Good day ladies and gentlemen and welcome to the ASUR second quarter 2010 results conference call. My name is Veronica, and I will be your coordinator for today. At this time, all participants are in listen-only mode. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions) For opening remarks and introductions, I would like to turn the call over to Mr. Adolfo Castro, Chief Financial Officer. Please proceed, sir.

Thank you, Veronica. Good morning, everybody. Thank you for joining us today for the conference call for our second quarter results. Allow me to remind you that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on management's current expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including risks that may be beyond our company's control. For explanation of these risks, please refer to ASUR's filings with the Securities and Exchange Commission and the Mexican Stock Exchange. I will start today's call by discussing passenger traffic performance and the results for the quarter. I also want to briefly comment on recent developments, compensation efforts, agreements and some interests to our CEO and Chairman and the launch of the bidding process for a second airport in Riviera Maya. As expected, this was an excellent quarter with better strong passenger traffic growth of 26.8% year-on-year. This compared with the decline of 27% in the second quarter for 2009 and the 3.6% in third quarter 2010. Within the quarter, traffic sales were 0.9% in April, bouncing back to an 85.5% increase in May and 25.5% in June. The 27.8% recovery in international traffic over the last year's weak figures which were affected by the H1N1influenza outbreak in April 2009 and the economic crisis was a key factor guiding this performance. All efforts with the exception of Oaxaca, reported international traffic passenger count. Domestic passenger traffic also contributed to the increase, although at the lower growth rate than by the high domestic airlines fares and there's no economic recovery. All airports reported domestic traffic growth with the exception of Tapachula. In fact, this was Cancún airport's third consecutive quarter of positive domestic passenger…

Ladies and gentlemen, (Operator Instructions). And your first question comes from the line of Nick Sebrell from Morgan Stanley. Please proceed.

Hi Adolfo. Was wondering if you could start out with discussing the decline in depreciation that we saw, whether that is, I read what you wrote in the press release but I was also wondering whether there was an extension or change in the depreciation term of some of the items you have and whether we'll see similar depreciation levels do you think in future quarters or that might change. And then I was wondering if you could say anything about the tariffs, given that the economy was rather poor last year and as well facing a second airport, which obviously changes the economic equilibrium of your business, is it possible that you will negotiate or renegotiate the tariff provision going forward?

Good morning. In case of the depreciation, of course, you know that the depreciation is the result of the calculation, about the assets that we have and the assets that we are including or the assets that we are adding to the infrastructure. Depreciation, the decline today means that if you go back to the history of this company, some of the concessions had 10-11 years amortization period. So, what we are seeing is that some of these have concluded their life into the depreciation process. And what we are adding today is not higher than what is finishing, that's the real reason. In terms of the tariffs, you are absolutely right that our concession title has that possibility and the possibility is that we can ask for maximum tariff revisions because of an extraordinary case which was the reduction in the Mexican GDP for more than 5% last year. This is something that we have requested in one of our efforts for the moment, which is the case of the effort that accrues. Basically what we are requesting is the diminishing of the investments into the fact that passenger traffic demand is not the same as what we expected when we made the plan, and this will affect of course the capacities. So today we have excess capacity comprising of what we expected. And because of these we are asking them to reduce the investment or not to reduce in terms of concepts, reduce in terms of amounts but basically to delay the project for some years. We have not received an answer yet from them and we will keep you posted on these during the third quarter.

Okay. And your tariffs would be on an airport-by-airport basis. So for example, what were NDP, whatever side you are choosing to address. So Veracruz is one airport and you could do other airports as you decide.

Yes, but basically the effect on the salaries will be the result of CapEx diminishing. And CapEx diminishing will be originated if the capacity is not the same as expected, or the capacities if the inflation is not as expected. We decided to start with better cubicles. That’s the one who is most effective in terms of passenger traffic and projects to be done. So, let me rephrase this. We are expanding today Veracruz terminal build, and we are expanding this because this airport was or has some years ago 500,000 passenger traffic on annual basis. During the growth process let's say 2007-2008 the passenger traffic reached 1.1 million. So, depending on what's completely congested. So that was the moment when we made the master development plans. So in that particular case, we included a very large expansion of these airports in terms of returning our build. Today you have seen the decrease in passenger traffic in Veracruz and I don’t have the annual figure right now on the top of my head but should be very close to 800. So we have today a space to serve the people. So basically what we are saying to the authority is look, the passenger traffic decreased, the capacity that we placed in our master development plans is not needed today, so we see the ways to reduce or to delay this project. Then they will have to recalculate the maximum rate if they accept to diminish the investments. Okay, I think that’s the case and we will see beyond the airport fleet, they have the same kind of trouble.

