Q4 2019 Earnings Call
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Let's start there they were on your Touchtone phone to speak with an audio coordinator.
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Good morning, everyone. Thank you for standing by and welcome to the Valores fourth quarter 2019 financial results Conference call. All lines are in listen only mode. Following the company's prepared remarks, we will open the call for questions and answers introductory instructions on how to ask a question. We provided at that time. Please note. This event is be.
We recorded at this point I would now like to turn the call over to Ms. Maria later Rodriguez Polaris corporate Finance and Investor Relations Director. Please go ahead and as Rodriguez.
Good morning, everyone. Thank you for joining the call with us today, except president and CEO and making it and they know our unlike executive Vice President older Frankenstein, No Vice President CFO Sonya.
He will be discussing the company's fourth quarter, our full year 2018 Russell.
The works well move on to your question.
Please note that this scores for investors and analysts.
Any question from the media will be taken on an individual basis.
Before I wouldn't again, please let me remind everyone that this call may include forward looking statements within the meaning of applicable securities laws.
Forward looking statements are subject to several factors that could cause the companys actual results to differ materially from expectations, but we still described in the company's filings with the U.S. Securities and Exchange Commission.
Furthermore, bars undertakes no obligation to publicly update or revise any forward looking statements.
Now, let's make sure to turn the call over Volaris is president and CEO Mr. everything is done in.
Since you're not really.
Good morning, and thank you for joining us today.
During 2019, we hit.
Or.
Operating revenues.
22 million fast.
I'm in the largest external goes courier is that the number.
In Mexico.
No 35% larger in terms of true passengers nowhere close to capacity.
This growth trajectory over the last 14 years, that's transform into the Mexican flagship prior year and the largest passenger Mexicans are you in the history of cold.
As you know we're on older local scar your.
It's with box is even more than we could be either.
They want to service the older than 87 routes to 65 destinations and wonder that Israel destinations in kosher with from the earnings.
Well, there's markets holds promise a need for growth.
Well, there's today's resilient and well positioned to address the challenges we face.
Well were commissioned affords cost efficiency initiatives, both cost was performed during 2018.
Well when you 19 controversy over the U.S., Mexico trade agreements.
They should provide certain areas immigration waters.
Loss stagnant economy have dominated Mexico related.
So in addition to reporting over strong results of the fourth quarters. So you're you disposal really important to convey the notwithstanding these recent Mexican economic backdrop, we consolidate.
I would say what it shouldnt improvements during the year.
There are rising interest in the fourth quarter over it year over year, 7% nice per cent for the full year following a trajectory of sequential quarterly improvement, which colder blanken started when describing.
Well, ladies who are your sense by 17% over the full year.
The main source of growth.
What well see taposh.
Generators.
You can see some of our existing assets, which allows us to rule crossing taught me a much more faster than the market inspite of the softening economic environment and in spite of the fact that we already brought five.
You should know ships.
41%.
One per cent for routes have no early companies.
These are all its we only compete against bosses. So when we benchmark what ours its cost structure, where no burn or self swear cars.
More than doubling our unit costs dropped to the boss cost structure.
We got to be the bus industry will most definitely outperformed all their names fries.
Let me give you it's very big Hi.
They are where do you ryzen level.
No that's the toward all got most of the publically used to urban seem to work.
During 2019, no passengers, we garner grew by 19.5% year over year.
More impressively, 68% for where customers still claims to be first time buyers.
25% of them state.
First in both whoops before purchasing or what are you.
This mess that 14 years after the foundation Liberal Arts, both companies remain our most significant competitors.
We can continue growing higher based send them for the continuation.
The Mexican market.
<unk> GAAP.
Increased from 2025 in 2007.
36 2018.
Growing domestic market from 24 million passengers per year.
Thousand seven.
[laughter] These 3 million passengers per year in 2018.
The international market doubled in the same.
48 million bass.
During 2019.
68% Oh, the Mexican market growth, you said Threed is double double ours.
