PAC

Pacific Airport Group (GAP) - Q1 2009 Financial Summary

Business Context and Reporting Period

This Form 6-K filing covers the unaudited results for the first quarter ended March 31, 2009, for Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (GAP). The company operates twelve airports in Mexico's Pacific region, including major hubs in Guadalajara and Tijuana. Results are prepared under Mexican Financial Reporting Standards (NIF) and presented in nominal pesos. The period is noted as not fully comparable to Q1 2008 due to the Easter Week vacation period occurring in March 2008 but shifting to April 2009.

Key Financial Metrics

• Revenue: Total revenues declined 6.1% to Ps. 892.9 million (from Ps. 950.4 million in Q1 2008). Aeronautical revenues fell 9.5%, while non-aeronautical revenues rose 8.4%.
• Profitability: Operating income declined 16.9%. Net income decreased 6.6% (Ps. 28.5 million lower than Q1 2008). The effective income tax rate was 10.0% (27.9% excluding deferred tax benefits).
• Margins: Operating margin decreased 580 basis points to 44.8%. EBITDA margin declined 330 basis points to 67.5% (adjusted EBITDA margin would have been 69.2% excluding doubtful account reserves).
• Costs: Total operating costs increased 4.4%. Cost of services rose 9.6%, driven largely by a Ps. 15.2 million reserve for doubtful accounts. Without this reserve, cost of services would have increased only 1.8%.
• Liquidity and Cash: Cash and cash equivalents totaled approximately Ps. 2,174.3 million as of March 31, 2009. Capital expenditures (investments paid) for the quarter were Ps. 192.1 million.
• Debt: The filing mentions unused balances from a bank loan for the Master Development Program but does not provide a specific total debt figure for the period.

Material Changes vs. Prior Period

• Passenger Traffic: Total terminal passengers decreased 16.8%. Domestic traffic fell 20.7% and international traffic declined 10.7%.
• Airline Operations: Significant traffic reductions were attributed to the cessation of operations by several airlines (Aerocalifornia, Avolar, Alma, Aviacsa) in late 2008. Conversely, new operations began with Mexicana Link (Guadalajara base) and Interjet (Los Mochis) in Q1 2009.
• Cost Structure: Employee costs decreased 10.3% due to prior year provisions and restructuring. Maintenance costs increased 32.8% due to terminal expansions and new equipment. Other operating costs rose 52.4% primarily due to the Ps. 15.2 million doubtful account reserve.
• Financing Results: Comprehensive financing results improved by Ps. 30.4 million, driven by a Ps. 26.7 million exchange rate gain and higher interest income, partially offset by a Ps. 14.6 million loss on embedded derivatives.

Guidance, Outlook, and Risks

• Revised Guidance: Due to lowered economic growth forecasts by the IMF and Central Bank of Mexico, GAP revised its 2009 total passenger traffic growth guidance to a range of -8% to -10%.
• Swine Flu Contingency: The filing explicitly states that the new guidance does not factor in the emerging Swine Flu virus outbreak in Mexico. Management cannot currently forecast the duration or intensity of the health crisis or its impact on tourism and operations.
• Regulatory Risks: The Mexican Ministry of Communications and Transportation began its 2008 compliance review in March 2009. Additionally, the company is appealing a 2005 tax assessment regarding the Mexicali airport's concession amortization rate.
• Share Repurchase: The company completed a Ps. 54.5 million share repurchase program between July 2008 and January 2009. As of March 2009, it had begun reselling 840,600 of these shares.

Investor Verification Checklist

• Verify the impact of the Swine Flu outbreak on Q2 2009 passenger traffic, as this was excluded from current guidance.
• Monitor the resolution of the Ps. 15.2 million reserve for doubtful accounts, which management expects to revert in Q2 2009.
• Track the performance of new airline entrants (Mexicana Link, Interjet, VivaAerobus) in offsetting traffic losses from ceased carriers.
• Review the outcome of the 2008 tariff compliance review by the Mexican Ministry of Communications and Transportation.
• Assess the sustainability of the 10.0% effective tax rate, which was significantly influenced by deferred tax changes under NIF B-10.