Q2 2020 Copa Holdings SA Earnings Call
Ladies and gentlemen, this just the operator for today's conference is scheduled to begin momentarily.
Until that time Airlines will again be placed on hold.
Thank you for your patience again today's conference is scheduled to begin momentarily.
Until that time Airlines will again be placed on hold.
Thank you for your patience.
[music].
Ladies and gentlemen, thank you free standing by and welcome to Copa Holdings' second quarter earnings call.
During the presentation, all participants will be on the 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 star one thing or touch phone.
As a reminder, this call is being webcast and recorded on August 620 20.
Now I'll turn the conference call over Troll bus qual.
Rector off Investor Relations, Sir you may begin.
Thank you Laura.
Welcome everyone to our second quarter earnings call.
Joining us today, our pivotal haberman to a football holdings, Oh someone Theodore CFO.
First better we'll start by going over the actual if the company has taken to mitigate the impact something over 19 crisis.
I don't like let's say, who will discuss our financial results.
Immediately after we will open the call for questions for minority.
Copa Holdings' financial reports I'd be prepared in accordance with international financial reporting standards in today's call will discuss non <unk> financial measures.
A reconciliation of then on your first whatever its financial measures can be found in our earnings release Shelton close some of the company's looks like cope outcome.
Our discussion today also contain forward looking statements not limited to historical facts that reflects the company's current beliefs expectations on or intentions regarding future events on results.
These forward looking statements involve risks and uncertainties that could cause actual results to differ materially on are based on assumptions subject to change.
Many of these are just caught their annual reports filed with the FCC.
Now I'd like to turn the call over to our CEO Mr. Pedro Heilbron.
Thank you Roland.
Good morning pool, and thanks for participating in our second quarter earnings call.
I hope that one of your and your families are doing well on staying safe.
Before we begin I'd like to thank all of our coworkers for their commitment to the company and Recognizer efforts and many sacrifices. During this is very difficult time.
To them my most respect and admiration.
Over the last several months.
Many concrete including Panama.
Ended or travel restrictions.
We have not been able to provide schedule commercial operation.
March 22nd.
I remain subject to the eventual easy open air travel restrictions in the region.
During the second quarter.
We completed a total of 86 humanitarian unchartered operations.
So the only provided a marginal revenue contribution I notice to demonstrate our readiness and ability to operate flights with effective biosafety mixtures.
This has been done most challenging quarter in our history.
The current demand environment, I know pretty restrictions have had a significant impacts on our financial results.
We recorded a net loss of 386 million in.
Including significant noncash or nonrecurring charges.
Which will say work screening be too.
Excluding special items.
We would have reported a net loss.
<unk> hundred 14.6 million.
Our first quarterly loss on an underlying basis in 20 years.
During this period, we have a pain new credit facility.
Once again demonstrated our ability to control costs.
I'm kept our cash burn below our original expectation.
We closed the quarter with 1.3 billion, daughter seem cash on Undrawn committed credit lines.
Our very strong liquidity position.
And great cost discipline, we believe makes us one on good fits prepared or events to what you're talking to crisis.
[noise], assuming there no further extensions to the air travel restrictions in Panama.
We will restart our commercial operations since September 4th.
Skills on schedule.
Equivalent to less than 10% of our September 2019 capacity.
In the meantime.
For the month of August we'd have a pain approval to operate a limited number of many Caribbean flights.
Initially we will serve 10 cities.
Passengers departing and connecting buyout, Panama, well, a write off in Panama would be subject to specific approval by the kind of meeting and government.
Subject to the easing of travel restrictions seem to region.
And the demand environment. Our plan is to gradually spool up our network. So that by December 2020 were at approximately 30% to 40% off December 2019 capacity.
To our jobs to this reduced demand on capacity expectations.
We continue making changes for threeq.
We finalized with Phil.
All over Embraer aircraft engines and spare parts.
Have agreed to deliver these assets during the next 12 months.
We're also marketing for sale, our boring 77 700 fleet.
