Q3 2023 Copa Holdings SA Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to Copa Holdings third quarter earnings call during.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question you'll need to press star one one on your Touchtone phone.
As a reminder, this call and this webcast is being recorded on November 16th 2023.
Now I will turn the conference call over to Daniel Copier Director of Investor Relations, Sir you may begin.
Thank you Avi.
And welcome everyone to our third quarter earnings call.
Joining us today are better I'll have Ron <unk> CEO of Copa Holdings, and Jose Montero our CFO.
First Pedro will start by going over our third quarter highlights.
Slowed by Jose, who will discuss our financial results.
Immediately after we will open the call for questions from analysts.
Copa Holdings' financial reports have been prepared in accordance with international financial reporting standards.
In today's call, we will discuss non <unk> financial measures.
A reconciliation of the non <unk> for it to IRA for a financial measure can be found in our earnings release, which has been posted on the company's website or by air Dot Com.
Our discussion today will also contain forward looking statements not limited to recycle that.
They reflect the company the company's current beliefs expectations, and our intentions regarding future events and results.
These forward looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change.
Many of these are discussed in our annual report filed with the SEC now I'd like to turn the call over to our CEO Mr band at all.
Yes.
Thank you Danielle.
Good morning to all and thanks for participating in our third quarter earnings call.
Before we begin.
I would like to extend my sincere gratitude to all of our coworkers for their commitment to the company. They are continuous efforts and dedication have kept cooper at the forefront of Latin American aviation to them as always my highest regard connect duration.
As you can see in our third quarter earnings release.
Once again copper reported strong financial results for the quarter.
We're able to deliver industry, leading operating margins, while continuing to roar capacity by double digits year over year.
The third quarter results were driven by robust demand environment in the region and.
And our focus on delivering low ex fuel unit costs.
Now I'll summarize the main highlights for Q3.
Passenger traffic grew 13, 3%.
Compared to the same period in 2002.
Pacing our capacity growth of 12, 1% as a result.
Load factor for the quarter increased nine percentage points.
Compared to Q3 dollars 22 to 87, 8%.
Passenger yield came in at $13.04, resulting in unit revenues or RASM of 12, 2%.
Unit costs decreased by 11, 2% compared to Q3, 'twenty, two mainly driven by lower jet fuel price per gallon and lower sales and distribution costs.
Excluding fuel.
Unit costs, our CASM ex came in at five 8%, a 2% decrease compared to Q3 2002.
And our operating margin came in at 23, 6%.
Five nine percentage points higher than in the third quarter of 'twenty two.
On the operational front.
Copa Airlines delivered an on time performance of 89, 4% and a completion factor of 99, 8% once again among the best in the World.
With.
Regards to our network.
In the last two quarters, we have started service to auditing in Baltimore in the U S on Monday in Ecuador, and more recently in October we started flying to bank of America and Venezuela.
With this addition, we now serve 81 destinations in 32 countries in North Central South America and the Caribbean.
As we continue to strengthen and solidifying our position as the most complete and convenient connecting hub in Latin America.
With regards to our fleet during.
During the third quarter, we took delivery of two 737 Max nine.
Ending the quarter with a total of 103 aircraft.
Turning now to wingo in the third quarter Wingo continued its network expansion with the start of three new routes from Bogota to Caracas, Venezuela, a panamax domestic flight from Panama City to Debbie.
In one season or route from Carey Lowe.
Additionally in October we can.
Starting to service from messaging to character Hana and announced one additional domestic route in December from messaging to Santa Monica.
With this addition, we would expect to end the year operating 37 routes with service through 'twenty three series in 11 countries.
Now turning to our current expectations.
Continue to see a robust demand environment in the region.
And as you can see in our earnings release published yesterday, we expect strong financial results for full year 'twenty three.
And preliminary in 2024, we plan to continue growing our capacity in the low double digit range.
And further reduce our unit costs.
