Q2 2024 Copa Holdings SA Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings' second quarter earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session.

Operator: second quarter earnings call. During the presentation, all participants will be in a listen-only mode.

At that time, if you have a question, you will have to press star then 11 on your touchtone phone.

Daniel Tapia: As a reminder, this call is being webcast and recorded on August 8, 2024. Now I will turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Operator: Afterward, we will conduct a question-and-answer session. At that time, if you have a question, you will have to press star then one one on your touchtone phone. As a reminder, this call is being webcast and recorded on August 8, 2024. Now I will turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Daniel Tapia: and welcome everyone to our second quarter earnings call. Joining us today are Pedro Heilbron, CEO of Copa Holdings, and Jose Montero, our CFO. First, Pedro will start by going over our second quarter highlights, followed by Jose, who will discuss our financial results. Immediately after, we will open the call for questions from analysts.

Daniel Tapia: Thank you GE and welcome everyone to our second quarter earnings call.

Speaker Change: Joining us today are Pedro Heilbron, CEO of Copa Holdings, and Jose Montero, our CFO .

Speaker Change: First, Pedro will start by going over our second quarter highlights, followed by Jose, who will discuss our financial results.

Speaker Change: Immediately after, we will open the call for questions from analysts.

Daniel Tapia: The Copa Holdings financial reports have been prepared in accordance with international financial reporting standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website, CopaAir.com. Our discussion today will also contain forward-looking statements, not limited to historical facts, that reflect the company's current beliefs, expectations, and or intentions regarding future events and results.

Operator: Second Quarter Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, you will have to press star then 1-1 on your touchtone phone.

Speaker Change: Copa Holdings financial reports have been prepared in accordance with international financial reporting standards. In today's call, we will discuss non-IFRS financial measures.

A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website CopaAir.com.

Operator: As a reminder, this call is being webcast and recorded on August 8, 2024.

Daniel Tapia: These forward-looking statements involve risk and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the FEC. Now, I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.

Daniel Tapia: Now I will turn the conference call over to Daniel Tapia. Director of Investor Relations.

Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations, and or intentions regarding future events and results.

Operator: Sir, you may begin. Thank you, G. And welcome everyone to our second quarter Earnings Call.

Operator: Joining us today are Pedro Heilbron, CEO of Copa Holdings and Jose Montero RCFO. First, Pedro will start by going over our second quarter highlights, followed by Jose, who will discuss our financial results. Immediately after, we will open up the call for questions from analysts.

Speaker Change: These forward-looking statements involve risk and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change.

Many of these are discussed in our annual report filed with the FEC.

Speaker Change: Now I'd like to turn the call over to our CEO , Mr. Pedro Heilbron.

Pedro Heilbron: Good morning to all, and thanks for participating in our second quarter earnings call. Before we begin, I would like to extend my sincere gratitude to all our co-workers for their commitment to the company. Their continuous efforts and dedication have kept Copa at the forefront of Latin American aviation. To them, as always, my highest regards and admiration. Once again, thank you for joining us.

Operator: Copa Holdings Financial Reports have been prepared in accordance with international financial reporting standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website, copaair.com. Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations, and or intentions regarding future events and results. These forward-looking statements involve risk and uncertainties that could cause actual results to the firm materially and are based on assumptions subject to change.

Pedro Heilbron: Thank you, Daniel.

Speaker Change: Good morning to all, and thanks for participating in our second quarter earnings call.

Pedro Heilbron: Before we begin, I would like to extend my sincere gratitude to all our co-workers for their commitment to the company.

Speaker Change: Their continuous efforts and dedication have kept COPA at the forefront of Latin American aviation. To them, as always, my highest regards and admiration.

Pedro Heilbron: We're pleased to report industry-leading financial results for the quarter. As stated in our earnings released yesterday, our 19.5% Q2 operating margin represents the second best Q2 performance in the company's history. Among the main highlights for the quarter, passenger traffic grew 10.6% compared to the same period in 2023, while capacity increased by 9.7%, resulting in a 0.7 percentage point increase in load factor to 86.8%. Unit cost excluding fuel, or CASAMEX, came in at 5.6 cents, a 5.8% decrease compared to Q2 2023, mainly driven by lower aircraft maintenance costs and sales and distribution costs. The passenger yield came in at $0.121, 8.7% lower year-over-year. As a result, unit revenues, or RASM, came in at $0.11, or 7.7% lower compared to Q2'23. On the operational front,

Speaker Change: Once again, we're pleased to report industry-leading financial results for the quarter.

As stated in our earnings released yesterday, our 19.5% Q2 operating margin represents the second best Q2 results in the company's history.

Speaker Change: among the main highlights for the quarter.

Operator: Many of these are discussed in our annual report file with the SEC.

Passenger traffic grew 10.6%.

Speaker Change: compared to the same period in 2023, while capacity increased by 9.7 percent, resulting in a 0.7 percentage point increase in load factor to 86.8 percent.

Daniel Tapia: Now I'd like to turn the call over to our CEO, Mr. Pedro Heilbron. Thank you, Daniel.

Pedro Heilbron: Good morning to all, and thanks for participating in our second quarter earnings call. Before we begin, I would like to extend my sincere gratitude to all our co-workers for their commitment to the company. Their continuous efforts and dedication have kept Copa at the forefront of Latin American aviation. To them, as always, my highest regards and admiration.

Speaker Change: unit cost excluding fuel or casammex came in at five point six cent a five point eight percent decreaseed compared to q two two thousand and twenty three main driven by lower per maintenance cost and sales and distribution cost

Speaker Change: Passenger yield came in at $0.121, 8.7% lower year-over-year. As a result, unit revenues, or RASM, came in at $0.11, or 7.7% lower compared to Q2-23.

