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Document of

The World bank

FOR OFFICIAL USE ONLY

Report No. 4874

Hi-YjECT COMPLETION REPORT

.-f :ICO - LOAN 1022-ME

REGIONAL A2PrfORTS , > OPMENT PRC:ECT

Decetnber 30, 1983

Latin America and ahe CaribbeaT'Regional Office

This document has a restrictAi distribution and may be used by recipients only in the periormr ince oftheir e.flicial duties. its contents may not otherwise be disclosed without Wore 3ank 2uthori-atien.

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FOR OFFICIAL USE ONLY

PROJECT COMPLETION REPORT

MEXICC - LOAN 1022-ME

REGIONAL AIRPORTS DEVEiLOPMENT PROJECT

TABLE OF OONTENTS

Page No.

Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Basic Data Sheet . . . . . . . . . . . . . . . . . . . . . . . . . .Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1

II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL. 2

III. PROJECT IMPLEMENTATION . . . . . . . . . . . . . . . . . . 4

IV. TRAFFIC AND OPERATIONS . 9

V. FINANCIAL PERFORMANCE OF THE BORROWER ANDTHE BENEFICIARY. . . . . . . . . . . . . . . . . . . . . 11

VI. INSTITUTIONAL DEVELOPMENT. . . . . . . . . . . . . . . . . 14

VII. ECONOMIC REEVALUATION. . . . . . . . . . . . . . . . . . . 15

VIII. ROLE OF THE BANK . . . . . . . . . . . . . . . . . . . . . 17

IX. CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . . 18

TABLES

3.1 Appraisal and Actual Estimates of Project Cost . . . . . . 193.2 Project Cost by Airport. . . . . . . . . . . . . . . . . . 203.3 Schedule of Disbursements. . . . . . . . . . . . . . . . . 214.1 Actual and Forecast Traffic at Project Airports. 225.1 ASA - Summary Revenue and Expenditure Accounts

1975-1981 . . . . . . . . 235.2 ASA - Summary Balance Sheets as of Decenber 31,

1975-1981. . . . . . 245.3 ASA - Operating Accounts 1980-1981 . . . . . 255.4 ASA - Financial Ratios 1975-1981 . . . . . . . . . . . . . 267.1 ASA - Project Economic Returns .27

MAPS

IBRD 10803IBRD 10804

This document has a restricted distribution and niay be used by recipients only in the perforrnance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.


MEXTCO - REGIONAL A.IRPORTS DEVELOPMENT PROJECT

(LOAN 1022-NE)

PREFACE

1. This report presents a Project Completion Report of theMexico Regional Airports Development Project for which Loan1022-ME for US$25.0 million equivalent was approved on June 6,1974.

2. The Project Completion Report (PCR) was prepared by theLatin America and Caribbean Regional Office. In accordance withthe revised procedures for project performance audit reporting,the PCR was read by the Operations Evaluation Department (OED)although it is not proposed to undertake an audit of the projectby the OED staff. The PCR was also sent to the Borrower by OEDbut no comments have been received from theB Rc-rower t'n theabove-mentioned Report.

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MEXICO LOAN 1022-ME

REGIONAL AIRPORTS DEVELOPMENT PROJECT

BASIC PROJECT DATA

Item Original Plan Actual

Total Project Cost (US$ million) 59.3 114.8Overrun (%) - 93.6Loan Amount (US$ million) 25.0 25.0Disbursed (US$ million) - 25.0Date Physical Components Completed 7/77 12/82Proportion Completed by Above Date (Z) 44.4 100.0Economic Rate of Return (Z) 22.0 17.0

Financial PerformanceInstitutional Performance

OTHER PROJECT DATA

First Mentior, in Files 5/23/72 -Negotiations 4/29/74 -Board Approval 6/6/74 -Loan Agreement 6/28/74 -Effectiveness 9/16/74 -Closing Date 6/30/78 6/30/82Borrower NAFINSA NAFINSAExecuting Agencies Airports Dept. Airport

of SOP Dept.Civil Aviation ofDept. of SCT SAHOP

Original Plan Actual

Fiscal Year of Borrower Jan. I-Dec. 31 SameFiscal Year of BeneflJIary (ASA) Jan 1 - Dec. 31 Same

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MEXICO LOAN 1022-ME

REGIONAL AIRPORTS DEVELOPMENT PROJECT

MISSION DATA

No. of No. of Man/ Date ofItem Month/Year Days Persons Days Report

Identification Jan. 1973 5 1 5 2/20/73Preappraisal July 1973 7 2 14 8/13/73Appraisal Sept. 1973 25 4 100 11/14/73

(Issues)5/28/74(Grey C)

Appraisal April 1974 7 3 21

TOTAL 140

Supervision I July 1974 7 1 7 Aug.'74Supervision II Dec. 1974 2 1 2 Jan. '75Supervision III July 1975 10 1 10 Sept.'75Supervision IV Dec. 1975 9 2 18 Jan. '76Supervision V May 1976 7 2 14 June '76Supervision VI Feb. 1977 10 2 20 March'77Supervision VII Sept. 1977 4 1 4 Oct. '77Supervision VIII Nov. 1977 10 1 10 Dec. '77Supervision IX June 1978 5 1 5 July '78Supervision X April 1979 8 3 24 May '79Supervision XI July 1979 4 3 12 July '79Supervision XII Sept. 1979 14 1 14 Oct. '79Supervision XIII Jan. 1980 11 2 22 Jan. '80Supervision XIV June 1980 11 2 22 July '80Supervision XV Nov. 1980 6 1 6 Nov. '80Supervision XVI Dec. 1981 5 2 10 Jan. '82

Completion Sept. 1982 9 2 18

TOTAL 218

CRAND TOTAL 358

COUNTRY EXCHANGE RATES

Name of Currency (Abbreviation) Mexican Peso (Mex $)

Appraisal Year Average Exchange Rate: US$1 = Mex $12.5Intervening Years Average US$1 - Mex $22.8Completion Year Average US$1 = Mex $48.0

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MEXICO - REGIONAL AIRPORTS DEVELOPMENT PROJECT

(LOAN 1022-ME)

HIGHLIGHTS

1. The PCR finds that the project largely met the objectivesenvisaged at the time of appraisal (para 9.01). It did so,however, with substantial time and cost overruns (+93%). Thesewere partly due to budget limitations (para 3.08), but alsochanges to the scope of the project due to much higher traffic inpetroleum producing areas (para 3.09), where two of the largestairports were located. Project completion was delayed from 1978until 1982 but some airports were already operating in 1979 or. aregular basis.

2. In addition to larger facilities at the two airportsabove, Villahermosa and Minatitlan, the scope of the project waschanged so that one airport was deleted as the local municipalityhad extended the present airport (Guaymas) and one airport(Campeche) was deleted when the Government went beyond the scopeof the limited Bank project. In both cases, traffic had notdeveloped sufficiently to justify their retention in the Bankproject.

3. The institution building components of the project hadlimited impact (para 6.03), but development in this area did takeplace. Secretaria de Comunicaciones y Transportes (SCT) is nowin charge of a more rational structure of institutions in thesubsector (paras 6.01 and 6.02) more or less meeting the Bankobjectives.

4. Partly as a result of higher than expected trafficincrease at certain airports but mostly due to the sameinflationary factors that increased construction costs, benefits

4 were much higher than expected leading to an economic rate ofreturn of 17%. T!e project thus well achieved its economicobjectives (paras 7.04 - 7.07).

