Q1 2020 Earnings Call

We are working to lower our fixed costs and even under an assumption of zero revenues. We expect to burn around 85 million dollars per month. Once we restart which we expect will happen in June. This average cash burn figure could be in the range of 70 million dollars per month for the rest of the year.

Ladies and Gentlemen, please stand by you are Copa Holdings first quarter earnings call Will begin momentarily again. Please stand by your conference will begin in 3 minutes. Thank you.

Let me close by stating that once this terrible situation passes We Believe Corpus of the Americas will once again be the best Connecting Point for travel in the region with a privilege location and even money and business model and the best team in the industry. We are working harder than ever with these goals in mind. Thank you, and with that we're open the call to some questions.

Dead dead dead dead.

Thank you. Ladies and gentlemen. If you have a question, please press star then the number one on your touch-tone telephone if your question has been answered or you wish to remove yourself from the tone, press the pound key. Your first question comes from site with Raymond James.

Hey, good morning, Jose. If I might clarify you mentioned can additional financing sources, what are the ones that you have in particular that you're planning? And are you mentioned a potential sale of a couple of aircraft? I'm just wondering, you know, what's the and even just you haven't kind of on the pipeline. Just what's the attractiveness of capital-raising bulb is out there. You know, what other loan-to-value is looking like these days saying sorry. We are working right now on a I think the next step is working on a revolving credit facility that is in the final stages of being documented. It will be based initially with a subset of the unencumbered assets that we have. And so now I'd say that it's you know, sixty 60% loan-to-value range is is Thursday.

Dead dead dead dead dead.

After figure that we're seeing with that and I think that could potentially yield up to you know, two to three hundred million dollars in additional potential sources of liquidity. The facility is is going to be relatively flexible in in in its form and it it will initially probably start at a lower level, but it it it's going to be it has an accordion feature to it that we can grow and Shrink depending on our on our knees. That's that's helpful. And and if I might have you had discussions with building, I know some of the some of the other Boeing Partners have kind of receive some payments and and redone their Fleet or to book. Where are you in that process?

Thursday

Ladies and gentlemen, thank you for standing by and welcome to the Copa Holdings first quarter earnings call during the presentation. All participants will be in a listen-only mode afterwards. We will conduct a question-and-answer session at that time. If you have a question, you will have to press * then 1 on your touchtone telephone reminder. This call is being webcast and recorded on on May 7th 2020. Now I will turn the conference call over to Raul peskov director of investor patience, sir. You may begin

Well, we are we're right now in negotiations with Boeing. We're we're in that process right now. So I I I think that's what we will say so far related to age. Thank you.

Our next question comes from the line of Duane pfennigwerth with evercore is I

hey guys, how are you?

Just just on your capacity plan, you know twelve percent of last year in June growing to 40% of last year by year end, Obviously. Nobody knows your your guess is is going to be far better than mine. But how how wide is the range of outcomes by by four Q in other words if you decide you know down sixty is is way too low how much how much flexibility do you have? Yes during this is Pedro. Hope you're doing well. It's it's hard to tell me that will said no one really knows we know that we know that forward bookings are very weak right now. And this is the industry bookings not only Copa, we're monitoring the whole industry off and there's not much out there. So our June a 12% capacity. I think it's in line with what we're seeing for the end of the year for December. It's really really hard to tell.

Thank you Crystal and welcome everyone to our first quarter earnings call joining us today are Pedro Haven CEO of Copa Holdings and Jose Montero rtfo.

First Federal will start with our first quarter highlights followed by Jose who will discuss our financial results immediately after we will open the call for questions from analysts.

Copa Holdings Financial reports have been prepared in accordance with International financial reporting standards in today's call. We will discuss non-ifrs Financial measures a Reconciliation of the non-ifrs do our financial measures can be found in our earnings release which has been posted on the company's website Copa. Com our discussion today will also contain forward-looking statements not limited to his a good fact that reflects the company's current beliefs expectations and or intentions regarding future events and results.

