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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 20-F

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Commission file number: 1-33168

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Securities registered or to be registered pursuant to Section 12(b) of the Act:

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Securities registered or to be registered pursuant to Section 12(g) of the Act:

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

⌧ Yes ◻ No

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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934.

◻ Yes ⌧ No

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Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

⌧ Yes ◻ No

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

⌧ Yes ◻ No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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Indicate by check mark which financial statement item the registrant has elected to follow:

◻ Item 17 ⌧ Item 18

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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

☐ Yes ⌧ No

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  

☒ Yes ◻ No

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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PART I

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Item 1.          Identity of Directors, Senior Management and Advisers

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Not applicable.

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Item 2.          Offer Statistics and Expected Timetable

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Not applicable.

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Item 3.          Key Information

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RISK FACTORS

Risks Related to the Regulation of Our Business

The Company provides a public service regulated by the Mexican government, and the flexibility in managing aeronautical activities is limited by the regulatory environment in which the Company operates.

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The Company’s aeronautical fees charged to airlines and passengers are regulated, like most airports in other countries. In 2021, 2022 and 2023, approximately 60.5%, 59.1% and 61.8%, respectively, of the Company’s total revenues, and approximately 76.1%, 76.0%, and 77.3%, respectively, of the sum of its aeronautical and non-aeronautical revenues were earned from aeronautical services, which are subject to price regulation under the Company’s maximum rates. These regulations may limit the Company’s flexibility in operating its aeronautical activities, which could have a material adverse effect on its business, results of operations, prospects and financial condition. In addition, several of the regulations applicable to the Company’s operations that affect its profitability are authorized (as in the case of the Master Development Programs) or established (as in the case of maximum rates) by the Ministry of Infrastructure, Communications and Transportation for five-year terms. The Company generally does not have the ability to unilaterally change its obligations (such as the investment obligations under its Master Development Programs or the obligation under its concessions to provide a public service) or increase our maximum rates applicable under those regulations should the passenger traffic or other assumptions on which the regulations were based change during the applicable term. In addition, this price regulation system may be amended in the future in a manner that would cause additional sources of the Company’s revenues to be regulated.

The Company’s results of operations may be adversely affected by required efficiency adjustments to its maximum rates.

The Company’s maximum rates in Mexico are subject to annual efficiency adjustments, which have the effect of reducing the maximum rates for each year to reflect projected efficiency improvements. For the five-year period ending December 31, 2020 and December 31, 2025, the maximum rates applicable to the Company’s airports reflect an annual efficiency improvement of 0.70%. Future annual efficiency adjustments will be determined by the Ministry of Infrastructure, Communications and Transportation in connection with the setting of each Mexican airport’s maximum rates every five years. For a description of these efficiency adjustments, see “Item 4. Information on the Company—Regulatory Framework—Revenue Regulation—Methodology for Determining Future Maximum Rates.” We cannot provide assurance that we will achieve efficiency improvements sufficient to maintain or increase our operating income as a result of the progressive decrease in each of our airport’s maximum rate.

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On October 4, 2023, the Company received a notification from the Mexican Federal Civil Aviation Agency, a deconcentrated entity of the Ministry of Infrastructure, Communications and Transportation, informing the amendment of the terms of the tariff base regulation (Bases de Regulación Tarifaria) set forth in Annex 7 of the Company’s concessions, which was further modified on October 19, 2023. The amendment to the terms of Annex 7 of the Company’s concessions will modify the maximum annual tariffs that each of our airports can charge for their services. Following the announcement by the Mexican Federal Civil Aviation Agency to modify the terms of the tariff base regulation of our concessions, our stock price on the Mexican Stock Exchange declined by 26% from October 4, 2023, to October 5, 2023. We cannot guarantee that the Mexican Federal Civil Aviation Agency or any other regulatory authority will refrain from further amending the terms of the tariff base regulation, which may potentially affect the maximum rates for each airport and result in a material adverse impact on our business operations, financial performance, and overall results. See “Item 3. Key Information—Risk Factors—Risks Related to the Regulation of Our Business— The regulations pursuant to which the maximum rates applicable to the aeronautical revenues are established do not guarantee that the consolidated results of operations, or the results of operations of any airport, will be profitable, or that the Company will realize the expected return on investment.”

The Company cannot predict how the regulations governing the business will be applied.

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Many of the laws, regulations and instruments that regulate the Company’s business were adopted or became effective in 1999, and there is only a limited history and examples that would allow the Company to predict the impact of these legal requirements on its future operations. Mexican law establishes ranges of sanctions that might be imposed should the Company fail to comply with the terms of one of its concessions, the Mexican Airport Law and its regulations or other applicable laws. The Company cannot predict the sanctions that are likely to be assessed for a given violation within these ranges. It may encounter difficulties in complying with these laws, regulations and instruments.

Although the Master Development Programs and maximum rates through 2025 have been set, the Company cannot predict what the Master Development Program for 2026 and following years will establish. When determining the maximum rates for the next five-year period (from 2026 to 2030), the Ministry of Infrastructure, Communications and Transportation may be solicited by different entities (for example, the Antitrust Commission) to modify the maximum rates, thus reducing the Company’s profitability. The laws and regulations governing the business, including the rate-setting process and the Mexican Airport Law, may change in the future or be applied or interpreted in a way that could have a material adverse effect on the Company’s business, results of operations, prospects and financial condition.

Additionally, on October 16, 2019, the Ministry of Infrastructure, Communications and Transportation established the Mexican Federal Civil Aviation Agency, an independent regulatory agency, that replaced the Mexican Bureau of Civil Aviation (Dirección General de Aeronáutica Civil). The Mexican Federal Civil Aviation Agency is responsible for establishing, coordinating, overseeing and controlling international and national air transportation, as well as the airports, complementary services and generally all activities related to civil aviation. The Mexican Federal Civil Aviation Agency was formally established on February 26, 2021, and while the internal regulations and operation manuals further enacted did not change materially with respect to the previous ones, the Company cannot predict the actions that the Mexican Federal Civil Aviation Agency will take in the future, or the effect of any such actions on its business.

In 2014, Mexico enhanced its Federal Antitrust Law (Ley Federal de Competencia Económica), significantly empowering the Antitrust Commission with broader regulatory powers, including overseeing essential facilities and enforcing market competition. This included the ability to enforce changes in business operations that could notably affect companies, especially concerning mergers, anti-competitive behavior, liabilities, and fines. Specifically, the Antitrust Commission recognized the allocation of flight slots at Mexico City International Airport as an essential service due to its impact on flight schedules and market competition. To address the observed inefficiencies and anti-competitive effects, the Antitrust Commission issued corrective measures in 2017. However, subsequent regulatory amendments and guidelines from the Ministry of Infrastructure, Communications and Transportation were found inadequate and contradicting these measures by the Antitrust Commission. This led to a legal dispute over the regulatory authority on slot allocation, culminating in the Mexican Supreme Court’s ruling against the Antitrust Commission in November 2019.

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Even though none of its airports have been declared congested as of the date of this report, the Company cannot predict whether or when this will happen. Similarly, it cannot predict whether the Antitrust Commission will declare any of its airports, or any complementary or commercial service provided at the airports, as essential services, and consequently, establish rules, recommendations, guidelines or conditions that could limit or restrict the Company’s aeronautical and/or non-aeronautical revenues.

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On May 3, 2023, the Mexican government published a decree amending the Airports Law (Ley de Aeropuertos) introducing several changes including (i) changing the administrative nature of the Mexican Federal Civil Aviation Agency from a regulatory agency to a decentralized administrative entity (órgano administrativo desconcentrado) of the Ministry of Infrastructure, Communications, and Transportation; (ii) enhancing the regulatory and supervisory responsibilities of the Mexican Federal Civil Aviation Agency over civil aviation matters, which were previously assigned to the Ministry of Infrastructure, Communications, and Transportation, including the issuance of technical and administrative regulations applicable to the Master Development Programs; (iii) coordinating security regulations to restore Mexico’s FAA safety rating to Category 1 (which was recovered in September, 2023); (iv) authorizing the Ministry of Infrastructure, Communications, and Transportation to grant, for an indefinite term, assignments to state-owned entities for the management, operation, and, if applicable, construction of airports; (v) notifying the Ministry of Infrastructure, Communications, and Transportation or the Mexican Federal Civil Aviation Agency of any amendments to their bylaws, early dissolution, change of purpose, merger, transformation, spin-off and any transfer of shares, even if these do not result in a change of control of the concessionaire; and (vi) establishing that the concession can be terminated if sanctions are imposed more than twice for the same violation, including exceeding an airport’s maximum rate, during a 10-year period. As of the date of this filing, we cannot determine whether these amendments could affect the Mexican economy or our operations.

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The regulations pursuant to which the maximum rates applicable to the aeronautical revenues are established do not guarantee that the consolidated results of operations, or the results of operations of any airport, will be profitable, or that the Company will realize the expected return on investment.

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The regulations applicable to the Company’s aeronautical activities establish an annual maximum rate for each airport, which is the maximum annual amount of revenues per workload unit (which is equal to one terminal passenger or 100 kilograms (220 pounds) of cargo) that the Company may earn at that airport from services subject to price regulation.

On November 30, 2020, the Ministry of Infrastructure, Communications and Transportation approved, based on the terms of the Company’s concessions, the maximum rates for its airports from January 1, 2021 through December 31, 2025. For a discussion of the framework for establishing its maximum rates and the application of the rates, see “Item 4. Information on the Company—Regulatory Framework—Revenue Regulation.”

The Company’s concessions provide that an airport’s maximum rates will be adjusted periodically for inflation (determined by reference to the Mexican Producer Price Index (Índice Nacional de Precios al Productor), excluding fuel). Although the Company is entitled to request additional adjustments to an airport’s maximum rates under certain circumstances including, among others, required capital investments not foreseen in the Master Development Programs, decreases in capital investments attributable to Mexican economy-related passenger traffic decreases or modifications of the concession tax payable by the Company, its concessions provide that such a request will be approved only if the Ministry of Infrastructure, Communications and Transportation determines that certain limited events specified in the concessions have occurred. Therefore, such a request may not be granted in the future. If a request to increase an airport’s maximum rates is not granted, and the Company is impacted by the circumstances that led to the request, its results of operations and financial condition could be adversely affected, and the value of Series B shares and ADSs could decline.

Under the terms of the Company’s concessions, there is no guarantee that the results of operations of any airport will be profitable. The Company may not realize its expected return on investment from investments under the Master Development Programs.

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The Company business is dependent upon international regulations that affect Mexican airlines.

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The FAA evaluates the legal framework for civil aviation and issues related to the monitoring, staff training and inspection processes related to regulations issued by the International Civil Aviation Organization (“ICAO”).

On May 25, 2021, the FAA announced that, following an assessment of the Mexican Federal Civil Aviation Agency, it had determined that Mexico was not in compliance with international safety standards set by ICAO, and as a result, downgraded Mexico’s aviation safety from Category 1 rating to an International Aviation Safety Assessment (“IASA”) Category 2 rating.

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The FAA had previously downgraded Mexico’s aviation safety rating from a Category 1 rating to a Category 2 rating on July 30, 2010, as a result of the FAA’s visit to the Mexican Bureau of Civil Aviation (currently the Mexican Federal Civil Aviation Agency) between January and July 2010. However, on September 14, 2023 the FAA restored Mexico’s Category 1 aviation safety rating.

The consequences of the above-mentioned downgrades were the suspension of the right to operate code-shared flights and the restriction of Mexican airlines’ ability to increase the frequency of, or add new routes to, the United States. Notwithstanding that FAA restored Mexico’s Category 1 aviation safety rating, Mexico’s rating can be downgraded again in the future, and we cannot predict what impact such a downgrade would have on our passenger traffic or results of operations, or on the public perception of the safety of our airports.

In 2021, 2022 and 2023, 5.0%, 3.0%, and 3.3% respectively, of our total passenger traffic, corresponded to passengers who traveled through our airports on flights to or from the United States operated by Mexican Airlines. The Company cannot be certain of how long this rating will be maintained and we cannot predict what impact a downgrade would have on our passenger traffic or results of operations, or on the public perception of the safety of our airports.

If the Company exceeds the maximum rate at any airport at the end of any year, it could be subject to sanctions.

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Historically, the Company has set the tariffs it charges for aeronautical services at each airport in order to come as close as possible to its authorized maximum rate for that airport in any given year. For example, in 2023, the revenues subject to maximum rate regulation represented approximately 97.5% of the amounts the Company was entitled to earn under the maximum rates for all of its airports. The Company may not be able to establish tariffs in the future that allows it to collect substantially all of the revenues it is entitled to earn from services subject to price regulation.

The specific tariffs the Company charges for aeronautical services are determined based on various factors, including projections of passenger traffic volumes, the Mexican Producer Price Index (excluding fuel), the Mexican Consumer Price Index and the value of the peso relative to the U.S. dollar. These variables are outside of the Company’s control. The Company’s projections could differ from the applicable actual data, and, if these differences occur at the end of any year, they could cause the Company to exceed the maximum rate at any one or more of its airports during that year.

If the Company exceeds the maximum rate at any airport at the end of any year, the Ministry of Infrastructure, Communications and Transportation may assess a fine and may reduce the maximum rate at that airport in the subsequent year. The imposition of sanctions for violations of certain terms of a concession, including for exceeding an airport’s maximum rate, can result in termination of the concession if the relevant term has been violated and sanctions have been imposed more than two times for the same cause, during a term of 10 years.

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In the event that any one of the Company’s concessions is terminated, its other concessions may also be terminated. For a discussion of events that may lead to a termination of a concession, see “Item 4. Information on the Company—Regulatory Framework—Penalties and Termination and Revocation of Concessions and Concession Assets.”

Depreciation of the peso may cause the Company to exceed the maximum rates.

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The Company aims to charge prices that are as close as possible to its maximum chargeable rates, and it is entitled to adjust the specific tariffs only once every six months for inflation (or earlier upon a cumulative increase of 5% in the Mexican Producer Price Index (excluding fuel)).

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However, the Company generally collects passenger charges from airlines 30 to 60 days following the date of each flight. The tariffs for the services that it provides to international flights or international passengers are generally denominated in U.S. dollars but are paid in Mexican pesos (or “pesos”) based on the average exchange rate for the month prior to each flight. Accordingly, depreciation of the peso, particularly late in the year, could cause the Company to exceed the maximum rates at one or more of its airports, which could lead to the imposition of fines and the subsequent termination of one or more of its concessions.

