MEXICAN AIRPORTS EARNINGS PREVIEW

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1 Latin American Equity Research Mexico City, April 20, 2009 Sector Preview Mexico Aerospace & Transportation MEXICAN AIRPORTS EARNINGS PREVIEW A Tough 1Q09, Driven by Weak Passenger Figures Luis Miranda, CFA* Mexico: Banco Santander S.A. (5255) lmiranda@santander.com.mx 1Q09 In this note, we present our 1Q09 earnings preview for Mexican airports. First quarter 2009 should be a weak quarter for the airport groups, as we expect that traffic will be negatively affected by a high base of comparison in 1H08, as well as by the suspension of operations of regional carriers, low-cost carriers, and the rationalization of routes and frequencies by airlines. Most of these problems started in 3Q08, and thus, we expect tough comps during the first half of Furthermore, during 1Q09, results should reflect a negative calendar effect, as in Mexico the Easter holiday had a positive effect on March 2008 figures, while in 2009 it will benefit April figures, making March 2009/March 2008 comps even tougher. We expect ASUR to post the best report in the quarter, driven by the resilience of the Cancun airport. We also underscore that, in our view, the negative news related to lower traffic in GAP and OMA are already priced in, as this was expected by the market. Consolidated sector results. At the consolidated level, we expect the sector to post a 1.3% decline in revenues in 1Q09 versus 1Q08 in nominal peso terms, and a 5.5% drop in EBITDA in the same period. We expect that the decline in aeronautical revenues, mainly driven by lower traffic, should be partially offset by higher revenues in the non-regulated area and cost-reduction initiatives implemented in 2008, especially at the end of the year. In U.S. dollar terms, the depreciation of the peso (33% 1Q09/1Q08 considering average exchange rate), will have a negative effect on the sector, which has a Mexican peso revenue base. Therefore, in dollar terms, we anticipate sales and EBITDA declines of 26% and 29%, respectively, for the sector on a consolidated basis. Total traffic. During the quarter, the total traffic for the three airport groups fell 12.8% YoY versus 1Q08 on a consolidated basis, driven by a 3.3% decline for Asur, a 16.8% decrease for GAP, and an 18.7% drop for OMA. The decline was driven by an 18.4% decline in domestic passengers (consolidated), and a 5.1% drop in international passengers. The expected decline in traffic should be partially offset by higher non-aeronautical revenues, as the groups have focused on improving their commercial revenues. Asur should be the company to benefit the most in this area, as 34% of Asur s total revenues were related to non-regulated revenues in 2008, versus 21% for Gap and 18% for OMA. ASUR (reports on April 22). The company should post growth of 5.3% in total revenues (YoY in 1Q09 in nominal peso terms) and a marginal 0.6% increase in EBITDA. Net income should come in at M$325 million (or M$1.08 per share), down almost 7.6% YoY. GAP (April 29). We expect revenue to decline 6% YoY in 1Q06 in peso terms, and EBITDA to fall 11.2% (affected by a high base of comparison). We estimate net income of M$392 million (-9.7% YoY), with EPS of M$0.70 or US$0.49 per ADR. OMA (April 27). The company should post a 3.8% decrease in revenues in 1Q09 versus 1Q08 and a 4.3% decline in EBITDA. We estimate net income of M$139 million or M$0.35 per share. Mexican Airports (U.S. Dollars in Millions a ) Price Target Upside/ Net Earnings P/E FV/EBITDA Mkt. Company Ticker Rec. 4/20 Price Down E 2010E E 2010E E 2010E Cap Asur ASR Buy % GAP PAC Buy % ,136 OMA OMAB Hold % a Except per share/adr amounts. Sources: Company reports and Santander estimates. Important disclosures/certifications are in the Important Disclosures section of this report. * Employed by a non-us affiliate of Santander Investment Securities Inc. and is not registered/qualified as a research analyst under FINRA rules.