Plan to operate a simplified fleet of Boeing seven 370 Congress at Max nine.
And in order to retain flexibility.
We plan to keep several or <unk> in long term storage to be able to accelerate ever capacity plan if needed.
Exactly.
We have a proven and very strong business model, which is based on operating the best and most convenient network for intra Latin America travel from or help us the Americas, leveraging panamax advantageous geographic position.
With the regions lowest unit costs.
Based on time performance.
Strongest balance sheet.
Going forward.
We expect that over half of the America would be an even more valuable source of strategic advantage.
They surely fewer intra Latin America markets are able to sustain direct point to point service.
We believe that help us the Americas would be the best positioned to serve this market.
Now I'll turn it over to fill said who will go over financial results in more detail.
Thank you Pedro everyone and thanks for being with us today.
I'd like to join paired with acknowledging our corporate team.
Today, and they're very difficult circumstances, they're showing their great spirit.
For the second quarter, we reported a net loss of $386 million or $9, an eight cents per share.
Adam mentioned our results include several noncash special charges. So let me begin by first.
During the quarter, we made the decision to space the voice kind of 377 hundred fleet for sale and given to reduce capacity plans determined that we will likely not operate those aircraft again.
That decision triggered at 186.8 million Dar noncash or nonrecurring charge and B assets are now classified as held for sale on the balance sheet.
During the quarter. We also negotiated the sale of all of our remaining 14 Embraer 190 aircraft.
Experian, James Industrial Park inventory.
This transaction was completed last week.
Might remember those assets were already booked as held for sale since our fourth quarter 2018 results.
He didn't only agreed sale price was lower than our original estimates, which resulted in a 50 million dollar noncash or nonrecurring loss given the current market conditions. We believe this was a good deal for us.
We also recorded a noncash $22.2 million unrealized mark to market loss the in place a derivative instruments related to the cash settlement option. The senior convertible notes issued in April Twentytwenty.
And finally at 12.3 million dollar noncash reversal of unredeemed ticket revenue provision is during the first quarter of 2020, given the shrinking future passenger behavior related to that will be 19 crisis.
Excluding these special items, our underlying net loss for the second quarter came in at $114.6 million.
Gosh $2.70 per share.
Our cash rent for the second quarter came in at $232 million, an average of $77 million per month.
She is lower than our prior estimates as we mainly focused on reducing our fixed expenses and had a lower number of cash ticket refunds and forecasted.
This figure only excuse pool season payments from extraordinary financing activities.
In terms of capacity for the remainder of the year operating plan for the month of September represents less than 10% 2019 capacity for the month.
Okay, and could build up to a range of 30% to 40% of 29 teenage son levels by December.
Assuming this gradual restart of operations, we should be able to further reduce our average monthly cash outflow for wrong $66 million for the second half.
Btwenty.
This figure assumes that our leased aircraft and debt commitments are paid in full that we stay current in all of our obligations.
The improvement in our cash burn estimate for the remainder of the year. It's a function of our sharp focus into reduction of our cost base. This was a gradual restart of operations.
I'm going to spend some time now discussing the balance sheet and liquidity.
So the answer the second quarter assets totaled $4.1 billion owner's equity was almost $1.7 billion.
Our debt plus our lease liabilities totaled $1.6 billion.
At least liability adjustment net debt to EBITDA ratio came in at <unk> 0.9 times.
And our debt to equity ratio ended the quarter at 1.1 times.
Closed the quarter with approximately $1.3 billion in debt more than 78%, if which is fixed with a blended rate, including fixed and floating rate debt of approximately 3%.
This debt balance includes $50 million in revolving short term gritting lines should be drawn during the month of March as was the convertible notes issued in April.
During the quarter, we also repaid $95 million of or short term credit facilities.
As to cash short and long term investments.
Quarter were $1.14 billion.
As previously reported during the second quarter to company took aggressive actions to further bolsters liquidity position, including racing $343 million in cash net of expenses through a senior unsecured convertible note offering maturing in 2025.