The peso has historically experienced significant volatility. From December 31, 2021 to December 31, 2022, the peso appreciated by approximately 5.0%, from Ps.20.51 per U.S.$1.00 on December 31, 2021 to Ps.19.50 per U.S.$1.00 on December 30, 2022. From December 31, 2022 to December 31, 2023, the peso appreciated by approximately 13.3% from Ps.19.50 per U.S.$1.00 to Ps.16.90 per U.S.$1.00. On April 19, 2024, the exchange rate was Ps.17.21 per U.S.$1.00.

The Mexican government may terminate or reacquire the concessions under various circumstances, some of which are beyond the control of the Company.

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The Company’s concessions are its principal assets, and it would be unable to continue operations without them. A concession may be revoked by the Mexican government for certain prescribed reasons, including the failure to comply with the Master Development Programs, a temporary or permanent halt in the Company’s operations, actions affecting the operations of other concession holders in Mexico, the failure to pay damages resulting from its operations, the failure to keep the rates from exceeding its maximum rates or the failure to comply with any other material term of its concessions. Violations of certain terms of a concession (including violations for exceeding the applicable maximum rate) can result in revocation of a concession only if sanctions have been imposed for violations of the relevant term more than two times for the same cause, during a term of 10 years. Violations of other terms of a concession can result in the immediate termination of the concession. The concessions may also be terminated upon the Company’s bankruptcy or insolvency. Violations of the Mexican Airport Law, its regulations or other federal regulations could result in similar sanctions. In the event that any one of the Company’s concessions is terminated, its other concessions may also be terminated. For a discussion of events that may lead to a termination of a concession, see “Item 4. Information on the Company—Regulatory Framework—Penalties and Termination and Revocation of Concessions and Concession Assets.”

Under applicable Mexican law and the terms of the Company’s concessions, its concessions may also be made subject to additional conditions, including under the renewed Master Development Programs, which the Company may be unable to meet. Failure to meet these conditions may also result in fines, other sanctions and the termination of the concessions.

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The Mexican government may also terminate one or more of the concessions at any time through reversion, if, in accordance with applicable Mexican law, it determines that it is in the public interest to do so. The Mexican government may also assume the operation of any airport in the event of war, public disturbance or a threat to national security. In addition, in the case of a force majeure event, the Mexican government may require the Company to implement certain changes in its operations. In the event of a reversion of the public domain assets that are the subject of the concessions, the Mexican government under Mexican law is required to compensate the Company for the value of the concessions or added costs based on the results of an audit performed by appraisers or, in the case of a mandated change in the Company’s operations, the cost of that change. Similarly, in the event of an assumption of the Company’s operations, other than in the event of war, the government is required to compensate it and any other affected parties for any resulting damages. The Company may not receive compensation equivalent to the value of its investment in or any additional damages related to its concessions and related assets in the event of such action.

In the event that any one of the Company’s concessions is terminated, whether through revocation or otherwise, its other concessions may also be terminated. Thus, the loss of any concession would have a material adverse effect on the business and results of operations.

The Mexican government could grant new concessions that compete with the airports operated by the Company.

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The Mexican government could grant additional concessions to operate existing government-managed airports or authorize the construction of new airports as well as directly operate, through the Ministry of National Defense or the Ministry of the Navy, concessions that may compete directly with the airports operated by the Company.

On February 5, 2014, the Mexican government announced in the Federal Official Gazette that the Ministry of Infrastructure, Communications and Transportation granted to Administradora de Servicios Aeroportuarios de Chihuahua, S.A. de C.V., a concession for 20 years to construct, operate and exploit a civil-aviation airport in the municipality of Bocoyna, Chihuahua, located 250 kilometers (144 miles) from the city of Chihuahua, within an area of 95.5 hectares (0.4 square miles). The government of the state of Chihuahua owns 98% of the capital stock of Administradora de Servicios Aeroportuarios de Chihuahua, S.A. de C.V. The airport has an ICAO Category 3C rating and could present competition to the Company’s airport located in the municipality of Chihuahua, which has a higher ICAO Category 4D rating and is located 18 kilometers (11.2 miles) from the city of Chihuahua. On January 31, 2024, the State of Chihuahua announced that the airport started operations for general aviation flights with an annual capacity of up to 20,000 passengers per year. The airport is expected to have an annual capacity to serve up to 80,000 passengers per year during the first five years of operations and later increase its capacity to serve up to 250,000 passengers per year. As of the date of this report, the Company cannot predict whether the Bocoyna airport will materially affect our results of operations or financial performance.

During the fourth quarter of 2023 and the first quarter of 2024, the Ministry of Infrastructure, Communications and Transportation awarded several airport concessions to state-owned companies in which the Mexican military holds the majority interest either through the Ministry of National Defense (Secretaria de la Defensa Nacional) or the Ministry of the Navy (Secretaria de Marina). As a consequence of these recent awards, Mexico’s military has now consolidated its presence as an airport operator which, as of the date of this report, oversees 20 airports in Mexico including Mexico City International Airport and the Felipe Angeles International Airport, according to press releases made by the Ministry of National Defense and the Ministry of the Navy.

In the future, the Company might encounter competition from Aeropuerto del Norte, an airport near Monterrey, which was operated by a third party pursuant to a concession. The concession held by this third party has recently expired, and it remains uncertain whether a new concession will be granted to a private third party or to a state-owned company, as it has been the trend recently. Historically, Aeropuerto del Norte has been used solely for general aviation operations. The state of Nuevo León has requested in the past that the Ministry of Infrastructure, Communications and Transportation amend Aeropuerto del Norte’s concession to allow it to serve commercial aviation operations. On December 26, 2023, the Mexican President announced that the concession of this airport will be granted to the Ministry of National Defense and that it intends to expand its current commercial aviation operations. As of the date of this report, we cannot assure how this new proposal from the President, if approved, would materially affect our results of operations or financial performance.

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Any competition from such airports could have a material adverse effect on the Company’s business, results of operations, prospects and financial condition.

Under certain circumstances, the grant of a concession for a new or existing airport must be made pursuant to a public bidding process. In the event that a competing concession is offered in a public bidding process, the Company may not participate in such a process, or it may not be successful if it were to participate. See “Item 4. Information on the Company—Regulatory Framework—Grants of New Concessions.”

The Ministry of Infrastructure, Communications and Transportation could require the Company to monitor certain aircraft movements at its airports that the Company does not currently control, which could result in increased costs.

The Mexican Air Traffic Control Authority (Servicios a la Navegación en el Espacio Aéreo Mexicano) or “SENEAM”, could require the Company to monitor certain aircraft movements at its airports that the Company does not currently control, which could result in increased costs. SENEAM may require the Company to manage and control aircraft movements in and out of its arrival and departure gates and remote boarding locations at its airports. Should SENEAM require the Company to control, or if the Company, for efficiency purposes, requests to control, these aircraft movements directly at any or all of its airports in the future, the Company’s results of operations could be negatively impacted by increased operating insurance and liability costs resulting from taking on these obligations.

Changes to Mexican laws, regulations and decrees applicable to the Company could have a material adverse impact on the results of operations.

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In recent years, the Mexican government has implemented changes to the tax laws applicable to Mexican companies, including the Company. The terms of the Company’s concessions do not exempt it from any changes to the Mexican tax laws. Should the Mexican government implement changes to the tax laws that result in the Company having significantly higher income tax, the Company will be required to pay higher amounts due pursuant to any such changes, which could have a material adverse impact on its results of operations. In addition, changes to the Mexican constitution or to any other Mexican laws could also have a material adverse impact on the Company’s business, results of operations, prospects and financial condition.

On December 27, 2016, the Ministry of Finance and Public Credit announced an increase, effective January 1, 2017, in the maximum gasoline and diesel prices to be applied in certain regions of Mexico, which caused an increase of gasoline prices of up to 20% in those areas. Furthermore, in November 2017, the Mexican Government removed price controls on gasoline and diesel, and such removal remains in place as of today. The removal of price controls and the resulting price increases led to widespread protests across Mexico. The Company cannot predict the effect of changes in gasoline and diesel prices, and any related political and social unrest, on the Mexican economy or whether the Mexican Government may alter its strategy for price liberalization in the future.

On May 1, 2019, the Mexican Government published significant reforms in the Federal Official Gazette to the Mexican Federal Labor Law. These changes include the creation of courts specializing in labor law and protections to the collective rights of workers and union rights. As a result of these reforms, employees cannot be forced to join a union and more than one union can exist in every workplace. Currently, all unionized Company employees, who are employed by our airport subsidiaries, are represented by a national union of airport workers that operates throughout Mexico. To the extent unionized airport workers seek to create or join new unions, and/or materially modify the conditions agreed with the Company and with other Mexican airport operators, the Company’s operations could be adversely affected by union activities, including organized strikes or other work stoppages. The Company cannot predict how these developments may affect the Company’s results of operations or its financial condition. Any increased demands by the Company’s unionized workers may lead to higher labor costs, which could have a negative impact on its results of operations. For more information, see “Collective labor conflicts in Mexico could have an adverse impact on our results of operations” and “If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.”

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As part of the current Federal Administration’s effort to protect worker’s rights, on October 23, 2019, NOM-035-STPS-2018 became effective. This NOM seeks to identify and prevent psychosocial risk factors in the workplace and promote a favorable work environment. Some of the obligations set forth in this NOM include the creation of internal policies to prevent psychosocial risks, such as workloads, excessive work hours and shift rotations, negative interference in family life, negative leaderships in the workplace and violence in the workplace. While the Company has complied with the NOM provisions, the Company cannot predict whether its employees will eventually claim that the Company violated any of the provisions under the NOM. Any claims against the Company filed by its employees may lead to higher labor costs, which could have a negative impact on our results of operations. For more information, see “If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.”

In December 2019, the Mexican government published several amendments to the Income Tax Law, Value Added Tax Law, Excise Tax Law and the Federal Tax Code, most of which became effective on January 1, 2020. This set of tax reforms is one of the most important in the past few years and its main purpose is to tackle tax evasion by strengthening tax authorities’ control mechanisms. These amendments imposed stringent restrictions on the deductibility of certain expenses, such as a new earnings-stripping rule applicable to net interest, and the non-deductibility of payments to related parties that are deemed subject to preferential tax regimes or by means of structured arrangements, introduced regulations regarding hybrid mismatches and added amendments to the tax treatment applicable to tax transparent foreign entities or arrangements, all of which could affect our operating results. None of these amendments significantly impacted our operating results in subsequent years.

The 2020 tax reform also introduced a new mandatory disclosure regime aimed at tax advisors, for purposes of reporting and monitoring specific tax schemes referred to in article 199 of the Federal Tax Code.

On January 11, 2021, the Mexican Government published reforms to Article 311 of Mexican Federal Labor Law and NOM-037-STPS-2023, regulating remote working conditions. As a result of these reforms, employees that work more than 40% of their work hours from home or from any other place that is not the applicable company’s domicile without supervision or guidance from the employer have new rights and obligations. These new rules also set forth new obligations for employers. For example, employers must now provide the necessary tools and services for employees to fulfill their jobs. This reform became effective as of January 12, 2021. While, as of the date of this report, the Company no longer implements a work from home policy, we cannot determine whether these developments could affect the Company’s results of operations in the future.

On April 23, 2021, the Mexican government published a decree pursuant to which several amendments were made to the Federal Labor Law, Income Tax Law, VAT Law, among others, in order to prohibit outsourcing of personnel, limit contracting and amending profit-sharing rules. The amendments became effective April 24, 2021, except for certain legal provisions that became effective August 1, 2021. Among the most important amendments made were: (i) prohibition of outsourcing of personnel, however the provision of specialized services or the execution of specialized works (through external providers or companies within the same business group) is still allowed, only to the extent the services provided are not part of the corporate purpose or the primary economic activity of the company receiving the services; (ii) joint and several liability of companies hiring specialized services with a contractor who fails to comply with its labor obligations; (iii) companies that provide specialized services will require to be registered with the Ministry of Labor and Social Welfare (STPS); (iv) increase in fines for violation of the rules; and (v) payments related to contracting of personnel will not be deductible for income tax purposes and the Value Added Tax corresponding to these payments will not be accredited. In order to comply with the new regulations, the Company transferred certain employees to its airport subsidiaries, terminated certain contracting services contracts and ensured that its remaining contracted service providers complied with the new regulation. None of these regulatory amendments nor the actions the Company took in response thereto had any material impact in the Company’s results of operations or its financial condition, and we do not expect any material impacts in the future.

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On March 10, 2021, a decree amending certain terms of the Electric Industry Law (“EIL”) became effective. The amendments aim to strengthen the state-owned utility Comisión Federal de Electricidad (“CFE”). The amendment includes, among others, (a) modifications to the order of priority of dispatch to the national electric grid; (b) modifications to the granting of permits referred in the EIL, which will now be subject to the planning criteria issued by the Ministry of Energy; and (c) powers granted to the Energy Regulatory Commission (“CRE”, for its acronym in Spanish) to revoke vesting self-supply contracts. The EIL amendments have been subject of numerous amparo lawsuits before federal courts in Mexico, in which judges have granted general injunctions, suspending the effects of the EIL amendments, for the benefit of anyone affected by the amendments, until a ruling on the merits of the amparo lawsuits is issued by the competent courts. Furthermore, the EIL’s constitutionality was judicially challenged by the Mexican Federal Antitrust Commission (Comisión Federal de Competencia Económica) and local governments, and through an unconstitutionality proceeding (acción de insconstitucionalidad) filed by two-thirds of the Mexican Senate. However, the Mexican Supreme Court dismissed the action of unconstitutionality and the constitutional challenges for lack of sufficient votes to proceed with these actions. On February 1, 2024, the Mexican Supreme Court granted six injunction proceedings (amparos) against the amendments to the EIL and declared the amendments unconstitutional.

On September 30, 2021, the Mexican federal executive branch presented a bill before the House of Representatives (Cámara de Diputados) to amend Articles 25, 27 and 28 of the Mexican Constitution, which bill proposed changes to the legal framework that governs CFE and the Mexican power industry generally. The bill was vetoed by the House of Representatives as of April 17, 2022 and will not go into effect.