5. Financial performance of the main project beneficiary,Aeropuertos y Servicios Auxiliares (ASA), was good, reflecting aperiod of substantial growth (para 5.02). The Government,however, has not increased tariffs sufficiently to meet some ofthe financial covenants (para 5.03). The key introduction ofpassenger departure fees was carried out early under the projectbut tariff levels were not increased continuously to keep pacewith inflation.

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T. INTRODUCTION

1.01 Mexico covers an area of nearly 2 mill.lon km2. Much ofthe country is sparsely populated because of its difficulttopographv and inadequate rainfall, and, althouagh extensiveschemes for agricultural development have iLncreased the areasunder irrigation, the population is urbanizing rapidly - a matterof concern to the Government. Close to 60% of the population of54 Inillion in 1973 was urban; this proportion was 52% in 1960 and43% in 1950. In 1972, about 18% of Mexico's population lived inthe district centered by Mexico City. Although overallpopulation growth was 3.5% per annum between 1960-1970 - one ofth-e highest rates in the world - urban population growth washigher than 5% per annum, while rural. growth was only about 1.5%per annum.

1.02 The Government's aviation policy is based on thepremaise that air transportation plays an important role innational development and population diffusion. Domestic aviationhas been one of the fastest growing transportation modes. TheGovernment is attempting to use aviation as of one of severalmeans to encourage a more even urban development. It is feltthat, by creating a dependable air transportation system at areasonable cost to the users, the population in widely dispersedcommunities of the nation will be drawn closer together and beassisted in their development, as well as being encouraged toremain in their communities rather than migrate to Mexico City.

1.03 A National Airport Plan (NAP) was developed in 1964 bya Government-wide committee which provided for a total of 75airports in Mexico. By 1973, nine of these airports, catering tolong range aircraft, had already been improved, while two morewere tunder construction; 22 others were for medium range aircraftand the rest for short range. Except for those already improved(about 20), the existing facilities were substandard for thetypes of aircraft then being added to tbe air carrier fleets.The NAP envisaged improving all of these facilities to meet "hepresent and future demands.

1.04 In 1972, the Bank was asked to consider financing theconstruction of 15 regional airports in the medium range group.Desk analysis prior to appraisal determined that only nine ofthese would meet Bank economic justification criteria. Duringthe appraisal in October 1973, two more complete airports weredropped but the minor improvement of one of these, Campeche, wasincluded in the proposed project. The project consisting ofseven complete and one improved airports was approved by theBoard in June 1974.

1.05 The Borrower was NAFINSA (Nacional Financiera S.A.) andthe executing agencies were SOP (Secretaria Obras Publicas, laterchanged to SAHOP, Secretaria Asentamientos Humanos y ObrasPublicas), and SCT (Secretaria de Comunicaciones y Transportes).The Beneficiary was ASA (Aeropuertos Servicios y Auxiliares), theoperator of the airports.

II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL

A. Origin of the Project

2.01 The airports to be replaced by the project generallyhad lightly paved, short runways obstructed by man-made ornatural obstacles which prevented physical expansion orthreatened the safety of flight. Originally intended forrelatively light single and multi-engine piston powered aircraft,the airports were totally unsuited for the modern heavier,faster, more efficient, turbo jet air transports coming intoservice. The NAP was developed to establish a priority list forairports which should be improved. Cursory plans were developedby SOP for fifteen of the airports and the Bank was askedunofficially (during a June 1972 supervision mission of Loan793-ME) to comment on these plans SOP dropped this list totwelve, and then following preliminary discussions with the Bank,to nine for its official request to the Bank.

B. Preparation, Appraisal and Negotiation

2.02 The preparation of the project was carried out by Bankstaff in close collaboration with SOP, SCT, ASA, SHCP, Presidencyand NAFINSA. From the beginning, one of the major objectives ofthe Bank was to assure the establishment of a more positivecooperation between the various Governmental organizations havingaeronautical responsibilities. General coordination bytransportation of SOP, SCT and Presidencia was begun as part ofthe Second Railway Loan 825-ME and a Transportation CoordinationCommittee was established in 1973. During negotiations, it wasagreed that this Committee would be continued and strengthened.

2.03 The Bank staff had recommended that the ExecutingAgency for the airports project be ASA, since ASA would be thebeneficiary in the first instance, and that SOP act as ASA'sagent in designing and constructing the project. Thisarrangement was declared unworkable during negotiations and SOPand SCT were made joint Executing Agencies with the much greaterresponsibility placed on SOP, who actually provided all of theengineering required for the design of the project.

2.04 During appraisal, two of the nine airport projectspresented by the Government failed to meet minimum economicreturns for a feasible Bank project. Upon review duringnegotiations, one of these was determined capable of earning asatisfactory return if only minor improvements were made at theexisting site (Campeche) and the construction of the proposedreplacement airport were delayed for at least five years. Thus,the project finally accepted consisted of the construction ofseven airports and the exp4'nsion of one other. Two of theairports were planned to have cross wind runways at some futuredate when such runways became justified but originally onlysingle runways would be constructed at each airport.

2.05 While the Government insisted that ASA maintain itsoriginal status as simply the airport operator, it was agreedthat with its own funds, ASA would reorganize its accountingsystem and establish a modern commercial cost accounting system.In addition, to place ASA on a firm financial footing, it wasagreed that international and domestic passenger departure feeswould be established.

C. Project Description

a. Physical

Construction of seven new airports at Villahermosa,Tuxtla Gutierrez, Minatitlan, Poza Rica, Los Mochis, Tapachulaand Guaymas were the main part of the project.

All these airports were to have asphaltic concreterunways, of 45 meters width and a length between 1,800 and 2,500meters depending upon elevation and estimated use, lead-intaxiways, aircraft aprons, terminal buildings, control towers,fire stations, fuel storage and hydrant systems, electronic andvisual aids, communication systems, automobile parking areas,fencing, and internal and external access roads of about 5 kmeach, except for the airport at Minatitlan, which will be about33 km long.

Expansion of the existing airport at Campeche, was alsoincladed as follows: lengthening the runway by about 30 metersand strengthening it, enlarging the existing terminal building,providing new runway lighting, obstruction removal andnavigational aids.

To replace existing installations destroyed to clearproject sites, the Project also included the construction of anelementary school at Minatitlan, the relocation of part of a gaspipeline at Villahermosa and the relocation of about 15 km of ahigh-tension powerline at Campeche.

b. Engineering

* Design, construction contract management andsupervision of construction by Airports Department of SOP of allcontracts, except for those relating to electronic navigationalaids and communications.

Procurement and installation of all electronicnavigational aids and communications by Civil Aviation Departmentof SCT.

c. Administrative

Design and implementation of a new cost accountingsystem for ASA covering all its airport operations and itsheadquarters.

Maintain in operation the Government's TransportationCoordinating Committee (para 5.09).

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III. PROJECT IMPLEMENTATION

A. Effectiveness and Start-Up

3.01 There were no special conditions of effectiveness. TheLoan Agreement was signed June 28, 1974, and the loan becameeffective September 16, 1974. The Closing Date was establishedas June 30, 1978.

