OMAB

Business Context and Reporting Period

Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.), trading as OMA (NASDAQ: OMAB).

Reporting Period: Third Quarter 2010 (ended September 30, 2010) and the first nine months of 2010.

Overview: OMA operates 13 international airports in central and northern Mexico, including the major hub in Monterrey, and manages the NH Terminal 2 Hotel at Mexico City International Airport. The quarter was significantly impacted by the bankruptcy and suspension of operations of Grupo Mexicana airlines.

Key Financial Metrics (3Q10)

Note: USD conversions based on the reported rate of Ps. 12.4801 per US$.

Material Changes vs. Prior Period

• Operational Growth: Passenger traffic increased 4.3% to 3.1 million; takeoffs and landings rose 7.1%; cargo volume surged 28.9%.
• Revenue Drivers: Non-aeronautical revenue grew 38.1%, driven by the NH T2 Hotel, new leases, advertising, and OMA Carga. Aeronautical revenue per passenger increased 7.1%.
• Major Negative Event: The bankruptcy of Grupo Mexicana airlines resulted in a Ps. 145.1 million provision for doubtful accounts (100% of receivables). This provision was recorded in cost of services, turning what would have been a profit into a net loss for the quarter.
• Cost Structure: Total operating costs increased 61.3% primarily due to the Mexicana provision. Excluding the provision and hotel costs, operating expenses rose 14.9% due to the opening of Terminal B in Monterrey.
• Adjusted Performance: Excluding the Mexicana provision, Adjusted EBITDA would have been Ps. 304.3 million (53.5% margin) and Operating Income would have been Ps. 189.5 million (33.3% margin).

Outlook, Risks, and Management Commentary

• Strategic Developments: Terminal B at Monterrey Airport began operations on September 1, 2010, hosting Aeroméxico, Aeroméxico Connect, and Delta. Twenty-two new commercial spaces opened across the network.
• Legal Contingency: OMA is pursuing legal measures to recover funds from Grupo Mexicana, including requesting the return of passenger charges (TUA) collected on OMA's behalf, arguing these funds are not part of the bankruptcy estate.
• Regulatory Risk: The U.S. FAA downgraded Mexico's civil aviation safety rating to Category 2 in July 2010, restricting Mexican airlines from opening new routes to the U.S.
• Liquidity: Operating cash flow for the first nine months was Ps. 463.6 million. The company maintains a cash balance of Ps. 394.8 million and has no exposure to financial derivatives.
• Dividends: The first quarterly installment of the 2009 dividend (Ps. 0.25 per share) was paid on October 15, 2010.

Key Facts for Investor Verification

• Receivable Recovery: Verify the status of OMA's claims against Grupo Mexicana and the likelihood of recovering the Ps. 145.1 million provisioned amount.
• Terminal B Performance: Monitor the utilization rates and revenue contribution of the newly opened Terminal B in Monterrey to ensure it offsets the loss of Mexicana traffic.
• FAA Category 2 Impact: Assess the long-term impact of the FAA downgrade on international passenger traffic growth, particularly on U.S. routes.
• Non-Aeronautical Growth: Confirm the sustainability of the 38.1% growth in non-aeronautical revenue, specifically regarding the NH T2 Hotel occupancy and new commercial leases.
• Debt Servicing: Review the company's ability to service Ps. 1,006 million in debt while maintaining capital expenditure levels of Ps. 104 million per quarter.