Adding new committed credit facilities for an aggregate amount of Henri $50 million.
King or total available liquidity to almost $1.3 billion at the end of quarter.
Furthermore, during the month of July post secured revolving credit facility for initial aggregate amount garnering $5 million.
Including gets facility, we now have an aggregate amount to $255 million in and utilize committed credit facilities.
Let me close by saying that wants this most challenging situation passes we believe corporate travel the Americas will remain as it best connecting point for travel into region with a premature location and even more efficient business model and the scheme in the industry.
We are working harder than ever with these goals and Mike.
Thank you and with that will be caught some questions.
At this time, if he would like to ask a question. Please press star one thing in telephone keypad.
Again that star one in your telephone keypad.
Your first question comes from the line of Savvy Smith from Raymond James Your line is open.
Yes.
[noise] excuse me savvy or line itself and you may ask your question.
Let me.
The next one.
Well shabby.
Picks interconnection.
Your next question goes into line of.
Hunter King your line is open.
Thank you everybody good morning.
Can you you can hear me okay great.
Hey, Joe I'd be curious to hear your views on the competitive landscape given the use of the U.S. bankruptcy process by a couple of your major competitors. Some I'm curious how you will you view is key.
For Copa to being competitive in a backdrop, where your competitors you're going to come out with potentially leaner cost structures. Thank you.
Yeah, Hi, Andrew So first of all I have to say that we're very happy to be able to avoid a chapter 11 proceeding which when we all know that you know one never know how it turns out and it can be a lot more complicated than what are what one would think so we're very happy to be able to stay away.
From that is good for our shareholders also of course, it we had such an advantage in terms of balance sheet strength.
Liquidity and unit costs that were very confident than after we get out of this crisis, even if our competitors have a successful chapter 11 process. We will retain maybe not the same advantage that's before they got might close, but we will still have an advantage.
In that sense plus of course, our very strong mean try American Edward.
And we hope that Doug. We're also remain at an advantage. So we're confident on that.
Okay. Thank you and then they can you elaborate a little more on the $12 million revenue reversal charge kind of curious what would the assumptions the triggered it and what does this mean for for revenue.
Assumptions going forward that that tied to whatever issue draw. It. Thank you.
Hunter you know the revenue standard Hey, accounting standard cost for you to make an estimation every month on and how much of your.
Of your sales are going to actually a expire <unk> a year from that period, where do you sell and then you basically performer reconciliation and once that moment passes and you make that a accounting entry based on past.
Eight here or pass for behavior that you see.
Yeah, you know mathematical formula and so a first quarter we're still.
Business as usual so we we.
Probably the accounting rule and performed at entry, but the reality is that given our changes in policy for re accommodating passengers et cetera, you cannot.
The terming that that dose at tickets are going to expire a year from from the first quarter. So we reversed that.
Exploration.
Entry. So that's that's the nature of that.
Okay. Thank you very much.
[music].
Your next question comes on line of Duane Pfennigwerth. Your line is open you may ask your question.
Hey, thanks.
Just just a question on.
You are retiring the one nineties.
Your it looks like you're exiting your seven hundreds.
You know post those two moves if you fully flexed up your capacity.
What would that look like relative to 2019 levels.
And.
When I think that that our capacity for next couple of years. We second we still have some flexibility in terms of lease expiration as a way it with the remainder of the fleet I. So we are.
Now trying to make sure that are that are.
Ah that our fleet matches, what could be a a.
Demand environment in the next couple of years, so I'm more likely than not we would it.
Hey, we're expecting return a majority of or of the lease or things that we have one once those contracts expire.
To be able to match our fleet size to what we have so what we have right now even with.
The actually.
A retirement of the 771 night East is is that we still probably see others for their fleet much less too much too where demand is.
And and so that's that's I think whats the concern about that and just keeping or flexibility open.
On the downside more anything just simply choice to adapt our free to where demand could be.
Yeah, and I know, what what a lot to that Dwayne means that you know we've always talked about our.
We're flexible fleet plan.