B. Revisions

3.02 The first of three major revisions in the projectoccured because of land ownership problems at the Los Mochisairport site in November 1975 one month after the award of theearthmoving contract. SOP apparently did not have clear title tothe airport land prior to starting construction, despite Section3.07 of the Guarantee Agreement which specifically made thismandatory. After about 1,000 m of the flight strip had beencleared, a group of Ejidos claimed the land underlying the first700 m. The Bank notified the Borrower that disbursements tocover work on the disputed land could not be made until theproblem had been resolved. SOP relocated the entire airport 800m along the runway centerline to avoid the disputed land.Additional land purchases were completed in December 1976 and theBank advieed the Borrower that disbursements at Los Mochis couldnow proceed.

3.03 The second revision was more serious. Despite theagreement by the Government to limit construction at Campeche toan expansion of the existing airport, a supervision mission inFebruary 1977 discovered that a contract for a completely newairport at the site earlier reviewed by the appraisal mission hadbeen awarded in September 1976. After considerable discussionwithin the Bank and with the Government, it was decided to deleteCampeche from the project description. In addition, since thecity of Guaymas had expanded its existing airport with its ownfunds, the Government had delayed construction of the new airportfrom July 1976 to late in 1977. Finally, the Government'srequest to delete Guaymas completely was combined with thedeletion of Campeche and the project description was changed inAugust 1977. The funds for both projects remained in the loanfor use at other project airports.

3.04 The final revision concerned the construction of across wind runway for light aircraft at Tuxtla Gutierrez. Thisrunway had been shown on the master plan of the airport, butduring the preparation of the project, it had been agreed thatconstruction would be delayed until such a runway was justified;a point in time not expected in the near future. However, asupervision mission in January 1980 discovered that PA contract toconstruct this second runway had been awarded in October 1979one month after the previous supervision mission. At that time,the construction was being funded by the contractoir because SOPdid not have money for that purpose in its budget. Afterdiscussions with SOP, documentation was finally provlded which

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allowed the Bank to accept the second runway as justified.Hlowever, fundirng for the runway was determined to be solely theresponsibility of the Government and Rank financing was notaffected.

C. Implementation

3.05 During preparation of the project, it was decided thatSOP would separate the various types of work they wereresponsible for into four packages for each airport: (a) airportbuildings; (b) aircraft movement areas and access roads; (c)visual aids and electrical supply and distribution and (d) fuelstorage and distribution. (SCT was to procure its necessaryequipment directly from designated suppliers.)

3.06 International advertising was carried out and a list ofprequalified contractors was prepared showing for which contracttype and location the contractor wished to be considered. Forthe 40 possible SOP contracts over 130 contractors registered.Of these, less than 10 were international firms. Althoughinternational firms were invited to propose, none did and allcontracts were awarded to local firms.

3.07 The original schedule agreed at negotiations called forthe eight (b) type contracts to be awarded at about three weekintervals with the other three contracts (which would take lesstime to complete) to follow so as to allow the completioris of allto coincide. However, from the very beginning, delays wereencountered. The first award was to be nade in November 1974.This was delayed until February 1975. All eight of the type (b)contracts should have been awarded by the end of April 1975. Thelast two were indefinetely delayed and finally deleted from theproject (para 3.03). As time went on, the delays becameprogressively worse.

3.08 The reason for the delays undoubtedly was the SOPairport budget. For instance, in December 1975 the request forMex $428.5 million was reduced to Mex $200 million by theGovernment. Since other airport work in addition to the Bankproject was in progress, SOP made reallocations of the availablefunds and the Bank project work program was stretched out. Thisfinancial problem continued through to the end of the project andwas intensified when political considerations caused SOP to takeon work not programmed originally during that time period, suchas the sudden decision to enlarge Puerto Vallarta terminal or tobuild a completely new airport at Campeche rather than the modestexpansion envisaged by the project.

3.09 An additional factor affected this problem. Traffic atVillahermosa and Minatitlan increased at a much greater rate thanexpected. As a result, the terminal buildings at both airportswere about doub)?d in size which further delayed the project, aswell as increasing their construction costs.

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3.10 The final factor affecting the project delays was thevalue of the contracts. Since they all had escalation clauses,adjustmerits for inflation kept raising the costs which furtherdiluted the avaiLable budgeted funds. To avoid fully disbursingthe loan premnturoly because of rising costs, thie disbursementrate was dropped from tho orIlginal 42% of total costs to 27%.Whle thlis extendloc thbe availability of loan ftunds it also addedLo tho 4elays.

3.11 As the various airports neared completion, SCT procuredthe required electronic air navigational aids and communicationequipment. These were Installed by SCT and SENEAM (Servicios dela Navegacion y del Espaclo Aereo Mexicano) technicians.During the appraisal, this organization was then called RAMSA -

Radio Aeronautica Moxicana, S.A. - and was partially owned bythe airlines. It was nationalized in 1978 and now reports toSCT.

3.1Z With the exception of Guaymas and Caxapeche, all theproposed airports were conpleted and are now receiving regularscheduled service by the type of modern aircraft for which theproject was conceived. Poza Rica was completed and dedicated bythe President March 18, 1.978 and service by AeroNexico startedMarch 29, 1979. Villahermosa was finished in April 1979 andservice by both AeroMexico and Mexicana started May 5. Therunway at Tuxtla Gutierrez was put in commercial operation whenAeroMexico and Mexicana began operations August 25, 1980.However, in October 1976, 1800 m of the runway had been providedwith a seal-coat of asphalt so that an insect control program(cattle screw worms) could operate its aircraft on an interimbasis from the new airport. Tapachula was completedand AeroMexico began operations in December 1962. The runwayhad been used by agricultural aircraft as early as two yearsbefore. L.os Mochis was completed in December 1982. A regionalairline, AeroCalifornia, began operations with DC-9 aircraft inOctober 1982. Minatitlan was finished in December 1982.Mexicana transferred its operations to the new airport in October1982. The 35 km access road from Minatitlan and Coatzacoalcosbesides providing acces3 to the airport is being heavilytravelled by local. residents, as well as farm and manufacturitngvehicles (both for supplies and employees). In addition to beingused by the large commercial transport aircraft, each airport nowhas a population of smaller (general aviation) aircraft based atthe airport

3.13 The constructior of all of the facilities funded by theloan was of good quality. Any minor problems which developedwere rectified.

D. Reporting

3.14 SOP provided a quarterly construction cost reportthrough out the project but despite repeated efforts by the Bank,ASA never provided any reports voluntarily. Attempts were madeby various supervision missions to have the Borrower, NAFINSA,compile a composite report of SOP and ASA without success. Infact, during the latter part of the project, ASA was reluctantto provide any information.

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E. Procurement

3.15 There were no problems with the procurement handled bySOP. Bank guidelines were followed throughout.

3.16 SCT was authorized to negotiate directly with certainequipment suppliers rather than advertise. SCT did this butcombined project purchases with non-project purchases in such away that determining amounts to be reimbursed was verydifficult. Repeated requests ti SCT and NAFINSA to clarify therecords were unsuccessful and fii.ally NAFINSA stated that no moreapplications for reimbursement from Category II, Equipment, wouldbe made and requested that all remaining funds in that Categorybe transferred to Category I, Civil Works. The Bank complied.

F. Performance by Contractors

3.17 Twenty-four major and six minor contracts were issuedby SOP. The civil works contractor at Los Mochis ran intofinancial trouble because of the delay of work and eventually wasreplaced by SOP. Except for this, all of the work was ofacceptable quality and the contractors performed well. The workdone by and for SCT was also acceptable and no problems wereencountered.

G. Performance of Consultants

3.18 SOP and SCT did not engage consultants for theproject. They performed all engineering design and constructionsupervision with their own forces. This work was acceptable.(SOP did subcontract some of the architectural design work withlocal architects but the control of the project remained withSOP.)