These forward-looking statements involve.

Risk and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change many of these are discussing our annual report filed with the SEC now need to turn the call over to our CEO. Mr. Federal. Thank you Robin.

But will retain enough.

Flexibility to go up and down or down depending on demand how the man builds up again. So that's that's that's a big part of our plan retaining flexibility in terms of off planes and Crews.

And then just just a longer-term question about capacity and and kasim, you know, you guys have been one of the one of the most flexible in terms of being able to preserve a really nice Chasm profile despite the fact that you know, whether Your Capacity assumptions change materially. So as you think about twenty Twenty-One, you know, what what's the Baseline you feel like you could get back to, you know, say a 2019 Cavs a Max. Could you be down, you know twenty Thirty forty percent and still have a hope of preserving a 2019 Chasm Max. Just how do you think about that into next year? Thanks for taking the questions.

Good morning to all and thanks for participating in our first quarter earnings call. I hope that all of you and your families are doing well and staying safe.

Today, we won't spend much time going over our first quarter results and we'll focus mostly on the covid-19 crisis and the many initiatives we have undertaken to assure me that Copa is one of the best position Airlines to survive and prosper in a post-crisis world.

Before we begin I'd like to thank all of our co-workers further commitment to our company and recognize their efforts and many sacrifices in response to this crisis to them my utmost respect and admiration.

Dwayne I I think that it's it's too premature to to determine what the cash and figure for next year is going to be because of you know, we I think our office right now is is reducing our cost base as much as we can both our our fixed costs and eventually when we start flying again are variable costs. So cancel a Target right now. It's not not our area of focus. It's just simply pure costs and reducing the total amount of cost that we have fair. I guess just the potential, you know, could you manage to a business? That's call it 30% smaller 2021 vs. 2019. It just feels like you'd have a much better shot at managing your cost to that level of capacity than the average airline. Well, I think that we already started with a low base and you know, we're we're pulling all the levers that that we need to pull to to continue having a bath.

We delivered strong operational and financial resource for the month of January and February with operating margins above 20% for the two months. However long the second week.

Unit cost but you know, there are there will be some precious because of the lower level of a SMS. But certainly I think if anybody has that ability to to produce RSM set a low-cost wage to be us.

Thank you guys for next question comes from the line of Hunter K with wolf research. Hi everybody. Good morning. Are you talked about simplification a lot. You also mentioned a simpler on board offering. I'm wondering how lopa or any just brought interior configuration May factor into that discussion and thought maybe it's also a question about these lie-flat seats, but it's overall just an aircraft configuration question. Thanks. Yeah. Yeah. Thanks Hunter. So we're not planning to make any type of configuration changes. We don't think it's it's worth investing that will not be an essential investment for the company. So we're we're leaving configuration and touch it sucks have more to do with product offering with a simplified, you know, where we always been a full-service Airline. We deliver full service at low cost lower than most other lines.

But going forward we're going to even simplify.

Further simplified our onboard product to reduce that interaction between Crews and passengers but also will take advantage of opportunities that will make us even more cost-effective and then also simplification comes from a single configuration of 737-800 and Max 9th. I'm sorry. I meant longer-term that by mistake. I realized that's not a near-term question, but I think when this thing is all done, have you think about this as the next few years is what I was asking sorry, right? So, we're going to have seven three seven eight hundred with a simple unified configuration for for let's say medium to short hauls off and then we'll have a Mac 9 configuration with a lie flat feet for longer haul flights. I would think that would be a a good guess.

Of what how we going to look like in a few years? That's great. Thanks and then sort of a specific you back a little bit on Duane's second question was, you know to think about the opportunity for Copa. Let's just say we're back to 2019 capacity levels and twenty twenty-three twenty-four when whenever maybe do you think we should expect margins to be in that sort of High Teens 18 to 20% range as well. I'm making any other changes that you think maybe should make that move higher or lower when things or should be back to normal.