Pedro Heilbron: Once again, we're pleased to report industry-leading financial results for the quarter. As stated in our earnings release yesterday, our 19.5% Q2 operating margin represents the second best Q2 results in the company's history. Among the main highlights for the quarter, passenger traffic grew 10.6% compared to the same period in 2023, while capacity increased by 9.7%. Resulting at a 0.7% percentage point increased in load factor to 86.8%. Unit cost, excluding fuel, or Casamax, came in at 5.6%, a 5.8% decrease compared to Q2 2023.

Pedro Heilbron: Copa Airlines delivered an on-time performance of 87.6% and a completion factor of 99.7% for the quarter, once again positioning itself amongst the best in the industry. Furthermore

Speaker Change: On the operational front, Copa Airlines delivered an on-time performance of 87.6% and a completion factor of 99.7% for the quarter, once again positioning ourselves amongst the best in the industry.

Pedro Heilbron: Copa was recently recognized by Skytrax for the ninth consecutive year as the best airline in Central America and the Caribbean. I would like to take this opportunity to recognize our more than 8,000 co-workers who, day in and day out, deliver a world-class travel experience for our customers. Their contributions are key to our success. Turn on El Toro Network. In the month of June, we started three new destinations: Raleigh-Durham in the U.S., Florianópolis in Brazil, and Tulum in Mexico.

Speaker Change: Furthermore...

Speaker Change: Copa was recently recognized by Skytrax for the ninth consecutive year as the best airline in Central America and the Caribbean.

Speaker Change: I would like to take this opportunity to recognize our more than 8,000 co-workers who day in and day out deliver a world-class travel experience for our customers. Their contributions are key to our success.

Pedro Heilbron: Passing your yield came in at 12.1 cents, 8.7% lower year over year. As a result, unit revenues or RASM came in at 11 cents or 7.7% lower compared to Q223. On the operational front, Copa Linen's delivered an on-time performance of 87.6% and a completion factor of 99.7% for the quarter, once again positioning ourselves amongst the best in the industry.

Speaker Change: Turn in El Toro Network.

Speaker Change: In the month of June , we started three new destinations.

Speaker Change: Rally Durham in the U.S., Florianópolis in Brazil, and Tulum in Mexico. With these additions, we're now serving 85 destinations in 32 countries, solidifying our leadership position as the hub with the most international destinations in Latin America.

Pedro Heilbron: We're now serving 85 destinations in 32 countries, solidifying our leadership position as the hub with the most international destinations in Latin America. With regard to our expectations for the rest of the year, As we notified the market last week, on July 29, the Venezuelan government temporarily suspended commercial flights between Venezuela and several countries in the region, including Panama, forcing us to cancel our flight effective July 31st. Although the official notice mandates the suspension of flights until August 31st, at this time, we cannot determine if this suspension will be extended.

Speaker Change: With regards to our expectations for the rest of the year,

Speaker Change: As we notified the market last week, on July 29, the Venezuelan government temporarily suspended commercial flights between Venezuela and several countries in the region, including Panama.

Pedro Heilbron: Furthermore, Copa was recently recognized by SkyTrack for the ninth consecutive year as the best airline in Central America and the Caribbean. I would like to take this opportunity to recognize our more than 8,000 co-workers who they in and they out the liver a world-class travel experience for our customers. Their contributions are key to our success.

Speaker Change: forcing us to cancel our flight effective July 31st.

Speaker Change: Although the official notice mandates the suspension of flights until August 31st, at this time we cannot determine if this suspension will be extended.

Pedro Heilbron: With regard to costs, we continue to focus on our cost efficiency initiative and expect to deliver lower year-over-year unit costs for 2024, leading us once again to deliver industry-leading margins for the year. Jose will provide more details regarding our outlook. To summarize, we delivered industry-leading financial results for the second quarter. We continue to execute on our cost execution strategy. We keep expanding our network, now serving 85 destinations across 32 countries, reinforcing Panama's position as the leading hub for international travel in Latin America, and we expect to deliver industry-leading operating margins for the year.

Speaker Change: With regards to cost, we continue to focus on our cost efficiency initiative and expect to deliver lower year-over-year unit costs for 2024, leading us once again to deliver industry-leading margins for the year.

Pedro Heilbron: Turn it out to our network. In the month of June, we started three new destinations, Raleigh Durham in the U.S., Florianopolitan Brazil and Tulumin Mexico. With these foundations, we're now serving 85 destinations in 32 countries, solidifying our leadership position as the hub with the most international destinations in Latin America.

Speaker Change: Jose will provide more details regarding our outlook.

Jose: To summarize, we delivered industry-leading financial results for the second quarter.

Pedro Heilbron: With regards to our expectations for the rest of the year, as we notified the market last week on July 29, the Venezuelan government temporarily suspended commercial flights between Venezuela and several countries in the region, including Panama, forcing us to cancel our flight effective July 31. Although the official notice mandate the suspension of flights until August 31, at this time we cannot determine if this suspension would be extended. With regards to cost, we continue to focus on our cost efficiency initiatives and expect to deliver lower-year-over-year unit costs for 2024, leading us once again to the liver industry-leading margins for the year, possible provide more details regarding our outlook.

Jose: We continue to deliver on our cost execution strategy.

Jose: We keep expanding our network, now serving 85 destinations across 32 countries, reinforcing Panama's position as the leading hub for international travel in Latin America.

Jose Montero: And we expect to deliver industry-leading operating margins for the year.

Pedro Heilbron: As always, our team continues to deliver world-leading operational results while providing world-class service to our passengers. Finally, we firmly believe that our business model remains as robust and relevant as ever and that our Hub of the Americas in Panama is the best connecting hub in Latin America, making us the best positioned airline in our region to consistently deliver industry-leading results. Now I'll turn over the call to Jose, who will go over the financial results in more detail.

