil engineering
from the Universidad Iberoamericana and a master’s degree in business
administration from the Kellogg School of Management at Northwestern University
in Chicago. Mr. Quintana is the son of the Chairman of the Board of Directors,
Mr. Bernardo Quintana Isaac.





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Sergio F. Montaño
León.  Mr. Sergio F. Montaño León has been a member of our
Board of Directors since December 2005. Mr. Montaño is member of the Board of
Directors and Executive Vice President in charge of overseeing administration of
Empresas ICA. Since 1972, Mr. Montaño has served in various capacities in the
management and finance areas of several companies within the Empresas ICA group.
Previously, Mr. Montaño held various management positions with such Mexican
companies as Trébol S.A. de C.V. and Cervecería Cuauhtémoc Moctezuma, S.A. de
C.V. Mr. Montaño holds a degree in Public Accounting from the Universidad
Nacional Autónoma de México; a Masters Degree in taxation from the Instituto
para la Especialización de Ejecutivos and a Specialization in Insurance from the
Instituto Tecnológico Autónomo de México. Mr. Montaño has been a member of the
Mexican Institute of Financial Executives since 1997.





José Luis
Guerrero Álvarez.  Dr. José Luis Guerrero Álvarez has been a
member of our Board of


Directors
since December 2005. Dr. Guerrero became Chief Executive Officer of Empresas ICA
effective January 1, 2007 and is a member of ICA’s Board of Directors.
Previously, he was Executive Vice President and Chief Financial Officer of
Empresas ICA. For the past 28 years, Dr. Guerrero has held various positions in
the finance, administrative, divestment, real estate, manufacturing and business
development areas of Empresas ICA. Before joining Empresas ICA, Dr. Guerrero
served as the Planning Director of Combinado Industrial Sahagún, the Technical
Director of Roca Fosfórica Mexicana and held various other positions in Mexico
and abroad. Dr. Guerrero holds a Diploma D’Ingenieur I.S.M.C.M. from Institut
Superieur des Materiaux et de la Construction Mechanique of Paris, and a M.S.
and a Ph.D. in engineering from the University of Illinois at
Urbana-Champaign.





Jean-Marie
Chevallier.  Mr. Jean-Marie Chevallier has been since December
2006 Chairman of the Board and Chief Executive Officer of Aéroports de Paris
Management (ADPM), the Aéroports de Paris (ADP) subsidiary that manages its
overseas airports investments and operations. Previously, he was ADP’s Director
of Planning for both Paris-CDG and Orly airports. He joined ADP in 1978 and
until 1990 worked extensively on planning and engineering consulting for large
overseas airports projects, including Jakarta-Cengkareng, Osaka-Kansai,
Seoul-Incheon and more recently Dubai-Al Maktoum. Promoted to Vice-President in
1993, he was successively in charge of the Engineering Division, International
Affairs and the CDG airport Facilities Division. Mr. Chevallier is a chartered
civil engineer from Ecole Nationale des Ponts et Chaussees (Paris, 1968). Mr
Chevallier is a member and former Chairman of the ACI World Safety and Technical
Committee and a member of the U.S. TRB Airport Compatibility
Committee.





Jacques Follain(Alternate Director for Mr. Chevallier).  Mr. Jacques Follain
is Managing Director of Aéroports de Paris Management. Mr. Follain joined the
Aéroports de Paris Group in 1998 and has played a key role in the development of
ADP as an international airport operator in China, Mexico, Egypt, Jordan,
Belgium and Algeria. Prior to joining ADP, Mr. Follain held a several positions
in L’Oreal starting in 1987, including heading its Mexico subsidiary, sales and
marketing manager for Europe in the International Department, and responsibility
for setting up the management information systems of the professional division.
He also worked for 6 years as an organizational consultant at Arthur Andersen
Consulting (Accenture). Mr. Follain is an aeronautical and telecommunications
engineer, graduated from the Ecole Nationale Superieure des Constructions
Aeronautiques (Toulouse) the Ecole Nationale Superieure des Telecommunications
(Paris) and has a master's degree from Stanford University.





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Fernando Flores
Pérez.   Mr. Fernando Flores Pérez has been a member of
our Board of Directors since April  2007. He is a member of the Board
of Directors of ICA SAB de CV and other important Mexican firms. He is Founder
and Partner of an independent consultant firm, EFE Consultores SC, since March
2007. He has served as Executive Director and Chairman of the Board of the
Mexican Social Secutiry Institute (IMSS) form October 2005 until December
2006.  From December 2004 to October 2005, he was Undersecrtary of
Labor, Security and Social Security at the Ministry of Labor and Social
Security.  Mr. Flores joined Compañía Mexicana de Aviación in 1991 and
served as Law and Administration Director, and from 1995 until 2004 as Executive
Director and Chairman of the Board.  Mr. Flores has also served as
Executive Director of Aerovías de México (AeroMéxico) form March to December
2004.  From January 1997 till January 2000 he was the President af
National Air Transportation Chamber.  Mr. Flores was Alternate
Director for Administration at the Mexican Institute for Social Security,
starting January 1984.  Mr. Flores holds a law degree from the
Universidad Iberoamericana and he received the “Master de Oro en Alta Dirección”
from the Forum de Alta Dirección in Spain.




Executive
Officers




Pursuant
to our bylaws, the holders of Series BB shares are entitled to nominate and
propose the removal of our chief executive officer and to appoint and remove our
chief financial officer, our chief operating officer and our commercial
director. The Series BB Directors are also entitled to appoint half of our
executive officers, which appointment must be made in accordance with the
Technical Assistance Agreement and the guidelines approved by our Board of
Directors.




The
following table lists our executive officers, their current position and their
year of appointment as an executive officer.




Name
            
            Current
      position
            
            Executive
                officer
      since(2)
            
            AgeRuben
      Gerardo López Barrera(1)
            
            Chief
      Executive Officer
            
            December
      11, 2003
            
            38Nicolas
      Etienne Marcel Claude(1)
            
            Chief
      Operating Officer
            
            October
      14, 2004
            
            42Victor
      Humberto Bravo Martin(1)
            
            Chief
      Financial Officer
            
            March
      20, 2006
            
            42Manuel
      de la Torre Melendez
            
            General
      Counsel
            
            January
      1, 2004
            
            44Jose
      Ignacio de la Peña Padilla
            
            Infrastructure
      and Maintenance Director
            
            July
      6, 2004
            
            49Jean
      Philippe Frederic Percheron(1)
            
            Commercial
      and Marketing Director
            
            April,
      26, 2006
            
            39Porfirio
      González Alvarez
            
            Airports
      Director
            
            April
      26, 2006
            
            57María
      Victoria Zapata Guerrero
            
            Human
      Resources Director
            
            April
      14, 2006
            
            46





(1)
            Appointed
      by SETA as holder of Series BB
shares.


(2)
            Date
      of Appointment.




Rubén Gerardo
López Barrerahas served as our Chief Executive Officer since December
2003.  Previously, he served as our General Vice President, Human
Resources and Legal, and our Communications Director.  Mr. López has
also previously served as Business Development Director and Project Finance
Director of ICA.  Mr. López received a degree in Civil Engineering
from Universidad Iberoamericana, a diploma in finance from the Instituto
Tecnológico Autónomo de México, a master’s degree in business administration
from the Pontificia Universidad Católica de Chile and the Washington University
and a certificate in airport management and development from ADP.




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Nicolas Etienne
Marcel Claude has served as our Chief Operating Officer since October
2004.  Previously, he served as Master Planning Coordinator of ADP for
the development of the Charles de Gaulle and Orly airports as well as other
projects, including the Beijing Capital International Airport in China, and has
also worked for ADP in strategic planning.  A systems engineer by
training, Mr. Claude also holds a master’s degree in statistics and a
specialization study in airport management from Ecole Nationale de l’Aviation
Civile in Toulouse.




Víctor Humberto
Bravo Martínhas served as our Chief Financial Officer since March
2006.  Prior to joining us, he served in various capacities with ICA,
including Corporate Finance Director, Project Finance Director, Corporate
Finance Analysis Manager and Corporate Economic Analysis Manager.  Mr.
Bravo holds a B.S. in economics from Instituto Tecnológico y de Estudios
Superiores de Monterrey, a diploma in finance from Instituto Tecnológico
Autónomo de México, a master’s degree in business administration from the
Leonard N. Stern School of Business at New York University and the Manchester
School of Business.  He has also completed various specialization
courses in the area of finance and management.




Manuel de la
Torre Melendez has served as our General Counsel since January 2004.
Prior to joining us, Mr. de La Torre was a senior associate at Thacher, Proffitt
& Wood LLP, where he advised a variety of corporate clients with a
particular focus on labor law.  Mr. de la Torre was a professor of labor
law and procedural labor law at the Instituto Tecnológico Autónomo de México and
holds a law degree, magna cum laude, from the Universidad Nacional Autónoma de
México.  He is a member of the Mexican Bar Association, the Interamerican
Bar Association and the Latin American Aeronautical Association. In 2007, Mr. de
la Torre carried out studies in Air and Space Law at McGill University. Since
2007, Mr. de La Torre has been working in the Latin American Aeronautical
Association Commission for the preparation of the first Latin American Airport
Code.




José Ignacio de
la Peña Padillahas served as our Infrastructure and Maintenance Director
since July 2004.  Previously, he was the General Projects Director for
the municipal government of Aguascalientes, the General Director of Rojas de la
Peña and the Director of Public Electricity in Aguascalientes
County.  Mr. de la Peña holds a B.S. in civil engineering from the
Instituto Tecnológico de Estudios Superiores Occidente, and he has completed a
specialization in structural engineering from the Ecole Nationale des Travaux
Publics de l’Etat in France and a specialization in structural design from the
Centre des Hautes Études de la Construction in France.




Jean Philippe
Frederic Percheronhas served as our Commercial and Marketing Director
since April 2006, previously serving as our Assistant Director of Commercial
Affairs.  He also served as Manager of Commercial Activities at
Aéroports de Paris and as Marketing Studies Director for Georges Chetochine
Consulting.  Mr. Percheron holds a degree in business administration
from Ecole Superior de Commerce de Paris, a master’s degree in economics from
Université de la Sorbonne de Paris, as well as a B.S. in civil engineering from
the École Spéciale des Travaux Publics in Paris.




Porfirio González
Álvarezhas served as our Airports Director since April
2006.  Previously, he has served as our Business Unit Manager, as our
Assistant Director of Operations and Development and as the Manager of our
Monterrey International Airport.  He has also served in various
capacities in the Mexican federal government and the state government of Nuevo
León.  Mr. González holds a B.S. in civil engineering from the
Universidad Autónoma de Nuevo León.




Maria Victoria
Zapata Guerrero has served as our Human Resources Director since April
2006.  Previously, she has served as an Associate Human Resources
Development Consultant with Consultores en Evaluación, Diagnóstico y Desarrollo
Humano, as Human Resources Director with the Interiors Division of Lear
Corporation and as Human Resources Strategic Planning Manager for
Aeroméxico.  She also served in various managerial capacities in the
area of in human resources with NationsBank/Bank of America, First Chicago Bank,
Kentucky Fried Chicken (Pepsico), Invermexico Casa de Bolsa and Empresas
Lanzagorta.  Ms. Zapata holds a B.S. in industrial relations from
Universidad Iberoamericana, a diploma in human development from Universidad
Iberoamericana, a diploma in executive management from Instituto Tecnológico y
de Estudios Superiores de Monterrey and has been certified in various personnel
development techniques.




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The
business address of our directors and executive officers is our principal
executive headquarters.




Compensation
of Directors and Executive Officers




For 2007,
the aggregate compensation earned by our 21 officers (including executive
officers, corporate managers, coordinators and airport administrators) was
approximately Ps. 43.8 million.  From the shareholders’ meeting
held on April 27, 2007 through the Shareholders’ meeting held on April 3,
2008, each of the Chief Executive Officer, the Chief Financial Officer, the
General Counsel and the permanent invitees and secretaries for each meeting of
the board or special committee receives compensation in the amount of Ps.40,000
net of any required withholding for each board meeting and corporate committee
meeting attended.  In addition, independent directors receives a fee
of U.S.$250 net of any required withholding for each hour they dedicate to our
affairs entrusted by the Board of Directors outside of board meetings and
corporate committee meetings.




None of
our directors or executive officers are entitled to benefits upon termination
under their service contracts with us, except for what is due them according to
the Federal Labor Law (Ley
Federal del Trabajo).




Committees




Our
bylaws provide for two committees to assist the Board of Directors with the
management of our business: an Audit Committee and a Corporate Practices
Committee. Our shareholders’ meeting of April 3, 2008, in its amendments to the
bylaws, eliminated the Nominations Committee, whose functions and
responsibilities are now carried out by the Board of Directors.




Audit
Committee




The Audit
Committee, currently composed of four members, is responsible for (i) selecting
the external auditor of the Company, recommending to the Board of Directors the
appointment of such external auditor and providing an opinion about any removal
of such external auditor, (ii) supervising our external auditors and analyzing
their reports, (iii)analyzing and supervising the preparation of our financial
statements, (iv) informing the board of our internal controls and their
adequacy, (v) requesting reports from our executive officers whenever the
committee deems appropriate, providing assistance to our Board of Directors in
the preparation of the reports containing the main accounting and information
guidelines used for the preparation of the financial information, and assistance
to our Board of Directors in the preparation of the report on the operations and
activities in which the Board of Directors had intervened pursuant to the
Securities Market Law, (vi) informing the Board of Directors of any
irregularities that it may encounter, (vii) receiving and analyzing
recommendations and observations made by the shareholders, members of the Board
of Directors, executive officers, our external auditors or any third party and
taking the necessary actions, (viii) calling shareholders’ meetings, (ix)
overseeing the execution of the shareholders’ and directors’ resolutions by the
Chief Executive Officer in accordance with the instructions provided thereto by
the shareholders or the directors and (x) providing an annual report to the
Board of Directors.




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Our
bylaws provide that a Board of Directors shall determine the members of the
Audit Committee, all of whom must be members of our Board of Directors and
independent.  The members of the Audit Committee are appointed by the
Board of Directors, except for one member who may be appointed by the Series BB
Directors.  The chairman of the Audit Committee was elected by our
shareholders’ meeting held on April 3, 2008.  The current members
of the Audit Committee are Luis Guillermo Zazueta (Chairman of the Committee),
Alberto Felipe Mulás Alonso, Fernando Flores Perez and Manuel F. Arce
Rincon.  Luis Guillermo Zazueta has been designated as an “audit
committee financial expert” as defined by the Commission.




The
chairman of the Audit Committee shall prepare an annual report to our Board of
Directors with respect to the findings of the Audit Committee, which shall
include (i) the status of the internal controls and internal audits and any
deviations and deficiencies thereof, taking into consideration the reports of
external auditors and independent experts, (ii) the results of any preventive
and corrective measures taken based on results of investigations in respect of
non-compliance of operating and accounting policies, (iii) the evaluation of
external auditors, (iv) the main results from the review of our financial
statements and those of our subsidiaries, (v) the description and effects of
changes to accounting policies, (vi) the measures adopted as result of
observations of shareholders, directors, executive officers and third parties
relating to accounting, internal controls, and internal or external audits, and
(vii) compliance of shareholders’ and directors’ resolutions.




Corporate
Practices Committee




The
Corporate Practices Committee, currently composed of four members, is
responsible for (i) providing opinions to our Board of Directors, (ii)
requesting and obtaining opinions from independent experts, (iii) calling
shareholders’ meetings, and (iv) assisting the board in the preparation of
annual reports and other reporting obligations.




Our
bylaws provide that the Board of Directors shall determine the members of the
Corporate Practices Committee, all of which must be members of our Board of
Directors.  The members of the Corporate Practices Committee are
appointed by the Board of Directors, except for one member who may be appointed
by the Series BB Directors.  The chairman of the Corporate Practices
Committee is elected by the shareholders meeting.  Under the Mexican
Securities Market Law and our bylaws, all members of the Corporate Practice
Committee must be independent (except to the extent a controlling shareholder or
shareholders maintain 50% or more of our outstanding capital stock, in which
case a majority must be independent).  The current members of our
Corporate Practices Committee are Fernando Flores Perez (Chairman of the
Committee, appointed on April 3, 2008), Alberto Felipe Mulas Alonso, Luis
Guillermo Zazueta Dominguez and Manuel F. Arce Rincon.




The
chairman of the Corporate Practices Committee shall prepare an annual report to
our Board of Directors with respect to the findings of the Corporate Practices
Committee, which shall include (i) observations with respect to relevant
directors and officers, (ii) the transactions entered into with related parties,
(iii) the remunerations paid to directors and officers and (iv) any permissions
granted for a director or officer to take advantage of a business
opportunity.




NASDAQ
Corporate Governance Comparison




Pursuant
to Rule 4350(a)(1) of the NASDAQ Stock Market, Inc. (NASDAQ) Marketplace Rules,
we are required to provide a summary of the significant ways in which our
corporate governance practices differ from those required for U.S. companies
under the NASDAQ listing standards.  We are a Mexican corporation with
shares listed on the Mexican Stock Exchange.  Our corporate governance
practices are governed by our bylaws, the Securities Market Law and the
regulations issued by theMexican National Banking and Securities
Commission.




On
December 30, 2005, a new Mexican Securities Market Law was published in the
Diario Oficial de la
Federación, which became effective on June 28, 2006.





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The table below discloses the
significant differences between our corporate governance practices and the
NASDAQ standards.




NASDAQ
      Standards
            
            Our
      Corporate Governance Practice




Director
      Independence.  Majority of Board of Directors must be
      independent and directors deemed independent must be identified in a
      listed company’s proxy statement (or annual report on Form 10-K or 20-F if
      the issuer does not file a proxy statement).  “Controlled
      companies,” which would include our company if we were a U.S. issuer, are
      exempt from this requirement.  A controlled company is one in
      which more than 50% of the voting power is held by an individual, group or
      another company, rather than the public.  Rules 4350(c)(1) &
      (c)(5).
            
            Director
      Independence.Pursuant to
      the Mexican Securities Market Law, we are required to have a Board of
      Directors composed of a maximum of 21 members, 25% of whom must be
      independent.  One alternate director may be appointed for each
      principal director; provided that the alternates for the independent
      director must also be independent.  Certain persons are per se non-independent,
      including insiders, control persons, major suppliers, and any relatives of
      such persons.  In accordance with the Mexican Securities and
      Market Law, our shareholders’ meeting is required to make a determination
      as to the independence of our directors, though such determination may be
      challenged by the National Banking and Securities
      Commission.  There is no exemption from the independence
      requirement for controlled companies.
              
              Our
      by-laws provide that our Board of Directors shall be composed of at least
      11 members.  Currently, our board has eleven members, of which
      five are independent under the Mexican Securities Market Law and the
      Sarbanes-Oxley Act of 2002.Executive
      Sessions.  Independent directors must meet regularly in
      executive sessions at which only independent directors are
      present.  Rule 4350(c)(2).
            
            Executive
      Sessions.Our non-management and independent directors
      are not required to meet in executive sessions and generally do not do
      so.  Under our bylaws and applicable Mexican law, executive
      sessions are not required.Nominations
      Committee.Director nominees must be selected, or
      recommended for the board’s selection, either by a nominating committee
      comprised solely of independent directors or by a majority of independent
      directors.  Each listed company also must certify that it has
      adopted a formal charter or board resolution addressing the nominations
      process.  “Controlled companies” are exempt from this
      requirement.  Rules 4350(c)(4)(A)-(B) &
    (c)(5).
            
            Nominations
      Committee.We are not required to have a nominating
      committee. According to the amendment of the bylaws in the shareholders’
      meeting held on April 3, 2008, this committee has been disbanded and its
      functions and responsibilities are now carried out by the Board of
      Directors.Audit Committee. Audit committee
      satisfying the independence and other requirements of Rule 10A-3 under the
      Exchange Act and the more stringent requirements under the NASDAQ
      standards is required.  Rule 4350(d).
            
            Audit
      Committee.We are in
      compliance with the independence requirements of Rule
      10A-3.  Marketplace Rule 4350(a)(1) permits us to follow our
      home country governance practices in lieu of certain NASDAQ requirements,
      and as such the members of our Audit Committee are not required to satisfy
      the NASDAQ independence and other Audit Committee standards that are not
      prescribed by Rule 10A-3.
              
              The
      principal characteristics of our Audit Committee are as
      follows:




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NASDAQ
      Standards
              
              Our
      Corporate Governance Practice


·Our Audit Committee is composed of four members, all of whom are
      members of our Board of Directors.·All of the members of our Audit Committee and the committee’s
      chairman are independent.·The Chairman of the Audit Committee is appointed and/or removed
      exclusively by the general shareholders’ meeting.·Our Audit Committee operates pursuant to provisions in the Mexican
      Securities Market Law and our bylaws.·Our Audit Committee submits an annual report regarding its
      activities to our Board of Directors.·The duties of our Audit Committee include, among others, the
      following:(i)       
      selecting the external auditor of the Company, recommending to the Board
      of Directors the appointment of such external auditor and providing an
      opinion about any removal of such external auditor;
              (ii)      
      supervising our external auditors and analyzing their
reports;
              (iii)     
      analyzing and supervising the preparation of our financial
      statements;
              (iv)     
      informing the board of our internal controls and their
      adequacy;
              (v)      
      requesting reports from our executive officers whenever the committee
      deems appropriate, providing assistance to our Board of Directors in the
      preparation of the reports containing the main accounting and information
      guidelines used for the preparation of the financial information, and
      assistance to our Board of Directors in the preparation of the report on
      the operations and activities in which the Board of Directors had
      intervened pursuant to the Securities Market
  Law;




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 NASDAQ
      Standards
                
                Our
      Corporate Governance Practice
 (vi)     
      informing the board of any irregularities that it may
      encounter;
                (vii)    
      receiving and analyzing recommendations and observations made by the
      shareholders, members of the Board, executive officers, our external
      auditors or any third party and taking the necessary actions;
                (viii)   
      calling shareholders’ meetings;
                (ix)      
      overseeing the execution of the shareholders’ and directors’ resolutions
      by the Chief Executive Officer in accordance with the instructions
      provided thereto by the shareholders or the directors; and
                (x) 
            providing an annual report to the
      Board.


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NASDAQ
      Standards
              
              Our
      Corporate Governance Practice


Compensation
      Committee.CEO compensation must be determined, or
      recommended to the board for determination, either by compensation
      committee comprised solely of independent directors or a majority of the
      independent directors and the CEO may not be present during voting or
      deliberations.  Compensation of all other executive officers
      must be determined in the same manner, except that the CEO, and any other
      executive officers, may be present. “Controlled companies” are exempt from
      this requirement.  Rules 4350(c)(3)(A)-(B) &
      (c)(5).
            
            Corporate
      Practices Committee.Pursuant to the Mexican Securities
      Market Law, we are required to have a corporate governance committee,
      although we are not required to have a separate compensation
      committee.  The Mexican Securities Market Law requires that
      committees consist of at least 3 independent directors appointed by the
      Board of Directors.  All committee members must be independent
      (except to the extent a controlling shareholder or shareholders own 50% or
      more of our outstanding capital stock, in which case the majority must be
      independent).
              
              Pursuant
      to our bylaws and the Mexican Securities Market Law, the duties of our
      Corporate Practices Committee include, among others, the
      following:
              
              (i)   
      providing opinions to our Board of Directors;
              
              (ii)  
      requesting and obtaining opinions from independent experts;
              
              (iii) 
      calling shareholders’ meeting; and
              
              (iv) 
      assisting the board in the preparation of annual reports and other
      reporting obligations.
              
              The
      board has vested certain functions and responsibilities of this committee
      on our Audit Committee.
              
              The
      duties of our Audit Committee with regard to corporate practices are,
      among others, the following:·evaluating the performance of relevant officers,·reviewing related-party transactions, and·determining the total compensation package of the chief executive
      officer.Equity Compensation
      Plans.  Equity compensation plans require shareholder
      approval, subject to limited exemptions.  Rule
      4350(i)(1)(A).
            
            Equity
      Compensation Plans.  Shareholder approval is not
      expressly required under our bylaws for the adoption and amendment of an
      equity-compensation plan.  Such plans must provide from similar
      treatment of executives in comparable positions.  No
      equity-compensation plans have been approved by our
      shareholders.




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NASDAQ
      Standards
              
              Our
      Corporate Governance Practice


Shareholder Approval for
      Issuance of Securities. Issuances of securities (1) that will
      result in a change of control of the issuer, (2) in connection with
      certain acquisitions of the stock or assets of another company, or
      (3) in connection with certain transactions other than public
      offerings require shareholder approval.
      Rules 4350(i)(1)(B)-(D).
            
            Shareholder
      Approval for Issuance of Securities. Mexican law and our bylaws
      require us to obtain shareholder approval for the issuance of equity
      securities. Treasury stock, however, may be issued by the Board of
      Directors without shareholder approval.Code of Ethics.Corporate
      governance guidelines and a code of business conduct and ethics is
      required, with disclosure of any waiver and the reasons for such waiver
      for directors or executive officers.  The code must include an
      enforcement mechanism.Rule
      4350(n).
            
            Code of
      Ethics.  We have adopted a code of ethics applicable to
      all of our directors and executive officers, which is available to you
      free of charge upon request and at www.oma.aero.  We
      are required by Item 16B of Form 20-F to disclose any waivers granted to
      our chief executive officer, chief financial officer and persons
      performing similar functions, as well as to our other
      officers/employees.Conflicts of Interest.
      Appropriate review of all related party transactions for potential
      conflict of interest situations and approval by an Audit Committee or
      another independent body of the Board of Directors of such transactions is
      required. Rule 4350(h).
            
            Conflicts
      of Interest. In accordance with Mexican law and our bylaws, the
      Audit Committee must provide an opinion regarding any transaction with a
      related party that is outside of the ordinary course of business, and such
      transactions must be approved by the Board of Directors. Pursuant to the
      Mexican Securities Market Law, our Board of Directors and our Audit
      Committee are required to establish certain guidelines regarding related
      party transactions that do not require board approval.Solicitation of Proxies.
      Solicitation of proxies and provision of proxy materials is required for
      all meetings of shareholders. Copies of such proxy solicitations are to be
      provided to NASDAQ. Rule 4350(g).
            
            Solicitation
      of Proxies. Under the Mexican Securities Market Law, we are
      obligated to make available proxy materials for meetings of shareholders.
      In accordance with Mexican law and our bylaws, we inform shareholders of
      all meetings by public notice, which states the requirements for admission
      to the meeting and provides a mechanism by which shareholders can vote by
      proxy. Under the deposit agreement relating to our ADSs, holders of our
      ADSs receive notices of shareholders' meetings and, where applicable,
      requests for instructions to the ADS depositary for the voting of shares
      represented by ADSs.Peer Review. A listed
      company must be audited by an independent public accountant that
      (i) has received an external quality control review by an independent
      public accountant ("peer review") that determines whether the auditor's
      system of quality control is in place and operating effectively and
      whether established policies and procedures and applicable auditing
      standards are being followed or (ii) is enrolled in a peer review
      program and within 18 months receives a peer review that meets
      acceptable guidelines. Rule 4350(k).
            
            Peer
      Review. Under Mexican law, we must be audited by an independent
      public accountant that has received a "quality control review" as defined
      by the National Banking and Securities Commission.  Galaz,
      Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte & Touche Tohmatsu,
      our independent auditor, is not subject to "peer review" as such term is
      defined in Marketplace
Rule 4350(k).




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NASDAQ
      Standards
                
                Our
      Corporate Governance Practice
 Peer Review. A listed
      company must be audited by an independent public accountant that
      (i) has received an external quality control review by an independent
      public accountant ("peer review") that determines whether the auditor's
      system of quality control is in place and operating effectively and
      whether established policies and procedures and applicable auditing
      standards are being followed or (ii) is enrolled in a peer review
      program and within 18 months receives a peer review that meets
      acceptable guidelines. Rule 4350(k).
              
              Peer
      Review. Under Mexican law, we must be audited by an independent
      public accountant that has received a "quality control review" as defined
      by the National Banking and Securities Commission.  Galaz,
      Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte & Touche Tohmatsu,
      our independent auditor, is not subject to "peer review" as such term is
      defined in Marketplace
Rule 4350(k).


Employees




As of
December 31, 2007, we had approximately 959 employees.  The total
number of employees increased by 1.5% in 2006 and by 1.6% in 2007 due primarily
to the addition of personnel operating our cargo facilities and security
personnel.  At December 31, 2007, approximately 58% of our
employees were unionized.





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The
following table sets forth the number of employees and a breakdown of employees
by main category of activity and geographic location as of the end of each
period indicated.




Employees




December
      31,2005
            
            
            2006
            
            
            2007Categories
      of activity:Airport
      operations
            
            493
            
            
            497
            
            
            508Airport
      maintenance
            
            145
            
            
            153
            
            
            155Administration(1)
            
            292
            
            
            294
            
            
            296Geographic
      location:Acapulco
            
            94
            
            
            91
            
            
            93Ciudad
      Juárez
            
            48
            
            
            49
            
            
            48Culiacán
            
            51
            
            
            50
            
            
            54Chihuahua
            
            61
            
            
            61
            
            
            60Durango
            
            41
            
            
            42
            
            
            42Mazatlán
            
            69
            
            
            69
            
            
            70Monterrey
            
            174
            
            
            188
            
            
            193Reynosa
            
            29
            
            
            27
            
            
            31San
      Luis Potosí
            
            39
            
            
            40
            
            
            41Tampico
            
            58
            
            
            57
            
            
            57Torreón
            
            46
            
            
            47
            
            
            49Zacatecas
            
            40
            
            
            42
            
            
            40Zihuatanejo
            
            47
            
            
            47
            
            
            47Servicios
      Aeroportuarios del Centro Norte, S.A. de C.V.
            
            133
            
            
            134
            
            
            134Total(1)
            
            930
            
            
            944
            
            
            959





(1)
            As
      of December 31, 2005, 2006 and 2007, includes 133, 134 and 134 persons
      respectively, employed by Servicios Aeroportuarios del Centro Norte, S.A.
      de C.V., our administrative services
subsidiary.




All of
our unionized employees are members of local chapters of the Mexican National
Union of Airport and Auxiliary Services Workers, an organization formed in 1998
whose members include employees of the Mexican Airport and Auxiliary Services
Agency as well as of the three other airport groups (the Southeast Group (Grupo
Aeroportuario del Sureste, S.A. de C.V.), the Mexico City Group (Grupo
Aeroportuario de la Ciudad de México), and the Pacific Group (Grupo
Aeroportuario del Pacifico, S.A. de C.V.) operating in Mexico.  Labor
relations with our employees are governed by 13separate collective
labor agreements, each relating to one of our 13airport subsidiaries,
and negotiated by the local chapter of the union.  As is typical in
Mexico, wages are renegotiated every year, while other terms and conditions of
employment are renegotiated every two years.  We last renegotiated our
collective bargaining agreements with our unionized employees in October 2006.
We believe that our relations with employees are good.  We believe the
wages we paid to Servicios Aeroportuarios del Centro Norte S.A. de C.V., or the
Service Company,
employees are similar to those paid to employees of similar airport operating
companies in Mexico.




We
maintain a savings plan available to all of our employees pursuant to which the
employees may make bi-weekly contributions of up to 13% of their pre-tax
salaries.  We make bi-weekly contributions matching each employee’s
contribution.  Employees are entitled to withdraw the funds in their
accounts on an annual basis.  In 2005, 2006 and 2007, we made a total
of Ps.18.6 million, Ps.17.7 million and Ps. 20.4 million, respectively, in
payments to employees’ accounts pursuant to the savings plan.




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Funds in
the savings plan may be used to make loans to employees and are otherwise
invested in securities listed on the Mexican Stock Exchange or in treasury bills
issued by the Ministry of Finance and Public Credit.




Item
      7.
            Major
      Shareholders and Related Party
Transactions




MAJORSHAREHOLDERS




Aeroinvest
is our controlling shareholder.  Aeroinvest directly owns 157,231,800
of our Series B shares that represent 39.32% of our outstanding capital
stock.  Aeroinvest also directly owns 331,972,000 Series A shares of
SETA that represent 74.5 % of its capital stock.  SETA in turn owns
58,800,000 of our Series BB shares and 8,000,000 Series B shares that
collectively represent 16.7% of our capital stock.  Consequently,
Aeroinvest is the beneficial owner of 56.02% of our capital stock.




In
November of 2006, a Mexican trust established by NAFIN, or the NAFIN Trust, acting pursuant
to the instructions of the 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 were paid to the Mexican government. After the offering, the Mexican
government ceased to be a shareholder.




The
following table sets forth information with respect to beneficial ownership of
our capital stock as of May 27, 2008:




Number of
      shares
            
            
            Percentage
      of total
                share
      capitalIdentity
      of stockholder
            
            B
      Shares
            
            
            BB
      Shares
            
            
            B
      Shares
            
            
            BB
      SharesAeroinvest(1)
            
            
            157,262,600
            
            
            
            
            
            
            39.32
            %SETA(2)
            
            
            8,000,000
            
            
            
            58,800,000
            
            
            
            2.0
            %
            
            
            14.70
            %Public
            
            
            192,080,000
            
            
            
            --
            
            
            
            48.02
            %
            
            
            --Officers
      and Directors
            
            
            275,901
            
            
            
            --
            
            
            
            0.07
            %
            
            
            --





(1)
            In
      addition to the Series B shares it directly owns, Aeroinvest may be deemed
      to beneficially own all of our shares owned by SETA by virtue of its
      ownership of 74.5 % of SETA’s capital stock.  Aeroinvest and
      SETA are subsidiaries of ICA.


(2)
            Held
      in trust with Bancomext.  Aeroinvest and SETA are subsidiaries
      of ICA.




Arrangements
relating to SETA




The rules
governing the sale of our Series BB shares to SETA required that SETA place all
of its Series BB shares in trust in order to guarantee SETA’s performance of its
obligations under the Technical Assistance Agreement and SETA’s commitment to
maintain its interest in us for a specified period.  Accordingly, SETA
has placed its shares in trust with Bancomext or the Bancomext
Trust.  Pursuant to our bylaws, the Technical Assistance
Agreement, the Participation Agreement, and the Bancomext Trust, SETA is
required to retain at least 51% of our shares until June 14, 2007, after which
it is entitled to transfer up to one eighth of this 51% during each year
thereafter.  The terms of the Bancomext Trust will be extended for an
additional 15 years if, at the end of the initial 15-year term, SETA holds
shares representing more than 10% of our capital stock.  SETA may
terminate the Bancomext Trust before the second 15-year term begins
if:  (i) SETA holds less than 10.0% of our capital stock at the
end of the initial term; and (ii) the Technical Assistance Agreement has
been terminated.  If the Bancomext Trust is not terminated within the
second 15-year term, SETA is required to instruct Bancomext to transfer the
shares to a new trust.  SETA is required to deposit in the trust any
additional shares of our capital stock that it acquires.