These accomplishments was driven by Oh, no cost business model.
Switching to compete.
Probably told him into domestic market continues to rise lines in emerging markets economy, which the middle class.
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What's more seats or a couple options, but just steeping enough the casing the best as Mark.
This trend explains part of what ours is traffic growth, where domestic demand for visiting friends and relatives traffic has been growing much faster than the order on it.
Well, let me she said scar it with an eye deals before this economy and population.
No.
Turning to size of the bus market, the Mexico steel indicates tremendous room for sustainable growth remotely like what ours.
Well, that's it used to full year CASM ex fuel Oh 6.9, U.S. dollar sense. That's a result before were almost.
Companywide cost saving for.
The total U.S. dollar cost for the year decreased 3% versus your 28 <unk>.
He offsetting the increase of Dabir out your economic fuel cost or Dilo.
During the year.
We remain to publicly traded early with the lowest cost in the western hemisphere, something we might have changed rigorous cost control.
Our cost structure is now so no that's fuel now represents around 38% forward thought of costs.
Well a newer just an engine technology are key to manage fuel costs.
They neal's represents already 29% forward toward a fleet and we welcome you know we're pleased to see shouldn't do they extend up by 2022.
57% will comprise eco friendly aircraft with engines that burn less fuel and our sharklet equipped.
Hoping to reduce fuel burn even for.
What do you know it wouldn't be finished it does he shouldn't holds betwo, how about cheap well now that's 9% lower fuel consumption, which also helps our low cost dropped.
The combination of both.
You didn't really think improvement.
Cost efficiencies reduce the full year eat a 4.4 billion barrels or a 12.5% eat margin.
Dod.
10.7 billion Mexican vessels, which is a navy darden barging of certainty what per se.
For those outperformed its turf war.
Which typically is better driven by stronger Thanksgiving and Christmas stress in the year foreign markets.
Strong fourth quarter full year results well see should want it already says what are the most brought out publicly traded erlandson declines.
Well that is finished the full year was positive operating cash flow generation 95 billion barrels for the 12 months.
It Mo.
Turning the leader these kind of growth.
Served you offer something different that outperforms, despite economic and political uncertainties.
As we look to 2020, we remain focused on creating value for our shareholders.
We're in strong operating results, we continue rolling efficiently and profitably.
Generating operating cash flow what are their into all operational reliability standards.
Let me pass it over to wherever they vice President Holger Blankenstein.
Well elaborate further on the revenues older piece.
Thank you Enrique.
The fourth quarter, we achieved strong volumes.
In the domestic market the load factor was 89.5%.
In line with last year.
In the international market.
So solid demand with load factors of 83.5% full 0.1 percentage points higher than the same period in 2018.
Total <unk> systems for the fourth quarter increased 15% year over year.
Domestic SM growth for the fourth quarter was 13% Jason by more capacity in our core markets of one of the hot I Wonder Andas optimization of frequencies in schedule.
This enabled us to offer lower fares with customized double trouble options to more people and in more places.
This is what we called healthy capacity will deliver to hide daily utilization and approved capacity production per aircraft per day.
In the transport market between the U.S. and Mexico fourth quarter S.N. capacity golf was 19%.
We are observing solid traffic demand between the two countries.
Passenger traffic continues outpacing both U.S. and Mexicos GDP growth.
Most of all our capacity is based in the North West area, Mexico, well ours is the leading airline in the Mexican states with the highest GDP growth.
Well I'd has built a strong and diverse network with minimal concentration in one specific halt and relatively low overlap with other carriers are diversified mid work allows us to work around the infrastructure gap such as those in the Metropolitan area.
And take advantage of untapped opportunities for example in the bus market throughout the Americas.
During 2019 again, we achieved capacity growth to improving asset utilization and the airline is now operating at around 850008 cents per aircraft per day, which is amongst the most productive utilization of comparable airlines in the world.
During the fourth quarter of 2019.