Jose Montero: As always, our team continues to deliver world-leading operational results while providing world-class service to our passengers.

Jose: Finally...

Jose: We firmly believe that our business model remains as robust and relevant as ever, and that our Hub of the Americas in Panama is the best-connecting hub in Latin America, making us the best-positioned airline in our region to consistently deliver industry-leading results.

Jose: Now I'll turn over the call to Jose, who will go over financial results in more detail. Thank you, Pedro. Good morning, everyone, and thanks for being with us today.

Pedro Heilbron: To summarize, with the liver industry-leading financial results for the second quarter, we continue to deliver in our cost execution strategy. We keep expanding our network now serving 85 destinations across 32 countries, reinforcing Panama's position as the leading hub for international travel in Latin America, and we expect to deliver industry-leading operating margins for the year. As always, our team continues to deliver world-leading operational results while providing a world-class service to our passengers.

Jose Montero: Thank you, Pedro. Good morning, everyone, and thanks for being with us today.

Jose Montero: I'd like to join Pedro in acknowledging our great team for all their efforts to deliver a world-class service to our passengers. I will start by going over our second quarter results. We reported a net profit for the quarter of $120.3 million, or $2.88 per share. We reported a quarterly operating profit of $159.5 million and an operating margin of 19.5% in what was our seasonally lowest quarter of the year. Capacity came in at 7.4 billion available seat miles, or 9.7% higher than in Q2 2023. Load factor came in at 86.8% for the quarter.

Jose Montero: I'd like to join Pedro in acknowledging our great team for all their efforts to deliver a world-class service to our passengers.

Jose Montero: 0.7 percentage point increase compared to the same period in 2023. However, passenger use decreased by 8.7% to 12.1%, mostly due to a revision of the unredeemed ticket revenue provision for tickets sold during the year 2024. As a result, univert news came in at 11 cents.

Jose Montero: I will start by going over our second quarter results.

Jose: We reported a net profit for the quarter of $120.3 million, or $2.88 per share.

Jose: We reported a quarterly operating profit of $159.5 million and an operating margin of 19.5%.

Jose: in what is our seasonally lowest quarter of the year.

Pedro Heilbron: Finally, we firmly believe that our business model remains as robust and relevant as ever, and that our hope of the Americas in Panama is the best-connecting hub in Latin America, making us the best position early in our region to consistently deliver industry-leading results.

Jose: Capacity came in at 7.4 billion available seat miles or 9.7% higher than in Q2 2023.

Jose: The load factor came in at 86.8% for the quarter, a 0.7 percentage point increase compared to the same period in 2023.

Jose: Passenger use decreased by 8.7% to 12.1 cents, mostly due to a revision of the unredeemed ticket revenue provision for tickets sold during the year 2024.

Operator: Thank you, Pedro.

Jose Montero: Good morning, everyone, and thanks for being with us today. I'd like to join Pedro in acknowledging our great team for all the efforts to deliver a world-class service to our passengers. I will start by going over our second quarter results. We reported a net profit for the quarter of $120.3 million or $2.88 per share. We reported a quarterly operating profit of $159.5 million and an operating margin of 19.5% in what is our seasonally lowest quarter of a year.

Jose Montero: 7.7% lower than in the second quarter of 2023. Excluding the revision related to the unredeemed ticket revenues, RASM would have decreased by 3.8% to 11.5%, and unit costs or CASM decreased to 8.9 cents, or 2.1% lower year-over-year. And finally, our chasm-excluding fuel came in at 5.6 cents, a 5.8% decrease versus Q2 2023, mainly driven by lower aircraft maintenance costs due to an adjustment in the leased aircraft return provisions of nine aircraft leases, which we extended during the quarter, as well as lower sales and distribution costs due to the higher penetration of both direct channels and the lower cost NDC travel agency channels. Excluding the adjustment in the leased aircraft return provisions, the company would have reported an ex-fuel gap of 5.8 cents for the quarter, a 1.7 percent decrease year-over-year.

Speaker Change: As a result, universities came in at 11 cents, or 7.7 percent lower than in the second quarter of 2023.

Speaker Change: Excluding the revision related to the unredeemed ticket revenues, RASM would have decreased by 3.8% to 11.5 cents.

Jose: Unit costs or CASM decreased to $0.089 or 2.1% lower year-over-year.

Jose: And finally, our chasm-excluding fuel came in at $0.056.

Speaker Change: A 5.8% decrease versus Q2 2023, mainly driven by lower aircraft maintenance costs due to an adjustment in leased aircraft return provisions of nine aircraft leases, which we extended during the quarter.

Jose Montero: Capacity came in at 7.4 billion available seat miles or 9.7% higher than in Q2 2023. Load factor came in at 86.8% for the quarter at 0.7% percentage point increase compared to the same period in 2023. Fascinating use decreased by 8.7% to 12.1 cents mostly due to a revision of the unredeemed ticket revenue provision for ticket sold during the year 2024. As a result, the universe news came in at 11 cents or 7.7% lower than in the second quarter of 2023.

Jose: as well as lower sales and distribution costs due to the higher penetration of both direct channels and the lower cost NDC travel agency channel.

Jose: Excluding the adjustment in leased aircraft return provisions, the company would have reported an ex-fuel chasm of 5.8 cents for the quarter, a 1.7 percent decrease year-over-year.

Jose Montero: Now I'm going to spend some time discussing our balance sheet and liquidity. As of the end of the second quarter, we had assets of close to $5.4 billion. To cash out short and long-term investments, we ended the quarter with over $1.2 billion, which represents 35% of our last 12 months revenue. And in terms of debt, we ended the quarter with $1.8 billion in debt and lease liabilities, and came in with an adjusted net debt to a bidder ratio of 0.6 times.