You know, it's it's hard to tell there's there's there's like no way we can get right now how things are going to look back in twenty twenty-two or twenty-three or off from a demand point of view. But what I can tell you is that we will take advantage of this really difficult crisis to make the airline even better and more competitive and you get leaner make it more more cost-effective. That's that's kind of how we do things. So we'll be in a better position than most everyone should take advantage of whatever it's offered to us, or what or to survive whatever is in front of us, but, you know part of that makes depends on demand, and that's that's really hard to predict now understood. Thank you.

Thanks a lot.

Our next question comes from Joseph dinardi with stifel. Yeah. Thanks. Good afternoon. Was it? Can you just talk about the liquidity that you guys have now, is that being raised because that's what you think you'll need to kind of get through this or that's what you want to have to be able to go on offense at some point.

Well Joe, this is I think as a function of the insurance environment where we're in and we're just building. I think we we starting off this crisis with a position of strength in terms of the balance sheet, but given the uncertainty we don't know how long this will last and and frankly what what are bath ker boss might might be coming, you know in the world over the next several months. We want to build just simply a fortress to be able to sustain this situation and be able to to come out on the other side strengthen. So so it's I don't think I wouldn't say that it's necessarily.

to give us the

Ability to play offense. We've always ran our business in a way that is conservative from the standpoint of the balance sheet and with profitability in mind off. So I think that's that's I think something that even under very difficult operating environment is still kind of our driving force.

Okay, that's helpful. And then Pedro sorry if you mentioned this in your prepared remarks is a little late getting on but when you all start flying again, what does the passenger experience look like in the airport on board? And then what do those changes maybe in in terms? I don't know. It's lower utilization. Like what does that mean for the cost structure? Right? I imagine that some of that may evolve over time but to the extent that doesn't does that mean anything for the financials of the business? Thank you. Yeah in terms in terms of what it means to be Financial. We we will stay off within the range. We've always been at so we're not expecting to to to let's say spend more money or have higher unit cost at least that's our plan right now, but we're still waiting for World standards, which are not very clear right now. We have been flying some special flights not many but, you know few special flights a week to age.

Get stranded passengers back home and we've been we've been applying some of the stands some of the of the safety protocols or biosafety protocol that will become Staffing in the future. For example, we are requiring our passengers and all Crews to wear masks. We're also checking passengers before they board we are dead we board and the way the way we we check in passengers, all of those procedures have changed in our special flight and we expect most of that to remain wage start schedule operations, hopefully in June, but then the product will be simplified also as I mentioned before to to reduce the interaction between Crews and passengers and there will be some cost savings there which should offset the value of the the additional cost from biosafety, but but still hard to know exactly what authors

that is going to look like

thank you.

Your next question comes from the line of Connor Cunningham with Cohen. Hey guys, appreciate the time just to piggyback on my first question. I know you it's obviously a wide range of expectations on four q, but how quickly can you actually add capacity back. Like is it a is it a matter of weeks or months? Like I mean, I know that that took you still kind of a wave out but just curious like if you saw something a month out, could you add back past the at that point?

Yeah, it really depends.

On on how much capacity we need to add so we'll have extra extra lift extra aircraft available to us for immediate flying off. So so if it's one or two additional aircraft were still flying that would be very we were also have some aircraft in temporary storage. I'm getting those out of storage will take you know, maybe a few weeks. So so it depends on on on how many aircraft we need to bring back but we'll have enough flexibility to add a reduced capacity because this could go either way we won't really know.

And then maybe I mean, I realize that the liquidity position looks pretty good and you guys are adding more and that's good to hear but curious on home. When what demand level you would need to see for you to get to cash flow break-even and and and I realize that's a hard question to answer but just curious. I'm like with with your current expectations. Capacity. What what timeline or what quarter do you think you can achieve free cash flow or sorry cash flow break-even.