I see began operations in four new domestic rules and one new international.
I just need for Lars lost for sale five new internationally.
Turning to fares and yield the total fare environment has also approved.
We were able to stimulate demand.
And the revenue, which resulted in a positive overall effect on our yes.
The C, 17% improvement for the quarter at 18% for the full year and also increased TRASM.
This represents the fifth consecutive quarter over quarter improvement in traffic.
Well, there's bus switching has been the cornerstone of our growth strategy and then we get already elaborated.
And the boss industry in Mexico in Central America provide almost 3 billion trips per year.
We decided to dive deeper into market research.
Our commercial areas now have a very solid understanding of the market segment, and social and cultural background of the bus passengers.
The market research also indicates that to date steady, 6% or mostly new customers.
Say that they are the first our first time Flyers in their lives on Belarus and.
These passengers claimed that they will travel by air again on future trips.
In 2019, it is important dimension that we increased passenger volume by 19.5% and a third of that growth came from first time Flyers, whom we were able to switch from Boston.
This is our key target group as well as the visiting friends and relatives traffic prevalent in the emerging markets in which we operate.
On the ground that the mid to low income segment is expected to grow well ours launched initiatives for this specific target market any lines with two key partner, Google and Facebook.
Together, we created data doesn't compete and rather than to content in social platforms, which are absolutely impacted these switchable customer groups doing their boss journey.
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During the fourth quarter total ancillary revenue per passenger performed well as well.
Reaching 557 vessels and increased 8.8% year over year.
For 2019 told not to revenue increased 33% year over year and now accounts for 34% total operating revenue.
Three reasons explain this increase in ancillary revenues.
Healthy purchase goods from international customers.
My Truing up product that we launched in 2017 2018.
And fine tuning of pricing and more targeted digital distribution.
The Cobranded credit card now has 482000 enrolled members.
The Big club has almost immediate memberships.
And our subscription products the path has 26000 members.
More members than ever our into acting with will artist digital experiences.
So these programs and we continue delivering more customer benefits by expanding better dynamic pricing techniques.
That's right Merit corporations are maturing during the fourth quarter capacity allocated to Central America represented 3% of our totaled 87.
Mostly by new flights from Central America to the U.S.
Total unit revenue trends in the region are strong.
Well, it's a low cost model becomes more and more accepted by passengers.
In 2020, we plan to motoric, we've had a moderate increase in central American capacity.
Our culture with some here is operating in 22 connecting airports and over 166, new connecting round trip rules.
This represents 67, new U.S. destinations for large taking the talks to 89.
For the quarter co chair passengers accounted for 3.4 percentage points.
Load factor on Mexico U.S. routes.
We have be going in terms of capacity without sacrificing operational integrity.
On time performance was 80% for the full year with a scheduled completion of 98% and an improved customer service net promoter score.
The guidance for Ah, Yes, then goals for 2020 continues to be 10%.
Plus or minus two percentage point.
Depending on market conditions.
We reaffirm our concerns on both airbus's capacity to deliver aircraft on time, and Pratt and Whitney engine availability.
We currently plan a fleet net growth of only five additional aircraft for the year.
And we will monitor market could do since closely for potential adjustment consistent with our healthy capacity growth strategy.
Capacity in terms of eight cents for the first quarter 2020 is currently planned at 11%.
Coming from a relatively low base in 2019, and this growth will be evenly split between the U.S. and makes equal.
No I'd like to turn the call over to our Vice President and CFO Sonya headed to discuss our financial performance for the quarter.
Thank you.
Hello, everyone.
Well I will continue talking about the horizontals in accordance with the cigars failed in the U.S. Securities and Exchange Commission and the both from a he got out.
I'm not breaking news for the whole Korea, where.
A new record all 9.7 billion pesos until the point yet were 34.8.
Yes.
They need Krish, all 23% of 27% respectively versus 2000.
Moving to cost I wasn't trying to keep them I think I don't know, there's still much healthy capacity going up.