Speaker Change: Now I'm going to spend some time discussing our balance sheet and liquidity.

Speaker Change: As of the end of the second quarter, we had assets of close to $5.4 billion.

Jose Montero: Excluding the revision related to the unredeemed ticket revenues, Rasm would have decreased by 3.8% to 11.5 cents. The unit cost or cash on decreased to 8.9 cents or 2.1% lower year over year. And finally, our cash on excluding fuel came in at 5.6 cents at 5.8% decrease versus Q2 2023. Mainly driven by lower aircraft maintenance costs due to an adjustment in leaster aircraft return provisions of 9 aircraft leases which we extended during the quarter.

Speaker Change: As to cash, short, and long-term investments, we ended the quarter with over $1.2 billion.

Speaker Change: which represents 35% of our last 12 months revenues.

Speaker Change: And in terms of debt, we ended the quarter with $1.8 billion in debt and lease liabilities.

Speaker Change: and came in with an adjusted net debt to EBITDA ratio of 0.6 times.

Jose Montero: We're pleased to report that our average cost of debt, which continues to be comprised solely of aircraft-related debt, is currently in the range of 3.6%, with around 70% of our debt being fixed. Turning now to our fleet, during the quarter, we received 3 Boeing 737 MAX 9 aircraft, ending the second quarter with a total fleet of 109 aircraft, comprised of 68 737-800s, 32 737 MAX 9s, These figures include one 737-800 freighter and the nine 737-800s operated by women.

Speaker Change: I'm pleased to report that our average cost of debt, which continues to be comprised solely of aircraft-related debt, is currently in the range of 3.6%, with around 70% of our debt being fixed.

Jose Montero: As well as lower sales and distribution costs due to the higher penetration of both direct channels and the lower cost NDC travel agency channel. Excluding the adjustment in leaster aircraft return provisions, the company would have reported an exfocasm of 5.8 cents for the quarter. The 1.7% decrease year-to-year.

Speaker Change: Turning now to our fleet during the quarter, we received 3 Boeing 737 MAX 9 aircraft, ending the second quarter with a total fleet of 109 aircraft, comprised of 68 737-800s, 32 737 MAX 9s, and 9 737-700s.

Jose Montero: Now I'm going to spend some time discussing our balance sheet on liquidity. As of the end of the second quarter, we had assets of close to 5.4 billion dollars. As to cash short and long-term investments, we ended the quarter with over 1.2 billion dollars which represents 35% of our last 12 months revenues. And in terms of debt, we ended the quarter with 1.8 billion dollars in debt and lease liabilities and came in with an adjusted net debt to a bid to a ratio of 0.6 times.

Speaker Change: These figures include one 737-800 freighter and the nine 737-800s operated by Wingo.

Jose Montero: Also, in the month of July, we received our first Boeing 737 MAX 8, increasing our total fleet size to 110 aircraft. Regarding the deliveries for the remainder of the year, recently, Boeing notified us of further delays to the 2024 delivery schedule. And now we expect to receive only two additional MAX 8s during the remainder of the year to end the year with a total fleet size of 112 aircraft instead of the 115 mentioned during last quarter's call.

Speaker Change: Also, in the month of July , we received our first Boeing 737 MAX 8, increasing our total fleet size to 110 aircraft.

Speaker Change: Regarding the deliveries for the remainder of the year, recently Boeing notified us of further delays to the 2024 delivery stream.

Speaker Change: And now we expect to receive only two additional MAX 8s during the remainder of the year to end the year with a total fleet size of 112 aircraft, instead of the 115 mentioned during last quarter's call.

Jose Montero: I'm pleased to report that our average cost of debt which continues to be comprised solely of aircraft related debt is currently in the range of 3.6% with around 70% of our debt being fixed. During now for our fleet during the quarter, we received 3.737-max-9 aircraft ending the second quarter with a total fleet of 109 aircraft,[inaudible] Prelis. These figures include 1737-800 freighter and the 9737-800 operator by Wingo. Also in the month of July we received our first Boeing 737-MAX-8, increasing our total fleet size to 110 aircraft.

Jose Montero: In terms of financing, we have already secured local financing for these deliveries, as well as for the first 3 deliveries of 2025. As for our 2025 fleet plan, we currently expect to receive 15 aircraft in the year, all Boeing 737 MAX 8. And, as mentioned before, we extended all of our nine operating leases expiring next year. Additionally, as contemplated in an updated fleet plan, we expect to retire two of our Boeing 737-700s to end the year with a fleet of 125 aircraft.

Speaker Change: In terms of financing, we have already secured Joco financing for these deliveries as well as for the first three deliveries of 2025.

Speaker Change: As for our 2025 fleet plan, we currently expect to receive 15 aircraft for the year, all Boeing 737 MAX 8s. And as mentioned before, we extended all of our 9 operating leases expiring next year.

Speaker Change: Additionally, as contemplated in an updated fleet plan, we expect to retire two of our Boeing 737-700s to end the year with a fleet of 125 aircraft.

Jose Montero: Turning now to the return of value to our shareholders, I'm pleased to announce that the company will make its third dividend payment of the year, of $1.61 per share, on September 13th to all shareholders of record as of August 30th. As to our guidance, we can provide the following update for the full year 2024. Due to the temporary suspension of our Panama to Venezuela flights, we now expect to increase our capacity in ASMs to approximately 9% year-to-year instead of our previous expectation of approximately 10%.

Speaker Change: Turning now to the return of value to our shareholders, I'm pleased to announce that the company will make its third dividend payment of the year of $1.61 per share on September 13th to all shareholders of record as of August 30th.