In addition, in 2017 we entered into a self-supply agreement (“SSA”) under the self-supply (“autoabasto”) legal figure, with a wind electricity generator, which expires in 2028. In 2023, approximately 79% of the total electricity consumption of the Company was supplied under this agreement. As of the date of this report, we cannot predict how these amendments to the EIL and the proposed bill to amend the Constitution will affect the SSA if they ever become effective.

Separately, upon the enactment of the Mexican Federal Antitrust law Law (Ley Federal de Competencia Económica) on May 23, 2014, the law granted broad powers to the Mexican Federal Economic Competition Commission (Comisión Federal de Competencia Económica) (“COFECE”), including the abilities to investigate and regulate essential facilities, investigate companies, eliminate barriers to competition in order to promote access to the market and order the divestment of assets. The law also set forth important changes in connection with mergers and anti-competitive behavior, increases liabilities that may be incurred for violations of the law, increases the amount of fines that may be imposed for violations of the law and limits the availability of legal defenses against the application of the law, since COFECE’s decisions may only be challenged through indirect appeal (amparo indirecto).

On March 28, 2023, the Mexican President presented to Congress an initiative to reform various federal laws. The bill provides, among others, additional grounds for the Mexican government to revoke concessions and permits. It also provides a mechanism to speed up private property expropriation. As of the date of this report, we cannot assure you how such bills, if passed, would affect our operations and competitiveness in the Mexican market.

On May 3, 2023, the Mexican government published a decree amending the Airports Law (Ley de Aeropuertos) See “Item 3. Key Information—Risk Factors—Risks Related to the Regulation of Our Business— The Company cannot predict how the regulations governing the business will be applied.” As of the date of this filing, we cannot determine whether these amendments could affect the Mexican economy or our operations.

On November 13, 2023, the Mexican government published a decree amending the Mexican Federal Duties Law (Ley Federal de Derechos). The amendments included the increase in the fee paid by airport concessionaires to the federal government from 5% to 9%. The excess concession tax payments related to aeronautical activities made during 2024 and 2025, will be incorporated as an addition to the reference value in the following ordinary review from 2026 to 2030. The excess payments corresponding to the regulated revenues for the following years, will be incorporated to the maximum tariff formula, as per the maximum rate regulation.

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On February 5, 2024, the Mexican President proposed to the Chamber of Deputies 18 amendments to the Mexican constitution (“the 2024 Constitutional Package”). The 2024 Constitutional Package includes, among other amendments (i) the establishment of the National Guard as a permanent armed force, (ii) amendments to criminal laws, including those related to drug trafficking, extortion and tax fraud, (iii) social security reforms, (iv) minimum wages for teachers, doctors and nurses, police officers, national guard and members of the armed forces, (v) establishing universal and free medical care to citizens, (vi) several reforms to the Federal judicial branch, including the voting mechanism to elect Supreme Court judges, (vii) reforms to the federal elections procedure, and the (viii) dissolution of certain regulatory entities such as the COFECE.

The introduction of the 2024 Constitutional Package by the Mexican President to the Chamber of Deputies represents the first phase of the legislative process to approve constitutional amendments, for which the Mexican Congress members must issue a qualified majority (two-thirds) vote. Once approved by the Mexican Congress, the amendments, must be approved by a simple majority (half plus one) of the legislatures of each of the federative entities. To approve the 2024 Constitutional Package, the parliamentary group of President Andrés Manuel López Obrador would require the support of the opposition parties as it does not have a qualified majority in the Chamber of Deputies nor in the Senate. As of the date of this report, we cannot assure you how such initiatives, if passed, would affect our operations and competitiveness in the Mexican market, or result in economic or political conditions that could materially and adversely affect our business.

Risks Related to Our Operations

Large scale international events, including acts of terrorism, wars and the military action launched by Russian forces in Ukraine, could have a negative impact on international air travel and our revenues.

Events such as the conflicts in the Middle East and terrorist attacks worldwide have in the past negatively affected the frequency and pattern of air travel worldwide.

On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region has continued as of the date of this report. The military conflict has since caused significant volatility in commodity prices (including, but not limited to fuel), credit and capital markets, as well as supply chain interruptions. The extent and duration of the military action resulted in market and supply chain disruptions. Any general increase of hostilities in the region as a consequence of this military conflict, even if not made on or targeted directly at the air travel industry, or the fear of or the precautions taken in anticipation of any potential military attacks such as elevated national threat warnings, travel restrictions, selective cancellation or redirection of flights and new security regulations, among others, (and any related economic impact of such events) could result in decreased passenger traffic and increased costs to the air travel industry as a result of new security requirements and, as a result, could cause a material adverse effect on our business, results of operations, prospects and financial condition.

Geopolitical conflicts, including the ongoing military conflict involving Russia and Ukraine and the resulting economic sanctions imposed on Russia and certain Russian citizens and enterprises, could also cause significant disruptions in supply chains across the world, which may have a material adverse effect on the travel industry and therefore our business, financial condition, cash flows and results of operations. See also “Variations in international fuel prices could directly or indirectly adversely affect our business and results of operations.”

On October 7, 2023, Hamas, a terrorist group in control of Gaza, carried out a surprise attack on Israeli cities and towns near the Gaza strip. Following this terrorist attack, Israel declared war on Hamas and other terrorist organizations in Gaza. On April 13, 2024, Iran launched explosive drones and fired missiles on Israeli territory, a retaliatory strike that raised the threat of a wider regional conflict as retaliation for an Israeli strike on an Iranian consular building in Damascus, Syria, which killed members of the Islamic Revolutionary Guard Corps. On April 18, 2024, the United States announced new sanctions imposed to Iran in retaliation for its recent aerial attack against Israel. The military conflicts are ongoing, and their length and outcome are highly unpredictable. Further escalation of these conflicts and the related economic sanctions imposed as a result of these conflicts could lead to significant market and other disruptions, which could have a material adverse effect on our business, financial position, results of operations and cash flows.

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Because our revenues are largely dependent on the level of passenger traffic in our airports, any general increase of hostilities relating to reprisals against terrorist organizations, armed groups, further conflict in the Middle East or Ukraine, pandemics or outbreaks of health epidemics such as COVID-19 or other events of general international concern (and any related economic impact of such events) could result in decreased passenger traffic and increased costs to the air travel industry and, as a result, could cause a material adverse effect on our business, results of operations, prospects and financial condition.

The outbreak of COVID-19 has had, and any similar outbreaks could have, a negative impact on the global economy and on our business, operations and results.

The outbreak, and measures taken to contain or mitigate the coronavirus (“COVID-19”), had dramatic adverse consequences for the global economy, including demand, operations, supply chains and financial markets. COVID-19 led to travel restrictions imposed by governments (including the Mexican Government), flight cancellations, and a marked decline in passenger demand for air travel, domestically and worldwide.

Due to the economic recovery from the COVID-19 pandemic in the airports in which we operate, the total passenger traffic in our airports increased during 2022 and 2023, mainly due to the efficacy of vaccination programs worldwide, and the easing of restrictive travel policies in various parts of the world. However, the full extent of the ongoing impact of COVID-19 on the Company’s longer-term operational and financial performance will depend on future developments, including those outside our control related to the introduction and spread of new variants of the virus which may be resistant to currently approved vaccines, passenger testing requirements, mask mandates or other restrictions on travel, all of which are highly uncertain and cannot be predicted. The COVID-19 pandemic had a material impact on the Company, and any potential reduced air travel demand as a result thereof could have a material adverse effect on the Company’s business, operating results, financial condition and liquidity.

Our revenues are highly dependent on levels of air traffic, which depend on factors beyond our control.

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Passenger and cargo traffic volumes and air traffic movements depend on many factors beyond our control, including pandemic outbreaks, seasonality, severe or extreme weather, economic conditions in Mexico, the United States or globally, the political situation in Mexico and elsewhere in the world, the attractiveness of the destinations of our airports relative to that of other competing destinations, fluctuations in fuel prices (which could cause airlines to increase tariffs and have a negative impact on traffic as a result of increased fuel costs), changes in regulatory policies applicable to the aviation industry and an increase or decrease in Mexican airlines’ fleets, among others.

Our revenues are closely linked to both passenger and cargo traffic volumes and to the number of air traffic movements at our airports. These factors directly determine our revenues from aeronautical services and indirectly determine our revenues from non-aeronautical services. Any decreases in passenger and cargo traffic volumes and the number of air traffic movements to or from our airports as a result of these factors could adversely affect our business, results of operations, prospects and financial condition.

Our business could be adversely affected by global political developments, particularly with regard to U.S. policies toward Mexico.

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Changes in economic, political and regulatory conditions in the United States or in U.S. laws and policies governing foreign trade and foreign relations could create uncertainty in the international markets and could have a negative impact on the Mexican economy and public finances. This correlation is due, in part, to the high level of economic activity between the two countries generally, including the trade facilitated by the North American Free Trade Agreement (“NAFTA”), as well as physical proximity.

On October 1, 2018, Mexico announced that it had reached an agreement with Canada and the United States to modernize their free trade relationship and replace NAFTA. The new agreement, which is known as the United States Mexico Canada Agreement (USMCA), was formally signed on November 30, 2018 and entered into force on July 1, 2020.

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Furthermore, in September 2017, the U.S. administration announced its plan to phase out the Deferred Action for Childhood Arrivals program (“DACA”), which allows certain individuals who entered the U.S. as undocumented minors to defer immediate deportation and to be eligible for a work permit. Because the majority of individuals who benefit from this program are from Mexico, terminating the program may affect relations between Mexico and the U.S., as well as transit between the two countries. On July 16, 2021, the U.S. District Court for the Southern District of Texas issued a ruling partially suspending DACA. The ruling permits the continued processing of DACA renewals but does not allow for any new applications to be granted. The DACA final rule took effect on October 31, 2022, pursuant to which the United States administration will accept and process renewal DACA requests and accompanying requests for employment authorization, so long as they are consistent with court orders and any ongoing partial stay (such as the ruling from the U.S. District Court for the Southern District of Texas). While the new rule will apply to applications considered as of October 31, 2022, currently valid grants of DACA, related employment authorization, and advance parole will continue to be recognized as valid under the final rule. On September 13, 2023, the U.S. District Court for the Southern District of Texas issued a decision finding the DACA Final Rule unlawful and expanding the original July 16, 2021 injunction and order of annulment to cover the Final Rule. We cannot assess the impact DACA may have on particular industries or government policies that may result. If new federal immigration legislation is enacted in the U.S., such laws may contain provisions that could make it more difficult for Mexican citizens to travel between Mexico and the United States. Such restrictions could have a material adverse effect on our passenger traffic results. We cannot predict the impact that these measures may have on trade between the U.S. and Mexico or whether foreign direct investment from the U.S. to Mexico will decrease.

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The U.S. Presidential Elections, scheduled to be held in November 2024, may introduce regulatory, economic, and policy changes with significant implications for our airports. Shifts in U.S. foreign policy, border security measures, and trade agreements resulting from the election outcome can affect cross-border travel, airline operations, and consequently, airport traffic and revenues in Mexico. We cannot assure you to what extent the change in the U.S. administration for the four-year period from 2025 to 2029 will affect the country’s economy and on our business, results of operations or financial condition.

The foregoing factors and further policy changes could have an impact on Mexico’s gross domestic product (“GDP”) growth, the exchange rate between the U.S. dollar and the Mexican peso, levels of foreign direct investment and portfolio investment in Mexico, interest rates, inflation, and the Mexican economy generally; which in turn, may impact the level of passenger traffic in our airports and adversely affect our financial condition or results of operations.

Our business could be adversely affected by a downturn in the global economy, particularly with regard to the U.S. economy.

Although the COVID-19 is no longer considered a pandemic, renewed waves and new variants could lead to new measures implemented by governmental authorities to contain and mitigate the effects of COVID-19, including shutdowns of non-essential infrastructure businesses, stricter border controls, stringent quarantines and social distancing. Such measures triggered significant economic downturn in Mexico and the United States. The extent and effect of a potentially new recession is difficult to predict, including whether such recession and any recovery thereof will be similar to past periods of recession and recovery.

Moreover, international events, such as decreases in oil prices and the slower growth in the Chinese economy, have led to volatility in the international markets and adversely affected the Mexican economy. As a result, Mexico has been forced to cut public expenses, since oil output is one of the main sources of revenue in Mexico. In recent years, however, the U.S. economy has improved; though GDP increased at an annualized rate in real terms of 5.7% in 2021, 2.1% in 2022, and 2.5% in 2023. Our international passenger traffic increased 94.3%, 17.9% and 21.2% in 2021, 2022 and 2023, respectively. In the event of an economic downturn, developing countries, which have largely rebounded from the economic and financial crisis in 2009, would be impacted through trade and financial channels.

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Our business is particularly dependent on the condition of the U.S. economy and is particularly influenced by trends in the United States relating to leisure travel, consumer spending and international tourism. According to the Mexican National Institute of Statistics and Geography (Instituto Nacional de Estadística y Geografía), in 2023, exports from Mexico to the United States represented approximately 82.6% of Mexican exports, and 37.8% of foreign direct investment in Mexico originated in the United States. According to the Mexican Bank (Banco de Mexico), in 2023, remittances received from the United States were approximately U.S.$60.93 billion, representing an 8.1% increase with respect to those received in 2022.

Since the demand for aeronautical services in Mexico is substantially dependent on the performance of the Mexican economy, which is in turn highly dependent on the performance of the U.S. economy, a further downturn in the U.S. economy or a disruption in commercial activities among the U.S. and Mexico could cause a material adverse effect on our results of operations, prospects and financial condition. More generally, further downturns in the global economy and/or in the Mexican economy would also adversely affect our business, results of operations, prospects and financial condition. See also “—Risks Related to Mexico—The Company is significantly dependent upon the volume of air passenger traffic in Mexico, and negative economic developments in Mexico could adversely affect its business and results of operations.”

Variations in international fuel prices could directly or indirectly adversely affect our business and results of operations.

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International fuel prices, which represent a significant cost for airlines, have experienced significant volatility in recent years.

