Q4 2021 Copa Holdings SA Earnings Call
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Speaker 1: Today's conference is scheduled to begin shortly. Please continue to stand by, and thank you for your patience.
[music].
Speaker 2: ??? ??? ??? ???
Ladies and gentlemen, thank you Mr <unk>.
Speaker 1: Ladies and gentlemen, thank you for...
But to the Copa Holdings fourth quarter earnings call.
Speaker 1: to the COPA Holdings 4th Quarter Earnings Call. During the presentation, all participants will be on 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 star, then one on your touch-tone phone.
During the presentation, all participants will be on 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 Star then one on your Touchtone phone.
As a reminder, this call is webcast and recorded on February 10 2022.
Speaker 1: As a reminder, this call is broadcast and recorded on February 10, 2022. Now we'll turn the conference over to Daniel.
Now I will turn the conference over.
Too dangerous.
Speaker 1: of Investor Relations. Sir, you may begin.
Abby and Investor Relations, Sir you may begin.
Thank you Chris.
And welcome everyone to our fourth quarter and full year 2021 earnings call.
Speaker 3: And welcome, everyone, to our fourth quarter and full year 2021. Very good.
Speaker 3: Joining us today are Pedro Hebron, CEO of Copa Holdings, and Jose Montero, our CFO .
Joining us today are better.
<unk> of Copa Holdings, and Jose Montero, our CFO .
Speaker 3: First, Pero will start by going over our fourth quarter and full year highlights, followed by Jose who will discuss our financial results.
First Pedro will start by going over our fourth quarter and full year highlights followed by Jose who will discuss our financial results.
Immediately after we will open the call for questions from analysts.
Speaker 3: Immediately after, we will open the call for questions from panelists.
Copa Holdings' financial reports have been prepared in accordance with international financial reporting standards.
Speaker 3: Copa Holdings financial reports have been prepared in accordance with international financial reporting standards.
Speaker 3: In today's call, we will discuss non-IFRS financial measures.
In today's call, we will discuss non <unk> financial measures.
Speaker 3: A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website, COPA.com.
Conciliation of the non ifr as.
<unk> financial measures can be found in our earnings release, which has been posted on the company's website Copa com.
Speaker 3: Our discussion today will also contain forward-looking statements.
Our discussion today will also contain forward looking statements.
Speaker 3: not limited to historical facts that reflect the company's current beliefs, expectations, and or intentions regarding future events and results.
Limited to historical facts that reflect the company's current beliefs expectations and our intentions regarding future events and results.
Speaker 3: These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change.
These forward looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change.
Speaker 3: Many of these are discussed in our annual report files with the SDSS.
Many of these are discussed in our annual report filed with the SEC.
Speaker 3: Now I'd like to turn the call over to our CEO , Mr. Pedro Helf.
Now I'd like to turn the call over to our CEO Mr. Pedro.
Speaker 4: Thank you, Daniel. Good morning to all and thanks for participating in our fourth quartering earnings call.
Thank you Danielle.
Good morning tool and thanks for participating in our first quarter earnings call.
Speaker 4: Before we begin, I'd like to thank all our coworkers for their commitment to the company and recognize their continuous efforts and dedication to keep COPA at the forefront of Latin American aviation.
Before we begin I'd like to thank all of our coworkers for their commitment to the company and recognize our continuous efforts and dedication to keep Copa at the forefront of Latin American aviation to them.
Speaker 4: To them, as always, my utmost respect and admiration.
My utmost respect and admiration.
So they were glad to report strong financial results for the fourth quarter of 2021.
Speaker 4: Today we're glad to report strong financial results for the fourth quarter of 2021. During the quarter, international air travel demand in Latin America continued to recover, which allowed us to end the fourth quarter with 83% of Q4 2019 ASN.
During the quarter International Air travel demand in Latin America continued to recover which allowed us to end the fourth quarter was 83% of Q4 2019 ASM.
Compared to the third quarter of 2021 unit revenues improved 11, 2% with solid gains in both load factor and yields while increasing capacity.
Speaker 4: Compared to the third quarter of 2021, unit revenues improved 11.2% with solid gains in both load factor and yield, while increasing capacity 16%.
10%.
Speaker 4: Adjusted unit cost, excluding fuel, came in at 6.1 cents for the quarter, a 2.4% reduction when compared to Q3 of 2021.
Adjusted unit costs, excluding fuel came in at $6 one for the quarter.
Two 4% reduction when compared to Q3 of 2021.
Speaker 4: For the quarter, we reported an adjusted operating profit of $115 million and an adjusted operating margin of 20.1%, an improvement of almost 9 percentage points quarter over quarter, and our best results since the beginning of the pandemic.
For the quarter.
We reported an adjusted operating profit of a Congress $15 million and an adjusted operating margin of 21% an improvement of almost nine percentage points quarter over quarter and our best result, since the beginning of the pandemic.
Speaker 4: HOCER will provide further details on our fourth quarter financial.
<unk> will provide further details on our fourth quarter financials.
Now turning to the main highlights for full year 2021.
Speaker 4: Now turning to the main highlights for full year 2021.
Speaker 4: Excluding special items, we would have reported a net profit of $2.7 million and an operating profit of $85.6 million with an operating margin of 5.8%.
Excluding special items, we would have reported a net profit of $2 7 million and an operating profit of $85 6 million with an operating margin of five 8%.
Speaker 4: Overall, a strong result when compared to what we expected at the beginning of the year.
Overall, a strong result, when compared to what we expected at the beginning of the year.
Speaker 4: We finalized the sale and delivery of our Embraer 190 and now operate an all Boeing 737 fleet.
We finalized the sale and delivery of our Embraer 190 <unk>.
Now operate an all Boeing 737 fleet.
Speaker 4: We restarted 737 Mach 9 operations and received seven additional aircraft during the year to end 2021 with a total of 14 Mach 9.
We restarted 707, Max nine operations and received seven additional aircraft during the year to end 2021 with a total of 14 Max nine.
Speaker 4: The additional aircraft, also equipped with our dream business-class cabin, would allow us to provide world-class comfort to our business-class passengers in Moormark.
The addition of are also equipped with our drinks business class cabin will allow us to provide world class comfort core business class passengers in more markets.
In December we launched our first new destinations since the beginning of the pandemic by starting service to our media and Cucuta in Colombia in Atlanta in the U S. With this addition, we ended the year, providing service to 68 destinations in North Central South America and the Caribbean.
Speaker 4: In December , we launched our first new destinations since the beginning of the pandemic by starting service to Armenia and Cucuta in Colombia and Atlanta in the U.S. With these additions, we ended the year providing service to 68 destinations in North, Central, South America, and the Caribbean, strengthening our position as the most complete and convenient hub in Latin America.
Strengthening our position as the most complete and convenient hop in Latin America.
And Copa Airlines.
Speaker 4: was recently recognized by Syrian for the eighth consecutive year as the most on-time airline in Latin America during 2021. In fact, COPA's on-time performance was again the highest of any airline in all of the Americas.
What's recently recognized by Syrian for the eighth consecutive year.
On time airline in Latin America during 2021.
In fact Copa on time performance was again, the highest of any airline in all of the Americas.
Speaker 4: I'd like to take this opportunity to recognize our more than 6,000 COPA and WINGO employees for everything they do, day in and day out, to deliver a world-class travel experience to our passengers.
I'd like to take this opportunity to recognize for more than 6000 Corp on wingo employees.
Everything they do day in and be out to deliver a world class travel experience toward passengers.
Speaker 4: Turning now to Wingo, it continued its regional expansion during the year, adding four new routes from Panama City to San Jose, Costa Rica, from Bogotá to Lima, from Cali to Cancun, and from Medellin to Punta Cana.
Turning now to lingo. It continued its regional expansion during the year, adding four new routes.
Panama City to San Jose Costa Rica from Bogota to Lima from Valley to Cancun and promoted into contact Anna.
Speaker 4: To summarize, in Q4 2021, we delivered our strongest quarterly financial results in the beginning of the pandemic.
To summarize it.
In Q4, 2021, we delivered our strongest quarterly financial results in the beginning of the pandemic.
Speaker 4: We were able to reach 83% of our pre-pandemic capacity in the fourth quarter.
We were able to reach 83% of our pre pandemic capacity in the fourth quarter.
Speaker 4: Our team continues to deliver world leading operational results, with COPA being recognized as the most fun time airline in the America.
Our team continues to deliver world, leading operational results with copper being recognized as the most on time airline in the America.