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Pursuant
to our bylaws, SETA (as holder of our Series BB shares) has the right to present
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, chief operating
officer and commercial director to elect three members of our Board of Directors
and to propose the appointment of
at least one member of each ofourcommittees.  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
theBoard of Directorsrequire the affirmative vote of the directors appointed by the holder ofourSeries BB
shares.In the event of the termination of 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.  In
addition, shareholders of SETA have allocated among themselves certain veto
rights relating to the exercise by SETA of its veto and other rights, which
increases the risk of impasse at the shareholders meeting of SETA and ultimately
at our shareholders meetings.




Our
bylaws, the Participation Agreement and the Technical Assistance Agreement also
contain certain provisions designed to avoid conflicts of interest between SETA
and us, such as approval of certain related party transactions by our Corporate
Practices Committee.




Under the
terms of the Participation Agreement and the Bancomext Trust, (i) SETA’s key
partners, currently ADPM and Aeroinvest, are required jointly to maintain at
least 51% ownership of SETA until June 14, 2015, (ii) Aeroinvest must maintain
at least a 25.5% ownership interest in SETA until such date and (iii) ADPM must
maintain at least a 10.0% ownership interest in SETA until such date. To the
extent that a key partner acquires shares of SETA in excess of its
above-referred interest, such additional interest may be sold without
restriction.  There can be no assurance that the terms of the
Participation Agreement or the Bancomext Trust would not be amended to reduce or
eliminate these ownership commitments.  If SETA or any of its
stockholders defaults on any obligation contained in the trust agreement, or if
SETA defaults on any obligation contained in the Participation Agreement or the
Technical Assistance Agreement, after specified notice and cure provisions, the
Bancomext Trust provides that the trustee may sell 5.0% of the shares held in
the trust and pay the proceeds of such sale to us as liquidated
damages.




Pursuant
to the consortium agreement entered into among ADPM, Aeroinvest and VASA S.A. (a
corporation organized under the laws of France,VASA) on May 16, 2000 as
amended and restated, or the consortium agreement, the shareholders of SETA
agreed that ADPM shall have the right to appoint one member of our Board of
Directors and that Aeroinvest shall have the right to appoint up to three
directors, the third of whom must satisfy the independence criteria of the
Sarbanes-Oxley Act of 2002.  The right to appoint certain of our
officers under the consortium agreement is allocated as follows: Aeroinvest
shall appoint our chief executive officer, chief financial officer, human
resources director (subject to the approval of ADPM) and general counsel; ADPM
shall appoint our chief operating officer, our commercial director and our chief
safety and quality control officer (subject to the approval of
Aeroinvest).




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Aeroinvest
and ADPM have also agreed that:




·
            Aeroinvest
      will select two members of our Audit Committee, one of whom must satisfy
      the independence criteria of the Sarbanes-Oxley Act of 2002;
      and




·
            Aereoinvest
      and ADPM will jointly select at least one member of our Corporate
      Practices Committee.




The
consortium agreement also requires the unanimous vote of Aeroinvest and ADPM to
approve: (i) the pledging or creation of a security interest in any of our
shares held by SETA and the shares issued by SETA; (ii) any amendments to SETA’s
bylaws or the SETA shareholders’ agreement; (iii) our merger, split, dissolution
or liquidation; (iv) the amendment or termination of our bylaws, the
Participation Agreement, the technical assistance agreement, the technology
transfer agreement or related ancillary agreements; (v) changes in our capital
structure; (vi) the conversion of our Series BB shares into Series B shares of
OMA; and (vii) any sale or transfer of shares of SETA.




Under the
consortium agreement, transfers by either of Aeroinvest or ADPM of its shares in
SETA to an unaffiliated third party are subject to limited rights of first
refusal in favor of the non-transferring shareholder, and such transfers by
Aeroinvest are subject, under certain conditions, to tag-along rights in favor
of ADPM.  In addition, the consortium agreement includes put and call
options in respect of shares of SETA held by Aeroinvest, whereby, from June 14,
2009 through the later of June 14, 2015 and the date that is six months
following the termination of the technical assistance agreement, under certain
conditions, ADPM may require Aeroinvest to purchase all or a portion of shares
of SETA held by ADPM, and in the event of the parties’ inability to resolve
definitely a matter to be decided by the Board of Directors or shareholders of
SETA, Aeroinvest may require ADPM to sell to Aeroinvest all or a portion of
shares of SETA held by ADPM.




Arrangements
relating to Aeroinvest




In June
2005, SETA assigned to Aeroinvest an option to purchase Series B shares
representing 36% of our then-outstanding capital stock (currently equivalent to
35.3% of our capital stock).  Aeroinvest purchased these shares from
the Mexican government in December 2005 pursuant to this option, acquiring
141,120,000 Series B shares at an aggregate purchase price of U.S.$203.3 million
(Ps.2,165.4 million) (determined based on an initial price per share of
U.S.$1.13 (Ps.11.0198) plus an annual 5% premium, subject to decreases for any
dividends declared and paid by us).  The acquisition of these Series B
Shares was financed through credit facilities.  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 representing 0.74% 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
therewith, Aeroinvest has assigned its economic interests (including its right
to receive dividends) in its Series B shares representing 39.32% of our capital
stock as well as 74.5% of the Series A shares of SETA.  The terms of
the refinancing documents are described in “Item 5. Operating and Financial
Review and Prospects – Liquidity and Capital Resources.”




On June
22, 2007, Aeroinvest, ADPM, SETA, Banco Nacional de Comercio Exterior, S.N.C.,
División Fiduciaria and Banca Múltiple, J.P. Morgan Grupo Financiero, División
Fiduciaria entered into a voting agreement pursuant to which Aeroinvest agreed
to vote its Series B shares representing 39.32% of our capital stock as a bloc
in the same way SETA votes its shares of our capital stock at all ordinary and
extraordinary shareholders meetings, subject to certain exceptions set forth in
the agreement. An English translation of this agreement is filed as an exhibit
to this Form 20-F.




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RELATED PARTY TRANSACTIONS




Arrangements
with SETA and its Affiliates




The rules
for the sale to SETA of the Series BB shares previously owned by the Mexican
government required SETA, OMA and the Ministry of Communications and
Transportation to enter into a Participation Agreement, which established the
framework for certain related agreements: the Option Agreement, the Technical
Assistance Agreement and the Bancomext Trust.  These agreements were
approved, in accordance with our Related Party Guidelines, by our Board of
Directors.




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 2007 amounted to approximately Ps.57.4 million (U.S.$5.3
million).  The agreement provides us an exclusive license in Mexico to
use all technical assistance and expertise transferred to us by SETA or its
stockholders during the term of the agreement.  The agreement has an
initial term of approximately 15 years beginning June 14, 2000 and expiring on
the date of the expiration of the Participation Agreement, or June 14,
2015.  The agreement automatically renews for successive five-year
terms unless one party provides the other a notice of termination at least 60
days prior to a scheduled expiration date.  A decision by us not to
renew the Technical Assistance Agreement is subject to the approval of the
holders of a majority of our Series B shares that are not owned by SETA or any
of its affiliates.  A party may terminate the Technical Assistance
Agreement prior to its expiration date upon non-compliance with its terms by the
other party.  SETA provides us assistance in various areas, including
development of our commercial activities, preparation of marketing studies
focusing on increasing passenger traffic, assistance with the preparation of the
master development programs that we are required to submit to the Ministry of
Communications and Transportation and the improvement of our airport
operations.




The
Technical Assistance Fee for 2000 and 2001 was fixed at U.S.$5
million.  Subsequent to January 1, 2003, the Technical Assistance
Fee is equal to the greater of U.S.$3 million adjusted annually for inflation
since June 14, 2006 (measured by the U.S. consumer price index) or 5% of our
annual consolidated operating income (calculated prior to deducting the
technical assistance fee and depreciation and amortization and in each case
determined in accordance with Mexican FRS).  We believe that this
structure creates an incentive for SETA to increase our annual consolidated
earnings.  SETA is also entitled to reimbursement for the
out-of-pocket expenses it incurs in its provision of services under the
agreement.




The
Technical Assistance Agreement allows SETA, its stockholders and their
affiliates to render additional services to us only if its Corporate Practices
Committee determines that these related persons have submitted an arm’s length
bid in a public bidding process.  For a description of this committee,
see “Item 6. Directors, Senior Management and
Employees—Committees.”




In 2004,
2005, 2006 and 2007 we recognized expenses of U.S.$3.0 million, U.S.$3.3
million, U.S.$4.4 million and U.S.$5.3 million, respectively, pursuant to the
technical assistance agreement plus additional nominal expenses paid to SETA and
its affiliates.




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Under the
Option Agreement, SETA was granted options to subscribe for newly issued Series
B shares representing 3% of our capital stock.  These options were
originally exercisable in three tranches of 1% each, the first one of which
expired unexercised and the second and third of which were exercised in 2006 at
the price of U.S.$1.3527 (Ps.14.6735) per share (determined based on an initial
price per share of U.S.$1.1286 plus an annual 5% premium, subject to decreases
corresponding to dividends declared and paid by us).




Arrangements
with Aeroinvest and its Affiliates




Our
parent company 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 39.32% of our
capital stock as well as 74.5% of the Series A shares of
SETA.  Aeroinvest has since purchased additional Series B Shares
representing 3.28% 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.  Although we are not parties to the refinancing agreements, the
refinancing agreements to require that Aeroinvest cause us to comply with
certain restrictions on our ability to create liens, incur indebtedness, sell,
transfer or encumber assets, engage in merger transactions or otherwise change
or business or make investments or capital expenditures outside our master
development plans.  The terms of the refinancing documents are
described in “Item 5. Operating and Financial Review and Prospects – Liquidity
and Capital Resources.”




Arrangements
with Other Affiliates




We
periodically engage ICA and its affiliates to provide construction and related
services to us.  In 2007, we paid approximately
U.S.$15.7 million, in connection with services provided by ICA and its
affiliates.  Such agreements were approved, in accordance with our
Related Party Guidelines, by our Board of Directors, upon the recommendation of
our Corporate Practices Committee. The Acquisitions and Agreements Committee was
replaced after our initial public offering, in accordance with our bylaws, by
the Corporate Practices Committee by the shareholders meeting held on October 2,
2006.  In June 2007 we entered into a Ps 113.9 million construction
contract with ICA for construction of the foundation, procurement, fabrication
and assembly of the metallic structure and installation of the three-dimensional
roofing structure of the new Terminal B of the Monterrey International Airport,
which is expected to begin operations in the fourth quarter of
2008.  In April 2008, we entered into additional agreements for Ps.
282.5 million in connection with construction works on new Terminal B of the
Monterrey International Airport. In particular, these works will concern
Terminal B’s the aprons, parking lots and roadways, as well as finishings,
electrical, hydraulic, sanitary and HAVC installations in the Terminal’s
building. The relevant agreement was approved in accordance with our Related
Party Guidelines adopted by our Board of Directors and received the favorable
evaluation of our Corporate Practices Committee, which was supported by a
fairness opinion stating that the agreement and its terms were arm’s
length.  In addition, we expect to sign a multi-annual service
agreement for the maintenance of our runways with ICA. During August and October
of 2007, we entered into agreements for Ps. 89.3 million for the rehabilitation
and maintenance of runways and aprons in the Ciudad Juarez, Culiacán, Chihuahua
and Durango Airports. We engaged an independent expert to evaluate both of the
offers made by ICA in connection with these contracts, and the expert determined
that ICA’s offers were consistent with market prices, and both of these
contracts with ICA were approved by our Board of Directors upon the
recommendation of our Corporate Practices Committee, which concluded that
these contracts are on terms that the Committee believes are arm's
length.




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Item8.
            Financial
      Information




See
“Item 18.  Financial Statements” beginning on
page F-1.




LEGALPROCEEDINGS




General




We are
involved in certain legal proceedings from time to time that are incidental to
the normal conduct of our business.  In addition, the Mexican Airport
and Auxiliary Services Agency is currently engaged in several legal proceedings
related to our airports, none of which is expected to have a material adverse
effect on our business.




Disputed
land ownership at Ciudad Juárez International Airport




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 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 2008, 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 2007, the Ciudad Juárez International Airport
represented 5.8% 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.




Property
tax claims by certain municipalities




Administrative
law proceedings were asserted against us by the municipalities of Chihuahua,
Ciudad Juárez, Reynosa, Tampico, Mazatlán 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 and Tampico (which amounted to Ps.25.3 million and Ps.1.02 million
respectively) were dismissed on April 11, 2008 and May 9, 2008,
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, Zihuatanejo and Ciudad
Juarez are Ps.59.5 million, Ps.1.6 million and Ps.1.8 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.




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On June
27, 2006, the municipality of Zihuatanejo issued a decree assessing taxes of
Ps.4.3 million and a fine of Ps.4.3 million in respect property tax liability
for the period from 1996 to 2000.  Pursuant to the decree, the
municipality seized and attached two bank accounts of the Zihuatanejo
International Airport and garnished rent paid by tenants located on concession
property. These two bank accounts contained no funds at the time of their
seizure.  The monthly amount of rent subject to garnishment is
approximately Ps.88,442.  We have filed claims seeking to (i) annul
the assessment of the fine on substantive and procedural grounds, (ii) stay the
seizure and attachment pending appeal and final resolution of our legal
challenge to the constitutionality of the underlying tax liability and (iii)
recover amounts paid by Zihuatanejo International Airport’s tenants to the
municipality as a result of the ordered garnishment.  On April 23,
2008 the Administrative Court issued a resolution that dismissed a portion of
the claim corresponding to Ps. 8.6 million; as a consequence only a claim for
Ps.1.6 million remains outstanding pending resolution before thee Administrative
Court. We anticipate that the municipality may issue additional decrees
assessing property taxes in respect of the period from 2000 to the
present.




On May
14, 2007, the municipality of Reynosa gave notice of an update to the amount of
property taxes and fines claimed of Ps. 59.2 million (in addition to the Ps 0.3
claimed in 2004).  We have filed claims contesting any obligation to
pay any property tax, the newly updated amount claimed by the municipality and
seeking to annul the assessment of the taxes and fines on constitutional
grounds.  We anticipate that the municipality may issue additional
decrees assessing property taxes claimed in respect of subsequent
periods.




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 because, should a
court determine that these taxes must be paid in response to any future
proceedings, we believe that only the owners 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 an obligation to pay such taxes, however, and
changes to the Mexican Constitution and other applicable laws could render it
liable to municipalities for property taxes in the future.  We cannot
predict the amount of any such future tax liabilities or the criteria that would
be used to determine them.  If such changes were to occur and any
amounts owed were substantial, these resulting tax liabilities could have a
materially adverse effect on our consolidated financial condition or results of
operations.




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.




Claim
for damages by Aero DaVinci Internacional, S.A. de C.V.




In May
2007 our Reynosa airport received notice of a lawsuit for damages and losses
filed by Aero DaVinci International S.A. de C.V. (Aero DaVinci), a sublessee at
the airport, in the amount of U.S.$3,900,000, in connection with the termination
of Aeroservicios of Reynosa, S.A. de C.V.’s (Aeroservicios, the principal
lessee) lease at the Reynosa airport for nonpayment of rent.  Upon
termination of Aeroservisio’s lease (and effectively Aero DaVinci’s sublease),
Aero DaVinci initiated legal proceedings against the Reynosa airport for damages
and losses, including lost profits, in connection with its airplane taxi, cargo
and charter service. OnJanuary 24,
2008, Aerodavinci abandoned
the claim, and consequently the Court terminated the
proceeding.





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In
addition, on May 2, 2007 our Tampico airport received notice of a lawsuit for
reimbursement of legal fees asserted by Aero DaVinci for termination of its
lease at the Tampico airport for nonpayment of rent.  The Tampico
airport filed a claim against Aero DaVinci on February 22, 2005 to recover the
unpaid rent under its lease, which was subsequently dismissed.  Aero
DaVinci then asserted a legal proceeding against the Tampico airport for its
legal fees in connection therewith in the amount of
Ps.$2,962,000,000.  We
filed documents contesting both of these claims.  OnJanuary 24, 2008,Aero DaVinci abandoned the claim, and consequently
the court terminated the proceeding.





Relocation
of a cargo tenant at Monterrey International Airport




As part
of the expansion and modernization of cargo operations at Monterrey
International Airport, we have entered into agreements with most of our cargo
customers and the Mexican customs authorities under which they have agreed to
relocate their operations to new facilities.  Braniff Air Freight and
Company, S.A. de C.V., or Braniff, a cargo customer
that leases a portion of the area originally dedicated to customs activities at
the airport from Mexican customs authorities, asserted a legal claim challenging
the validity of our relocation agreement with the Mexican customs
authorities.  Although Braniff’s claim was dismissed, it has refused
to vacate the space it occupies.  We brought a claim against the
Mexican customs authorities seeking to cause them to relocate Braniff, and a
Mexican court recently entered an initial judgment in our favor.  The
Mexican customs authorities did not appeal such initial judgment and we are
currently requesting the execution of the court’s order against the customs
authorities.  Braniff and other cargo customers (Levisa, Salvador Daw
Vidal and Braniff Despachos Advanales) challenged our efforts to seek this
enforcement and obtained a suspension of the court order against the Mexican
customs authority the fulfillment of the court resolution. As of the date
hereof, the constitutional trials (or juicios de amparo) filed
by Braniff and other cargo are pending.  In the event that the matter
is not definitively resolved in favor of the Monterrey International Airport,
Braniff and other cargo customers’ continued occupation of this space could
impede the expansion and modernization of cargo operations as well as plans for
the construction of new commercial terminals at the airport.




Administrative
proceeding for potential environmental violations in Monterrey




On April
18, 2008, we were notified about an administrative investigation by the Mexican
Federal Environmental Protection Agency (Procuraduría Federal de Protección
al Ambienteor PROFEPA) with respect to potential violations of
environmental regulations in connection with the construction of Terminal B at
the Monterrey International Airport, which was constructed on an allegedly
forested area.  The notification alleged that the construction took
place without the required feasibility studies and environmental analysis, in
violation of the environmental regulations. We filed a formal answer with
PROFEPA on May 12, 2008 in order to provide evidence that we have complied with
all applicable environmental laws.  PROFEPA will then issue a
resolution determining the sanction (if any), which they consider appropriate
based on their analysis of the documentation we have provided.  If
this investigation is not resolved in our favor, PROFEPA may impose sanctions on
the Monterrey International Airport of up to 50,000-fifty thousand times the
minimum wages currently applicable in Mexico City.




DIVIDENDS









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Mexican
companies may pay dividends only out of earnings (including retained earnings
after all losses have been absorbed or paid up) and only after such allocation
to the legal reserve fund.  The reserve fund is required to be funded
on a stand-alone basis for each company, rather than on a consolidated
basis.  The level of earnings available for the payment of dividends
is determined under Mexican FRS.  Our subsidiaries are required to
allocate earnings to their respective legal reserve funds prior to paying
dividends to us.  We are also required to allocate earnings to our
legal reserve fund prior to distributing any dividend payments to our
shareholders.




Dividends
that are paid from a company’s distributable earnings that have not been subject
to corporate income tax are subject to a corporate-level dividend tax (charged
against cumulative net income and payable by us).  Companies are
entitled to apply any corporate-level dividend tax on the distribution of
earnings as a credit against their Mexican corporate income tax corresponding to
the fiscal year in which the dividend was paid or against the Mexican corporate
income tax of the two fiscal years following the date in which the dividend was
paid.  Dividends paid from a company’s distributable earnings that
have been subject to corporate income tax are not subject to this
corporate-level dividend income tax.  Furthermore, dividends paid to
resident and non-resident holders with respect to our Series B shares and ADSs
are currently not subject to Mexican withholding tax.




Our
current dividend policy seeks to ensure the tax efficient payment of dividends.
Because any dividend we expect to pay will likely be subject to the
corporate-level dividend tax referred to above, our dividend policy has been
designed to ensure that any corporate level dividend tax we pay may be applied
by us as a credit against its projected future corporate income tax liability in
the year paid and in the subsequent two years.




Our
current dividend policy has a fixed and a variable component paid annually in
equal quarterly installments. The fixed component is Ps.325 million per year.
The variable component will be based on the funds available for distribution in
excess of the fixed component.




Our
dividend policy presupposes that the declaration and amount of dividends that
are paid are subject to (and determined by) the following factors:




·
            compliance
      with applicable law regarding the declaration and payment of dividends
      with respect to any year including the establishment of the statutory
      legal reserve fund of 5%;




·
            we
      must maintain sufficient cash reserves, as determined by our Board of
      Directors, necessary to cover our projected investments for the subsequent
      twelve months and our expected operating expenses for the subsequent six
      months;




·
            the
      amount of dividends to be paid may be limited to the extent necessary to
      avoid generating a tax liability that cannot be credited against our
      expected income tax liability in the subsequent two years (which is the
      period during which Mexican law allows us to credit the corporate level
      dividend tax against our income tax liability);
  and




·
            we
      must maintain sufficient cash reserves, as determined by our Board of
      Directors, as to allow us to react to or prevent any adverse financial
      change in the operations of the
business.




Our
dividend policy was prepared based on current Mexican tax law and our current
projections of our future earnings and corporate income tax
liability.  Changes in Mexican tax law and our actual results of
operations could cause our Board of Directors to propose to our shareholders to
change the current dividend policy.




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The
declaration, amount and payment of dividends, if any, are subject to the
approval of either (x) holders of a majority of our capital stock present at a
shareholders’ meeting and, so long as the Series BB shares represent at least
7.65% of our outstanding capital stock, the approval of SETA (as the holder of
the Series BB shares) or (y) holders of 95% of our capital stock.




On
January 31, 2007, our shareholders approved a proposal to include quarterly
payment of dividends in our dividend policy.  Subject to the
satisfaction of the factors mentioned above and the approval of the
shareholders, any dividends that are approved will be payable by us to the
holders of our shares following the shareholder meeting that approved such
dividends in four equal payments on the following dates in any given year: July
15, October 15, January 15 and April 15.




On April
3, 2008, our shareholders approved a cash dividend of Ps. 434.2 million and the
use of up to Ps. 300 million to repurchase shares. The dividend is Ps. 1.0856
per share, to be paid in four equal quarterly installments of Ps. 0.2714 per
share each. Other resolutions of the Shareholders’ Meeting included: (i)
ratification of all current members of the Board of Directors; (ii) designation
of Independent Director Fernando Flores as the new Chairman of the Corporate
Practices Committee; and (iii) modification of the Bylaws in order to strengthen
corporate governance. The shareholders also agreed to postpone consideration of
a proposal to modify the dividend policy to a future Extraordinary Shareholders’
Meeting.




Prior to
September 22, 2006, we had not paid any dividends.  On September 22,
2006, prior to the effectiveness of our new dividend policy, we paid an
aggregate dividend of Ps.446.7 million.  On April 27, 2007, our
shareholders’ meeting approved payment of a dividend of Ps.444.1 million, which
shall be paid in four equal quarterly installments as follows: Ps.107.4 on July
16, 2007, Ps.107.4 on October 15, 2007, Ps.107.4 on January 15, 2008 and
Ps.107.4 on April 15, 2008. On April 3, 2008, our Shareholders’ meeting approved
payment of a dividend of Ps.434.2, which shall be paid in 4 installments of
Ps.108.5 each one, pursuant to the dividends policy.




We
declare our dividends in pesos.  In the case of Series B shares
represented by ADSs, the cash dividends are paid to the depositary and, subject
to the terms of the deposit agreement, converted into and paid in U.S. dollars
at the prevailing rate of exchange, net of conversion expenses of the depositary
and applicable Mexican withholding tax.  Fluctuations in exchange
rates will affect the amount of dividends that ADS holders receive.




Distributions
we make to our shareholders other than as dividends (in the manner described
above), including capital reductions, amortization of shares or otherwise, would
be subject to taxation in Mexico, including withholding taxes.  The
tax rates applicable and the method of assessing and paying taxes applicable to
any such non-dividend distributions will vary depending on the nature of the
distributions.




Our
parent company Aeroinvest entered into agreements with Merrill Lynch, Pierce,
Fenner & Smith Incorporated to refinance its existing credit facilities in
June 2007.  Under the refinancing agreements, 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.  This requirement may cause Aeroinvest to vote
in favor of a dividend in an amount greater than would otherwise be required by
our dividend policy.  The terms of the refinancing agreements are more
fully described under “Item 5. Operating and Financial Review and Prospects –
Liquidity and Capital Resources.”




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Item9.
            The
      Offer and Listing




STOCKPRICE HISTORY




The
following table sets forth, for the periods indicated, the high and low closing
prices for (i) the ADSs on the New York Stock Exchange in U.S. dollars and
(ii) our common shares on the Mexican Stock Exchange in
pesos.  For more information, see “Item 3. Key Information—Exchange
Rates” for the exchange rates applicable during the periods set forth
below.  The information set forth in the table below reflects actual
historical amounts at the trade dates and has not been restated in constant
pesos.




The
annual high and low market prices for (i) our common shares on the Mexican
Stock Exchange in pesos and (ii) the ADSs on the New York Stock Exchange in
U.S. dollars since our initial public offering is as follows:







U.S.$
      per ADR(1)
            
            
            Pesos
      per Series B ShareLow
            
            
            High
            
            
            Low
            
            
            High2007Fourth
      Quarter
            
            
            24.49
            
            
            
            31.00
            
            
            
            33.23
            
            
            
            42.21U.S.$
      per ADR(1)
            
            
            Pesos
      per Series B ShareLow
            
            
            High
            
            
            Low
            
            
            HighMonthly
      PricesDecember,
      2007
            
            
            24.49
            
            
            
            26.85
            
            
            
            33.23
            
            
            
            37.00January,
      2008
            
            
            21.31
            
            
            
            24.75
            
            
            
            29.10
            
            
            
            34.20February,
      2008
            
            
            22.33
            
            
            
            23.60
            
            
            
            30.07
            
            
            
            31.88March,
      2008
            
            
            20.94
            
            
            
            22.81
            
            
            
            28.56
            
            
            
            30.88April,
      2008
            
            
            21.54
            
            
            
            23.98
            
            
            
            28.37
            
            
            
            31.72May,
      2008
            
            
            18.65
            
            
            
            21.75
            
            
            
            24.20
            
            
            
            28.65





(1)
            8
      Series B shares per ADR.


Sources:
            Mexican
      Stock Exchange and the New York Stock
Exchange.




TRADINGON THE MEXICAN STOCK EXCHANGE




The
Mexican Stock Exchange, located in Mexico City, is the only stock exchange in
Mexico.  Founded in 1894, it ceased operations in the early 1900s, and
was reestablished in 1907.  The Mexican Stock Exchange is organized as
a corporation (sociedad
anónima de capital variable) whose shares are held by brokerage
firms.  These firms are exclusively authorized to trade on the floor
of the Exchange.  Trading on the Mexican Stock Exchange takes place
exclusively through an automated inter-dealer quotation system known as SENTRA,
which is open between the hours of 8:30 a.m. and 3:30 p.m., Mexico City time,
each business day.  Each trading day is divided into six trading
sessions with ten-minute periods separating each session.  Trades in
securities listed on the Mexican Stock Exchange can, subject to certain
requirements, also be effected off the Exchange.  Due primarily to tax
considerations, however, most transactions in listed Mexican securities are
effected through the Exchange.  The Mexican Stock Exchange operates a
system of automatic suspension of trading in shares of a particular issuer as a
means of controlling excessive price volatility.  The suspension
procedures will not apply to shares that are directly or indirectly (through
ADSs or CPOs) quoted on a stock exchange outside Mexico.




Settlement
is effected two business days after a share transaction on the Mexican Stock
Exchange.  Deferred settlement, even if by mutual agreement, is not
permitted without the approval of the CNBV.  Most securities traded on
the Mexican Stock Exchange are on deposit with S.D. Indeval, S.A. de C.V., Instituto para el Deposito de
Valores, a privately-owned central securities depositary that acts as a
clearing house, depositary, custodian and registrar for Mexican Stock Exchange
transactions, eliminating the need for the physical transfer of
shares.




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The
Mexican Stock Exchange is one of Latin America’s largest exchanges in terms of
market capitalization, but it remains relatively small and illiquid compared to
major world markets, and therefore subject to greater volatility.




As of
December 31, 2007, 125 Mexican companies, excluding mutual funds, had equity
listed on the Mexican Stock Exchange.  In 2007, the ten most actively
traded equity issues (excluding banks) represented approximately 71% of the
total volume of equity issues traded on the Mexican Stock
Exchange.  Although the public participates in the trading of
securities, a major part of the activity of the Mexican Stock Exchange reflects
transactions by institutional investors.  There is no formal
over-the-counter market for securities in Mexico.




The
market value of securities of Mexican companies is, to varying degrees, affected
by economic and market conditions in other emerging market countries and in the
United States.  In late October 1997, for example, prices of both
Mexican debt securities and Mexican equity securities dropped substantially
following declines earlier in the year in the Asian, Russian and Brazilian
securities markets.




Item
      10.
            Additional
      Information




CORPORATEGOVERNANCE




Bylaws




This
section summarizes certain provisions of Mexican law and our bylaws (estatutos sociales), a copy
of which is attached to this Form 20-F as Exhibit 1.1.




At our
Extraordinary Stockholders’ Meeting held on October 2, 2006, our shareholders
adopted resolutions amending and restating of our bylaws to organize the company
as a sociedad anonima
bursatil, and conform our bylaws to the provisions of the Mexican
Securities Market Law.  Some of the relevant changes included the
enhancement of certain provisions applicable to the corporate governance of
public companies, clarification of certain provisions relating to directors’ and
officers’ liability, and the elimination of restrictions on ownership of our
shares.




Our
bylaws were further amended in the shareholders’ meeting held on April 3, 2008.
In particular, the primary change concerned the elimination of the Nominations
Committee and transfer of such Committee’s duties to the Shareholders Meeting
and, where appropriate, to the Board of Directors.




Purposes




The
purposes of our company include the following:




·
            to
      acquire, as founder or through acquisitions, shares of or interests or
      participations in privately- or state-owned companies engaged in the
      management, operation (including the provision of aeronautical,
      complementary, commercial and construction services) and/or development of
      civilian airports pursuant to the Airport Law and its Regulations; to
      participate in the capital stock of companies engaged in the provision of
      all types of services; to vote, as a group and in the same manner, as
      prescribed by these bylaws or as directed by the Board of Directors, the
      shareholders’ meeting or any other person authorized by these bylaws to
      issue such a directive, any shares of stock of any other company owned
      thereby; and to sell, transfer or dispose of any such shares,
      participations or other securities in accordance with the applicable
      law;




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·
            to
      receive from any other Mexican or foreign entity, company or individual,
      and to provide to any company in which it may hold any interest or
      participation or to any other entity, company or individual, any services
      required to achieve its or their purposes, including, without limitation,
      any industrial, administrative, accounting, marketing or financial
      consulting services associated with the management, operation,
      construction and/or development of
airports;




·
            to
      apply for and obtain, by any means, directly or through its subsidiaries,
      concessions and permits to manage, operate, build and/or develop airports,
      provide airport development services or conduct other related activities,
      including, without limitation, storage and other activities to supplement
      or improve its service offerings, and grant guaranties in respect of such
      concessions and permits. Subject to the applicable law and the terms of
      the relevant concessions, we may also receive, directly or through its
      subsidiaries, the proceeds from the use of any civilian airport
      infrastructure, the execution of any agreement, the provision of any
      service or the conduction of any business activity. We may also provide
      merchandise handling, storage and custody services at bonded facilities in
      the manner prescribed by the applicable law and subject to any necessary
      concessions or authorizations. We may also provide, coordinate, direct,
      supervise and/or render merchandise loading, unloading and handling
      services as provided by the applicable
law;




·
            to
      obtain, acquire, use, transfer and grant or secure licenses in respect of
      all types of patents, invention certificates, registered trademarks, trade
      names, copyrights or any rights associated therewith, whether in the
      United Mexican States or abroad;




·
            to
      obtain all types of secured and unsecured loans or credit facilities, and
      to grant loans to any association, company, entity or individual in which
      it holds more than 50% (fifty percent) of the capital stock with voting
      rights or which is otherwise under its
control;




·
            to
      provide all types of collateral and guaranties in respect of any credit
      instrument issued or obligation assumed thereby or by any entity in which
      it holds more than 50% (fifty percent) of the shares of stock with voting
      rights or which is otherwise under its
control;




·
            to
      issue, subscribe, accept and endorse all types of credit instruments,
      including secured and unsecured
debentures;




·
            to
      issue unsubscribed shares of any series of stock, which will be maintained
      as treasury shares for their delivery upon subscription, and to enter into
      option agreements with third parties providing for the right to subscribe
      and pay for any such shares. We may also issue unsubscribed shares
      pursuant to Article 53 and other related provisions of the Securities
      Market Law;




·
            to
      maintain, hold, sell, transfer, dispose of or lease all types of assets,
      personal and real property and rights thereto as may be necessary or
      convenient to achieve its corporate purpose or the purpose of any
      association or company in which it holds an interest or participation;
      and




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·
            generally,
      to carry out and execute any related, incidental or ancillary activities,
      agreements and transactions that may be necessary or convenient to achieve
      the abovementioned purposes.




Directors




Election
of Directors




The Board
of Directors is responsible for the management of our
business.  Pursuant to our bylaws, the Board of Directors must consist
of an odd number of directors determined at an ordinary general meeting of
shareholders and is required to have at least 11 members.  Our Board
of Directors currently consists of 11 directors and 1 alternate director, each
of who is elected at the annual shareholders’ meeting.  Under the
Mexican Securities Market Law and our by-laws, at least 25% of our directors
must be independent.  Under Mexican law, the determination as to the
independence of our directors made by our shareholders’ meeting may be contested
by the National Banking and Securities Commission.




At each
shareholders’ meeting for the election of directors (i) each person (or group of
persons acting together) holding 10% of our capital stock in the form of Series
B shares is entitled to designate one director, (ii) the holders of Series BB
shares are entitled to elect three directors and their alternates pursuant to
our bylaws, the participation agreement and the technical assistance agreement
and (iii) the remaining members of the Board of Directors are to be elected by
the holders of our capital stock (both the Series BB and the Series B shares,
including those Series B holders that were entitled to elect a director by
virtue of their owning 10% of our capital stock).  The candidates to
be considered for election as directors by the shareholders will be proposed to
the shareholders’ meeting by the Board.  Any slate of candidates
proposed by the Board shall include independent directors to the extent required
by the Mexican Securities Market Law and other applicable law.




Under the
participation agreement, NAFIN, as trustee of the selling stockholder,
Bancomext, ICA and SETA agreed that three of our directors are to be elected by
SETA, as holder of the Series BB shares, three are to be elected by ICA. Five of
our directors are independent.