2 A Tough 1Q09, Driven by Weak Passenger Figures ASUR 1Q09 PREVIEW In 1Q09, Asur s total passengers (PAX) of million passengers decreased 3.3% YoY, driven by a 3.0% increase in international PAX and a 13.9% decline in domestic. Cancun posted flat figures during the quarter, but was negatively affected by weak domestic demand in March (due to the Easter holiday). On the back of these figures, we estimate 5.3% growth in total revenues, driven by a 2.7% rise in aeronautical revenue and an 11% jump in nonaeronautical revenue. We underscore that non-aeronautical revenue should benefit from the company s sales mix, as it is the group with the highest exposure to commercial revenues. At the EBITDA level, we estimate 0.6% growth YoY. We estimate a 7.6% decline in net income in peso terms, driven by FX losses and taxes. We estimate EPS of M$1.08 of US$0.77 per ADR. In our view, 1Q09 results should not come as a surprise to the market, and we believe they will have a neutral effect. ASUR First-Quarter 2009 Preview U.S. Dollars in Millions a Mexican Pesos in Millions a 1Q09E 4Q08 %Δ Q/Q 1Q08 %Δ Y/Y 1Q09E 4Q08 % Δ Q/Q 1Q08 %Δ Y/Y Revenue % % Revenue % % EBIT % % EBIT % % EBITDA % % EBITDA % % EBITDA Mrg. 64.0% 57.0% 12.2% 67.0% -4.5% EBITDA Mrg. 64.0% 57.0% 12.2% 67.02% -4.5% Net Profit % % Net Profit % % ADR % % EPS % % a Except per share/adr amounts Sources: Company reports and Santander estimates. GAP 1Q09 PREVIEW GAP s total traffic in 1Q09 was million (down 16.8% YoY). Of the total PAX, 59% was domestic and 41% international. Domestic traffic fell 20.7% YoY during the quarter, while international traffic fell 10.7%. Traffic in Guadalajara (30.1% of total PAX), dropped 16.3% YoY in the first quarter, while in Pto. Vallarta (19.1% of total PAX), it declined 10.2% YoY. We estimate a total revenue decline of 6.0% YoY in 1Q09, driven by a 10.2% drop in aeronautical revenue and an 11.3% increase in non-regulated revenues. This increase should be driven by expansions in Pto. Vallarta and control over other operations (mainly parking lots). However, we estimate an EBITDA drop of 11.2% YoY in the quarter, as the company will be negatively affected by a very strong base of comparison in 1Q08 (EBITDA margin of 70.8%). We expect that GAP will continue to be the airport group with the strongest EBITDA margins in 1Q09 (67.0%). We estimate net income of M$392 million, M$0.70 per share or US$0.49 per ADR. Given that we expect Gap to post the steepest EBITDA decline among its peers, we believe the report could have a moderate negative effect on the stock. However, we maintain our positive view on Gap, recognizing that it has the highest margin among its peers, and going forward we expect a YoY decline in traffic to be lower in 2H09. GAP First-Quarter 2009 Preview U.S. Dollars in Millions a Mexican Pesos in Millions a 1Q09E 4Q08 %Δ Q/Q 1Q08 %Δ Y/Y 1Q09E 4Q08 % Δ Q/Q 1Q08 %Δ Y/Y Revenue % % Revenue % % EBIT % % EBIT % % EBITDA % % EBITDA % % EBITDA Mrg. 67.0% 60.9% 9.9% 70.8% -5.5% EBITDA Mrg. 67.0% 60.9% 9.9% 70.82% -5.5% Net Profit % % Net Profit % % ADR % % EPS % % a Except per share/adr amounts Sources: Company reports and Santander estimates. 2 Important disclosures/certifications are in the Important Disclosures section of this report.

