PAC

Pacific Airport Group (GAP) - Q1 2011 Financial Summary

Business Context and Reporting Period

This Form 6-K filing covers the unaudited results for the first quarter ended March 31, 2011, for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP). The company operates twelve airports in Mexico's Pacific region. Financial figures are presented in nominal Mexican pesos (Ps.) in accordance with Mexican Financial Reporting Standards (NIF).

Key Financial Metrics

• Total Revenues: Ps. 1,243.1 million (Increase of 14.5% or Ps. 157.6 million vs. 1Q10).
• Aeronautical & Non-Aeronautical Revenues: Ps. 966.4 million (Increase of 2.4% or Ps. 22.5 million vs. 1Q10).
• Operating Income: Increased 1.7% (Ps. 7.2 million) to Ps. 428.9 million (implied from margin data).
• EBITDA: Ps. 652.4 million (Increase of 2.6% or Ps. 16.3 million vs. 1Q10).
• Net Income: Decreased 28.2% (Ps. 156.8 million) to Ps. 399.6 million (implied from prior year data and decline).
• EBITDA Margin: 52.5% (Declined from 58.6% in 1Q10). Excluding INIF 17 effects, margin was 67.5% (up 10 bps).
• Operating Margin: 34.5% (Declined from 38.9% in 1Q10). Excluding INIF 17 effects, margin was 44.4% (down 30 bps).
• Cash and Equivalents: Ps. 2,169.2 million as of March 31, 2011.
• Capital Expenditures (CAPEX): Ps. 345.0 million (cash basis).

Material Changes vs. Prior Period

• Passenger Traffic: Total terminal passengers decreased by 2.5% (129.1 thousand passengers). Domestic traffic fell 1.5%, while international traffic fell 3.8%.
• Revenue Drivers: The 14.5% total revenue increase was significantly driven by Ps. 276.7 million in non-cash revenue from improvements to concession assets (INIF 17), compared to Ps. 141.6 million in 1Q10. Core aeronautical and non-aeronautical revenue grew only 2.4%.
• Cost Structure: Cost of services rose 1.9% (Ps. 4.2 million), driven by higher personnel, security, and insurance costs. Total operating costs rose 22.7% primarily due to the non-cash INIF 17 accounting treatment.
• Net Income Decline: The 28.2% drop in net income was primarily due to a reduction in deferred income tax benefits. In 1Q10, the benefit was Ps. 211.4 million; in 1Q11, it was Ps. 56.7 million, largely due to lower inflation rates and the non-repetition of a specific fiscal amortization benefit.

Outlook, Risks, and Management Commentary

• Impact of GMA Suspension: The decline in passenger traffic is attributed to the indefinite suspension of Grupo Mexicana de Aviación (GMA) operations in August 2010. Management expects a gradual recovery as other carriers (Volaris, Continental, Aeroméxico) fill the void.
• Recovery Guidance: The company estimates that by June 2011, 50.6% of the domestic and international seats previously covered by GMA will be recovered.
• Seasonality: Comparability is affected by the Easter holiday period, which occurred in March 2010 (1Q) but in April 2011 (2Q).
• Accounting Changes: GAP plans to adopt International Financial Reporting Standards (IFRS) on January 1, 2012. The company has not yet quantified the specific monetary impact of this transition.
• Corporate Actions: Grupo México (GM) holds 20.0% of outstanding shares and has requested an additional board seat, though by-laws currently limit representation to 10%. A share repurchase program of Ps. 1,000 million is active, with Ps. 913.8 million utilized as of March 31, 2011.

Investor Verification Checklist

• Verify the distinction between reported EBITDA/Operating margins (including non-cash INIF 17 revenue) and cash-based margins (excluding INIF 17) to assess true operational performance.
• Monitor the actual recovery rate of GMA seats by June 2011 against the 50.6% management estimate.
• Review the status of the administrative appeal regarding fiscal amortization rates for Mexicali and Aguascalientes airports.
• Assess the impact of the Grupo México (GM) 20% stake and their request for board representation on corporate governance.
• Confirm the timeline and financial impact of the transition to IFRS accounting standards effective January 1, 2012.