Adolfo Castro - CEO.

Stephen Trent - Citi Ramon Obeso - Scotiabank Pablo Zaldivar - Grupo Bursatil Mexicano Gene Grenier - BBVA Compass Fernando Abdalla - JPMorgan.

Good day ladies and gentlemen and welcome to the ASUR Second Quarter 2015 Results Conference Call. My name is Christy and I’ll be your operator. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of today’s conference.

[Operator instructions] As a reminder, today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please proceed..

Thank you, Christy and good morning, everybody. Thank you for joining us today on the conference call to discuss our second quarter 2015 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 current management expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company’s control.

For an explanation of these risks, please refer to our filings with the Securities and Exchange Commission and the Mexican Stock Exchange. As usual, I will start by reviewing operations in San Juan, Puerto Rico International airport. And afterwards briefly discuss the results of the quarter.

The second quarter 2015 passenger traffic at San Juan, Puerto Rico airport increased 0.9% year-on-year to MXN2.3.

Note that our second quarter result benefitted from a MXN21.7 million equity gain for ASUR’s equity participation in added stock and 11.4% and MXN11 million in stockholders' equity from the translation of the dollar against the peso during the period.

In terms of the infrastructure operator of airport, we remain on track to complete the remodeling of terminal C including a fully renewed space with the rebound commercial offering and more efficient traffic flow. The space should be completed ending operations by the first quarter 2016.

Moving on to our Mexican operations, the performance this quarter remains strong, Total passenger traffic increased 14.3% year-on-year to MXN6.6 million, nearly in line with the record setting in the first quarter 2015. Domestic traffic continued to perform well with all operations reporting year-over-year traffic growth.

Second quarter 2015 we saw an increase of 14.2% year-on-year reaching a record for our second quarter. Cancún airport specifically posted an 8.8% increase at Cancún for 1.5 million passengers. We continue to see earnings expanding at Cancún or going point to point and increasing connectivity between the differences in Mexico.

The combination of increased capacity, high traffic and to from Mexico City and lower fuel prices even after considering the effect of the position of the Peso, with clearly contributing to more than specific airports. In addition, constant appeals to domestic travelers who are more inclined to strive rather than use a bus.

The continuous position of the dollar against the Peso has remained a driving force behind ASUR’s international traffic. Actually passenger traffic between Mexico, Canada and the United States represented 88.6% of the total traffic compared with the 88% a year ago.

So while we are seeing a strong performance in traffic from Latin America, all areas however continue to show lead dynamics. In summary, one traffic figures the dates are quite strong moving in more tranches for the remaining of the year.

Moving on to the profit and loss account, total revenues excluding the 1,059% increase in revenue from construction services rose 23.2% compared with the second quarter 2014. Commercial revenues per passenger posted a strong performance of 11.9% year-on-year reaching MXN81.7, just below the record high of MXN82.6 set in the last quarter.

It was not only driven by a significant growth in passenger traffic, but also reflects the efforts of our concessioners across most airports to drive commercial revenues. Looking ahead, we are free to conduct potential to maintain these levels of commercial revenue as we continue to expand the capacity of Cancún airport.

EBITDA increased to MXN1.1 billion, up 29.2% year-on-year, reflecting ASUR’s ability to leverage a timely fiscal base. Actually operating company expenses excluding the increase in construction cost were up 9.1% well below revenue growth.

In addition, if their margin move in back from construction revenue drove 330 basis points to 70.8% from 67.5% in second quarter 2014. Second quarter 2015 results however, were affected by a non-cash foreign exchange loss of MXN30.5 million in the quarter resulting from the 204% depreciation of the peso on our currency net liability position.

Overall capital expenditures for the second quarter 2015 were MXN389 million invented along the parameters of our master development plan. Funds were invested principally in the expansion of Terminal 3, which is on track to be completed in December.

During the quarter, we conducted a bidding process to select the contractor to begin the construction of Terminal 4. Construction is expected to start in August. As usual, we maintain a healthy balance sheet with cash and cash equivalents of MXN3.2 billion and bank debt of MXN3.4 at the close of the quarter.

Each quarter we also deliver a cash dividend of MXN1.3 out of the retaining reflecting our commitment to provide value to our shareholders. Finally on July 17, 2015, ASUR was able to successfully restructure the bank loans related to our Cancún airport.

The Cancún airport subsidiary came to an agreement to extent about three field loans with BBA and Bank of America for a combined total amount of $250 million. From 2015 to 2022, in addition the two banks agreed to commit an additional line of credit were a total $85 million.

The proceeds of these additional loans will support the capital expenditures in Cancún airport. Now Christy, let me open the floor for questions. Go ahead..

Thank you. [Operator Instructions] And we’ll take our first question from Stephen Trent with Citi..

Thank you, Adolfo. And thanks for taking my question. Good morning to you.

Actually two if may, the first is Puerto Rico given what seems to be difficult budget situation there, what’s your view with respect to what we could see on the traffic standpoint as well as maybe taxation or utility rates?.

Hi. Good morning. Well taxes have increased in the island. This effect has increased from 7% to 11% as probably this will have a minor impact on the currency of the company because it's important to say that most of our traffic -- so the most important piece of traffic lives in New York.

So people that live out of the island that goes back to the island to see their families and go back again to the continent, so in general I would say to make this a short answer, I do not hesitate to major effect because of the situation today in summer..