Speaker 4: We delivered lower unit costs compared to pre-pandemic levels on less capacity.
We delivered lower unit cost compared to pre pandemic levels on less capacity.
Speaker 4: And we're strategically focused on restarting destinations and adding new markets, strengthening our position at the most complete and convenient hub in Latin America.
And we are strategically focused.
Focused on restarting destinations and adding new markets strengthening our position as the most complete and convenient hub in Latin America.
Speaker 4: Overall, the recovery in demand and rebuilding of our network in 2021 was quite encouraging.
Overall, the recovering demand and rebuilding of our network in 2021 was quite encouraging.
Speaker 4: Now, as I'm sure you're aware, 2022 is off to a much more challenging start.
Now.
As I'm sure you are aware 2020 twos up to a much more challenging start.
Speaker 4: The Omicron variant is impacting both international travel demand in the region and the number of crews we have available to fly.
The only current variant is impacting both international travel demand in the region and the number of crews we have available to fly.
Due to a reduced number of available pilots and flight attendants, we cancel approximately 1000 flights during the months of January and February .
Speaker 4: Due to a reduced number of available pilots and flight attendants, we cancel approximately 1,000 flights during the month of January and February , which is 4% of our Q1 schedule. Unfortunately, we do not expect any crew availability cancellations for March.
4% of our Q1 scheduled Fortunately, we do not expect any crew availability cancellations for March.
Speaker 4: We're seeing, however, an industry slowdown in bookings for Q1 travel that will cost our load factors and unit revenues to come in lower than the fourth quarter of 2021. Jose will share our Q1 guidance during his presentation.
We're seeing however, an industry slowdown in bookings for Q1 travel that will cost our load factors and unit revenues to come in lower than the fourth quarter of 2021.
So we will share our Q1 guidance during his presentation.
Speaker 4: I'd like to reiterate that we have a proven and strong business model, which is based on operating the best and most convenient network for intra-Latin America travel from our hub of the Americas, leveraging Panama's advantageous geographic position with low unit costs, best on time performance, and strongest balance sheet. And we expect that going forward, our hub of the Americas will be an even more valuable source of strategic advantage.
I would like to reiterate that we have a proven and strong business model, which is based on operating the best and most convenient network for intra Latin America travel from our hub of the America.
Leveraging panamax advantageous geographic position with low unit cost best on time performance and strongest balance sheet, and we expect that going forward our hub of the Americas will be an even more valuable source of strategic advantage.
Speaker 4: Now, I'll turn it over to Jose who will go over our financial results in more detail.
Now I will turn it over to Jose who will go over our financial results in more detail.
Speaker 5: Thank you Pedro. Good morning everyone. Thanks for being with us today.
Thank you Pedro good morning, everyone, thanks for being with us today.
Speaker 5: I'd like to join Pedro in acknowledging our great team for all their efforts and their great spirit during these many months of the pandemic. I will start by going over our four...
I'd like to join Pedro in acknowledging our great team for all their efforts and their great spirit. During these many months of dependent.
I will start by going over our fourth quarter results.
Speaker 5: Capacity came in at 5.1 billion available seat miles, which amounts to 83% of the capacity that we operated during the fourth quarter of 2019.
Capacity came in at $5 $1 billion available seat miles, which amounts to 83% of the capacity that we operated during the fourth quarter of 2019.
Speaker 5: Load factor came in at an average of 83.5% for the quarter, a 4.2 percentage point increase compared to Q3, while operating 16% more ASM.
Load factor came in at an average of 83, 5% for the quarter a four two percentage point increase compared to Q3, while operating 16% more ASM.
We reported a net profit of $114 4 million or $2 69 per share.
Speaker 5: We reported a net profit of $114.4 million, or $2.69 per share.
Speaker 5: Screwing special items, we would have reported a net profit of $84.1 million for $1.98 per share.
Excluding special items, we would've reported a net profit of $84 $1 million.
A $1 98 per share.
Speaker 5: Special items for the quarter are mainly comprised of an unrealized market loss of $8.9 million related to the company's convertible notes issued in 2020, and a reversal of $39.2 million related to the company's provision for the return of b-star coin.
Special items for the quarter are mainly comprised of unrealized mark to market loss of $8 9 million related to the company's convertible notes issued in 2020, and a reversal of $39 $2 million related to the Companys provision for the return of leased aircraft.
We reported a quarterly operating profit of $155 million.
Speaker 5: We reported a quarterly operating profit of $155 million.
Speaker 5: the reversal of $39.2 million, we would have reported a not just operating profit of $115.8 million for the quarter. Our reported operating margin
Excluding the reversal of $39 $2 million, what our reported and adjusted operating profit of $115 8 million for the quarter.
Our reported operating margin was 27%.
Speaker 5: excluding the special items, we will report an operating margin of 20.1%.
Excluding these special items, we will report at an operating margin of 21%.
Unit costs, excluding fuel were better than in the third quarter coming in at $6 <unk> driven by our continued focus on reducing expenses as well as a quarter over quarter capacity growth of 16%.
Speaker 5: Unit costs, excluding fuel, were better than in the third quarter, coming in at $0.061 per ASM, driven by a continued focus on reducing expenses, as well as a quarter over quarter capacity growth of 16% of the total fuel production industry.
Speaker 5: Our yields for the quarter came in at 12.7 cents, an increase of 5.8% compared to the third quarter, while operating more of them
Our yields for the quarter came in at 12, seven cents, an increase of five 8% compared to the third quarter, while operating more ASM.
I'd like to highlight that our cargo revenues for the quarter also came in higher quarter over quarter and over 60% above our quarterly revenues for Q4 2019.
Speaker 5: I'd like to highlight that our cargo revenues for the quarter also came in higher quarter over quarter, and over 60% above our cargo revenues for Q4 2019 driven by an improved cargo demand environment in the region.
Driven by an improved cargo demand environment in the region.
Turning to cash during the fourth quarter, we had a cash buildup of approximately $84 million driven mainly by increased sales during the period as well as by our continued focus in our costs.
Speaker 5: Turning to cash, in the fourth quarter we had a cash buildup of approximately $84 million, driven mainly by increased sales during the period as well as by our continued focus on our costs.
Speaker 5: As a reminder, for a cash build-up measure, we exclude all extraordinary proceeds from asset sales, including capex, the payment of debt principal and interest, as well as the payment of our lease.
A reminder, for our cash buildup measure we exclude all extraordinary proceeds from asset sales would include capex payment of debt principal and interest as well as the payment of our leases.
Now I'd like to go over our full year 2021 financial highlights our reported net income came in at $39 $9 million.
Speaker 5: Now I'd like to go over our full year 2021 financial highlights. Our report on that income came in at 39.
Speaker 5: special items we would have reported an adjusted net income of $2.7 million or adjusted earnings per share of 6 x
Special items, we would've reported and adjusted net income of $2 7 million or adjusted earnings per share was <unk>.
Speaker 5: Special items for the year include a $22.8 million unrealized market loss related to the company's convertible notes, passenger revenue adjustment of $20.8 million corresponding to unredeemed coupons from 2019 and 2020 sales, and the reversal of $39.2 million in the company's provision for the return of Mr.
Special items for the year include a 22 eight.
$8 million unrealized mark to market loss.
Related to the company's convertible notes passenger revenue adjustments of $28 million corresponding to unredeemed coupons from 2019, and 2020 sales and the reversal of $39 2 million and the Companys provision for the return of leased aircraft.
Speaker 5: Reported operating profits came in at $145.7 million.
Reported operating profit came in at $145 $7 million.
Speaker 5: Screwing the special items, we would have reported an operating profit of $85.6 million and a 28% operating margin.
Excluding the special items, we would've reported an operating profit of $85 6 million.
And a five 8% operating margin.
Finally for the full year, we had a cash buildup of $133 million.
Speaker 5: Finally, for a full year, we had a cash build-up of $133 million.
I want to spend some time now discussing our balance sheet and liquidity.
So at the end of 2021 assets close to $4 2 billion.
Speaker 5: So at the end of 2021, we had assets of close to $4.2 billion, and our cash, short and long-term investments, ended at $1.2 billion.
And our cash short and long term investments of $1 2 billion.
Speaker 5: We also ended the quarter with an aggregate amount of $295 million in unutilized committed credit facilities, which brought our total liquidity to more than 1.5 million.
We also ended the quarter with an aggregate amount of $295 million in Unutilized committed credit facilities, which brought our total liquidity to more than one 5 billion.