Oh definitely keep me well go get it was about a little money towards hundreds of cost reduction initiatives throughout the year.
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Well I want to cost management culture.
And we can't mention.
Yes on these calls.
During the fourth quarter CASM ex fuel that those remain.
He 0.9 U.S. at.
The same number I didn't know fourth quarter 2018.
Your thought on CASM ex fuel for the full year increased by 8.4% on the U.S. dog <unk> cat.
For the year increased by 2.6% versus 2013.
Additionally, our tight so do you to go do Oh, gosh operational synergies along with a global bunch locking perspective on the upper chasing board well a lot of getting the.
But I think our negotiating leverage.
During 2019 the company finish.
Selling negotiations with the Utica well airline what it cost.
What's Riverside see Michigan savings related to yet well have to be the leave it I'm just going into anything.
Shooting our continued focus on cost as our primary proceed at BTD twice.
No one is pretty well ladies has told me that go out than anybody in the fourth quarter 2019, ending the year Weve 82.
So it might be so oh, we had to go out our Sunday it creates.
Routine dream come true.
You know shape.
Now with that 28% policy on double the low well see what they're hoping yours, how what we said.
Oh, yes, that's such a Buddy company D. these wage which.
Support our ultra.
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Well I think.
Maybe dar into fourth quarter was 8.5 be off the shelves, we can and EBITDA margin all people.
6.5%.
Yeah.
You bet divorced don't be media.
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I think 20% even.
Nothing goal for the quarter was 1.8 billion basis with a net margin all some people don't.
The earnings per share for the full year that don't 0.61 source their share and 1.38 U.S. dollar bit 80.
During the fourth quarter net gosh, no candidate that by operating activities.
Oh point 2 billion.
And then gosh, though you didn't investing activities.
828 million pesos, and then that's actually using financing activities was 900 tasty neon basis.
As of December 31st.
I wasn't thinking gosh I've got to accumulate were 2.9 billion basis.
And what will be in helping us above last year, and representing 23% last 12 months operating revenues.
Well actually adjusted net loss net that they'd be me on but just excluding he's playing any do you recognized on the I forgot assisting adoption and the thought that Oh.
5.4 billion pesos IDN all 2019.
Well that he said that living got ratio close obviously people are five times for the year, if anything of a healthy uncertainly balance sheet any let up to the enhancement and be dot.
No later than we think change weighs on field Shannon for the fourth whereas 2019 U.S. dollar denominated collection represented 45% soak up revenues.
Helping to insulate approximately two thirds of the company Oh gosh, the U.S. dollar fish oil exposure I'm, representing the company for probably not at all hedge.
Diversified network.
Okay. Just 2020 I would guess he will touching on a well yeah I see is approximately 45%. Thanks I'll be expected jet fuel consumption.
Oh gosh I've been average price of 1.7 $8 Kellogg understood. It was zero cost collars in a range of 1.65 to one point.
Yeah ill dollar spent.
Oh, just started to hedge our projected feel assumption from 2021, yeah folks.
No I just bought 20 Enrique for closing remarks.
Thank you. So now so recently Volaris wasn't one to the renewal of its concession for a 20 year term.
I want to express, how we're positioned and ready to do the threed decent entire wears team involved in achieving this important object.
These long term brands represent significant investments in aircraft the network expansions.
So first start with you know, we're used to friends and relatives and middle class income passengers.
Well, let me switch gears.
Little bit about something else.
This is a purpose driven organization.
This strategy Im not only at improving the performance of the business.
All such important in protecting the environment.
Well, there's money doors fuel burn very closely.
Because of the economic impact, but also because of our commitment to sustainability.
In 2018, we have saved 13.3 2.5 million guns genfuel versus the industry I'm in a few burn brought yeah.
Moreover, in 29 being we saved another 15.8 million gallons of jet fuel version, so were fueled earning 2018.
There is no body by having more efficient neo aircraft, but also by increasing awareness amongst our bio and grown cruise reduce the use of it use up demand seems like directories.