As always for sale will provide more details regarding the 2023 and 2020 for outlook.
To summarize we delivered strong third quarter results, while growing capacity, 12% year over year.
We continue to see a robust demand environment in the region.
We achieved low ex fuel unit cost during the quarter and we continue to deliver on our cost execution strategy.
We continue growing and strengthening our network the most complete and convenient hub for travel in the Americas.
And as always our team continues to deliver world leading operational results.
Lastly.
We remain as confident as ever in our business model, we continue to deliver low unit cost high margin and a great products for our passengers, including the best connecting network in Latin America.
Making us the best position early in our region to consistently deliver industry leading results.
Now I'll turn it over to Jose who will go over financial results in more detail.
Thank you Pedro and good morning, everyone. Thanks for being with us today I.
I would like to join Pedro in acknowledging our great team.
All their efforts to deliver world class service to our passengers.
I will start by going over our third quarter results.
Reported a net profit for the quarter of $187 4 million or $4 72 per share.
Excluding special items, our adjusted net profit came in at $174 $4 million.
$4 39 per share.
Third quarter special items are comprised of a net gain of $12 $2 million related to the company's convertible notes, which were retired during the quarter and $800000 unrealized mark to market gain related to changes in the value of financial investments.
We reported a quarterly operating profit of $205 million and an operating margin of 23, 6%.
Capacity came in at $7 1 billion available seat miles or 12, 1% higher than in Q3 2022.
Our load factor came in at 87, 8% for the quarter nine percentage point increase compared to the same period in 2022.
We achieved passenger use of $13 four.
As a result unit revenues came in at 12 two.
Mainly driven by lower jet fuel prices unit cost or CASM decreased to nine three.
Or 11, 2% lower than our CASM in Q3 2022.
Finally, we continue with our initiatives for maintaining our costs low four.
For the quarter, our CASM, excluding fuel came in at five eight.
At two 1% decrease versus Q3, 2022, mainly driven by lower sales and distribution costs due to the higher penetration of both direct sales and the lower cost travel agency channels, which were launched by Copa Airlines in September of 2022.
I'm going to spend some time now discussing our balance sheet and liquidity.
As of the end of the third quarter, we had assets of close to $5 billion.
As to cash short and long term investments we ended the quarter with over $1 2 billion.
Which represents 34% over last 12 months revenues.
And in terms of debt, we ended the quarter with $1 $7 billion of debt and lease liabilities and came in with an adjusted net debt to EBITDA ratio 0.4 times.
Our debt now is comprised solely of aircraft related debt and I am pleased to report that our average cost of debt is currently in the range of three 4%.
As we've previously announced in the month of September we completed the redemption of the four 5% convertible senior notes due in 2025.
To summarize the transaction holders of $349 million aggregate principal amount.
Converted their notes in accordance with the terms of the inventor.
All holders of outstanding notes in the aggregate principal amount of $1 million redeemed at a price equal to 100% of the principal amount of each node call for your attention.
This was paid in cash plus accrued and unpaid interest.
As a result of the transaction generated a total cash payment of $350 million. In addition to approximately three 7 million shares.
Turning now to our fleet during the third quarter, we received two Boeing 707, Max Nines to end the quarter with a total of 103 aircraft.
In November we received two additional 7% Max nines to bring our total fleet to 105 aircraft.
With these additions our total fleet is now comprised of 68 737 eight hundreds.
28, 737, Max Nines, and nine 737 seven hundreds.
These figures include $1 737, 800 freighter and the nine 737 eight hundreds operated by window.
Two thirds of our fleet continues to be comprised of one aircraft and one third of our aircraft are under operating leases.
During the remainder of 2023, we expect to receive one additional aircraft a Boeing seven seven Max nine to end the year with a total fleet of 106 aircrafts.
As for our 2024 fleet plan preliminary early next year, we expect to receive 15, 7% of Max aircraft.
Three 7% of Max Nines, and 12, 7% and Max Eights.