In terms of debt, we ended the quarter with $1 6 billion in debt and lease liabilities similar levels to the ones reported for the end of the third quarter.
Speaker 5: In terms of debt, we ended the quarter with $1.6 billion in debt and lease liabilities, similar levels to the ones reported for the end of the third quarter.
Speaker 5: In order to adjust the net debt to a bigger ratio, it came in at 1.05.
Our adjusted net debt to EBITDA ratio came in at one five times.
Speaker 5: Turning now to our fleet, during the fourth quarter we received 1737 MAX 9 and decided to keep three 737 700s, previously considered as assets held for sale.
Turning now to our fleet during the fourth quarter, we received $1, 700% and Max nine and decided to keep three 737 seven hundreds previously considered as assets held for sale.
Speaker 5: During the quarter, we also completed the conversion of one of our 737-800s into a freighter.
During the quarter. We also completed the conversion of one of our 778 hundreds interest later.
We ended the year with 91 aircraft 68, $700 had an 814 770, <unk> and 90 737 seven hundreds.
Speaker 5: We ended the year with 91 aircraft, 68 737-800s, 14 737 MAX 9s, and 9 737-700s.
Speaker 5: These figures include three 737-700s, which are currently in temporary storage, and a 737-800 fridge.
These figures include three 737, seven hundreds which are currently in temporary storage.
$700 and 800 freighter.
In Q1 of this year, we have received $1 737, Max nine and expect to receive one additional Max nine aircraft to end the quarter with 16 Max Nines.
Speaker 5: Q1 of this year, we have received one 737 MAX 9 and expect to receive one additional MAX 9 aircraft to end the quarter with 16 MAX 9s and a total fleet of 93 aircraft.
And the total fleet of 93 aircrafts.
So our outlook based on the current state of the demand environment Air travel restrictions and the impact of the omicron variance that can provide the following guidance for the first quarter of 2022.
Speaker 5: To our outlook, based on the current state of the demand environment, air travel restrictions, and the impact of the Omicron variant, we can provide the following guidance for the first quarter of 2022.
Speaker 5: We expect capacity to be approximately 88% of Q1 2019 levels, or about 5.7 billion ASM.
We expect capacity to be approximately 88% of Q1 2019 levels or about $5 7 billion ASM.
Speaker 5: And we expect our operating margin to be in the range of 3% to 6%.
And we expect our operating margin to be in the range of 3% to 6%.
Speaker 5: We're basing our Q1 2022 outlook on the following assumption.
We're basing our Q1 2020 outlook on the following assumptions.
Speaker 5: revenues of approximately 82% of Q1 2019 levels, or approximately $550 million, Casamax fuel of approximately 6 cents, and an all-in fuel price of $2.79 per gallon, an increase of approximately 15% compared to the average fuel price in the fourth quarter of 2021.
News of approximately 82% of Q1, 2019 levels or approximately $550 million CASM ex fuel of approximately <unk> <unk>.
And an all in fuel price of $2 79 per gallon, an increase of approximately 15% compared to the average fuel price in the fourth quarter of 2021.
Speaker 5: Given the recent volatility in the environment, we believe it is premature to give complete full year guidance.
Given the recent volatility in the environment. We believe it is premature to give complete full year guidance.
Speaker 5: However, preliminarily, we expect our full year 2022 capacity to be approximately 93% of 2019 AFMs and our CasiMax fuel to be in the range of 5.9 cents. Thank you and with that we'll...
However, preliminarily, we expect our full year 2022 capacity to be approximately 93% of 2019 asn's.
And our CASM ex fuel to be in the range of $5 nine.
Thank you and with that we'll open the call some questions.
Thank you.
Speaker 1: As a reminder to ask a question, you will need to press star 1 on your touch tone phone. To withdraw your question, please press the pound key. Standby as we compile the Q&A roster.
As a reminder to ask a question you will need to press star one on your Touchtone phone to withdraw your question. Please press the pound key standby as we compile the Q&A roster.
Speaker 1: Our first question comes from Savi Stiff of Raymond James. Your line is open.
Our first question comes from Savi <unk>.
Raymond James.
Your line is open.
Yes.
Speaker 6: Hey, good morning, everyone. Just on 1Q outlook, you know, given Easter is not until mid-April and kind of January , I believe is the seasonally strongest month in 1Q, is it fair to say that you have fairly good visibility into the quarter? Or are there, you know, some of those assumptions incorrect or perhaps the booking behavior is so different today that maybe kind of March kind of matters a lot more to the quarter than it has historically?
Hey, good morning, everyone.
Yes.
<unk> outlook, given Easter is not until mid April and kind of generally I believe is the seasonally strongest month and in <unk> is it fair to say that you have fairly good visibility into the quarter or are there. Some of those assumptions are incorrect or perhaps the booking behavior. So different today that maybe end of March.
The matters a lot more to the quarter then that it has historically.
Hi, Savi it's.
Speaker 4: Hi, savvy page review so so yes, I mean all booking patterns are very different to what we were used to in normal times a pre pandemic. David Architectural
Pedro here, so, yes, I mean, all the booking patterns are.
Very different to what we were used to in normal times pre pandemic.
But.
Speaker 4: What we've seen so far, but so far means the last two weeks.
What we've seen so far but so far the last two weeks.
Speaker 4: It's looking to coming back to quote unquote a normal level or a normal meaning when we were seeing a pre-omichron. So, but again, that's just a few weeks. And what we've learned from this pandemic is that things change from one day to another.
As bookings coming back to quote unquote normal level or a normal meaning what we were seeing.
Pre owned <unk>.
So, but again, that's just a few weeks and what we've learned from this pandemic is that things change.
From one day to the other.
Yes.
And we did see an impact in omicron salary during the month of January .
Speaker 5: And we did see an impact in omicron study during the month of January and early February . There are various things back there, but that's included within the guidance that we just...
And early surgical case.
Early February so there is an impact there, but that's included within the guidance that we just issued.
Speaker 6: Makes sense. And then I think I might ask on the max fleet, just one, you know, when do you start to, you know, when do you expect to start getting max tens into your fleet? And two, just want to clarify, I think originally, I think the first 13 max nines were supposed to be with 166 and then beyond with 174. You get into the 174 seat configuration now, so you get a little bit more gauge benefit here.
Okay makes sense and then if I might ask on the Max fleet.
One when do you start.
When do you expect to start getting Max turns into your fleet in Q I just wanted to clarify I think originally the first 13, Max Nines are supposed to be 166, and then beyond that 174 or you get into the Hunter Anthony Fauci configuration. Now so you can get a little bit mortgage benefit here.
Speaker 4: Yes, you're correct. The last two Mac 9s, if I'm not mistaken, have come with the 174 configuration.
Yes, you are correct. The last two Max nine since I am not mistaken have come with the with the 174 configuration.
Speaker 4: and so will the rest of the next night we still have to receive.
So we will the rest of the Max nine we still have to receive and we will decide in the future. We havent made that decision yet if the ones that are under a 166 configuration will also change to $1 74, which it takes very little effort, but that decision has not been made.
Speaker 4: And we will decide in the future. We haven't made that decision yet. If the ones that are under a 166 configuration will also change to 174, which takes very little effort. But that decision has not been made yet.
Speaker 5: In terms of the max pen? Yeah, I think that the max pens are not yet in the pipeline for this year and next, so it's still sometime last until we start to receive them.
Yet.
In terms of the Mack <unk>, yes.
It makes sense are yet not yet in the pipeline for this year and actually it's still some time left until we.
We start with the board.
To start to receive them and again I want to highlight also savvy that we have a lot of flexibility in terms of the subtypes that we have within the order. So we can switch them from from Tencent into other of the subtypes as well so.
Speaker 5: And again, I want to highlight also, Sally, that we have a lot of flexibility in terms of the subtypes that we have within the order, so we can switch them from tens into other subtypes as well. So there's still quite a bit of flexibility related there, and it will happen yet removed from 2022 by a couple years.
Theres still quite a bit of flexibility related there.
Happen yet removed from 2022 by a couple of years.
Thank you.
Thank you.
Our next question comes from Stephen Trent of Citi.
Speaker 1: Our next question comes from Stephen Trent of Citi. Your line is open.
Your line is open.
Speaker 5: Good morning gentlemen and many thanks for taking my question.
Good morning, gentlemen, and many thanks for taking my question.
Kind of.
Speaker 5: to in terms of your pilot pipeline, just thinking about the more significant.