General burning less fuel amongst all agents.
This is Dick we wouldn't serving more than 314 killed on subsea to what are the equivalent of the missions of more than 60000 passenger vehicles driven in a year.
Savings can also be translated any almost 2000 acres you can be served not.
Turning my team was a Europe continued focus on holding the line.
And further reducing costs, we're committed to find ways to increase efficiency and dried fruit.
Hi, good engage her capacitors the strong cohesive management team with a winning culture, all of whom will certainty right.
Any forward and continue generating an improved ROI.
For our investors with actions in line with our sustainability.
They will like to have the finest statements Oh, sorry was still about the impact of core underwriting was in populations I mean, the industry in Europe and Asia.
Even though we're not aware of any guys Casey Mexico.
Very or cells with protocols.
To the Dynasils over health organizations that are younger and preparing ourselves in capacity Mashing management if you.
That's just today, we have not seen any impact of this house prices and sales northern go far.
Thank you very much to everybody for leasing no operator, we're ready to open the call for questions go ahead. Please.
Certainly at this time, if he would like to ask a question. Please press the Star then one.
Stuff you may withdraw your question anytime by pressing the pound keep again. It is star then wants to ask a question and we will take her first question from Duane Pfennigwerth with Evercore. Your line is open.
Good morning, this is actually a raymond not for Duane.
[noise] has there been any changes in the competitive landscape her signs of distressed from weaker players and are you seeing any delivery delays from Airbus.
Nothing reality.
They continue operating and adding capacity.
Sometimes failing to fly it.
But yeah that seem to not sure what we're seeing.
Nothing major.
Distress in terms of interruptions.
So regarding the Airbus delivery delays, yeah, we have confirmed the delivery schedule for 2020, as we mentioned, we're planning to advertise and you know aircraft to the fleet.
And we have been informed by Airbus about some potential delays, which already baked into our capacity guidance that we gave you.
And 2021, we might see additional delivery delays.
Between four and nine months.
That's what we're currently seeing but we are in close contact with Airbus tool to mitigate the situation.
Alright, great. Thanks, and a if I can squeeze one more in could you update us on the progress of Central America U.S. markets.
Yes, absolutely. So we launched the Central America to the U.S. last year, it's been in ramp up and there's no performing extremely well.
We've seen a unit revenue trends I'm being very solid volume are being quite solid as well and.
We obviously limited by a certain restrictions.
Of course, the recall the country Oh, the D.J.C. in Costa Rica, which is currently in catch it would be to.
Between.
Well flights between the U.S. and Central America.
But we plan to grow capacity modestly once we come out of that category situation.
Great appreciate the help responses.
Thank you.
And we could take our next question for Lane Becker with Cowen Your line is open.
Thanks, Operator, hi, everybody and thank you very much for the time.
[laughter] just to clarify you have revised your near delivery schedule is is that correct.
Yes, correct, although as we said basically we don't have.
Well much moves.
In terms of the leverage will see shows 2020.
Right understood have whenever that may arise he made a good shifting to June but that's it okay. Okay.
Oh or management.
You should that we're seeing is much more you did 2021.
Well, we're seeing important downwards delays, depending on the type of first and the 2020 guidance. We gave your capacity Helane already.
Takes into account any delivery delays for 2020.
Okay. That's all helpful. Thanks for clarifying that for me and my my other question [laughter] thing I know I think you Enrique for your thoughts on on that's covered by our.
And I'm glad it hasn't shown up in Mexico, yet and hopefully it won't.
Are you concerned at all about aeromexico moving capacity.
Into the domestic market.
Into the Mexican domestic market.
On the international Marquette, Yes, if.
Traffic on nail Lannach.
You know starts to effect.
Demand I think I said that wrong, but if demand starts to be affected by by the virus on the Atlantic and they move capacity back into domestic Mexico are you worried at all about that.
Well.
So.
Aeromexico operates the long haul.