Your next question comes from the line of Eric Keener from River Road. Please proceed.

Good morning, Mr. Castro. Really excited about the great results today, I also want to ask about capital expenditures and the use of cash flow for this year. It looks like through the first half you guys have under spent what I would have expected for CapEx, under the master development plan. Is the plan that you just discussed for the Veracruz airport is accepted by authorities. Could you give us an idea of the change to the master development plan in terms of CapEx this year or what you might target?

Well let me fill in, you are absolutely right. And the same fact, we should be spending more, at times all of these deals are done on a proportional basis through the year. The fact is that, the first thing that we do normally in a project is to design the thing, work into a bidding process of whose going to construct these things then we sign the agreement and then they start the construction process. So, normally if we see this on the EF you will see that it is not proportional and normally at the end of the years when we spend more. But nevertheless we have requested the situation because of Veracruz. That could have an impact of around 200 million pesos decrease in the case of Veracruz. I don’t have and we have not calculated the previous orders of requests on the other efforts, but I believe that is they authorize the situation in Veracruz. We can we will proceed with some other efforts and next one I am sure will be more and probably the reduction there could be another 1550 to 100 million.

That’s very helpful. Thank you. Also we are really happy that the progress made on the balance sheet this quarter in terms of debt reduction. Doesn’t the company plan to use cash generated from operations to further reduce that this year and what are the plans for cash as you continue to strengthen the balance sheet? Do you look to have flexibility if the project in Tulum comes through, or what might contingency plans be?

That’s a very good question. We decided to reduce the bank debt, because if you remember we took back that last year when the conditions around the world and of course in the case of Mexico we’re not the best, so we decided to pay the bank debt in order to take advantage of the reduction in the cost of the debt. As a matter of fact what we are going to do this year is to increase the leverage of this company. We will be having some debt during the third quarter of this year and probably some more during the fourth quarter. But of course we had several different cost of the one that we have. And in the case of the project that you have mentioned I cannot say too much about it, but it’s clear if we grow inside that and we result the winners of that situation in terms of leverage of this company may change significantly. That means that we will take advantage of these and we will leverage the project in a significant way.

(Operator Instructions) Your next question comes from the line of Mauricio Santos from GBM. Please proceed.

Very good morning Adolfo, congratulations on your results. I just wanted to ask you about the like the competition of you’re international passenger traffic I didn’t get when you said it, and if you could elaborate more on this? Thank you.

Okay Mauricio. The international traffic of course was completely different than what it was during the second quarter last year. And that was basically because of the swine flu effect. If you remember, this was announced on April 26 last year. Immediately some of them, the two operators decided to cancel their programs and basically their programs for all the summer. So what we are seeing today is the two brackets, a normal or a normalized passenger traffic composition. I would say what was wrong was the one that we had last year.

Yes. What about, I think you said like 38% was on Canada or your mix has changed significantly from a year ago?

The mix on Canada, I'm calculating the numbers, sorry, don't have any.

(Operator Instructions) Your next question is a follow-up question from Nick Sebrell from Morgan Stanley. Please proceed.

Yes, I think you're still answering that question from the last guy.

Let me say, Canada was 6.7%.

Adolfo, Nick Sebrell, just couple of quick follow-up questions. One, Oaxaca, that’s returning to normal and from what you said and your comment sounds like any of the problems that occurred there have been completely normalized? And then the second, cost of new debt. What does that run or what were your expectations of new debt being contracted in the second half, in terms of interest rate?

Okay. The question about Oaxaca; the things have normalized. We cannot say that things have normalized, of course it was. It is not as it was two years ago. These events of public disputes are basically coming from teachers and their bagging agreement is revised every May, every year. So again, we saw some disputes and we had some noise about the CD itself. And also we can ask, this specifically, that in the month of June we have the elections, election process for Governor. So, we had some additional public demonstrations because of this. And summer is not as it was during the last two years. It's improving but it's not yet normal completely. And your second question was about the cost of debt?

Cost of new debt, yes.

Well, I have not reached a complete agreement with the banks for the new debt but I am expecting between 25 to 45 basis points less in terms of what we had before.

Okay, very helpful. And is there anything you can say about US Tourism and assuming that the US doesn't fall into a double dip and it continues to grow at the rate that we are seeing now, would that mean a very normal year next year in terms of the international traffic that you guys see?

Well if nothing happens, yes.