Two very quick ones for you.
First am I correct in thinking that.
You guys are probably not under.
A significant pressure in terms of pile.
Pilot pipeline, just thinking about the more significant.
Speaker 5: dislocation among the Latin Airlines versus the US, you know, considering maybe there's some policy.
Dislocation among the Latin airlines versus the U S.
When considering maybe this.
Some pilots out there looking for work.
Speaker 5: just sort of wanted a high level understanding how you guys are seeing your pilot supply.
Wanted high level understanding how you guys are seeing your pellet supply.
Speaker 4: Right, so short term we are OK. And we we have field pilots with that took voluntary leave during during the pandemic that we can bring back.
So short term and we are okay.
We have fewer pilots that took voluntary leave during the pandemic that we can bring back.
Speaker 4: We activated every pilot that was on furlough, but we still have the voluntary leave we can bring back. We also have an interesting pipeline from our own flight academy.
And we activated every tidewater was on furlough, but we still have the voluntary leaves we can bring back. We also have an interesting pipeline from our own flight Academy.
Speaker 4: And we're going to have, at the end of the year, about 100 pilots there that we can incorporate and that we will incorporate into the airline. So we're thinking it's more medium term. And we think that we're taking the necessary steps to be fine also medium term and beyond.
And we're going to have the end of the year about 100 pilots there that we can.
And that we will incorporate into the airline so we're thinking more medium term and we think that we're taking the necessary steps to be fine also medium term and beyond.
Okay, great color Pedro I definitely appreciate that.
Speaker 5: Okay, great color Pedro, I definitely appreciate that. And just one other quick one for me, I was intrigued by what you guys mentioned about converting one of your 737-8s into a freighter.
And just one other quick one for me I was intrigued by what you guys mentioned about.
Converting one of your 700 8700, it's into a freighter.
Is this something that.
Speaker 5: Is this something that you might consider doing with other 7378s? Or do you kind of see it as a one-off? That should kind of be a narrative medium term thing as the pandemic winds down.
You might can.
We are doing with.
With that Ed.
737 eights or.
Would you kind of see it as a one off.
That should kind of be a near to medium term thing is as the pandemic winds down.
Right. So a few things there first is that we made that decision when we had our aircraft in the desert.
Speaker 4: Right, so a few things there. First is that we made that decision when we had our aircraft in the desert.
Speaker 4: We're not flying and cargo was booming worldwide and in the region. And in hindsight, it was the right decision. We expect that aircraft to produce on a single airplane basis.
We're not Brian .
Cargo was booming worldwide and in the region.
In hindsight it was the right decision and we expect that aircraft to produce on a single airplane basis.
Speaker 4: a better profit than our last passenger or less profitable passenger aircraft. So it's a good decision and we have an option for a second conversion in the coming years.
Better profit than ours.
Passenger.
Or less profitable passenger aircrafts, so what's a good decision and we have an option for a second conversion in the coming years.
Speaker 4: Also, these are our oldest non-Boeing Sky Interior 800s. The other thing I would add is that we charter aircraft. We already charter. We've been chartering for a while in freighter aircraft.
Also and also the our.
Our oldest non Boeing sky interior eight hundreds and the only thing I would add is that we charter aircraft were already charter we've been charging for for a while.
Freighter aircrafts that slide regionally.
Speaker 4: that fly regionally.
So this.
Speaker 4: many of the hours are going to be replacement. This is our own freighter, a much more efficient 800 freighter. It's going to replace a less efficient 727 freighter we charter for regional flying and then we'll add hours to that. So we're really happy with the decision. It's not turning us into a big-time freighter carrier. It's more of a niche opportunity, but I think it complements well the rest of our business.
Many of the hours are going to be replacement our own freighter a much more efficient 800 freighter, it's going to replace the less efficient 727 trader. We we charter for regional flying and then we'll add hours to that so we're really happy with inflation is not turning us into a <unk>.
Big time freighter.
It's more of a niche opportunity, but I think it compliments well the rest of our business.
Speaker 5: OK, definitely appreciate that Pedro. Thank you. I'll let someone else ask their question.
Okay definitely I appreciate that Pedro Thank you I will let someone else ask a question.
Thank you Steve.
Thank you.
Speaker 1: And next we have Alejandro Damacoa of Credit Suisse. Your line is open.
And next we have Alejandro Makola credit Suisse. Your line is open.
Speaker 7: Thank you. Hi Pedro, José, Emil. Thank you for the call. A quick question on the Sub6 plan. So back in the investor day in 2019, you guided the KSMXTO below $0.06 for 2021 onwards.
Thank you <unk>.
Thank you for political.
A quick question on the <unk>.
Glenn so backing to Investor day came in.
You guided the <unk> low <unk> for 2021 onwards.
Speaker 7: It seems that you are getting close to a target and I'm wondering how would the number, the current number would look like if COVID-19 wouldn't exist.
It seems like you are getting close to the target.
I'm wondering.
The number the current.
<unk> would look like.
COVID-19, we're going to keep it.
I missed the last part of your question Alejandro.
Speaker 5: I missed the last part of your question Alejandro. So you asked how does a number look like in...
You asked us a number look like in.
Speaker 7: So, the current KSM XTO, how do you think that would look like without COVID-19?
Yes, so so.
<unk> ex fuel.
How do you think that would look like.
Without <unk>.
Without the Covid effects, okay. Okay. So.
Speaker 5: Okay, okay, so look, I think that the principal component of our CASSEM reduction that we've seen so far is related to the fleet movements that we've made. We've moved away from the 190 fleet, which was part of our initial assessment in terms of how to move into a sub-6 CASSEM. I would say that...
Look I.
I think the principal component of our of our capital reduction that we've seen so far that it is related to <unk>.
To the fleet movements that we've made we've moved away from the 190 fleet, which was part of our initial.
Assessment in terms of how to move into a sub six CASM.
I will say that again, we are ahead of the of the plan in the sense of that.
Speaker 5: Again, we are ahead of the plan in the sense that...
Speaker 5: What we published back in 2019 assumed a larger COPA. So a lot of the benefits that we're going to get in terms of size, and the size of the company, we're going to flow down into a cash-in figure.
What we published back in 2019, I assume the larger copper so a lot of the benefits that we're going to get in terms of our size.
Title of the company.
We're going to flow down into a CASM figure.
Speaker 5: We are achieving that in a smaller COPPA. So we're achieving the sub-seq-casm, we're saying at 93% of pre-coil capacity. So it is actually ahead of that. And I will say that that...
We are achieving that in a smaller Copa so we're achieving the subsidy CASM.
We're saying at 93% of pre Covid capacity. So it is actually ahead of that and I would say that that.
In some of the items that we've had in terms of overhead that we've reduced probably.
Speaker 5: Some of the items that we've had in terms of overhead that we've reduced probably are on the margin. I don't think it's necessarily that material in terms of where the castle will be. Maybe the castle will be just above six. But that certainly has...
On the margin I don't think its necessarily.
Material in terms of how we're the casualty maybe I guess it will be.
Above six.
But that certainly has.
<unk>.
Speaker 5: has made a difference. The fact that we have actually accelerated some of the fleet moves that we've made, been very effective in renegotiating a lot of contracts and also worked a lot in terms of overhead. So that's kind of what's gotten us faster into the sub-six target that we had.
Has made a difference the fact that we have actually accelerated some of those.
It moves that we've made been very effective in renegotiating a lot of contracts and also worked a lot on in terms of overhead. So that's kind of what's gotten us faster into into the sub six.
That we had.
Right got it. Thank you and then on the <unk>.
Speaker 7: Right, got it. Thank you. And then on the Unitary Revenue, the guidance for the first quarter 2022 shows some implicit reduction relative to the fourth quarter 2021. So would you say that it's fully explained by Omicron and how can we think about use for the remaining years?
It probably revenue.
The guidance for the first quarter 2022.
Show some depletion deduction.
Fourth quarter 2021 .
So would you say that it's fully explained by omnicom.
How can we think about yields for the remaining year.
Speaker 5: Yeah, I'll start by talking about Q1 and indeed it is related to Omicron in terms of the revenue figures. It is, I would say that it is solely...
Yes.
Yes.
Start by talking about Q1, and indeed, it is related to omit grown in terms of the revenue figures.
I would say that.
It is solely related to Macquarie. There's two components. One is a cancellations that we had which reduce our revenue figures.