For example, European Brent crude oil spot prices increased from U.S.$77.24 per barrel on December 31, 2021 to U.S.$82.82 per barrel on December 31, 2022, and decreased from U.S.$ 82.82 per barrel on December 31, 2022 to U.S.$ 77.69 per barrel on December 31, 2023. The price of fuel may be subject to further fluctuations resulting from a reduction or increase in output of petroleum, voluntary or otherwise, by oil-producing countries, other market forces, a general increase in international hostilities, or any future terrorist attacks. Further, the outcome of the conflict between Russia and Ukraine and the impact that it may continue to have on fuel prices is uncertain. For more information, see “Large scale international events, including acts of terrorism, wars and the military action launched by Russian forces in Ukraine, could have a negative impact on international air travel and our revenues.”

In the past, increased costs were among the factors leading to cancellations of routes, decreases in frequencies of flights and, in some cases, even contributed to filings for bankruptcy by some airlines. Our business could be negatively impacted by hydrocarbon price volatility as the result of, or as a result of the threat of, Russian activities in Ukraine and as the result of, or as a result of the threat of, Russia expanding its production of oil and gas to finance its activities in Ukraine and destabilize world energy markets. Oil prices are particularly sensitive to actual and perceived threats to global political stability and to changes in production from member states in the Organization of the Petroleum Exporting Countries. Further, recent increases in oil prices may lead to an unpredictable drop in pricing in the medium to long-term, and any substantial variation in fuel prices could have an adverse effect on our results of operations and financial condition. Additionally, the recent conflict between Russia and Ukraine has caused shortages in the availability of aircraft fuel, including as a result of targeted sanctions and export control measures imposed by the United States and foreign government bodies. Because Russia is one of the world’s largest oil exporters, we expect recent global developments relating to Russia’s conflict with Ukraine and resulting export restrictions to decrease fuel global supply and increase fuel prices, which could be aggravated if the OPEC member states decide not to, or are unable to, increase their fuel production. Although, for the year ended December 31, 2023, any such shortages have not been material, there is no assurance that the shortages will not become more severe, and we cannot predict the continued impact of these sanctions and export control measures, or the impact of any further retaliatory actions that may be taken by Russia and the United States and foreign government bodies. Shortages in the availability of, or increases in demand for, crude oil in general, other crude oil-based fuel derivatives and aircraft fuel in particular have resulted, and could continue to result, in increased fuel prices and could have a material adverse effect on our business, results of operations and financial condition.

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Our business is highly dependent on the operations of Mexico City International Airport.

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In 2021, 2022 and 2023, approximately 40.3%, 40.4%, and 36.0% respectively, of our domestic passengers flew to or from our airports via Mexico City International Airport (Aeropuerto Internacional de la Ciudad de México, S.A. de C.V.). As a result, our domestic traffic is highly dependent upon the operations of Mexico City International Airport.

In the past, the Mexican Federal Antitrust Commission (Comisión Federal de Competencia Económica, or the “Antitrust Commission”) issued corrective measures for the Mexico City International Airport to address the inefficiencies observed at the airport during congested hours, including limiting operations during those hours.

To alleviate congestion at the Mexico City International Airport, the current Mexican federal administration implemented the conversion of a military airport, approximately 40 kilometers (24.9 miles) outside of Mexico City, into the civil Felipe Ángeles Airport, which began operations on March 21, 2022.

On August 28, 2023, the Mexican Federal Civil Aviation Agency (Agencia Federal de Aviación Civil) issued a resolution indicating that, due to the saturation of capacity at Mexico City’s ‘Benito Juarez’ International Airport, air traffic movements would be temporarily reduced from 52 to 43 per hour, starting October 28, 2023. However, the Ministry of Infrastructure, Communications, and Transportation postponed the implementation of this resolution to January 8, 2024. The reduction in air traffic movements will remain in effect until the saturation conditions are resolved. In addition, in September 2023, pursuant to a Presidential decree issued in February 2023, all domestic and international cargo operators (with the exception of those that provide combined cargo and passengers operations) relocated their operations from the Mexico City International Airport to the Felipe Angeles Airport.

There is still uncertainty about what impact such decree and the new Felipe Ángeles Airport will have to alleviate congestion at the existing Mexico City International Airport, and we cannot assure you how such decree or capacity adjustments would affect our results of operations.

Security enhancements have resulted in increased costs and may require additional investments in the future.

In 2023, 12.3% of the passengers served by our airports were international passengers, of which, 78.6% arrived or departed on flights originating in or departing to the United States. The air travel business is susceptible to increased costs resulting from enhanced security and higher insurance. Following the events of September 11, 2001, we reinforced security at our airports, and our general liability insurance premiums increased substantially. For more information on the insurance policies we carry, see “Item 4. Information on the Company – Property, Plant and Equipment.”

Because a substantial majority of our international flights involve travel to and from the United States, we may be required to comply with security directives of the U.S. Federal Aviation Administration (“FAA”) in addition to the directives of Mexican aviation authorities. World events, such as the terrorist attacks worldwide attributed to the Islamic State of Iraq and Syria or any other organization, could lead to additional security measures taken by the FAA or the ICAO, an agency of the United Nations Organization, and could require us to incur in additional costs to comply with these measures. Similarly, our airport operations and passenger volume could be negatively impacted by terrorist attacks on aircrafts, such as those which occurred with international airlines’ aircraft operating over Egypt and the Ukraine in 2015.

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While governments in other countries have agreed to indemnify airlines for liabilities they might incur resulting from terrorist attacks, the Mexican government has not done so and has given no indication of any intention to do the same. In addition, fuel prices and supplies, which constitute a significant cost for airlines using our airports, may be subject to increases resulting from any future terrorist attacks, a general increase in international hostilities or a reduction in output of fuel, voluntary or otherwise, by oil producing countries. See “Risk Factors— Large scale international events, including acts of terrorism, wars and the military action launched by Russian forces in Ukraine, could have a negative impact on international air travel and our revenues.” Such increases in airlines’ costs have resulted in higher airline ticket prices and decreased demand for air travel generally, thereby having an adverse effect on our revenues and results of operations. In the event of a recurrence of COVID 19 pandemic or any similar outbreaks, we may be required to adopt additional safety measures in the future which could increase costs. Security measures taken to comply with future security directives or in response to a terrorist attack or threat could reduce passenger capacity at our airports due to increased passenger screening and slower security checkpoints and increase our operating costs, which would have an adverse effect on our overall performance.

Furthermore, under the Mexican Airport Law, we are currently responsible for inspecting passengers and their carry-on luggage before they board any aircraft. Under Mexican law, we may be liable to third parties for personal injury or property damage resulting from the performance of such inspection. Furthermore, we are responsible for the implementation of measures for the adequate inspection of checked baggage in our airports. In addition, we may be required to adopt additional security measures in the future or undertake capital expenditures if security measures for carry-on luggage are enhanced, which could increase our liability or adversely affect our operating results.

The operation of baggage screening equipment could increase our expenses and may expose us to greater liability.

The ICAO’s security guidelines require checked baggage on all international commercial flights and domestic commercial flights to undergo a comprehensive screening process for the detection of explosives. In some countries, such as the United States, the federal government (in the case of the United States, through the Transportation Security Administration (“TSA”)) is responsible for screening checked baggage. On May 1, 2014 and July 1, 2016, the Mexican Bureau of Civil Aviation (currently the Mexican Federal Civil Aviation Agency (Agencia Federal de Aviación Civil or “AFAC”)) published mandatory circulars CO SA-17.2/10 R3 and CO SA-17.9/16, respectively, which require that all airlines screen checked baggage and that all airports have screening equipment that complies with specified guidelines. We have purchased and installed screening equipment in all of our airports to facilitate compliance with the baggage screening guidelines, and our subsidiary, Servicios Complementarios del Centro Norte, S.A. de C.V., has operated the checked baggage screening system since March 1, 2012.

We incur ongoing expenses to maintain and operate this equipment and expect to incur ongoing expenses to maintain any equipment purchased. In the future, we could be required to undertake significant additional capital expenditures for items such as a new screening technology or additional equipment if screening guidelines are expanded further and require that additional steps be taken to comply with the requirements. For instance, replacement of the majority of our baggage screening equipment with new Computer Tomography X-ray (CTX) baggage screening equipment began in 2021 and will continue through 2025, although regulatory changes could force our airports to undertake this replacement sooner. In addition, the circular CO SA-17.9/16 established that airports must have alternative baggage screening methods in case the inspection technology currently used is no longer available. On September 7, 2023, the Mexican Federal Aviation Agency published mandatory circulars establishing specific design requirements for the infrastructure required to protect airport facilities against acts of unlawful interference, including requirements with respect to baggage screening equipment. We believe that we comply with the baggage screening guidelines, but the Mexican Federal Civil Aviation Agency may require additional investments. These additional expenses could restrict our liquidity and adversely affect our financial position.

Although Mexican law holds airlines liable for screening checked baggage, the purchase, installation and operation of equipment could increase our exposure to liability as a result of our involvement in the screening process.

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Competition from other tourist destinations could adversely affect our business.

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The principal factor affecting our results of operations and business is the number of passengers using our airports. The number of passengers using our airports (particularly the Acapulco, Mazatlán and Zihuatanejo airports) may vary as a result of factors beyond our control, including the level of tourism in Mexico. In addition, our passenger traffic volume may be adversely affected by the attractiveness, affordability and accessibility of competing tourist destinations in Mexico, such as Cancún, Puerto Vallarta and Los Cabos, or elsewhere, such as Florida, Puerto Rico, Cuba, Jamaica, the Dominican Republic and other Caribbean islands and destinations in Central America.

Tourism levels may decrease, and therefore the number of passengers using our airports in the future may not exceed or match current levels, which could have a direct and indirect impact on our aeronautical and non-aeronautical revenues.

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Our business is highly dependent upon revenues from seven of our thirteen airports and OMA Logística, S.A. de C.V. (“OMA Logística”) and could be adversely impacted by any condition affecting those businesses.

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In 2023, approximately 82.4% of the sum of our aeronautical and non-aeronautical revenues were generated from seven of our thirteen airports and OMA Logística. The Monterrey airport generated the most significant portion of our revenues. The following table lists the percentage of the sum of aeronautical and non-aeronautical revenues generated at our airports, including the percentage of total revenues generated by our other subsidiaries:

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As a result of the substantial contribution to our revenues from these seven airports and OMA Logística, any event or condition affecting these principal airports could have a material adverse effect on our business, results of operations, prospects and financial condition.

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We are dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity risks.

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We rely on a variety of information technology to manage our operations. The proper functioning of these systems is critical to the efficient operation and management of our business. If critical information systems fail or are otherwise unavailable, our ability to provide services at our airports, collect accounts receivable, pay expenses and maintain our security and customer data, could be adversely affected. In addition, these systems may require modifications or upgrades as a result of technological changes or growth in our business. These changes may be costly and disruptive to our operations, and could impose substantial demands on management time. Our systems may be vulnerable to damage or disruption caused by circumstances beyond our control, such as catastrophic events, power outages, natural disasters, computer system or network failures, viruses or malware, physical or electronic break ins, unauthorized access and cyber-attacks. Additionally, while we maintain insurance coverage for some of these events, the potential liabilities associated with network or IT security could result in damage to our reputation.

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In the third quarter of 2021, we detected that several of our servers had been compromised with ransomware. Relying on our backup processes and consolidated infrastructure, we were able to restore the majority of our compromised servers within 48 hours of the incident. The main systems at the airports were not affected and remained in operation with minimal disruption.

To prevent future cybersecurity incidents, we are constantly updating our infrastructure with the latest security technologies, and we conduct vulnerability analysis and penetration testing periodically. Our information systems contain backup systems, including physical and software safeguards located outside of our offices, and a cold site for critical systems. In addition, we protect our systems with antivirus software, end-point protection software and last generation firewalls, including firewalls to filter traffic from the Internet. There can be no assurances that these preventive actions to mitigate cybersecurity risks and incidents will be successful in avoiding future cyber-attacks. Any such incident could hinder our ability to protect the privacy of our clients and business by causing the unauthorized distribution of confidential data and valuable financial information, which may cause damage to our reputation and may require us to incur additional expenses. Although actions are taken continuously to improve and monitor our information technology systems, these systems remain vulnerable to failures or unauthorized access, which could adversely affect our operations, financial condition and liquidity.

We face risks associated with our diversification activities, which could lead to our inability to recover our investment as planned.

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We face risks associated with the nature of the diversification projects that we have developed and in which we participate as shareholders, which could impact our results of operations, prospects and financial condition. Our Terminal 2 NH Collection Hotel and our Hilton Garden Inn Hotel depend on passenger traffic travel to and from the Mexico City International Airport and the Monterrey airport, respectively, and any event that reduces passenger volume in these airports could adversely affect the results of operations of these hotels. The passenger traffic volume in such airports depends on factors that may be beyond our control, such as the attractiveness of the commercial, industrial and tourist centers that the airports serve. Accordingly, there can be no assurance that the passenger traffic volume in such airports will increase or maintain the current level.

Both of the hotels that we operate, our OMA-VYNMSA industrial park and our OMA Carga bonded warehouses could face additional competition from third parties developing similar projects in areas adjacent to the Mexico City airport and the Monterrey airport. In particular, with respect to the Monterrey airport, the competition could increase due to “nearshoring”, as certain U.S. companies are moving their operations to Mexico, especially in Monterrey and the areas surrounding the Monterrey airport are in high demanded to establish and operate warehouses.

Despite our efforts to retain clients, we cannot predict whether our clients will continue occupying our commercial spaces or cancel their contracts. Furthermore, the continued growth at our OMA-VYNMSA industrial park and our OMA Carga bonded warehouses business could also decline should there be a slowdown in the Mexican economy. In addition, our OMA Carga bonded warehouses require permits issued by the Mexican National Customs Agency (Agencia Nacional de Aduanas de México or “ANAM”). However, we cannot assure that the ANAM will renew OMA Carga permits upon their expiration or grant new permits, as the case may be. All such factors could adversely affect the profitability of our non-aeronautical businesses and our ability to recover our investments in such projects.

Our operations depend on certain key airline customers, and the loss or suspension of operations of one or more of them could result in a loss of a significant amount of our revenues.