Authority
of the Board of Directors




The Board
of Directors is our legal representative under Mexican law.  Pursuant
to the Mexican Securities Market Law, the Board of Directors is required to
approve, among other matters:




·
            our
      general strategy;




·
            annual
      approval of the business plan and the investment
  budget;




·
            capital
      investments not considered in the approved annual budget for each fiscal
      year;




·
            the
      proposal to increase our capital or that of our
    subsidiaries;




·
            the
      approval of our five-year master development program and any amendments
      thereto for each of our airports to be submitted to the Ministry of
      Communications and Transportation;




·
            the
      voting of the shares we hold in our
  subsidiaries;




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·
            our
      management structure and any amendments
thereto;




·
            the
      election of our Chief Executive Officer from the candidates proposed by
      the Series BB Directors and the approval of his compensation or his
      removal for cause;




·
            any
      transfer by us of shares in our
subsidiaries;




·
            subject
      to the recommendation of the Corporate Practices Committee, among other
      matters (i) the guidelines for the use or enjoyment of the goods that are
      part of our patrimony or that of our subsidiaries, by any related party,
      (ii) any transaction with related parties, subject to certain limited
      exceptions, (iii) the authorization for any member of our board, relevant
      officers or person with power of command, to take advantage of business
      opportunities for his own benefit or for the benefit of third parties,
      that originally corresponded to us or the companies under our control or
      in which we have a significant influence, and that exceed the limits set
      forth under item (iii) of the next paragraph, and (iv) the establishment
      of guidelines for the appointment and compensation of executive officers,
      which must be consistent with the guidelines established in the Technical
      Assistance Agreement;




·
            subject
      to the recommendation of the Audit Committee, among other matters (i) our
      financial statements and those of our subsidiaries, (ii) subject to
      certain limited exceptions, the acquisition and alienation by us, of our
      own stock, (iii) the guidelines for the granting of loans or any type of
      credits or guarantees to any related party, (iv) the guidelines regarding
      our internal controls, internal audits and those of our subsidiaries, (v)
      our accounting policies, including adjustments to our accounting
      principles to conform to or recognize those issued by the Commission, (vi)
      the hiring and termination of our external auditors, and (vii) unusual or
      non-recurrent transactions and any transactions or series of related
      transactions during any calendar year that involve (a) the acquisition or
      sale of assets with a value equal to or exceeding 5% of our consolidated
      assets or U.S.$20 million, or (b) the giving of collateral or guarantees
      or the assumption of liabilities equal to or exceeding 5% of our
      consolidated assets, U.S.$40 million or in excess of the debt level set
      forth in the annual business plan, which must not exceed a 50% debt to
      capital ratio;




·
            the
      appointment and delegation of responsibilities, the creation of new
      committees or changing the responsibilities assigned to existing
      committees;




·
            the
      appointment of members of the Corporate Practices Committee and Audit
      Committee; with the understanding that at least one of its members shall
      be appointed from those proposed by the members of the board appointed by
      the holders of Series BB shares;




·
            proposals
      to the shareholders’ meetings regarding (a) our dividend policy and (b)
      the use of our earnings;




·
            subject
      to certain conditions, the appointment of provisional members of the
      board, without the need for a shareholders’
  meeting;




·
            public
      tender offers;




·
            the
      presentation at a general ordinary shareholders’ meeting of any of the
      following agenda items: (i) the annual reports of the Audit Committee and
      the Corporate Practices Committee, (ii) the annual report given by the
      chief executive officer, the opinion of the external auditor and the
      opinion of the board on the content of such report, (iii) the report
      containing the main accounting and information guidelines used for the
      preparation of our financial information, and (iv) the report on the
      operations and activities in which the board had intervened pursuant to
      the Mexican Securities Market Law;




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·
            the
      appointment, removal, duties and responsibilities of our internal
      auditor;




·
            communication
      policies with regards to providing information to our shareholders, the
      market and to other members of the board and relevant officers as well as
      decisions with regards to specific information to be
    released;




·
            actions
      to be taken in order to rectify any known irregularity and to implement
      any corrective measures;




·
            the
      terms and conditions subject to which the chief executive officer shall
      exercise his power and duties; and




·
            resolutions
      instructing our chief executive officer to disclose material information
      to the general public.




Under our
bylaws, resolutions at board meetings with respect to any of the issues listed
above will be valid only if approved by the members of the Board of Directors
elected by the holders of the Series BB shares.




Powers
of Series BB Directors




The
Series BB directors are entitled to: (i) nominate the candidates for chief
executive officer to our Board of Directors, (ii) move for the removal of our
chief executive officer, (iii) appoint and remove half of our executive officers
in accordance with the guidelines established in the technical assistance
agreement and the guidelines approved by our Board of Directors, and (iv)
appoint at least one member to each of our committees.




In
addition, any matter requiring board approval under our bylaws, as indicated
above, will require the approval of a majority of the directors appointed by the
Series BB shareholders for so long as the Series BB shares represent at least
7.65% of our capital stock.




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Our
Capital Stock




The
following table sets forth our authorized capital stock and our issued and
outstanding capital stock as of May 31, 2008:




Capital
Stock




As of May31,
      2008Authorized
            
            
            Issued
      and outstandingCapital
      Stock:Series
      B shares
            
            
            341,200,000
            
            
            
            341,200,000Series
      BB shares
            
            
            58,800,000
            
            
            
            58,800,000Total
            
            
            400,000,000
            
            
            
            400,000,000





All
ordinary shares confer equal rights and obligations to holders within each
series.  The Series BB shares have special voting and other rights
described below.




Our
bylaws provide that our shares have the following characteristics:




·
            Series
      B.  Series B shares currently represent 85.3% of our
      capital.  Series B shares may be held by any Mexican or foreign
      natural person, company or entity.




·
            Series
      BB.  Series BB shares currently represent 14.7% of our
      capital.  Series BB shares, which are issued pursuant to Article
      112 of the Mexican General Law of Business Corporations, may be held by
      any Mexican or foreign natural person, company or
  entity.




Under the
Mexican Airport Law and the Mexican Foreign Investments Law, foreign persons may
not directly or indirectly own more than 49% of the capital stock of a holder of
an airport concession unless an authorization from the Mexican Commission of
Foreign Investments is obtained.




Voting
Rights and Shareholders’ Meetings




Each
Series B share and Series BB share entitles the holder to one vote at any
general meeting of our shareholders.  Holders of Series BB shares are
entitled to elect three members of our Board of Directors.




Under
Mexican law and our bylaws, we may hold three types of shareholders’
meetings:  ordinary, extraordinary, and special.  Ordinary
shareholders’ meetings are those called to discuss any issue not reserved for
extraordinary shareholders’ meeting.  An annual ordinary shareholders’
meeting must be convened and held within the first four months following the end
of each fiscal year to discuss, among other things, the report prepared by the
Board on our financial statements, the appointment of members of the Board,
declaration of dividends and the determination of compensation for members of
the Board.  Under the Mexican Securities Market Law, our ordinary
shareholders’ meeting, in addition to those matters described above, will have
to approve any transaction representing 20% or more of our consolidated assets,
executed in a single or a series of transactions, during any fiscal
year.




Extraordinary
shareholders’ meetings are those called to consider any of the following
matters:




·
            extension
      of a company’s duration or voluntary
  dissolution;




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·
            an
      increase or decrease in a company’s minimum fixed
  capital;




·
            change
      in corporate purpose or
nationality;




·
            any
      transformation, merger or spin-off involving the
  company;




·
            any
      stock redemption or issuance of preferred stock or
  bonds;




·
            the
      cancellation of the listing of our shares with the National Registry of
      Securities or on any stock
exchange;




·
            amendments
      to a company’s bylaws; and




·
            any
      other matters for which applicable Mexican law or the bylaws specifically
      require an extraordinary meeting.




Special
shareholders’ meetings are those called and held by shareholders of the same
series or class to consider any matter particularly affecting the relevant
series or class of shares.




Shareholders’
meetings are required to be held in our corporate domicile, which is Mexico
City.  Calls for shareholders’ meetings must be made by the Chairman,
the Secretary, two members of the Board of Directors, the Audit Committee or the
Corporate Practices Committee.  Any shareholder or group of
shareholders representing at least 10% of our capital stock has the right to
request that the president of the Board of Directors, the Audit Committee or the
Corporate Practices Committee calls a shareholders’ meeting to discuss the
matters indicated in the relevant request.  If the president of the
Board of Directors, the Audit Committee or the Corporate Practices Committee
fails to call a meeting within 15 calendar days following receipt of the
request, the shareholder or group of shareholders representing at least 10% of
our capital stock may request that the call be made by a competent
court.




Calls for
shareholders’ meetings must be published in the Official Gazette of the
Federation or in one newspaper of general circulation in Mexico City at least 15
calendar days prior to the date of the meeting.  Each call must set
forth the place, date and time of the meeting and the matters to be
addressed.  Calls must be signed by whoever makes them, provided that
calls made by the Board of Directors, the Audit Committee or the Corporate
Practices Committee must be signed by the Chairman, the Secretary or a special
delegate appointed by the Board of Directors, the Audit Committee or the
Corporate Practices Committee for that purpose.  Shareholders’
meetings will be validly held and convened without the need of a prior call or
publication whenever all the shares representing our capital are duly
represented.




To be
admitted to any shareholders’ meeting, shareholders must:  (i) be
registered in our share registry; and (ii) at least 24 hours prior to
the commencement of the meeting submit (a) an admission ticket issued by us
for that purpose, and (b) a certificate of deposit of the relevant stock
certificates issued by the Secretary or by a securities deposit institution, a
Mexican or foreign bank or securities dealer in accordance with the Mexican
Securities Market Law.  The share registry will be closed three days
prior to the date of the meeting.  Shareholders may be represented at
any shareholders’ meeting by one or more attorneys-in-fact who may not be our
directors.  Representation at shareholders’ meetings may be
substantiated pursuant to general or special powers of attorney or by a proxy
executed before two witnesses.




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At or
prior to the time of the publication of any call for a shareholders’ meeting, we
will provide copies of the publication to the depositary for distribution to the
holders of ADSs.  Holders of ADSs are entitled to instruct the
depositary as to the exercise of voting rights pertaining to the Series B
shares.




Quorums




Ordinary
meetings are regarded as legally convened pursuant to a first call when more
than 50% of the shares representing our capital are present or duly
represented.  Resolutions at ordinary meetings of shareholders are
valid when approved by a majority of the shares present at the
meeting.  Any number of shares represented at an ordinary meeting of
shareholders convened pursuant to a second or subsequent call constitutes a
quorum.  Resolutions at ordinary meetings of shareholders convened in
this manner are valid when approved by a majority of the shares present at the
meeting.




Extraordinary
shareholders’ meetings are regarded as legally convened pursuant to a first call
when at least 75% of the shares representing our capital are present or duly
represented and no minimum number of shares is required for a quorum at a second
call for an extraordinary shareholders meeting.  Resolutions at
extraordinary meetings of shareholders are valid if taken by the favorable vote
of shares representing more that 50% of our capital.




Notwithstanding
the foregoing, resolutions at extraordinary meetings of shareholders called to
discuss any of the issues listed below are valid only if approved by a vote of
shares representing at least 75% of our capital:




·
            any
      amendment to our bylaws which:  (i) changes or deletes the
      authorities of our committees or  (ii) eliminates or modifies
      any minority rights;




·
            any
      actions resulting in the cancellation of the concessions granted to us or
      our subsidiaries by the Mexican government or any assignment of rights
      arising therefrom;




·
            termination
      of the participation agreement that was entered into by SETA and the
      Mexican government in connection with the Mexican government’s sale of the
      Series BB shares to SETA;




·
            a
      merger by us with an entity the business of which is not related to the
      business of us or our subsidiaries;
and




·
            a
      spin-off, dissolution or liquidation of
us.




Our
bylaws also establish that a delisting of our shares requires the vote of
holders of 95% of our capital stock.




Veto
Rights of Holders of Series BB Shares




So long
as the Series BB shares represent at least 7.65% of our capital stock,
resolutions adopted at shareholders’ meetings with respect to any of the issues
listed below will only be valid if approved by a vote of at least 95% of our
capital stock or a majority of the Series BB shares:




·
            approval
      of our financial statements and those of our
  subsidiaries;




·
            anticipated
      liquidation or dissolution;




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·
            capital
      increases or decreases of us or of our
  subsidiaries;




·
            declaration
      and payment of dividends;




·
            amendment
      to our bylaws;




·
            mergers,
      spin-offs, reclassifications, consolidations or
    share-splits;




·
            grant
      or amendment of special rights of any series of shares of our capital
      stock;




·
            any
      decision amending or nullifying a resolution validly taken by the Board of
      Directors with respect to decisions of the Board of Directors that require
      the affirmative vote of the directors elected by the holders of our Series
      BB shares; and




·
            any
      shareholder resolution with respect to a matter requiring the affirmative
      vote of the directors appointed by the holders of our Series BB
      shares.




Right
of Withdrawal




Any
shareholder having voted against a resolution validly adopted at a meeting of
our shareholders with respect to (i) a change in our corporate purpose or
nationality, (ii) a change of corporate form, (iii) a merger involving
us in which we are not the surviving entity or the dilution of its capital stock
by more than 10% or (iv) a spin-off, may request redemption of its shares,
provided that the
relevant request is filed with us within fifteen days following the holding of
the relevant shareholders’ meeting.  The redemption of the
shareholders’ shares will be effected at the lower of (a) 95% of the
average trading price determined based on the average of the prices of our
shares on the 30 days on which the shares may have been quoted prior to the date
of the meeting, or (b) the book value of the shares in accordance with the
most recent audited financial statements approved by our shareholders’
meeting.




Dividends
and Distributions




At our
annual ordinary general shareholders’ meeting, the Board of Directors will
submit to the shareholders for their approval our financial statements for the
preceding fiscal year.  Five percent of our net income (after profit
sharing and other deductions required by Mexican law) must be allocated to a
legal reserve fund until the legal reserve fund reaches an amount equal to at
least 20% of our capital stock (without adjustment for
inflation).  Additional amounts may be allocated to other reserve
funds as the shareholders may from time to time determine including a reserve to
repurchase shares.  The remaining balance, if any, of net earnings may
be distributed as dividends on the shares of common stock.  A full
discussion of our dividend policy may be found in “Item 8. Financial Information
- Dividends.”




Registration
and Transfer




Our
shares are registered with the Mexican National Securities Registry, as required
under the Mexican Securities Market Law and regulations issued by the Mexican
National Banking and Securities Commission.  Our shares are evidenced
by share certificates in registered form, and registered dividend coupons may be
attached thereto.  Our shareholders may either hold their shares
directly, in the form of physical certificates, or indirectly, in book-entry
form through institutions that have accounts with Indeval.  Indeval is
the holder of record in respect of all such shares held in book-entry
form.  Indeval will issue certificates on behalf of our shareholders
upon request.  Accounts may be maintained at Indeval by the following
“Indeval participants”:  brokers, banks, other financial entities or
other entities approved by the National Banking and Securities
Commission.  We maintain a stock registry and only those persons
listed in such stock registry, and those holding certificates issued by Indeval
indicating ownership and any relevant Indeval participants, will be recognized
as our shareholders. The transfer of shares must be registered in our stock
registry. In the case of the international offering, the Depositary will appear
in such stock registry as the registered holder of the common shares represented
by the ADSs.




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Series BB
shares may only be transferred after conversion into Series B shares, and are
subject to the following rules:




·
            SETA
      was required to retain at least 51% of its Series BB shares until June 14,
      2007. Since June 14, 2007, SETA is free to sell in any year up to one
      eighth of such 51% interest in Series BB
shares.




·
            If
      SETA owns Series BB shares that represent less than 7.65% of our capital
      stock after June 14, 2014, those remaining Series BB shares will be
      automatically converted into freely transferable Series B
      shares.




·
            If
      SETA owns Series BB shares representing at least 7.65% of our capital
      stock after June 14, 2014, those Series BB shares may be converted into
      Series B shares, provided the holders of at least 51% of Series B shares
      (other than shares held by SETA and any of its “related persons”) approve
      such conversion.




For
purposes of our bylaws, a “related person” means, with respect to any
person:




·
            any
      corporation or person, directly or indirectly, controlling, controlled by
      or under common control with such
person;




·
            any
      corporation or person having the capacity to determine the business
      guidelines and policies of such
person;




·
            in
      the case of an individual, an individual having a blood or civil kinship
      in a direct line (ascending or descending) within and including the fourth
      degree with such person;




·
            SETA;
      or




·
            with
      respect to SETA, its shareholders, persons related to it or any party to
      the operating agreement pursuant to which SETA fulfills its obligations
      under the technical assistance
agreement.




For
purposes of our bylaws, “control” of a person, with respect to any person, is
defined as:




·
            the
      ownership, directly or indirectly of 20% or more of the capital stock with
      voting rights of such person,




·
            the
      contractual right to elect the majority of the members of the Board of
      Directors of the person,




·
            the
      ability to veto resolutions that could otherwise be adopted by the
      majority of the person’s shareholders,
or




·
            existence
      of commercial relations representing the purchase of more than 15% of the
      total annual sales of such person.




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Shareholder
Ownership Restrictions and Anti-Takeover Protection




Under the
Airport Law,




·
            no
      more than 5% of our outstanding capital stock may be owned by air
      carriers, and




·
            foreign
      governments acting in a sovereign capacity may not directly or indirectly
      own any portion of our capital
stock.




The
foregoing ownership restrictions do not apply to:




·
            The
      Mexican government, prior to the consummation of this
      offering,




·
            NAFIN,
      including in its capacity as trustee of the selling
      stockholder,




·
            Institutions
      that act as depositaries for securities,
and




·
            Financial
      and other authorized institutions that hold securities for the account of
      beneficial owners (including the ADS depositary), provided that such
      beneficial owners are not exempt from the ownership
      restrictions.




Air
carriers and their subsidiaries and affiliates are not permitted, directly or
indirectly, to “control” us or any of our subsidiary concession
holders.




Under the
Mexican Airport Law, any acquisition of control requires the prior consent of
the Ministry of Communications and Transportation.




For
purposes of these provisions, “related person” and “control” are defined above
under “Registration and Transfer.”




Changes
in Capital Stock




Increases
and reductions of our capital must be approved at an extraordinary shareholders’
meeting, subject to the provisions of our bylaws and the Mexican General Law of
Business Corporations.




Subject
to the individual ownership limitations set forth in our bylaws, in the event of
an increase of our capital stock, other than for purposes of conducting a public
offering of the shares issued as a result of such increase, our shareholders
will have a preemptive right to subscribe and pay for new stock issued as a
result of such increase in proportion to their shareholder interest at that
time, unless: (i) the capital increase relates to the issuance of shares for
placement in public offerings, or (ii) the capital increase relates to the
issuance of shares upon the conversion of debentures as provided in Section
210 bis of the Mexican General Law on Negotiable Instruments and Credit
Transactions.  Said preemptive right shall be exercised by any method
provided in Section 132 of the Mexican General Corporations Law, by subscription
and payment of the relevant stock within fifteen business days after the date of
publication of the corresponding notice to our shareholders in the Official
Gazette of the Federation and in one of the newspapers of greater circulation in
Mexico, provided that if at the corresponding meeting all of our shares are duly
represented, the fifteen business day period shall commence on the date of the
meeting.




Our
capital stock may be reduced by resolution of a shareholders’ meeting taken
pursuant to the rules applicable to capital increases.  Our capital
stock may also be reduced upon withdrawal of a shareholder as provided in
Section 206 of the Mexican General Corporations Law (See “—Voting Rights and
Shareholders’ Meetings—Right of Withdrawal” above) or by repurchase of our own
stock in accordance with the Securities Market Law (See “—Share Repurchases”
below).




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Share
Repurchases




We may
choose to acquire our own shares through the Mexican Stock Exchange and The
NASDAQ National Market on the following terms and conditions:




·
            the
      acquisition must be carried out through the Mexican Stock
      Exchange;




·
            the
      acquisition must be carried out at market price, unless a public offer or
      auction has been authorized by the National Banking and Securities
      Commission;




·
            the
      acquisition must be carried out against our paid in capital, and shares
      acquired will be held as treasury stock without any requirement to adopt a
      reduction in capital stock or to count them against capital stock, in
      which case, such shares will be converted to unsubscribed
      shares.  No shareholder consent is required for such
      purchases;




·
            the
      amount and price paid in all share repurchases shall be made
      public;




·
            the
      annual ordinary shareholders meeting shall determine the maximum amount of
      resources to be used in the fiscal year for the repurchase of
      shares;




·
            we
      may not be delinquent on payments due on any outstanding debt issued by us
      that is registered with the National Securities Registry;
    and




·
            any
      acquisition of shares must be in conformity with the requirements of
      Article 54 of the Securities Market Law and we must maintain a sufficient
      number of outstanding shares to meet the minimum trading volumes required
      by the stock markets on which our shares are
  listed.




Ownership
of Capital Stock by Subsidiaries




Our
subsidiaries may not, directly or indirectly, invest in our shares, except for
shares of our capital stock acquired as part of an employee stock option plan
and in conformity with the Mexican Securities Market Law.




Repurchase
Obligation




Pursuant
to the Mexican Securities Market Law, in the event that we decide to cancel the
registration of our shares in the Mexican National Securities Registry and the
listing of our shares on the Mexican Stock Exchange or if the National Banking
and Securities Commission orders such cancellation, we will be required to
conduct a tender offer for the purchase of stock held by minority shareholders
and to create a trust with a term of six months, with amounts sufficient to
purchase all shares not participating in the tender offer. Under the law, our
controlling shareholders will be secondarily liable for these obligations. The
price at which the stock must be purchased shall be the higher of (i) the
average of the trading price on the Mexican Stock Exchange during the last 30
days on which the shares were quoted prior to the date on which the tender offer
is made or (ii) the book value of such shares as determined pursuant to our
latest quarterly financial information filed with the National Banking and
Securities Commission and the Mexican Stock Exchange. If the tender for
cancellation is requested by the National Banking and Securities Commission, it
must be initiated within 180 days from the date of the request. If requested by
us, under the new Mexican Securities Market Law, the cancellation must be
approved by 95% of our shareholders.




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Liquidation




Upon our
dissolution, one or more liquidators must be appointed at an extraordinary
shareholders’ meeting to wind up our affairs.  All fully paid and
outstanding shares will be entitled to participate equally in any distribution
upon liquidation.  Partially paid shares participate in any
distribution in the same proportion that such shares have been paid at the time
of the distribution.




Other
Provisions




Liabilities
of the members of the Board of Directors




The
Mexican Securities Market Law imposes a duty of care and a duty of loyalty on
directors.  The duty of care requires our directors to act in good
faith and in the best interests of the company.  For such purpose our
directors are required to obtain the necessary information from the chief
executive officer, the executive officers, the external auditors or any other
person in order to act in our best interests.  Our directors are
liable for damages and losses caused to us and our subsidiaries as a result of
violations of this duty of care.




The duty
of loyalty requires our directors to preserve confidential information received
in connection with the performance of their duties and to abstain from
discussing or voting on matters in which they have a conflict of
interest.  In addition, the duty of loyalty is violated if a
shareholder or group of shareholders is knowingly favored or if, without the
express approval of the Board of Directors, a director usurps a corporate
opportunity.  The duty of loyalty is also violated by (i) failing to
disclose to the Audit Committee or the external auditors any irregularities that
the director encounters in the performance of his or her duties or (ii)
disclosing information that is false or misleading or omitting to record any
transaction in our records that could affect our financial
statements.  Directors are liable for damages and losses caused to us
and our subsidiaries for violations of this duty of loyalty.  This
liability also extends to damages and losses caused as a result of benefits
obtained by the director or directors or third parties, as a result of actions
of such directors.




Our
directors may be subject to criminal penalties of up to 12 years’ imprisonment
for certain illegal acts involving willful misconduct that result in losses to
us. Such acts include the alteration of financial statements and
records.




Liability
actions for damages and losses resulting from the violation of the duty of care
or the duty of loyalty may be exercised solely for our benefit and may be
brought by the company or by shareholders representing 5% or more of the capital
stock of the company and criminal actions may only be brought by the Mexican
Ministry of Finance, after consulting with the National Banking and Securities
Commission. As a safe harbor for directors, the liabilities specified above
(including criminal liability) will not be applicable if the director acting in
good faith (i) complied with applicable law, (ii) made the decision based upon
information provided by our executive officers or third-party experts, the
capacity and credibility of which would not give rise to reasonable doubt and
(iii) selected the most adequate alternative in good faith or the negative
effects of such decision were not foreseeable.




In
addition to the duty of care and duty of loyalty required by the Mexican
Securities Market Law, our bylaws provide that, from the date on which at least
51% of our capital stock is listed on a stock exchange, a member of the Board of
Directors will be liable to us and our shareholders in the following
circumstances:




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·
            negligence
      resulting in the loss of more than two-thirds of our capital stock and
      which results in our dissolution;




·
            bankruptcy,
      subject to certain conditions, when the actions taken by the Board of
      Directors results in a declaration of insolvency (concurso
      mercantil);




·
            breaching
      any of the duties set forth under our bylaws;
  and




·
            failure
      to report irregularities in the actions of former board
      members.




The
members of the board are liable to our shareholders only for the loss of net
worth suffered as a consequence of disloyal acts carried out in excess of their
authority or in violation of our bylaws.




Information
to Shareholders




The
Mexican General Law on Business Corporations establishes that companies, acting
through their boards of directors, must annually present a report at a
shareholder’s meeting that includes the following:




·
            a
      report of the directors on the operations of the company during the
      preceding year, as well as on the policies followed by the directors and
      on the principal existing projects;




·
            a
      report explaining the principal accounting and information policies and
      criteria followed in the preparation of the financial
      information;




·
            a
      statement of the financial condition of the company at the end of the
      fiscal year;




·
            a
      statement showing the results of operations of the company during the
      preceding year, as well as changes in the company’s financial condition
      and capital stock during the preceding
year;




·
            the
      notes which are required to complete or clarify the above mentioned
      information; and




·
            the
      report prepared by the Audit Committee with respect to the accuracy and
      reasonability of the above mentioned information presented by the Board of
      Directors.




In
addition to the foregoing, our bylaws provide that the Board of Directors should
also prepare the information referred to above with respect to any subsidiary
that represents at least 20% of our net worth (based on the financial statements
most recently available).




Duration




The
duration of our corporate existence is indefinite.




Shareholders’
Conflict of Interest




Under
Mexican law, any shareholder that has a conflict of interest with respect to any
transaction must abstain from voting and from being present and participating in
discussions thereon at the relevant shareholders’ meeting.  A
shareholder that votes on a transaction in which its interest conflicts with
ours may be liable for damages in the event the relevant transaction would not
have been approved without such shareholder’s vote.




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Directors’
Conflict of Interest




Under
Mexican law, any director who has a conflict of interest in any transaction must
disclose such fact to the other directors and abstain from voting on such
transaction.  Any director who violates such provision will be liable
to us for any resulting damages or losses.




Certain
Differences between Mexican and U.S. Corporate Law




The
Mexican General Corporations Law and the Mexican Securities Market Law, which
apply to us, differ in certain material respects from laws generally applicable
to U.S. corporations and their shareholders.




Independent
Directors




The
Mexican Securities Market Law requires that 25% of the directors of Mexican
public companies be independent.  Pursuant to the rules and
regulations of The NASDAQ National Market, foreign companies subject to
reporting requirements under the U.S. federal securities laws and listed on The
NASDAQ National Market must maintain an Audit Committee comprised entirely of
independent directors as defined in the U.S. federal securities
laws.




Mergers,
Consolidations, and Similar Arrangements




A Mexican
company may merge with another company only if a majority of the shares
representing its outstanding capital stock approve the merger at a duly convened
general extraordinary shareholders’ meeting, unless the company’s bylaws impose
a higher threshold.  Dissenting shareholders are not entitled to
appraisal rights.  Creditors have ninety days to oppose a merger
judicially, provided they have a legal interest to oppose the
merger.




Under
Delaware law, with certain exceptions, a merger, consolidation, or sale of all
or substantially all the assets of a corporation must be approved by the Board
of Directors and a majority of the outstanding shares entitled to vote
thereon.  Under Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under certain
circumstances, be entitled to appraisal rights pursuant to which the shareholder
may receive payment in the amount of the fair market value of the shares held by
the shareholder (as determined by a court) in lieu of the consideration the
shareholder would otherwise receive in the transaction.  Delaware law
also provides that a parent corporation, by resolution of its Board of Directors
and without any shareholder vote, may merge with any subsidiary of which it owns
at least 90% of each class of capital share.  Upon any such merger,
dissenting shareholders of the subsidiary would have appraisal
rights.




Anti-Takeover
Provisions




Subject
to the approval of the Mexican National Banking and Securities Commission, the
Mexican Securities Market Law permits public companies to include anti-takeover
provisions in their bylaws that restrict the ability of third parties to acquire
control of the company without obtaining approval of the company’s Board of
Directors.




Under
Delaware law, corporations can implement shareholder rights plans and other
measures, including staggered terms for directors and super-majority voting
requirements, to prevent takeover attempts.  Delaware law also
prohibits a publicly-held Delaware corporation from engaging in a business
combination with an interested shareholder for a period of three years after the
date of the transaction in which the shareholder became an interested
shareholder unless:




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·
            prior
      to the date of the transaction in which the shareholder became an
      interested shareholder, the Board of Directors of the corporation approves
      either the business combination or the transaction that resulted in the
      shareholder becoming an interested
shareholder;




·
            upon
      consummation of the transaction that resulted in the shareholder becoming
      an interested shareholder, the interested shareholder owns at least 85% of
      the voting stock of the corporation, excluding shares held by directors,
      officers, and employee stock plans;
or




·
            at
      or after the date of the transaction in which the shareholder became an
      interested shareholder, the business combination is approved by the Board
      of Directors and authorized at a shareholders’ meeting by at least 66 2/3
      % of the voting stock which is not owned by the interested
      shareholder.




Shareholders’
Suits




As
mentioned above, holders of 5% of our outstanding shares may initiate action
against some or all of our directors for violations of their duty of care or
duty of loyalty, for our benefit, in an amount equal to the damages or losses
caused to us. Actions initiated on these grounds have a five-year statute of
limitations and will not be applicable if the relevant directors acted under any
of the exclusions set forth under the new Mexican Securities Market
Law.  Class action lawsuits are not permitted under Mexican
law.




Class
actions and derivative actions are generally available to shareholders under
Delaware law for, among other things, breach of fiduciary duty, corporate waste
and actions not taken in accordance with applicable law.  In these
kinds of actions, the court generally has discretion to permit the winning party
to recover attorneys’ fees incurred in connection with the action.




Shareholder
Proposals




Under
Mexican law and our bylaws, holders of at least 10% of our outstanding capital
stock are entitled to appoint one member of our Board of Directors and his or
her alternate.




Delaware
law does not include a provision restricting the manner in which nominations for
directors may be made by shareholders or the manner in which business may be
brought before a meeting.




Calling
of Special Shareholders’ Meetings
  Under
Mexican law and our bylaws, a shareholders’ meeting may be called by the Board
of Directors, any two directors, the chairman, the secretary, the Audit
Committee or the Corporate Practices Committee.  Any shareholder or
group of shareholders with voting rights representing at least 10% of our
capital stock may request that the chairman of the Board of Directors, the Audit
Committee or the Corporate Practices Committee call a shareholders’ meeting to
discuss the matters indicated in the written request.  If the chairman
of the Board of Directors, the Audit Committee or the Corporate Practices
Committee fails to call a meeting within 15 calendar days following date of the
written request, the shareholder or group of shareholders may request that a
competent court call the meeting.  A single shareholder may call a
shareholders’ meeting if no meeting has been held for two consecutive years or
if matters to be dealt with at an ordinary shareholders’ meeting have not been
considered.
  Delaware
law permits the Board of Directors or any person who is authorized under a
corporation’s certificate of incorporation or bylaws to call a special meeting
of shareholders.




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Cumulative
Voting




Under
Mexican law, cumulative voting for the election of directors is not
permitted.




Under
Delaware law, cumulative voting for the election of directors is permitted only
if expressly authorized in the certificate of incorporation.




Approval
of Corporate Matters by Written Consent




Mexican
law permits shareholders to take action by unanimous written consent of the
holders of all shares entitled to vote.  These resolutions have the
same legal effect as those adopted in a general or special shareholders’
meeting.  The Board of Directors may also approve matters by unanimous
written consent.




Delaware
law permits shareholders to take action by written consent of holders of
outstanding shares having more than the minimum number of votes necessary to
take the action at a shareholders’ meeting at which all voting shares were
present and voted.




Amendment
of Certificate of Incorporation




Under
Mexican law, it is not possible to amend a company’s certificate of
incorporation (acta
constitutiva).  However, the provisions that govern a Mexican
company are contained in its bylaws, which may be amended as described
below.  Under Delaware law, a company’s certificate of incorporation
generally may be amended by a vote of the majority of shareholders entitled to
vote thereon (unless otherwise provided in the Certificate of Incorporation,
subsequent to a resolution of the Board of Directors proposing such
amendment.




Amendment
of Bylaws




Under
Mexican law, amending a company’s bylaws requires shareholder approval at an
extraordinary shareholders’ meeting.  Mexican law requires that at
least 75% of the shares representing a company’s outstanding capital stock be
present at the meeting in the first call (unless the bylaws require a higher
threshold) and that the resolutions be approved by a majority of the shares
representing a company’s outstanding capital stock.  In addition,
pursuant to our bylaws the amendment of our bylaws requires the approval of
either (i) holders of at least 95% of our outstanding capital stock or (ii)
holders of at least a majority of our outstanding capital stock, including, for
so long as the Series BB shares represent at least 7.65% of our capital stock, a
majority of holders of Series BB shares.




Under
Delaware law, holders of a majority of the voting power of a corporation and, if
so provided in the certificate of incorporation, the directors of the
corporation, have the power to adopt, amend, and repeal the bylaws of a
corporation.




Staggered
Board of Directors




Mexican
law does not permit companies to have a staggered Board of Directors, while
Delaware law does permit corporations to have a staggered Board of
Directors.




MATERIALCONTRACTS




Our
subsidiaries are parties to the airport concessions granted by the Ministry of
Communications and Transportation under which we are required to construct,
operate, maintain and develop the airports in exchange for certain
benefits.  See “—Sources of Regulation” and “—Scope of Concessions and
General Obligations of Concession Holders” under “Regulatory Framework” in Item
4.




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We are a
party to a participation agreement with SETA and the Ministry of Communications
and Transportation which establishes the framework for several other agreements
to which we are a party.  See “Item 7. Major Shareholders and Related
Party Transactions—Related Party Transactions—Arrangements relating to
SETA.”




We have
entered into a technical assistance agreement with SETA providing for management
and consulting services.  See “Item 7. Major Shareholders and Related
Party Transactions—Related Party Transactions—Arrangements relating to
SETA.”




Aeroinvest
and SETA have entered into a voting rights agreement providing for bloc voting
with respect to their shares of our capital stock. See "Item 7. Major
Shareholders and Related Party Transactions - Major Shareholders - Arrangements
relating to Aeroinvest. An English translation of this agreement is filed as an
exhibit to this Form 20-F.




EXCHANGECONTROLS




Mexico
has had free market for foreign exchange since 1991 and the government has
allowed the peso to float freely against the U.S. dollar since December
1994.  There can be no assurance that the government will maintain its
current foreign exchange policies.  See “Item 3. Key
Information—Exchange Rates.”