H. Project Costs

3.19 The original bid prices of the earthwork contractsexceeded the appraisal estimates by an average of about 12%. Thecontract prices for the first four building contracts all awardedin 1976 exceeded estimates by an average of about 8% but the lasttwo contracts awarded the latter part of 1978 exceeded theestimates by about 44%. The fuel system contracts rose from 65%above estimates for contracts awarded in early 1977 to 500% overestimates for the last contract awarded in December 1978 for anaverage of about 225% over estimates for the six contracts. Thevisual aids contracts followed a similar pattern. The contractawarded in mid-1977 was 39% over estimates, while that awarded inDecember 1978 was 184% over estimates. The six contractsaveraged 104% over the original estimates.

3.20 The very high costs of the fuel systems could beexplained by the boom in fuel pipeline work in Mexico during thatperiod. The 100% rise in the visual aids costs reflect the veryhigh foreign component of this type of material and thedevaluation of the Mexican peso from 12.5 to about 22.5 per U.S.dollar. Table 3.1 compares the appraisal estimates with theactual final costs of each contract. Table 3.2 shows the projectcost per airport.

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I. Disbursements and Financial Sources

3.21 The reduction of the Government budget allocation toSOP plus an increase in the scope of this project in addition toothers not contemplated at the time of appraisal Furtheraggravated by an unrealistic implementation schedule establishedby SOP for the project, combined to make disbursements runsubstantially behind the appraisal forecast. Table 3.3 comparesthe appraisal and actual schedule of disbursements. Fulldisbursement had been expected by June 30, 1978, but only 44% ofthe loan had actually been disbursed at that time. In total,disbursements ran four years behind the appraisal schedule, withfinal disbursements made in mid-1982.

3.22 All funds not provided by the loan were provided by theGovernment in the annual SOP investment budget.

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IV. TRAFFIC AND OPERATIONS

4.01 Air traffic in Mexico hasi grown very rapidly 4. thelast few years. The best indicatcr is passenger-movewaents whichhave developed as follows for the whole of Mexico:

Arriving and Departing Passengers (millions)

Domestic International

1976 10.8 4.01977 13.8 4.21978 14.8 5.31979 19.3 6.51980 22.6 7.11981 24.8 7.4

4.02 For the project airports traffic compare' to forecastis indicated in Table 4.1. Two of the project air orts are inareas of rapid petroleum development which clearly influencedtraffic growth. In the others, traffic is slightly below the SARforecast. Delays in completing the new airport is the dominantfactor affecting the airport which shows the least growth (LosMochis). For the year 1982 despite the fact that the airport wasnot quite finished, traffic has increased dramatically and for1983 traffic is now expected to be close to the originalforecast.

4.03 The results compared to the SAR forecasts of aircraftmovements show more uneven growth. Shifts to heavier aircraft,as well as from air-taxi services to scheduled flights, have beenvery difficult to predict with accuracy. The overall number offlights, nevertheless, is not as important as the number ofscheduled flights and passengers for the operations and financialsituation of the airports.

4.04 Two airports were deleted from the Bank-financedproject (see para 3.03) Guaymas and Campeche. Traffic at bothhas developed less than anticipated. As an example, Guaymas in1981 had only 49,494 passengers, compared to a forecast for 1981of 79,100 and Campeche in 1981 4,003 passengers, compared to aforecast for 1981 of 13,800. For the six project airports in1981, total arriving and departing passengers were 1,254,000,compared to a forecasted 950,000 or 32% higher than expected.This was primarily the result of higher traffic at Villahermosaand Minatitlan indicated above.

4.05 As anticipated, jet aircraft now operate to the sixproject airports. Due partly to higher traffic growth, a shiftto larger aircraft has taken place more rapidly thananticipated. Both main airlines, AeroMexico and Mexicana nowoperate 155-seat aircraft for Minatitlan, Tuxtla-Gutierrez and

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Villahermosa with 85-seat aircraft to the other airports. Thischange to more cost-effective aircraft has meant a substantialdecrease in real terms in air fares. The average single airticket to the three largest airports above changed from US$33.2in 1976 to US$33.5 in early 1982. At the same time, as a closecomparison, consumer prices in the United States increased some66%, and operating cost per hour for 2-engine jet aircraft inUt.S. domestic trunk service grew from US$835 in 1976 to US$1,718ir 1981. These cost changes in view of the proximity of theUnited States broadly represent US$ cost changes in this period.

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V. FINANCIAL PERFORMANCE OF THE BORROWER AND THE BENEFICIARY

5.01 Although virtually all of the loan was provided toSAHOP through Nacional Financiera S.A. (NAFINSA) on behalf of theGovernment, the main beneficiary is ASA (see para 1.05). Most ofthe financial provisions in the Guarantee Agreement with theMexican Government, therefore, relate to ASA and its financialperformance has been the most important. The Loan Agreement withNAFINSA essenOially only integrates the loan with the SAHOPbudgets for conrstruction. SCT, apart from its responsibility forASA, has had no direct influence on the financial performance.Indirectly, however, SCT has been a limiting factor constrainingtariff increases for ASA and SENEAM (see para 6.02).

A. Financial Performance

5.02 The financial perfornance of ASA reflects a period ofsubstantial growth. Not only has traffic over five-year period1976-1981 more than doubled, but the integration of fuel services(para 6.02) has made a major impact on already rapidly expandedyearly revenues and costs. The development in the 1976-1981period is shown in Tables 5.1-5.2. Despite these favorabledevelopments, the overall financial performance of the borrowerfor certain years has fallen short of meeting some of thefinancial covenants. The main reason for this is inadequatetariff increases in relation to inflationary increases inoperating costs. Recently, this has been recognized and asubstantial increase, particularly in passenger departure fees,has taken place in 1982 after ASA became responsible for thecollection of these changes late in 1980. Still even with thesechanges, working and operating ratios have been higher thanexpected, particularly for the project airports (Table 5.3) wherefor 1980 a figure of 150 for the operating ratio was the targetand 155 was achieved, despite higher traffic. In 1981 thisimproved to 117. Return on net fixed assets has, for most of theyears, been higher than the 6% target for the operations as awhole (Table 5.4):

Return of NetFixed Assets Operating RatloSee Table 5.4 See Table 5.1

1975 6.7 1071976 .1 1291977 2.0 1341978 8.0 1141979 12.0 1001980 13.3 1001981 7.3 103

Mostly, however, the return on Net Fixed Assets has been achievedthrough interest income or the passenger departure fee. Withoutthese the operating ratio indicates a negative return on assets.Furthermore, assets have not been continuously revalued since1976.

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5.03 In sumtnary, not all of the financial targets havebeen met, alshough the most important ones have for most of thetime, if fue- revenues are included. Fuel supply services arenot nornally a part of air-ort operations. A cost accountingsystem was established, reNaluation of assets did take place,independent auditors were retained and a Government return (seeTable 5.4) of 6% was achieved in 5 years of 7. The projectairports, however, had an operating ratio slightly exceeding 150irn 1980 and ASA without passenger departure fees did not earn a4% return (para 5.07 below). The most serious shortcoming,however, is that governtment counterpart funds to the executingagency (SAHOP) have not been adequate and, in fact, delayedimplementation by some three years, d,spite the deletion of twoairports, Campeche and Guaymas, from the project.