Speaker 5: There's two components to Omicron. One is cancellations that we had, which reduce our revenue triggers. It might not necessarily affect as much on a P&L basis because it's resulting in cancellations. And then you're...
Not necessarily affect as much on a P&L basis, because this resulted in cancellations.
And then the other portion of it is just a pure sort of.
Speaker 5: portion of it is just a pure sort of softening during the month of January and February related to how we're seeing demand.
Softening during the month of January and February related to how we're seeing demand.
So that's on the top line, but I think the way you match this to profitability for Q1 and kind of what our guidance is for Q1. The range that we have for an operating margin. There is also the impact of fuel in the jet fuel that is 15% higher than our cost basis versus what we had in Q4. So that's another component of it I would say.
Speaker 5: So that's on the top line. But I think that when you match this to profitability for Q1 and kind of what our guidance is for Q1, the range that we have for an operating margin, there is also the impact of fuel.
Speaker 5: in there. We have fuel that is 15% higher on a cost basis versus what we had in Q4. So that's another component of it.
I mean kind of.
Speaker 5: deconstructing a little bit sort of the operating margin between Q4 and Q1, that about 2 thirds of the reduction in margin that we're seeing quarter over quarter is related to the Omicron sort of in brass impact, and about a third related to fuel. As for the rest of the year, we think it's too early to make an assessment for the rest of the year. I mean, we have to guard.
The construction a little bit sort of the.
Operating margin between Q4, and Q1 that about two thirds of the reduction in margin that were seeing quarter over quarter is related to the WOMAC on sort of.
RASM impact and about a third related to field as for the rest of the year, we think.
It's too early to.
Make a an assessment for the rest of the year I mean, we I think are.
Speaker 5: are confident in terms of what we're seeing in terms of capacity going forward, but I think there's still a lot of water to flow in the region in terms of putting an assessment of where the revenues are going to be for the rest of the year. Okay. Thank you.
Our confidence in terms of what we're seeing in terms of capacity going forward, but I think there's still a lot of.
A lot of water to flow and rich in terms of what you put out an assessment, that's where the revenues are going to be for the rest of the year.
Okay. Thank you.
Thank you.
And of Wolfe Research your line is open.
Hello, Good morning.
Speaker 8: Morning. How much would it cost to add Wi-Fi onto your planes? And what sort of cost benefit analysis have you done there, particularly as you consider the lie flat seats that you're putting on board?
Good morning, how much would it cost to add Wi Fi onto your clients and what sort of cost benefit analysis, you've done there, particularly as you consider.
The lifelock seats that you're putting on on board. Thanks.
Speaker 4: Okay, so you don't have a figure for Wi-Fi right now.
Okay. So.
I don't have a figure for <unk>.
Wi Fi right now.
Speaker 4: on my mind, so I cannot really share that. It is something that we always look at. I mean, it's been a trend in certain parts of the industry of the world, so we don't ignore it. But we have not yet seen a compelling case for it. But again, we stay very much on top of it. So when time comes, we'll be ready to make the right decision, hopefully.
On my mind.
So I cannot really share that.
It's something that we always.
Look at I mean, it's been a trend in certain parts of the industry of the world. So we don't ignore it but we have not yet seen that compelling case.
For it but again, we stay very much on top of it.
So when time when time comes we'll be ready familiar right decision hopefully.
Yes, okay.
Speaker 8: Okay. Um, and on the T and L you're, I can understand why the passenger servicing costs are half of what they were pre COVID with, you know, no business travelers.
Okay.
And on the P&L.
I can understand why the passenger servicing costs are half of what they were pre COVID-19 .
<unk> business travelers.
Speaker 8: and the like, but why, it's a simpler onboard product as you mentioned, but why are your distribution costs pretty much all the way back to pre-COVID level? But I feel like those two things should sort of trend together, particularly with the lack of business travel and more direct bookings.
And the like but why simpler onboard product as you mentioned, but why are your distribution costs pretty much all the way back to pre COVID-19 levels I feel like those two things should sort of trend together, particularly with the lack of business travel in more direct bookings is is there an opportunity.
Speaker 8: to do better there and sort of why those two costs have diverged. I'd be curious about that. Thanks. Yeah, there's a couple items there. First of all, yeah, our onboard costs have been lower related to...
To do better there and sort of why those two costs have diverged I'd be curious about that yes. There's a couple of items. There first of all yes, our onboard cost.
<unk> been lower.
<unk> two.
Speaker 5: just moves that we've made in terms of our onboard product, not necessarily driven by by business travel more than just simply for COVID decisions that we've made in terms of onboard products.
Just moves that we've made in terms of our onboard product not necessarily driven by by business travel more than just simply sort.
Colgate.
Decisions that we've made in terms of a more product.
Speaker 5: By the way, we always listen to what our customers say as well, so it's something that we pay attention to in terms of what our customers' feedback is.
By the way, we will always listen to what our customers say as well so it's.
Something that we.
We pay attention to in terms of what our customers' feedback.
Speaker 5: But in terms of sales and distribution, actually, it is, first of all, that line moves with sales. And Q4 you might see in the spike in terms of sales going forward. So I think that's the explanation for the distribution line.
But and in terms of sales and distribution actually it is first of all I'd deadline moves with sales.
In Q4, you might have seen a spike in terms of sales going forward. So it is it is setting that's the explanation for.
The distribution line.
Alright, well, thank you very much.
Okay.
Thank you.
Speaker 1: Up next we have Helene Becker of Cowan. Your line is open.
Up next we have Helane Becker of Cowen Your line is open.
Speaker 9: Thanks very much, operator. Hi, guys. Thanks for the time. Just a couple of questions. One, how are you thinking about reinstating the dividends?
Thanks, very much operator, hi, guys. Thanks for the time.
Just a couple of questions. One how are you thinking about reinstating the dividend.
Speaker 5: Well, I would say, Elaine, that for the time being, it is still not something that the
Well I would say that for the time being.
It is still not something that.
Speaker 4: I think it's too early to say how or when that's going to be restated. We have a policy which is 40% of the previous year's profits, adjusted profits. So that's the policy. And 40% of 2021 adjusted profits. It would make for a fraction of a cent. So we're not going to do that, but.
I think it's too early to say, how how or when that's going to be restated.
We have a policy.
Which is 40% of the previous year.
Our adjusted profit so that's the policy.
Yeah.
40% of 2021 adjusted profit.
It would make for like a fraction of our spend so we're not going to do that but.
Speaker 4: But, you know, I'm pretty confident that if we have a normal year...
But im pretty confident that if we have a normal year.
Speaker 4: you know this in 2022 as we are expecting to have that that policy would automatically come back.
In 2020, we were expecting.
That policy would automatically come back.
Okay. That's helpful. Thanks, Pedro and then my other question is with respect to aircraft deliveries this year.
Speaker 9: Okay, that's helpful. Thanks, Pedro. And then my other question is with respect to aircraft deliveries this year. So I guess I got a little confused. You said you took one in one max nine in January , and you have one more coming in the first quarter. And then how many are coming in the second through fourth quarters? Yeah, so in total there'll be eight.
Im.
Okay.
I guess it got a little confused you said you took one in when Max nine in January and you have one more coming in the first quarter and then how many are coming in the second through fourth quarters.
So total there'll be eight Max deliveries in the year.
Speaker 5: including the one that we took on in January .
Including the one that we kind of quantity.
In January .
Okay.
Okay and are those going to be.
Speaker 9: Okay, and are those going to be leased or...
Leased or.
Speaker 5: owned and or command. Yeah, okay so look the first four, well including the December airplane, so the December airplane plus the first three deliveries of this year, they already have, they're going to be owned and they're going to be financed and that's that. The remaining aircraft.
Alright owned and.
Okay.
Okay, great yeah, Okay. So look the first four.
Well, including the December at play there.
<unk> airplanes, the first three deliveries of this year.
Already have.
Going to be owned and theyre going to be financed and that's that.
The remaining aircrafts.
Speaker 5: of 2022 we're in that starting that process now we're open for you know alternatives it could be cell defects or it could be financing that's yet to be determined those aircraft are coming in later in the year so that process is just going.
Of 2022 were in that starting that process now we are opening for alternators that could be sale leasebacks or it could be.
Financing.
Yes, we are driving those aircraft are coming in later in the year. So that process is just right.
Speaker 9: Okay, that's really helpful. And then if I could just squeeze one more in.
Okay. That's really helpful. And then if I could just squeeze one more in.
Speaker 9: The reversal is in the maintenance line, right?