TAXATION




The
following summary contains a description of the material anticipated U.S. and
Mexican federal income tax consequences of the purchase, ownership and
disposition of our Series B shares or ADSs by a beneficial holder that is a
citizen or resident of the United States or a U.S. domestic corporation or that
otherwise will be subject to U.S. federal income tax on a net income basis in
respect of our Series B shares or ADSs and that is a “non-Mexican holder” (as
defined below) (a “U.S. holder”), but it does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to a decision
to purchase our Series B shares or ADSs.  In particular, the summary
deals only with U.S. holders that will hold our Series B shares or ADSs as
capital assets and does not address the tax treatment of special classes of U.S.
holders such as dealers in securities or currencies, U.S. holders whose
functional currency is not the U.S. dollar, U.S. holders that own or are treated
as owning 10% or more of our outstanding voting shares, tax-exempt
organizations, financial institutions, U.S. holders liable for the alternative
minimum tax, securities traders who elect to account for their investment in
Series B shares or ADSs on a mark-to-market basis and persons holding Series B
shares or ADSs in a hedging transaction or as part of a straddle, conversion or
other integrated transaction for U.S. federal income tax purposes.  In
addition, the summary does not address any U.S. or Mexican state or local tax
considerations that may be relevant to a U.S. holder.




The
summary is based upon the federal income tax laws of the United States and
Mexico as in effect on the date of this Form 20-F, including the provisions of
the income tax treaty between the United States and Mexico and protocol thereto
(the “Tax Treaty”), all of which are subject to change, possibly with
retroactive effect in the case of U.S. federal income tax
law.  Prospective investors in our Series B shares or ADSs should
consult their own tax advisors as to the U.S., Mexican or other tax consequences
of the purchase, ownership and disposition of the Series B shares or ADSs,
including, in particular, the effect of any foreign, state or local tax laws and
their entitlement to the benefits, if any, afforded by the Tax
Treaty.




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For
purposes of this summary, the term “non-Mexican holder” shall mean a holder that
is not a resident of Mexico and that will not hold the Series B shares or ADSs
or a beneficial interest therein in connection with the conduct of a trade or
business through a permanent establishment or fixed base in Mexico.




For
purposes of Mexican taxation, the definition of residency is highly technical
and residency results in several situations.  Generally an individual
is a resident of Mexico if he or she has established his or her home in Mexico,
and a corporation is a resident if it is incorporated under Mexican law or it
has its center of interests in Mexico.  An individual who has a home
in Mexico and another country will be considered to be a resident of Mexico if
Mexico is the individual’s significant center of interest.  An
individual’s significant center of interest will be considered Mexico in the
following circumstances, among other factors: (i) when more than 50% of such
person’s total yearly income originates in Mexico, and (ii) when Mexico is the
individual’s principal place of business.  Additionally, Mexican
officers and employees working for the Mexican government but living outside of
Mexico will be considered to be Mexican residents even if their significant
center of interest is not in Mexico.  However, any determination of
residence should take into account the particular situation or each person or
legal entity.




In
general, for U.S. federal income tax purposes, holders of ADSs will be treated
as the beneficial owners of the Series B shares represented by those
ADSs.




Taxation
of Dividends




Mexican
Tax Considerations




Under
Mexican Income Tax Law provisions, dividends paid to non-Mexican holders with
respect to our Series B shares or ADSs are not subject to any Mexican
withholding tax.




U.S.
Federal Income Tax Considerations




The gross
amount of any distributions paid with respect to the Series B shares or ADSs, to
the extent paid out of our current or accumulated earnings and profits, as
determined for U.S. federal income tax purposes, generally will be includible in
the gross income of a U.S. holder as ordinary income on the date on which the
distributions are received by the depositary and will not be eligible for the
dividends received deduction allowed to certain corporations under the U.S.
Internal Revenue Code of 1986, as amended.  To the extent that a
distribution exceeds our current and accumulated earnings and profits, it will
be treated as a non-taxable return of basis to the extent thereof, and
thereafter as capital gain from the sale of Series B shares or
ADSs.  Distributions, which will be made in pesos, will be includible
in the income of a U.S. holder in a U.S. dollar amount calculated by reference
to the exchange rate in effect on the date they are received by the depositary
whether or not they are converted into U.S. dollars.  If such
distributions are converted into U.S. dollars on the date of receipt, a U.S.
holder generally should not be required to recognize foreign currency gain or
loss in respect of the distributions.




Subject
to certain exceptions for short-term and hedged positions, the U.S. dollar
amount of dividends received by an individual U.S. holder prior to January 1,
2011 with respect to the ADSs will be subject to taxation at a maximum rate of
15% if the dividends are “qualified dividends.”  Dividends paid on the
ADSs will be treated as qualified dividends if: (i) the ADSs are readily
tradable on an established securities market in the United States, and (ii) the
issuer was not, in the year prior to the year in which the dividend was paid,
and is not, in the years in which the dividend is paid, a passive foreign
investment company (PFIC).  The ADSs are listed on the New York Stock
Exchange, and will qualify as readily tradable on an established securities
market in the United States so long as they are so listed. Based on our audited
financial statements and relevant market and shareholder data, we believe that
we were not treated as a PFIC for U.S. federal income tax purposes with respect
to our 2006 and 2007 taxable years. In addition, based on our audited financial
statements and our current expectations regarding the value and nature of our
assets, the sources and nature of our income, and relevant market and
shareholder data, we do not anticipate becoming a PFIC for our 2008 taxable
year.




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The U.S.
Treasury has announced its intention to promulgate rules pursuant to which
holders of ADSs or common stock and intermediaries through whom such securities
are held will be permitted to rely on certifications from issuers to establish
that dividends are treated as qualified dividends. Because such procedures have
not yet been issued, it is not clear whether we will be able to comply with
them.  Holders of ADSs and common shares should consult their own tax
advisors regarding the availability of the reduced dividend tax rate in the
light of their own particular circumstances.




Taxation
of Dispositions of Shares or ADSs




Mexican
Tax Considerations




Gain on
the sale or other disposition of ADSs by a non-Mexican holder will not be
subject to any Mexican tax.  Deposits and withdrawals of our Series B
shares in exchange for ADSs will not give rise to Mexican tax or transfer
duties.




Gain on
the sale of our Series B shares by a non-Mexican holder will not be subject to
any Mexican tax if the transaction is carried out through the Mexican Stock
Exchange or other securities markets approved by the Mexican Ministry of
Finance, and provided certain requirements set forth by the Mexican Income Tax
Law are complied with.  Sales or other dispositions of Series B shares
made in other circumstances generally would be subject to Mexican tax, except to
the extent that a holder is eligible for benefits under an income tax treaty to
which Mexico is a party.  Under the Tax Treaty, a holder that is
eligible to claim the benefits of the Tax Treaty will be exempt from Mexican tax
on gains realized on a sale or other disposition of the Series B shares in a
transaction that is not carried out through the Mexican Stock Exchange or such
other approved securities markets, so long as the holder did not own, directly
or indirectly, 25% or more of our capital stock (including ADSs) within the
12-month period preceding such sale or other disposition.




For
non-Mexican holders that do not meet the requirements referred to above, gross
income realized on the sale of the Series B shares will be subject to a 5%
Mexican withholding tax if the transaction is carried out through the Mexican
Stock Exchange.  Alternatively, a non-Mexican holder can choose to be
subject to a 20% withholding rate on the net gain obtained, as calculated
pursuant to Mexican Income Tax Law provisions.




U.S.
Tax Considerations




Upon the
sale or other disposition of the Series B shares or ADSs, a U.S. holder
generally will recognize capital gain or loss in an amount equal to the
difference between the amount realized on the sale or other disposition and such
U.S. holder’s tax basis in the Series B shares or ADSs.  Gain or loss
recognized by a U.S. holder on such sale or other disposition generally will be
long-term capital gain or loss if, at the time of the sale or other disposition,
the Series B shares or ADSs have been held for more than one
year.  Long-term capital gain recognized by a U.S. holder that is an
individual is subject to lower rates of federal income taxation than ordinary
income or short-term capital gain.  The deduction of a capital loss is
subject to limitations for U.S. federal income tax purposes.  Deposits
and withdrawals of Series B shares by U.S. holders in exchange for ADSs will not
result in the realization of gain or loss for U.S. federal income tax
purposes.




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Gain, if
any, realized by a U.S. holder on the sale or other disposition of the Series B
shares or ADSs generally will be treated as U.S. source income for U.S. foreign
tax credit purposes.  Consequently, if a Mexican withholding tax is
imposed on the sale or disposition of the Series B shares, a U.S. holder that
does not receive significant foreign source income from other sources may not be
able to derive effective U.S. foreign tax credit benefits in respect of these
Mexican taxes.  U.S. holders should consult their own tax advisors
regarding the application of the foreign tax credit rules to their investment
in, and disposition of, Series B shares.




Other
Mexican Taxes




There are
no Mexican inheritance, gift, succession or value added taxes applicable to the
ownership, transfer or disposition of the Series B shares or ADSs by non-Mexican
holders; provided, however, that gratuitous transfers of the Series B shares or
ADSs may in certain circumstances cause a Mexican federal tax to be imposed upon
the recipient.  There are no Mexican stamp, issue, registration or
similar taxes or duties payable by non-Mexican holders of the Series B shares or
ADSs.




U.S.
Backup Withholding Tax and Information Reporting Requirements




In
general, information reporting requirements will apply to payments by a paying
agent within the United States to a non-corporate (or other non-exempt) U.S.
holder of dividends in respect of the Series B shares or ADSs or the proceeds
received on the sale or other disposition of the Series B shares or ADSs, and a
backup withholding tax may apply to such amounts if the U.S. holder fails to
provide an accurate taxpayer identification number to the paying
agent.  Amounts withheld as backup withholding tax will be creditable
against the U.S. holder’s U.S. federal income tax liability, provided that the
required information is furnished to the U.S. Internal Revenue
Service.




DOCUMENTSON DISPLAY




The
materials included in this annual report on Form 20-F, and exhibits hereto, may
be viewed at the U.S. Securities and Exchange Commission’s public reference room
in Washington, D.C.  Please call the Commission at 1-800-SEC-0330 for
further information on the public reference rooms.  The Securities and
Exchange Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports and information statements and other
information regarding us.  The reports and information statements and
other information about us can also be downloaded from the Securities and
Exchange Commission’s website.




Item11.
            Quantitative
      and Qualitative Disclosures About Market
Risk




We are
exposed to market risk from changes in currency exchange rates.




Our principal exchange rate risk
involves changes in the value of the peso relative to the
dollar.  Historically, a significant portion of the revenues generated
by our airports (principally derived from passenger charges for international
passengers) has been denominated in or linked to the U.S. dollar, although such
revenues are collected in pesos based on the average exchange rate for the prior
month.  In 2005, 2006 and 2007, approximately 16.4%, 16.2% and 14.5%,
respectively, of our consolidated revenues were derived from passenger charges
for international passengers.  Substantially all of our other revenues
are denominated in pesos.  We estimate that substantially all of our
consolidated costs and expenses are denominated in pesos (other than the
technical assistance fee, to the extent paid based on the fixed minimum annual
payment).  Based upon a 10% depreciation of the peso compared to the
U.S. dollar as ofDecember
31, 2007, we estimate that
our revenues would have decreased by Ps. 27,512 million.




150
 Table of Contents





As ofDecember 31, 2005, 2006 and 2007, 31.3%, 22.6% and 15.4%,
respectively, of our cash and cash equivalents were denominated in
dollars.  Based upon a 10% depreciation of the peso compared to the
U.S. dollar as ofDecember
31, 2007, we estimate that
the value of our cash and cash equivalents would have increased by Ps. 27,053
million.




We did
not have any foreign currency indebtedness at December 31, 2005, 2006 and
2007.  In the event that we incur foreign currency denominated
indebtedness in the future, decreases in the value of the peso relative to the
dollar will increase the cost in pesos of servicing such
indebtedness.  Depreciation of the peso relative to the dollar would
also result in foreign exchange losses as the peso value of our foreign currency
denominated indebtedness is increased.




At
December 31, 2005, 2006 and 2007, we did not have any outstanding forward
foreign exchange contracts or other derivative contracts.




Item12.
            Description
      of Securities Other Than Equity
Securities




Not
applicable.




151
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PART
II




Item
      13.
            Defaults,
      Dividend Arrearages and
Delinquencies




Not
applicable.




Item
      14.
            Material
      Modifications to the Rights of Security Holders and Use of
      Proceeds




Not
applicable.




Item
      15.
            Controls
      and Procedures




(a)
            Disclosure
      Controls and Procedures




We have
evaluated, with the participation of our chief executive officer and chief
financial officer, the design and operation of our disclosure controls and
procedures as of December 31, 2007.




There are
inherent limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the circumvention
or overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon our evaluation, our chief
executive officer and chief financial officer concluded that as of
December 31, 2007, our disclosure controls and procedures were effective to
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
applicable rules and forms, and that it is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding required
disclosure.




(b)
            Management’s
      Annual Report on Internal Control Over Financial
  Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities and Exchange Act of 1934. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:




1.
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      company;




2.
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements and that our receipts and expenditures
      are being made only in accordance with authorizations of our management
      and directors; and




3.
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies and procedures may deteriorate. Under the supervision of our Chief
Executive Officer and Chief Financial Officer, our management assessed the
design and effectiveness of our internal control over financial reporting as of
December 31, 2007.




152
 Table of Contents





In making
its assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission, or COSO, in Internal
Control — Integrated Framework.




Based on
our assessment and those criteria, our management believes that our company
maintained effective internal control over financial reporting as of
December 31, 2007.




(c)
            Report
      of Independent Registered Public Accounting Firm on Internal
      Controls




Galaz,
Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu, the
independent registered public accounting firm that has audited our consolidated
financial statements, has also issued an attestation report on the effectiveness
of our internal control over financial reporting. That report appears directly
below.




To the
Board of Directors and Stockholders of




Grupo
Aeroportuario del Centro Norte, S.A.B. de C.V.:




We have
audited the internal control over financial reporting, of Grupo Aeroportuario
del Centro Norte, S.A.B. de C.V. and subsidiaries (the “Company”) as of
December 31, 2007, based on criteria established in Internal Control — Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the
accompanying Management’s Annual Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects.  Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.




A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, the company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company’s board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the
financial statements.




153
 Table of Contents





Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis.  Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.




In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2007, based on the
criteria established in Internal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission.




We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and
for the year ended December 31, 2007 of the Company and our report dated
June 9, 2008 expressed an unqualified opinion on those financial statements
based on our audit and includes explanatory paragraphs regarding (1) the nature
and effect of differences between Mexican Financial Reporting Standards and
accounting principles generally accepted in the United States of America and (2)
that our audit also comprehended the translation of Mexican peso amounts into
U.S. dollar amounts in conformity with the basis stated in Note 2 to such
consolidated financial statements.




Galaz,
Yamazaki, Ruiz Urquiza, S.C.




Member of
Deloitte Touche Tohmatsu




C.P.C. A.
Alejandra Villagómez García




Monterrey,
Mexico




June 9,
2008




(d)
            Changes in Internal Control over
      Financial Reporting




There has been no change in our internal
control over financial reporting during 2007 that has materially affected, or is
reasonably likely to materially affect, or internal control over financial
reporting.




Item16.
            [Reserved]




Item16A.
            Audit
      Committee Financial Expert




Our Board
of Director has determined that Mr. Luis Guillermo Zazueta, a member of our
Audit Committee, qualifies as an “audit committee financial expert” and as
independent within the meaning of this 16A. The shareholders’
meeting of April 3, 2008 ratified Mr. Luis Guillermo Zazueta, as the
independent director required by the Mexican Securities Market Law and
applicable NASDAQ listing standards, as an “audit committee financial expert”
within the meaning of this Item 16A.  See “Item 6. Directors, Senior
Management and Employees—Directors.”




Item
      16B.
            Code
      of Ethics




We have
adopted a code of ethics, as defined in Item 16B of Form 20-F under the
Securities Exchange Act of 1934, as amended.  Our code of ethics
applies to our chief executive officer, chief financial officer, chief
accounting officer and persons performing similar functions as well as to our
other officers and employees.  Our code of ethics is filed as an
exhibit to this Form 20-F and is available on our website at
www.oma.aero.  If we amend the provisions of our code of ethics that
apply to our chief executive officer, chief financial officer, chief accounting
officer and persons performing similar functions, or if we grant any waiver of
such provisions, we will disclose such amendment or waiver on our website at the
same address.




154
 Table of Contents





Item
      16C.
            Principal
      Accountant Fees and Services




Audit
and Non-Audit Fees




The
following table sets forth the fees billed to us by our independent auditors,
Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu
(Deloitte), during the fiscal years ended December 31, 2006 and
2007:




Year
      ended December 31,2006
            
            
            2007(thousands
      of pesos)Audit
      fees
            
            
            13,498
            
            
            
            6,000Audit-related
      fees
            
            
            1,813
            
            
            
            1,490Tax
      fees
            
            
            944
            
            
            
            546Other
      fees
            
            
            635
            
            
            
            1,237Total
      fees
            
            
            16,890
            
            
            
            9,273





Audit
fees in the above table are the aggregate fees billed by Deloitte in connection
with audits of both our consolidated financial statements and those financial
statements of our subsidiaries and other statutory audit reports.




Tax fees
in the above table are fees billed by Deloitte for tax compliance.




Other
fees in the above table are fees billed by Deloitte in connection with social
security annual compliance review, Sarbanes-Oxley compliance review and a
Technical Assistance Agreement compliance report.




Audit
Committee Pre-Approval Policies and Procedures




Our Audit
Committee expressly approves on a case-by-case basis any engagement of our
independent auditors for audit and non-audit services provided to our
subsidiaries or to us.




Item16D.
            Exemptions
      from the Listing Standards for Audit
Committees




Not
applicable.




Item16E.
            Purchases
      of Equity Securities by the Issuer and Affiliated
    Purchasers




155
 Table of Contents





The
tables below set forth, for the periods indicated, the total number of shares
purchased by us or on our behalf, or by or on behalf of an “affiliated
purchaser”, the average price paid per share, the total number of shares
purchased as a part of a publicly announced repurchase plan or program and the
maximum number (or approximate dollar value) of shares that may yet be purchased
under our plans and programs.




Shares
repurchased by OMA pursuant to the share repurchase program




2007
            
            (a) Total
      number of shares purchased
            
            
            (b) Average
      price paid per share in Pesos
            
            
            (c) Total
      number of shares purchased as part of publicly announced plans or programs
      (1)
            
            
            (d) Maximum
      number of shares that may yet be purchased under the plans or programs
      (1)January
      1-31
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            0February
      1-28
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            0March
      1-31
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            0April
      1-30
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000May
      1-31
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000June
      1-30
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000July
      1-31
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000August
      1-31
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000September
      1-30
            
            
            0
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            100,000,000October
      1-31
            
            
            486,800
            
            
            
            38,74
            
            
            
            486,800
            
            
            
            81,142,209November
      1-30
            
            
            2,076,200
            
            
            
            38.21
            
            
            
            2,076,200
            
            
            
            1,808,581December
      1-31
            
            
            41,700
            
            
            
            34.84
            
            
            
            41,700
            
            
            
            355,9012007
      Total
            
            
            2,064,700





(1)
            This
      column includes only the shares purchased by OMA with respect to our share
      repurchase program: on April 27, 2007, our shareholders approved the
      establishment of a share repurchase reserve in the amount of Ps.
      400,000,000 and allocated up to Ps. 100,000,000 for share repurchases
      during the 2007 fiscal year.  Share repurchases began in October
      of 2007.  As of May 27, 2008, the Company had used Ps.
      139,152,333 to repurchase a total of 3,985,700 Series B shares in
      accordance with the share repurchase program. On April 3, 2008, our
      shareholders authorized the use of an additional amount of Ps. 300,000,000
      for repurchases of Series B shares during 2008, for a total of Ps.
      400,000,000.








Shares
purchased by Aeroinvest





2007
            
            (a) Total
      number of shares purchased
            
            
            (b) Average
      price paid per share in Pesos
            
            
            (c) Total
      number of shares purchased as part of publicly announced plans or
      programs
            
            
            (d) Maximum
      number of shares that may yet be purchased under the plans or
      programsJanuary
      1-31
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AFebruary
      1-28
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AMarch
      1-31
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AApril
      1-30
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AMay
      1-31
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AJune
      1-30
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AJuly
      1-31
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AAugust
      1-31
            
            
            29,000
            
            
            
            34.39
            
            
            
            N/A
            
            
            
            N/ASeptember
      1-30
            
            
            0
            
            
            
            0
            
            
            
            N/A
            
            
            
            N/AOctober
      1-31
            
            
            2,441,400
            
            
            
            40.14
            
            
            
            N/A
            
            
            
            N/ANovember
      1-30
            
            
            8,725,400
            
            
            
            39.34
            
            
            
            N/A
            
            
            
            N/ADecember
      1-31
            
            
            1,345,200
            
            
            
            35.64
            
            
            
            N/A
            
            
            
            N/A2007
      Total
            
            
            12,541,000





156
 Table of Contents




PART
III




Item
      17.
            Financial
      Statements




Not
applicable.





157
 Table of Contents





Item
      18.
            Financial
      Statements




See pages
F-1 through F-41, incorporated herein by reference.




158




Item19.
              Exhibits
  Documents
filed as exhibits to this annual report:
  Exhibit
      No.
              
              Description
  1.1
              
              An
      English translation of the Amended and Restated Bylaws (Estatutos Sociales) of
      OMA.*2.1
              
              Deposit
      Agreement among OMA, the Bank of New York and all registered holders from
      time to time of any American Depositary Receipts, including the form of
      American Depositary Receipt (incorporated by reference to our amended
      registration statement on Form F-1/A (File No. 333-138710) filed on
      November 22, 2006).3.1
              
              Trust
      Agreement among OMA, Operadora Mexicana de Aeropuertos, S.A. de C.V. (now
      Servicios de Tecnología Aeroportuaria, S.A. de C.V.), or SETA, and Banco
      Nacional de Comercio Exterior, S.N.C., División Fiduciaria, or Bancomext,
      English translation (incorporated by reference to our registration
      statement on Form F-1 (File No. 333-138710) filed on November 15,
      2006).3.2
              
              Amendment
      to the Trust Agreement among OMA, SETA, and Bancomext, English translation
      (incorporated by reference to our registration statement on Form F-1 (File
      No. 333-138710) filed on November 15, 2006).3.3
              
              Voting
      Agreement among Aeroinvest, ADPM, SETA, Banco Nacional de Comercio
      Exterior, S.N.C., División Fiduciaria and Banca Múltiple, J.P. Morgan
      Grupo Financiero, División Fuduciaria, English translation (incorporated
      by reference to our annual report on Form 20-F for the year ended December
      31, 2006, filed on July 2, 2007).4.1
              
              Amended
      and Restated Monterrey Airport Concession Agreement and annexes thereto,
      English translation and a schedule highlighting the differences between
      this concession and OMA’s other concessions (incorporated by reference to
      our registration statement on Form F-1 (File No. 333-138710) filed on
      November 15, 2006).4.2
              
              Participation
      Agreement among OMA, the Mexican Federal Government through the Ministry
      of Communications and Transportation, Nacional Financiera, S.N.C.,
      Dirección Fiduciaria, or NAFIN, Servicios Aeroportuarios del Centro Norte,
      S.A. de C.V., Aeropuerto de Acapulco, S.A. de C.V., Aeropuerto de
      Chihuahua, S.A. de C.V., Aeropuerto de Ciudad Juárez, S.A. de C.V.,
      Aeropuerto de Culiacán, S.A. de C.V., Aeropuerto de Durango, S.A. de C.V.,
      Aeropuerto de Mazatlán, S.A. de C.V., Aeropuerto de Monterrey, S.A. de
      C.V., Aeropuerto de Reynosa, S.A. de C.V., Aeropuerto de Tampico, S.A. de
      C.V., Aeropuerto de Torreón, S.A. de C.V., Aeropuerto de San Luis Potosí,
      S.A. de C.V., Aeropuerto de Zacatecas, S.A. de C.V. and Aeropuerto de
      Zihuatanejo, S.A. de C.V. (collectively, the "Concession Companies"),
      SETA, Constructoras ICA, S.A. de C.V., Aéroports de Paris and Vinci, S.A.,
      with the appearance of Bancomext, English translation (incorporated by
      reference to our registration statement on Form F-1 (File No. 333-138710)
      filed on November 15, 2006).
 159
 Table of Contents
  Exhibit
      No.
                
                Description
 4.3
              
              Amendment
      to Participation Agreement among OMA, the Mexican Federal Government
      through the Ministry of Communications and Transportation, NAFIN,
      Servicios Aeroportuarios del Centro Norte, S.A. de C.V., the Concession
      Companies, SETA, Constructoras ICA, S.A. de C.V. and Aéroports de Paris,
      with the appearance of Bancomext, English translation (incorporated by
      reference to our registration statement on Form F-1 (File No. 333-138710)
      filed on November 15, 2006).4.4
              
              Agreement
      entered into among NAFIN, Aeroinvest, SETA and the Mexican Federal
      Government through the Ministry of Communications and Transportation with
      respect to certain provisions of the Participation Agreement, English
      translation (incorporated by reference to our registration statement on
      Form F-1 (File No. 333-138710) filed on November 15,
  2006).4.5
              
              Technical
      Assistance and Transfer of Technology Agreement among the Registrant,
      Servicios Aeroportuarios del Centro Norte, S.A. de C.V., the Concession
      Companies, SETA and Constructoras ICA, S.A. de C.V., Aéroports de Paris
      and Vinci, S.A., English translation (incorporated by reference to our
      registration statement on Form F-1 (File No. 333-138710) filed on November
      15, 2006).4.6
              
              Shareholders
      Agreement among NAFIN, SETA and Bancomext, with the appearance of the
      Registrant and the Mexican Federal Government through the Ministry of
      Communications and Transportation, English translation (incorporated by
      reference to our registration statement on Form F-1 (File No. 333-138710)
      filed on November 15, 2006).4.7
              
              Termination
      Agreement in respect of the Shareholders Agreement among NAFIN, SETA and
      Bancomext, with the appearance of OMA and the Mexican Federal Government
      through the Ministry of Communications and Transportation, English
      translation (incorporated by reference to our registration statement on
      Form F-1 (File No. 333-138710) filed on November 15,
  2006).4.8
              
              Stock
      Purchase Agreement between the Mexican Federal Government through the
      Ministry of Communications and Transportation and SETA, with the
      appearance of Constructoras ICA, S.A. de C.V., Aéroports de Paris and
      Vinci, S.A., and the Mexican Federal Treasury, English translation
      (incorporated by reference to our registration statement on Form F-1 (File
      No. 333-138710) filed on November 15, 2006).4.9
              
              Shareholders
      Agreement among NAFIN, SETA and Bancomext, with the appearance of the
      Registrant and the Mexican Federal Government through the Ministry of
      Communications and Transportation, English translation (incorporated by
      reference to our registration statement on Form F-1 (File No. 333-138710)
      filed on November 15, 2006).4.10
              
              Termination
      Agreement in respect of the Shareholders Agreement among NAFIN, SETA and
      Bancomext, with the appearance of OMA and the Mexican Federal Government
      through the Ministry of Communications and Transportation, English
      translation (incorporated by reference to our registration statement on
      Form F-1 (File No. 333-138710) filed on November 15,
  2006).8.1
              
              List
      of subsidiaries of OMA (incorporated by reference to our registration
      statement on Form F-1 (File No. 333-138710) filed on November 15,
      2006).11.1
              
              Code
      of Ethics of the Company (incorporated by reference to our annual report
      on Form 20-F for the year ended December 31, 2006, filed on July 2,
      2007).
  160
 Table of Contents
 Exhibit
      No.
                
                Description
 12.1
              
              Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.*12.2
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.*13.1
              
              Certification
      of Chief Financial Officer and Chief Executive Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002.*
    
 161
 Table of Contents
 
 SIGNATURES
  The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to
sign this registration statement on its behalf.
  GRUPO
      AEROPORTUARIO DEL CENTRO NORTE, S.A.B. DE C.V.By:
              /s/ Víctor Humberto Bravo
      MartínName:
              Víctor
      Humberto Bravo MartínTitle:
              Chief
      Financial Officer
 
 Dated:  June
11, 2008
  162




Index to Financial
Statements


Consolidated
Financial Statements


for
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.


and
Subsidiaries




PageReport
      of Independent Registered Public Accounting Firm
            
            F-3Consolidated
      Balance Sheets as of December 31, 2007 and 2006
            
            F-4Consolidated
      Statements of Income for the Years Ended December 31, 2007, 2006 and
      2005
            
            F-5Consolidated
      Statements of Changes in Stockholders’ Equity for the Years Ended December
      31, 2007, 2006 and 2005
            
            F-6Consolidated
      Statements of Changes in Financial Position for the Years Ended December
      31, 2007, 2006 and 2005
            
            F-8Notes
      to Consolidated Financial Statements
            
            F-9





F-1
 Table of Contents


Grupo
      Aeroportuario del Centro Norte, S.A.B. de C.V. and
      Subsidiaries(Subsidiary
      of Aeroinvest, S.A. de C.V.)Consolidated
      Financial Statements for the Years Ended December 31, 2007, 2006 and 2005,
      and Report of Independent Registered Public Accounting Firm Dated June 9,
      2008
  F-2
 Table of Contents
  Report
of Independent Registered Public Accounting Firm
 To
the Board of Directors and Stockholders of
 Grupo
Aeroportuario del Centro Norte, S.A.B de C.V.:
 
 We have
audited the accompanying consolidated balance sheets of Grupo Aeroportuario del
Centro Norte, S.A.B. de C.V. and subsidiaries (the “Company”) as of December 31,
2007 and 2006, and the related consolidated statements of income, changes in
stockholders’ equity and changes in financial position for each of the three
years in the period ended December 31, 2007, all expressed in millions of
Mexican pesos of purchasing power as of December 31, 2007. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, based on our audits, such consolidated financial statements present
fairly, in all material respects, the financial position of Grupo Aeroportuario
del Centro Norte, S.A.B. de C.V. andits subsidiaries as of December 31, 2007 and
2006, and the results of their operations, changes in their stockholders’ equity
and changes in their financial position for each of the three years in the
period ended December 31, 2007, in conformity with Mexican financial reporting
standards.
 
 Mexican
financial reporting standards vary in certain significant respects from
accounting principles generally accepted in the United States of
America.  Information relating to the nature and effect of such
differences is presented in Note 21 to the consolidated financial
statements.
 
 Our
audits also comprehended the translation of the Mexican peso amounts into U.S.
dollar amounts and, in our opinion, such translation has been made in conformity
with the basis stated in Note 2.  The translation of the financial
statement amounts into U.S. dollars and the translation of the financial
statements into English have been made solely for the convenience of readers in
the United States of America.
 