Okay, so also with that answer while while and and Jose can back me up. So there may be many moving Parts here and and it's hard cock a time a specific time to to this. But I know you're also asking what what kind of demand so our our our cash burning on Bruce a imply really severe rasim and reductions. So we're hitting racism very hard in our in our prediction anything that gets us, you know, anywhere between probably to 20% off rock some reductions probably gets us very close to cash neutral numbers. I think that's that's the that's the key figure if you're like in the teens in. Yep.

So rapid dilution, you're basically Cache Creek you now the question is when does that happen and under what circumstance that that's I think left to be determined that given month how the man close back or the next several months and and of course I'll add to that. You know with time time being years back. We will be able to adjust the airline site and cause based who whatever future demand is but that will take a few years. That's assuming that we're carrying our entire life, you know, basically fix or not and tire fixed cost base where entire aircraft base right in terms of bed and Easter play cetera. So, you know what time you be able to adjust that as well, but well that's kind of where where that life.

Okay, and maybe just one one quick one. I mean, I know that you're not running the operation right now.

Probably not a ton of searching going on your website. But have you seen any upticks in searches in in the last couple of weeks? Just given, you know, there's been talk of reopening and all that stuff off. So I just curious if you've seen anything see anything. Yeah, not much not nothing significant and and that that's not only in our website but no industry-wide numbers that were monitoring and in Latin America force and in our region. Okay, great. Thank you.

Your next question comes from the line of Josh mellberg with Morgan Stanley.

Hi everyone. Thank you guys for the call. My first one is a follow up on the capacity ramp up and and just on how you see the SM being distributed geographically as you as you took them back just you know, also taking into account some of the big currency moves in the region and and I'm sure that those currency moves are part of you know, what's behind your your your expectations for a 50,000.

A yes Joshua for the the economic the economic impact situation in our region including the currency devaluation are part of the mix and it's all related. Of course, so our capacity the way we're going to ramp up capacity from here to your end. It's it's kind of mirrors our Network before the crisis. So the percentages per region or per Market are going to be very similar. However, we have that ability to move capacity around and we serve Market that go all the way from VFR visiting friends and relatives business and Leisure. We have a good balance in terms of the market. We serve and will closely monitor how the man comes back in each of those segments and adjust capacity accordingly.

Okay, that's very helpful. And and and could you guys to also talk a little bit about the about the opportunity to take share coming out of the crisis you mentioned some of the uncertainties there but you know, I'm not giving your your competitors difficulties. I mean, it seems like there there there would be a major opportunity and and and it related questions. If you could just address the degree of overlap you had with your log in Columbia just just before covid-19 it at least for us. It's always been a little bit of murkiness on the degree of overlap that you've had with that competitor and other major competitors just because I think you took it in so many markets and because you've had this past focus on on smaller markets that need to have

Right. So so we do think that that our our much broader Network and and larger in South America have an intranet in America Hub. We'll we'll put it in a good strategic position. Assuming many Market will have to shrink in size and won't be able to sustain direct point-to-point service. So Panama been in the best Geographic position and being the better and and most efficient connecting Hub should take advantage should be in an advantageous position it with those modern Market. We always as you know, we run the company first and foremost foremost for our shareholders Thursday, and we do what's right for the company to be successful and profitable. We don't Focus as much in in our competitors at least dead.

not not in a way that sacrifices or

On performance and we would take advantage of opportunities as part of our just the way we run the business. So so if we're in the best position to take advantage of Market that will either be abandoned or no longer sustain point-to-point service or we're going to we're going to be in a position to be able to come back at a faster Pace will do it because it's good for the business. That would be the main reason and the way it's been in the past and it has worked very well for us.

That that that's great. I suppose there really isn't, you know an easy way to quantify what that opportunity would be in terms of just the magnitude and hard to tell right now and I'm also how much we offer overlap with our main competitor. So so the Panama hop and the BOGO table or the ones that overlap overlap the most often and I would say that that it's it's less less than half of the market where there's a overlap probably more like a third of the market where there's a there's overlap.

Okay, that's great color. Thank you guys very much. Thank you Josh.