B. Compliance with Loan Conditions

Conditions Not Complied with in Guarantee Agreement

5.04 Article Ill, Section 3.01(d). The funds required forthe project were not provided in quantities large enough to meetthe agreed project schedule (para 3.08).

5.05 Article III, Section 3.05(a). In two instances majorchanges to the project were not presented to the Bank for reviewprior to the initiation of construction(paras 3.03 and 3.04).

5.06 Article IV, Section 4.06(ii) and (iii) - ASA did notprovide the Bank with its annual audit and financial statement asrequired, and in fact, refused to provide this information on twoEnissions.

5.07 Article IV, Section 4.09(a)(ii) - ASA was not able tomeet the 4% rate of return on its operations when the passengerdeparture fee is not included in its revenues (tables 5.1-5.2).

5.00 Article IV, Section 4.09(a)(iii) - ASA has been ableto meet the 6% rate of return on its airports operations(e:xcluding fuel supply services) even with the passengerdeparture fee included in its total revenues only once (1979).rhis, in combination with Para 5.07, indicates that airport usercharges for other than passengers, i.e., airlines, are not highenough (para 5.02). Net revenues from fuel supply services hascornpensated for this shortfall since 1978.

Conditions Met in Guarantee Agreement

5.09 Article III, Section 3.06 - The Government ismaintaining its Transportation Coordinating Committee and SAHOPdid engage consultants to formulate an airport development planfor the country. T:!is plan has been followed in all new airportdevelopment.

5.10 Article III, Section 3.07 - SAHOP did purchase all landrequired for development of the project prior to construction onthat land with one exception. In that case, a claim arose afterwork had started. Frota that moment until all claims had beenresolved, no further work was done at that airport (Los Mochis)(para 3.02).

- 13 -

5.11 Article III, Section 3.08 - SCT has continued tomaintain an adequate air traffic control and aeronauticalcommunication system throughout the country first through RAMSAand now through SENEAM.

5.12 Article IV, Section 4.08 - ASA did identify all itsassets and entered the new valuations in its accounts effectiveDecember 1976, however, no further revaluation has been carriedout since that time (para 6.03).

- 14 -

VI. INSTITUTIONAL DEVELOPMENT

6.01 The Mexican Government has several entities concernedwith civil aviation. At the level of central government, themain departments are Secretaria de Obras Publicas y AsentamientosHumanos (SAHOP), previously called SOP, responsible for civilworks construction and maintenance, including airports, andSecretaria de Comunicaciones y Transportes (SCT), responsible foroperatin& the transport system. At the time of appraisal,SAHOP was building and maintaining most major airports with anagency under SCT called Aeropuertos y Servicios Auxiliares (ASA),operating these airports and other agencies providing serviceslike air traffic control and fuel supply. Air traffic controland communications was then provided by a semi-private companycalled Radio Aeronautica Mexicana S.A. (RAMSA) and fuel at smallairports provided by Distribuidora de Gasolina S.A. (DIGAS) andat larger airports by Nacional de Combustibles de Aviacion(NACOA). RAMSA, despite being a separate company, was also underthe responsibility of SCT.

6.02 In late 1978, the Government bought the privateshareholding in RAMSA and established a new Governmental agencyto handle its functions. This new agency is called Servicios deNavegacion y del Espacio Aereo Mexicano (SENEAM). In 1978-1980this was followed by an integration of fuel services provided byNACOA and DIGAS into ASA. Finally, in 1981 the responsibilityfor maintaining runways, taxiways and other airport civil workswas transferred from SAHOP to ASA. At the same time,responsibility for collecting airport passenger fees became thetask of ASA although the proceeds still goes to the CentralGovernment (Hacienda).

6.03 It is obvious that a project only affecting 4% of theair passengers in Mexico can have only limited impact on theinstitutions involved. Nevertheless, particularly in the earlystages of the project, some institutional improvements did takeplace. An ASA cost accounting system was established, anidentification and revaluation of assets was made, maintenancecost and responsibilities formerly under SOP have beentransferred to ASA and coordination between the agencies hasimproved, though still short of what is desirable.

- 15 -

VII. ECONOMIC REEVALUATION

A. General

7.01 As indicated in para 4.01, air transport has been arapidly growing mode of transport in Mexico. Its potential wasrecognized by the government in a National Airport Plan developedin 1964. The Bank-financed project can be best described as thesecond group of a-rports in this development effort. At the timeof appraisal nine new airports were completed and two were underconstruction. Mexico is a country of widely dispersedcommunities and some rapidly growing urban centers, primarilyMexico City. To help integrate the country and promote a moreeven urban development, the Government has attempted to create adependable air transportation system at a reasonable cost tousers. The two major Mexican airlines were encouraged to buymore efficient aircraft but substantial infrastructureimprovements were needed at the same time. The economicevaluation focused on the effects of such improvements on theeight airports that were part of the Bank project individually,since most were part of a hub and spoke system with Mexico Cityas the hub.

7.02 The evaluation focused on the transport cost savings tothe operators directly affected, i.e., primarily the mainairlines. As was shown in para 4.05, these savings were largelypassed on to the travelers. Other benefits were savings due tothe better use of land for abandoned previous airports sites andtime savings to passengers. This reevaluation mainly reestimatesthe actual aircraft cost savings based on present traffic withanticipated growth. In two cases, benefits from better land useand passenger time savings were considered important enough to beincluded in the new estimate. In the other cases, the residualland values had not been received either because the land hadbeen ceded for community use or because the old airport continuedoperating for small private aircraft.

7.03 The eight project airports in 1981 served almost 1.3million passengers of which, Campeche and Guaymas, the twoairports deleted from the Bank project only accounted for53,000. This gives an indication that their exclusion from theproject was a correct decision from an economic point of view inboth cases (see 3.03).

7.04 A complicating factor for the economic analysis is thehigh inflation rate under this period and that the peso has beenundervalued at certain times. Construction costs with 1975as base ( = 100) in 1981 was 407 whereas consumer prices had onlyincreased to 335 and the exchange rate changed only from 12.5pesos/$ to 27.5 pesos/$ from 1975 to 19$1). To convertconstruction costs and benefits to the same yearly base can,therefore, yield different results depending on the methodologyused. Converting all peso amounts to US$ using current exchangerates, thus ignoring any correction for real cost increases,leads to an overvaluation of construction costs in US$. This

- 16 -

overvaluation compensates for much of the effect of real (US$)construction cost increases. The rate of return using thismethod is 17% for the six airports with individual rates varyingfrom 12% to 21%. (See Table 7.1).

7.05 Ignoring exchange rate influences, another methodconverts construction cost by an index for these costs to theprice level of 1981, to be compared with benefit calculations inthe prices (in pesos) of that year. This preferred method gives,again, a return of 17% for the six airports with individual ratesvarying from 12% to 22% for the different airports.

7.06 For both methods, the price level for costs andbenefits has been 1981 assuming an 18-20 year life of theinvestment and a continued growth of traffic of ?OX, compared toan average annual growth rate for all domestic air traffic inNexico of 18% the last five years and about 16% for the sixproject airports.

7.07 The returns estimated above indicate that the projectdespite delays and cost overruns is economically viable. Themain reason why rates are lower than the 22-29% indicated in theSAR is primarily that real cost increases did take place to alarger extent than anticipated, especially for the most expensiveairports. Thus, the total cost in current US$ wenr from aboutUS$59 million to US$115 million despite deletion of two airports.