And this is no patient worry that becomes very very valuable and we have a large order per mcfe nine as we know and we can work with deliveries. We connect center raid, we can weekends at fair and I suppose I mentioned, we can return leases or renew them depending on.
How demand behaved wouldn't forward. So right now we're making sure that were protected on the downside sourcing state stay low stay weak we will have a fleet that can adjust to that demand knowing that it's not very difficult for us to increase the fleet.
If needed given the flexibility that's embedded in our plan.
That makes sense and then if I could ask just.
If you have a baseline in mind as we think about you know 21 and 22.
Relative to 2019, you know how much how much smaller do you think the airline would be over that timeframe.
It's hard hard to tell right now very very hard to tell right now because it depends on home.
So many are known factors, but in terms this hour of our fleet. It we can our plan is to bring down our fleet to a number that we're not being the high seventys, but some of those things are going to being long term storage, depending on on demand forecast and we.
Can bring their model storage at any time, if it's demand improves then again, we'd have the leases we can renew we had the Mac nine deliveries.
So so there's plenty of flexibility there.
Got it and it just just for a follow up.
In terms of reopening.
Which countries would you expect to reopen or which which you know what do you think your network will look like.
On that first kind of 10% that you're targeting in in September.
And what data are you guys watching that gives you any.
Any change in confidence.
That this you know that this late August timeframe is the right is the right time frame and appreciate you taking the questions.
Right was it the right time frame.
No one knows that to be very honest.
So we're going by by when Congress or lifting the restrictions the the flight restrictions.
And what else on mentioned at the beginning of this earnings call. It the we have been approved.
Start for line, where we could cause some sort of a mean new clubs starting.
Mid August 14 of August Onest start serving.
10 destinations.
And my Yeah, I mean, New York, Mexico, Ecuador, I mean in Ecuador, Waikiki, then and keep though we're in a flight centre mingle, we're going to fly Santiago, Chile, so powerful.
And I think have Diana and San Jose So we're going to play around 10 destinations mid August it we're going to offer connect connections connectivity among those destinations.
And even if they have September gets delayed just the fact that we're ready offering is this meaning hub starting in August even though it's going to be yeah, only a few percentage points, we can add destinations.
The concrete list restriction on AD demand improves so once were up into your line with a small and network, it's very easy to pick up from there and just increased service that demand.
It shows up so that's the plan right now.
Okay. Thank you.
Thanks, Mike.
Your next question comes from the line or Joseph Denardi. Your line is open.
Hey, good morning.
Can you talk a little bit about your expectations for non fuel costs over the next few quarters as you bring back capacity.
And then what level of capacity you think you need to get CASM ex back to 19 levels just in that context that you'll likely a merchant. This a little leaner can you get back to 2018, CASM X or the substantially smaller.
Asset base. Thank you.
Okay ill start and then I'll, let Jose complimented me, maybe I'll start with the with the second part of your question.
Of course for an early in its very difficult it to bring down.
Unit costs to pre crisis levels on less capacity you saw side I'm not sitting in there seem at our <unk> percent.
So we're not focusing so much on unit cost on ex fuel CASM right now, we're focusing mostly on bringing down or our fixed costs were negotiating contracts, making cost more variable.
Then fig I'm of course with two I said on our cash burn and our liquidity. So that's our focus right right now.
And we think we're being quite successful in doing that which puts it leaves us in a good spot for when traffic starts recuperating.
Whenever that starts.
Happening.
But if I had to give you a number okay. We think that when we get to the 70% range of capacity.
Lets say you have 2019 capacity, so 70 ruin weren't to 70%.
A range of 2019 capacity I were unit cost are also going to be in the range of what we had before a this crisis, where we had in 2019 and that's going to be are we sold the efforts and we're making to lower fixed costs to renegotiate congrats on track.
And to make sure that we can you had this success we've had before.
A smaller capacity side, yeah, and Joe in terms of.
Where we see these costs in the second half I I'd say a.
Pixart as pedal make sure our focus is on fixed costs.