For next question comes from the line of Michael Lindberg with Deutsche Bank.

Oh, hey, good morning. Everyone was just a few questions here. So I see you know, you loaded your June schedule I think in the last week or so and when I look at you said some of your biggest city pairs, you know, you're going to be flying less than daily a lot of two-day-a-week type stuff for the time being and then it slowly starts to ramp up and when I think about kind of the success, it's all about connectivity. And so it does seem like that at least initially your service is going to cater to the local market, you know, it seems like it's going to be actually very difficult to construct connection connecting itineraries. And my sense. Is that as you look out as you go from this 12% to 40% It seems like there will be a point where you know City pairs that are two or three times a week. We'll go to daily and we'll get to a step-function where five hundred or seven hundred or so and D itineraries will turn on and you'll get a jump and load so presumably your loads will start at a low level.

Not just because of the weakness that we're seeing across the region but because historically you realize so much on connecting traffic and so just your thoughts on that, you know, maybe initially is it 90% local 10% off and maybe you can give us a sense to the year at what month. Do you think you actually get to maybe the 50/50 Point local course connect? Because I think you're going to see that in your low to know there will be a big jump because you know, I think my said that it would be a step function increase just comments on that or maybe maybe my my my thesis is completely wrong here. So, all right Mike. So you're you're there's a Porsche, you you are correct, which is in the fact that we start in June with Hillary that is less than daily many markets, but we have actually crafted our teenage precisely sorry connects, and we've actually taking care from the standpoint of the overall, uh wage

frequent

please in in some of these cities even at a a you know understanding that paragraph your decision might not be the most efficient just simply so that the markets connect and so uh Thursday we're catering from the start that the Hub is as a connecting Hub and we will continue building upon that and as time passes throughout the year yes there will be more connecting on these included because of both the number of frequencies and number of cities that were adding but from the start you will have quite a bit of of connectivity throughout the city that we are starting with an issue

Okay. Yeah, so so it does have quite a bit of connectivity in there. It's just simply that it's it's a tad less than daily frequency. Yeah and right off.

Yeah, the only thing I will add to that is that our planning team was very clever in putting the schedule together and preserving our connectivity for connectivity pretty much even even when not all markets are daily.

Yeah, no. No, I mean I'm looking at the schedule and it'll be remarkable to see you know, where you actually do get connectivity, especially a lot of these flights that are you know twice a week. I guess there's going to be some busy days, you know every Friday and Sunday will be your busy day. Yeah. Yeah, there's some of that and there's there's some some something there in terms of how we're rotating aircraft et cetera. So it's it's we're very clever in the way. They may be able to walk. Okay? Okay great. Then just another question as I you know, as I think about, you know, you talked about the the compensation, you know on the max with Boeing obviously, you're still working through that long as as the last I think the last time I checked I I recall you having something and I could be wrong on this number, but I recall you having something, you know north of four hundred and fifty million in pre-delivery deposits wage Boeing and so the question is

The fact that you're not taking airplanes and that you have this conversation ongoing can we look to you know one is that 450 million? Is that in the right Ballpark? And can we look to that as a potential source of financing as as you work through, you know the compensation agreement? Yeah, my I just need liquidity not financing but liquidity. I understand. I understand the question. Yeah. I mean, I figure it's in that ballpark in terms of the pre-delivery deposits that we have there are going I you know the realities that we're in discussions with one right now and and bio leave it at that for now.

That's fine. That's fine. I just wanted to get confirmation of that number Yep. This is my last question. And this is probably again to you when we look at your air traffic liability home. It did come down a lot from December to March which you know, I know seasonally, you know, there's some changes here and there but it was bigger and I suspect that because you did shut down with, you know, I don't know seven eight days to go at quarter-end. You must have gotten a flood of cancellations you indicated in earlier that your guidance assumed that you know, fifty percent of your cancellations were basically refunded in cash. So presumably a lot of cash went out the door as we look at that 412 million that a TL and we look at the June quarter. How much is that? 512 actually covers would you have a sense of how much of that actually covers the June Q since you know, we've seen you know, a lot of cancellations between now and then yeah any covers Thursday.