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Of the total aeronautical revenues generated at our airports in 2023, VivaAerobus represented 38.7%, Volaris represented 23.5% and Aeroméxico and its affiliates represented 19.9%. None of our contracts with our airline customers obliges them to continue providing service from our airports and, if any of our key customers reduces their use of our airports, competing airlines may not add flights to their schedules to replace any flights no longer handled by our principal airline customers. On December 9, 2020, Interjet, which accounted for 5.7% of our total passenger traffic in 2020, stopped operating at our airports mainly due to the financial impact of the outbreak of COVID-19 on their operations. In August 2022, Interjet initiated bankruptcy proceedings under Mexican Law (Concurso Mercantil), and on April 10, 2023 the bankruptcy federal judge issued a ruling declaring the company bankrupt and ordering the sale of all of its assets to pay its creditors. Our business and results of operations could be adversely affected if we do not continue to generate comparable portions of our revenues from our key customers.

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Due to increased competition, volatility in fuel prices and the general decrease in demand because of global volatility in the financial and exchange markets, economic crises and the COVID-19 related health crisis, many airlines are operating in adverse conditions. Should fuel prices increase or in the event of other adverse health or economic developments, one or more of our principal carriers could become insolvent, cancel routes, suspend operations or file for bankruptcy. All such events could have a material adverse effect on our results from operations. Furthermore, any accident, incident or any other event that affects the perception of safety standards of any of the major airlines may affect their image and generate a public perception that it is less safe or reliable than other airlines. These events would affect consumer demand and the number of passengers serviced by the airline, thus affecting our business, results of operations, prospects and financial condition.

The global airline industry has experienced significant financial difficulties and warnings regarding industry profitability in previous years. However, on December 6, 2023, the International Air Transport Association, or IATA, issued its 2024 financial forecast for the global commercial airline industry, estimating net post-tax profit of about U.S.$ 25.7 billion, mainly due to an increase in yield. The forecast also indicated that net profit margins were expected to marginally increase to 2.7% in 2024 compared to 2.6% in 2023. Airlines profitability is dependent on a number of variables including, economic conditions or supply chain issues, which could trigger insolvencies within the global airline industry in the future. Please see “Item 3. Key Information—Risk Factors—Risks Related to Our Operations—We could be exposed to risks related to aircraft parts manufacturing” for more information on how key airline customers could affect our operations.

Some of our airline and other clients and tenants have asked for assistance in previous years, either through discounts on payments owed to us or by an extension on those payments. During 2020 and early 2021, we provided payment extensions to our main airline customers, which allowed us to mitigate noncompliance risks. As a result of the COVID-19 pandemic, our reserve for doubtful accounts receivable, increased by 231% to Ps.20.8 million as of December 31, 2020, slightly decreased to Ps.20.3 million as of December 31, 2021, decreased to Ps.12.4 million as of December 31, 2022. On December 31, 2023, this reserve amounted to Ps.17.0 million. We cannot assure you whether any resurgence of the COVID-19 pandemic or any other such events will cause an increase in our reserve for doubtful accounts receivable in the future.

On December 18, 2015, the United States and Mexico entered into an Air Transport Agreement with the purpose of promoting and facilitating an international aviation system, based on competition among airlines, to facilitate the expansion of international air transport opportunities and ensure the highest degree of safety and security in air transport. The agreement provides for an increase in services on existing routes between both nations, as well as the addition of new routes and an increase in the frequency of flights on existing routes. The agreement also grants Mexican airlines the ability to further penetrate international markets, as it permits airlines from both countries that operate flights between the United States and Mexico to pick up passengers and continue with the flights to a third country. This agreement may be modified in the future to provide for international airlines to operate domestic flights in our airports, but until then we expect to continue to generate a significant portion of our revenues from domestic travel from a limited number of airlines.

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On December 14, 2016, the U.S. Department of Transportation issued a final order granting approval of, and antitrust immunity for, the Joint Cooperation Agreement and other alliance agreements between Delta Air Lines and Aeromexico. Since then, Delta Air Lines and Aeromexico have used the antitrust immunity to operate a joint venture between the U.S. and Mexico, coordinating their network planning, pricing, and sales activities, as well as enhancing the alignment of their respective frequent flyer programs. However, in January 2024, the U.S. Department of Transportation “tentatively dismissed” the request to renew the antitrust immunity. Consequently, the partnership between Delta Air Lines and Aeromexico must be dissolved by October 26, 2024, unless the decision is appealed and overturned. If confirmed, this decision could negatively affect our operations, potentially leading to the cancellation or reduction of certain routes and decreased passenger traffic at our airports.

Collective labor conflicts in Mexico could have an adverse impact on our results of operations.

A number of events have led workers and labor unions to demand more significant benefits and higher salary increases than in prior years, which could in turn increase our cost of personnel. These events include (i) the endorsement by the Mexican Senate of the International Labor Organization’s Convention C098, the “Right to Organize and Collective Bargaining Convention”, (ii) the approval by Congress to modify the Mexican Federal Labor Law, (iii) new labor unions created to negotiate and/or dispute existing collective bargaining agreements on behalf of the labor unions that currently hold such contracts, and (iv) a 15.0% increase of the general minimum wage applicable in Mexico and in municipalities near the northern border of Mexico, as of January 1, 2021, a 22.0% increase as of January 1, 2022, a 20.0% increase as of January 1, 2023, and a 20.0% increase as of January 1, 2024. For more information on employee relations, see “If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations” and “Changes to Mexican laws, regulations and decrees applicable to the Company could have a material adverse impact on the results of operations.”

The Company cannot predict how these developments may affect the Company’s results of operations or its financial condition. Any increased demands by the Company’s unionized workers may lead to higher labor costs, which could have a negative impact on its results of operations.

If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.

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If any conflicts with our employees were to arise, including with our unionized employees (which accounted for 45.2% of our total employees as of December 31, 2023), resulting in events such as strikes or other disruptions that could arise with respect to our workforce could have a negative impact on our results of operations. Our unionized employees, who are employed by our airport subsidiaries, are represented by a national union of airport workers that operates throughout Mexico. To the extent unionized airport workers seek material modifications to the conditions agreed with us and with other Mexican airport operators, our operations could be adversely affected by union activities, including organized strikes or other work stoppages.

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Our operations could be adversely affected due to changes in the collection of passenger charges.

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Passenger charges are collected by the airlines and then paid to us on the basis of contracts entered into with each airline operating at our airports. We cannot guarantee that all airlines will continue collecting the passenger charges for us. Should one or more airlines stop collecting passenger charges for us, we would have to collect these charges directly ourselves, which would result in additional costs.

In the past, some airlines have reported losses. In cases where we extend days of credit to airlines, substantially all of our revenues from passenger charges and other aeronautical services are secured by a performance bond or other types of guarantees; however, guarantees may not fully cover the amount owed by an airline at a certain date. In the event of the insolvency of any of these airlines, we would not be certain of the collection of any amounts invoiced to that airline in respect of passenger charges. In cases where the airlines cannot provide adequate or sufficient performance bonds or other types of guarantees, the airlines operate under advance payment conditions.

The main domestic airlines operating at our airports may refuse to pay certain increases in our specific rates for regulated aeronautical services.

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In the past, we have entered into a series of agreements with the Mexican National Air Transportation Chamber of Commerce (Cámara Nacional de Aerotransportes), pursuant to which we have established specific rates for regulated services applicable to our principal airline customers. Historically, amounts paid under these agreements have not been material, and we do not expect any such agreements with the Mexican National Air Transportation Chamber of Commerce to have a material effect on our results of operations. Although passenger traffic volume (and therefore overall revenues) may increase, any agreed incentives and/or discounts offered to airlines as a means to prevent or settle any potential dispute could reduce our aeronautical revenues per terminal passenger in the future. In addition, should any of our principal airline customers refuse to continue to make payments to us, or should they refuse to pay increases in our charges for aeronautical services in future years, our results of operations could be adversely impacted by decreased cash flows from operations.

Our operation depends on our management team for its knowledge and experience and the loss of capable executives could affect our operations.

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The current and future performance of our operations depends significantly on the continuous contribution of managers and other key employees. In order to achieve the objectives of each manager or key position, the ability, experience, aptitude and knowledge of each candidate is taken into account for recruitment and personnel allocation purposes. We cannot guarantee that in the future our executive team will be maintained, or that if new executives are incorporated, they will have the same level of knowledge and experience. The potential lack of a capable management team could adversely affect our operations, financial condition and results of operations.

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The operations of our airports may be affected by the actions of third parties, which are beyond our control.

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As is the case with most airports, the operation of our airports is largely dependent on the services of third parties, such as air traffic control authorities, airlines, airline providers and ground transportation providers. We also depend upon the Mexican government or government entities for provision of services, such as electricity, supply of fuel to aircraft, air traffic control and immigration and customs services for our international passengers. On October 23, 2023, the Mexican government issued a decree temporarily restricting imports of certain fuels and petrochemicals into Mexico, and we cannot determine whether the government will adopt any other measures restricting fuel imports in the future. The disruption or stoppage of taxi or bus services at one or more of our airports could also adversely affect our operations. We are not responsible for and cannot control the services provided by these parties. Any disruption in, or adverse consequence resulting from, their services, including a work stoppage or other similar event, may have a material adverse effect on the operation of our airports and on our results of operations.

In addition, if any service providers were to halt operations at any of our airports, we could be required to seek a new provider of these services or to provide these services ourselves, either of which may result in increased costs and have an adverse impact on our results of operations.

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We may be liable for property taxes as a result of claims asserted against us by certain municipalities.

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Various municipalities have assessed tax credits against us for the payment of property taxes with respect to the real estate on which we operate our airports in those cities. We have appealed all the administrative law proceedings, as well as the tax credits, assessed against us and, while some have been dismissed by the relevant administrative authority, some are still pending. We believe there are no legal grounds which enable the municipalities to collect such taxes and although we intend to defend our position vigorously, if procedures are brought by authorities, there can be no assurance that we will be successful in such defense. See “Item 8. Financial Information—Legal Proceedings—Property Tax Claims” for a full discussion of these property tax proceedings. Some Mexican airport operators contesting the assessment of similar property tax claims have been required to post material surety bonds in connection with their challenge of those assessments. If we are required to post similar surety bonds in the future, the terms of the surety bonds may restrict our ability to pay dividends or otherwise limit our flexibility. In addition, if we are required to pay for additional state or municipal rights, we could face costs, limiting our liquidity, flexibility and ability to pay dividends.

Furthermore, if the Mexican Congress changes the current laws or if we do not prevail in these proceedings, these tax liabilities could have an adverse effect on our financial condition and results of operations. In addition, any change in law which enables municipalities to request construction or operation permits may affect our ability to comply with investments required under our Master Development Programs, which in turn may result in additional payments for governmental tariffs and affect our results of operations.

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Inability to generate sufficient future taxable profits or adverse changes to tax laws, regulatory requirements or accounting standards could have a negative impact on the recoverability of certain deferred tax assets.

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We recognize deferred tax assets relating to tax losses carried forward and deductible temporary differences only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the temporary differences can be utilized. Net deferred tax assets amounted to approximately Ps.809,700 thousand at December 31, 2023. The deferred tax assets are quantified on the basis of currently enacted tax rates and accounting standards and are subject to change as a result of future changes to tax laws or the rules for computing taxable profits and allowable losses. Failure to generate sufficient future taxable profits or changes in tax laws or accounting standards may reduce our estimated recoverable amount of net deferred tax assets. Such a reduction could have an adverse effect on our financial condition and results of operations. For further information on deferred tax assets, refer to Note 4 to our audited consolidated financial statements. See “Item 5. Operating and Financial Review and Prospects—Critical Accounting Policies—Deferred Income Taxes.”

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Natural disasters could adversely affect our business.

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From time to time, the northern and central regions of Mexico experience torrential rains, hurricanes (particularly during the months of July through September) and, depending on the region, earthquakes and volcanic activity. In addition, the Mazatlán, Culiacán and Acapulco airports are susceptible to occasional flooding due to torrential rainfall.

Natural disasters may impede or cause the suspension of operations, damage infrastructure necessary to our operations or adversely affect the destinations served by our airports. For instance, on November 3, 2016, the Tampico airport flooded due to heavy rains, causing the collapse of part of the bordering fence. Although, the affected neighbors filed claims for damages against the Tampico airport, the insurance carrier rejected the neighbors’ claims alleging that the damage was caused by a natural disaster. In addition, the Terminal 2 NH Collection Hotel located in Terminal 2 of the Mexico City International Airport was temporarily closed after the earthquake on September 19, 2017. Although the Terminal 2 NH Collection Hotel did not suffer any structural damage, utilities of the hotel were interrupted and hotel operations were suspended until September 25, 2017. Further, our international passenger traffic decreased 1.2% during September 2017, partially due to the cancellation of flights caused by hurricanes Harvey and Max.

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On October 25, 2023, Hurricane Otis, a category 5 storm, struck Acapulco, causing landslides, floodings, and a total blackout as Acapulco’s power transmission and distribution lines were damaged. Hurricane Otis affected Acapulco Airport’s control tower and certain areas of the terminal building. Therefore, commercial air travel was suspended until November 13, 2023. In October, November and December 2023, our total passenger traffic in Acapulco decreased by 4.7%, 79.2% and 62.8%, respectively.

Any natural disasters could reduce our passenger and cargo traffic volume in the airports and our guest volume in the Terminal 2 NH Collection Hotel. The occurrence of any of these events in the destinations that we serve could adversely affect our business, results of operations, prospects and financial condition.

We have insurance for the physical facilities at our airports against damage caused by natural disasters, accidents or other similar events, but we do not have insurance covering losses due to resulting business interruption. Also, we maintain an Environmental Impairment Liability insurance for our 13 airports. Moreover, should losses occur, losses caused by damages to the physical facilities may exceed the pre-established limits on any of our insurance policies.

The increasing effects of climate change, including the heightened frequency and severity of natural disasters such as hurricanes, floods, and wildfires, as well as prolonged drought conditions in regions where we operate, pose a significant risk to our business. These climate-related events could lead to operational disruptions, damage to our infrastructure, and a decrease in passenger traffic, all of which could adversely affect our financial condition and results of operations.

Our reputation and business could be adversely affected in the event of an emergency, accident or similar

incident involving our airports.