And so I think where you at all that it's probably going to be a 40% reduction a horse baseline add a.
The release, so and here, we're talking about kind of trying to get shed from baseline all or most of that sort of a unnecessary fixed costs that we might have and we're doing a lot in renegotiating contracts with suppliers and and just simply getting rid of items that we don't need.
Under the reduced operations scenario so.
I will say that's range.
Super helpful.
So they can you just update us sorry, if I missed this in your prepared remarks, but just on a unencumbered assets and your appetite to raise additional liquidity going forward. Thank you.
Yeah, we actually I think it.
We have around 300.
$100 million in unencumber assets in the balance sheet right now I think that from now as you saw in July we.
Concluded our 105 million dollar our revolving credit facility that we expect that has an accordion.
A feature to which I think we can expect at that facility will grow.
As time passes and I expect that to grow you know anywhere between 50 $200 million more over the next several months.
Terms of the availability that we'll have four additional liquidity.
Hi, using that facility.
Thank you very much.
<unk>.
Your next question comes from the line.
Matthew Wisnieski your line is open.
Yeah. Thanks for taking my question. So the 66 million cash burn minus thing that's the average from September to December.
But maybe you can share what it could look like under a 30% to 40% capacity and by the end of the ended the year is it possible to hypothetically breakeven at that at that level.
Or is that the not necessary prudent to take that much costs out of the out of the out of the business. Given you know in pairs you going forward.
Any thoughts on that.
Yeah, a matter of Israel say here. So the just to clarify $66 million cash brings trigger a monthly cash burn figure is for the second half of the years released from the average from July until December.
This year.
But we.
Again with the estimates that we have right now we still will be even under 30% operational or 30, 40% range operation will still be burning a figure.
Cash.
Okay.
Okay.
Helpful. And then quickly can you remind us where you're at with Boeing as far as delivery schedule and Abaxis should we just assume that that's still kind of influx and kind of being negotiated with Boeing going forward.
It's still being negotiated this picture here.
I should say that we have.
And then build but not deliver aircraft somewhere in Seattle.
Andrew. So also said then what they call implemented aircraft, we still need to be built but you know everything has been ordered maybe parts of it has already been bins are manufactured by born suppliers. So it's to be expected that those 14 aircraft.
Hey will be delivered.
I would say in the.
18 months.
After a then Mac start delivering again, so in that 18 month period. It it's expected that we could be taken delivery of for dinner break even though we're still negotiating with Boeing so that's that's not a given.
Right now and we're still in the middle of those negotiations.
Okay. That's helpful and if I could sneak one more in just understand as you start up the operation again should we assume that there's kind of some onetime.
Cost to bring aircraft back into service or restarting operations or could there be a blip in costs as well as you as you kind of ramping back up.
A nothing really that its major in nature and the in any event and all that will be the 66 million guard catchment figure. So there wasn't really anything particularly.
The significant in the restart.
Okay cool thanks for the time.
Thank you.
Your next question comes from the line Oh, Gee intro Vanda Kona Your line is open.
In the low double digit loan limiting.
We couldn't hear your.
Well thank you so anything.
Could there one interesting thing.
One question regarding probably sturgeon, so I'm, a little but you have a good you mentioned.
And so based on your ongoing conversations.
Do you feel comfortable saying no reinsurance buying the report.
Well the weight the way we looked at it right now is that yeah.
This is this approval we just got to start operating mid August.
Okay with this you can call it on humanitarian really harper or it doesn't really matter, but we can grow that.
Older contracts open up lift trouble restrictions and at the men material materializes. So this september 4th.
Restart date, we have.
It's not as critical to maybe a week ago before we got approval to start operating in mid August again, it's in a limited and control way at first but we can build on on that so so it won't be that significant is the August 22nd date re.
Start date for Panama opening date for listing of restriction day for Pennymac. It gets extended it because we will continue building on this operation we're going to start <unk> made almost.
Okay. Thank you that's a good question pardon me.
No.
So.
You mentioned some moves one.