To give on that. Thanks. Yeah, I think

Mike the majority of the there's there's a couple of components to the reduction in the ATL one is as you well mentioned. There's some seasonality in there but mostly is the fact that that a lot of their ATL that we had in December basically flew in the first quarter and then um sales basically stopped coming in for the latter part of the first quarter. So more than necessarily a significant amount of cash going out because of reimbursements. It was mostly because of sales not coming in during the latter part of order. Yeah. So that's that's more of the the explanation there is, you know, we we have an estimate that for the remainder of 2020 hours of around half of that balance will go out to be one thing to have to be very clear as well. So we've been very very much for what time

In our opening of reflexively station of of tickets and and credits were passengers and allowing them to user their tickets for travel. So we've been very flexible on that and has minimized the the cash out. I you know, I so far. We have not seen a significant amount of of a request for reimbursement. But of course that might change going forward there is a portion of that ATL that is that is related to to flying in the second quarter and you know in April and May we have not flown. So there's there's might be some additional Pressure Works is what we have observed right now and that's what is in our figures in the figures that we have put out the cash burn figures that we put up a main part of the year.

Is it should we look at that 50% as in being conservative because of what you just said about reimbursed from what I'm observing right now. Yes, but I don't know what the you know how how the accelerates going forward and what are changes in Behavior with might see but so far it is it is conservative in nature from what I'm saying that that makes sense that I I would say that you know, whatever schedule you put out for June that is obviously subject to being changed again and it's possible that you could scale that back from 12% to 8% based on company page opening up or not over the next month. So yeah, that's correct. That's that's exactly why we're trying to be uh fairly conservative with that assumption. Yeah, that's super helpful. Thank you. All right. Thank you by your next question comes from the line of work area from UBS.

Yeah. Hey you got some and thanks so much for the opportunity. I have a couple of questions here. First is a follow-up on Josh question and I would like to explore a little bit more about Columbia. So is is is this scenario possible? So if there is for instance a fast recovery of the domestic Market versus international flights and and if there is a capacity hold on that market can we imagine copper exploring more that market and the mix of domestic flights best international flights increased significantly in upcoming months. So in other words, are you going to explore any Market that is possible wage that may recover faster. So can we even expect maybe much less connectivity as a percentage of total flights for Copa in in in in in several?

If if those domestic flights.

Covered faster. That's my first question. Thank you.

This page here. I would say that that a faster recovery recovery does not mean that the market is going to be more profitable. So we usually look at at both things, but I would say no that would be no significant change in the next few months or four from here to your end. Even though even though of course, we have bought a Colombian operation and we have Wingo in Columbia, which is a successful u o c c but nothing is going to change overnight. So I would not expect significant wage it changes from here to your end.

Okay, what what about in in the long-term can this be a possible scenario in which the mask flights wage increase significantly side Papa if if there is of course an opportunity there, I mean, I don't want to speculate long-term but you know, we could always have the flexibility to to take advantage of opportunities that my present along the way but but I don't want to I don't want to speculate because we don't really know right now, Okay, I'll good. Thank you. And my second question is regarding the convertible senior notes. So the stocks sold off after after this was announced it. We we received a lot of taxes on that matter. So it would be great. If if you could provide more details on the process for each these notes release was decided within the management team.

Why the company decided to issue that now and and at the beginning of the crisis and also if a follow-on offer was also taking into consideration a month and why the first one was was was was the chosen option and also if there is if there was a lot of demand for that note off, you know with a strike price at 51.66 if you can say how many times oversubscribed if that was the case and lastly off the case the notes are redeemed before the conversion. Which is as of October twenty four. So we would accompany have to pay the equity website from a Mexican version to the note holders. In other words. Does that make whole premium include the Acura website as well?

