Fitch Ratings Upgrades Grupo Senda's IDR to 'B+'; Outlook Stable.

CHICAGO -- Fitch Ratings has upgraded the local and foreign currency Issuer Default Ratings (IDR) of Grupo Senda Autotransporte, S.A., de C.V. (Grupo Senda) to 'B+' from 'B'. The Rating Outlook is Stable.

The upgrade of Grupo Senda's ratings reflect a significant improvement in the company's financial profile due to the generation of higher EBITDA and the reduction of debt. During the first half of 2007, the company generated $30 million of EBITDA, an improvement from $23 million in the first half of 2006. The improved performance of Grupo Senda was due to the continued integration of Transportes del Norte (TDN) into Grupo Senda's business model, the optimization of the company's existing routes and the expansion into new routes, plus the decrease in operation costs per kilometer.

For the last twelve months (LTM) ended June 30, 2007, Grupo Senda generated $59 million of EBITDA, an increase from $52 million in 2006. The company's funds from operations (FFO) increased at a similar pace during this timer period to $35 million from $29 million. Grupo Senda has used the increase in its cash flow plus a reduction in capital expenditures to reduce its lease adjusted total debt from $256 million as of Dec. 31, 2006 to $235 million as of June 30, 2007. As of June 30, 2007, Grupo Senda had $11 million of cash, a slight increase from $9 million at the end of 2006. The company has $8 million of debt falling due before year-end 2007.

July and December are typically the busiest months for the transportation industry in Mexico. Consequently, Grupo Senda should generate more than $35 million of EBITDA in the second half of the year. This should result in an improvement in the company's total debt-to-EBITDA ratio of 4.0 times (x) for the LTM ended June 30, 2007 to less than 3.6x for 2007. Meanwhile, the company net debt-to-EBITDA ratio should improve from 3.8x to about 3.4x.

Compared with other passenger bus companies in Mexico, Grupo Senda's business model allows the company to operate more efficiently, better adapt to market conditions and provide higher quality standardized services and enhanced safety. The model involves hiring drivers and other workers that are directly employed by the company. In contrast, most of Mexico's other authorized bus transportation companies are owner-operated such that the bus drivers typically own one or more of the buses they operate and control shares of a cooperative company in proportion to the number of buses owned.

The bus service market plays a significant role in the overall passenger transportation sector of Mexico, accounting for approximately 98% of the passenger tickets sold for intercity travel. Alternative means of transportation such as by airplane or personal car are not economically viable for the average traveler as approximately 93% of the Mexican population earns less than $700 per month. In the future, low-cost airlines will play a more important role in intercity transportation. Considerable growth in per capita incomes will need to occur before this represents a major threat for Grupo Senda, however, this will take time. Like other bus companies, Grupo Senda's buses use diesel fuel. The price of diesel fuel and gasoline is controlled by the Mexican government and is below international prices. Any unforeseen change in the government's policy would squeeze Grupo Senda's margins and would likely lead to a decline in ticket sales.

Grupo Senda is a holding company and a leading provider of interstate passenger bus transportation and package delivery services covering 15 states and more than 120 cities in northeast and central Mexico and 12 destinations in the state of Texas in the United States.

In 2006, approximately 81% of Grupo Senda's revenues of about $256 million was generated from its passenger transportation segment for public intercity and chartered bus services and 19% from its personnel division for intracity transportation services to industrial facilities and educational institutions. The company employs more than 6,000 people and operates a fleet of more than 2,200 buses under several subsidiaries and brand names and transported about 53 million passengers in 2006. The company's most important subsidiary is TDN. It was purchased in 2004 for $155 million.

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