Jose Montero: Regarding the deliveries for the remainder of the year, recently, Boeing notified us of further delays to the 2024 delivery stream. And now we expect to receive only two additional MAX-8s during the remainder of the year to end the year with a total fleet size of 112 aircraft instead of the 115 mentioned during last quarter's call. In terms of financing, we have already secured local financing for these deliveries as well as for the first three deliveries of 2025.

Speaker Change: as to our guidance we can provide the following update for a full year two thousand and twenty four

Speaker Change: Due to the temporary suspension of our Panama to Venezuela flights, we now expect to increase our capacity in ASMs to approximately 9% year-to-year, instead of our previous expectation of approximately 10%.

Jose Montero: And we reaffirm our operating margin guidance to be within the range of 21 to 23%. We're basing our outlook on the following assumptions. Low factor of approximately 86.5%, unit revenues in the range of $0.115, which account for the unexpected Venezuelan capacity reductions, weaker currencies in the region, and a lower fuel cost environment. Casamex fuel is in the range of 5.9 cents. And we are now expecting an all-in-few price of $2.70 per gallon.

Speaker Change: And we reaffirm our operating margin guidance to be within the range of 21 to 23 percent.

Jose Montero: As for 2025 fleet plan, we currently expect to receive 15 aircraft for the year, all Boeing 737-MAX-8s. And as mentioned before, we extended all of our nine operating VCs expiring next year. Additionally, as contemplated in an updated fleet plan, we expect to retire two of our Boeing 737-700s to end the year with a fleet of 125 aircraft.

Speaker Change: We're basing our outlook on the following assumptions.

Speaker Change: Low factor of approximately 86.5%, unit revenues in the range of 11.5 cents, which account for the unexpected Venezuelan capacity reductions, weaker currencies in the region, and a lower fuel cost environment.

Speaker Change: Casamex Fuel in the range of 5.9 cents.

Jose Montero: Turning now to the return of Altera's shoulders, I'm pleased to announce that the company will make its third dividend payment of the year $1.61 per share on September 13th to all shareholders of record as of August 30th. As to our guidance, we can provide the following update for the full year 2024. Due to the temporary suspension of our Panama to Venezuela flights, we now expect to increase our capacity in ASMs to approximately 9% year-a-year instead of our previous expectation of approximately 10%.

Speaker Change: And we are now expecting an all-in-fuel price of $2.70 per gallon.

Jose Montero: Lastly, as you already know, last month, after a career spanning over 30 years at Copa, I announced my decision to retire from the company by the end of 2024. Being part of the Copa team here has been one of the joys of my life. Our company is in great form, consistently delivering strong financial results with unit costs at the lowest level they have ever been, while continuing to build our very strong balance sheet and returning value to shareholders.

Speaker Change: Lastly, as you already know, last month, after a career spanning over 30 years at Copa, I announced my decision to retire from the company by the end of 2024. Being part of the Copa team here has been one of the joys of my life.

Speaker Change: Our company is in great form, consistently delivering strong financial results with unit costs at the lowest level they have ever been, while continuing to build our very strong balance sheet and returning value to the shareholders.

Jose Montero: We're currently engaged in an internal and an external search for my replacement, and I will remain with the company in an advisory role after my successful departure or my successor is named to assist with a smooth transition. Thank you, and with that, we will open the call to some questions.

Jose Montero: And we reaffirm our operating margin guidance to be within the range of 21 to 23%. We'll be basing our outlook on the following assumptions. Low factor of approximately 86.5%, unit revenues in the range of 11.5 cents which account for the unexpected Venezuela capacity reductions, weaker currencies in the region, and a lower fuel cost environment. Casamix fuel in the range of 5.9 cents, and we are now expecting an all-in-fuel price of $2.70 per gallon.

Speaker Change: We are currently engaged in an internal and external search for my replacement and I will remain with the company in an advisory role after my successor is named to assist with a smooth transition. Thank you and with that we will open the call to some questions.

Operator: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Savi Sith from Raymond James.

Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again.

Speaker Change: Please stand by while we compile the Q&A roster.

Jose Montero: Lastly, as you already know, last month after our career spanning over 30 years of COPA, I announced my decision to retire from the company by the end of 2024. Being part of the COPA team here has been one of the joys of my life. Our company is in great form, consistently delivering strong financial results with unit costs at the lowest level they have ever been while continuing to build our very strong balance sheet and returning value to the shareholders. We are currently engaging in an internal and external search for my replacement, and I will remain with the company in an advisory role after my successor is named to assist with a smooth transition.

Speaker Change: Our first question comes from the line of Savi Sith from Raymond James.

Savi Sith: Hey, good morning, everyone. And I guess congratulations on getting some time off from the airline world, Jose. And maybe, can I ask on the... Venezuela site suspension impact, like how you're thinking about the impact given the uncertainty that you alluded to just you know what's in the guidance in terms of kind of how long this impacts units and and you know what kind of pressure it puts on unit revenue in the third quarter.

Savi Sith: Hey, good morning everyone, and I guess congratulations on getting some time off from the airline world, Jose. And maybe, can I ask on the...

Speaker Change: Venezuela site suspension impact, like how you're thinking about.

Speaker Change: The impact, given the uncertainty that you alluded to, just, you know, what's in the guidance in terms of kind of how long this impacts and, you know, what kind of pressure it puts on unit revenue in the third quarter?

Operator: Thank you, and with that, we will open the call to some questions. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Ann, please stand by while we compile the Q&A roster.

Jose Montero: Thank you for your good wishes there. So, let me start by saying that the Venezuelan impact is included in the guidance, and we have taken a conservative assumption in terms of capacity and the RASM guidance. And we assume that there will be a buildup of capacity related to Venezuela, either in Venezuela after August or on alternative markets. And the reason why the buildup of capacity over a period of time will be a ramp-up of that capacity.