Thank you. Yeah, I don't know how much how much we can answer or one answer right now and and we're going to try not to be a Monday Morning Quarterback, but we're doing what what makes sense for Copa to come out of this crisis. As one of the the the better prepared most successful song and poised to prosper in the future Airlines. So we're doing what we think we need to do right now to have a solid and successful future as we've got we've had and this is a crisis like we've never seen before so I would say a few things one that that many of our board members are significant shareholders in the company. So this is not a decision that was taken off. Also, there's enough uncertainty regarding future demand and the timing and shape of recovery for us to be very conservative and make sure we have a game.

a fortress

Liquidity position which is what we're building and we're building for the long run and not for not for the short-term. And you know, there's also there's also off limits in in what's going to be available going forward for an airline being Aviation one of the hardest hit the market. So we take everything into account off and and we conclude that building the cash Fortress. I mentioned and Riot is note is the best decision to as I mentioned before make sure that package comes out of this crisis in a strong position. We enter in a strong position. We're going to we want to come out in a strong position and we want to be able to be underlined that contains succeeding in the future.

Yeah, that that's very. Thank you. So all you follow up here a question. I've been receiving is there any related-party in that transaction month?

Okay.

Thanks so much and have a great day at 1. Thank you.

Your next question comes from the line of Pablo with Barclays.

Hello, good morning. Thanks for taking my question. I have a a couple of questions. The first one is I would like to have more color on your plan. And you mentioned you want to stick to do simplify further your Fleet any sense of timing priorities how easy right now is to drop the nineties and $700 off. Also another question on government restrictions. What are you assuming on that front incorporating in your in Your Capacity recovery plan and off and my last question is on ticket reimbursement. I think I do already kind of touch on that. But what have you seen in the last six weeks and wage and we expect for modeling purposes to to to that number look like thank you. Yeah the first in terms of Cleveland. Yeah, it's we discuss wage.

We are assuming that the 14 190s are disposed off but we're we're already announced that last year and that was already in the plan off when we are announcing today is that we are also considering retiring the seven three seven seven hundred feet that's fourteen aircraft and you know, there could be other Fleet moved. We have going forward just simply to to match where we have demand at a particular moment. So we will ultimately remain with the with the reduce of seven three seven $800 and Max nine aircraft in in in the company's Fleet. There's a lot of moving Parts. I think that there's several Alternatives that are out there related to to both of you 190 and and the 700 and we are actively looking at at that wage.

With well, we having money.

Adapter free to reality and and make the best decision for the company. And again, we want to keep the flexibility so that we have the fleet that we need to operate em, but it will be essentially eighteen hundreds and Max nights at this stage in terms of government, you know, we're tracking closely day-by-day what each government has in terms of restrictions as of now with the date that we have for commencing operations in June. The the publishing that we have is has has included we're flying to places were there so far. There are no significant restrictions for us to restart operations, but that could change your life for the last week. I've been very active and just adapting their their dates and and the restrictions but so far where we where we have published has has the above.

To be flown during that moment. But again, it could change you could change here or you could change in order of the neighboring countries that we have.

And what we have observed in in terms of ticket reimbursements is a lower figure than that average that you know, you kind of reviews spread out the the the assumption that we put out which is close to fifty percent and you assume a linear reduction of that fifty percent of the ATL what we have seen in the months of March and April is life than that figure that we have assumed but we are also expecting that this could accelerate depending on what passenger airbag et cetera. So so we we that's the reason we have a somewhat of a higher figure in in our forward assumptions. But so far the observed figure has been lower than what we have been including in a modest.

Thank you. Thanks.

Your next question comes from the line of Gabriel Resendez from Modesto BBI.