- 17 -

VIII. ROLE OF THE BANK

8.01 The Bank colitributed throughout project preparation andexecution by reviewing and commenting on project selection andprimarily its engineering aspects. During implementation, theproject composition was changed so that one of the airports(Campeche) was dropped when the Government wanted to construct acomplete new airport. On the basis of traffic development since,both the original appraisal decision to stay at lower level ofdevelopment of this site and this Bank action were clearlyjustified. The Bank also showed flexibility to change the scopeof the project as warranted by developments unforeseen duringproject preparation. As a result of very successful petroleumdevelopment traffic in Villahermosa and Minatitlan, terminalbuildings there needed a very substantial increase in size whichthe Bank approved. The Bank also agreed to a deletion of the newairport at Guaymas to allow these buildings, as well as otherhigher priority work to be carried out.

8.02 The Bank's role in institution-building has been morelimited. Some of the financial covenants have not beenconsistently met but by and large the institutions in the sectorare now better coordinated than before and a more realisticdistribution of tasks have taken place, with ASA now, forexample, responsible for all airport maintenance.

8.03 At the time of the Completion Report Mission, there wasserious considerations within ASA, SAHOP and SCT, that the entireresponsibility for airport design, construction and operationwould be transfered to ASA under the new administration. Ifthis, in fact, happens, then most of the coordination andadministration problems forseen by the Bank's Executive Directorsduring Board Presentation that have not already been taken careof will be rectified.

- 18 -

IX. CONCLUSIONS

9.01 The Regional Airports Project has been successfuldespite cost and time overruns. The primary objective ofproviding a number of local population centers with much improvedairport Infrastructure has been met thereby providing significantdirect savings to users and assistance in integrating thiecountry.

9.02 Unfortunately, the financial capability of the MexicanGovernment was overestimated and some of the priorities had to Semodified. Generally, however, changes made were well justifiedand the project well executed despite cost increases mainly dueto inflation.

MEXICO - LOAN 1022-ME

PROJECT COMPLETION RFPaIT

REGIONAL AIRPORTS DEVELOPHENI PROJECT

Prices Shaun in Current Mexican Pesos

Appraisal and Actual Estimates of Project Cost

Poza Rica Villahermosa 'tuxtla Gutierrez blinatitlan lapachula Los Sotbis

ConttTact typeCivil

Contractor Constructora Ballesteros. S.A. Contratista Nacional, S.A. Constructors. de la Cerd., .A. ngnroy Arquirectc. SA. Proyectos y Ad... S.A. Cfe S.A. de C_T.Award, Start

Finisk Dates 2/75, 5/75, 3/79 11/74, 1/75, 5/79 11(74, 1(75, 6t81 L3[74, Z175, 1(82 3175, 4175, 10162 6f]5, 8115, 11182Appraisal Est. 32.890.000.00 55.100.000.00 66.790.000.00 76.760,000.00 42,160,000.00 37,330,000.00Contract Est. 40,895.586.03 76.265.979.52 74.998.597-54 88.549.282-81 35.977,168.30 39.022.033.69Final Cost 85,432,338.22 139,710,230.27 294,557,685.32 630.152.646.23 95.450.000.D3 215.673.640.00

Buildings

Contractor lecalcos Especialistas en Ingenieria Latiinoamericana. Grupo Constructor J. de R.S.A. Estruc-tras y Cicnrarin..es. Constru-t-ra to. S-A. nenieros rq-Conscruccion, S.A. S.A. S.A. tectos de Vxico. S.A

Award, StartFinish Datcs 8176. 9J76. 3179 9/76, 10176. 5/79 11!75. 12/75. 6/81 10/76. 11/76. 7182 8/78. 9/78. 10/82 8/78. 10/78, 12/82Est

Appraisal Est. 14,200,000.00 i6,331,000.00 17,054,000.00 16.420.000.00 18.116.000.00 22,600.0OD.00Contract Esc. 16,523,117.03 16,937,227.25 20,976,975.95 15,860,56-.58 40.Z65.975.67 36.261.286.24Final Cost 43,823.117.03 251.785.056.00 96.219.975.95 76.386,000.00 94,264,760.10 131,245.872.21 Est.

Visual Aids C

Contractor ATG, S.A. Ingenieria Latinoacericana, A.T.G., S.A. Ingenieria Latiuoaoericaca, Abastecedores Geerales, A.T.G., S.A.Award, Start S.A. S.A. S.A.

Finish Dates 4/177, 4177, 3/79 4177, 5177, 5/79 9177, 10177. 6/81 10/78. 11/78. 7182 8178. 9)78. 10182 10178. 11/72. 11/79Appraisal Est. 2,720,000.00 3.627,000.00 3,500,000.00 3,670,000.00 3.480,000.00 3,155,000.00Contract Est. 7.015.195.93 6.803.387.00 4.880.462.16 9.657.924.91 7,686,974.34 9.094,528.87Final Cost 11.015,195.93 26.240,951.31 66,010.462.16 29.485.000.00 16.800.000.00 28.680.000.00

Fuel Storage and

Distribution

Contractor Ingenieria Paparelli, S.A. Ingenieria Latinoamericana, Constructora E.l., S.A. Constructores e lngenieros. S.A. Ingenieria Latin- lIgoni-ria Latir-S.A. acericana, S.A. acericana, S-A.

Award, Start

Finish Dates 3177. 4177. 3/79 4/77. 5/77. 5/79 8177. 10177. 6181 10/78. 11/78. 12/82 Est. 8/78, 9/78, 10/82 10/78. il/78. 11/82Appraisal Est. i,580,000.00 2,780.000.00 2.460.000.00 1,610,000.00 1.660,000.00 1.580.000.00Contract Eat. 4,985,980.21 4,822,934.45 4,708,358.00 5,349,573.Z9 5,486,432.29 5,6-4.693.06Final Cost 5.985.980.21 13,251,313.14 6,578.358.00 9.056,595.35 Est. 14.456,639.66 12,570,000.00

:Navaids

Contctor 8cTr/ENeAt SCT/S'I EAM SCT7S5NEAM .. LCSL%EA?' SulISEIEAŽ SCI(f S1i i524iStart, Finish

Dates 12/78, 6/80 7/82. 9/82 4WK0. 11/80 6/82. 7/S2 4S82, 8)82 5/19. 30)79Appraisal Esa. 4,300,000.00 4,183,000.00 4,370,000.00 4.400,000.00 4.529,000.00 4.315.000.00 :FInal Cost 12,943,452.99 54.482.117.90 30.881.881.58 53. 372,636.80 42,030,6S9.05 13.302.711.99

Total CostaMesican Pesos 159.200,084.38 485,469,668.62 494,248.363.01 798,482,878.38 263,002,078.81 ;01.471. 22.20Average aE.chose

9late 19.71 19839 20.87 23.49 25.24 29.43

uS$ Eqi-valent 8.075,628.36 25,028,983.74 23,680,613.05 33,957,706.65 1S,420,38-.75 53,6;0. 33.05

Appraisal Est. 4.734,000.00 6.862.000.00 8.090.000.00 8.893,000.00 6,186.000.0D 5.S78.000-09

Percent Overrun 70.52 264.72 192.72 282.6Z 6B.-4 :32.1;2

MICO - Wfl 1022-IM

MAi- rt. PEle.- t 7rete

Prpt.ct Cact 6, AIrprt

7,?mt Uts m _KASS D i 1SMS

S0620 VEA18 1081L5 4£ 3A7 IlT2 818IXILS !55Ui X3i SST81LhS 1.08 z1S

no6 tn 083.81 1550 WI 08265 18A=*8 822 701 DOLAR mWE vLAS 0130 nu1 DOUAIS nISOS 2m1 t0aJA*S ____