Speaker Change: Sure, Savi, and thank you for your good wishes there.

Speaker Change: so let me start by saying that the venetral impact is included in the guidance and we have taken conservative assumption in terms of the capacity and their r cent guidance here

Savi Sith: Our first question comes from the line of Savi Sith from Raymond James.

Speaker Change: And we assume that there will be a buildup of the capacity related to Venezuela either in Venezuela after August or on alternative markets.

Jose Montero: Hey, good morning, everyone, and I guess congratulations on getting some time off from the airline world, Jose. And maybe can I ask on the Zenezuela flight suspension impact, like how you're thinking about the impact given the uncertainty that you alluded to, just, you know, what's in the guidance in terms of kind of how long this impacts and, you know, what kind of pressure it puts on unit revenue in the third quarter.

Speaker Change: and the reason why the build-up of the capacities over a period of time will be a ramp-up of that capacity.

Jose Montero: It's because the flights need time to sell, but we expect basically to be back at full capacity by December, let's say, and a ramp-up to occur between September and December. And it's all, again, just to reiterate, it's all included in the guidance, both in the capacity guidance and in the rationale. Got it.

Speaker Change: is because the flights need time to sell, so, but we expect.

Speaker Change: basically to be back at the full capacity by December, let's say, and a ramp-up to occur between September and December. So that's, and it's all again, just to reiterate, it's all included in the guidance, both in the capacity guidance and in the ration guidance.

Jose Montero: So the impact across the second half is what you have here. Yes. And not just three.

Speaker Change: So the impact is across second half is what you have here.

Jose Montero: Sure, Savi, thank you for your good wishes there. So let me start by saying that the Zenezuela impact is included in the guidance and we have taken a conservative assumption in terms of the capacity and the recent guidance here. And we assume that there will be a buildup of the capacity related to Venezuela, either in Venezuela after August or on alternative markets. And the reason why the buildup of the capacities over a period of time will be a ramp up of that capacity is because the flights need time to sell.

Jose Montero: Absolutely. Can I... Here. Here. Yes. Just if I might, on the demand side, you've seen some meaningful local currency devaluation against the U.S. dollar over the last several months. Are you seeing any, you know, perhaps, either because of that or the weakening of economies, any impact on demand or any change in point of sale direction? Hi Savvy, it's Pedro.

Speaker Change: And not just 3Q.

Speaker Change: you can i you're here yes

Speaker Change: that

Speaker Change: just if i might on the on the demand side you've seen some meaningful local currency devaluation against u s dollar of the last several months i

Speaker Change: Are you seeing any, you know, perhaps, you know, either because of that or weakening of economies, any impact on demand or any change in point-of-sale direction?

Pedro Heilbron: Hi Savvy, it's Pedro. Hi Pedro.

Pedro Heilbron: So, of course, the Venezuelan impact is immediate. We are a network airline, so it affects beyond just the OND, Panama, and Venezuela, and having to cancel from one day to the next, that has an impact on our whole network. So it's in the guidance already for Q3 and the rest of the year, as Jose will mention.

Pedro Heilbron: Hi Savvy, it's Pedro.

Pedro Heilbron: himeshow

Pedro Heilbron: The, of course, the Venezuela impact is immediate.

Jose Montero: But we expect basically to be back at the full capacity by December, let's say, and I ramp up to a curve between September and December. And it's all again, just to reiterate, it's all included in the guidance, both in the capacity guidance and in the recent guidance. So the impact is across second half is what you have here. And not just through here. Makes sense. Can I? You're over here, yes. Just if I might, on the demand side, you know, you've seen some meaningful, you know, local currency devaluation against US dollar over the last several months. Like, are you seeing any, you know, perhaps, you know, either because of that or reckoning of economies, any impact on demand or any change in point of sale direction?

Speaker Change: We are a network airline, so it affects beyond just the O&D Panama-Venezuela, and having to cancel from one day to the other, that has an impact in our whole network. So it's in the guidance already for Q3 and the rest of the year, as Jose will mention. And then that also is combined with the weaker currency.

Pedro Heilbron: And then that is combined with the weaker currency that you alluded to, which is affecting mostly Brazil, which is the most important market for anyone in South America and, actually, in Latin America. So that's the main impact we're dealing with. It also has a network impact in our case. Otherwise, demand is OK, in spite of a lot of capacity growth from the industry in general.

Jose Montero: that you alluded to, which is affecting mostly Brazil.

Jose Montero: which is the most important market for anyone in South America and actually in Latin America.

Jose Montero: So that's the main impact we're dealing with. It also has a network impact in our case. Otherwise, demand, it's okay, in spite of a lot of capacity growth from the industry in general.

Pedro Heilbron: Hi, Sabi, it's Pedro. So the, of course, the Venezuela impact is immediate. We are a network airline. So it affects beyond just the OND Panama Venezuela. And having to cancel from one day to the other, that has an impact in our, in our whole network. So it's in the guidance already for Q3 and the rest of the year, as Jose will mention. And then that also is combined with the weaker currency that you alluded to, which is affecting mostly Brazil, which is a most important market for anyone in South America, and actually in Latin America.

Speaker Change: That's helpful. Thank you.

Speaker Change: Thank you. One moment for our next question.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Duane Pfennigwerth from Evercore ISI.

Duane Finnegwerth: Our next question comes from the line of Duane Finnegwerth from Evercore ISI.

Duane Pfennigwerth: Hey guys, good morning. And Jose, I don't know why you'd ever want to leave this industry. I think you're crazy.