 We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2007, based on the criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission, and our report dated June
9, 2008 expressed an unqualified opinion on management’s assessment of the
effectiveness of the Company’s internal control over financial reporting and an
unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
 
 Galaz,
Yamazaki, Ruiz Urquiza, S.C.
 Member of
Deloitte Touche Tohmatsu
 
 
 
 C.P.C. A. Alejandra Villagómez García
 Monterrey,
N.L., Mexico
 June 9,
2008
  F-3
 Table of Contents
  Grupo
Aeroportuario del Centro Norte, S.A.B. de C.V. and
Subsidiaries
 
 Consolidated
Balance Sheets
 At
December 31, 2007 and 2006
 (In
thousands of U.S. dollars ($) and thousands of Mexican pesos (Ps.) of purchasing
power of December 31, 2007)
 
 Assets
              
              2007
      (Convenience Translation; See Note 2)
              
              
              2007
              
              
              2006Current
      assets:Cash
      and cash equivalents (Note 4)
              
              $
              160,870
              
              
              Ps.
              1,756,704
              
              
              Ps.
              1,672,994Trade
      accounts receivable –  net (Note 5)
              
              
              23,864
              
              
              
              260,600
              
              
              
              251,329Recoverable
      taxes
              
              
              3,202
              
              
              
              34,968
              
              
              
              131,348Other
      current assets
              
              
              2,912
              
              
              
              31,785
              
              
              
              87,600Total
      current assets
              
              
              190,848
              
              
              
              2,084,057
              
              
              
              2,143,271Property,
      real estate,  machinery, equipment and improvements to
      concessioned properties – net (Note 6)
              
              
              209,982
              
              
              
              2,293,007
              
              
              
              1,824,150Rights
      to use airport facilities – net (Note 7)
              
              
              366,336
              
              
              
              4,000,390
              
              
              
              4,126,235Airport
      concessions – net (Note 7)
              
              
              68,354
              
              
              
              746,426
              
              
              
              764,198Other
      assets – net
              
              
              962
              
              
              
              10,508
              
              
              
              16,096Total
              
              $
              836,482
              
              
              Ps.
              9,134,388
              
              
              Ps.
              8,873,950Liabilities
      and stockholders’ equityCurrent
      liabilities:Trade
      accounts payable
              
              $
              5,131
              
              
              Ps.
              56,031
              
              
              Ps.
              69,438Accrued
      expenses and taxes other than income taxes
              
              
              8,171
              
              
              
              89,227
              
              
              
              59,616Accounts
      payable to related parties (Note 11)
              
              
              3,232
              
              
              
              35,289
              
              
              
              34,905Advances
      from customers
              
              
              211
              
              
              
              2,301
              
              
              
              11,347Dividends
      payable
              
              
              19,680
              
              
              
              214,901
              
              
              
              -Statutory
      employee profit sharing
              
              
              855
              
              
              
              9,347
              
              
              
              8,930Total
      current liabilities
              
              
              37,280
              
              
              
              407,096
              
              
              
              184,236Guarantee
      deposits
              
              
              1,784
              
              
              
              19,477
              
              
              
              19,352Employee
      retirement obligations (Note 8)
              
              
              3,832
              
              
              
              41,843
              
              
              
              43,654Deferred
      statutory employee profit sharing (Note 12)
              
              
              9,545
              
              
              
              104,230
              
              
              
              110,342Deferred
      income taxes (Note 13)
              
              
              99,578
              
              
              
              1,087,400
              
              
              
              534,415Total
      liabilities
              
              
              152,019
              
              
              
              1,660,046
              
              
              
              891,999Commitments
      and contingencies (Notes 14 and 15)Stockholders’
      equity (Note 9):Capital
      stock – nominal value
              
              
              403,685
              
              
              
              4,408,239
              
              
              
              4,437,132Restatement
      for inflation of capital stock
              
              
              161,941
              
              
              
              1,768,394
              
              
              
              1,779,985Additional
      paid in capital
              
              
              101
              
              
              
              1,100
              
              
              
              1,100Retained
      earnings
              
              
              60,834
              
              
              
              664,312
              
              
              
              1,501,745Reserve
      for repurchase of shares
              
              
              32,369
              
              
              
              353,468
              
              
              
              -Additional
      liability for labor obligations (Note 8)
              
              
              455
              
              
              
              4,968
              
              
              
              (11,872
              )Cumulative
      initial effect of deferred income taxes
              
              
              25,078
              
              
              
              273,861
              
              
              
              273,861Total
      stockholders’ equity
              
              
              684,463
              
              
              
              7,474,342
              
              
              
              7,981,951Total
              
              $
              836,482
              
              
              Ps.
              9,134,388
              
              
              Ps.
              8,873,950
 
 See
accompanying notes to consolidated financial statements.
  F-4
 Table of Contents
  Grupo
Aeroportuario del Centro Norte, S.A.B. de C.V. and
Subsidiaries
 
 Consolidated
Statements of Income
 For
the years ended December 31, 2007, 2006 and 2005
 (In
thousands of U.S. dollars ($) and thousands of Mexican pesos (Ps.) of purchasing
power of December 31, 2007, except share and per share data)
 
 2007
      (Convenience Translation; See Note 2)
              
              
              2007
              
              
              2006
              
              
              2005Revenues
      (Note 17):Aeronautical
      services
              
              $
              141,926
              
              
              Ps.
              1,549,827
              
              
              Ps.
              1,370,968
              
              
              Ps.
              1,192,249Non-aeronautical
      services
              
              
              31,825
              
              
              
              347,526
              
              
              
              316,343
              
              
              
              287,628173,750
              
              
              
              1,897,353
              
              
              
              1,687,311
              
              
              
              1,479,877Operating
      costs:Cost
      of services (Note 18)
              
              
              38,533
              
              
              
              420,777
              
              
              
              397,465
              
              
              
              389,037General
      and administrative expenses
              
              
              23,510
              
              
              
              256,730
              
              
              
              237,475
              
              
              
              244,707Concession
      taxes (Note 11)
              
              
              9,002
              
              
              
              98,307
              
              
              
              84,635
              
              
              
              72,643Technical
      assistance fees (Note 11)
              
              
              5,258
              
              
              
              57,416
              
              
              
              49,541
              
              
              
              40,016Depreciation
      and amortization
              
              
              30,788
              
              
              
              336,202
              
              
              
              292,096
              
              
              
              227,805107,091
              
              
              
              1,169,432
              
              
              
              1,061,212
              
              
              
              974,208Income
      from operations
              
              
              66,660
              
              
              
              727,921
              
              
              
              626,099
              
              
              
              505,669Other
      (expenses) income – net (Note 12)
              
              
              (695
              )
              
              
              (7,584
              )
              
              
              (30,679
              )
              
              
              3,853Net
      comprehensive financing income (cost):Interest
      income – net
              
              
              11,599
              
              
              
              126,660
              
              
              
              133,449
              
              
              
              109,131Exchange
      gain (loss) – net
              
              
              1,090
              
              
              
              11,905
              
              
              
              12,446
              
              
              
              (26,444
              )Monetary
      position loss
              
              
              (3,878
              )
              
              
              (42,347
              )
              
              
              (75,567
              )
              
              
              (53,074
              )8,811
              
              
              
              96,218
              
              
              
              70,328
              
              
              
              29,613Income
      before income taxes
              
              
              74,776
              
              
              
              816,555
              
              
              
              665,748
              
              
              
              539,135Current
      income tax expense (Note 13)
              
              
              17,147
              
              
              
              187,248
              
              
              
              112,784
              
              
              
              4,574Deferred
      regular income tax (benefit) expense (Note 13)
              
              
              (43,566
              )
              
              
              (475,744
              )
              
              
              83,727
              
              
              
              153,455Deferred
      business flat tax expense (Note 13)
              
              
              98,339
              
              
              
              1,073,859Consolidated
      net income
              
              $
              2,856
              
              
              Ps.
              31,192
              
              
              Ps.
              469,237
              
              
              Ps.
              381,106Weighted
      average number of common shares outstanding (Note 9)
              
              
              399,611,578
              
              
              
              399,611,578
              
              
              
              395,173,149
              
              
              
              392,000,000Basic
      and diluted earnings per share
              
              $
              0.0072
              
              
              Ps.
              0.0781
              
              
              Ps.
              1.1874
              
              
              Ps.
              0.9722
 
 See
accompanying notes to consolidated financial statements.
  F-5
 Table of Contents
  Grupo
Aeroportuario del Centro Norte, S.A.B. de C.V. and
Subsidiaries
 
 Consolidated
Statements of Changes in Stockholders’ Equity
 For
the years ended December 31, 2007, 2006 and 2005
 (In
thousands of U.S. dollars ($) and thousands of Mexican pesos (Ps.) of purchasing
power of December 31, 2007, except share data)
 
 Capital
      stockNumber
      of shares
              
              
              Nominal
      value
              
              
              Restatement for
      inflation of capital stock
              
              
              Additional
      paid-in capital
              
              
              Retained
      earnings
              
              
              Reserve
      for repurchase of shares
              
              
              Additional
      liability for labor obligations
              
              
              Cumulative
      initial effect of deferred income taxes
              
              
              Total
      stockholders’ equityBalances
      as of  January 1, 2005
              
              
              392,000,000
              
              
              Ps.
              4,320,278
              
              
              Ps.
              1,773,715
              
              
              
              
              
              
              Ps.
              1,098,091
              
              
              
              -
              
              
              
              -
              
              
              Ps.
              273,861
              
              
              Ps.
              7,465,945Comprehensive
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              381,106
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              381,106Balances
      as of December 31, 2005
              
              
              392,000,000
              
              
              
              4,320,278
              
              
              
              1,773,715
              
              
              
              -
              
              
              
              1,479,197
              
              
              
              -
              
              
              
              -
              
              
              
              273,861
              
              
              
              7,847,051Dividends
      declared (Ps.1.1167 per share)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (446,689
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (446,689
              )Issuance
      of common stock
              
              
              8,000,000
              
              
              
              116,854
              
              
              
              6,270
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              123,124Additional
      paid in capital
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              Ps.
              1,100
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,100Comprehensive
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              469,237
              
              
              
              -
              
              
              Ps.
              (11,872)
              
              
              
              -
              
              
              
              457,365Balances
      as of December 31, 2006
              
              
              400,000,000
              
              
              
              4,437,132
              
              
              
              1,779,985
              
              
              
              1,100
              
              
              
              1,501,745
              
              
              
              
              
              
              
              (11,872
              )
              
              
              273,861
              
              
              
              7,981,951Dividends
      declared (Ps.1.1103 per share)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (444,125
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (444,125
              )Capitalization
      approved by shareholders
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (11,872
              )
              
              
              -
              
              
              
              11,872
              
              
              
              -
              
              
              
              -Reserve
      for repurchase of shares
              
              
              (2,604,700
              )
              
              
              (28,893
              )
              
              
              (11,591
              )
              
              
              -
              
              
              
              (412,628
              )
              
              Ps.
              353,468
              
              
              
              -
              
              
              
              -
              
              
              
              (99,644
              )Comprehensive
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              31,192
              
              
              
              
              
              
              
              4,968
              
              
              
              -
              
              
              
              36,160Balances
      as of December 31, 2007
              
              
              397,395,300
              
              
              Ps.
              4,408,239
              
              
              Ps.
              1,768,394
              
              
              Ps.
              1,100
              
              
              Ps.
              664,312
              
              
              Ps.
              353,468
              
              
              Ps.
              4,968
              
              
              Ps.
              273,861
              
              
              Ps.
              7,474,342
  F-6
 Table of Contents
  Capital
      stockNumber
      of shares
              
              
              Nominal
      value
              
              
              Restatement for
      inflation of capital stock
              
              
              Additional
      paid-in capital
              
              
              Retained
      earnings
              
              
              Reserve
      for repurchase of shares
              
              
              Additional
      liability for labor obligations
              
              
              Cumulative
      initial effect of deferred income taxes
              
              
              Total
      stockholders’ equityBalances
      as of December 31,  2006 (Convenience
      translation;  Note 2)
              
              
              400,000,000
              
              
              $
              406,331
              
              
              $
              163,002
              
              
              $
              101
              
              
              $
              137,522
              
              
              
              -
              
              
              $
              (1,087
              )
              
              $
              25,078
              
              
              $
              730,947Dividends
      declared ($0.1008 per share)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (40,671
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (40,671
              )Capitalization
      approved by shareholders
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,087
              )
              
              
              -
              
              
              
              1,087
              
              
              
              -
              
              
              
              -Reserve
      for repurchase of shares
              
              
              (2,604,700
              )
              
              
              (2,646
              )
              
              
              (1,061
              )
              
              
              -
              
              
              
              (37,786
              )
              
              $
              32,369
              
              
              
              
              
              
              
              -
              
              
              
              (9,124
              )Comprehensive
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,856
              
              
              
              -
              
              
              
              455
              
              
              
              -
              
              
              
              3,311Balances
      as of December 31, 2007
              
              
              397,395,300
              
              
              $
              403,685
              
              
              $
              161,941
              
              
              $
              101
              
              
              $
              60,834
              
              
              $
              32,369
              
              
              $
              455
              
              
              $
              25,078
              
              
              $
              684,463
 
 See accompanying notes to consolidated
financial statements.
  F-7
 Table of Contents
  Grupo
Aeroportuario del Centro Norte, S.A.B. de C.V. and Subsidiaries
 
 Consolidated
Statements of Changes in Financial Position
 For
the years ended December 31, 2007, 2006 and 2005
 (In
thousands of U.S. dollars ($) and thousands of Mexican pesos (Ps.) of purchasing
power of December 31, 2007)
 
 2007
      (Convenience Translation; See Note 2)
              
              
              2007
              
              
              2006
              
              
              2005Operating
      activities:Net
      income
              
              $
              2,856
              
              
              Ps.
              31,192
              
              
              Ps.
              469,237
              
              
              Ps.
              381,106Items
      that did not require (generate) resources:Depreciation
      and amortization
              
              
              30,788
              
              
              
              336,202
              
              
              
              292,096
              
              
              
              227,805Employee
      retirement obligations –net
              
              
              487
              
              
              
              5,313
              
              
              
              7,457
              
              
              
              11,512Deferred
      statutory employee profit sharing
              
              
              (560
              )
              
              
              (6,112
              )
              
              
              27,990
              
              
              
              -Deferred
      income tax
              
              
              50,640
              
              
              
              552,985
              
              
              
              81,087
              
              
              
              141,70584,211
              
              
              
              919,580
              
              
              
              877,867
              
              
              
              762,128Changes
      in operating assets and liabilities:(Increase)
      decrease in:Trade
      accounts receivable – net
              
              
              (849
              )
              
              
              (9,271
              )
              
              
              (114,510
              )
              
              
              (85,045
              )Accounts
      receivable from Consorcio Aeroméxico, S.A. de C.V., a related
      party
              
              
              -
              
              
              
              -
              
              
              
              91,136
              
              
              
              64,456Recoverable
      taxes
              
              
              8,826
              
              
              
              96,380
              
              
              
              (96,749
              )
              
              
              (35,343
              )Other
      current assets
              
              
              5,111
              
              
              
              55,815
              
              
              
              (64,496
              )
              
              
              (8,605
              )Increase
      (decrease) in:Trade
      accounts payable
              
              
              (1,228
              )
              
              
              (13,407
              )
              
              
              (2,900
              )
              
              
              (16,805
              )Accrued
      expenses and taxes other than income taxes
              
              
              2,712
              
              
              
              29,611
              
              
              
              23,266
              
              
              
              (1,545
              )Accounts
      payable to related parties
              
              
              35
              
              
              
              384
              
              
              
              8,457
              
              
              
              5,426Advances
      from customers
              
              
              (828
              )
              
              
              (9,046
              )
              
              
              (7,306
              )
              
              
              14,519Guarantee
      deposits
              
              
              11
              
              
              
              125
              
              
              
              6,938
              
              
              
              1,074Employee
      profit sharing
              
              
              38
              
              
              
              417
              
              
              
              7,387
              
              
              
              1,145Net
      resources generated by operating activities
              
              
              98,039
              
              
              
              1,070,588
              
              
              
              729,090
              
              
              
              701,405Financing
      activities:Dividends
      paid
              
              
              (20,991
              )
              
              
              (229,224
              )
              
              
              (446,689
              )
              
              
              -Issuance
      of common stock
              
              
              -
              
              
              
              -
              
              
              
              123,124
              
              
              
              -Repurchase
      of shares
              
              
              (9,125
              )
              
              
              (99,644
              )
              
              
              -
              
              
              
              -Additional
      paid-capital
              
              
              -
              
              
              
              -
              
              
              
              1,100
              
              
              
              -Net
      resources used in investing  activities
              
              
              (30,116
              )
              
              
              (328,868
              )
              
              
              (322,465
              )
              
              
              -Investing
      activities:Additions
      to property, real estate, machinery, equipment and improvements to
      concessioned properties
              
              
              (60,257
              )
              
              
              (658,010
              )
              
              
              (440,235
              )
              
              
              (274,712
              )Other
      assets
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (18,804
              )Net
      resources used in investing activities
              
              
              (60,257
              )
              
              
              (658,010
              )
              
              
              (440,235
              )
              
              
              (293,516
              )Cash
      and cash equivalents:Net
      increase (decrease)
              
              
              7,666
              
              
              
              83,710
              
              
              
              (33,610
              )
              
              
              407,889Balance
      at beginning of year
              
              
              153,204
              
              
              
              1,672,994
              
              
              
              1,706,604
              
              
              
              1,298,715Balance
      at end of year
              
              $
              160,870
              
              
              Ps.
              1,756,704
              
              
              Ps.
              1,672,994
              
              
              Ps.
              1,706,604
 
 See accompanying notes to consolidated
financial statements.
  F-8
 Table of Contents
  Grupo Aeroportuario del
Centro Norte, S.A.B. de C.V. and Subsidiaries
 
 Notes
to the Consolidated Financial Statements
 For
the years ended December 31, 2007, 2006 and 2005
 (In
thousands of U.S. dollars ($) and thousands of Mexican pesos (Ps.) of purchasing
power of December 31, 2007, except share and per share data)
 
 1.
              Activities
      and significant events
 
 Activities– Grupo Aeroportuario del
Centro Norte, S.A.B. de C.V.  (“GACN”, or collectively with its
subsidiaries, the “Company”) is a holding company, whose subsidiaries are
engaged in the administration, operation and use of 13 airports under a
concession granted by the Mexican government through the Ministry of
Communications and Transportation (“SCT”).  The airports are located
in the following cities: Monterrey, Acapulco, Mazatlán, Zihuatanejo,
Ciudad Juárez, Reynosa, Chihuahua, Culiacán, Durango, San Luis Potosí,
Tampico, Torreón, and Zacatecas.
 
 Company
revenues are classified as aeronautical and non-aeronautical
services.  Aeronautical services include those services provided to
airlines and passengers as well as complementary
services.  Non-aeronautical services include those services that are
not essential for operating an airport, such as the lease of commercial
premises, restaurants and banks.
 
 Revenues
generated by aeronautical services are under a price regulation system
administered by the SCT for airport concessions, which establishes a maximum
rate (“TM”) for each year in a five-year period.  The TM is the
maximum amount of revenue per “work load unit” that may be earned at an airport
each year from regulated sources.  Under this regulation, a work load
unit is equivalent to one passenger (excluding transit passengers) or 100
kilograms (220 pounds) of cargo.
 
 Non-aeronautical
services are not covered by the regulation system administered by the
SCT.  However, in some cases, they may be regulated by other
authorities, as is the case with revenues generated from the operation of
parking lots.
 
 TheCompany and its
subsidiaries began operations on November 1, 1998.  The Company’s
formation was part of the Mexican government’s plan to open the Mexican Airport
System to private investors under a two-stage program developed by the
SCT.  As part of the programs’ first stage, strategic partners were
selected for each airport group (except the Mexico City Group) through public
bidding processes.  The strategic partner would acquire 15% of the
capital of the airport group and the obligation to enter into a participation
contract as well as a contract to provide technical assistance
services.  In the second stage of the privatization, part or all of
the remaining equity holdings in each airport group would be offered to the
general public in the securities markets.
 
 On June
29, 1998, the SCT granted to the subsidiaries of GACN, concessions to manage,
operate and develop the 13 airports that comprise the Central-North Group, and
benefit from the use of the airport facilities for a period of 50 years
beginning November 1, 1998.  The term may be extended by the SCT in
one or more instances, not to exceed a total of an additional 50
years.  The value of the concessions of Ps. 5,813,656 (Ps. 3,962,405
historical pesos) was not determined by the Mexican government until June 2,
2000, the date on which Servicios de Tecnología Aeroportuaria, S.A. de C.V.
(“SETA”), the Company’s strategic partner, acquired 15% of the
Company.  On that date, the Company and the Mexican government
determined the value of the concessions on the basis of the price paid by SETA
which was recorded as a single asset in the Company’s financial statements, and a
corresponding credit to equity in favor of the Mexican government.
 
 As a
result of the public bidding process discussed above, in June 2000, a stock
purchase agreement was executed between the Mexican government and SETA, whereby
the Mexican government sold 15% of its then-outstanding equity interests in the
Company to SETA.  SETA paid the Mexican government Ps. 1,214,375 (Ps.
864,056 historical pesos), excluding interest, in exchange for: (i) 58,800,000
Class I Series “BB” shares; (ii) an option to acquire from the Mexican
government an additional 36% of the then-outstanding equity interest held by the
Mexican government in the Company, in the event that such shares were not sold
in a public offering within a specified time period (which was subsequently
assigned to one of SETA’s stockholders; see below); (iii) the right and
obligation to enter into various agreements, including a technical assistance
and transfer-of-technology agreement as defined in the public bidding process;
and (iv) a stock option agreement, according to which SETA had the option to
subscribe up to 3% of the new Series “B” shares.
  F-9
 Table of Contents
  Significant
events:
 
 Business Flat Tax
Law-On
October 1, 2007, the Business Flat Tax Law (“IETU
Law”) was enacted andprovided for a new flat rate business tax (Impuesto Empresarial a Tasa
Única, or “IETU”), which went into
effect on January 1, 2008 (see Note 12).  Based on its financial
projections, which were performed over a four year period and according to INIF
8, “Effects of the Business Flat Tax”, the Company determined that it will
essentially pay IETU.  Therefore, as of December 31, 2007, the Company
recorded a deferred IETU liability of Ps. 1,073,859, and cancelled the deferred
regular income tax (“ISR”) liability of Ps. 597,506, recognizing the effect net
in the statement of income of Ps. 476,353.  The impact of the IETU on
the Company’s deferred tax balances did not affect the Company’s cash flows in
2007.
 
 Initial Public
Offering-On
November 29, 2006, the Company carried out an initial public offering (“IPO”)
under which the Mexican government sold its 48% participation in the Series B
shares of the Company (including the exercise of the over allotment option) on
the Mexican Stock Exchange and the NASDAQ Global Select Market.  A
total of 192,080,000 shares were sold.  The Company did not receive
any proceeds from the IPO.  As
of December 31, 2007, 44.52% of the Company’s capital is owned by
the public, 51.19% is held directly by Aeroinvest,
the majority shareholder of SETA, and 4.29 % is owned by Aérports de Paris
Management, S.A. (ADP).
 
 Stock Split-On
October 2, 2006, the Company’s shareholders approved a 1-for-14.69482276 reverse
stock split of the Company’s outstanding common stock, reducing the number of
shares outstanding at such date from 5,877,929,102 shares to 400,000,000
shares.
 
 Share Issuance-On
August 28, 2006, the Company’s shareholders approved the issuance of 8,000,000
Series “B” shares increasing the number of shares outstanding at such date from
392,000,000 shares to 400,000,000 shares.  On September 5, 2006, SETA
acquired such shares through the exercise of a stock option at a price per share
of $1.3527 (Ps. 14.6735).
 
 Aeroinvest Option-The
option of the 36% of Series “B” shares was assigned to and exercised by
Aeroinvest during December 2005 at an exercise price per share of $1.4404
(Ps.15.3449).
 
 In
December 2005, in order to finance its acquisition from the Mexican government
of Series “B” shares representing 36% of the Company’s capital stock, Aeroinvest
entered into a $125 million loan agreement with WestLB AG that matures in May
2007.  On October 25, 2006, Halkin Finance Plc, an affiliate of
Merrill Lynch & Co., purchased the loan from WestLB AG.  In June, 2007,
Aeroinvest,
placed a long-term bond among qualified investors in the United States of
America (Bond 144-A) to pay the credit.
 
 2.
              Basis
      of presentation and consolidation
 
 Translation into
English –The accompanying
consolidated financial statements have been translated from Spanish into English
for use outside of Mexico.  These consolidated financial statements
are presented in accordance with Mexican Financial Reporting Standards
(“MFRS”).  Certain accounting practices applied by the Company vary in
certain significant respects from accounting principles generally accepted in
the United States of America (“U.S. GAAP”).  See Note 21 for a
discussion of such differences and for a reconciliation of the Company’s
financial statements between MFRS and U.S. GAAP.
 
 Convenience
translation –The consolidated
financial statements are stated in Mexican pesos, the currency of the country in
which the Company is incorporated and operates.  The translations of
Mexican peso amounts into U.S. dollar amounts are included solely for the
convenience of readers in the United States of America and have been made at the
rate of 10.92 Mexican pesos to one U.S. dollar, the noon buying rate of the
Federal Reserve Bank of New York on December 31, 2007.  Such
translations should not be construed as representations that the Mexican peso
amounts have been, could have been, or could in the future, be converted into
U.S. dollars at that rate or any other rate.
 
 Basis of
consolidation–The consolidated
financial statements include the financial statements of Grupo Aeroportuario del
Centro Norte, S.A. de C.V. and its wholly-owned subsidiaries.  All
significant intercompany balances, transactions and investments have been
eliminated in the accompanying consolidated financial
statements.
  F-10
 Table of Contents
  The
wholly-owned subsidiaries whose financial statements have been consolidated with
those of Grupo Aeroportuario del Centro Norte, S.A. de C.V. are as follows:
Aeropuerto de Acapulco, S.A. de C.V., Aeropuerto de Ciudad Juárez, S.A. de C.V.,
Aeropuerto de Culiacán, S.A. de C.V., Aeropuerto de Chihuahua, S.A. de C.V.,
Aeropuerto de Durango, S.A. de C.V., Aeropuerto de Mazatlán, S.A. de C.V.,
Aeropuerto de Monterrey, S.A. de C.V., Aeropuerto de Reynosa, S.A. de C.V.,
Aeropuerto de San Luis Potosí, S.A. de C.V., Aeropuerto de Tampico, S.A. de
C.V., Aeropuerto de Torreón, S.A. de C.V., Aeropuerto de Zacatecas, S.A. de
C.V., Aeropuerto de Zihuatanejo, S.A. de C.V., and Servicios Aeroportuarios del
Centro Norte, S.A. de C.V. (“SACN”).
 
 Comprehensive
income (loss)–-Comprehensive income (loss)
presented in the accompanying consolidated statements of changes in
stockholders’ equity represents the Company’s total activity during each year
and is comprised of the net income for the year, plus other comprehensive income
(loss) items for the same period which are presented directly in stockholders’
equity without affecting the consolidated statements of income.  In
2007 and 2006, the other comprehensive loss item consists of the additional
liability recognized for labor obligations.  In 2005, there were no
other items in comprehensive income.
 
 Classification of
costs and expenses–-Costs and
expenses presented in the consolidated statements of operations were classified
according to their function due to the various business activities of the
subsidiaries.  Consequently, cost of services is presented separately
from other costs and expenses.
 
 Income from
operations– Income from operations is the result of subtracting cost of
sales and general expenses from net sales.  While NIF B-3, “Income
Statements”, does not require inclusion of this line item in the consolidated
statements of income, it has been included for a better understanding of the
Company’s economic and financial performance.
 
 Reclassifications
-Certain amounts in the consolidated financial statements as of and for
the year ended December 31, 2006 and 2005 have been reclassified to conform to
the presentation of the 2007 consolidated financial statements.
 
 3.
              Summary
      of significant accounting policies
 
 The
accompanying consolidated financial statements have been prepared in conformity
with MFRS, which require that management make certain estimates and use certain
assumptions that affect the amounts reported in the financial statements and
their related disclosures; however, actual results may differ from such
estimates.  The Company’s management, upon applying professional
judgment, considers that estimates made and assumptions used were adequate under
the circumstances.  The significant accounting policies of the Company
are as follows:
 
 a.
              New
      accounting polices –
 
 Statements of
income–Beginning January 1, 2007, the Company adopted new NIF B-3, which now
classifies revenues, costs and expenses into ordinary and
non-ordinary.  Ordinary items are derived from primary activities
representing an entity’s main source of revenues.  Non-ordinary items
are derived from activities other than those representing an entity’s main
source of revenues.  Consequently, the classification of certain
transactions as special and extraordinary was eliminated; these items are now
part of other income and expenses and non-ordinary items,
respectively.  Statutory employee profit sharing (“PTU”) should now be
presented as an ordinary expense and no longer presented as a tax on
income.  According to Interpretation of Financial Information
Standards Number 4, “Presentation of Statutory Employee Profit Sharing in the
Statement of Income”,
(“INIF 4”), PTU should be included within other income and
expenses.  The main effect of adopting this NIF was the
reclassification of current and deferred PTU for fiscal 2006 and 2005 of Ps.
41,484 and Ps. 1,524, respectively, to other income and expenses.
 
 Relatedparties–BeginningJanuary 1, 2007, the Company adoptedNIF C-13, “Related Parties”, which broadens the concept
“related
parties”to include a) the
overall business in which the reporting entity participates,b) close family members of key
management or prominent
executives,and c) any fund created in connection
with a labor-related compensation plan.NIF C-13 also requires the following
disclosures: 1) provides that companies may disclose that the terms and
conditions of consideration paid or received intransactions carried out between
related parties are equivalent to those of similar transactions carried out
between independent parties and the reporting entity, only if sufficient
evidence exists; 2) requires disclosure of benefits granted to the
entity’s key management or prominent
executives).  Notes to the 2006 and 2005
consolidated financial statements were amended to comply with the new
provisions.
 
 Service Concession
Arrangements – On November 30, 2006, the International Reporting
Interpretations Committee issued Interpretation No. 12, “Service Concession
Arrangements” (“IFRIC 12”), which became effective for fiscal years beginning on
January 1, 2008 with early application permitted.  This interpretation
deals with the accounting by private sector operators involved in supplying
infrastructure assets and services to the public sector such as schools and
roads.
  F-11
 Table of Contents
  The
interpretation establishes that for the agreements that are within its scope,
the infrastructure assets are not recognized as property, plant and equipment of
the operator; rather, depending on the terms of the contract, the operator will
recognizethat: (i) a
financial asset results when an operator constructs or makes improvements to the
infrastructure, in which the
operator has an unconditional right to receive a specific amount of cash or
other financial asset during the contract term, or (ii) an intangible asset results when the operator
constructs or makes improvements and is allowed to operate the infrastructure
for a fixed period after the construction is terminated, andin which the future cash
flows of the operator have not been specified, because they may
vary depending on the use of the asset, and are therefore considered contingent,
or (iii) both a financial asset and an
intangible asset may result when the return/gain for the operator is provided
partially by a financial asset and partially by an intangible
asset.  The IFRIC establishes that revenues and costs related to
construction or improvements be recognized as revenues during the construction
phase, in accordance with IAS 11 "Construction Contracts".  The
adoption of IFRIC 12 did not have a material impact on the Company’s
consolidated financial position, results of operations or cash
flows.
 
 b.
              Recognition
      of the effects of inflation – The Company restates its consolidated
      financial statements to Mexican peso purchasing power as of the most
      recent balance sheet date presented.  Accordingly, the consolidated
      financial statements of the prior year, that are presented for comparative
      purposes, have also been restated to Mexican pesos of the same purchasing
      power and, therefore, differ from those originally reported in prior
      years.  Recognition of the effects of inflation results mainly
      in inflationary gains or losses on nonmonetary and monetary items that are
      presented in the financial statements under the caption monetary
      position loss.  Monetary position loss represents the erosion of
      the purchasing power of monetary items caused by inflation and is
      calculated by applying Mexican National Consumer Price Index (INPC)
      factors to monthly net monetary position.  Losses result from
      maintaining a net monetary asset
position.
 
 EffectiveJanuary
1, 2008, we adopted several accounting
changes pursuant to MexicanFRSand their interpretations (INIFs).  In
particular as per NIF B-10, “Effects of Inflation”, the effects of inflation
will no longer be recognized in financial statements, effectiveJanuary 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 too r greater than 26%.  As a
result of this change, we expect our financial statements in 2008 and subsequent
periods to be expressed in nominal pesos.
 
 c.
              Cash and
      cash equivalents-This item mainly consists of bank deposits in checking accounts and
      daily investments of cash surpluses which may be immediately
      realized.  They are recorded at face value plus accrued yields
      which are recognized in results as they
accrue.
 
 d.
              Property,
      real estate, machinery, equipment and improvements to concessioned
      properties–Expenditures for
      property, machinery and equipment, including improvements that form part
      to the concessioned properties and that increase the value of assets by
      increasing their service capacity, improving their efficiency or
      prolonging their useful lives, are capitalized.  These amounts
      are initially recorded at acquisition cost and are restated using the
      INPC.  Depreciation is calculated using the straight-line method
      beginning with the month following the purchase date, using final restated
      balances, based on the estimated remaining useful lives of the related
      assets, as follows:
 
 Total
      yearsImprovements
      to concessioned properties
              
              8
      to 20Machinery
      and equipment
              
              
              10Office
      furniture and equipment
              
              
              10Vehicles
              
              
              4Computers
              
              
              3.3
 
 During 2006, the Company modified the
rates used to determine the depreciation of runway surfaces, taxiways and
platforms,by considering an estimated useful
life of eight years for these assets, which is equivalent to an annual
amortization rate of 12.5%.Through 2005, the amortization rate
used by the Company was 5%.The change in estimate occurred based
on technical studies carried out by the Company,which identified that the runway
surfaces were wearing out more quickly than originally estimated,mainly due to increased traffic over
original estimates as well as other factors including,but not limited to,temperature, rainfall, humidity and
the size of aircraft utilizing the runways.  Based on the
aforementioned factors, runways must be routinely resurfaced to keep them in
optimum operating conditions.  The Company noted that it was
resurfacing its runways much earlier than anticipated, for which reason it
carried out the technical studies and changed the estimated lives of the runway
surfaces.
  F-12
 Table of Contents
  The
effect of the change in the useful life of the runway surfaces for the year
ended December 31, 2006 was additional depreciation expense and a corresponding
decrease to improvements to concessioned assets of    Ps.
31,369 with a resulting income tax benefit of Ps. 9,097 for a net effect on net
income of Ps. 22,272 (Ps.0.056 per share).
 
 e.
              Rights to
      use airport facilities and airport concessions –This caption
      represents the value of the airport concessions and the related rights to
      use airport facilities granted by the SCT at each of the Company’s 13
      airports.
 
 In
January 2003, in order to assign values to the concessioned assets at each
airport, the Company obtained an appraisal performed by independent experts, on
which basis the Company allocated the original cost of the concession to the
airport terminals, runway surfaces, aprons, platforms, land and
machinery.  Such assets are presented in the balance sheet under the
caption “Rights to use airport facilities”, which are restated by considering
factors derived from the INPC, and are amortized in accordance with the
remaining useful lives of the concessioned assets determined in the appraisal
(or as modified, as discussed in insert c above).
 
 At those
airports where the original cost of the concession exceeded the appraised value
of the related assets, such surplus is classified as “Airport
concessions”.  The airport concessions are restated by considering
factors derived from the INPC and are amortized using the straight-line method
over 50 years, which represents the duration of the concession (see Note
7).
 
 f.
              Impairment
      of long-lived assets in use– The Company reviews the carrying
      amounts of long-lived assets in use when an impairment indicator suggests
      that such amounts might not be recoverable, considering the greater of the
      present value of future net cash flows or the net sales price upon
      disposal.  Impairment is recorded when the carrying amounts
      exceed the greater of the amounts mentioned above.  Impairment
      indicators considered for these purposes are, among others, operating
      losses or negative cash flows in the period if they are combined with a
      history or projection of losses, depreciation and amortization charged to
      results, which in percentage terms in relation to revenues are
      substantially higher than that of previous years, obsolescence, and other
      legal and economic factors.
 
 In
accordance with MFRS, management considers that GACN, together with its 13
airport subsidiaries, can be considered an “independent cash generating unit”,
as all formed part of the Central-North package included in the Mexican
government’s bidding process.  In accordance with the terms
established by the Mexican government, all of the Company’s 13 airports must be
in operation, regardless of their individual results and are therefore evaluated
for impairment on a consolidated basis.  For the year ended December
31, 2007, based on the analysis performed, the Company did not recognize any
impairment losses.
 
 g.
              Employee
      retirement obligations –Seniority premiums
      and, beginning in 2005, severance payments, are recognized as costs over
      employee years of service and are calculated by independent actuaries
      using the projected unit credit method at net discount
      rates.  Accordingly, the liability is being accrued which, at
      present value, will cover the obligation from benefits projected to the
      estimated retirement date of the Company’s
  employees.
 
 h.
              Provisions
      –Provisions are recognized for current obligations that result
      from past events, that are probable to result in the use
      of economic resources, and that
      can be reasonably
      estimated.
 
 i.
              Statutory
      employee profit sharing -Statutory employee profit sharing is
      recorded in the results of the year in which it is incurred and presented
      under other income and expenses in the accompanying consolidated
      statements of income.  Deferred PTU is derived from temporary
      differences between the accounting result and income for PTU purposes and
      is recognized only when it can be reasonably assumed that such difference
      will generate a liability or benefit, and when there is no indication that
      circumstances will change in such a way that the liabilities will not be
      paid or benefits will not be realized.  PTU is determined based
      on taxable income, according to Section I of Article 10 of the Income Tax
      Law.
  F-13
 Table of Contents
  j.
              Income
      taxes– Income taxes are recorded in the results of the year in
      which they are incurred.  Beginning in October 2007, based on
      its financial projections, the Company must determine whether it will
      incur regular income tax (“ISR”) or the new Business Flat Tax (“IETU”)
      and, accordingly, recognizes deferred taxes based on the tax it expects to
      pay in the future.  Deferred taxes are calculated by applying
      the corresponding tax rate to the applicable temporary differences
      resulting from comparing the accounting and tax bases of assets and
      liabilities and including, if any, future benefits from tax loss
      carryforwards and certain tax credits.  Deferred tax assets are
      recorded only when there is a high probability of recovery.Tax on assets
      (“IMPAC”) paid that is expected to be recoverable is recorded as an
      advance payment of ISR and is presented in the balance sheet decreasing
      the deferred ISR liability.
 
 k.
              Foreign
      currency transactions –Foreign currency transactions are recorded
      at the applicable exchange rate in effect at the transaction
      date.  Monetary assets and liabilities denominated in foreign
      currency are translated into Mexican pesos at the applicable exchange rate
      in effect at the balance sheet date. Exchange fluctuations are recorded as
      a component of net comprehensive financing income (cost) in the
      consolidated statements of income.
 
 l.
              Concentrations
      of credit risk –Financial instruments that are subject to a
      potential credit risk due to non–compliance by the counterparty primarily
      consist of cash and cash equivalents and trade receivables from the
      Company’s principal domestic and international airline
      customers.  Cash and cash equivalents are maintained in
      different prestigious financial institutions in Mexico and mainly refer to
      bank deposits and immediately realizable investments.  With
      respect to trade accounts receivable, to reduce its credit risk, the
      Company conducts periodic evaluations of the financial situation of its
      customers and also requests specific guarantees or advances when deemed
      necessary.  The Company believes that its potential credit risk
      is adequately covered by the allowance for doubtful accounts that it has
      recognized. In 2007, 2006 and 2005, approximately 18.8%, 18.5% and 16.4%,
      respectively, of the Company’s accounts receivable correspond to amounts
      due from Compañía Mexicana de Aviación, S.A. de C.V. (“Mexicana”),
      approximately 24.2%, 28.3% and 29.1%, respectively, correspond to amounts
      due from Aerovías de México, S.A. de C.V. (“Aeromexico”), and
      approximately 13.6%, 11.7% and 17.5%, respectively, correspond to amounts
      due from Consorcio Aviacsa, S.A. de C.V.   In addition, of
      the Company’s consolidated revenues for the years ended December 31, 2007,
      2006 and 2005, approximately 9.3%, 10.3% and 9.4%, respectively,
      correspond to revenues generated by Mexicana, approximately 13.2%, 16.9%
      and 19.1%, respectively, correspond to revenues generated by Aeromexico
      and approximately 7.9%, 9.6% and 10.1%, respectively, correspond to
      revenues generated by Consorcio Aviacsa, S.A. de
  C.V.
 
 m.
              Revenue
      recognition –Revenue is generated mainly from the rendering of
      aeronautical services (regulated revenues), which refer to the use of the
      airport facilities by airlines and passengers.  Aeronautical
      services consist of services that generate revenues necessary for the
      operation and proper functioning of an airport.  These revenues
      are subject to a system of prices regulated by the SCT, which establishes
      a maximum rate for such aeronautical and complementary services provided
      at each airport.  Such revenues are recognized when the services
      are rendered (see Note 17).
 