Yeah, I know it is a big assumption. Okay so in other words, the signal that you see now for US Tourism to Cancún, et cetera, argue for or indicate a more normal year of say, and I am just throwing numbers out, I am not saying that this is what it will be, but for example, 6-7% traffic growth, which is similar to the kind of growth rates we saw before the low-cost carrier phenomena before the financial crisis et cetera.

Well, what I can say to you Nick is that of course this year is not also a normal year because we have this recovery process. In terms of the process, what I can see is that it is low, recovery process in the sense that we are not, that we are not going to reach what we had during 2008, but the reality is that the thing is getting better. And of course if nothing happens, we expect to have a decent year next year or a normalized year and the four divisions you have mentioned, are something that could be close to normal.

(Operator Instructions) Your next question comes from the line of Rogelio Urrutia from Santander. Please proceed.

Yes, good morning Adolfo. I just want to ask you about the decline in commercial revenues from the parking lots in the press release you mentioned that during the quarter you saw 0.26% decrease in this type of revenues, and as I understand it there will be some very significant portion of total commercial revenues?

Well parking lots is one of the most important activities that we have. We are working very, very hard in order to increase that revenue. And not just it is important it is very, very important in the smaller airports, I would say in the smaller airports it’s probably more important than what the normal commercial operations inside the terminal could be. We are working to gain or to improve our controls and our equipment, and these also in order to facilitate the operation of the parking lots, and to facilitate this operation to the users. I hope that with these kind of measures that we are taking we will see an improvement, let’s say at the end of the year. I don’t think we will reach the conclusion of redoing, that part of it I hope that by the end of the year or the beginning of the year 2011.

Your next question comes from the line of Francisco Suarez from HSBC. Please proceed

Hi, thank you. Good morning Adolfo, congrats on the results. Basically, what can you share with us on new frequencies going to Cancún, particularly the long haul ones? I believe that the ministry of tourism especially stated that British wanted to increase the frequency to Cancún directly from London.

Well, Francisco good morning, and thank you for your comments and thank you for your question. This is a very important question in the sense of the following. And it was announced that British Airlines is going to start with a scheduled flight from November this year to Cancún. And this is very important, because they were not in Cancún with regular flights probably eight years ago. So this is a major achievement. This achievement was the conclusion of the negotiation between the tourism authorities of the state and their own tourism authorities together with us, and together with our redevelopment team. And we are very happy to see that it's good to see that even with the financial crises that we are seeing in the UK, they believe in us and they were able to fly these regular flights.

So, in other words do you think that it is right to assume that we might be seeing inflection pointer as for the overall long haul flights into Mexico? Or do you think this is going to be a gradual approach by carriers given that everything is very, very uncertain at this moment as per the economic environment that greens cant give up?

Well, it’s not easy to say because what we’re seeing today is that the European Traffic is still weak. I was gladly surprised to receive this news about the situation with British, in other words it was not expected what we are seeing in terms of the financial crisis there, and the current situation in terms of flights.

Can you also remind us what is the share of European tourism as per passenger traffic?

Well as I said, it’s close to 8%.

Okay and lastly if I may, can you walk us a bit with your potential trends of in transit traffic due to Cancún?

Well transit passengers in Cancún it’s not significant. Since the end of last year Mexican Airlines have launched some programs in order to greet this in Cancún. They have in some of the cases succeeded, but of course this is not very, very important in the overall picture.

Okay, thank you. Sorry I forgot the question, sorry for that. Can you also share any comment whatsoever as for the, all the gossip that has been around here in Mexico on the health of the major carriers in Mexico and Méxicana, do you think that, actually is that a concern if I am not mistaken which is kind of currently about 10% of your passenger traffics in it?

Well, you can refer to the filings in the SEC and you will see a very clear point there. That is of course always a risk when we lose one carrier. It's something that you saw during the second half of the year 2008. Always, when we lose a carrier, we have effects. In the medium and long term, those effects should disappear because reality is that if you have passengers, you must have airlines and not the opposite. When you talk about, hub airports, the situation is different then you need an airline to have passengers, which is not the case of Cancún and which is not the case of most of our airports.

(Operator Instructions). Ladies and gentlemen, this concludes the question-and-answer session. I will now hand the call back to Mr. Adolfo Castro for closing remarks. Please proceed.

Thank you, Veronica. Before you leave, I would like to mention that we will host an event in New York on September the 13th, and the same event in Mexico City on September 28th. This will be to celebrate the 10 years of our company in both markets. This will be also, including a presentation, I think that well, the CEO has confirmed to be there, so I’m taking this opportunity to invite you to be there. Thank you for being with us and thank you for your attention for this conference call. Have a good day.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.