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We are exposed to potential significant losses and material adverse effects on our business in the event that any of our airports, or any aircraft operating within our airports is subject to an emergency, accident, terrorist incident or any other similar incident, and significant costs related to passenger claims, repairs or replacement of a damaged asset. For more information on recent events affecting our airports as a result of similar incidents see “Risks Factors — Risks Related to Mexico — High incidences of crime in Mexico, including extortion and drug trafficking, could adversely affect the Mexican economy and may have a negative effect on the Company’s business.” There can be no assurance that we will not be affected by such events or that the amount of our insurance coverage will be adequate in the event such circumstances arise and any such event could cause a substantial increase in our insurance premiums. See “Risks Factors —Risks Related to Our Business —Our insurance policies may not provide sufficient coverage against all liabilities.” In addition, any future airport and/or aircraft emergency, accident or similar incident, even if fully covered by insurance or even if it does not involve our airports, may create a public perception that our airports or the facilities included within out airports is less safe or reliable than other transportation alternatives, which could have an adverse impact on our reputation and could have a material adverse effect on our business, results of operations and financial condition.

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Our operations are at greater risk of disruption due to the dependence of several of our airports on a single commercial runway.

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As is the case with many other domestic and international airports around the world, several of our airports, including the Monterrey, Culiacán, Ciudad Juárez and Mazatlán airports, have only one runway for most commercial flights. The operation of our runways may be disrupted due to required maintenance or repairs. In addition, our runways may require unscheduled repair or maintenance due to natural disasters, aircraft accidents and other factors that are beyond our control. The closure of any runway for a significant period of time could have a material adverse effect on our business, results of operations, prospects and financial condition.

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We are exposed to risk related to construction projects.

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The building requirements under our Master Development Programs could encounter delays or cause us to exceed our budgeted costs for such projects, which could limit our ability to expand capacity at our airports, increase our operating or capital expenditures and could adversely affect our business, results of operations, prospects and financial condition. Such delays or budgetary overruns also could limit our ability to comply with our Master Development Programs, which are established as a necessary requirement to our concessions.

From March 31, 2020 to June 1, 2020, we stopped most construction works, including those needed to comply with our Master Development Program, as a result of the restrictions imposed by the Mexican government on non-essential activity, including construction, due to the COVID-19 outbreak. These restrictions generated delays in our scheduled works to comply with our Master Development Program commitments for 2020. Even though the delays were notified to and agreed upon with the regulator, should we experience any other delay that prevents us from complying with our Master Development Program commitments, there could be penalties which could adversely affect our business, results of operations, prospect and financial condition.

We are exposed to the risk of non-performance by our contractors.

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We currently contract certain specialized services (including security and surveillance services) necessary to conduct our operations. In the event that our contractors fail to perform their obligations under our agreements and applicable law, we could incur extra costs in providing replacements and could be exposed to liability for operations that we may have to provide directly, which could adversely affect our business, results of operations, prospects and financial condition.

In accordance with applicable labor laws, contractors are required to register their employees with the Mexican Social Security Institute (Instituto Mexicano del Seguro Social) and the National Workers’ Housing Fund Institute (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) and anyone employing the services of contractors that has failed to comply with these laws is jointly liable for the payment of social security obligations as well as any applicable penalties. Therefore, if contractors providing specialized services at our airports do not have their employees registered at the Mexican Social Security Institute and the National Workers’ Housing Fund Institute, or if they are not in compliance with their employee/employer obligations, including but not limited to, the subcontracting of personnel, we could be held jointly liable for the payment of social security obligations that such contractors may have, as well as any applicable penalties.

For more information on the latest legal reform affecting contracting and its effects on the Company, see “Item 3. Key Information—Risk Factors—Risks Related to the Regulation of Our Business— Changes to Mexican laws, regulations and decrees applicable to the Company could have a material adverse impact on the results of operations.”

Our ability to expand certain of our airports and to comply with applicable safety guidelines could be limited by difficulties we encounter in acquiring additional land on which to operate our airports.

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Certain guidelines established by the ICAO require the maintenance of a perimeter surrounding the land used for airport operations. At several of our airports, we do not control portions of the land within the required perimeters. If portions of such land adjacent to certain of our airports are developed by third parties in a manner that encroaches on the required perimeters, our ability to comply with applicable guidelines of the ICAO or to expand our airport operations could be adversely affected. Also, the growth of certain cities in the proximity of our airports could limit our ability to expand our airports.

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To allow the future expansion of the Monterrey airport, including the construction of a second commercial runway and the relocation of the control tower, between 2007 and 2011 we entered into a series of agreements for the purchase and exchange of plots of land adjacent or nearby the Monterrey airport. We currently own approximately 519 hectares (2.0 square miles) of land adjacent or nearby the Monterrey airport with an aggregate book value of Ps.1,422,046 thousand. Improvements made to airport facilities at our expense may be recognized by the Mexican Federal Civil Aviation Agency as part of our investment in the airport concession. To recover the cost of our investments in land reserve, on December 4, 2012, we received authorization from the former Mexican Bureau of Civil Aviation (currently the Mexican Federal Civil Aviation Agency) to reallocate Ps.386,538 thousand (amount expressed in nominal 2009 Mexican pesos) in investments included in the 2011–2015 Master Development Program for the Monterrey airport to recover the cost of land acquisition. Additionally, the 2011 Master Development Program review recognized Ps.77,307 thousand (amount expressed in nominal 2009 pesos) in land acquisition costs. In 2022, we donated 56.6 hectares (0.2 square miles) of land with a book value of Ps.283,728 thousand to the Federal Government, acting through the Ministry of Infrastructure, Communications and Transportation, which will be incorporated into the Monterrey airport concession. The recovery of the remaining investment made by the Company in the amount of Ps.395,561 thousand (amount of Ps.694,390 expressed in nominal 2009 pesos) in land acquisition costs has been included in the indicative period of our current approved Master Development Program for 2026-2035. The remaining amount of the investment may not be recognized by the Ministry of Infrastructure, Communications and Transportation in the future.

Our future profitability and growth will depend upon our ability to expand our airports in the future. Potential limitations on our possibility of expansion, such as those described above, could restrict any such expansion and thus have a material adverse effect on the future profitability and growth of our business.

We are exposed to risks inherent to the operation of airports.

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We are obligated to protect the public at our airports and to reduce the risk of accidents at our airports. As with any company dealing with members of the public, we must implement certain measures for the protection of the public, such as fire safety in public spaces, design and maintenance of car parking facilities and access routes to meet road safety rules. We are also obligated to take certain measures related to aviation activities, such as maintenance, management and supervision of aviation facilities, rescue and fire-fighting services for aircraft, measurement of runway friction coefficients, flood control at the Acapulco airport and measures to control the threat from birds and other wildlife on airport sites. These obligations may require us to incur additional costs and could increase our exposure to liability to third parties for personal injury or property damage resulting from our operations.

Our insurance policies may not provide sufficient coverage against all liabilities.

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While we seek to ensure all reasonable risks, our insurance policies may not cover all of our liabilities in the event of an accident, terrorist attack or any other incident. The markets for airport insurance and construction insurance are limited, and a change in coverage policy by the insurance companies involved could reduce our ability to obtain and maintain adequate or cost-effective coverage. A certain number of our assets cannot, by their nature, be covered by property insurance (notably aircraft movement areas, and certain civil engineering works and infrastructure). In addition, we do not currently carry business-interruption insurance.

We are exposed to risks related to handling cargo.

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The air cargo system is a complex, multi-faceted network that handles a vast amount of freight, packages and mail carried aboard passenger and all-cargo aircraft. The air cargo system is vulnerable to several security threats, including: potential plots to place explosives aboard aircraft; illegal shipments of hazardous materials; criminal activities, such as smuggling and theft; and potential hijackings and sabotage by persons with access to aircraft. Several procedural and technology initiatives to enhance air cargo security and detect terrorist and criminal threats have been put in place or are under consideration, such as an x-ray machine certified by the TSA in the bonded OMA Carga area and explosive trace detection (ETD) equipment at the Monterrey airport. In addition, we have several mechanisms that have allowed airlines to obtain certifications such as the ACC3, allowing such airlines to transport cargo to Europe. We may be subject to risks related to the integrity of our facilities or the reduction of our cargo traffic volume. The occurrence of such events could adversely affect our business, results of operations, prospects and financial condition.

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We could be exposed to risks related to aircraft parts manufacturing.

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The operation of our airports is dependent on the services of third parties, including airlines and aircraft manufacturers. Airlines are generally dependent on limited number of suppliers for aircraft, aircraft engines and parts. In the event of any actual or suspected design defects or mechanical problems with aircraft engines, airlines may choose, or be required, to suspend or restrict the use of their aircraft, which could in turn reduce passenger traffic. Our business could also be materially adversely affected if the public avoids flying due to an adverse perception of aircraft manufacturing, whether because of safety concerns or other problems, real or perceived, or in the event of an accident involving such aircraft or its engines.

On July 25, 2023, RTX, parent company of Pratt & Whitney, announced that it had determined that a rare condition in powder metal used to manufacture certain engine parts will require accelerated inspection of the V2500, PW1100G and PW1500G jet engines which power mainly Airbus A320neo. In addition to a potential reduction in air traffic, the recall of Pratt & Whitney jet engines posed a notable risk to airport operations, potentially affecting the efficiency of aircraft movements, gate allocations, and overall air traffic management. The need to ground or perform maintenance on the affected aircraft, including those from airlines such as VivaAerobus and Volaris that rely heavily on these engines for a substantial portion of their fleet, may lead to congestion, delays, and reduced capacity in our airport operations.

On January 6, 2024, the Federal Aviation Administration (FAA) ordered the temporary grounding of 171 Boeing 737-9 MAX aircraft worldwide, affecting Aeromexico, which is one of our main airline customers, as it has a significant number of these aircraft in its fleet. This decision was based in an incident reported during flight 1282 from Alaska Airlines. On January 24, 2024, FAA authorized 737-9 MAX to return flying after approving a detailed inspection and maintenance process.

The dependency on airlines to swiftly resolve these issues may lead to prolonged operational challenges. While we do not yet know the full impact of these operational disruptions resulting from engine shortages from Pratt & Whitney and any possible additional grounding of 737-9 MAX, suffered by the airlines operating at our airports, such disruptions could result in additional reputational harm to the airlines and our airports if disruptions are frequent or not managed effectively, which could have an adverse effect on our business, results of operations and financial condition.

We may not be able to detect money laundering operations and other illegal or improper activities, which could expose us to additional liabilities and adversely affect our operations and financial results.

We are required to comply with applicable anti-money laundering and anti-terrorism and other regulations in Mexico. Such laws require us to adopt and implement certain policies and procedures designed to detect and prevent transactions with third parties involved in money laundering or terrorist activities. Although we have adopted such policies and procedures, these procedures require services related to third parties that are not under our control, including third-party providers of complementary services or retailers, restaurants and other commercial tenants leasing spaces at the airport. To the extent that we may fail to fully comply with applicable laws and regulations or fail to detect illegal activities carried out by third parties, the competent authorities may impose certain fines on us and our reputation may also be adversely affected.

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We could be exposed to additional risks if we pursue business opportunities in other countries.

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From time to time, we may consider strategic participation in airport assets located in other countries. In the past, we have evaluated business opportunities in Mexico and other countries, and we may evaluate international expansion opportunities through capital investment in other concessions in the future. Expansion into a market outside of Mexico could require significant capital expenditures. If we pursue an international expansion opportunity, we could face internal or external risks, including, without limitation: (i) a lack of market experience in the relevant country, (ii) foreign exchange and economic volatility, (iii) the dedication of significant management resources to execute the international operation and (iv) exposure to risks inherent to doing business in the relevant country. Our inability to successfully manage the risks and uncertainties related to such business opportunities could have a material adverse effect on our business, results of operations, prospects and financial condition, including our capital structure. 

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Risks Related to Mexico

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The Company’s business is significantly dependent upon the volume of air passenger traffic in Mexico, and negative economic developments and security concerns in Mexico could adversely affect its business and results of operations.

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In 2021, 2022 and 2023, domestic terminal passengers have represented approximately 87.2%, 88.3% and 87.7% respectively, of the passenger traffic volume in the Company’s airports. In addition, all of its assets are located, and all of its operations are conducted, in Mexico. Accordingly, the Company’s financial conditions and results of operations are substantially dependent on economic conditions prevailing from time to time in Mexico. As a result, its business, financial condition and results of operations could be adversely affected by any deterioration of the general condition of the Mexican economy, by a devaluation of the peso, by inflation and high interest rates in Mexico or by other negative political, social and economic developments in Mexico.

In the past, Mexico has experienced economic crises, caused by internal and external factors, characterized by exchange-rate instability (including large devaluations), high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates.

The Mexican economy underwent an economic crisis that began in 2008 and continued in 2009 as a result of the impact of the global financial crisis, which affected many emerging economies. The Mexican economy’s link with the U.S. economy remains very important, and therefore, any downside to the economic outlook of the U.S. may hinder any recovery in Mexico. This correlation may have an impact on Mexico’s GDP growth and other macro-economic conditions. The Mexican economy achieved real GDP growth rates of 3.1%, 3.1% and 5.0% in 2023, 2022 and 2021, respectively, and is estimated to increase by 2.7% in 2024 and to grow by 1.5% in 2025, according to the World Economic Outlook published by the International Monetary Fund in January 2024.

During 2023, average reference interest rates in Mexico increased by 344 basis points compared to 2022. The annualized interest rates on 28-day short-term Mexican treasury bills, or Cetes (Certificados de la Tesorería de la Federación), averaged approximately 4.4%, 7.7% and 11.1% for 2021, 2022 and 2023, respectively. As of December 31, 2023, 31.2% of our long-term debt has interest payments at a variable rate, all of which are indexed to the 28-day TIIE reference rate, which highly exposes us to risk due to fluctuations in market interest rates.

If inflation or interest rates increase significantly or if the Mexican economy is otherwise further adversely impacted, the Company’s business, financial condition, prospects and results of operations could be materially and adversely affected because, among other things, demand for transportation services may decrease. Similar events may occur, and the recurrence of such events may adversely affect the Company’s business, results of operations, prospects and financial condition.

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In addition, Mexico has experienced periods of increasing criminal activity and particularly homicide rates, primarily due to organized crime. This poses a risk to our business and might negatively impact business continuity. An increase in crime rates could negatively affect our sales and passenger traffic, increase our security expenses, affect our hours of operation and result in higher turnover of personnel or damage to the perception of our brands. Furthermore, as consumer behaviors adapt to the heightened perceived and actual security threats, people may become increasingly reluctant to travel across Mexico. This shift could impact foreign direct investment, which in turn could affect our business and financial performance. The heightened security concerns may deter potential investors, affecting not only our direct operations but also the broader investment landscape in the region. See “Risks Factors —Risks Related to Mexico—High incidences of crime in Mexico, including extortion and drug trafficking, could adversely affect the Company’s business.”