 The
Company also generates revenue from non-aeronautical services, which consist
mainly of the leasing of commercial spaces in airport terminals, revenues from
the operation of parking lots, fees from access to third parties that provide
catering services and other services at airports.  Spaces in the
airport terminals are rented through operating lease agreements that contain
either fixed monthly rent (increased annually based on the INPC) or fees based
on a minimum monthly fee or a percentage of the monthly income of the lessee,
whichever is higher.  The fixed portion of lease revenues is
recognized when the services are rendered or based on the terms of the related
lease.  The contingent rentals generated from the percentage of lessee
monthly income are recognized in income once the contingency is
met.  Therefore, during the year, the percentage of lessee monthly
revenues is recognized in the following month, once the Company has received
information related to its tenants’ revenues.  Though each year
reported includes twelve months of revenues, this accounting treatment results
in a one-month lag with respect to the commercial revenues for those tenants
whose stated percentage of monthly income is greater than the minimum monthly
fee.  However, the Company monitors the effect of this one-month lag
at each reporting date and does not believe such effect to be material to its
reported results.
  F-14
 Table of Contents
  n.
              Earnings
      per share –Basic earnings per common share are calculated by
      dividing consolidated net income by the weighted average number of shares
      outstanding during the year.  The Company does not have diluted
      securities for purposes of MFRS; therefore basic and diluted earnings per
      share are the same.
 
 4.
              Cash
      and cash equivalents
 
 2007
              
              
              2006Cash
      equivalents
              
              Ps.
              1,736,046
              
              
              Ps.
              1,543,928Cash
              
              
              20,658
              
              
              
              129,066Ps.
              1,756,704
              
              
              Ps.
              1,672,994
   5.
              Trade
      accounts receivable
 
 2007
              
              
              2006Accounts
      receivable
              
              Ps.
              269,894
              
              
              Ps.
              260,571Allowance
      for doubtful accounts
              
              
              (9,294
              )
              
              
              (9,242
              )Ps.
              260,600
              
              
              Ps.
              251,329
 
 Passenger
charges are payable for each passenger (other than diplomats, infants, transfer
and transit passengers) departing form the airport terminals operated by the
Company and are collected by the airlines and subsequently remitted to the
Company.
 
 Accounts
receivable (including amounts from Consorcio Aeroméxico, S.A. de C.V.) includes
balances invoiced to domestic and international airlines for passenger charges
at December 31, 2007 and  2006, amounting to Ps.267,400
and  Ps.222,931, respectively.
 
 The
Company periodically reviews the sufficiency of its allowance for doubtful
accounts considering the nature and aging of its receivables as well as other
factors including the credit risks associated with individual customers, the
airline industry as a whole and existing macro-economic
conditions.  Past due or delinquency status is determined on the basis
of the terms of the relevant contract, at which point the Company employs all
efforts to collect the amount.  When an account is deemed
uncollectible, such account is written-off once the Company has exhausted all
collection means at its disposal, which generally occurs following a judicial
determination that a particular receivable is not collectible.
 
 6.
              Property,
      real estate, machinery, equipment and improvements to concessioned
      properties
  2007
              
              
              2006Improvements
      to concessioned properties
              
              Ps.
              2,102,094
              
              
              Ps.
              1,807,940Machinery
      and equipment
              
              
              247,354
              
              
              
              204,098Land
              
              
              122,219
              
              
              
              -Office
      furniture and equipment
              
              
              49,906
              
              
              
              47,278Vehicles
              
              
              117,499
              
              
              
              113,191Computers
              
              
              21,583
              
              
              
              20,4532,660,655
              
              
              
              2,192,960Accumulated
      depreciation and amortization
              
              
              (697,746
              )
              
              
              (516,628
              )1,962,909
              
              
              
              1,676,332Construction
      in-progress
              
              
              330,098
              
              
              
              147,818Ps.
              2,293,007
              
              
              Ps.
              1,824,150
 
 Amortization
for the years ended December 31, 2007, 2006 and 2005 related to improvements to
concessioned properties was Ps. 150,594, Ps. 112,141 and Ps. 60,697,
respectively.  Depreciation for the years ended December 31, 2007,
2006 and 2005 related to property, machinery and equipment was Ps. 33,603, Ps.
28,257 and Ps. 22,560, respectively.  In addition, for the years ended
December 31, 2007, 2006 and 2005, the Company incurred Ps.8,388, Ps. 8,090 and
Ps. 941, respectively related to the amortization of other
assets.
  F-15
 Table of Contents




Construction
in-progress refers mainly to the rehabilitation of the runways at the Durango
and Ciudad Juárez airports, the construction of Terminal B at the Monterrey
airport and the remodeling of the Monterrey airport’s Terminal C.
  7.
              Rights
      to use airport facilities and airport
  concessions
  As
described in Note 3 e., effective January 1, 2003, the total cost of the
concession was assigned proportionally to rights to use airport facilities on
the basis of the net replacement value of the assets determined by an
independent appraiser; at any airport concession where the cost exceeded the
appraised value, such excess was recognized within the airport concessions
caption.  The allocation was determined as set forth
below:
  Period
      of Remaining Amortization
                in
      YearsCost
      of the concession from the SCT (Note 1 and 3e.)
              
              Ps.
              5,813,656Appraised
      amount assigned to:Rights
      to use airport facilities:Runways,
      aprons and platforms
              
              Ps.
              1,528,878
              
              
              27Buildings
              
              
              1,002,794
              
              
              29Other
      infrastructure
              
              
              349,935
              
              
              21Land
              
              
              2,043,447
              
              
              424,925,054Airport
      concessions
              
              
              888,602
              
              
              42Total
      cost
              
              Ps.
              5,813,656
  The value
of the rights to use airport facilities and airport concessions at December 31
is as follows:
  
 2007
              
              
              2006Rights
      to use airport facilities
              
              Ps.
              4,925,054
              
              
              Ps.
              4,925,054Less
      – Accumulated amortization
              
              
              (924,664
              )
              
              
              (798,819
              )Ps.
              4,000,390
              
              
              Ps.
              4,126,235Airport
      concessions
              
              Ps.
              888,602
              
              
              Ps.
              888,602Less
      – Accumulated amortization
              
              
              (142,176
              )
              
              
              (124,404
              )Ps.
              746,426
              
              
              Ps.
              764,198
  Amortization
for rights to use the airport facilities and airport concessions for the years
ended December 31, 2007, 2006 and 2005 were Ps. 143,617, Ps. 143,608 and Ps.
143,607, respectively.
  Each
airport concession agreement contains the following terms and basic
conditions:
  ·
              The
      concessionaire has the right to manage, operate, maintain and use the
      airport facilities and carry out any construction, improvements or
      maintenance of the related facilities in accordance with its
      Master Development Program, and to provide airport,
      complementary and commercial
services.
  ·
              The
      concessionaire will use the airport facilities only for the purposes
      specified in the concession agreement, will provide services in conformity
      with the law and applicable regulations and will be subject to inspections
      by the SCT.
  ·
              The
      concessionaire must pay a tax for the operation of the assets under
      concession (currently 5% of the concessionaire’s annual gross revenues
      derived from the use of public property), in conformity with the Mexican
      Federal Duties Law.
  ·
              Aeropuerto
      y Srvicios Auxiliares (“ASA”) has the exclusive right to supply fuel
      at the concessionaire’s airports.  F-16
 Table of Contents
  ·
              The
      concessionaire must grant free access to specific airport areas to certain
      Mexican government agencies, so that they may carry out their activities
      within the airports.
  ·
              According
      to Article 27 of the General Law on Airports, the concession may be
      revoked if the concessionaire breaches any of its obligations established
      therein or falls under any of the causes for revocation referred to in
      Article 26 of the law and in the concession agreement.  The
      breach of certain concession terms may be cause for revocation if the SCT
      has applied sanctions in three different instances with respect to the
      same concession term.
  ·
              The
      SCT may modify concession terms and conditions that regulate the Company’s
      operations.
  ·
              The
      concession may be renewed in one or more instances, for terms not to
      exceed an additional 50 years.
  8.
              Employee
      retirement obligations
  The
related liability and annual cost of such benefits are calculated by an
independent actuary on the basis of formulas defined in the plans using the
projected unit credit method.
  The
present values of these obligations and the rates used for the calculations
are:
  2007
              
              
              2006Accumulated
      benefit obligation
              
              Ps.
              (32,231
              )
              
              Ps.
              (34,359
              )Projected
      benefit obligation
              
              Ps.
              (34,555)
              
              
              Ps.
              (37,177)Unrecognized
      items:Transition
      obligation
              
              
              4,683
              
              
              
              6,438Prior
      service costs and plan modifications
              
              
              (17,076
              )
              
              
              (17,852
              )Variances
      for assumptions and adjustments based on experience
              
              
              17,536
              
              
              
              23,133Net
      projected liability
              
              
              (29,412
              )
              
              
              (25,458
              )Additional
      liability (recognized as an intangible asset and within stockholders’
      equity)
              
              
              (12,431
              )
              
              
              (18,196
              )Ps.
              (41,843)
              
              
              Ps.
              (43,654)
  Real
rates used in actuarial calculations:
  2007
              
              
              2006
              
              
              2005%
              
              
              %
              
              
              %Discount
      of the projected benefit obligation at present value
              
              
              4.50
              
              
              
              5.00
              
              
              
              4.50Salary
      increase
              
              
              1.50
              
              
              
              1.50
              
              
              
              1.00
  Net
period cost:
  2007
              
              
              2006
              
              
              2005Service
      cost for the year
              
              Ps.
              7,818
              
              
              Ps.
              7,813
              
              
              Ps.
              11,557Amortization
      of the transition obligation
              
              
              1,992
              
              
              
              1,998
              
              
              
              -Amortization
      of prior service costs and plan modifications
              
              
              (1,022
              )
              
              
              332
              
              
              
              346Amortization
      of the variances for assumptions
              
              
              1,986
              
              
              
              1,156
              
              
              
              92Interest
      cost for the year
              
              
              1,667
              
              
              
              1,432
              
              
              
              459Net
      period cost
              
              Ps.
              12,441
              
              
              Ps.
              12,731
              
              
              Ps.
              12,454
  9.
              Stockholders’
  equity
  a.
              At
      December 31, 2007, a total of 400,000,000 Class I shares, consisting of
      58,800,000 Series “BB” shares and 341,200,000 Series “B”, were
      issued.  As of December 31, 2006 and 2005, the total number of
      authorized Class I shares was 404,123,711, of which 58,800,000 consisted
      of Series “BB” and 345,323,711 of Series “B” shares.  As of
      December 31, 2005, 12,123,711 of the Class I Series "B" shares, remained
      unissued and represented SETA’s option to acquire 3 % of the Company’s
      shares.  F-17
 Table of Contents
  b.
              The
      subscribed and paid-in capital stock at December 31, 2007, 2006 and 2005
      is solely comprised of fixed   capital and is represented
      by ordinary, registered no-par shares and is composed as
      follows:
  2007Number
      of shares
              
              
              Historical
                value
              
              
              Restatement
      effect
              
              
              Restated
      capital stockFixed
      capital:Series
      B, Class I
              
              
              341,200,000
              
              
              Ps.
              3,792,513
              
              
              Ps.
              1,515,334
              
              
              Ps.
              5,307,847Series
      BB, Class I
              
              
              58,800,000
              
              
              
              644,619
              
              
              
              264,651
              
              
              
              909,270Treasury
      shares
              
              
              (2,604,700
              )
              
              
              (28,893
              )
              
              
              (11,591
              )
              
              
              (40,484
              )Total
              
              
              397,395,300
              
              
              Ps.
              4,408,239
              
              
              Ps.
              1,768,394
              
              
              Ps.
              6,176,633
  2006Number
      of shares
              
              
              Historical
                value
              
              
              Restatement
      effect
              
              
              Restated
      capital stockFixed
      capital:Series
      B, Class I
              
              
              341,200,000
              
              
              Ps.
              3,792,513
              
              
              Ps.
              1,515,334
              
              
              Ps.
              5,307,847Series
      BB, Class I
              
              
              58,800,000
              
              
              
              644,619
              
              
              
              264,651
              
              
              
              909,270Total
              
              
              400,000,000
              
              
              Ps.
              4,437,132
              
              
              Ps.
              1,779,985
              
              
              Ps.
              6,217,117
  2005Number
      of shares
              
              
              Historical
                value
              
              
              Restatement
      effect
              
              
              Restated
      capital stockFixed
      capital:Series
      B, Class I
              
              
              333,200,000
              
              
              Ps.
              3,675,659
              
              
              Ps.
              1,509,064
              
              
              Ps.
              5,184,723Series
      BB, Class I
              
              
              58,800,000
              
              
              
              644,619
              
              
              
              264,651
              
              
              
              909,270Total
              
              
              392,000,000
              
              
              Ps.
              4,320,278
              
              
              Ps.
              1,773,715
              
              
              Ps.
              6,093,993
  c.
              On
      April 27, 2007, at the Stockholders' Ordinary General Meeting, the
      following matters were approved:  to increase the legal reserve
      by Ps. 23,354; to declare dividends of Ps. 444,125, of which at December
      31, 2007, Ps. 214,901 had not been paid; the creation of a reserve to
      repurchase the Company’s shares of Ps. 412,628  and the
      capitalization of the balance related to the additional liability for
      labor obligations of Ps.11,872, against the restatement of retained
      earnings.
  d.
              On
      August 28, 2006, the Company’s shareholders approved the issuance of
      8,000,000 Series “B” shares.  On September 5, 2007, SETA
      acquired such shares through the exercise of a stock option granted to it
      by the Company as mentioned in Note
1.
  e.
              On
      August 28, 2006, at the Stockholders’ Ordinary and Extraordinary General
      Meeting, the stockholders declared a dividend Ps. 446,689, which was paid
      on September 22, 2006.
  f.
              On
      October 2, 2006, the Company’s shareholders approved a 1-for-14.69482276
      reverse stock split of the Company’s outstanding common shares, reducing
      the number of shares outstanding at such date from 5,877,929,102 shares to
      400,000,000 shares.  All share, per share and option data in the
      accompanying consolidated financial statements and notes thereto have been
      retroactively restated to reflect the effects of the reverse stock split
      for all periods presented.
  g.
              As
      of December 31, 2007, the Company held in treasury shares repurchased with
      a cost basis of Ps. 99,644. This amount is represented by 2,604,700 Series
      “B” shares, which appear in the Statement of Changes in Stockholders’
      Equity reducing the reserve for the repurchase of shares.  The
      weighted average number of shares outstanding during the year mentioned in
      Note 3.n. is affected considering the dates in which shares were
      repurchased.  On December 31, 2007, the market value of the
      Company’s shares as listed on the Mexican Stock Exchange was approximately
      33.86 pesos.
  h.
              Mexican
      General Corporate Law requires that at least 5% of net income of the year
      be transferred to the legal reserve until the reserve equals 20% of
      capital stock at par value in historical pesos.  The legal
      reserve may be capitalized but may not be distributed, except in the form
      of a stock dividend, unless the entity is dissolved.  The legal
      reserve must be replenished if it is reduced for any reason. 
      On December 31, 2007 and 2006 the legal reserve amounted to Ps.
      95,554 and Ps. 72,200, respectively.  F-18
 Table of Contents
  i.
              Stockholders’
      equity, except restated paid-in capital and tax retained earnings will be
      subject to income taxes payable by the Company at the rate in effect upon
      distribution.  Any tax paid on such distribution may be credited
      against annual and estimated income taxes of the year in which the tax on
      dividends is paid and the following two fiscal
  years.
  The
balances of the stockholders’ equity tax accounts as of December 31 are as
follows:
  2007
              
              
              2006Contributed
      capital account
              
              Ps.
              5,836,926
              
              
              Ps.
              5,836,926Net
      taxable income account
              
              
              119,795
              
              
              
              18,242Reinvested
      net taxable income account
              
              
              33,503
              
              
              
              33,508Total
              
              Ps.
              5,990,224
              
              
              Ps.
              5,888,676
  10.
              Foreign
      currency balances and transactions
  As of
December 31 the foreign currency monetary position in thousands of U.S. dollars
is as follows:
  2007
              
              
              2006Monetary
      assets
              
              $
              24,939
              
              
              $
              32,912Monetary
      liabilities
              
              
              (3,477
              )
              
              
              (3,774
              )Monetary
      asset position
              
              $
              21,462
              
              
              $
              29,138Equivalent
      in Mexican pesos
              
              Ps.
      233,456
              
              
              Ps.
      324,884
  Transactions
denominated in foreign currency in thousands of U.S. dollars for the years ended
December 31 were as follows:
  2007
              
              
              2006
              
              
              2005Technical
      assistance fee
              
              $
              5,154
              
              
              $
              4,340
              
              
              $
              3,373Payment
      of insurance policies
              
              
              1,509
              
              
              
              1,416
              
              
              
              1,571Payments
      for machinery and maintenance safety equipment
              
              
              2,202
              
              
              
              -
              
              
              
              -Professional
      services, fees and subscriptions and expenses related to initial public
      offering
              
              
              2,866
              
              
              
              2,358
              
              
              
              -
  As of
December 31, 2007, 2006 and 2005, the exchange rate of Mexican pesos per one
U.S. dollar, as published by Banco de Mexico, was 10.8795, 10.8205, and 10.6344
pesos, respectively.
  As of
March 6, 2008, the exchange rate was 10.8510 pesos per one U.S.
dollar.
  11.
              Balances
      and transactions with related
parties
  Balances
with related parties at December 31 were as follows:
  2007
              
              
              2006Balances
      payable:SETA
              
              Ps.
              32,563
              
              
              Ps.
              29,352Grupo
      ICA, S.A. de C.V.
              
              
              2,726
              
              
              
              5,553Ps.
              35,289
              
              
              Ps.
              34,905
 F-19
 Table of Contents
  Transactions
with related parties, carried out in the ordinary course of business, for the
years ended December 31 were as follows:
 
 2007
              
              
              2006
              
              
              2005Revenues
      generated by aeronautical and non-aeronautical services provided to
      Consorcio Aeroméxico
              
              
              -
              
              
              Ps.
              339,898
              
              
              Ps.
              527,367Expenses:Technical
      assistance fees and related out-of-pocket costs
              
              Ps.
              57,416
              
              
              
              49,541
              
              
              
              40,016Concession
      taxes
              
              
              -
              
              
              
              77,224
              
              
              
              72,632Administrative
      services provided by Grupo ICA, S.A. de C.V.
              
              
              -
              
              
              
              4,877
              
              
              
              -Capital
      expenditures - Construction of  the Terminal "B" at the
      Monterrey airport and rehabilitation of the runways in Culiacán, Ciudad
      Juárez, Chihuahua and the Durango airports provided by Ingenieros Civiles
      Asociados, S.A.de C.V. (1)
              
              
              223,237
              
              
              
              27,314
              
              
              
              25,520
  (1) The
Company uses the services of an independent expert to supervise and ensure that
the construction services are provided at current market rates for similar
services.
  The
benefits granted to key personnel of the Company, were as follows:
  2007
              
              
              2006
              
              
              2005Short-
      and long-term direct benefits
              
              Ps.
              43,842
              
              
              Ps.
              39,030
              
              
              Ps.
              53,734
  The
majority of the common stock of Consorcio Aeroméxico, S.A. de C.V. (“Consorcio
Aeroméxico”) is owned by the Bank Savings Protection Institute (“IPAB”), a
decentralized federal government entity, for which reason Consorcio Aeroméxico
and the Mexican government were considered to be related parties of the Company
up to November 29, 2006, on which date the Mexican government sold its
participation in the Company through a public offering.
  Technical assistance–The Company has executed a
technical assistance and transfer-of-technology contract with SETA, which will
be in effect for 15 years.  Currently, the Company is required to pay
the greater of the fixed $3,000 component or 5% of consolidated operating income
(as defined in the contract) annually for such services.  Beginning in
2006, the fixed $3,000 component will be updated according to the consumer price
index of the United States of America.  In 2007, 2006 and 2005, 5% of
consolidated operating income was greater than of the fixed $3,000.
  As
of December 31, 2007, SETA’s, stockholders were Aeroinvest, S.A. de C.V.
(“Aeroinvest”) (subsidiary of Empresas ICA, S.A. de C.V.) with 74.5% and
Aéroports de Paris, S.A with 25.5%.  Pursuant to the Company’s
bylaws, SETA (as holder of the Company’s Series “BB” shares) has the right to
present to the board of directors the name or names of the candidates for
appointment of certain of the Company’s senior management, the right to appoint
and remove the Company’s chief financial officer, chief operating officer and
commercial director, the right to elect three members of the Company’s board of
directors and the right to veto certain actions requiring approval of the
Company’s stockholders (including the payment of dividends, the amendment of the
Company’s bylaws and the amendment of its right to appoint certain members of
senior management).  In the event of the termination of the technical
assistance agreement, the Series “BB” shares will be converted into Series “B”
shares resulting in the termination of these rights.   If at any
time, prior to June 14, 2015, SETA were to hold less than 7.65% of the Company’s
capital stock in the form of Series “BB” shares, it would lose its veto rights
(but other special rights it possess as a Series “BB” shareholder would be
unaffected) .  If at any time after June 14, 2015, SETA were to hold
less than 7.65% of the Company’s 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.  So long as SETA retains at
least 7.65% of the Company’s capital stock in form of Series “BB” shares, all
its special rights will remain in force.
  Pursuant
to the Company’s bylaws, the technical assistance agreement and the
participation agreement, SETA may not transfer more than 51% of its Series “BB”
shares until after June 14, 2007.   After such date, SETA is
entitled to transfer up to one eighth of such 51% during each year
thereafter.
  F-20
 Table of Contents
  Concession tax– According to
the Mexican Federal Duties Law and the terms of the Company’s concession
agreements, the Company must pay the Mexican government an annual tax for the
rights to use the airport facilities, which is currently equal to 5% of annual
gross revenues.
  12.
              Other
      (expenses) income
  Detail is
as follows:
  2007
              
              
              2006
              
              
              2005Statutory
      employee profit sharing – current
              
              Ps.
              (9,587
              )
              
              Ps.
              (8,985
              )
              
              Ps.
              (1,524
              )Statutory
      employee profit sharing – deferred
              
              
              2,097
              
              
              
              (32,499
              )
              
              
              -Other
      (expenses) income
              
              
              (94
              )
              
              
              10,805
              
              
              
              5,377Ps.
              (7,584)
              
              
              Ps.
              (30,679)
              
              
              Ps.
              3,853
  The
principal items comprising deferred PTU are improvements to concessioned
properties, machinery and equipment, rights to use airport facilities and
airport concessions.
  13.
              Taxes
      on income
  In
accordance with the Mexican tax law, the Company is subject to ISR, and through
2007, to IMPAC.  ISR is computed taking into consideration the taxable
and deductible effects of inflation, such as depreciation calculated on restated
asset values.  Taxable income is increased or reduced by the effects
of inflation on certain monetary assets and liabilities through the inflationary
component, which is similar to the gain or loss from monetary
position.  As of 2007, the tax rate is 28%, in 2006 it was 29% and
2005 it was 30%.  Due to changes in the tax legislation, effective
January 1, 2007, taxpayers who file tax reports and meet certain requirements
may obtain a tax credit equivalent to 0.5% or 0.25% of taxable
income.  PTU paid is fully deductible.
  In 2007,
IMPAC was calculated by applying 1.25% to the value of the assets of the year,
without deducting any debt amounts.  Through 2006, IMPAC was
calculated by applying 1.8% on the net average of the majority of restated
assets less certain liabilities, including liabilities payable to banks and
foreign entities.  IMPAC is payable only to the extent that it
exceeded ISR payable for the same period.
  The
Company is subject to ISR and, through 2007, IMPAC, on an individual entity
basis.  The related tax results are combined in the consolidated
financial statements.
  Business Flat Tax
Law-On
October 1, 2007, the Business Flat Tax Law (“IETU Law”) was enacted and provided
for a new flat rate business tax (Impuesto Empresarial a Tasa
Única, or “IETU”), whichwent into effect on
January 1, 2008.  IETU applies to the sale of goods, the provision of
independent services and the granting of use or enjoyment of goods, according to
the terms of the IETU Law, less certain authorized deductions.  IETU
payable is calculated by subtracting certain tax credits from the tax
determined.  Revenues, as well as deductions and certain tax credits,
are determined based on cash flows generated beginning January 1,
2008.  IETU Lawestablishes that the
IETU rate will be 16.5% in 2008, 17% in 2009, and 17.5% as of
2010.  Based on its financial projections, which were performed over a
four year period and according to INIF 8, “Effects of the Business Flat Tax”,
the Company determined that it will essentially pay IETU.  Therefore,
as of December 31, 2007, the Company recorded a deferred IETU liability of Ps.
1,073,859, and cancelled the deferred regular income tax (“ISR”) liability of
Ps. 597,506, recognizing the effect net in the statement of income of Ps.
476,353.  The impact of the IETU on the Company’s deferred tax
balances did not affect the Company’s cash flows in 2007.
  In
addition, the Tax Benefits Decree and the Third Omnibus Tax Bill were published
on November 5, 2007 and December 31, 2007, respectively, clarifying or expanding
the transitory application of the law regarding transactions carried out in 2007
that will have an impact in 2008.
 F-21
 Table of Contents
  The
      reconciliation of the statutory income tax rate and the effective tax rate
      as a percentage of income before income taxes for the years ended December
      31 is as follows:
  2007
                %
              
              
              2006
                %
              
              
              2005
                %Statutory
      rate
              
              
              28.00
              
              
              
              29.00
              
              
              
              30.00Effect
      of permanent differences, mainly non-deductible expenses, restatement of
      taxes and effects of inflation for financial and tax
    purposes
              
              
              (4.86
              )
              
              
              (1.19
              )
              
              
              0.26Change
      in valuation allowance for recoverable tax on assets paid
      and  tax loss carryforwards
              
              
              14.70
              
              
              
              1.71
              
              
              
              (0.95
              )Effect
      of canceling the deferred ISR liability
              
              
              (73.17
              )
              
              
              -
              
              
              
              -Effect
      of adding the deferred IETU liability
              
              
              131.51
              
              
              
              -
              
              
              
              -Effective
      rate
              
              
              96.18
              
              
              
              29.52
              
              
              
              29.31
  At
December 31, the main items comprising the liability balance for deferred taxes
are as follows:
  2007
              
              
              2006Deferred
      ISR:Assets:Labor
      obligations and other current liabilities
              
              Ps.
              12,093
              
              
              Ps.
              30,291Other
              
              
              -
              
              
              
              2,625Liabilities:Rights
      to use airport facilities and concessions
              
              
              -
              
              
              
              (1,369,321
              )Others
      liabilities
              
              
              (26,494
              )
              
              
              (36,253
              )Machinery
      and equipment
              
              
              860
              
              
              
              (146,146
              )Net
      deferred ISR liability
              
              
              (13,541
              )
              
              
              (1,518,804
              )2007
              
              
              2006Tax
      loss carryforwards, net of valuation allowance of Ps.
    866,198
              
              Ps.
              -
              
              
              Ps.
              873,987Recoverable
      tax on assets paid
              
              
              221,047
              
              
              
              220,060207,506
              
              
              
              (424,757
              )Valuation
      allowance for recoverable tax on assets paid
              
              
              (221,047
              )
              
              
              (109,658
              )Net
      deferred ISR liability
              
              
              (13,541
              )
              
              
              (534,415
              )Deferred
      IETU:Assets:Fixed
      assets acquired between January 1998 to August 2007
              
              
              111,928
              
              
              
              -Fixed
      assets acquired between September 2007 to December 2007
              
              
              12,908
              
              
              
              -Credit
      from for the immediate deduction of tax loss carryforwards
              
              
              5,546
              
              
              
              -Other
      deferred IETU assets
              
              
              29,987
              
              
              
              -Deferred
      IETU asset
              
              
              160,369
              
              
              
              -Liabilities:Rights
      to use airport facilities and concessions
              
              
              (830,694
              )
              
              
              -Improvements
      to concessioned properties, machinery, and equipment
              
              
              (400,221
              )
              
              
              -Other
      deferred IETU liabilities
              
              
              (3,313
              )
              
              
              -Deferred
      IETU liability
              
              
              (1,073,859
              )
              
              
              -Total
              
              Ps.
      (1,087,400)
              
              
              Ps. (534,415)
  The
Company created a valuation allowance for the entire amount of tax loss
carryforwards that can be offset against ISR taxable income in the calculation
of the 2007 deferred taxes as a result of applying the guidance established by
INIF 8.  Each airport concession has received approval from the
Mexican Tax Authorities to carryforward their tax losses up to the earlier to
occur of the date such tax loss carryforwards are utilized by the airport or the
date of expiration or liquidation of the concession.  Amounts as of
December 31, 2007, as restated for inflation, are as follows:
  F-22
 Table of Contents
  Year
      of
                origin
              
              Tax
      loss carryforwards1998
              
              Ps.
              10,4461999
              
              
              208,6772000
              
              
              589,8722001
              
              
              593,1942002
              
              
              592,9352003
              
              
              499,4002004
              
              
              431,3292005
              
              
              47,6882006
              
              
              67,3462007
              
              
              52,677Ps.
      3,093,564
  In the
calculation of deferred IETU, according to the paragraphs above, the effects of
recoverable IMPAC paid of Ps. 221,047 were included; however, they have been
fully reserved because there is not a high probability of recovering such
amounts:
  Year
      of
                expiration
              
              Recoverable
      tax on asset2012
              
              Ps.
              70,0842013
              
              
              62,8142014
              
              
              54,9342015
              
              
              15,2122016
              
              
              8,3792017
              
              
              9,624Ps.
      221,047
  14.
              Contingencies
  At
December 31, 2007, resolution is pending on lawsuits filed against the following
subsidiaries:
  a.
              A
      claim against the Ciudad Juárez airport was filed on November 15,
      1995 claiming repossession of part of the land (240 hectares) where the
      International Airport of Ciudad Juárez is located, claiming that the land
      was incorrectly transferred to the Mexican government.  The
      plaintiff claims payment of $120,0003 (Ps.1,311,540),
      given the impossibility of repossessing the land because of its
      utilization as an airport.  In May 2005, the Appeals Court
      ordered the Ciudad Juarez airport to return such land.  An
      appeal (seeking court relief on constitutional grounds) was filed by the
      Ciudad Juárez airport against this verdict, which was filed to
      request that the Appeals Court consider certain additional evidence and on
      such basis issue a new judgment.  On November 8, 2006, the
      Appeals Court vacated the May 2005 court order, nullified the
      underlying legal proceeding and dismissed the plaintiff’s claim without
      prejudice.  The plaintiff then filed a new appeal against this
      verdict.  On July 3, 2007, a Federal District Court ordered that
      the Federal Government be joined as a defendant in the proceeding,
      however, as of the date of the financial statements, the Court had not
      notified the federal Government of any order to appear, and the
      contingency remains in effect related to the plaintiff’s
      appeal.  If the resolution is not favorable to the Company, the
      economic repercussions of the lawsuit are expected to be the
      responsibility of the Mexican government, as established in the concession
      agreement, for which reason the Company has not recognized any liability
      in relation to this claim.
  b.
              Certain
      administrative law enforcement proceedings are in effect against some of
      the Company’s airports, the most important of which involves the
      Zihuatanejo airport, in relation to real estate property
      tax.  The Municipality of Zihuatanejo issued a ruling assessing
      an additional amount of Ps. 4,462 from what had originally been assessed
      for a total amount of Ps. 8,407.  In accordance with this
      ruling, the Municipality seized two of the airport’s bank accounts and
      attached the rentals paid by the lessees located on the concessioned
      property.  The bank accounts had no funds at the time of their
      seizure.  As a result of this notice by the Municipality, the
      Company recognized an additional liability of Ps. 5,189, for a total
      liability of Ps.8,407 in the Zihuatanejo
  airport.
 F-23
 Table of Contents
  c.
              An
      administrative law enforcement proceeding against the Reynosa airport is
      in effect, in relation to real estate property tax of Ps.
      59,367.  The Company filed a motion to dismiss the
      claim.  As of the issuance date of these financial statements,
      the ruling remains unresolved.
  d.
              An
      administrative law enforcement proceeding against the Chihuahua airport is
      in effect, in relation to real estate property tax of Ps.
      25,317.  The Company filed a motion to dismiss the
      claim.  As of the issuance date of these financial statements,
      the ruling remains unresolved.
  e.
              The
      Company determines PTU based on Section I of Article 10 of the Mexican
      Income Tax Law; however, the tax authorities and/or the employees may
      disagree with this treatment, in which case the Company will file the
      necessary appeals in order to continue calculating PTU using its current
      methodology.
  15.
              Commitments
  a.
              As
      discussed in Note 11, Article 232-A of the Federal Duties Law establishes
      the obligation of the Company, as a concessionaire or holder of permits
      authorizing the use, enjoyment and development of public domain properties
      assigned to render public services, to pay taxes for such rights,
      equivalent to 5% of the gross revenue obtained from such
    use.
  b.
              As
      discussed in Note 11, the Company has executed a technical assistance and
      transfer-of-technology contract with SETA, which will be in effect for 15
      years. Currently, the Company is required to pay the greater of the fixed
      $3,000 component or 5% of consolidated operating income (as defined in the
      contract) annually for such services.  Beginning in 2006, the
      fixed $3,000 component will be updated according to the consumer price
      index of the United States of
America.
  c.
              The
      Company is required to invest in fixed assets and improvements in the
      concessioned properties according to a five-year
      Master Development Program (“MDP”) established in the concession
      agreement.  At December 31, 2007, the total amount committed for
      investments in fixed assets and improvements in concessioned properties
      under the MDP over the next five years is Ps. 2,145,791 (Ps. 1,890,102
      historical pesos as of September 2004).  Part of these
      investments includes the requirement to install a security system for
      screening luggage.  However, as of December 31, 2007, the
      Company had not made these investments, as the specific terms had not yet
      been formalized with the respective airlines.  The expected
      amount of this investment is Ps. 494,398.  The required
      investment amount as of December 31, 2007 is Ps. 1,474,164, which is based
      on the assumption that the investment in the luggage review system will be
      performed in 2008.
  d.
              The
      anticipated investment amounts per year are as
  follows:
  Year
              