Okay. Great.

And just one other question your -- the company's commercial revenue in 2Q, it was a big excluding direct operations, but direct operations it was flat, could you just refresh my memory what is commercial revenue excluding direct operations?.

Okay. Let me start saying what’s commercial because if you see the report carefully, there is a note on the bottom of the table saying that we have agreed to sign an agreement with a new concessioner in the case of advertising stores from maybe advertising is no longer a direct commercial operation for us.

So today even commercial direct operation is the case of convenient store and that is what probably you're seeing a flat equation during the quarter..

Advertising; got it. Okay. I saw that note. I didn’t quite understand, but that’s helpful. I appreciate the time Adolfo..

Okay. Thank you..

And we’ll take our next question from Ramon Obeso from Scotiabank..

Thank you for the call. And question regarding aeronautical pricing, we saw a strong growth in aeronautical revenue per passenger this quarter, could you give us some color on this and how sustainable these levels are going forward? Thank you..

Absolutely, aeronautical revenues are basically regulated revenues. Regulated revenues aren’t basically the result of our maximum rates times the number of passengers or the number of work load units.

So the numbers you are seeing is basically the result of maximum base of what's approved by the authority at the beginning of the year 2014 plus inflation minus 0.7% inefficiency factor. It is important to say that the case of inflation is measured by the BPI unit volume and not CPI.

So probably the effect that you're seeing is the effect of the BPI and of course it is obtainable for the remaining of the year..

Okay. Thanks..

You’re welcome..

[Operator Instructions] And our next question comes from Pablo Zaldivar with Grupo Bursatil Mexicano..

Hello Adolfo. Thank you for taking my question.

All right, do you have a timeframe when the Cancún renovations will be ready?.

Well as I said in the remarks, the expansion of Terminal 3 is expected to be concluded at the end of this year. So in December it should be ready..

Okay.

Perfect and can you give us a number or just an estimate or something of how much additional commercial area will be included in the new terminal?.

Okay. I would say that basically the expansion of Terminal 3 is -- well it’s divided in two pieces, the first piece is checking area and the second piece is boarding gate. So basically most of this is going to be operational phases not that we will increase in commercial revenues. But the benefit of these is that this will allow be Terminal 2.

So some of the passengers are today in Terminal 2, which is basically congested, will be able to fly from Terminal 3 and that will give us a relief and that should increase the commercial revenue per passenger….

Okay. Thank you very much..

You’re welcome..

And our next question comes from Gene Grenier with BBVA Compass Bank..

Gene Grenier:.

So just want to know what your view is on these operations. We know that you’re at [Carmine] [ph], which is not very far from the airport so the geographical exposure you have at the moment.

So I am not sure if that's something really to mention about, is something happening or we can expect from manuals on that matter in the coming weeks or month, thanks?.

Well to be honest, I do not have any additional information. The one that you have is the just note from the press. I do not have additional information. Of course this occurs -- once this occurs we will see the documents carefully and we will be interested to analyze the possible opportunity there..

Okay. Thank you very much..

You’re welcome..

And our next question from Fernando Abdalla with JPMorgan.

Hey, good morning Adolfo. I just have a question regarding CapEx. In the MDP that you published to the market it's expected to invest roughly MXN3 billion this year, but I guess in the first half CapEx was around MXN500 million.

So should we expect CapEx in the second half to increase and reach this MXN3 billion or part of this CapEx will move to the next years of the MDP?.

Hi Fernando. Good morning. No CapEx this year is you’re saying is more than MXN3 billion and it has to be a standard during this year, no matter what..

Okay. Perfect. Thanks..

You’re welcome..

[Operator Instruction] Our next question comes from Stephen Trent with Citi..

Hi Adolfo and thank you for taking my follow-up. Just one more if I may.

Looking at the very strong traffic growth that we've had assuming that the current growth rates are -- excuse me, the current growth rates are sustained, how long do you think it would be holding everything else constant, before we have to start assuming a mark down in tariffs in the next regulatory review?.

Well the traffic is really strong as I said to you in March because of the exchange rate that is originating more U.S. traffic to our destinations mainly Cancún. I don't know how sustainable this is.

You probably have more information of the one that I have, but of course at the level of Peso that we are seeing today, it's creating an opportunity for the U.S. guys to go to Cancún and they're taking this opportunity. The other important information is of course the strength of the domestic traffic. The airlines continue to increase their capacity.

They continue to add airplanes into their fleet. Also I have to say that we're seeing more point-to-point routes, more directly flight to Cancún from somewhere else apart from Mexico City.

The other thing is that we're seeing while we continue to see increase in the case of Mexico City so a better use of the plots they have even with the capacity constraints that they have on these particular piece of the airport.

So I believe that this is strong traffic growth that we are seeing today is because of these reasons and of course as I have said during the remarks and will be cautious about the future, I will not be expecting these to continue for a long number of times. So that's my view..

Okay. That’s helpful. Thank again for taking my follow-up Adolfo..

You’re welcome..

[Operator Instructions] It appears we have no questions in the queue at this time. I’d now like to turn the conference back over to Mr. Adolfo Castro for any closing remarks or comments..

Thank you, Christy and thank you everybody for joining us today on the conference call. Also, do not hesitate to contact me if there is any further question. Have a good day. Good bye..

This does conclude today's conference. Thank you for your participation. You may now disconnect..