We published an updated fleet plan of our in our Investor Relations website.
And we have already secured local financing for 10 out of the 15 deliveries in 2024.
Turning now to our return of value to our shareholders in October we finalized the execution of our existing share repurchase program.
And as published in our earnings release yesterday, our board of directors approved a new share repurchase program of $200 million.
Additionally, I'm pleased to announce that our board has ratified the fourth dividend payment of the year of 82 cents per share to be paid on December 15 to all shareholders of record.
As of November 30.
As for our outlook, we can provide the following guidance update for our full year 2023.
We expect to increase our capacity in <unk> versus 2022 by approximately 13%.
And we expect to deliver an operating margin within the range of 23%.
We're basing our outlook on the following assumptions load factor of approximately 87%.
Unit revenues within the range of 12 <unk>.
CASM ex fuel to be in the range of six.
And we're expecting an all in fuel price of $3.02 per gallon.
In anticipation of 2024, we are projecting a year over year capacity increase between 12 and 14%.
Additionally, we anticipate our CASM ex fuel to be in the range of $5 nine.
Mining with our goal to achieve a CASM ex fuel of $5.08.
By 2025.
This outlook reflects our continued commitment to operational excellence.
Thank you and with that we'll open the call for some questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
For first question.
Our first question comes from Savi <unk> with Raymond James Your line is open.
Hey, good morning.
Yeah.
If I might ask on the on the revenue front you you know you took the outlook up here.
For 2023, and <unk> and it doesn't seem like the competitive capacity you have seen any pullback since your last update.
Your capacities, even kind of come down.
Just curious what youre seeing in the market, that's driving that strength and just any color on if theres any kind of regional differences are and how you see that continuing.
Hi, Savi. This is Pedro demand has stayed strong in spite of the additional capacity is coming in from ourselves and especially from other airlines.
Fingers.
Specific reason for that I mean, the currencies have stayed strong also in Latin America. So so that doesn't hurt.
In the U S economy is doing well also so I think all those factors are contributing for demand to remain robust in spite of the capacity I would say savi only that in general terms and discipline.
The network and all the different regions that we were at in general is still very robust.
That's helpful.
If I might ask on the you know after the convert is done and the share buybacks that you've done so far with where does the share count stand today.
We were at 42 million shares around 42 million shares right now sorry.
Perfect. Thank you.
One moment for our next question.
Okay.
Okay.
Our next question comes from Duane <unk> with Evercore ISI. Your line is open.
Hey, Good morning, this is Jake on for Duane.
First question on non op is is that the new run rate for non op or were there any one time benefits. This quarter and then could you just remind us what the.
Actual interest expense through the P&L was given that it was different from what the coupon rate would indicate from the convert.
Yeah, Jake I would summarize that taking aside the effectively convert that we retired and going forward I would say that our finance cost line would probably go down by approximately $10 million per quarter. So I would say that's the way to moderate the remainder of the non op lines.
In general terms are in line with where just simply the debt levels that we have an average cost of debt.
Mentioned that is about three 4% right now and the yields that we have in terms of our investments.
I would say that's the big change going forward I would say is the reduction.
A reduction in the finance cost line not associated with the coupon, but rather associated with the way the accounting for our convert work there was a noncash item that pass through the P&L and it was around $10 million per quarter.
Right that makes sense.
And then just to go a little bit deeper into 2020 for capacity growth could you just break out the components and the pacing of that seed stage links gauge et cetera.
I would say Jade.
The majority of the growth for next year is going to be frequencies, where we haven't broken down is about call. It about 70% of the <unk>.
Capacity growth is going to be in additional frequencies into markets that we operate already then about let's say.
<unk> 20, 25% is going to be.
Around.
Full year effect of growth that we performed throughout 2023 that sort of lapse the year and then the remainder is new.
New service that we're starting in 2024.
Our placing so the vast majority of us just frequencies into markets, where we're already present.