Hi, good morning to question for my site first. You mentioned this suspension of all non-essential topics during the the current situation. I was just wondering if you could provide some detail on how much money back to me in terms of our essential capital or mm training and whether it is included in the 85 million dollars monthly cash point you mentioned and and the second question. Are you are you considering any possibility of an implant from Panama government? Do you have any ongoing discussions on that? Thanks. I'll answer the first one off the non-essential topics that we have assumed basically is related to our craft maintenance, you know kind of require capex from a regulatory perspective and it's down mid-single digits per month on average and it is included in the $85 million dollar figure that we that we put up so that that is included and Federal.

yeah in terms of

We're not requesting nor are we expecting any aid from the government? I think the government has bigger issues to deal with and as we mentioned before we came in in a in a stronger position than others and we're taking the the necessary measures some very difficult, of course to be able to survive this crisis prosper in the future using our own means

Okay, that's very helpful. Thanks.

Your next question comes from the line of Alejandro, Credit Suisse.

Thank you for the call just a follow-up question and negotiations with Boeing. So kind of life on a potential relation to the other book maybe point and the what should be the new face of the Livery after covid-19 it it's all on the table, but but there's not there's not anything specific that I can share right now. We're still talking to them.

Okay, thank you cancel during twenty twenty 40% off over you expecting to so what should be our expectations in terms of going back to previous levels. I mean, are you expecting a recovery of three years four years five years maybe longer term. Thank you. Yeah, I don't think we know more than anyone else and the expert a talk mostly about two to five years and probably most are in the range of three to four years in that range. We don't really know anything that they don't know and no one really knows much so it's hard to tell but we're going to you know, we're putting all of our efforts in one taking action in a proactive way.

And secondly in making sure we prepare the company for whatever size. We need to be in the future and whatever the amount is out there available for us. So we we want to be successful, you know, even if we if the industry is not at pre-crisis levels for a long time.

And your final question comes from the line of I'm sorry from Stephen Trent with City.

Hello gentlemen in thanks very much for taking my question. I hope you and your family as well just to very quick follow-ups from me. I mean kind of actually 1 and 1/2 when you think about uh, you know, the long-term strategic landscape and the potential that the stronger carrier of the region, uh, you know, benefit from some potential demand still over kind of a follow-up the judge milberger's question. If anything at this juncture of leading you to think differently about one of your potential joint business agreement with United Airlines with one of the partners, they're assuming through not off of you but one of your partner seems to be some difficulties and to early stage once again anyway that you are thinking longer-term that wage

the redeployment of Wingo perhaps

More aggressively or even less aggressively just kind of wanted to get your thoughts there. Thank you. Okay, it's well, I would say first first month that we feel our Hub Our Hope of the Americas in Panama. It's going to be an even more valuable strategic asset in the future because it's the industry has long string or if if that happens and that will probably happen for a while. I mean, that's pretty certain. There'll be a number of markets that will need a hub more than before. And we're the better hop in terms of geographic position and he's of connectivity Etc. So so Panama will be even more relevant than before and we should be in a position to take advantage of that from again from a from the standpoint of the Strategic position, but also being a a stronger carrier from a a balance sheet a birth.

Standpoint so so we should be in a good position there and we'll be flexible as mentioned before we England Colombia will be flexible and and Kolb Panama and throughout the Americas will move up and down depending on the opportunities. We don't want to just get ahead of ourselves and we don't want to do things because someone else is weaker. We want to make sure we are strong and we we take advantage of all the opportunities that belong to us everything that makes sense for Copa to remain a profitable Airline going forward no matter the size that that will be

Okay, that's that's Crystal Clear. Thanks for that Pedro and hope that you and your family stay healthy. Thank you, Steven, Steven.

I am showing no further questions at this time. I would now like to hand the conference back over to Pedro.

Okay, thank you. All this concludes our earning call. Thank you for being with us. Thank you for your continued support a please stay strong and healthy and be sure that we're taking all the actions all the necessary action to make sure that Copa comes out of this crisis in good shape and ready to continue to prosper in the future, even though we know the rough times ahead for the aviation industry, but we hope to be one of the airlines that that does better relatively speaking and again that is like in a good position for what's ahead in the long run? So thank you again. Stay safe save healthy and see you in the next call.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.

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