Routes with 77, which which is not an aircraft that is.
That is suitable for for the domestic market the in an efficient fashion. So we don't see that Happing immediately.
Okay, and then I just want to scratch and one more question you know on that I've reported earnings yesterday, or I think I'm sure actually asked our reported earnings earlier this weekend.
The stock with among those that got crushed and and I know you said, there's nothing any impact on travel. So I'm, assuming that you know you're not seeing declines in you know demand through your airports and so on I know you don't really overlap with them too much but you know.
Yeah, I just want to you know I guess I'll make sure that you're not seeing that that weakness.
Well I mean, I think we overread level raises the fact that our traffic just kind of difference.
But the where we operate is different.
And were wearing the stage that we are due looked over that.
Great. Thank you.
I think it's important to say, though have laid that out we do not consider ourselves free of these global buyers.
Yeah, I wasn't doing systems, we need for ourselves and that we need to be ready or whatever it can't happen.
And and we're working with that.
We were almost per rather than be working on trying to to set up the actions that we need to boot up.
And ER much minute by minute he's a crisis like that.
Okay. Thank you. Thanks for all that help I really appreciate up.
And we'll go next to Michael Linenberg with Deutsche Bank. Your line is open.
Oh, Yeah, Hey, Hey, good morning, everyone I have just a couple here I want to make sure that I heard this right holger on the capacity I know you gave the March number 11%. He said it was basically similar domestic international did you give a full year 2020 capacity number.
Yes, we did we're currently planning capacity growth of 10% plus or minus two percentage points.
Depending on market conditions.
So my Okay. That's helpful and then it's for when you also.
You mentioned you talked about you know the performance in 2019 and I believe you mentioned, an 80% on time performance and then I believe I thought I heard you said did you say, 90% completion factor.
That's right.
Okay, then 90 tell I mean, it it it's high right, but but an airline world. That's actually that's actually somewhat Wow I mean, a lot of carriers at seem to be running north of 99 was there anything in 2019 that would have impacted you or maybe maybe you just reported maybe you report it definitely it's a different standard than what what I'm used to.
Thanks.
I see where opponent missing some best Cmos there.
One and and the second thing is it's a.
Yes, these very much related with the weather issues that we do have is gone.
What do we have photos for example is required to quite a closes for 10 days.
And that makes those pads so much more active operations and what are your international Daria dos.
I would say that's probably our most important affect you in terms of all scheduled deliveries and Ah and they just mainly driven by the weather conditions in that area.
And we'll have an airport, which has a cat two or three system because of where the airport displaced almost impossible to installed.
Okay that makes sense I, presumably you're I bet you your numbers are probably not that far off from from the local competition, you know everybody's kind of dealing maybe with the same issues and so maybe that's yeah, maybe within that context.
I would appreciate.
We do have much stronger presence in quite a though.
Okay. Yeah, that's a good point, you're the largest player there and then just one last one on you know the moderate growth anticipated for the Central American operation in 2020.
I don't know Phyllis Enrique or holder, who just mentioned that you know Costa Rica right now is cat too and you know once that improves.
You will add more capacity and so I wasn't sure if you're waiting for that rating change, which as everyone. On this call no sometimes that can take more than a year when you're dealing with the U.S.A. I, sometimes it can be many years that have come a country is stuck in category too.
Or were you referring to maybe another AOCI because I know you have been working on setting are establishing another.
Airline operator certificate up you know I don't know if it was I think it was el Salvador or or another country, what it would that be up and running it would include capacity cost on that and so I I know, it's kind of a multipart question, but it addresses kind of it that the same thing.
Collaborative.
Let me cover taken several pieces first one I suppose study.
Yes, I guess, what do you see a restrictions imposed by the U.S.
Yep political stuff, Oh, sorry, and that affects our original because we do all regions and try to make that was in register aircrafts. Okay. It's always been so basically freezes the classic.
HM.