1275 1230 *J1.* SZ34.9 2.50 2.148.4 26,834.9 12.50 4330.4 79,130.5 12.50 *20.S 5.260.5 13.S0 36.3 453.4 -

1C76 13.47 2lOl.0 28,312.1 13.23 5.815.1 76.933.7 IZ.3Z 5,848.6 74,988.6 12.30 6.390. S 9.,U 12.50 1,539.9 19.2685 12.50 5.441.l 18,C13.3

1977 17.48 1,047.3 18,08.7 19.6Z 3,650.3 71,611.2 21.39 3,048.4 *3.810.7 19.10 1.926.5 36.739.0 20.12 972.3 22,24.6 S6 ff5 12.332,5

1874 22.82 1.68.51 38,451.1 22.82 3,406. 717T31.6 u1.11 3.719.1 86,84.50 n2.82 631.D 16.419.8 22.34 1008.4 2z.928.0 2.7S 591.9 20.3l2.0

1979 Z2.3 1,391.6 31,768.5 22.83 7,047.2 160,873.0 21.S1 3,740.9 a5.333.3 22-81 9.S12.3 217,003-8 22.81 2.73c.7 6,2Z.6 22.8 1,320.3 33,163.3

158 22.Lt 1.690.3 368.59.1 22.56 549.3 12,555.1 23501 5.114.0 117,661.3 22.83 y,270.2 z19,73z.s 22.853 1,80.1 38,348.5 22L.8 1.076.7 70.161!

ul8 4.se 111.3 3.373.? 24.62 2,612.2 698,09.2 24.55 1.439 . 33,3346. 2-43 3.676.0 138,777.2 26.64 1,15.6 ?9.6435.1 24.78 6.366.5 316.853-3

19el - - _ _ _ _ 26s3 878.7 23,204.7 70.00 1,550.4 E11,6Z5.35 55.66 25,.o T0,034.9 70.00 2.049..3 163.449i

1.T 1-.1 19.31 - - 20.87 - 23.69 _ 23.2 _ 29J3 _ _

2t - 8 ,073.8 159,288 23,029.0 485,469.9 - 23,680.6 484,248.4 - 33.987.7 399,482.9 - 10.;Z=. 263,0021 - 13.,60.2 61,471.2

8 8~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

- 21 -

TABLE 3.3



AIRPORTS DEVELOPMENT PROJECT

Schedule of Disbursements(In US$ millions)

Appraisal Percentage ofFiscal Year Estimate Actual Disbursements Appraisal Est.

June 30, 1975 2.124 .09 4.45%

June 30, 1976 13.138 2.773 21.11%

June 30, 1977 22.365 8.000 35.77%

June 30, 1978 25.000 11.100 44.40%

June 30, 1979 17.415 69.64%

June 30, 1980 21.500 86.00%

June 30, 1981 23.250 93.00%

Nov. 30, 1981 24.580 98.32%

June 30, 1982 25.000 100.00%

Actual disbursements have been slower than estimated at time of appraisalfor two reasons. First, counterpart funds from the Government were notfurnished as quickly as estimated because of a general shortage of fundswithin the Government; and second, processing of disbursement requeststhrough the Government and the Borrower take approximately one year.All efforts to have this done more quickly have failed.

- 22 -

TABLE 4.1

PROJECT COM1PLETION REPORT

MEXICO - LOAN 1022-KE


Actual and Forecast Traffic at Project Airports

SAR Forecast Actual JAR Forecast Actual SAR Forecast1975 1976 1980 1981 1985

Villahermosa

Landings (scheduled) 2,242 4,281 3,316 6,704 5,006

(other) 3,210 2,925 4,700 5,603 5,995

Passengers (000) 142.4 211.9 274.2 531.7 441.7

Tuxtla Gutierre*

Landings (scheduled) 1,922 5,762 2,409 2,04B 3,927

(other) 5,360 4,248 8,635 2,245 11,020

Passengers (000) 114.3 179.9 238.0 255.0 403.2

.inatitlan

Landling6 (scheduled) 547 2,209 880 2,883 141.8

(other) 6,170 2,039 9,945 3,068 13,950

Passengers (000) 63.4 110.5 102.1 278.8 164.5

Poza Rica

Landings (scheduled) 370 New ASA 370 1,085 1,184

(other) 6,170 airport not 6,170 2,358 13,945

Passengers (000) 6.7 yet in service 40.0 34.4 79.7

Los Mochis

Landings (scheduled) 823 New ASA 1,591 1,007 /a 2,719

(other) 6,170 airport not 9,945 - 13,950

Passengers (000) 39.5 yet in servise 126.2 44.6 216.5

Tapachula

Landings (scheduled) 554 576 786 2,133 1,348

(other) 4,670 2,038 5,950 4,945 7,560

Fassengers (000) 26.6 49.1 66.8 109.7 114.6

a/ 1980

- 23 -

PR(JJECT COMPLETION REPORT TABLE 5.1


AIRPORT DEVELOPMENT PROJECT

SurmarY Revenue and Vxpenditure Accounts 1975-19d1 _(!ex$ ritlions)

1975 1976 1977 1978 1979 1980 1982Forecast Actual Forecast Actual Forecast Actual Forecas, Actual Forecast Actual Forecast Actual Forecast Actual

Revenues

Airport operations 441 464 469 514 521 604 555 737 588 999 622 1,290 657 2,001

Fuel services - - - - - - - 1,024 - 1,702 - 4,714 - 1l.026

Total revenues 441 464 469 514 521 604 555 1,761 588 2,701 622 6,004 657 13,027

Expenses

Airport operations 194 404 211 543 220 657 226 840 231 1,029 235 1,410 241 2,950

Cost of fuel sold - - - - - - - 969 - 1,457 - 4,363 - 10,190

Working expenses 194 404 211 543 220 657 226 1,809 231 2,486 235 5,773 241 13,140

Net working revenue 247 60 258 (29) 301 (53) 329 (48) 357 215 387 231 416 (113)

Depreciation 133 91 144 123 155 151 161 194 171 223 182 250 194 302

Net operating revenue 114 (31) 114 (152) 146 (204) 168 (242) 186 (8) 205 (19) '22 (415)

Ron-operating ravenue - 15 - 7 - 7 - 51 - 101 - 109 - 178

Interest income - - - 2 - 44 - 137 - 72 - 71 - 56

Pass.daparture fee 57 144 62 146 67 227 73 351 79 368 86 450(E) 92 555

Governmr'nt contribution - - - - - - - 180 - 312 - 344 - 32,to ASASurplus/Deaficit 171 !28 176 3 213 74 241 297 265 533 291 611 314 374(for Governaent%

Working ratio i1 44 86 45 106 42 109 41 103 39 92 38 96 37 101

Operating ratiol/ 74 107 76 129 72 134 70 114 68 100 67 i00 66 103

Working ratio for airport - - - - - - - 114 - 103 - 109 - 147operations only

Operating ratio for airport - - - - - - - 140 - 125 - 129 - 162operations only

1/ Working expense for total ASA operations divided by total revenues excluding non-operatir.g revenue, interest income,passenger departure fee and government contributions.

2/ Working expense and depreciation divided by operating revenues as above.