3 OMA 1Q09 PREVIEW During 1Q09, OMA s total traffic of million PAX decreased 18.7% YoY versus 1Q08, driven by an 18.2% decline in domestic passenger traffic, which represents 79.3% of total traffic, and a 20.6% drop in international passengers. OMA is the group with the lowest exposure to international traffic. Monterrey and Acapulco, the two most important airports that represent 42% and 10% of total traffic, respectively, posted YoY declines of 20.5% and 14.9% YoY in the quarter, respectively. We estimate a total revenue decline of 3.8% YoY in 1Q09, driven by a 4.9% decline in aeronautical revenue and 1% growth in non-aeronautical revenue. We estimate an EBITDA decline of 4.3% YoY, as we expect that OMA will be able to benefit from its efforts to reduce operating expenses. Net income should come in at M$139 million or M$0.35 per share, which would imply US$0.20 per ADR. In our view, the report should be neutral for the stock, as the strong decline in total traffic should be partially offset by an improvement in productivity. As a result, the drop in EBITDA should not be as sharp as expected (compared with traffic figures). However, we maintain our cautious view on the stock, as we believe that there could be pressure on margins in the short term due to the ramp-up of the Hotel project in Mexico City International Airport Terminal 2. OMA First-Quarter 2009 Preview U.S. Dollars in Millions a Mexican Pesos in Millions a 1Q09E 4Q08 %Δ Q/Q 1Q08 %Δ Y/Y 1Q09E 4Q08 % Δ Q/Q 1Q08 %Δ Y/Y Revenue % % Revenue % % EBIT % % EBIT % % EBITDA % % EBITDA % % EBITDA Mrg. 57.2% 49.7% 15.2% 57.5% -0.6% EBITDA Mrg. 57.2% 49.7% 15.2% 57.53% -0.6% Net Profit % % Net Profit % % ADR % % EPS % % a Except per share/adr amounts. Sources: Company reports and Santander estimates. VALUATION AND RISKS TO INVESTMENT THESIS: ASUR. Our YE2009 target price is based on a DCF model with an 11.98% discount rate and a 2.0% terminal growth rate and implies a trailing 2009E FV/EBITDA multiple of 8.4 times and forward multiple of 7.2 times. Main risks: (1) further deterioration of growth prospects for the U.S. and Mexican economies; (2) ASUR could be barred from bidding on the construction of the airport in the Mayan Riviera, which would compete with its Cancun airport (3) the upcoming revision of its Master Development Plan in 2008; and (4) natural disasters (such as hurricanes) and terrorist threats (which could affect the tourism industry), among others. GAP. Our YE2009 target price is based on a discounted free cash flow valuation, with a 12.1% discount rate and a 2.5% terminal growth rate, which implies a target trailing FV/EBITDA of 8.1 times for 2009E and 7.1 times forward. Main risks include: weaker-than-expected economic growth; lower-than-expected passenger traffic at GAP s airports; changes in regulations that imply lower tariffs or higher capital expenditure; changes in travel preferences; industry consolidation; and terrorist or natural disasters that could affect airline traffic. OMA. Our YE2009 target price is based on a DCF valuation, using a 12.0% discount rate and a 2.5% terminal growth rate, and implies a target forward FV/EBITDA multiple of 8.0 times for 2009 and 7.0 times forward multiple. Main risks include: steeper-than-expected economic slowdown, which could negatively affect air traffic at OMA s airports; industry consolidation (reduction in flights and frequencies); and natural disasters or terrorist acts. Important disclosures/certifications are in the Important Disclosures section of this report. 3

4 A Tough 1Q09, Driven by Weak Passenger Figures IMPORTANT DISCLOSURES Asur 12-Month Relative Performance (U.S. Dollars) ASUR IPC 50 M-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 Sources: Bloomberg and Santander. Asur Three-Year Stock Performance (U.S. Dollars) B $ /1/06 B $ /26/06 B $ /4/07 B $ /13/07 B $ /28/08 B $ /6/09 3,500 3,000 2,500 2,000 1,500 Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review , M-06 J-06 S-06 D-06 M-07 J-07 S-07 D-07 M-08 S-08 D-08 M Asur ( L Axis) IPC (R Axis) Source: Santander. 4 Important disclosures/certifications are in the Important Disclosures section of this report.

5 Gap 12-Month Relative Performance (U.S. Dollars) IPC GAP M-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 Sources: Bloomberg and Santander. Gap Three-Year Stock Performance (U.S. Dollars) B $ /16/06* H $ /1/06 *Initiation of Coverage B $ /27/07 B $ /13/07 B $ /28/08 B$ /30/09 H $ /06/ M-06 A-06 D-06 M-07 S-07 F-08 O-08 M-09 3,500 3,000 2,500 2,000 1,500 1,000 Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review GAP ( L Axis) IPC (R Axis) Source: Santander. Important disclosures/certifications are in the Important Disclosures section of this report. 5

6 A Tough 1Q09, Driven by Weak Passenger Figures OMA 12-Month Relative Performance (U.S. Dollars) IPC OMA M-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 Sources: Bloomberg and Santander. Oma Three-Year Stock Performance (U.S. Dollars) B $ /23/07* Initiation of Coverage* B $ /30/07 H $ /21/08 B $ /1/08 H $ /6/ N-06 M-07 O-07 S-08 M-09 3,500 3,000 2,500 2,000 1,500 1, Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review Source: Santander. Series2 Series1 6 Important disclosures/certifications are in the Important Disclosures section of this report.