Duane Finnegwerth: Hey guys, good morning, and Jose, I don't know why you'd ever want to leave this industry. I think you're crazy.

Jose Montero: We agree.

Duane Pfennigwerth: Just to follow up on Savi's question, is this a utilization hit, or do you actually have aircraft parked at this time? I don't want to split hairs on your words, but you're assuming that by December this capacity is reallocated to Venezuela or to, you know, somewhere else in the network. Is that the right way to think about it?

Speaker Change: and busy

Speaker Change: We agree.

Savi Sith: Just to follow up on Savi's question, is this a utilization hit or do you actually have aircraft parked at this time?

Pedro Heilbron: So that's the main impact we're dealing with. It also has a network impact in our case. Otherwise, the man is, it's okay. Inspired of a lot of capacity growth from the industry in general. Thank you. Thank you, one moment for our next question.

Speaker Change: i don't want to spl hereizon your words but you're assuming that by december this capacities reallocated to venezuela or to somewhere else in the network is that is that the right way to think about it

Jose Montero: Sure. Yeah, absolutely. That's the way to think about it. And there will be a ramp-up. So it's not like we will have the ability to redeploy everything immediately, but we're assuming that there is a ramp-up of that capacity, but that essentially it will be either in Venezuela or somewhere else by the final part of the year. So yeah. And it's, I think, conservative in nature in the way that we've done it.

Speaker Change: Sure, yeah, absolutely, that's the way to think about it. And there will be a ramp-up, so it's not like we will have...

Speaker Change: The ability to redeploy everything immediately, but we're assuming that there is a ramp-up of that capacity, but that essentially it will be either in Venezuela or somewhere else by the final part of the year.

Duane Pfennigwerth: Our next question comes from the line of Duane Pfennigwerth from Evercore ISI. Hey guys, good morning and Jose, I don't know why you'd ever want to leave this industry. I think you're crazy.

Speaker Change: So, yeah, and it's, I think, conservative in nature in the way that we've done it.

Duane Pfennigwerth: Okay, and then just on one of the things you called out in the release, this change to the unredeemed ticket revenue provision, can you just explain what that is and what changed, and, you know, if that impact, you know, kind of continues? Yeah, Duane, so it's

Speaker Change: One of the things you called out in the release, this change to an unredeemed ticket revenue provision. Can you just explain what that is and what changed and if that impact continues?

Jose Montero: We agree. Just to follow up on Savi's question, is this a utilization hit, or do you actually have aircraft parked at this time and just to maybe, I don't want to split hairs on your words, but you're assuming that by December, this capacity is reallocated to Venezuela or to somewhere else in the network? Is that the right way to think about it? Sure, yeah, absolutely. That's the way to think about it.

Jose Montero: There will be a ramp up, so it's not like we will have the ability to really point everything immediately, but we're assuming that there's a ramp up back capacity, but that essentially it will be either in Venezuela or somewhere else by the final part of the year. It's conservative in nature and the way that we've done it.

Jose Montero: Yeah, Duane, so it's a revision to the unredeemed ticket revenue provision that we have for tickets that we sell or we are selling in the year 2024. So, following IFRS 15 standards, we apply for every dollar of sales, you apply your unredeemed ticket factor, and then that gets reconciled after a year once the ticket expires.

Speaker Change: Yeah Duane, so it's a indeed it's a revision to the unredeemed ticket revenue provision that we have for tickets that we sell or we are selling in the year 2024. So following IFRS 15 standards we apply

Duane: For every dollar of sales, you apply your unredeemed ticket factor. And then that gets reconciled after a year, once the ticket is expired.

Jose Montero: So what we did this year, just based upon, you know, observed behavior, we reduced somewhat the factor that we use. And so there is an assumption that there is a lower percentage of tickets that will expire next year. And so, and we therefore took the factor somewhat down and included that here. That's something that happens every year, but in this particular year, we just saw a difference in the behavior of expired coupons. And that's all included in the guidance. It's contemplated in the guidance and the rest of the guidance as well, so it's something that we've included in there.

Duane: so what we did this year just based upon observed behavior we reduced somewhat the factor that we use and there is an assumption that there is a lesser percentage of tickets

Speaker Change: that will expire next year, and so, and we, we therefore...

Jose Montero: Okay, and then just on the one of the things you call down, the release of this change to an unredeemed ticket revenue provision, can you just explain what that is and what changed and, you know, if that impact, you know, kind of continues? Yeah, Dwayne, so it's indeed, it's a revision to the unredeemed ticket revenue provision that we have for tickets that we sell or we are selling in the year 2024.

Speaker Change: took the factor somewhat down.

Speaker Change: um

Speaker Change: and included that here that's something that happens every year with in this particular year we would just saw a difference in the the behavior of fire coupons and that'sall including guance compleplted guance the es guance as well so it's something that we ve've included in there

Duane Pfennigwerth: Okay, so maybe a way to think about it is less breakage, less breakage, or lower assumed breakage going forward. And so that's a 2Q through, you know, the next 12 months' impact. So that's in this back half as well. And it's inside, it's included in the wraps. Okay, thank you very much.

Jose Montero: So following IFRS 15 standards, we apply for every dollar sales, you apply your unredeemed ticket factor, and then that gets reconciled after a year once the ticket just expired. So what we did this year, just based upon, you know, observed behavior, we reduced somewhat the factor that we use, so there is an assumption that there's a lesser percentage of tickets that will expire next year, and so we therefore took the factor somewhat down and included that here.

Speaker Change: Okay, so maybe a way to think about it is less breakage, less breakage or lower assumed breakage going forward and so that's a, that's a 2Q through, you know,

Speaker Change: the next twelve months impact so i would impact that's in this back half as well

Speaker Change: so you've got an i sci ence se the rom guidance forro full year that we clear ither

Speaker Change: Okay, thank you very much.