On Friday last week the process of Ah assessments with if you are basically finished then goes down because I was sort of you requested officially a new assessment for the country, which made during the next malls and meet their needs every goes right. We may be released.
According to what they did you guys you may be released by the end of the screen or something like that so okay.
Yes, we keep on working in Central America, both countries, what am I don't know Salvador Cielo is progressing very well, which swung to be absolutely sure Sabal will not fall down into the same brother and Costa Rica felt.
Yeah, you had I know you know over which Ah you didn't go very well is and our position is we rather than non she knows it's easy to the corporation before we are absolutely sure that the country's use is performing in the right way for like our standards we rather.
We'd for for their qualification.
Okay, I, just I bring it up Enrique because you know as we watch the changes to routes in the area. You know we see competitor is pulling down service say from Guatemala to two New York, and and Miami and San Pedro similar to the U.S. and its its opening up markets and it would seem that if we didn't have the cat too on the.
Hey, Costa Rican operation.
You could probably do you can move more quickly into some markets that that are that are opening up an IPO. So.
I mean you.
Maybe you agree maybe you disagree, but it's just kind of a observation from from what we're saying.
Well I absolutely agree with you.
I think also that what we're doing was in Central America without the restrictions of the U.S. market is going really well or sure and penetration of the older local scars throughout Central America has been tremendously successful as markets like for example, in Costa Rica, too close to what am I not which.
Doubled in the last 24 months.
So so yes, we're certainly study instantly U.S., but then on the other side.
People, playing with in Central America, and hopefully you will be sold is that Youre absolutely right. It is a restriction people rolling.
I think as well as I always say, the low cost always wins and [laughter].
Two Lewis will people hitting the market.
Well good luck and thanks, thanks for taking the questions.
Thanks, Michael.
Yep.
And we will take or next question from Stephen Trent with Citi. Your line is open.
Hello, Good morning, everybody and thanks for taking my questions.
At two for me just a very quickly you mentioned you'd seen a you know much stronger demand.
On U.S., Mexico flying and just out of curiosity, you know to what degree that's coming from and Ah you guys, starting the lapse and easier comps or or are there specific factors that I've really started to the boost that segment.
Even though we operate in the via far segment up between the U.S. in Mexico, We have a lot of news markets to cater to the Mexican heritage population in the U.S. and we've seen a quite a robust market a in that segment.
In comparison to the neither cell phone market from the U.S. to the Mexican beach destinations [laughter], we're seeing strength in our market segment.
We are tracking toward statistics, very closely which is exports from Mexico to the U.S., which are actually at historical highs or close to historical highs and remittances from the Mexican heritage population in the U.S. to their friends and families in Mexico.
And those remittances also close to historical highs and those two indicators.
Our our goods predictors of the international traffic in our market segments I'm, So we've seen pretty healthy growth and robustness and bookings as well it and that's it.
Okay, great stuff about the appreciated that Holger you know the second question, just kind of pertains to your cash position and cash generation and your cash generation has been so robust.
I think one you know do you see any kind of short term scenario or perhaps you would maintain a minimum cash level.
You know short term as a let's say a life jacket again to run a virus and two you no longer term you know what are your thoughts about you know cash dividends down the road.
Yes.
If I may I, just want to tune.
To repeat the cash and cash equivalents number which is 7.9 billion best speed from which to one wouldn't be the best is about it's it's above last year feed representing a 23%. So youre absolutely right Steven that Oh, gosh has been growing in an important and way Nevertheless.
You need to understand which does have an owner to workers comp and we are starting over so bear with subs towards the payment of the B piece of the new order, which may start to arriving in 2022. So we're almost 24 months ahead, and we start babies no and.
Just doesn't mean that it will debilitate the cash flow. We think we can sustain these these kind of level of cash flow, but we need to prepare ourselves for that we're not thinking about anything related to do.
Okay very clear I'm very helpful. Thanks, Enrique let me leave it there.
Okay, and we will.