And so but the patient of that be steadier.
In general just throughout the year, you say the cadence.
They are a little bit of a I would.
I will say in general terms steady I don't think that there's a particular bumps throughout the year given the majority of it is.
Or a portion of his four year effect.
On the aircraft.
Our aircraft deliveries in any case are spread throughout the year.
So that's another reason.
Okay. Thank you very much.
Thanks.
One moment our next question.
Our next question comes from Jeremy Mendez with Jpmorgan. Your line is open.
Good morning, Pedro Jose Danielle Thanks for taking my question two questions as well first one is on the fleet plan.
You guys mentioned about 15 deliveries next year on the Max's if you see any kind of bottlenecks come from Boeing or any risk on this 15 aircraft deliveries I understand that you mentioned that 10% already secure in terms of financing.
So if theres any kind of risk for the additional five.
So sorry go ahead.
Second question on weather.
So the second question is regarding to the CASM ex fuel guidance for next year.
Pretty impressive to see lower CASM ex U N. Maybe if you could comment on what are the main initiatives.
Thinking that there's any kind of labor pressure in Europe, our initiatives to sustain just higher efficiency. Thank you.
Yes so.
So a few things.
In terms of aircraft deliveries.
11 of the 15 deliveries scheduled for next year are already financed.
Withdrawals.
So that pretty much set.
And in terms of delivery dates. This is the latest we have from Boeing.
Some aircraft.
Pass from from one aircraft at least process from from 2023 to 2024, that's why the number is.
Increased to 15, so so the best information, we have right now and again most of the financing is already in place.
I mean, there's still ensuring on Boeing aircraft manufacturers are facing.
Supply chain issues, so we have our conversation going with them but for.
We're now in our in terms of our guidance.
I'll start by saying that it's a preliminary guidance at wafer for a year, we will issue our formal guidance in February but in general terms is in line with our expectations in terms of aircraft deliveries for 2024.
And in terms of CASM for next year, I would say that the main areas of opportunity first of all is our.
Continued work in our distribution our team has been doing a great job there was a copa connect.
Project in our new distribution strategy.
Number two we are continuing with our fleet Densification of our signed 378 hundred fleet and the Copa Airlines side, so that will provide.
Some cash.
CASM benefit.
Third we continue working with our.
Efficiencies in terms of overhead and some of the growth that the efficiencies that we get with with the growth that we have for next year and finally, we're on track to to resolve the teething issues that we've had with the leap. So I think thats. Another one that you have to.
Consider or the next.
Over the next several months as well.
Okay very clear thank you both.
Thank you.
One moment for our next question.
Okay.
Our next question comes from Michael Lindenberg with Deutsche Bank. Your line is open.
Hey, good morning, everyone.
Jose I wanted to go back to just on next year's 12% to 14% frequency it sounds like 5% to 10% of the ASM are going to be new service.
Maybe more specifically what what is the plan the number of new dots on the map a number of new cities and there's two or three or four cities, it's going to be like what we saw this year, where you added.
It was what four new cities, maybe five years.
Yeah, Hi, Mike I'll answer that one so maybe we will have a little bit more.
Maybe it will have a little bit more information in February.
And we will make a few announcements, but right now there's not much we can share we're working on many possibilities.
It should be more than a few.
But we don't want to give a target because we don't really know it's kind of early.
We're still.
Planning, usually start new cities maybe year.
And at the end of the year, but we still have some months ago.
Very good.
My second question Lingo is nine airplanes now in a more more frequency of more routes as we move through this year is the plan to keep window at nine airplanes in 'twenty.
24.
That is decline that's the plan as of right now.
Given the dynamics of the Colombian market.
Yes, so so so.
So yes, that's the plan.
Okay.
Okay, Great and then.
My last question.
When I think about.
You have a significant cost of capital advantage.
When I think about some of the other big debt deals that we've seen in some of your competitors launch over the last 12 to 18 months and so that is three 4% cost of debt.