Political conditions in Mexico, could materially and adversely affect the Mexican economy and political climate and, in turn, the operations of the Company.

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The next presidential and congressional elections in Mexico will be held on June 2, 2024, and the new president will be sworn in on October 1, 2024, for a six-year term. We cannot predict the impact that political developments in Mexico will have on the Mexican economy nor can provide any assurances that these events, over which the Company has no control, will not have an adverse effect on our business, financial condition, results of operations, cash flows, prospects and/or the market price of our shares and ADSs. The Mexican government could implement significant changes in laws, policies, and regulations, which could affect the economic and political situation in Mexico. In addition, changes in laws, public policies or regulations may affect the political and economic environment in Mexico and, consequently, contribute to economic uncertainty and heightened volatility of the Mexican capital markets and in securities issued by Mexican companies. See “Risks Factors —Risks Related to the Regulation of Our Business —Changes to Mexican laws, regulations and decrees applicable to the Company could have a material adverse impact on the results of operations.”

The term of the current Mexican president, Andrés Manuel López Obrador, will conclude on September 30, 2024. Historically, the Mexican president has strongly influenced new policies and governmental actions that impact the Mexican economy. We cannot assure you that the current administration or any other future administration will maintain business-friendly and open-market economic policies and policies that stimulate economic growth and social stability. Any administration could implement substantial changes in law, policy, and regulations in Mexico, which could adversely affect our business, financial condition, results of operations and prospects. In addition, any actions taken by the administration may lead to riots, protests and looting that could adversely affect our operations. Our financial condition and results of operation may be adversely affected by changes in Mexico’s political climate, to the extent that such changes affect the nation’s economic policies, growth, stability, outlook, or regulatory environment.

On June 6, 2021, various electoral processes occurred, including mid-term elections for the Mexican Chamber of Deputies and gubernatorial elections in fifteen states, six of which are locations where we operate our airports. While the opposition coalition made significant gains in the Chamber of Deputies. However, the Morena political party won the most seats compared to any other party in Mexico. Despite this, the Morena political party does not have a qualified majority in the Chamber of Deputies nor in the Senate. Morena also won 11 state governor races that year.

The elections to be held on June 2, 2024, will renew 128 senators, all 500 deputies and state governors for Chiapas, Guanajuato, Jalisco, Morelos, Puebla, Tabasco, Veracruz, Yucatán, as well as the governor for Mexico City. Even though these elections will not take place in states where we operate our airports, we are unable to predict the outcome of such elections. If the Morena political party gains a majority in Congress, it could potentially obtain enough votes to pass constitutional amendments and new laws.

Any changes in laws, public policies or regulations may affect the political and economic environment in Mexico and, consequently, contribute to increased economic uncertainty and volatility in Mexico, which could in turn adversely affect our operations and competitiveness in the Mexican market.

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Furthermore, our business may be adversely affected by fluctuations in the value of the U.S. dollar as compared to the Mexican peso, inflation, interest rates, changes in laws and other political or social developments in Mexico over which we have no control. Any of the above may have an adverse effect on Mexico’s economic situation and, in turn, on our business, results of operations, financial condition and ability to repay our indebtedness.

Adverse domestic events could negatively impact the Company’s business and results of operations.

The operations of our airports may be disrupted due to the actions of third parties, such as protestors or demonstrators, which are beyond our control. Any disruption in our operations, or adverse consequence resulting from protests or riots, including flight delays, a work stoppage or other similar event, may have a material adverse effect on the operation of our airports and on our results of operations.

Demonstrations and riots taking place in cities where our airports are located and where they are either a potential target or in the path of such demonstrations could generate flight cancellations and the suspension of our operations and could materially and adversely affect our business, results of operations, prospects and financial condition. See “Risk Factors – Risks Related to Mexico – High incidences of crime in Mexico, including extortion and drug trafficking, could adversely affect the Company’s business.”

Adverse economic conditions in Mexico may adversely affect our financial condition or results of operations.

All of our operations are conducted in Mexico and are dependent upon the performance of the Mexican economy. As a result, our business, financial condition and results of operations may be affected by the general condition of the Mexican economy, over which we have no control. In the past, Mexico has experienced economic crises, caused by internal and external factors, characterized by exchange rate instability (including large devaluations), high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates. We can provide no assurance that such conditions will not return or that such conditions will not have a material adverse effect on our business, financial condition, or results of operations.

According to the Mexican National Institute for Statistics and Geography (Instituto Nacional de Estadística y Geografía), or “INEGI,” GDP increased 5.0% in 2021, increased 3.1% in 2022 and increased 3.1% in 2023, respectively, in each case compared with the previous year. The annualized interest rates for 28-day Mexican Treasury Bills (CETES) averaged approximately 4.5%, 7.7% and 11.1% in 2021, 2022 and 2023, respectively. As of April 19, 2024, the 28-day Interbank Equilibrium Interest Rate (Tasa de Interés Interbancaria de Equilibrio), or “TIIE-28,” was 11.25%. To the extent that we incur peso-denominated debt in the future, it could be at high interest rates.

If inflation or interest rates increase significantly or if the Mexican economy is otherwise adversely impacted, our business, financial condition or results of operations could be materially and adversely affected.

Economic conditions in Mexico may also be affected by political developments in the United States and economic developments in the United States, such as interest rates, inflation, exchange rates and GDP growth, among others.

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Depreciation of the peso relative to the U.S. dollar could adversely affect the results of operations and financial condition of the Company.

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From December 31, 2021 to December 31, 2022, the peso appreciated from Ps.20.51 per U.S.$1.00 on December 31, 2021 to Ps.19.50 per U.S.$1.00 on December 31, 2022, an appreciation of 5.0%. From December 31, 2022 to December 31, 2023, the peso appreciated from Ps.19.50 per U.S.$1.00 on December 31, 2022 to Ps.16.90 per U.S.$1.00 on December 31, 2023 an appreciation of 13.3%. During the first months of 2024, the peso depreciated, reaching Ps.17.21 per U.S.$1.00 on April 19, 2024. Rising inflation in the U.S., the extent of which is still uncertain, could have an impact on the value of the peso relative to the U.S. dollar. During 2023, inflation in the U.S. amounted to 3.4%, according to the Consumer Price Index Data provided by the U.S. Department of Labor. A depreciation of the peso affects the Company’s business in the following ways: (i) international passengers and international flights pay tariffs reported in U.S. dollars; while these tariffs are generally collected in Mexican pesos up to 60 days following the date of each flight, any depreciation of the Mexican peso has a positive impact on the Company’s results from operations, which are reported in Mexican pesos; (ii) the Company has cash balances denominated in U.S. dollars; a depreciation in the Mexican peso would result in higher cash balances when converted to Mexican pesos, thus causing foreign exchange gains; and (iii) the Company has financial liabilities denominated in U.S. dollars; a depreciation in the Mexican peso results in higher debt balances when converted to Mexican pesos, thus causing foreign exchange losses. As of December 31, 2023, the Company had U.S.$3.8 million of liabilities denominated in U.S. dollars, representing 0.02% of its consolidated liabilities. As of March 31, 2024, U.S.$17.5 million of the Company’s cash balance was denominated in U.S. dollars.

Moreover, the depreciation of the peso also affects some of the Company’s airline customers transacting in U.S. dollars, including the purchases or leases of equipment, maintenance and fuel. Severe devaluation or depreciation of the peso may also result in the disruption of the international foreign exchange markets and may limit the Company’s ability to transfer or to convert pesos into U.S. dollars and other currencies.

High incidences of crime in Mexico, including extortion and drug trafficking, could adversely affect the Mexican economy and may have a negative effect on the Company’s business.

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Higher incidences of crime throughout Mexico, including extortion and drug trafficking, could have an adverse effect on our business, results of operations, prospects and financial condition, as it may decrease the international and domestic passenger traffic directed to or within Mexico. The travel warning issued by the U.S. Department of State (Bureau of Consular Affairs) on August 22, 2023 (the “Travel Advisory”) urges U.S. citizens not to travel to the states of Colima, Guerrero, Michoacán, Sinaloa (except the city of Mazatlán), Tamaulipas and Zacatecas. This Travel Advisory also urges U.S. citizens to defer non-essential travel to cities, states and other regions, such as Baja California, Chihuahua, Durango, Guanajuato, Jalisco, Morelos and Sonora. Drug-related violence and other incidents of organized crime may not be contained, which could have a material adverse effect on our business, results of operations, prospects and financial condition. In addition, violent crime (which has had had an adverse impact on the economic activity in Mexico) may further affect travel within the country and between Mexico and other countries, including the United States, which could particularly affect the airports in the north of Mexico where we have significant operations and increase our insurance and security costs.

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Insecurity and violent crime rates in Mexico have risen during the current administration. Nevertheless, we cannot guarantee the extent to which these violent crimes will either increase or decrease, whether they will persist in spreading throughout the country, and the potential adverse effects they may have on the nation’s economy and, consequently, on our business, results of operations, or financial condition.

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In January 2019, the Mexican government implemented measures to reduce the theft of fuel transported in pipelines operated by Mexican state-owned entity Petróleos Mexicanos (PEMEX) throughout Mexico. As a result of these measures, certain states in Mexico, such as Mexico State, Hidalgo, Querétaro, Guanajuato, Jalisco, Tamaulipas and Nuevo León, were affected by a shortage of gasoline for automobile use. Even though there were no shortages of aircraft fuel as a result of the actions implemented by the Mexican government, we cannot assure that future actions taken by the Mexican government against theft of fuel will not affect the availability of aircraft fuel in states where our airports are located, which, in turn, could have an adverse effect on our operations.

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On January 5, 2023, a major drug cartel leader was arrested in Culiacan. The arrest caused a violent outbreak in the state of Sinaloa, leading to, among others, confrontations with the military forces, blockage of city point entries, and armed clashes occurring in the vicinity of the Culiacan airport. At least one commercial carrier plane on the ground was hit by a stray bullet, without major consequences. At the request of the local civil aviation authority, the Culiacán and Mazatlán airports suspended operations that day. A total of 163 air traffic movements were cancelled at the Culiacán and Mazatlán airports as a result of these events. Even though these events did not result in any injury for passengers or airport employees nor did they significantly impact our operations, we cannot assure that future conflicts or violent outbreaks related to the Sinaloa drug cartel will not have an adverse effect on our operations.

The value and prices of securities issued by Mexican companies, including us, may be adversely affected by developments in other countries.

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The market value of securities of Mexican companies, including us, may be, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in these countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers. In past years, prices of both Mexican debt and equity securities have been adversely affected by the sharp drop in Asian securities markets and the economic crises in Argentina, Brazil, Greece, Italy, Portugal, Russia, Spain, Venezuela and the United Arab Emirates.

In addition, economic conditions in Mexico have become increasingly correlated to economic conditions in the United States. Therefore, an economic downturn in the United States will significantly adversely impact the Mexican economy. Furthermore, the Company cannot assure you that any policies adopted by the Biden U.S. administration will not have an impact in the market value of its securities, or that the market value of its securities will not be adversely affected by events elsewhere. See also, “—Risks Related to Our Operations— Large scale international events, including acts of terrorism, wars and the military action launched by Russian forces in Ukraine, could have a negative impact on international air travel and our revenues.”

Delays in the process of obtaining necessary governmental approvals could affect the ability to expand the airports of the Company.

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The expansion, development and growth of the Company’s airports from time to time may require governmental approvals, administrative proceedings or some other governmental action. Any delay or inability to obtain such approvals or favorable outcomes of such proceedings could have a negative impact on the expansion, development and growth of the Company’s airports.

Mexico’s environmental legislation could limit the growth of some of our airports.

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The level of environmental regulation in Mexico is increasing and the enforcement of environmental laws has become more common. For instance, Mexico launched a carbon dioxide (CO2) market in 2018. This initiative requires that industries that generate above a certain amount of CO2 emissions pay for rights to excess emissions. Starting in 2019, the legislation also requires that companies report their global emissions as verified by the Mexican Emissions Registry (Registro Nacional de Emisiones). In addition, new water quality standards are being discussed, which would require greater water quality for all of our wastewater disposal. There can be no assurance that environmental regulations or their enforcement will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

According to the Mexican Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) norm NOM-SEMARNAT-059-2010, mangroves are protected species, and it is a criminal offense to remove such species. Within the grounds of our Acapulco and Zihuatanejo airports, we have extended areas with mangroves, which may limit our potential to expand such airports.

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The Mexican National Water Commission (Comisión Nacional del Agua) has the authority to restrict water use in some of our airports due to water shortage in Mexico and has enhanced its mechanisms to verify compliance with the fiscal, administrative and technical requirements regarding the extraction and discharge of water. Concessionaires who fail to comply with any of these requirements may be subject to administrative procedures that may result in the cancellation of water extraction rights and /or the imposition of significant fines. Currently, we have the concession to manage groundwater extraction in 9 of our 13 airports.

Furthermore, all thirteen of our airports have received the Environmental Quality Certification awarded by the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente). However, compliance with current or future environmental regulations may require us to incur additional costs in order to bring our airports into compliance, and if we fail to comply with current or future environmental regulations, we may be subject to fines and other sanctions.

On August 11, 2014, the Mexican National Agency of Industrial Safety and Protection of the Environment of the Hydrocarbons Sector (Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos, or “ASEA”) was created. While initially taking a secondary role to the role of the Mexican Ministry of the Environment and Natural Resources, ASEA has started to enforce its legal powers. Our airport growth projects related to fuel supply must now be approved by ASEA, which may result in more burdensome proceedings for the approval of special projects related to hydrocarbons. As of the date of this report, there can be no assurance whether ASEA’s rules and regulations will materially affect our business or results of operations.

Minority shareholders may be less able to enforce their rights against the Company, its directors or controlling shareholders in Mexico.

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Under Mexican law, the protections afforded to minority shareholders are different from those afforded to minority shareholders in the United States. For example, there are no precedent cases in which Mexican courts found that the directors violated their fiduciary duties. As a result, it may be difficult for minority shareholders to bring an action against directors for breach of these duties and achieve the same results as in most jurisdictions in the United States. Procedures for class-action lawsuits were incorporated into Mexican law and became effective in March 2012. However, these rules and procedures are different and more limited than those in place in the United States. Therefore, it may be more difficult for minority shareholders to enforce their rights against the Company, its directors or its controlling shareholders.