Personal operation saw when you start I.
I mean.
Who.
Well.
And Oh man JMP.
Thank you.
Yes, Andrew we the expectation is that yields are gonna be affected.
Once we restart operations, so too I mean, I think ultimately when you look at unit revenues a in India in the restart there there will be a impact both on load factor and on and on yields definitely even with a lower capacity.
But you haven't in general.
The pendulum they Maggie good luck.
Thank you.
And I say that it's a it's too early to tell I mean it bears.
Hi, good beta.
Still.
I would say not known to know not too much clarity in what we're seeing but certainly what we are seeing is that there is dropping anita it's going to be a.
So a good drop versus what we had been seen prior to cope with in terms of.
A yield environment and it's going to be significance is not going to be.
You know, it's never going to be small numbers, but but right now there's not enough demand to know.
For how long and how severe it's just very hard to predict.
Okay. Thank you.
Thanks.
Just a reminder, analysts please limit your question to only one.
Your next question comes from the line of Harry ill.
Our all you your line is open.
Yes. Thank you. Thank you so much for further opportunity. So can you I know, it's pretty difficult to talk about demand recovery at this moment, but can you speak a little bit about the mix of passengers up papaconstantinou leisure corporate travel nurse tragedy passengers.
No. They may roots. So what are what is your thoughts so far.
On what is going to be a sustainable dropping in traffic you know what is again not recover faster.
And there these two crop as exposure I again, I know, it's pretty difficult at this moment, but I would I would really appreciate if you could share your thoughts so far.
Thank you good.
Yeah, we actually feel.
I feel that that's where we're I were business and network.
Structure it we're in a good position.
To deal with what sort of course, it most difficult crisis ever for our industry.
And I say this because I work or were passenger is is evenly segmented or a third leisure answered it via far enough third business.
And also where network and we have a that the most complete network. We're also there's a combination of leisure markets and business and and and and via far. So so we expect VSR visiting friends and relatives to recuperate.
Faster, probably followed by leisure and business rule will reach a thoughtful maybe I wouldn't take that much but but it's going to take maybe longer to go back to what it used to be.
But I think we can you know bad and the fact that we have such a diversified.
Mark Good and network.
To just put more emphasis and capacity where it's needed most.
And in many in any you know.
We will also have to adjust total sites and we're preparing for that also.
Their care. Thanks, so much have a everywhere they haven't.
Thank you everybody anchored.
Your next question comes from the line of Victor Mizusaki. Your line is open.
Hi, Thank you I how about your questions here are the first one is a kind of a falloff phone call into question related to the yields during this period of let's do you need to reconstruct the network.
So I'd like to understand I mean, Oh I've done it's gonna come from you're going to do this but.
And I'm comfortable with pricing strategy or I mean, what folks out these pardon me.
Just to look so.
Boston marginal contribution applicable gosh I Wonder just started your Oh on margins and its can also go a little bit deeper and the comment a little bit the how youre port moved since it looks like today.
And my second question.
Richard split or two to your fleet.
Before I mean do different Berman.
With the jets and lifting seven for 700.
Or is there any plans to turn on call to finance the aircraft fleet.
Okay. So starting with the first part and then on that it will sit address the second part of your of your question.
I don't I won't get into pricing strategy, and we think that pricing strategy is probably going to be different.
Hey post crisis at least.
For a while we are we strive to have the lowest cost. So we can be as competitive as needed and in terms of pricing and pricing a reaction to our competitors. It there will be lower yields so we mentioned before.
That's going to be aware of stimulate new traffic, even though Wilson other segments.
I would probably because they need.
No not type of pricing. So so we'll try to make the best decisions and what will be a new where you're doing business at least for for a while in terms of future demand.
Hey, it's early and we're talking about some much modern numbers than before to US it's hard to predict right now, but short term demand short term is down 90%.
And if we look let's say five.
Six months.
Okay, it's down 75%.
That's what we're seeing right now one of course, our capacity, it's going to much demand then it's going to get adjusted accordingly.