- 24 -TABLE 5.2

PROJECT CO}tLETION PEPORT


AIRPORTS DEVELOPMTNT PROJECT

Summary Balance Sheets as of December 31, 1975-198a

1975 1976 1977 1978 1979 19B0 1981Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast ACul Forecast Actual

Assets

Cash & Bank 532 61 455 48 535 4 529 234 468 163 456 541 391 641

Balance with Federal - 18 - - - - - - - - - - - _Treasury

Short term investment - 54 - 6 - 186 - - - - - - - -

Receivables 108 121 117 118 125 205 134 337 143 545 153 1.563 162 4,103

Inventories 10 14 10 1B 11 17 11 86 12 110 12 277 13 447

Other current assets -A 17 - 16 - 16 - 7 - 26 - - - 6

Total current assets 650 285 582 206 671 428 674 664 623 844 623 2,381 566 5,197

Fixed assets 3,040 2,703 3,451 3,901 3,780 4,746 3,941 5,024 4,180 5,909 4,455 6,395 4,755 7,186

Less accumulated 838 798 982 921 1,137 1,129 1,298 1,346 1,469 1,538 1,651 1,788 1,845 2,076depreciation

Net fixed assets 2,202 1,905 2,469 2,980 2,643 3,617 2,643 3,678 2,711 4,371 2,804 4,607 2,910 5,110

Work in progress 176 398 240 82 170 119 400 - 625 _ 864 - 1,078 -

Total net fixed 2,378 2,303 2,709 3,062 2,813 3,736 3,043 - 3,336 4,371 3,668 4,607 3,988 5,110assets

Total assets 3,028 2,588 3,291 3,268 3,484 4,164 3,717 4,342 3,959 5,215 4,291 6,986 4,534 IC,307

Liabilities

Current liabilities 28 116 32 253 36 296 40 501 45 450 50 1,863 55 4,040

Other - la - 3 - 11 - - - - - - - -

Long-term debt 121 - 266 50 309 366 400 ,13 486 484 568 407 650 243

Capital and Reserv,s 2,879 2,454 2,993 2,962 3,139 3,491 3,277 3,328 3,428 4,282 3,673 4,718 3,849 6,024

Total Liabilities 3,028 - 3,291 3,268 3,484 4,164 3,717 4.342 3,959 5,215 4,291 6,988 4,554 10,307

.,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


MEXICO LOAN 1022-lIE

Operating Accounts 1980-1981

Mex S(000)

VILLA HERMIOSA TUXTLA GUTIERREZ TAPACHULA POZA RICASAM ~~~~ ~ ~~SANt SAE SAX SAR SAX SAR SAX

Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual1980 1981 1980 1981 1980 1981 1980 1981

RevenuesLanding Fees 9,116 9,522 9,495 11,621 7,477 5,761 8,127 S,047 2,093 2,341 2,359 2,111 1.627 1.571 1.632 1,693Fuel Sales - 34,422 - 120,340 - 15,098 - 55.594 - 7,580 - 19,228 - 4,755 - 11,588Other Revenues 796 6,809 854 23.672 776 2,413 872 10,108 593 742 679 3,396 420 1,078 511 2,887

9.912 50,753 10,349 155.633 8.253 23.272 8.999 7.,749 2.686 10,663 3.038 24,735 2.047 7,404 2,143 16,168

Operating CostsLabor 1,130 8,166 1,153 13,997 768 4,862 783 8,878 1,047 5,836 1.062 10,386 785 3.730 800 5.740Material and Serv. 549 3,781 560 10,899 441 1,905 450 7,397 689 804 702 1,981 517 2.427 527 3,272Fuel Purchased - 31,682 - 112.041 - 15,074 - 54,931 - 6,713 - 17.190 - 4.382 - 10,866Maintenance - 2,195 360 5.503 - 1,810 307 1,395 - 991 220 j88 - 1,544 165 4,930

1,679 45,824 2,073 142,440 1,209 23,651 1.540 72.601 1.736 14.344 1,989 29.945 1.302 12.123 1.492 24.808Depreciation 5,020 13,392 5,020 13,803 5,890 92 5,890 1,229 4.550 666 4.550 805 3,530 7.200 3.530 6.947ASA Overheads 330 11,731 337 12,855 257 3,891 262 5,919 338 3.575 345 2.019 254 6.192 259 1.273

7,029 70,947 7,430 169,098 7,356 27,634 7,692 79,749 6,624 18.585 6,884 32.769 5.086 25.515 5.281 33,028Net lWorkiog Revenue

(Loss) 8.233 4,929 8.276 13,193 7.044 ( 379) 7.459 ( 852) 950 (3.681) 1.049 (5,210) 745 (4,719) 651 (8,640)Net Operating

Revenue (Loss) 2,883 (20,194) 2,919 (13,465) 897 (4,362) 1,307 (8.000) (3.938) (7.922) (3,846) (8.034) (3.039) (18.111) (3.138) (16.860)

Worki,,g Ratio l/ 17 90 20 92 15 102 17 101 65 135 65 121 64 16l 70 153Operating Ratio 2V 71 140 72 109 89 119 85 211 247 174 227 132 248 345 24t 204

11 Working 9xpense divided by operating revenues.

21 Working expense, depreciation and ASA overhead divided by operating revenues.

PROJECT COMPLETION REPOR



Financial Ratios 1975-1981

1975 1976 1977 i978 1979 1980 1981Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual

Government surplus 171 1ZB 176 3 213 74 241 297 265 533 291 611 314 374from airport operat.

ASA net fixed asses 22,021 1,905 2,469 2,980 2,643 3,617 2,643 3,678 2,711 4,371 2,804 4,607 2,910 5,110in use

Return on net fixedassets 7.8 6.7 7.1 0.1 8.0 2.0 9.0 8.0 9.7 12.0 10.4 13.3 10.8 7.3

Current assets 650 285 582 206 671 428 674 664 623 844 623 2,381 566 5,197

Current liabilities 28 116 32 253 36 296 40 501 45 450 50 1,863 55 4.040

Current ratio 23.2 2.5 18.2 0.8 18.6 1.4 16.8 1.3 13.8 1.9- 12.5 1.3 10.3 1.3

Long-term debt 121 - Z66 50 309 366 400 513 486 484 568 407 650 243

Capital and reaervs 2,879 2,454 2,993 2,962 3,139 3,491 327.7 3,328 3,428 4,282 3,673 4,718 3,849 6,024

Debt equity ratio 4(96 01100 8192 8192 1191 9191 4189 13187 12188 10190 13/87 8/92 14/86 4/96

Ml

U'

- 27 - TABLE 7.1


MEXICO - Loan 1022-HE

Airports Development Project

Project Economic Returns

Staff Appraisal Report Project Completion

PesosDeflated by

Best 15% increase Based on constructionAirport Estimate Construction costs US$ costs cost index

Villahermosa 38.- 34 21.0 22.0

T.gxtla Gutierrez 33 30 14.0 13.5

Minatitlan 30 16 11.7 11.6

Poza Rica 21 18 11.7 12.4

Los Mochis 35 31 14.6 12.5

Tapachula 17 15 14.0 12.7

January 1983

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LOCATION PLAN

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PERIMETER ROAD

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Future Extension 600 M 0

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i School to be ,elocaled off Airport property _

PERIMETER ROAD ____, -- -_ J.PROPERTY LINE

AIRPORT OF MINATITLAN, VERACRUZTypical Plan of Project Airports

(Project Shown in Red)

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