Enforcing civil liabilities against us or our directors, officers and controlling persons may be difficult.

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We are organized under the laws of Mexico, and almost all of our directors, officers and controlling persons reside in Mexico. In addition, a substantial portion of our assets and the assets of our directors, officers and controlling persons are located in Mexico. As a result, it may be difficult for investors to effect service of process on such persons within the United States or elsewhere outside of Mexico or to enforce judgments against us or our directors, officers and controlling persons, including in any action based on civil liabilities under U.S. federal securities laws. There is doubt as to the enforceability in Mexico, whether in original actions or in actions to enforce judgments of U.S. courts or other courts outside of Mexico, of liabilities based solely on U.S. federal securities laws.

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Mexican law and the bylaws of the Company restrict the ability of non-Mexican shareholders to invoke the protection of their governments with respect to their rights as shareholders.

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As required by Mexican law, the Company’s bylaws provide that non-Mexican shareholders shall be considered as Mexicans in respect of their ownership interests in the Company and shall be deemed to have agreed not to invoke the protection of their governments in certain circumstances. Under this provision, a non-Mexican shareholder is deemed to have agreed not to invoke the protection of his own government by asking such government to interpose a diplomatic claim against the Mexican government with respect to the shareholder’s rights as a shareholder, but is not deemed to have waived any other rights it may have, including any rights under the U.S. securities laws, with respect to its investment in the Company. If you invoke such governmental protection in violation of this agreement, your shares could be forfeited to the Mexican government.

The Company is subject to different corporate disclosure standards than U.S. companies.

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A principal objective of the securities laws of the United States is to promote full and fair disclosure of all material corporate information. However, there may be less publicly available information about foreign issuers of securities listed in the United States than is regularly published by or about U.S. issuers of listed securities.

Risks Related to Our Shareholders

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Servicios de Tecnología Aeroportuaria, S.A. de C.V. (“SETA”) has the right to appoint certain key members of our management, and SETA’s interests may differ from those of other shareholders.

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VINCI SA (“VINCI”), VINCI Concessions SAS (“VINCI C”), VINCI Airports SAS (“VINCI A”), VINCI Airports Participations SAS (“VINCI Participations”) and CONCESSOC 31 SAS (“CONCESSOC” and together with VINCI, VINCI C and VINCI A, and VINCI Participations, the “VINCI Entities”), through CONCESSOC and their direct subsidiary SETA, are the beneficial owners of 29.99% of our total capital stock. SETA directly owns Series B shares and Series BB shares that represent 14.8% of our capital stock. CONCESSOC owns Series B shares that represent 15.1% of our capital stock.

As long as SETA retains at least 7.65% of our capital stock in the form of Series BB, all of its special rights, including its right to nominate, appoint and remove certain directors and officers as holder of Series BB shares, will remain in place. The rights and obligations of SETA in our management are explained in “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

The termination of the Technical Assistance Agreement would also trigger the conversion of SETA’s remaining Series BB shares into Series B shares, resulting in the termination of all of SETA’s special rights. As long as the Technical Assistance Agreement remains in effect and SETA continues to hold at least 7.65% of our capital stock in the form of Series BB shares, it also has the right to appoint and nominate the same number of directors and officers that it is currently entitled to appoint under our bylaws. For further information on the Technical Assistance Agreement and its terms, see “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Arrangements Relating to SETA.”

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SETA’s veto rights as holder of at least 7.65% of our capital stock in the form of Series BB shares and its right to nominate, appoint and remove certain directors and officers as holder of Series BB shares, which will continue for as long as it maintains the aforementioned percentage and the Technical Assistance Agreement remains in effect, could constitute an obstacle for us to bring in a new strategic shareholder and/or operator. With the right to nominate, appoint and remove certain members of our senior management, SETA influences the actions of our management. Should SETA’s shares fall below this threshold, our management could change significantly. In the event of termination of the Technical Assistance Agreement, SETA would cease to have the special rights of the Series BB shares, which may adversely affect and disrupt our operations.

On September 14, 2020, Empresas ICA, S.A.B. de C.V. and Controladora de Operaciones de Infraestructura, S.A. de C.V. (“CONOISA”) filed Amendment No. 9 amending the Schedule 13D filed with the SEC, informing that prior to June 12, 2020, SETA was a wholly-owned subsidiary of ICA Tenedora, S.A. de C.V. (“ICATEN”). On June 10, 2020, each of Bagual S.à r.l., Grenadier S.à r.l., Pequod S.à r.l., Harpoon S.à r.l. and Expanse S.à r.l. entered into a Stock Purchase Agreement with ICATEN and in the case of Bagual, a Stock Purchase Agreement with each of ICATEN and ICA Infraestructura, S.A. de. C.V. (a subsidiary of ICATEN), to purchase collectively 100% of the capital stock of SETA. The transactions closed on June 12, 2020 and the aggregate purchase price for the SETA shares was Ps.5.47 per share for 862,703,377 shares.

On May 24, 2021, Aerodrome, SETA, Bagual S.à r.l., Grenadier S.à r.l., Pequod S.à r.l., Harpoon S.à r.l. and Expanse S.à r.l., Fintech, and David Martínez purchased 923,703 ADSs, representing 7,389,624 Series B Shares, and 52,765,577 Series B Shares of the Company through a cash tender offer in the U.S and an offer by Aerodrome in Mexico directed to holders of Series B Shares. The transaction closed on July 9, 2021 and the aggregate purchase price for the Company’s shares was Ps.137 per Series B Share and Ps.1,096 per ADS, for a total of approximately Ps.8,241 million (the “Tender Offer”).

On December 7, 2022, CONCESSOC completed the purchase of all the equity interests in SETA and Aerodrome pursuant to a Share Purchase Agreement (“SPA”) dated July 31, 2022, by and among, inter alia, CONCESSOC as purchaser and Fintech Holdings Inc., Bagual S.à r.l., Grenadier S.à r.l., Pequod S.à r.l., Harpoon S.à r.l. and Expanse S.à r.l., as sellers, (collectively, the “Sellers”), in which CONCESSOC agreed to purchase 100% of the equity interests held by the Sellers in SETA and Aerodrome, respectively for US$1,170,000,000. As of such date, SETA and Aerodrome collectively owned 66,046,210 of the Company’s Series B Shares (including Aerodrome’s Series B Shares represented by ADSs) and SETA owned 49,766,000 of the Company’s Series BB shares.

Additionally, according to a press release issued by VINCI on December 8, 2023, Aerodrome and CONCESSOC completed a cross-border merger on May 25, 2023, to merge and dissolve Aerodrome into CONCESSOC for internal management purposes (referred to as the “Internal Restructuring”). As a result of this merger, the Series B Shares of the Company were transferred to CONCESSOC at fair market value, and Aerodrome ceased to exist. CONCESSOC became the direct beneficial owner of the Series B Shares previously held by Aerodrome. Following the Internal Restructuring, all rights and obligations of Aerodrome were transferred to CONCESSOC.

The interests of SETA, the VINCI Entities, or any shareholder holding Series BB shares may differ from those of our other shareholders and can be contrary to the preferences and expectations of our other shareholders. SETA and the officers nominated or appointed by it may not exercise their rights in ways that favor the interests of our other shareholders. Furthermore, as a result of our board’s decision-making process, officers appointed by SETA may influence decisions taken by the rest of our officers.

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Risks Related to Our ADSs

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You may not be entitled to participate in future preemptive rights offerings.

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Under Mexican law, if we issue new shares for cash as part of a capital increase, we generally must grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentage in the Company. Rights to purchase shares in these circumstances are known as preemptive rights. We may not legally be permitted to allow holders of ADSs in the United States to exercise any preemptive rights in any future capital increase, unless we file a registration statement with the SEC with respect to that future issuance of shares or the offering qualifies for an exemption from the registration requirements of the Securities Act of 1933, as amended.

At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration statement with the SEC and any other factors that we consider important to determine whether we will file such a registration statement.

We may not file a registration statement with the SEC in the future to allow holders of ADSs or shares in the United States to participate in a preemptive rights offering. In addition, under current Mexican law, sales by the depository of preemptive rights and distribution of the proceeds from such sales to you, the ADS holders, is not possible. As a result, your equity interest in the Company may be diluted proportionately.

Holders of ADSs are not entitled to attend shareholders’ meetings, and they may only vote through the depositary.

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Under Mexican law, a shareholder is required to deposit its shares with the Secretary of the Company, S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V. (“Indeval”), a Mexican or foreign credit institution or a brokerage house in order to attend a shareholders’ meeting. A holder of ADSs will not be able to meet this requirement, and accordingly is not entitled to attend shareholders’ meetings. A holder of ADSs is entitled to instruct the depositary as to how to vote the shares represented by ADSs, in accordance with the procedures provided for in the deposit agreement, but a holder of ADSs will not be able to vote its shares directly at a shareholders’ meeting or to appoint a proxy to do so.

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FORWARD-LOOKING STATEMENTS

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This Form 20-F contains forward-looking statements. We may from time to time make forward-looking statements in our annual and periodic reports to the SEC on Forms 20-F and 6-K, in our annual report to shareholders, in offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to analysts, institutional investors, representatives of the media and others. Examples of such forward-looking statements include but are not limited to:

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Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

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Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the projections, plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors, some of which are discussed above under “Risk Factors,” include material changes in the performance or terms of our concessions, competitive pressures on maximum rates, developments in legal proceedings, effects on our company from changes in our relationship with or among our affiliated companies, economic and political conditions and government policies in Mexico or elsewhere, inflation rates, exchange rates, increases in interest rates, fluctuation of crude oil prices and its effect on fuel costs, regulatory developments, customer demand and competition in the airline industry. We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements.

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Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments.

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Item 4.          Information on the Company

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HISTORY AND DEVELOPMENT OF THE COMPANY

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Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., which we refer to by the acronym “GACN”, is a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. We were incorporated in 1998 as part of the Mexican government’s program for the opening of Mexico’s airports to private investment. The duration of our corporate existence is indefinite. We are a holding company and conduct substantially all of our operations through our subsidiaries. The terms “GACN”, “the Company”, “we”, “us” and “our” in this annual report refer to Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., together with its subsidiaries, and to properties and assets that we own or operate, unless otherwise specified. Our registered office is located at Plaza Metrópoli Patriotismo, Piso 5, Av. Patriotismo 201, Col. San Pedro de los Pinos, Benito Juárez, Ciudad de México, México 03800, telephone +52.81.8625.4300. Our U.S. agent is Puglisi & Associates. Our U.S. agent’s address is 850 Library Avenue, Suite 204, Newark, Delaware 19711.

The SEC maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and information statements and other information regarding us. The reports and information statements and other information about us can also be downloaded from the SEC’s website or our website at http://www.oma.aero.

Investment by SETA and Its Affiliates

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In 2000, as part of the first stage of our privatization, the Mexican government sold Series BB shares to SETA in a public bidding process. Pursuant to this transaction, SETA paid the Mexican government a total of Ps.864,055,578 (amount in nominal pesos, excluding interest) (U.S.$76.0 million based on the exchange rate in effect on the date of SETA’s bid) in exchange for:

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Currently, Series BB shares represent 12.9 % of our outstanding capital stock and the remainder consist of Series B shares. SETA currently owns all of the outstanding Series BB shares representing 12.9% of our outstanding capital stock and also owns Series B shares representing 1.9% of our outstanding capital stock.

SETA’s current shareholders are the VINCI Entities, through wholly-owned subsidiaries, which in the aggregate own directly 100% of SETA.

Under the Technical Assistance Agreement, SETA provides management and consulting services and transfers industry expertise and technology to us in exchange for a fee, which in 2023 amounted to approximately Ps.237,896 thousand. This agreement is more fully described in “Item 7. Major Shareholders and Related-Party Transactions.”

Initial Public Offering

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On November 29, 2006, a Mexican trust established by Nacional Financiera, S.N.C., or NAFIN (a Mexican national credit institution and development bank owned and controlled by the Mexican Government), acting pursuant to the instructions of the former Ministry of Communications and Transportation (as of October 10, 2021, the “Ministry of Infrastructure, Communications and Transportation”), sold 48.02% of our outstanding capital stock through a global public offering of shares in the form of ADSs and Series B shares, concurrently in the United States and Mexico. The net proceeds from the sale of the shares totaled approximately U.S.$432.2 million and were paid to the Mexican government.

Master Development Programs and Capital Expenditures

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Master Development Program

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Every five years, we are required to submit to the Ministry of Infrastructure, Communications and Transportation for approval a Master Development Program for each of our concessions describing, among other matters, our traffic forecasts for the following 15 years, and detailed expansion, modernization and major and minor maintenance plans for the following five years. Each Master Development Program is required to be updated and resubmitted for approval to the Ministry of Infrastructure, Communications and Transportation every five years. Upon such approval, the Master Development Program is binding for the following five years and deemed to constitute part of the relevant concession. Any major construction, renovation or expansion of an airport generally may only be made pursuant to a concession holder’s Master Development Program and upon approval by the Ministry of Infrastructure, Communications and Transportation. In November 2020, the Ministry of Infrastructure, Communications and Transportation approved the Master Development Programs for each of our subsidiary concession holders for the 2021 to 2025 period. These five-year Master Development Programs, which were approved by the Ministry of Infrastructure, Communications and Transportation, are in effect from January 1, 2021 until December 31, 2025, and we are required to comply with them on a year-by-year basis.

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On October 19, 2023, in accordance with the amendments to the tariff regulation bases set forth in Annex 7 of the Company’s concession titles, the Federal Civil Aviation Agency authorized the Company to defer certain investments committed under the Master Development Programs currently in place by approximately 24 months. As a result, instead of the Ps.618,833 thousand and Ps.563,693 thousand (expressed in pesos with purchasing power as of December 2023) originally committed to be invested between 2024 and 2025, respectively, Ps.805,654 thousand will be executed in 2026, and Ps.376,872 thousand will be executed in 2027.

The following table sets forth our committed investments, including major maintenance expenditures, under our Master Development Programs by airport for 2021 through 2025. Figures are updated based on the Producer Price Index for the construction industry:

Committed Investments Under Master Development Programs by
Airport for 2021 through 2025 (1)(2)(3)

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