Well as we think about the.
You know the 10 or 11 airplanes that have already been financed with telcos.
Does that change that three 4% how should we think about your average financing for 'twenty call. Thanks for taking my questions.
I'll give you a data point.
Mike.
You could argue that.
And then incremental aircraft right now is in the range of around five 5%.
So are a little higher but.
We buy.
By the way, we have our 80% of our fleece finance under under fixed rate. So changes in interest rates that are affected significantly, but given the current environment our last set of aircraft.
Variable rate, so we'll enjoy the benefit of it.
When rates come down so, but it's around the 5% range.
So very good very good yeah still very very good. Thanks, thanks, everyone good quarter great quarter.
Thank you Mike.
One moment for our next question.
Okay.
Our next question comes from <unk> <unk> with Bank of America. Your line is open.
Hi, guys. Congratulations on the results and thanks for taking the questions I had two.
One on <unk>.
I know you didn't provide any guidance for 'twenty four.
But can you give us you know the.
What are you seeing in the booking curve for next year can you give us an expected direction.
Is it coming down.
<unk> 2023, because of extra capacity company.
Or are you still.
No at this moment.
And the second question is regarding <unk>.
A mismatch between jet fuel price in oil and dirt acuity did not happen only for copper, but all the peers.
In the region.
What is driving that is it sustainable going forward.
Hum.
Okay. So I'll start with the first one.
Yes, we're not giving RASM guidance for 'twenty for steel early and our visibility is always like three months or two months into the future. So what we're seeing so far which would be early 2024.
Is that the revenue strength sustained robust is following the same trend we've seen in Q3 and Q4.
So even with the capacity you mentioned revenues are staying strong.
So far.
Yeah and in terms of fuel.
This match between jet and crude it's yes.
The crack of jet fuel spike during the quarter.
It's in the range is a little bit over $40 right now per barrel. So its at a historically historically high but it is at a higher level than what.
It was on a regular basis and but you know what we have.
<unk> to manage our fuel expense and in terms of.
Recapping, our recouping some of this incremental expense in our unit revenues and we've done that in the fourth quarter with our revised guidance and so I think in the end.
It's something that we.
We know how to do.
Sounds great and one follow up on that last one.
Is this your guidance.
It includes the current curves.
Yes, yes, absolutely is occurring jet curve I sort of like two days ago. So are we there and it's all in it's our average fuel price all in <unk> <unk> above the last guidance that we provided back in August.
Sure.
Sounds great. Thank you so much.
Thank you.
One moment for our next question.
Our next question comes from Stephen Trent with Citi. Your line is open.
Good morning, gentlemen, and thanks very much for taking the time.
Definitely appreciate the.
Color on 2024, as you think about that build out.
Are you.
Content with maintaining those six daily flight banks.
A document or do you think you could make.
It makes them possible adjustment to that with that with the 2020 for growth.
Yes, not in 'twenty four I mean, we could make adjustments in the future.
But that's not the plan and 24.
We can still strengthen our six bank structure. There are opportunities there are gaps that we can fill and further strengthen our our whole network.
So that's the plan for now perfect Pedro appreciate that.
And as my follow up.
Looking at this.
Very good ex fuel CASM color for 2024.
What degree do you think that some of that might be coming from tilt towards more direct channel.
Our sales for example.
No absolutely that's a big portion of our strategy.
Four.
Having a multiyear CASM target.
Clearly sub six it's been driven in large part through our Copa connect strategy.
Being working out right over the last several.
Several months so that certainly.
Big portion of our of our continued.
Track towards.
$5, 19, and 2024 and $5 80 to 2025 rigs.
So Stephen it's <unk>.
<unk> overhead holding fixed costs tight so we benefit from the growth in ASN.
That's another way, we're achieving our numbers and look I mean, we're talking about CASM, there's always headwinds of items that we might not control there might be in or whatever aerospace.