              Total
                amount2008
              
              Ps.
              1,106,1272009
              
              
              266,8532010
              
              
              101,184Ps.
      1,474,164
  16.
              Information
      by industry segments
  The
Company determines and evaluates its airports’ individual performances before
allocating personnel-related costs and other costs incurred by Servicios
Aeroportuarios del Centro Norte, S.A. de C.V. (“SACN”), the subsidiary that
includes the Company’s senior management.  The following table shows a
summary of the Company’s financial information by segment as it relates to the
Monterrey Airport, the Acapulco Airport, the Mazatlán Airport,
the Culiacán Airport, the Chihuahua Airport and the
Zihuatanejo Airport.  The financial information relating to the
remaining seven airports, as well as that of SACN and the Company (including
investment in its subsidiaries) was combined and included under
“Other”.  The elimination of the investment of the Company in its
subsidiaries is included under “Eliminations”.
  F-24
 Table of Contents
  December
      31, 2007
              
              Monterrey
              
              
              Acapulco
              
              
              Mazatlán
              
              
              Culiacán
              
              
              Chihuahua
              
              
              Zihuatanejo
              
              
              Other
              
              
              Eliminations
              
              
              TotalTotal
      revenues
              
              Ps.
              847,764
              
              
              Ps.
              148,388
              
              
              Ps.
              143,430
              
              
              Ps.
              145,194
              
              
              Ps.
              116,693
              
              
              
              Ps.
      96,193
              
              
              Ps.
              1,018,524
              
              
              Ps.
              (618,833)
              
              
              Ps.
              1,897,353Income
      from operations
              
              
              30,847
              
              
              
              (1,813
              )
              
              
              1,497
              
              
              
              8,009
              
              
              
              12,403
              
              
              
              3,739
              
              
              
              225,133
              
              
              
              448,106
              
              
              
              727,921Interest
      income-net
              
              
              106,584
              
              
              
              9,808
              
              
              
              12,950
              
              
              
              2,127
              
              
              
              4,628
              
              
              
              1,402
              
              
              
              (10,839
              )
              
              
              -
              
              
              
              126,660Income
      tax expense
              
              
              52,834
              
              
              
              92,205
              
              
              
              55,541
              
              
              
              47,133
              
              
              
              37,682
              
              
              
              58,572
              
              
              
              441,396
              
              
              
              -
              
              
              
              785,363Total
      assets
              
              
              4,121,807
              
              
              
              834,154
              
              
              
              738,957
              
              
              
              551,894
              
              
              
              534,104
              
              
              
              560,300
              
              
              
              9,672,540
              
              
              
              (7,879,368
              )
              
              
              9,134,388Total
      liabilities
              
              
              846,680
              
              
              
              132,473
              
              
              
              114,051
              
              
              
              92,085
              
              
              
              87,157
              
              
              
              105,350
              
              
              
              984,086
              
              
              
              (701,836
              )
              
              
              1,660,046Capital
      expenditures
              
              
              396,147
              
              
              
              42,622
              
              
              
              22,378
              
              
              
              12,487
              
              
              
              16,422
              
              
              
              14,753
              
              
              
              153,201
              
              
              
              -
              
              
              
              658,010Property,
      machinery, equipment and improvements to concessioned
      properties
              
              
              887,698
              
              
              
              145,187
              
              
              
              122,706
              
              
              
              176,152
              
              
              
              162,156
              
              
              
              151,707
              
              
              
              647,401
              
              
              
              -
              
              
              
              2,293,007Depreciation
      and amortization
              
              
              84,495
              
              
              
              42,244
              
              
              
              29,258
              
              
              
              23,697
              
              
              
              21,249
              
              
              
              25,303
              
              
              
              109,956
              
              
              
              
              
              
              
              336,202-
  December
      31, 2006
              
              Monterrey
              
              
              Acapulco
              
              
              Mazatlán
              
              
              Culiacán
              
              
              Chihuahua
              
              
              Zihuatanejo
              
              
              Other
              
              
              Eliminations
              
              
              TotalTotal
      revenues
              
              Ps.
              746,924
              
              
              Ps.
              144,880
              
              
              Ps.
              128,351
              
              
              Ps.
              115,232
              
              
              Ps.
              99,565
              
              
              Ps.
              94,272
              
              
              Ps.
              1,334,943
              
              
              Ps.
              (976,856)
              
              
              Ps.
              1,687,311Income
      from operations
              
              
              91,722
              
              
              
              20,037
              
              
              
              15,762
              
              
              
              14,151
              
              
              
              12,227
              
              
              
              11,576
              
              
              
              635,970
              
              
              
              (175,346
              )
              
              
              626,099Interest
      income-net
              
              
              103,035
              
              
              
              8,570
              
              
              
              11,868
              
              
              
              916
              
              
              
              4,208
              
              
              
              9,515
              
              
              
              (4,663
              )
              
              
              -
              
              
              
              133,449Income
      tax expense
              
              
              32,480
              
              
              
              7,780
              
              
              
              4,421
              
              
              
              3,706
              
              
              
              3,371
              
              
              
              5,915
              
              
              
              138,838
              
              
              
              -
              
              
              
              196,511Total
      assets
              
              
              3,786,300
              
              
              
              831,326
              
              
              
              725,545
              
              
              
              555,218
              
              
              
              519,712
              
              
              
              560,027
              
              
              
              10,089,265
              
              
              
              (8,193,443
              )
              
              
              8,873,950Total
      liabilities
              
              
              573,711
              
              
              
              41,926
              
              
              
              53,249
              
              
              
              57,861
              
              
              
              49,465
              
              
              
              51,959
              
              
              
              646,052
              
              
              
              (582,224
              )
              
              
              891,999Capital
      expenditures
              
              
              166,480
              
              
              
              28,872
              
              
              
              25,204
              
              
              
              26,438
              
              
              
              52,252
              
              
              
              22,777
              
              
              
              118,212
              
              
              
              -
              
              
              
              440,235Property,
      machinery, equipment and improvements to concessioned
      properties
              
              
              531,883
              
              
              
              121,107
              
              
              
              113,216
              
              
              
              178,288
              
              
              
              159,881
              
              
              
              152,364
              
              
              
              567,411
              
              
              
              -
              
              
              
              1,824,150Depreciation
      and amortization
              
              
              76,080
              
              
              
              38,252
              
              
              
              26,313
              
              
              
              20,283
              
              
              
              15,604
              
              
              
              19,141
              
              
              
              96,423
              
              
              
              -
              
              
              
              292,096
  December
      31, 2005
              
              Monterrey
              
              
              Acapulco
              
              
              Mazatlán
              
              
              Culiacán
              
              
              Chihuahua
              
              
              Zihuatanejo
              
              
              Other
              
              
              Eliminations
              
              
              TotalTotal
      revenues
              
              Ps.
              643,651
              
              
              Ps.
              126,692
              
              
              Ps.
              121,265
              
              
              Ps.
              102,541
              
              
              Ps.
              86,551
              
              
              Ps.
              80,238
              
              
              Ps.
              749,663
              
              
              Ps.
              (430,724)
              
              
              Ps.
              1,479,877Income  from
      operations
              
              
              336,923
              
              
              
              12,155
              
              
              
              28,519
              
              
              
              32,112
              
              
              
              21,629
              
              
              
              15,010
              
              
              
              319,630
              
              
              
              (260,309
              )
              
              
              505,669Interest
      income-net
              
              
              99,427
              
              
              
              7,916
              
              
              
              11,889
              
              
              
              (1,012
              )
              
              
              4,368
              
              
              
              (1,505
              )
              
              
              (11,952
              )
              
              
              -
              
              
              
              109,131Income
      tax expense
              
              
              64,927
              
              
              
              9,666
              
              
              
              11,051
              
              
              
              9,554
              
              
              
              6,462
              
              
              
              7,164
              
              
              
              49,205
              
              
              
              -
              
              
              
              158,029Total
      assets
              
              
              3,845,110
              
              
              
              807,740
              
              
              
              698,151
              
              
              
              528,101
              
              
              
              506,268
              
              
              
              557,840
              
              
              
              9,673,193
              
              
              
              (8,024,829
              )
              
              
              8,591,574Total
      liabilities
              
              
              734,095
              
              
              
              51,521
              
              
              
              50,099
              
              
              
              39,915
              
              
              
              72,101
              
              
              
              64,775
              
              
              
              376,288
              
              
              
              (644,272
              )
              
              
              744,522Capital
      expenditures
              
              
              64,922
              
              
              
              13,620
              
              
              
              9,097
              
              
              
              7,227
              
              
              
              28,131
              
              
              
              30,017
              
              
              
              140,502
              
              
              
              -
              
              
              
              293,516Property,
      machinery, equipment and improvements to concessioned
      properties
              
              
              397,317
              
              
              
              107,078
              
              
              
              98,127
              
              
              
              163,090
              
              
              
              116,141
              
              
              
              138,983
              
              
              
              503,578
              
              
              
              -
              
              
              
              1,524,314Depreciation
      and amortization
              
              
              65,703
              
              
              
              30,367
              
              
              
              23,210
              
              
              
              18,811
              
              
              
              13,219
              
              
              
              17,266
              
              
              
              59,229
              
              
              
              -
              
              
              
              227,805
  In 2006,
GACN instituted an internal management reporting strategy in order to improve
its evaluation of the performance of its subsidiaries as one economic unit,
thereby allowing it to make corporate allocations to and from its subsidiaries
for the purpose of establishing sufficient cash flows at each subsidiary to
support their respective obligations.  This strategy, affects the
operating result per airport; however, these allocations do not impact the
Company’s consolidated results as such effects are eliminated.  The
information by segment for the year ended December 31, 2007 and 2006 shows the
above-mentioned effects.  The segment information for the year ended
December 31, 2005 does not include such changes as the Company did not implement
the strategy until 2006, for which reason it is not comparable with the current
presentation.
  F-25
 Table of Contents
  17.
              Revenues
  According
to the General Law on Airports and its regulations, Company revenues are
classified as airport services (to airlines and passengers), complementary and
commercial.
  Aeronautical
services include those services provided to airlines and passengers as well as
complementary services.
  Non-aeronautical
services include those services that are not essential for operating an airport,
such as the lease of commercial premises, restaurants and banks.
  Revenues
generated by aeronautical services are under a price regulation system
administered by the SCT for airport concessions, which establishes a maximum
rate (“TM”) for each year in a five-year period.  The TM is the
maximum amount of revenue per “work load unit” that may be earned at an airport
each year from regulated sources.  Under this regulation, a work load
unit is equivalent to one passenger (excluding transit passengers) or 100
kilograms (220 pounds) of cargo.
  Non-aeronautical
services are not covered by the regulation system administered by the
SCT.  However, in some cases, they may be regulated by other
authorities, as is the case with revenues generated from the operation of
parking lots.
  Under the
General Law on Airports and its regulations, revenues generated from the
operation of parking lots should be classified as aeronautical; however, for
purposes of these financial statements, such revenues are classified as
non-aeronautical.
  The
following table presents an analysis for the years ended December 31, 2007, 2006
and 2005 of the Company’s revenues.
  2007
              
              
              2006
              
              
              2005Aeronautical
      servicesAirport
      services:Landing
              
              Ps.
              119,624
              
              
              Ps.
              114,136
              
              
              Ps.
              113,241Parking
      on embarking/disembarking platform
              
              
              79,573
              
              
              
              75,501
              
              
              
              76,110Parking
      on extended stay or overnight platform
              
              
              16,513
              
              
              
              17,013
              
              
              
              14,615Aerocars
      and jetways
              
              
              23,093
              
              
              
              24,818
              
              
              
              27,582Passenger
      and carry-on baggage check, national and international
              
              
              22,614
              
              
              
              19,293
              
              
              
              17,683Domestic
      passenger charges
              
              
              884,738
              
              
              
              729,015
              
              
              
              594,759International
      passenger charges
              
              
              277,255
              
              
              
              273,972
              
              
              
              242,344Complementary
      services – Airport real estate services and rights of access to other
      operators and complementary services
              
              
              126,417
              
              
              
              117,220
              
              
              
              105,915Total
      aeronautical services revenues
              
              
              1,549,827
              
              
              
              1,370,968
              
              
              
              1,192,249Non-aeronautical
      servicesCar
      parking charges
              
              
              105,499
              
              
              
              90,814
              
              
              
              81,827Commercial
      concessions  (1):Retail
      operations
              
              
              34,568
              
              
              
              30,598
              
              
              
              29,145Food
      and beverages
              
              
              31,596
              
              
              
              24,733
              
              
              
              18,487Duty
      free
              
              
              14,321
              
              
              
              15,958
              
              
              
              16,789VIP
      lounges
              
              
              33,980
              
              
              
              30,311
              
              
              
              29,464Financial
      services
              
              
              1,796
              
              
              
              1,530
              
              
              
              2,099Communications
      and networks
              
              
              3,981
              
              
              
              3,925
              
              
              
              3,595Car
      rentals
              
              
              29,633
              
              
              
              23,773
              
              
              
              20,882Advertising
              
              
              36,937
              
              
              
              35,992
              
              
              
              32,847Time
      share
              
              
              18,014
              
              
              
              17,104
              
              
              
              16,820Complementary
      service providers
              
              
              5,908
              
              
              
              6,000
              
              
              
              4,838Expense
      recovery
              
              
              155
              
              
              
              -
              
              
              
              -OMA
      freight
              
              
              15,221
              
              
              
              13,837
              
              
              
              12,752Non-airport
      access fees
              
              
              11,762
              
              
              
              11,038
              
              
              
              8,635Miscellaneous
      commercial-related revenues
              
              
              4,155
              
              
              
              3,110
              
              
              
              5,734Total
      non-aeronautical services
              
              
              -
              
              
              
              7,620
              
              
              
              3,714Total
      revenue
              
              
              347,526
              
              
              
              316,343
              
              
              
              287,628Aeronautical
      services
              
              Ps.
      1,897,353
              
              
              Ps.
      1,687,311
              
              
              Ps.
      1,479,877
 F-26
 Table of Contents
  (1)
              Non-aeronautical
      service revenues are earned based on the terms of Company’s operating
      lease agreements.  Lease agreements are based on either a
      monthly rent (which generally increases each year based on the INPC) or
      the greater of a monthly minimum guaranteed rent or a percentage of the
      lessee’s monthly revenues.  Monthly rent and minimum guaranteed
      rent earned on the Company’s operating lease agreements are included under
      the caption “Commercial concessions”
above.
  At
December 31, 2007, future minimum rentals are as follows:
  Year
              
              Amount2008
              
              Ps.
              223,1492009
              
              
              109,4402010
              
              
              67,8742011
              
              
              38,440Thereafter
              
              
              109,887Total
              
              Ps.
              548,790
  Future
minimum rentals, which generally include rents that are increased each year by
the INPC, do not include the contingent rentals related to increases based on
the INPC or contingent rentals that may be paid under certain commercial leases
on the basis of a percentage of the lessee’s monthly revenues in excess of the
monthly minimum guaranteed rent.  Contingent rentals earned during the
years ended December 31, 2007, 2006 and 2005 were Ps. 68,379, Ps.
57,527 and Ps. 61,215, respectively.
  Approximately
79%, 78% and 78% of consolidated revenues during the years ended December 31,
2007, 2006 and 2005, respectively, were generated by the six principal airports
(Monterrey, Acapulco, Mazatlán, Culiacán, Chihuahua and
Zihuatanejo).
  18.
              Cost
      of services
  Cost of
services for the years ended December 31 is as follows:
  2007
              
              
              2006
              
              
              2005Employee
      cost
              
              Ps.
              143,067
              
              
              Ps.
              140,296
              
              
              Ps.
              127,341Maintenance
              
              
              53,900
              
              
              
              54,836
              
              
              
              53,841Safety,
      security and insurance
              
              
              74,933
              
              
              
              68,921
              
              
              
              71,681Utilities
              
              
              94,408
              
              
              
              92,286
              
              
              
              86,808Other
              
              
              54,469
              
              
              
              41,126
              
              
              
              49,366Ps.
      420,777
              
              
              Ps.
      397,465
              
              
              Ps.
      389,037
  19.
              New
      accounting pronouncements
  In 2007,
the Mexican Board for Research and Development of Financial Information
Standards (CINIF) issued the following NIFs and Interpretations of Financial
Reporting Standards (“INIF”), which became effective for fiscal years beginning
on January 1, 2008:
 
 NIF
      B-2,
              “Statement
      of Cash Flows”
 NIF
      B-10,
              “Effects
      of Inflation”
 NIF
      D-3,
              “Employee
      Benefits”
 NIF
      D-4,
              “Taxes
      on Income”
 INIF
      5,
              “Recognition
      of the Additional Consideration Agreed To at the Inception of a Derivative
      Financial Instrument to Adjust It to Fair
Value”
 INIF
      6,
              “Timing
      of Formal Hedge Designation”
 INIF
      7,
              “Application
      of Comprehensive Income or Loss Resulting From a Cash Flow Hedge on a
      Forecasted Purchase of a Non-Financial
Asset”
 
 Some of
the significant changes established by these standards are as
follows:
  F-27
 Table of Contents
  ·
              NIF B-2, “Statement of Cash
      Flows”.  This NIF
      establishes general rules for the presentation, structure and preparation
      of a cash flow statement, as well as the disclosures supplementing such
      statement, which replaces the statement of changes in financial
      position.  NIF B-2 requires that the statement show a company’s
      cash inflows and outflows during the period.  Line items should
      be preferably presented gross.  Cash flows from financing
      activities are now presented below those from investing activities (a
      departure from the statement of changes in financial
      position).  In addition, NIF B-2 allows entities to determine
      and present their cash flows from operating activities using either the
      direct or the indirect method.
   ·
              NIF B-10, “Effects of
      Inflation”.  CINIF
      defines two economic environments: a) inflationary environment, when
      cumulative inflation of the three preceding years is 26% or more, in which
      case, the effects of inflation should be recognized using the
      comprehensive method; and b) non-inflationary environment, when cumulative
      inflation of the three preceding years is less than 26%, in which case, no
      inflationary effects should be recognized in the financial
      statements.  Additionally, NIF B-10 eliminates the replacement
      cost and specific indexation methods for inventories and
      fixed assets, respectively, and requires that the cumulative gain or
      loss from holding non-monetary assets be reclassified to retained
      earnings,if such
      gain or loss is realized; the gain or loss that is not realized will be
      maintained in stockholders’ equity and charged to current earnings of the
      period in which the originating item is
  realized.
 
 ·
              NIF D-3, “Employee Benefits”.This NIF includes
      current and deferred PTU.  Deferred PTU should be calculated
      using the same methodology established in NIF D-4.  It also
      includes the career salary concept and the amortization period of most
      items is reduced to five years, as
follows:
 
 ·
              Items will be amortized
      over a 5-year period, or less, if employees’ remaining labor life is less
      than the:
 
 -
              Beginning
      balance of the transition liability for severance and retirement
      benefits
 -
              Beginning
      balance of past service cost and changes to the
  plan
 -
              Beginning
      balance of gains and losses from retirement benefits, according to
      actuarial calculations, should be amortized over a 5-year period (net of
      the transition liability), with the option to fully amortize such item
      against the results of 2008.
 
 Beginning
balance of gains and losses from severance benefits, according to actuarial
calculations, should be amortized against the results of 2008
 
 ·
              NIF D-4, “Income Taxes”.This NIF
      relocates accounting for current and deferred PTU to NIF D-3, eliminates
      the permanent difference concept, redefines and incorporates various
      definitions and requires that the cumulative ISR effect be reclassified to
      retained earnings, unless it is identified with some of the other
      comprehensive income items that have not been applied against current
      earnings.
 
 ·
              INIF 5, “Recognition of the Additional
      Consideration Agreed To at the Inception of a Derivative Financial
      Instrument to
      Adjust It to Fair Value”.INIF 5 states
      that any additional consideration agreed to at the inception of a
      derivative financial instrument to adjust it to its fair value at that
      time should be part of the instrument’s initial fair value and not subject
      to amortization as established by paragraph 90 of Bulletin
      C-10.  INIF 5 also establishes that the effect of the change
      should be prospectively recognized, affecting results of the period in
      which this INIF becomes effective.  If the effect of
      the change is material, it should be
  disclosed.
 
 ·
              INIF 6, “Timing of Formal Hedge
      Designation”.INIF 6 states
      that hedge designations may be made as of the date a derivative financial
      instrument is contracted, or at a later date, provided its effects are
      prospectively recognized as of the date when formal conditions are met and
      the instrument qualifies as a hedging relationship.  Paragraph
      51.a) of Bulletin C-10 only considered the hedge designation at the
      inception of the transaction.
 
 ·
              INIF 7, “Application of Comprehensive Income or
      Loss Resulting From a Cash Flow Hedge on a Forecasted Purchase of a
      Non-Financial Asset”. INIF 7 states
      that the effect of a hedge reflected in other comprehensive income or loss
      resulting from a forecasted purchase of a non-financial asset should be
      capitalized within the cost of such asset, whose price is set through a
      hedge, rather than reclassifying the effect to the results of the period
      affected by the asset, as required by Paragraph 105 of Bulletin
      C-10.  The effect of this change should be recognized by
      applying any amounts recorded in other comprehensive income or loss to the
      cost of the acquired asset, as of the effective date of this
      INIF.
  F-28
 Table of Contents
  At the
date of issuance of these consolidated financial statements, the Company has not
fully assessed the effects of adopting these new standards on its financial
information.
  20.
              Authorization
      for issuance of financial
statements
  On March
6, 2008, the issuance of these financial statements was authorized by Ing. Rubén
Lopez Barrera General Director of Grupo Aeroportuario del Centro
Norte, S.A.B. de C.V.  These consolidated financial statements are
subject to approval at the ordinary stockholders’ meeting, where they may be
modified based on provisions set forth by the Mexican General
Corporate Law.
  21.
              Differences
      between MFRS and U.S. GAAP
  The
Company’s consolidated financial statements are prepared in accordance with
MFRS, which differs in certain respects from U.S. GAAP.  The
consolidated financial statements prepared under MFRS include the effects of
inflation as provided for under Bulletin B-10, “Recognition of the Effects of
Inflation in Financial Information”, whereas financial statements prepared under
U.S. GAAP are presented on a historical cost basis.  The
reconciliations to U.S. GAAP do not include the reversal of the adjustments
required under Bulletin B-10.  The application of Bulletin B-10
represents a comprehensive measure of the effects of price level changes in the
Mexican economy and, as such, is considered a more meaningful presentation than
historical cost-based financial reporting.  Bulletin B-10 also
requires the restatement of all financial statements to pesos as of the date of
the most recent balance sheet presented.
  As
mentioned in Note 19, NIF B-10, is effective January 1, 2008.  NIF
B-10 revised the accounting for inflation such that the inflation accounting
methods summarized in Note 3(c) will no longer apply unless the economic
environment in Mexico qualifies as “inflationary” for purposes of MFRS.
Given the cumulative inflation in Mexico for the three years ended December
31, 2007, the Mexican economic environment will not qualify as inflationary in
2008, thereby eliminating inflationary accounting in the Company’s consolidated
MFRS financial statements.
  The
principal differences, other than inflation accounting, between MFRS and
U.S. GAAP and their effects on consolidated net income and consolidated
stockholders’ equity are presented below with an explanation of such
adjustments:
  2007
              
              
              2006
              
              
              2005Reconciliation
      of net income (loss):Consolidated
      net income according to MFRS
              
              Ps.
              31,192
              
              
              Ps.
              469,237
              
              
              Ps.
              381,106U.S.
      GAAP adjustments:(i)    Amortization
      of assets under concession
              
              
              85,734
              
              
              
              85,734
              
              
              
              85,735(ii)   Amortization
      of airport concession
              
              
              17,771
              
              
              
              17,772
              
              
              
              17,771(iii)  Depreciation
      of fixed assets recorded at predecessor cost basis
              
              
              (3,164
              )
              
              
              (3,167
              )
              
              
              (3,168
              )(iv)  Deferred
      fees for technical assistance services
              
              
              (10,133
              )
              
              
              (19,731
              )
              
              
              (7,367
              )(v)   Accrued
      vacation
              
              
              (3
              )
              
              
              (1,735
              )
              
              
              (2,678
              )(vi)  Provisions
      for seniority premiums and severance payments
              
              
              (4,232
              )
              
              
              3,060
              
              
              
              6,916(vii)
      Deferred statutory employee profit sharing
              
              
              (6,112
              )
              
              
              27,989
              
              
              
              (2,743
              )Total
      U.S. GAAP adjustments before the effect of income taxes
              
              
              79,861
              
              
              
              109,922
              
              
              
              94,466(viii)
      Income taxes
              
              
              (229,371
              )
              
              
              (30,361
              )
              
              
              (29,760
              )Consolidated
      net (loss) income according to U.S. GAAP
              
              Ps.
      (118,318)
              
              
              Ps.
      548,798
              
              
              Ps.
      445,812
 
 2007
              
              
              2006Reconciliation
      of stockholders’ equity:Consolidated
      stockholders’ equity according to MFRS
              
              Ps.
              7,474,342
              
              
              Ps.
              7,981,951U.S.
      GAAP adjustments:(i)    Cost
      of assets under concession
              
              
              (3,683,547
              )
              
              
              (3,683,547
              )(i)    Accumulated
      amortization of assets under concession
              
              
              560,543
              
              
              
              474,809(ii)   Amortized
      cost of airport concessions
              
              
              (746,426
              )
              
              
              (764,197
              )(iii)  Net
      carrying value of fixed assets recorded at predecessor cost
      basis
              
              
              2,898
              
              
              
              5,980(v)    Accrued
      vacation
              
              
              (6,238
              )
              
              
              (6,235
              )(vi)   Provision
      for seniority premiums and severance payments
              
              
              3,224
              
              
              
              (4,125
              )(vii)  Deferred
      statutory employee profit sharing
              
              
              104,230
              
              
              
              110,342Total
      U.S. GAAP adjustments before the effect of income taxes
              
              
              (3,765,316
              )
              
              
              (3,866,973
              )(viii)
      Income taxes
              
              
              874,389
              
              
              
              1,115,454Consolidated
      stockholders’ equity according to U.S. GAAP
              
              Ps.4,583,415
              
              
              Ps.5,230,432
 F-29
 Table of Contents
  A summary
of the changes in consolidated stockholders’ equity after giving effect to the
aforementioned U.S. GAAP adjustments is as follows:
  Common
                stock
              
              
              Additional
      paid-in capital
              
              
              Retained
                earnings
              
              
              Reserve
      for repurchase of shares
              
              
              Accumulated
      other comprehensive income
              
              
              Total
      stockholders’ equityBalances
      at January 1, 2006
              
              Ps.
              1,708,028
              
              
              Ps.
              41,155
              
              
              Ps.
              3,230,541
              
              
              
              -
              
              
              
              -
              
              
              Ps.
              4,979,724Increase
      in stockholder’s equity
              
              
              150,821
              
              
              
              (26,597
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              124,224Dividends
      paid
              
              
              -
              
              
              
              -
              
              
              
              (446,689
              )
              
              
              -
              
              
              
              -
              
              
              
              (446,689
              )Deferred
      fees for technical assistance services
              
              
              -
              
              
              
              19,731
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              19,731Comprehensive
      income:
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Net
      income
              
              
              -
              
              
              
              -
              
              
              
              548,798
              
              
              
              -
              
              
              
              -
              
              
              
              548,798Labor
      obligations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              Ps. (5,608)
              
              
              
              (5,608
              )Total
      comprehensive income
              
              
              -
              
              
              
              -
              
              
              
              548,798
              
              
              
              -
              
              
              
              (5,608
              )
              
              
              543,190Adjustment
      to initially apply FASB Statement No. 158, net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              10,252
              
              
              
              10,252Balances
      at December 31, 2006
              
              
              1,858,849
              
              
              
              34,289
              
              
              
              3,332,650
              
              
              
              -
              
              
              
              4,644
              
              
              
              5,230,432Dividends
      paid
              
              
              -
              
              
              
              -
              
              
              
              (444,125
              )
              
              
              -
              
              
              
              -
              
              
              
              (444,125
              )Deferred
      fees for technical assistance services
              
              
              -
              
              
              
              10,133
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              10,133Comprehensive
      income:Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              (118,318
              )
              
              
              -
              
              
              
              -
              
              
              
              (118,318
              )Labor
      obligations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,937
              
              
              
              4,937Total
      comprehensive income
              
              
              -
              
              
              
              -
              
              
              
              (118,318
              )
              
              
              -
              
              
              
              4,937
              
              
              
              (113,381
              )Repurchase
      of shares
              
              
              (40,484
              )
              
              
              -
              
              
              
              (412,628
              )
              
              Ps.
      353,468
              
              
              
              -
              
              
              
              (99,644
              )Balances
      at December 31, 2007
              
              Ps.
      1,818,365
              
              
              Ps.
      44,422
              
              
              Ps.2,357,579
              
              
              Ps.
      353,468
              
              
              Ps. 9,581
              
              
              Ps.4,583,415
  F-30
 Table of Contents
  Condensed
consolidated balances sheets and statements of income including the
aforementioned U.S. GAAP adjustments, as of and for the years ended December 31,
2007 and 2006.
  2007
              
              
              2006AssetsCurrent
      assets:Cash
      and cash equivalents
              
              Ps.
              1,756,704
              
              
              Ps.
              1,672,994Other
      current assets
              
              
              327,353
              
              
              
              470,276Total
      current assets
              
              
              2,084,057
              
              
              
              2,143,270Property,
      real estate, machinery, equipment and improvements to concessionedproperties
      – net
              
              
              2,295,905
              
              
              
              1,830,132Assets
      under concession
              
              
              877,388
              
              
              
              917,496Deferred
      income taxes
              
              
              -
              
              
              
              594,413Other
      assets – net
              
              
              6,342
              
              
              
              9,773Total
              
              Ps. 5,263,692
              
              
              Ps.
      5,495,084
  2007
              
              
              2006Liabilities
      and stockholders’ equity:Current
      liabilities
              
              Ps.
              421,398
              
              
              Ps.
              203,843Long-term
      deferred income taxes
              
              
              204,977
              
              
              
              -Other
      long-term liabilities
              
              
              53,902
              
              
              
              60,809Total
      liabilities
              
              
              680,277
              
              
              
              264,652Common
      stock
              
              
              1,818,365
              
              
              
              1,858,849Additional
      paid-in capital
              
              
              44,422
              
              
              
              34,289Retained
      earnings
              
              
              2,357,579
              
              
              
              3,332,650Reserve
      for repurchase of shares
              
              
              353,468
              
              
              
              -Accumulated
      other comprehensive income
              
              
              9,581
              
              
              
              4,644Total
      stockholders’ equito
              
              
              4,583,415
              
              
              
              5,230,432Total
      liabilities and stockholders’ equity
              
              Ps.
              5,263,692
              
              
              Ps.
              5,495,084
 
 2007
              
              
              2006
              
              
              2005Net
      revenues
              
              Ps.
              1,897,353
              
              
              Ps.
              1,687,311
              
              
              Ps.
              1,479,877Cost
      of operations:Cost
      of services
              
              
              419,725
              
              
              
              397,687
              
              
              
              384,761General
      and administrative expenses
              
              
              255,959
              
              
              
              237,097
              
              
              
              245,851Concession
      taxes
              
              
              98,307
              
              
              
              84,635
              
              
              
              72,643Technical
      assistance fees
              
              
              67,550
              
              
              
              69,272
              
              
              
              47,383Depreciation
      and amortization
              
              
              235,122
              
              
              
              191,757
              
              
              
              127,466Statutory
      employee profit sharing
              
              
              9,587
              
              
              
              8,984
              
              
              
              1,524Total
      cost
              
              
              1,086,250
              
              
              
              989,432
              
              
              
              879,628Income
      from operations
              
              
              811,103
              
              
              
              697,879
              
              
              
              600,249Net
      comprehensive financing income
              
              
              67,369
              
              
              
              71,906
              
              
              
              31,515Other
      income (expense) – net
              
              
              (94
              )
              
              
              10,804
              
              
              
              5,377Income
      tax expense
              
              
              996,696
              
              
              
              231,791
              
              
              
              191,329Consolidated
      net (loss) income
              
              Ps.
              (118,318)
              
              
              Ps.
              548,798
              
              
              Ps.
              445,812Weighted
      average number of common shares outstanding
              
              
              399,611,578
              
              
              
              391,624,384
              
              
              
              389,060,000Weighted
      average number of common shares and common share equivalents (unless
      antidilutive)
              
              
              399,611,578
              
              
              
              394,564,384
              
              
              
              392,022,615Basic
      earnings per share (in Mexican pesos)
              
              
              (0.2961
              )
              
              
              1.4013
              
              
              
              1.1459Diluted
      earnings per share (in Mexican pesos)
              
              
              (0.2961
              )
              
              
              1.3909
              
              
              