The reversal is in the maintenance line right.
Speaker 5: Yes, that's the reason why you see the maintenance line with the credit balancer.
Yes, that's the reason why you see maintenance language.
Okay.
Similar.
Right, that's what I was thinking but.
Speaker 9: Right, that's what I was thinking, but I just wanted to be sure. Thank you. Thanks, you guys. Have a nice rest of your day. We actually took a good guy out of our underlying results to true them up.
I just wanted to be I, just wanted to be sure.
Thanks.
Alright, Thanks, you guys.
Yes, we actually took it very good.
Good guy out of our underlying results.
Through the market.
Yes, Okay, Alright, I just wanted to make sure I got that right.
Speaker 9: Yeah, okay. All right. I just wanted to make sure I got that right. Thank you.
Yes.
Thank you.
Speaker 1: And next we have Pablo Venceva of Barclays. Your line is open.
And next we have Pablo on CEVA.
Barclays. Your line is open.
Hi, good morning, and thanks for taking my question I have a pretty simple question here can you. Please share with us some details on which countries are showing the strongest demand dynamics and which ones are still working in progress. Thank you.
Speaker 3: Hi, good morning and thanks for taking my question. I have a fairly simple question here. Can you please share with us some details on which countries are showing the strongest demand dynamics and which ones are still working in progress? Thank you. I would say that it's...
We have our I would say that.
It's balanced.
Yes.
Speaker 4: It's hard to say that one country in particular, I mean there could be a few exceptions here and there and it usually has to do more than anything with restrictions. There are a few countries that still have travel restrictions even though in most cases any significant restriction has been lifted. I would not say that there's a...
It's hard to say that one one country in particular.
I mean, there could be a few exceptions here and there and it usually has to do more than anything with restrictions. There are few countries that still have travel restrictions.
Even though in most cases.
Significant restriction has been lifted and but I would not say that there is.
Hey.
Speaker 4: one significant destination or country that we should highlight. Very well spread out the behavior of the demand trends seem to be
One <unk>.
Significant destination or country that we should highlight very well spread out.
The behavior of the.
Demand trends seem to be.
Uniforms and generally in the bigger markets in our region, including the U S are opened and.
Speaker 4: uniform in general. And the bigger markets in our region, including the U.S., are open and are behaving in similar ways.
Are behaving in similar ways the U S.
Speaker 4: Brazil, other countries in South America, Colombia. They're all open and Mexico the same. It's always been open. So we're seeing traffic flowing among those countries in, I mean, not in the same levels as before and there's a shift, more leisure, less business, but I could not say that one is really much different to the other. So, yeah. That's all.
In Brazil.
Other countries in South America, Colombia, they're open in Mexico. The same it's always been open.
And.
So we're seeing traffic flowing.
Those countries.
Not in the same levels as before and there's a shift more leisure business, but.
I could not say that one is really much different to the other.
Okay. Thank you very much.
Thank you.
Next we have Mike Minogue.
Speaker 1: Next we have Mike Linenberg of Deutsche Bank. Your line is open.
Deutsche Bank your line is open.
Speaker 10: Oh hey, good morning everyone. Hey, just before I go into questions, Pedro, you know, when you mentioned a 727 for your freighter operation, I got all misty-eyed here. I can't think of the last time I've heard an airline executive actually mention a 727 on a call. So, hopefully when you switch the business to the 800, they're not putting that thing out to the pasture, but maybe it's a flashlight.
Oh, Hey, good morning, everyone, Hey, just before I go into questions Pedro when you mentioned.
727 for your freighter operation I got all Misty eyed here I can't think of the last time I have heard of airline executive actually mentioned the 737 on a call. So.
Okay.
Hopefully when you switch the business to the 800, theyre not putting that thing out to the past year, but maybe maybe classify.
Speaker 4: Luckily, when I mentioned those three numbers, was...
So anyway lot Luckily Luckily when I mentioned those three numbers.
Speaker 10: talking about a freighter and not a passenger.
Talking about our freighter.
Sure.
That's right.
Unless it had parachute.
Anyway.
Speaker 10: Pedro, I want to go back to kind of, you know, in previous periods, you know, over the years since you guys have been a public company, you know, one of the things that I always thought, you know, that you sort of stood out versus other carriers, you know, whether around the region or the world was your ability to recapture.
Peter I want to go back to kind of <unk>.
Previous periods over the years since you guys have been a public company.
One of the things that I always thought.
You sort of stood out versus other carriers, whether around the region of the world was your ability to recapture.
Speaker 10: higher fuel prices in your fare structure. And historically, you've done a pretty good job and I can even recall you saying, look, we were able to get 100% and I know there's a lag and maybe that lag is three months, five months. And I don't know if it's because you...
Higher fuel prices and your fare structure and historically you have done a pretty good job and I can't even recall you, saying look.
We were able to get 100% and I know, there's a lag and maybe that lag is three months five months.
I don't know if it's because you fly 99% of your services International right. So their fuel surcharges, you do get that benefit.
Speaker 10: 99% of your service is international, so their fuel surcharges, you do get that benefit. You also fly to a lot of countries where their economies actually tend to do well when commodity prices are rising. That's what we're seeing around the world right now. Just look at the Brazilian stock market, it's up pretty meaningfully. I don't know, do you feel like that your business and the competition and the backdrop that you can say that you'll be able to recapture 100%? I'm just curious, in the March quarter...
And you'll also find a lot of countries that where their economy is actually tend to do well when commodity prices are rising and thats what were seeing around the world right. Now just look at like the Brazilian stock market, it's up pretty meaningfully so.
Don't know do.
Do you feel like that your business and the competition and the backdrop that you can say that youll be able to recapture 100% and I'm just curious in the March quarter.
Speaker 10: underlying your three to six percent operating margin guide, what's your assumption? Are you assuming maybe you recapture 50 percent of the run-up in fuel, 75 percent? Is there some percentage that you can give us? So I realize it's kind of a long and sort of comprehensive type question, but there's, you know, it obviously matters a lot to your, you know, your P&L in the March quarter and where you think you could be for the year.
Underlying your 3% to 6% operating margin guide what's your assumption are you assuming maybe recapture.
The percent of the run up in fuel, 75% is there some percentage that you can give us.
It's kind of a long and sort of comprehensive type question, but there's.
It obviously it matters a lot to your your P&L in the March quarter, and where you think you could be for the year.
Speaker 4: Right. So, staying in the 727, a whole timers category, the 100% recapture comment.
Right. So so stay in the seven to seven.
Hi.
That category.
The one hand, they're 100% recapture comment.
Speaker 4: was actually in 2007 or 2008, if I'm not mistaken, which was the last time actually that fuel went through the roof. Maybe not the last time, but when it kind of got the worst. The reason, and now let Jose kind of round up what I'm saying, the reason we're not a machine- forest, but most of it is some kind of huge rain fan, so it's been electricity level greater than human age. Now, if we go back and take minutes, what you're seeing is, it's all kind of like ice crystalsoft, it doesn't have any precedent for responsible for precipitation, or some thing.
What's actually in 'twenty, seven or 'twenty or eight okay. If im not mistaken, which was the last time actually that that tier went through the roof, yes, maybe not the last time, but win.
Got kind of got the worst.
The recent amounted Jose kind of round of what I'm, saying the.
And the reason we're not.
Speaker 4: expecting or banking on recapturing the increase in fuel price is just all the uncertainty related to the virus and how we're bringing back capacity and how competition is less predictable. The traffic flows, it's more leisure, less business.
Expecting or banking on recapturing.
The increase in fuel price is just all the uncertainty related to the drivers and how we're bringing back capacity and know how.
Tissue is less predictable.
Traffic flows it's more leisure less business. So so so also harder to change prices in some markets from one day to the ASO.
Speaker 4: So also harder to change prices in some markets from one day to the other. So it's just the whole business environment.
Just before the whole business environment.
Speaker 4: It is very different right now. And I know the water, the waters will settle and things will normalize as they used to.
It's very different right now.
The water the waters will settle.
And things will normalize.
As the year progresses.
Speaker 4: But we don't want to make any bets right now or any promises. Our PRM team, as always...
We don't want to make any bets right now or any promises our PRN team as always.
Speaker 4: will do its best to recapture.
Will do its best to recapture.
Speaker 4: as much as we can, hopefully all, but it will take longer I think than before. I was going to add something. I would just add that the other component there is currencies in the region and that currency environment in Latin America is still...
As much as we can hopefully all.
But.