Charge increases in different countries et cetera, and that's the sort of thing where inflationary pressures because of a or b suppliers, where we try to counter those with our own internal efficiencies and with projects.
Projects, such as copper connect with Densification et cetera. So we always have our our guard up in terms of keeping our costs as low as they can be.
Okay. That's very very helpful. Thanks, very much Jensen.
Are you in a few weeks.
Thank you.
One moment for our next question.
Our next question comes from Daniel Mckenzie with Seaport Global Your line is open.
Oh, Hey, good morning, guys.
I guess following up on that last question going back to Copa connect into lower distribution costs.
I Wonder if you can just help us put some numbers around what that means exactly so what youre seeing on cost savings and specifically from this initiative in and how the change in the distribution strategy is is helping you to drive more revenue. So maybe just related to that what percent of the passengers come into copper dot com or <unk>.
Actually purchasing the ticket with an upsell feature for example.
Okay. So let me start with a few general.
Comment.
And then I will get to assess some time to see how much of the four you're asking if we can gather.
They are quickly, but first thing I would say is that therefore, Sam mentioned, our direct distribution strategy, which we call co pack connect has been very successful.
And to date, we are already over 70% direct sales, including the NBC channel for the agencies. So when we add our website, our other direct channels and the agencies that connect through our NBC channel Rover.
70% it used to be the other way around.
Over a year ago, when we first started so that in itself.
It's a significant change and.
Surpass our projections for this year, then by going direct.
Be it through the MVC channel or a website and we're able to offer more options for passengers.
We're able to work on the upsell and a significant percent of the passengers that debt by in the website and NBC for sure are upselling.
Sure.
I don't think we have with us right now.
Percentage, but it's important.
It's a valid question because of course, our lowest fares.
Come with additional ancillary like feed and.
And bag, but then Upselling. It's also a very important revenue stream for us.
Dan I would say that in terms of cost.
The channel shifting in Copel connect strategy.
How are you.
One sense of CASM as provided for us.
For this year.
And.
And in terms of.
The value of ancillary.
Ben.
I don't know we proudly.
Quadrupled.
The value of our salaries back in 2018 so.
And in terms of revenue. So there is of course within that upsell of product.
Folks that are buying tickets through our channel. So yes, it has actually grown quite a bit over the last.
This was back in 2019 call it four times less.
Where we were and.
That's information that we shared back in our Investor day, a couple of months ago.
Yeah, very good and then second question here.
Historically Copa has targeted 18% to 20% operating margins and you know.
In light of this year's results I guess my next question is is how investors should really think about steady state margins.
Are the initiatives in place today.
Enough to help you punch above what you've done historically.
Well now now you're asking for 2020 for guidance.
Correct.
So.
We have to wait until February for that but we have we have.
The wind on our back right now and.
What that means for steady state into the future.
It's going to depend on how external factors.
Change.
Fuel capacity from competitors et cetera et cetera.
But.
But we are really pleased with our operating margin guidance of 23% for the year 2000, and full year 2023, it's pretty pretty good.
Pretty good result, I think it is.
Certainly it's been a very very good year so far.
Yes, very good its an impressive year. Thanks, so much you guys.
Thank you Dan.
Our next question.
Our next question comes from Bruno Amorim with Goldman Sachs. Your line is open.
Thank you. Thank you for taking my question I have a follow up on this question on margins.
I'm not asking for 'twenty for guidance.
When did you hear from you what would in your view of the big changes that could eventually have led to those higher margins. So we can understand to what extent they are sustainable I understand you have some cost efficiencies.
<unk> is performing well because these people NAMIC laterals.
Look on a total cost perspective, it is too higher versus 2019.
He is much higher so maybe the answer in terms from the revenue side and then on the revenue side.
One could argue that there is less competition now post pandemic.
Is that the main change.
Or is there anything else that you believe could justify much higher revenue on a sustainable basis. Thank you very much.