7 Key to Investment Codes IMPORTANT DISCLOSURES Rating Definition % of Companies Covered with This Rating % of Companies Provided Investment Banking Services in the Past 12 Months Buy Expected to outperform the local market benchmark by more than 10% % 55.56% Hold Expected to perform within a range of 0% to 10% above the local market benchmark % 25.93% Underperform/Sell Expected to underperform the local market benchmark % 18.52% Under review 1.07% The numbers above reflect our Latin American universe as of Monday, April 6, For a discussion, if applicable, of the valuation methods used to determine the price targets included in this report and the risks to achieving these targets, please refer to the latest published research on these stocks. Research is available through your sales representative and other electronic systems. Target prices are 2009 year-end unless otherwise specified. Recommendations are based on a total return basis (expected share price appreciation + prospective dividend yield) unless otherwise specified. Stock price charts and rating histories for companies discussed in this report are also available by written request to Santander Investment Securities Inc., 45 East 53 rd Street, 17 th Floor (Attn: Research Disclosures), New York, NY USA. Ratings are established when the firm sets a target price and/or when maintaining or reiterating the rating. Ratings may not coincide with the above methodology due to price volatility. Management reserves the right to maintain or to modify ratings on any specific stock and will disclose this in the report when it occurs. Valuation methodologies vary from stock to stock, analyst to analyst, and country to country. Any investment in Latin American equities is, by its nature, risky. A full discussion of valuation methodology and risks related to achieving the target price of the subject security is included in the body of this report. The benchmark used for local market performance is the country risk of each country plus the 1-year U.S. Treasury yield plus 6.5% of equity risk premium, unless otherwise specified. The benchmark plus the 10.0% differential used to determine the rating is time adjusted to make it comparable with the total return of the stock over the same period. For additional information about our rating methodology, please call (212) This research report ( report ) has been prepared by Santander Investment Securities Inc. ("SIS"; SIS is a subsidiary of Santander Investment I, S.A. which is wholly owned by Banco Santander, S.A. ["Santander"]) on behalf of itself and its affiliates (collectively, Grupo Santander) and is provided for information purposes only. This report must not be considered as an offer to sell or a solicitation of an offer to buy any relevant securities (i.e., securities mentioned herein or of the same issuer and/or options, warrants, or rights with respect to or interests in any such securities). Any decision by the recipient to buy or to sell should be based on publicly available information on the related security and, where appropriate, should take into account the content of the related prospectus filed with and available from the entity governing the related market and the company issuing the security. This report is issued in Spain by Santander Investment Bolsa, Sociedad de Valores, S.A. ( Santander Investment Bolsa ) and in the United Kingdom by Banco Santander, S.A., London Branch. Santander London is authorized by the Bank of Spain. This report is not being issued to private customers. SIS, Santander London and Santander Investment Bolsa are members of Grupo Santander. The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed, that their recommendations reflect solely and exclusively their personal opinions, and that such opinions were prepared in an independent and autonomous manner, including as regards the institution to which they are linked, and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report, since their compensation and the compensation system applying to Grupo Santander and any of its affiliates is not pegged to the pricing of any of the securities issued by the companies evaluated in the report, or to the income arising from the businesses and financial transactions carried out by Grupo Santander and any of its affiliates: Luis Miranda* *Employed by a non-us affiliate of Santander Investment Securities Inc. and not registered/qualified as a research analyst under FINRA rules, and is not an associated person of the member firm, and, therefore, may not be subject to the FINRA Rule 2711 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Grupo Santander receives non-investment banking revenue from the subject companies, with the exception of Asur. Within the past 12 months, Grupo Santander has received compensation for investment banking services from Gap. The information contained within this report has been compiled from sources believed to be reliable. Although all reasonable care has been taken to ensure the information contained within these reports is not untrue or misleading, we make no representation that such information is accurate or complete and it should not be relied upon as such. All opinions and estimates included within this report constitute our judgment as of the date of the report and are subject to change without notice. From time to time, Grupo Santander and/or any of its officers or directors may have a long or short position in, or otherwise be directly or indirectly interested in, the securities, options, rights or warrants of companies mentioned herein. 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