It will take too long right thing than before.
I would just add that the <unk> component there is currencies in the region and that currency environment in Latin America is still.
Speaker 5: not as predictable maybe as it would have been in
Not as predictable maybe yes.
It would've been in.
In other times. So that's another component of this right in terms of purchasing power.
Speaker 5: in other times. So that's another component of this, right, in terms of purchasing power. And I have to second what Pedro mentioned in terms of our pricing and revenue management practice which is world class and they're excellent at what they do and they capture as much as they can from every ASM that we sell. So it's very important. And then the other thing however I think that the other aspect that.
And I have a second what Pedro mentioned in terms of our.
Pricing and revenue management practice, which is world class and they're excellent at what they do when they capture as much as they can from memory.
And that we sell so it is very important and then the other thing however, I think that the other aspect.
Speaker 5: change or that we are really focusing on is our own controllable costs. And so our Cas on X today is much lower than where it was back in 2007 and that's another big component of our ultimate profitability that we're striving for.
Change or that we are really focusing on is our own controllable cost and so our CASM X today is much lower than where it was back in <unk> seven and that's another big component of our ultimate profitability of that.
Right.
Okay. Okay, Great and then just one quick follow up Bob.
Speaker 10: Okay great, and just one quick follow up on since you sort of said that obviously given the current backdrop, obviously a lot more discretionary than say corporate, but is there anything youíre seeing on the corporate side over the last quarter, two or three, where maybe youíre starting to see a little bit of a pickup or the surveys that you maybe do or whether theyíre anecdotal or formal surveys with your corporate customers, are you starting to see some improvement there or is it just stillÖ
<unk>.
Said that obviously given the turn.
Backdrop, obviously, a lot more discretionary than say corporate but is there anything you're seeing on the corporate side over the last quarter or two or three where maybe you are starting to see a little bit of a pickup for years. The surveys that you may be due or whether they're anecdotal or formal surveys with your corporate customers are you starting to see.
Some improvement there or is it just still unchanged any any color on that front just given the leverage that you guys have to that side of the business. Thank you.
Speaker 10: unchanged. Any color on that front, just given the leverage that you guys have to that side of the business. Thank you.
Speaker 4: I'll let Jose look for more specific information, but we haven't seen much change from the last few quarters. We're still doing something like 40 percent leisure, 40 percent VFR, and 20 percent.
On the wholesale look for more more specifics specific information, but it.
We haven't seen.
<unk>.
Much change from from the last few quarters.
We're still doing something like 40% leisure, 40% VFR and 20%.
Speaker 4: a business. It used to be a third each before the pandemic.
Business used to be a third each.
Yes.
But.
But also there are other favorable trends, which as we have better load factors in business class.
Speaker 4: But also, there are other favorable trends, which is we have better load factors in business class.
Speaker 4: is for whatever reason and including probably the pandemic being a reason that we're spending better business class than before. So that's a positive trend. Yeah, no, no, that's it. It's basically, you know, business travel is about half of where it was.
If for whatever reason.
Including protein dependent there can be no reason.
We're selling better business class than before so.
So that's that's a profit positive trend yes.
Basically this.
Business travel is about.
Half of where it was.
Back before the pandemic.
Yes, that's helpful. So it sounds like maybe youre getting some premium.
Speaker 10: Yeah, that's helpful. It sounds like maybe you're getting some premium leisure or premium VFR that's sitting up front, which is what we're hearing and seeing in the US. It sounds like there's a little bit of that. A little bit of that happened.
Leisure premium VFR thats sitting upfront, which is what we're hearing and seeing in the U S. It sounds like theres, a little bit of that.
A little bit of that happen here.
Speaker 10: Very good. Well great, great quarter. Thank you. Thanks for taking my questions.
Very good well great great quarter. Thank you thanks for taking my questions.
Thank you thank you Mike.
Thank you.
Next we have criteria Rahho of UBS. Your line is open.
Speaker 1: Next we have Rogerio Araujo of UBS. Your line is open.
Okay.
Speaker 3: Yeah, hi, gentlemen. Congratulations on this quarter.
Yes, hi, guys congrats.
Congratulations on this quarter.
Speaker 5: So first I'd like to address your expectations for yields. When the market normalizes, what I mean is when you know all the grounded aircraft are back to fly and international demand normalizes. Do you expect yields to be above 90 t level and by how much? And I know it's a very difficult question, especially regarding timing.
So first I'd like to address your expectations for yields.
The market normalize what I mean is when all.
The grounded aircraft.
To fly in and international demand their lives.
Yields to be above 93 level and by how much.
I know it's.
Very difficult question, especially regarding timing.
Speaker 3: But I think only some kind of best guess here would be very appreciated. And I'll give my second question later. Thank you.
But.
I think one needs some kind of best guess here would be very appreciated.
My second question related thank you.
Speaker 5: Yeah, first of all, we have to early to determine where things ultimately are going to end up. You know, we're at least in 2022, we're just keeping it in terms of our revenue guidance for the first quarter.
Yeah.
Okay.
First of all it's too early to determine where things ultimately are going to end up.
Sure.
At least in 2022, we're just keeping it in terms of our revenue guidance for the first quarter.
Speaker 5: But I would say that the way that we're preparing for any sort of yield environment that might occur with increased competition or other type of situations with our costs. We have again our sub-6 chasm, A-X is stronger than where we were pre-pandemic and that's the way that we'll compete.
What I would say that that the way that we're preparing for any sort of yield environment that may occur with the increased competition or type of situations with our costs, we have again.
Six CASM.
<unk> is.
Stronger than where we were pre pandemic and that's the way that we will compete.
Speaker 5: And by the way, we also believe, of course, that the network and the hub in Panama is the best strategy for serving the passengers in our region as well.
And by the way, we also believe of course that the networking to hub in Panama.
Is the best strategy for serving the passengers in our in our region as well.
Yes.
Okay sounds good what about capacity deployment in the region, because we saw help us market share.
Speaker 3: Okay, sounds good. And what about capacity deployment in the region? Because we saw COPA's market share in the major countries.
And the major foundries.
No.
Speaker 3: You know, um, bubbling, basically, do you expect a lot of capacity to be still deployed in the coming quarters? And when should this movement end? You know, when should we be more confident that you are going to likely increase with the normalizing? So, any caller on
Globally <unk>.
<unk>.
Basically we expect a lot of capacity to be redeployed.
In waters and when should this model in hand.
When should we.
Mark calls for them.
The yields are going to likely ingredients.
Normalizing so any color on.
On capacity deployment and how much aircraft is still grounded some competitors would be good.
Speaker 3: capacity deployment and how much aircraft is still grounded from competitors would be great.
Thank you.
Speaker 4: Right, so I would say that capacity market share has been a little bit all over the place in Latin America. Dr. Bill Mirlens has...
Right. So so I would say that.
Capacity market share it has been a little bit all over the place.
In Latin America, some airlines have have.
Deployed capacity faster than others.
Speaker 4: the throat capacity faster than others. I mean, there's some that are above pre pandemic capacity and others are, you know, still behind. We are like in the middle. We're very close. And by the second half of this year, we will be at a pre pandemic capacity.
I mean, there are some that are above pre pandemic capacity.
And so.
Still behind we are like in the Middle we're very close and by the second half of this year, we would be at pre pandemic capacity.
Speaker 4: So again, some are above some of the US carriers, even some carriers.
So again some are above some of the U S carriers and some carriers.
Speaker 4: in our region or above and some of the main airlines that went through the chapter 11 process.
<unk>.
In our region are above and some of the main airlines that went through the chapter 11 process.
Speaker 4: are a little bit behind. And all of that alters the market share numbers too. So again, I think we stayed in the middle.
Little bit.
Behind all of that alters the market share numbers too. So again I think we stayed like in the middle.
Speaker 4: And we're following our course. We are focusing on our network, on what makes sense to us, on bringing back the capacity and we know we can fly profitably and we expect, as mentioned, to be sometime in the second half of the year to be above 2019.
And we're following our course, we are focusing on on our network on what makes sense to us on bringing back the capacity and we know we can fly profitably and we expect as mentioned to be sometime in the second half.
Year to be above.
2019.
Thank you very much have a great day.
Thank you.
Thank you.
Last question comes from Dan Mckenzie of Seaport Global.
Speaker 1: Last question comes from Dan McKenzie of Seaport Global. Yep, the line is open.
Line is open.
Oh, Hey, thanks, good morning, guys.