So she'll Bruno I'll say three things three general concepts that are important coming.
Coming out of the pandemic.
They are playing in different directions.
So the number one surprise out of the pandemic was that demand.
Same back a lot quicker than what anyone expected and it has remained strong.
Overall in our region in the Americas.
It is still robust.
These days of course demand.
Has been has been a positive change the owner.
I would say surprise coming out of the pandemic, which works in a different direction in the opposite direction.
It's how much growth there has been <unk>.
In aviation in our region, how much growth by by the airline industry in general.
That also surprised us coming out so capacity came back.
Quicker than what we would've expected and it's actually above pre pandemic levels and then the third concept I want to share which is more.
Copa specific is that we work really hard.
During the pandemic, even while we were shutdown for almost five months, we never stopped working on two things and one was working on our cost on the cost side and doing all the investments and changes that we're going to make us more efficient going forward and pruning.
Copa connect and now a lot of technological enhancements and same thing for revenues, which in a way some are related to Copa connect August are not so we've worked very hard in our revenue related technology on the revenue team and.
We are a much more efficient competitive airline from the revenue side and from the cost side. So I would say those are through three general concept.
I would have a lot to do with where we are today.
Yeah.
Thank you and in terms of the competitive dynamics and what kind of economy.
Well its competitive dynamic it's growing it.
Strong.
It is now mostly LCC or you also see in our region. Most of our competitors are you occ's or else the key either because they were born that way or they converted.
To that model.
Right and.
In a way.
Has has made us become a lot more efficient and that's the vision we had from before so.
We were not surprised we were preparing for this from way back.
We are meeting the challenge.
The tools, we have a strong network we have the hub, we have the costs and we're still working on additional efficiency and we think there is room for all I mean, we've gone our success did not.
Dependent on the failure of others.
Especially as the market continues.
On a healthy on a healthy pace, but we worry about ourselves and we're just making sure. We're just making proper a better and more competitive airline, but yes competition has grown and right now.
Many of our competitors are growing actually at a faster rate than we are.
Thank you have a good day thank.
Thank you Bruno.
One moment our next question.
Our last question comes from Savi <unk> with Raymond James Your line is open.
Hey, thanks for the follow up.
Mike.
Curious if you can hone in on business demand. It seems like there is a slight pick up in other regions and wondering if you're seeing that in and particularly in Panama and I'm wondering if the drought is having any impact or the economy is still pretty strong.
Yes, so business demand has not changed much.
From the previous two quarters.
It used to be.
Above 30% is now in the 25%.
Range, but it has been replaced.
By I would say I mean by leisure, but also by issuer by the higher segment of leisure travelers, because we're doing better in business class revenues than what we were doing pre pandemic.
And with less business demand so in a way it has been replaced we're not messing it even though we're happy to see it.
Grow and hopefully will grow at a faster pace in the future.
The Panama Canal of course has been affected by the El Nino drought.
In the region and it has restricted the transit of ships, but it is not having I would say a significant impact on the economy of Panama the outcome economy still expected to be one of the fastest growing economies in Latin America.
And in spite of the.
Adjustments to the Panama canal needs to make because of anemia, but again, it's not having a drastic impact on our economy and it's still a small a small percent of their revenues are being affected.
In a way that's helpful. Bob.
The news is probably exaggerating the problem.
Makes sense. Thank you.
Thank you Savi.
Thank you that concludes the question and answer session. At this time I would like to turn the call back to Pedro <unk> for closing remarks.
Thank you. Thank you operator, so thank you to all.
This concludes our earnings call as always thank you for participating and special Thanks for your continued support to Copa Holdings. So hope you have a great day.
Ladies and gentlemen, thank you for your participation that concludes the presentation. You may now disconnect and have a wonderful day.
Okay.
Okay.
[music].
Okay.
[music].
Yes.
[music].
Okay.
[music].
Okay.
[music].
Okay.
Yeah.
[music].