              1.1372
 F-31
 Table of Contents
  (i)
Amortization of assets under concession (treated as intangible “rights to use
airport facilities” under MFRS)
  Under
MFRS, the cost of the concessions to operate the airports and the related
facilities was determined on a basis proportionate to the amount SETA paid to
the Mexican government for its investment in 15% of the common stock of the
Company.  This amount is reflected as two intangible assets: “rights
to use airport facilities,” which reflects the value of the land and facilities
used to operate each airport (up to the total amount of the concession for
each individual airport to the extent such fair value was in excess) and
“airport concessions.” As discussed in Notes 3.e and 7, for purposes of
MFRS, the portion of the cost of the concession allocated to the rights to use
airport facilities was determined based on an independent appraisal of the
assets at each airport concession, and is amortized over the useful lives of the
related assets, with total lives ranging from 8 to 37 years from the date such
concessions were granted.   The remainder of the appraised value
over the cost of the concession was recorded as airport concessions, and is
amortized over a total life equal to the concession term of 50
years.
  For
purposes of U.S. GAAP, since the concession arrangement provides the Company
with the right to use the airports and related facilities for a 50-year term,
and since the Company was created and controlled by the Mexican government at
the date of the grant of the concessions, the arrangement is accounted for based
on its economic substance as a contribution by the Mexican government of fixed
assets including runways, aprons, platforms, buildings and other infrastructure,
used to operate the airport facilities under the related concession
agreements.  Throughout the 50-year concession term, the Mexican
government retains title to the assets under concession.  Upon
expiration of the concession term, use of the assets reverts to the Mexican
government.  Pursuant to U.S. GAAP, the transfer of fixed assets was
made among entities under common control.  Thus, under U.S. GAAP, the
related assets were recognized at their carrying value in the records of the
Mexican government, and are reflected as “assets under
concession.”  The assets are depreciated over their remaining useful
lives, or 22 years for other infrastructure, 30 years for buildings, and 28
years for runways, aprons and platforms.  Useful lives were determined
by an independent appraiser and take into account major maintenance overhauls
that the Company is required to perform on the assets to prolong their lives in
accordance with its Master Development Programs.
  In
addition, as the transfer of fixed assets included land and buildings, the
Company compared the fair values of the fixed assets as obtained from the
independent appraisal of such assets performed for MFRS
purposes.  Based on the appraisals, the fair value of the land
transferred at all airports except for the Acapulco airport was considered
significant in relation to the total fair value of all assets
transferred.  Accordingly, at such airports, the value included within
the caption assets under concession for U.S. GAAP purposes does not include the
value of the land transferred.  With respect to the Acapulco airport,
the land has been recorded as a single unit with the building transferred and is
amortized over the economic life of the building of 26
years.  Accordingly, this treatment results in a difference in
amortization expense between MFRS and U.S. GAAP.
  In
addition, as described in Note 11 to the consolidated financial statements
prepared under MFRS, the concession arrangements require the Company to pay a
concession tax, pursuant to the Mexican Federal Duties Law, currently equal to
5% of annual gross revenues, which is classified within operating
expenses.  The Mexican Federal Duties Law is a law of general
applicability and is not specifically directed to airport concession
holders.  The concession tax under the Mexican Federal Duties Law is
applicable to and payable by any concession-holder that uses state-owned assets,
without regard to the value of state-owned assets used.  This annual
payment is considered a tax rather than consideration paid in exchange for the
Mexican government’s contribution of the concessioned assets, and is recognized
as an operating expense when it becomes payable for both U.S. GAAP and MFRS
purposes.
  Accordingly,
the reconciliation to stockholders ́ equity under U.S. GAAP includes an
adjustment to reduce the basis of the concessioned assets under MFRS to the net
historical cost basis as recorded in the accounting records of the Mexican
government at the time of transfer.  A corresponding adjustment is
recognized to the Company’s consolidated net income for the related effects on
depreciation expense
  (ii)
Airport concessions
  There is
no asset recorded under U.S. GAAP for the “airport concessions” as the Mexican
government’s carrying value of such asset was zero.  Accordingly, with
respect to the intangible airport concession asset, annual amortization is
removed from consolidated net income under MFRS and the amortized cost of such
asset under MFRS is removed from consolidated stockholders’ equity each year in
the U.S. GAAP reconciliation.
  (iii)
Depreciation of fixed assets recorded at predecessor cost basis
  As part
of the grant of the concession, the Company also acquired certain machinery,
furniture and equipment from the Mexican government.  Under MFRS, the
value of these fixed assets was recorded based on an independent appraisal
obtained by the Company.
  F-32
  The
acquisition of these fixed assets also constitutes a transfer of assets between
entities under common control, for which reason under U.S. GAAP such assets must
be recognized at the cost basis of the predecessor at the time of
transfer.  Accordingly, the reconciliation includes an adjustment to
the value of such assets and the effect of the related
depreciation.
  (iv)
Deferred fees for technical assistance services
  As
discussed in Note 1, in June 2000, the Company and SETA entered into a stock
option agreement, whereby the Company granted SETA the right to acquire an
additional three percent of the Company’s outstanding Series “B” common stock
provided that SETA had complied with its obligations under the technical
assistance agreement.  The option was exercisable in three tranches of
one percent each, exercisable during a two-year period beginning June 14, 2003,
June 14, 2004 and June 14, 2005, respectively, at an exercise price of $1.1286
(Ps.11.0198 nominal value), plus a 5% annual premium, subject to decrease based
on any dividends paid by the Company. 1% expired, unexercised during 2005; the
remaining 2% was exercised by SETA during 2006.
  MFRS does
not presently require the recognition of stock-based compensation
costs.
  Financial
Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards
(“SFAS”) No. 123R, “Accounting for Stock-Based Compensation”, requires that all
transactions in which equity instruments are issued to other than employees in
conjunction with the selling of goods or services be accounted for based on
the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.
  Further,
EITF 96-18, “Accounting for Instruments That Are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling Goods or Services”, provides
guidance to establish a measurement date for awards issued to other than
employees.  As the Company did not believe that SETA had sufficiently
large disincentives for nonperformance, and thereby SETA did not have a
performance commitment as defined by EITF 96-18, it established the measurement
date as the date performance by SETA is complete, and consequently recognized
the related cost of the award using variable accounting, as illustrated in FIN
No. 28, “Accounting for Stock Appreciation Rights and Other Variable Stock
Option or Award Plans.”
  Under
variable accounting, the Company recognized a recovery of previously recognized
expense and a corresponding debit to additional paid-in capital of Ps. 245 for
the year ended December 31, 2005 and an expense and a corresponding debit to
additional paid-in capital of Ps. 16,767 for the year ended December 31,
2004.  In 2006, for MFRS purposes, at the date of exercise of the
option by SETA, the Company recognized Ps.122,812 of common stock and Ps. 1,100
of additional paid-in capital for the difference between the book value of the
shares and the amount paid by SETA for such shares.  However, in
accordance with SFAS No. 123R, for purposes of U.S. GAAP, given that the stock
under option had no par value, the amount recognized as common stock would be
represented by the sum of (i) the amount of cash proceeds received and (ii) the
amounts previously credited to additional paid-in capital for services received
earlier that were charged to compensation cost.  Accordingly, the
stockholders’ equity statement under U.S. GAAP reflects the reclassification of
Ps. 26,597 from additional paid-in capital to common stock, related to the
8,000,000 shares exercised.
  Additional
information related to the options outstanding for the years ended December 31,
2006 is as follows:
  Shares
              
              
              Weighted
      Average Exercise Price (nominal value)Outstanding
      at January 1
              
              
              8,000,000
              
              
              $
              1.4852
              
              Ps.
              15.7936Exercised
              
              
              (8,000,000
              )
              
              $
              1.3527
              
              Ps.
              14,6735
  The
number of shares exercisable at December 31, 2005 were 8,000,000, at
weighted-average exercise prices of $1.4852 (Ps. 15.7936 nominal
value).  As of December 31, 2005, the weighted-average remaining
contractual life of the outstanding option was .94 years.  On
September 5, 2006, SETA exercised the remaining 2% under option, at an exercise
price per share of $1.3527 (Ps. 14.6735 nominal value).  The decrease
in the exercise price was due to an adjustment based on dividends paid to the
Company’s stockholders in September 2006 as required by the terms of the option
agreement.
  In
addition to the stock option, SETA also holds forfeitable shares of the
Company’s common stock in a trust.  Upon SETA’s initial acquisition of
15% of the Company’s common stock, pursuant to the terms of the participation
agreement between SETA and the Company, SETA signed a trust agreement with Banco
Nacional de Comercio Exterior, S.N.C, and assigned to the trust, all of the
Series “BB” shares it acquired.  In the trust agreement, the Company
was named as secondary beneficiary only in the instance in which SETA does not
comply with the terms of the technical assistance agreement, in which case 5% of
the Series “BB” shares would be forfeited and sold, with the proceeds of
the sale to be provided to the Company as liquidated damages and
penalties.
  F-33
  Based on
the fact that the five percent of SETA’s original investment held in the trust
is forfeitable subject to compliance with the technical assistance agreement,
the Company considers those shares to be compensatory and has recorded the fair
value of these compensatory shares in a manner consistent with the stock option,
applying variable accounting, resulting in a related expense and corresponding
increase to additional paid-in capital of      Ps.
10,133, Ps. 19,731 and Ps. 7,614 in 2007, 2006 and 2005,
respectively.
  (v)
Accrued vacation
  Under
MFRS, there are no specific pronouncements establishing standards to accrue for
liabilities related to employees’ rights to receive compensation for future
absences; therefore, amounts related to vacation benefits earned by the
Company’s employees but not yet taken are expensed when paid.
  Under
U.S. GAAP, SFAS No. 43, “Accounting for Compensated Absences”, requires that
such vacation benefits be accrued.  Accordingly, the Company has
estimated such liability as of December 31, 2007 and 2006, and recognized the
related expense in the U.S. GAAP reconciliation.
  (vi)
Provisions for seniority premiums and for severance payments
  Under
both MFRS and U.S. GAAP, the Company recognizes a liability for its seniority
premiums based on actuarial computations using the project unit credit
method.  Differences exist in the discount rates used for actuarial
purposes between U.S. GAAP and MFRS (U.S. GAAP requires that nominal rates be
used while MFRS allows the use of real or “inflation-free” rates).
  With
respect to severance payments, prior to January 1, 2005, under MFRS, severance
payments were recognized as a charge to income when paid.  Effective
January 1, 2005, the Company adopted the revised provisions of Bulletin D-3,
which require the recognition of a severance indemnity liability calculated
based on actuarial computations.  The same recognition criteria under
U.S. GAAP is established in SFAS No. 112, “Employers’ Accounting for Post
employment Benefits”, which has been effective since 1994, and requires that a
liability for certain termination benefits provided under an ongoing benefit
arrangement be recognized when the likelihood of future settlement is
probable.  Accordingly, the Company obtained an actuarial calculation
related to such severance payments as if the Company had been recognizing a
liability since its inception for U.S. GAAP purposes and recognized the related
cost for the year ended December 31, 2004.
  In 2005,
the adoption of Bulletin D-3 resulted in a cumulative charge of Ps. 13,327 in
the MFRS financial statements, of which Ps. 8,898 was recognized in the
statement of income and Ps. 4,524 was recorded as a transition obligation to be
recognized in future periods (as allowed by the transition guidance in the
bulletin).  The cumulative effect included in the statement of income
for MFRS purposes (which, due to materiality, was classified as cost of
services) is reflected in the U.S. GAAP reconciliation for 2005 as an increase
to income, since, for U.S. GAAP purposes, the Company was recognizing a
provision each year.  This amount was offset by an additional period
cost of Ps. 1,983 recognized under U.S. GAAP related to the differences in
discount rates discussed above.
  During
2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87,
88, 106 and 132(R)”, which requires companies to recognize the overfunded or
underfunded status of a defined benefit plan as an asset or liability in its
statement of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive
income.  SFAS No. 158 also requires that a company measure the funded
status of its plans as of the date of its year-end balance sheet, as well as
prescribes additional disclosure requirements.
  SFAS No.
158 is applicable to the Company’s seniority premium plan, as well as its
liability recognized for severance, given that such liability is calculated
using a methodology similar to SFAS No. 87, “Employers’ Accounting for
Pensions”.  The adoption of SFAS No. 158 resulted in a decrease in
seniority premiums of Ps.15,915 (net of tax of Ps. 6,189) and an increase in the
severance liability of Ps. 5,663 (net of tax of Ps. 2,202), recognized within
accumulated other comprehensive income, as shown in the rollforward of
stockholders’ equity above.  In addition, prior to the application of
SFAS No. 158 at December 31, 2006, the Company recognized an additional minimum
liability (with a corresponding debit to accumulated other comprehensive loss)
of Ps. 5,608 (net of tax of Ps. 2,181) related to changes in actuarial
assumptions on its severance liabilities, based on the fact that the Company was
paying such obligations to terminated employees earlier than previously
estimated.
  F-34
  Further
disclosures related to the Company’s seniority premiums and severance payment
benefits required by U.S. GAAP are as follows:
  The
Company uses a December 31 measurement date for its seniority premiums plan and
severance obligations.
  Seniority
      Premium
                Benefits
              
              
              Severance
                Benefits2007
              
              
              2006
              
              
              2007
              
              
              2006Projected
      benefit obligation – unfunded status
              
              Ps.
              (3,716)
              
              
              Ps.
              (3,523)
              
              
              Ps.
              (30,709)
              
              
              Ps.
              (37,932)
 
 Seniority
      Premium
                Benefits
              
              
              Severance
                Benefits2007
              
              
              2007Amounts
      recognized in accumulated other comprehensive incomePrior
      service cost, net of deferred tax of Ps. 5,207
              
              Ps.
              (13,394
              )
              
              Ps.
              -Actuarial
      net (gain) or loss, net of deferred tax Ps. 1,482
              
              
              (1,056
              )
              
              
              4,869Ps.
              (14,450
              )
              
              Ps.
              4,869
  The
Company expects that Ps. 374 of the items in other comprehensive income
disclosed above will be recognized into earnings in 2008.
   Seniority
      Premium
                Benefits
              
              
              Severance
                Benefits2007
              
              
              2006
              
              
              2007
              
              
              2006Change
      in benefit obligation:Projected
      benefit obligation at beginning of year
              
              Ps.
              (3,523)
              
              
              Ps.
              (21,188)
              
              
              Ps.
              (37,932)
              
              
              Ps
              (22,322)Service
      cost
              
              
              (559
              )
              
              
              (3,954
              )
              
              
              (3,681
              )
              
              
              (3,145
              )Interest
      cost
              
              
              (271
              )
              
              
              (1,545
              )
              
              
              (2,882
              )
              
              
              (2,341
              )Actuarial
      loss
              
              
              371
              
              
              
              2,458
              
              
              
              10,736
              
              
              
              (15,595
              )Benefits
      paid
              
              
              364
              
              
              
              187
              
              
              
              8,260
              
              
              
              5,471Prior
      service costs
              
              
              -
              
              
              
              20,519
              
              
              
              -
              
              
              
              0Settlements
              
              
              (98
              )
              
              
              -
              
              
              
              (5,210
              )
              
              
              -Projected
      benefit obligation at end of year
              
              Ps.
      (3,716)
              
              
              Ps.
      (3,523)
              
              
              Ps.(30,709)
              
              
              Ps.(37,932)
 
 Seniority
      Premium
                Benefits
              
              
              Severance
                Benefits2007
              
              
              2006
              
              
              2007
              
              
              2006Components
      of net periodic pension cost:Service
      cost
              
              Ps.
              559
              
              
              Ps.
              3,954
              
              
              Ps.
              3,681
              
              
              Ps.
              3,145Interest
      cost
              
              
              271
              
              
              
              1,545
              
              
              
              2,882
              
              
              
              2,341Amortization
      of net actuarial (gain) or loss
              
              
              (1,263
              )
              
              
              -
              
              
              
              1,458
              
              
              
              -Settlements
              
              
              83
              
              
              
              -
              
              
              
              2,717
              
              
              
              -Net
      periodic pension cost
              
              Ps. (349)
              
              
              Ps. 5,499
              
              
              Ps.10,738
              
              
              Ps. 5,486
 
  F-35
  Seniority
      Premium
                Benefits
              
              
              Severance
                Benefits2007
              
              
              2006
              
              
              2007
              
              
              2006Weighted-average
      assumptions used to determine benefit obligations at  December
      31:Discount
      rate
              
              
              8.00
              %
              
              
              8.68
              %
              
              
              8.00
              %
              
              
              8.68
              %Rate
      of compensation increase
              
              
              5.00
              %
              
              
              5.04
              %
              
              
              5.00
              %
              
              
              5.04
              %Weighted-average assumptions used
      to determine  net periodic benefitcost for the years ended
      December 31:Discount
      rate
              
              
              8.50
              %
              
              
              8.68
              %
              
              
              8.50
              %
              
              
              8.68
              %Rate
      of compensation increase
              
              
              5.00
              %
              
              
              5.04
              %
              
              
              5.00
              %
              
              
              5.04
              %
  The
following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:
  Seniority
      Premium Benefits
              
              
              Severance
      Benefits2008
              
              Ps
              408
              
              
              Ps
              4,7532009
              
              
              388
              
              
              
              4,6652010
              
              
              419
              
              
              
              4,4122011
              
              
              432
              
              
              
              4,1212012
              
              
              451
              
              
              
              3,934Thereafter
              
              
              2,496
              
              
              
              17,010Ps.
      4,594
              
              
              Ps. 38,895
  (vii) Deferred
statutory employee profit sharing
   As
discussed in Note 3i, under MFRS, the Company calculates deferred employee
profit sharing based on taxable income, according to Section I of Article 10 of
the Income Tax Law.  The Company only recognizes a deferred statutory
employee profit sharing asset or liability when it can be reasonably assumed
that such difference will generate a liability or benefit, and there is no
indication that circumstances will change in such a way that the liabilities
will not be paid or benefits will not be realized.
  However,
for purposes of U.S. GAAP, the Company is required to follow SFAS No. 109,
“Accounting for Income Taxes”, under which the Company must calculate deferred
statutory employee profit sharing based on the temporary differences between the
financial reporting basis and the statutory employee profit sharing basis of
assets and liabilities for those subsidiaries of the Company that have employees
in Mexico.  Using such methodology, because of the adjustments to the
accounting value of the rights to use airport facilities and airport concessions
under U.S. GAAP, a net deferred statutory employee profit sharing asset
results.  U.S. GAAP prohibits the recognition of deferred statutory
employee profit sharing assets.  Accordingly, the U.S. GAAP
reconciliation includes an adjustment to remove the liability recognized for
MFRS purposes but does not reflect the recognition of any deferred statutory
employee profit sharing asset.
  In
addition, current statutory employee profit sharing is included in other
(expenses) income for MFRS purposes.  Under U.S. GAAP, such cost is
classified as an operating expense.  Accordingly, this difference,
which does not affect the determination of consolidated net income for U.S. GAAP
purposes, would decrease operating income by Ps. 9,587 Ps. 8,984 and Ps. 1,524
for the years ended December 31, 2007, 2006 and 2005, respectively.
  (viii)
Income taxes
  Under
MFRS, the Company accounts for deferred income taxes in accordance with
Bulletin D-4, ”Income Tax, Asset Tax and Statutory Employee Profit
Sharing”.  As a result of the new Business Flat Tax (“IETU”), which
was enacted in 2007, the Company is required to determine what deferred tax
effects if any the IETU has on its financial statements for both MFRS and U.S.
GAAP purposes.  Based on its financial projections for purposes of
MFRS, which were performed over a four year period and according to INIF 8,
“Effects of the Business Flat Tax”, the Company determined that it will
essentially pay IETU.  Therefore, as of December 31, 2007, the Company
recorded a deferred IETU liability of Ps. 1,073,859, and cancelled the deferred
regular income tax (“ISR”) liability of Ps. 597,506, recognizing the effect net
in the statement of income of Ps. 476,353.
  For U.S.
GAAP purposes, under SFAS No. 109, the Company is required to address the tax
consequences of both the ISR and the IETU regimes by scheduling the reversal of
its temporary differences and to use the tax rates that are expected to apply
each year.  Based on its financial projections, for purposes of U.S.
GAAP, which were performed through the period its taxable temporary differences
are expected to reverse, the Company concluded that it expects to alternate
between both the ISR and IETU regimes.  As such, it scheduled the
reversal of its inventories of temporary differences and determined by year
whether the applicable reversing temporary differences were those under ISR or
those under IETU and similarly what rate to apply to determine the appropriate
amount of deferred tax assets and liabilities.  In addition, as the
Company’s subsidiaries have net operating loss (NOL) carryforwards under the ISR
regime, it used scheduling to demonstrate the amount of the NOL carryforwards it
expects will more likely than not be realized.
   F-36
  As a
result of U.S. GAAP adjustments to certain assets and liabilities, their U.S.
GAAP accounting value differs from their accounting value under
MFRS.  Accordingly, all adjustments for deferred income taxes for
purposes of the U.S. GAAP reconciliation were determined based on the difference
between the accounting values of assets and liabilities under U.S. GAAP and MFRS
versus the tax values and applicable tax rates of such assets and
liabilities.
  In
addition, deferred taxes are classified as non-current for MFRS purposes while
they are based on the classification of the related asset or liability for U.S.
GAAP purposes.
  The most
significant adjustments to deferred income taxes in the U.S. GAAP reconciliation
are due to the differences in accounting for the cost of the airport concessions
and the rights to use airport facilities, the cost of fixed assets acquired from
the Mexican government and the accounting for tax loss
carryforwards.  Because there is no value attributed to the airport
concessions under U.S. GAAP and because the cost of the assets under concession
for purposes of U.S. GAAP is lower in value than the fair value of those same
assets recorded for MFRS purposes, a deferred tax asset results under U.S. GAAP
as compared to a deferred tax liability under MFRS.
  A
reconciliation of the net deferred income tax liability from MFRS to a deferred
tax liability and deferred tax asset under U.S. GAAP and the composition of the
deferred income taxes under U.S. GAAP at December 31, 2007 and 2006,
re-spectively are as follows:
 
 Reconciliation
      of deferred income taxes:
              
              2007
              
              
              2006Deferred
      income tax liability under MFRS
              
              Ps.
              (1,087,400)
              
              
              Ps.
              (534,415)Effect
      of cost of airport concession and rights to use airport
      facilities
              
              
              623,096
              
              
              
              1,112,422Effect
      of labor obligations
              
              
              (6,632
              )
              
              
              2,961Effect
      of cost of fixed assets acquired from Mexican government
              
              
              (54,848
              )
              
              
              (1,675
              )Tax
      loss carryforwards
              
              
              311,480
              
              
              
              -Other
              
              
              1,293
              
              
              
              1,746Total
      U.S. GAAP adjustments to net deferred income tax liability
              
              
              874,389
              
              
              
              1,115,454Net
      deferred income tax (liability) asset under U.S. GAAP
              
              Ps. (213,011)
              
              
              Ps.
      581,039
  Composition
of net deferred income tax assets (liabilities):
  2007
              
              
              2006Assets:Provisions
              
              Ps.
              19,063
              
              
              Ps.
              16,699Advances
      from customers
              
              
              158
              
              
              
              3,177Other
      liabilities
              
              
              -
              
              
              
              4,333Total
      current assets
              
              
              19,221
              
              
              
              24,209Liabilities:Other
      liabilities
              
              
              (27,255
              )
              
              
              (37,582
              )Net
      current deferred  tax liability
              
              Ps.
              (8,034)
              
              
              Ps.
              (13,373)Non-current
      assets (liabilities):Assets:Provisions
      for seniority premiums and severance payments
              
              Ps.
              5,459
              
              
              Ps.
              13,414IETU
      tax credits
              
              
              9,509ISR
      tax loss carryforwards
              
              
              866,205
              
              
              
              873,987Recoverable
      tax on assets
              
              
              221,047
              
              
              
              220,060Valuation
      allowance for tax loss carryforwards and recoverable tax on
      assets
              
              
              (770,226
              )
              
              
              (109,658
              )Total
      non-current assets
              
              
              331,994
              
              
              
              997,803Liabilities:Airport
      concessions and assets under concession
              
              
              (207,598
              )
              
              
              (256,899
              )Property,
      real estate, machinery, equipment and improvements to concessioned
      properties
              
              
              (329,373
              )
              
              
              (146,492
              )Total
      non-current liabilities
              
              
              (536,971
              )
              
              
              (403,391
              )Net
      non-current deferred income tax (liability) asset
              
              
              Ps.
      (204,977)
              
              
              Ps.
              594,412
  F-37
  In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes”. FIN 48 provides detailed
guidance for the financial statement recognition, measurement and disclosure of
uncertain tax positions recognized in an enterprise’s financial statements in
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109,
“Accounting for Income Taxes”. FIN 48 requires an entity to recognize the
financial statement impact of a tax position when it is more likely than not
that the position will be sustained upon examination.  If the tax
position meets the more-likely-than-not recognition threshold, the tax effect is
recognized at the largest amount of the benefit that is greater than 50% likely
of being realized upon ultimate settlement.  Any difference between
the tax position taken in the tax return and the tax position recognized in the
financial statements using the criteria above results in the recognition of a
liability in the financial statements for the unrecognized
benefit.  Similarly, if a tax position fails to meet the
more-likely-than-not recognition threshold, the benefit taken in the tax return
will also result in the recognition of a liability in the financial statements
for the full amount of the unrecognized benefit.  FIN 48 became
effective for fiscal years beginning after December 15, 2006 for public entities
and their subsidiaries.  The Company adopted FIN 48 as of January 1,
2007, as required.  The provisions of FIN 48 were applied to all tax
positions under SFAS No. 109 upon initial adoption.  The impact of
adopting this interpretation was not material to the Company’s consolidated
financial position, results of operations or cash flows.
  It is the
Company’s policy to classify interest and penalties related to income tax
related matters within income tax expense and other expenses,
respectively.   The Company’s operations are all located in
Mexico.  The Mexican Tax Law allows the tax authorities five tax years
that remain subject to examination.
  (a) Earnings per share according to
U.S. GAAP – In accordance with SFAS No. 128, “Earnings per Share”,
basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding.  The computation of diluted earnings per share is
adjusted to include any potential common shares.  Potential common
shares include the Company’s stock option as well as the forfeitable five
percent of SETA’s shares held in the trust.
  Diluted
earnings per share for the year ended December 31, 2006 and 2005 includes
2,940,000 equivalent shares from the forfeitable shares, which are considered to
be contingently issuable under SFAS No. 128, and thereby are included in the
calculation of diluted EPS until such time as the contingency is resolved, at
which time they will become a part of basic EPS. For the year ended December 31,
2007, such potentially dilutive shares were excluded from the computation of
diluted earnings per share was antidulitve.
  With
respect to the stock option, in 2006, as 8,000,000 shares were exercised by
SETA, such shares form part of the weighted average shares outstanding during
the year for purposes of computing basic EPS and no further dilutive effects
exist with respect to the option.  In 2005, diluted earnings per share
also included 22,615 dilutive shares of common stock from the outstanding stock
option agreement with SETA.
  The
computation and reconciliation of basic and diluted earnings per share for the
years ended December 31, prepared in accordance with U.S. GAAP, are as
follows:
  2007
              
              
              2006
              
              
              2005NumeratorNet
      (loss) income under U.S. GAAP
              
              Ps.
              (118,318)
              
              
              Ps.
              548,798
              
              
              Ps.
              445,812Denominator
      (share amounts)Weighted
      average number of common shares outstanding
              
              
              399,611,578
              
              
              
              391,624,384
              
              
              
              389,060,000Dilutive
      effects of stock option
              
              
              -
              
              
              
              -
              
              
              
              22,615Dilutive
      effects of forfeitable shares
              
              
              -
              
              
              
              2,940,000
              
              
              
              2,940,000Total
      potential dilutive shares
              
              
              399,611,578
              
              
              
              394,564,384
              
              
              
              392,022,615Basic
      earnings per share
              
              
              (0.2961
              )
              
              
              1.4014
              
              
              
              1.1459Diluted
      earnings per share
              
              
              (0.2961
              )
              
              
              1.3909
              
              
              
              1.1372
 F-38
  (b) Statement of cashflows — Under MFRS, the
Company presents a consolidated statement of changes in financial position in
accordance with Bulletin B-12, “Statement of Changes in Financial Position”,
which identifies the generation and application of resources as the differences
between beginning and ending financial statement balances in constant Mexican
pesos.
  As
mentioned in Note 19, NIF B-2, is effective January 1,
2008.   NIF B-2 requires that the statement shows a company’s
cash inflows and outflows during the period and establishes general rules for
the presentation, structure and preparation of a cash flow statement and
replaces the statement of changes in financial position on a prospective
basis
  For U.S.
GAAP purposes, the Company presents its supplemental cash flow information in
accordance with SFAS No. 95,” Statement of Cash Flows”, presenting cash
movements, excluding of the effects of inflation in each individual line item in
the balance sheet reported under U.S. GAAP. Such information for the years ended
December 31, 2007, 2006, and 2005 is presented below:
  2007
              
              
              2006
              
              
              2005Cash
      flows from operating activities:Consolidated
      net (loss) income
              
              Ps.
              (118,318)
              
              
              Ps.
              548,798
              
              
              Ps.
              445,812Adjustments
      to reconcile net income to cash provided by operating
      activities:Other
      provisions
              
              
              -
              
              
              
              -
              
              
              
              26Depreciation
      and amortization
              
              
              235,122
              
              
              
              191,757
              
              
              
              127,466Deferred
      fees for technical assistance services
              
              
              10,133
              
              
              
              19,732
              
              
              
              7,367Bad
      debt expense
              
              
              387
              
              
              
              (12,824
              )
              
              
              (11,266
              )Provisions
      for seniority premium and severance payments
              
              
              (5,530
              )
              
              
              (358
              )
              
              
              5,852Deferred
      income tax expense
              
              
              772,999
              
              
              
              69,927
              
              
              
              121,746Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              (18,763
              )
              
              
              (19,430
              )
              
              
              (16,011
              )Recoverable
      taxes
              
              
              91,621
              
              
              
              (81,760
              )
              
              
              16,694Other
      current assets
              
              
              52,641
              
              
              
              (65,396
              )
              
              
              (9,072
              )Accounts
      payable and other accruals
              
              
              17,570
              
              
              
              36,565
              
              
              
              (19,562
              )Accounts
      payable to related parties
              
              
              1,649
              
              
              
              9,487
              
              
              
              6,077Advances
      from customers
              
              
              (8,635
              )
              
              
              (6,578
              )
              
              
              14,653Value-added
      tax payable
              
              
              3,569
              
              
              
              (10,685
              )
              
              
              361Statutory
      employee profit sharing
              
              
              740
              
              
              
              7,447
              
              
              
              1,158Guarantee
      deposits
              
              
              826
              
              
              
              7,422
              
              
              
              1,438Net
      cash provided by operating activities
              
              
              1,036,011
              
              
              
              694,103
              
              
              
              692,739Cash
      flows from investing activities:Acquisitions
      of property, machinery, equipment and improvements to concessioned
      properties
              
              
              (657,018
              )
              
              
              (458,262
              )
              
              
              (286,083
              )Net
      cash used in investing activities
              
              
              (657,018
              )
              
              
              (458,262
              )
              
              
              (286,083
              )Cash
      flows from financing activities:Dividends
      paid
              
              
              (229,224
              )
              
              
              (446,689
              )
              
              
              -Repurchase
      of shares
              
              
              (99,644
              )
              
              
              -
              
              
              
              -Increase
      in capital
              
              
              -
              
              
              
              124,224
              
              
              
              -Net
      cash used in financing activities
              
              
              (328,868
              )
              
              
              (322,465
              )
              
              
              -Effect
      of inflation on cash and cash equivalents
              
              
              33,585
              
              
              
              53,014
              
              
              
              1,234Net
      increase (decrease)  in cash and cash
equivalents
              
              
              83,710
              
              
              
              (33,610
              )
              
              
              407,890Cash
      and cash equivalents at beginning of the year
              
              
              1,672,994
              
              
              
              1,706,604
              
              
              
              1,298,714Cash
      and cash equivalents at end of the year
              
              Ps.
              1,756,704
              
              
              Ps.
              1,672,994
              
              
              Ps.
              1,706,604
 F-39
  Cash
paid for:
  Income
      taxes
              
              Ps.
              134,680
              
              
              Ps.
              216,352
              
              
              Ps
              47,867
  Supplemental
schedule of noncash investing activities:
  Acquisitions
      of property, machinery, equipment and improvements to concessioned
      properties on account
              
              Ps.
              20,193
              
              
              Ps.
              19,113
              
              
              Ps.
              7,681
  (c) Valuation and qualifying
accounts (MFRS) –
  Description
              
              Balance
      at beginning of the year
              
              
              Additions
      charged to costs and expenses
              
              
              Inflation
      effects
              
              
              Deductions
              
              
              Balance
      at the end of the yearAllowance
      for doubtful accounts2007
              
              Ps.
              9,242
              
              
              Ps.
              2,285
              
              
              Ps.
              (467)
              
              
              Ps.
              (1,766)
              
              
              Ps.
              9,2942006
              
              
              22,959
              
              
              
              (9,843
              )
              
              
              (894
              )
              
              
              (2,980
              )
              
              
              9,2422005
              
              
              35,366
              
              
              
              (701
              )
              
              
              (1,215
              )
              
              
              (10,491
              )
              
              
              22,959Valuation
      allowance2007
              
              
              -
              
              
              Ps.
              866,205
              
              
              
              -
              
              
              
              -
              
              
              Ps.
              866,205
  New
U.S. GAAP Accounting Standards -
  SFAS No.
157, ‘‘Fair Value Measurements’’, was issued in September 2006.  This
statement establishes a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 clarifies the definition
of exchange price as the price between market participants in an orderly
transaction to sell an asset or transfer a liability in the market in which the
reporting entity would transact for the asset or liability, that is, the
principal or most advantageous market for the asset or liability.  The
changes to current practice resulting from the application of this statement
relate to the definition of fair value, the methods used to measure fair value,
and the expanded disclosures about fair value measurements. SFAS No. 157 is
effective for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years.  On February 12, 2008, the FASB issued FSP
FAS 157-1 and FSP FAS 157-2, which remove leasing transactions accounted for
under SFAS No. 13, “Accounting for Leases” from the scope of SFAS No. 157 and
partially defer the effective date of SFAS No. 157 as it relates all
nonrecurring fair value measurements of nonfinancial assets and nonfinancial
liabilities until fiscal years beginning after November 15, 2008.  The
Company is in the process of determining the impact of adopting this new
accounting principle on its consolidated financial position, results of
operations and cash flows.
  In February 2007, the FASB issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities—Including an Amendment of FASB Statement No. 115. SFAS No.
159 permits an entity to choose to measure many financial instruments and
certain other items at fair value.  The objective is to expand the use
of fair value measurements in accounting for financial
instruments.  The fair value option permits a company to choose to
measure eligible items at fair value at specified election dates.  A
company will report unrealized gains and losses on items for which the fair
value option has been elected in earnings after adoption. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007.  The
Company does not anticipate the adoption of this new accounting principle will
have a material effect on its consolidated financial position, results of
operations and cash flows.
  In December 2007, the FASB issued
SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements—an amendment of ARB No. 51. SFAS No. 160 (a) amends ARB 51 to
establish accounting and reporting standards for the noncontrolling interest in
a subsidiary and the deconsolidation of a subsidiary; (b) changes the way the
consolidated income statement is presented; (c) establishes a single method of
accounting for changes in a parent’s ownership interest in a subsidiary that do
not result in deconsolidation; (d) requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated; and (e) requires
expanded disclosures in the consolidated financial statements that clearly
identify and distinguish between the interests of the parent’s owners and the
interests of the noncontrolling owners of a subsidiary. SFAS No. 160 must be
applied prospectively but to apply the presentation and disclosure requirements
must be applied retrospectively to provide comparability in the financial
statements.  Early adoption is prohibited.   SFAS No.
160 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  The impact of this
standard is dependant upon the level of future acquisitions.
  F-40
  In December 2007, the FASB issued
SFAS No. 141(R), Business Combinations—a replacement of FASB No. 141.
SFAS No. 141(R) requires (a) a company to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at fair
value as of the acquisition date; and (b) an acquirer in preacquisition periods
to expense all acquisition-related costs.  SFAS No. 141(R) requires
that any adjustments to an acquired entity’s deferred tax asset and liability
balance that occur after the measurement period be recorded as a component of
income tax expense.  This accounting treatment is required for
business combinations consummated before the effective date of SFAS No. 141(R)
(non-prospective), otherwise SFAS No. 141(R) must be applied
prospectively.  The presentation and disclosure requirements must be
applied retrospectively to provide comparability in the financial
statements.  Early adoption is prohibited.   SFAS No.
141(R) is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  The impact of this
standard is dependant upon the level of future acquisitions.
   * * * *
*
   F-41