And Victor this is so say here in terms of aircraft financing.
As Pedro mentioned before we're currently in negotiations with Boeing for.
Doug.
Max a situation there special mention there are seven airplanes that are already manufactured.
And once the returned to service or the fleet starts at one point onex.
18 months, we expect to take delivery of a certain number of aircraft.
With that we are preparing we ran a or were in the process running an RFP for the financing and so far we've gotten a good offers bolt on to show leaseback side and also on the U.S. X Ing Bank.
Guarantee side. So there are financing a attractive financing options available so for us.
Okay. Thank you.
Your next question comes from the line of Cotter Cunningham Your line is open.
Hey, everyone. Thanks for the time.
On the a $10 million cash burn improvement from Twoq through the remainder of the or.
Can you, saying, which portion of that is better revenue and then what's cost in general I would think that majority of it's robin the revenue related but just curious as because it just seems like you've achieved a lot of your cost reduction stuff already.
Yes, absolutely kind of be majority is a cost related.
Hey, I would say that.
HM.
Fixed it how it works and it's probably a cost related and then you already that Theres, a meyer portion for probably related to.
Two.
Yes, I'm sure restarted the operation.
Okay. So just a little revenue mostly cost okay.
And then on the 10 markets at your restarting in August.
Yes.
Did you go to the government with the west of those 10 markets, saying like here's where we think demand days or did they come to you just curious on how about on how those are determined.
Overall, thanks and with that.
Yeah, It's Pedro a corner the markets, we pick and is in markets were in that market. There are opening of course, that's kind of rule number one the market needs to be will kind of where we're seeing most demand and need for travel it both auto Panama and connection and and we can we can.
Add a city, whose that list. The government is not really involved was that the government's main concerned it has to do with wood passengers entering Panama with your limiting to kind of maintenance and rescue then of Panama and that's what they will control it.
Okay, but otherwise in terms of connectivity and city.
We can we have hurdle flexibility, there and thats, what I could whiting said before that even if kind of make sense. The closure of past the end of our gross yeah. Our September 4th restart date, it's no longer so critical because we can grow this operation that we're going to start made algos.
That's older Conference open up and at the men materializes.
Okay, great. Thank you.
Thank you.
Your next question comes into line of Michael Linenberg. Your line is open.
Hi, this can't on for Mike I'm, just wondering with labianca bankruptcy or are you considering you know maybe your strategy in the Colombian operation and then adding onto that can you just give a little bit of an update on window. Please.
Oh I just the first.
We didn't get the second part of your question an update on one.
On window.
Oh, okay, Okay. When bill yeah. Thank you.
So you know we were very careful in not assuming.
The weakness of others, even even are under a chapter 11, a procedure and we obviously have the assets we have the aircraft.
We have the team. So so we can be very flexible to take advantage of opportunity.
But we usually don't jump.
The gun is so so when go we can go has this fleet and has the flexibility is their priorities going to be too to put together the network. They through before the crisis, because they're not operating either airport long, but Columbus close until the end of August.
So they're not operating either but that's sort of either priority and since that further they're up rate I mean since their operations only FERC rep right now if we think that by the end of this year. It will can be very close to pre colby operational levels. It but is there are opportunities if any.
Your name drops markets or struggles more than expected they will have the capacity and the ability to take advantage of that but you know right now, we'll probably be more reactive done proactive in that sense.
Okay. Thank you and then just for my second question. When you do we start your services can you just talk a little bit about like the safety measures you might be taking are you planning on block in the middle see anything along those line.
Yeah. So we've been we've been.
For line humanitarian flights, we ended the quarter with did over 80 operations many of which had multiple stops. So so probably around 200 flights segment had been flown into quarter using our new volume safety protocols with great success.
We havent had any reports of Ah.
Oh Reissues would passengers for cruise is too. So we're very glad to have that a above that and then the nature Saar is there's social distancing at the airport.
Okay.
Extreme cleaning of the aircraft cabin.
We reduced onboard service.