Speaker 11: Oh, hey, thanks. Good morning, guys. You know, hey, a few questions here. Jose, I am seeing a bigger expansion by Wingo in the current quarter.
Hey, a few questions here.
<unk> seen a bigger expansion by window in the current quarter.
Speaker 11: And my question is, to what extent Wingo is going to aid or help the overall system cost story going forward? So if we were to dissect or separate out the two cost stories, is it that Wingo's Casimex is sub-5 just given the higher utilization model, and then that helps to drive the sub-6 Casimex story at the system level? Or is the cost story really being driven as much on the COPA side just given the cost restructuring you've done there?
And my question is as to what extent Wingo is going to aid or helped the overall system cost story going forward. So if we were to dissect or separately separate out the two the two cost stories is it that windows CASM ex is sub 5% just given the higher utilization model and then that helps to drive the sub.
Six CASM ex story at the system level or is the is the cautionary really being driven as much on the copper side, just given the cost restructuring you've done there.
It's both it's both and.
Speaker 4: It's both. It's both. And I would say that we're both, as you know, we don't disclose individually the two units. But both airlines or both units are doing better cost-wise. No one is sub-five, I should say. At least not yet.
I would say that we're both we don't as you know we don't.
<unk> disclosed individually.
The two units.
Doug.
Most bolster remains for both units.
Doing better cost wise and no one is sub five I should say.
Not yet.
Speaker 4: But that could change in the future. Good target, yes. It is a good target.
Alright.
Could change.
The future target.
It is a good target.
Speaker 4: And Wingway is operating more ESM than before the pandemic. We're a little bit less, they are a little bit more. So they're a higher percentage of the total. They're contributing a little bit more then to the overall COPA holdings numbers. But again, the improvement comes from both units. Yep. Both airlines are doing much better in terms of cost than pre-pandemic.
We waste operating Maureen sands.
And before the pandemic, we are a little bit less they are a little bit more so so.
So they are a higher percentage of the total they're contributing a little bit more than to the overall.
Copa Holdings' number, but again the improvement comes from from both units yes.
Both airlines are doing much better in terms of cost and prevent any.
Yes, very good.
Speaker 11: Yeah, very good. And the second question that I have really is just kind of putting a finer point on some of the prior questions. And that is, um,
And the second question I have really is just kind of putting a finer point on some of the prior questions and that is.
Speaker 11: I'm wondering if you can just provide some perspective on the percent of overall flying, you know, say ballpark to the top five countries. And the reason I'm asking is, at least when I dug into the schedules, it looks like flying in the first quarter is a bit more concentrated than it normally would be. So, you know, it looks like you're clearly making some deliberate network decisions here just to leverage traffic in the near term.
I Wonder if you can just provide some perspective on the percent of overall flying say ballpark until the top five countries and the reason I'm asking is at least when I dug into the schedules it looks like flying in the first quarter.
More concentrated than it normally would be so it looks like you're clearly, making some deliberate network decisions here just to leverage traffic in the near term.
I would say that.
We're taking opportunities as they come but it's been bouncing out more than where you were maybe Q2 of last year, where there was a clear.
Speaker 5: You know, we're taking opportunities as they come, but it's been bouncing out more than where we were maybe Q2 of last year where there was a clear...
Speaker 5: traffic going to the US for vaccine tourism and the like. Now it is
Traffic going to the U S, where vaccine tourism and the like.
Now it is.
Speaker 5: There's quite a bit in terms of leisure, but it is more balanced than where we were last year. And then there's some countries that have opened up. That's your item here. Some countries in South America were very closed during the second and third quarter of last year, but as they've opened, we've added some capacity into those markets as well.
It is a quite a bit in terms of leisure.
But it is I think more balanced in where we are.
Please.
<unk>.
Last year and then there are some countries that have opened up that's your item here than some countries in South America. We're very closed during the third quarter second and third quarter of last year and that they've opened and we've added some capacity into those.
Those markets as well.
Okay, I'm going to squeeze one last one here.
Speaker 11: Okay, and I just squeeze one last one here. You know, I always am asking questions on pent-up demand to all the airlines. And I'm just wondering if you can speak to the COPPA website searches that you're seeing for travel in March and this summer. I guess that would be winter in South America, actually, compared to 2019. So looking at searches, not bookings, I'm just wondering if you can kind of give us some perspective of what the appetite for travel is as we look ahead.
Always I'm asking questions on pent up demand to all the airlines.
Just wondering if you can speak to the Copa website searches that you are seeing for travel in March and this summer I guess that would be winter in South America actually compared to 2019, so looking at searches not bookings.
Bookings I'm just wondering if you can kind of give us some some perspective of what the appetite for travel is as we look ahead.
Speaker 4: Well, we didn't bring that information. It's probably the one piece of information we missed. I think that's your specialty. Sorry. Coming up with that one question that we are not prepared to answer. But I'm going to have to give you a very, very general. We'll get back to you.
Well, we didn't we didn't bring that information.
One Friday, the one piece of information.
I think thats your specialty.
Sorry, coming up with that one question that we are not prepared to answer.
So I'm going to have to give you a very very general, but we'll get back to you.
Speaker 4: I'm going to have to give you a very general a.
To give you a very general.
Speaker 4: answer here.
The answer here.
What's encouraging is that.
Speaker 4: We are seeing appetite for travel throughout the region, especially for leisure travel, not only to copa markets, but you know to Europe , to everywhere, skiing season in the US, some are copa markets, some are not.
We are seeing appetite for travel throughout the region, especially for leisure travel not only to copper markets, but through Europe .
Through two everywhere skiing season in the U S. Some are copper market. Some some are not.
Speaker 4: to Caribbean destinations. So in general, we do not see...
Two Caribbean destinations so in general we.
Do not see.
Speaker 4: that people are hesitant about traveling abroad. And there's still some pent-up demand. Or, as it's no longer pent-up, is the urge to get out.
That people are are hesitant about about traveling abroad, and there are still some pent up demand or if it's no longer pent up is the urge to get out.
Speaker 4: and do things and go somewhere. So in that sense, we are very, very optimistic on the rest of the year, even though, you know, corporate demand is really hard to predict.
And do things and go somewhere between <unk> and <unk>.
We are very very optimistic on the rest of the year, even though.
Corporate demand, it's really hard to predict right now for many reasons.
Speaker 5: right now for many reasons. What we see in general is people are willing and want to travel. If something like you had a plan in January couldn't occur because of Womie Crone, we're seeing these people say, okay, I'm going to go in on Easter weekend. That sort of thing. It's not like people are somehow canceling. It's just simply they're postponing their travels. That's a good point also because the booking curve has been
What we see in general is people are willing and want to travel and if something like you had a plan in January couldn't occur because of what we're seeing is people say, okay I'm going to go on Easter weekend.
That sort of thing so it sounds like people are somehow canceling is just simply postponing their trials and that's a good point also because the booking curve.
Sure thing so so so for for all good reasons, we know with the virus and travel restrictions restrictions and the like.
Speaker 4: So for all the reasons we know with the virus and travel restrictions and the like, there's more people making their travel plans a lot closer to the traveling date.
There's more people, making their travel plans.
Got closer to the traveling days.
Speaker 11: Very good. Thanks so much you guys. Great quarter and look forward to hearing again in another three months here. Thank you.
Very good. Thanks, so much you guys great quarter and look forward to hearing again in another another three months here.
Thank you Dan Thank you.
Thank you.
That ends our Q&A session I will now hand, the call back over to Pedro Hi, O'brien for closing remarks.
Speaker 1: That ends our Q&A session. I will now hand the call back over to Pedro Haya-Brun for closing remarks.
Speaker 4: Thank you, thank you operator. So thank you all. This concludes our Q4 and 2021 earnings call. Thank you for being with us and thanks for your continued support. Have a great day and we'll see you in the next one. Thank you again.
Thank you. Thank you operator, so thank you all this concludes our.
Q4 in 2021 earnings call. Thank you for being with US and thanks for your continued support and have a great day and we'll see you in the next one thank you again.
Ladies and gentlemen, thank you for your participation that concludes the presentation you may disconnect and have a wonderful day.
Speaker 1: Ladies and gentlemen, thank you for your participation. That concludes the presentation. Please make sure to leave me a comment, leave me a disconnect, and have a wonderful day.
Speaker 2: ["Pomp and Circumstance"] ["Pomp and Circumstance"]
Yes.
Okay.
Hum.
[music].
Yes.
Okay.
Yes.
[music].
Yes.