We will take or next question from Pablo months of US with Barclays. Your line is open.
Hi, Andrew can deem things for taking my questions I have two on my side, Oh, I'm, sorry, if I missed this.
These but I would like to have more color on the unit caustic fuel in dollars for 22 any is there any room for improvement here or I guess, we're already not very efficient level, but how are we going to see these little going forward and my second question would be honest about your revenue side Kogut already.
I mentioned the drivers for this quarter, but I would like to have a view or for 2020.
Thanks.
Hi, I don't know salty Sunday I, so regarding our CASM ex field.
Oh, that's funny 20, so we think that we are able to sustain.
I'm not gonna metals.
I'm not working on this well you feel how about the in Mississippi is yet to be impacted.
Original side I would say broadly the reductions in terms of fuel burn did you will see it's mainly due to a bit of big So fleet and I mean, well there tests that arrived last year. The fighter aircraft at the right unless you have a fool even back to you know a fuel burn does your those were I mean kind of in the second half another.
The five aircraft to be so yes, you should be seen from the operational performance little bit of improvement in terms of fuel burn on it forgotten base.
So that can I follow up on on on the initiative do how many are any number or and if or a bit more detail, which initiatives or should we see these here. Thanks.
Yeah well.
The first one is we need to continue doing debut initiative by the so debut initiative for use dose last year more than nine Wade million dollars and we kind of he implemented it in a ramp up which basically started from me or.
I think that initiative still has some $3 million of improvement going forward.
The second thing is RPM routes, we continue working with the did you see especially Mexico because in the U.S., we are basically with 95% of RPM Roe to ready.
In Mexico, we're kind of that may not passing away I mean, we should keep improving in the implementation of RPM routes and ER and stuff and maybe your strategy. Then finally I mean, the Mexican government has been working on a big Big Boy, you're done there, which we.
We are you doing approximation and departure pass for the Metropolitan area in a combination of strategies that have been developed both by out of what it to it but he said that blue.
The implementation of a lot of those measures are being tested in a simulator for malaria is and we're working together with a send them to implement those strategies and the faster. We go in that the better we will be especially because it's going to be continues this ensign and and.
Approximations, it's no more than eight points into the metropolitan area, which facilitates a lot.
RPM routes in Central America also being implemented equal study.
And then regarding your question on ancillary revenues, maybe I'm I'll I'll quickly comment on that.
We've been very active on developing our ancillary revenues as you saw the result.
We focused on the top generators, we've implemented a whole.
Most of the new ideas, which are coming to that run rates a in this year and ended the next and.
Well, it's coming for 2020, well, we just made a big change in our.
Baggage policy, especially on the onboard to carry on baggage, which we basically unbundled, our lowest fare completely and we now require anybody that purchase lowest fare.
For a French welfare to purchase a carry on and we're going to enforce that at the airport. So that should help back its revenues.
As I mentioned earlier, we are executing full dynamic pricing on many of our ancillary products, what you'll see that they get the run rate effect. This year next and we're working a lot on on personalization I'm offering the right products to the right customer segments.
At the right moment, a in their purchase in their journey in there in the south of journey with us.
And then finally 'em, we also renewing our subscription program, so making them more diverse giving customers more options for subscription.
Products, which should also drive that's your revenues in the future.
As we had mentioned earlier.
We are targeting higher percentage of non ticket revenue as a percentage of total operating revenue for 2000 points, but we do see room for growth.
Thank you. This does conclude the question and answer session for closing remarks, I'd like to turn the program back over to CEO Enrique Beltranena.
Please go ahead.
I wanted to finish by saying here were ambassadors for their own going to the occasional commitment to keep us up to four front over the Mexican radiation next month, we'll celebrate our form 10 university or and I could not be brother or four of the when I started really survives and achievements. During this year. So congratulations to the velocity as family.
And as Mark. Thank you very much to everybody and I really appreciate your participation. This morning.
Thank you for your participation. This does conclude todays program you may disconnect at any time.
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