[music] limited interaction between crews and passengers every passenger has to worry Matt inside your brain and I were a Panama Hot also and then older or ports, depending on the owner ports regulations, but on board and 100% mass temperature checkers.
For boarding.
The aircraft or modern aircraft.
So have the H.C.P.A. filters, which which are very very effective in filtering 99 from 7% of particle. So we think we're offering.
Quite a safe environment, right environment and and knows these.
Yeah, there's still there's still a waste to go in terms of getting passengers confident enough.
But but so far I think we've done well in that regard.
Thank you.
Thanks.
Your next question comes in the line Defund trends your line is open.
Good morning, gentlemen, and.
Thanks, very much but taking my question I.
I just had a quick follow up you guys mentioned.
Conversations with Boeing.
That you're going to keep some of your plane and storage and this kind of things I'm just wondering when I look at this are you, suggesting perhaps over the long term that palpable a lean towards owning its fleet as opposed to leasing its fleet you know maybe given your views.
About the asset risk of upholding planes.
And the financial advantage is oh owning versus leasing was just curious if I got that correctly.
Hey, Steve is going to here.
We.
Historically have had a mix of Ah onez airplanes Christmas leased or things a our historical racial it's been a church one third owned versus leased.
And I think that it did they definition or it depends on several factors.
So what decision we make it depends on on just simply keeping the flexibility the pricing on that particular movement in terms of the markets for financing and so that decision gets made I think yeah, you know in in giving each individual sort of.
Campaign that we perform for for the financing of each individual shortly.
Always keeping a balance and trying to maintain flexibility I think a different than we have.
A portion of the of the fleet as at least it's providing flexibility in the past and.
That's been okay, but at the same time ownership of aircraft has been much.
Cheaper for us So I think it's a balance.
I would say that going forward and probably a preference is to own aircraft, but but it's something that we consider depending on what market conditions are the time.
Yeah.
Very helpful Jose and if I could just squeeze in one other quick one I know it's been since 2005, when you guys acquired.
However, a public.
Just to ask again.
It given the massive dislocation in the space that you see any kind of medium to longer term opportunities to buy competitor.
Yeah.
Well.
Figure here.
Susan Good your go to hearing from your then we won't comment on armed that specific question.
And we've always been very comfortable with the strength of our Panama based top model that allows us to serve in a very effective way all of the America. So for that reason, we've never been in a rush to get into.
M&A transactions with older next in the region to the Columbia opportunity 15 years ago, what's very unique and has been very valuable for us but at the same time, we're always open we're always open and willing to listen and considered sort of those opportunities come along and I will take.
Our long and hard looked at it.
Very helpful. Pedro Thanks, very much and you guys stay safe and healthy.
Thank you think is leaving the same to essentially.
Your last question comes on the line of math Roberts airline is helping.
Hey, good morning, Thanks for squeezing me on here I'm filling in for Savi I appreciate the color around they are the cash burn and I apologize if I missed this but you could you talk about what you're expecting in terms of refunds reflected in that second half cash burn as well as.
As any or deferring assumptions between Threeq and Fourq you.
And yeah, I'll I'll speak to the second half you're right you know so far we've seen.
The ticket reimbursements in the range of around $9 million to $10 million. So I think that that's that's it.
Fair figure for for the remainder of the.
On a per month basis.
Great. Thank you.
And then maybe lastly in terms of the unencumbered assets you mentioned the accordion feature on that revolving credit facility does that impact that initial number.
Or is that all embedded right yeah, correct, yes ass.
If we draw on the facility then and of course as the number of the level unencumbered assets would would come down.
But.
Just on them on the moment, where we draw on it so so yeah.
No. Thank you very much.
Huh.
Thank you Matt.
Excuse me for centers, some or phone questions.
Okay.
Thank you. Thank you all this concludes our earnings call. Thank you for being with us.
And thank you for your continued support have a great day.
Thank you.
Ladies and gentlemen, thank you for your participation that concludes the presentation. You may now disconnect have a wonderful day.
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