Guilherme Mendes: Our next question comes from the line of Guilherme Mendes from J.P. Morgan.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Guilherme Mendes from J.P. Morgan.

Guilherme Mendes: Hey, good morning, and good afternoon, everyone. Thanks for taking my question and best wishes, Jose, on your new endeavors as well. I have just a follow-up on the first question. I guess, Pedro, you mentioned demand being still resilient despite all the capacity increase in the region. My question is, if you see any kind of oversupply in any of the markets that you guys operate in, how comfortable are you with the yield assumptions you have for the upcoming quarters? Thank you.

Guilherme Mendes: Hey, good morning, good afternoon, everyone. Thanks for taking my question and best wishes, Jose, on your new endeavors as well.

Jose Montero: That's something that happens every year, but in this particular year, we just saw a difference in the behavior of the expired coupons, and that's all included in the guidance, it's contemplated in the guidance and the resume guidance as well, so it's something that we've included in there. Okay, so maybe a way to think about it is less breakage or lower assume breakage going forward, and so that's a 2Q through, you know, the next 12 months impact, so that would impact the, that's in this back half as well. So you got it, I think that it's included in the resume guidance for all of you.

Guilherme Mendes: I have just a follow-up on the first question. I guess, Pedro, you mentioned about...

Guilherme Mendes: demand still resilient despite all the capacity increase in the region. My question is that if you see any kind of oversupply in any of the markets that you guys operate, how comfortable are you with the yield assumptions you have for the coming quarters? Thank you.

Operator: Thank you very much.

Pedro Heilbron: Okay, so... I mean, it's.

Speaker Change: Okay, so...

Pedro Heilbron: What you're saying cannot be ignored, so there's always going to be more pressure on yields when demand is growing at the pace that it has grown in Latin America. But the seats are being filled, load factors are not hurting in general terms, at least not in our case, but when you add that up to other factors like the weaker currencies, which, by the way, the weaker currencies are right now, and in a month they could be different, they could strengthen again, so we're not saying this is like a forecast for the year, but things could change. But if we add growing capacity to the other factors I mentioned, yes, there's always going to be some impact on yields, but that's all factored in our guidance.

Speaker Change: I mean, it's...

Speaker Change: What you're saying cannot be ignored so there's always going to be more pressure on yields.

Operator: Thank you.

Speaker Change: when the man is growing at the pace that it has grown in Latin America.

Speaker Change: But the seats are being filled, a lot of factors.

Guilherme Mendes: Our next question comes from the line of Guilherme Mendes from A good morning.

Speaker Change: are not hurting in general terms, at least not in our case.

Guilherme Mendes: But when you add that up...

Pedro Heilbron: Good afternoon, everyone. Thanks for taking my question and best wishes, Jose, on your new endeavors as well. I have just a follow-up on the on the first question. I guess better you mention about demand still resilient despite all the capacity increase in the region. My question is that you see any kind of oversupply in any of the markets that you guys operate or are comfortable with the EU, the assumptions you have for the upcoming quarters.

Guilherme Mendes: to all the factors like likely weaker currencies which by the way the weaker currencies or it's right now and in a month could be different it could strengthen again so we're not saying this is like we're forecasting the year but but things could change

Guilherme Mendes: But if we add a growing capacity to the other factors I mentioned, yes, there's always going to be some impact on yields, but that's all factoring in our guidance.

Guilherme Mendes: Super clear. Thank you. And maybe a follow-up on this. You mentioned ending 2025 with nearly 10% fleet addition. Does that imply that we can assume a lower yield in 2025 when compared to 2024 given this additional capacity?

Pedro Heilbron: Thank you. Okay, so I mean it's what you're saying cannot be ignored so there's always going to be more pressure on yields when demand is growing at the pace that it has grown in Latin America. But the seats are being filled. A lot of factors are not hurting in general terms, at least not in our case. But when you add that up to other factors like the weaker currencies, which by the way the weaker currencies are it's right now and in a month could be different.

Speaker Change: Super clear, thank you. And maybe a follow-up on this. You mentioned about ending 2025 with nearly 10% fleet addition.

Speaker Change: Does it imply that we can assume a lower yield in 2025 when compared to 2024 given this additional capacity?

Pedro Heilbron: Well, we're growing capacity in a measured way, and we're actually growing probably half what others are growing in our part of the world, and we're growing according to the needs we have, and the opportunities we see within our network. We're not trying to take land from anyone else, and again, it's measured against our opportunities and to our network half what the industry, in general, is growing, so we're very, very comfortable with that, plus we have a lot of flexibility to adjust along the way.

Speaker Change: ohyeah

Speaker Change: Well, we're growing capacity in a measured way.

Speaker Change: and we're actually growing

Speaker Change: Probably half what others are growing in our part of the world, and we're growing according to the needs we have, the opportunities we see within our network. We're not trying to...

Pedro Heilbron: It could strengthen again, so we're not saying this like a we're forecasting the year but but things could change. But if we add a growing capacity to the other factors I mentioned, yes, there's going to there's always going to be some impact on yields. But that's all factor in in our guidance.

Speaker Change: take land from anyone else, and again, it's measured to our opportunities.

Operator: Super clear. Thank you.

Speaker Change: and to our network, have what the industry in general is growing. So we're very, very comfortable with that. Plus, we have a lot of flexibility to adjust along the way. We can park the 700s and harvest the engines, or we can...

Pedro Heilbron: We can park the 700s and harvest the engines, or we can keep them flying, depending also on Boeing delivery, so we have a lot of, a lot of flexibility, we feel, and we are a profitability-driven company, so we'll make the best decisions we can to make sure that maximizes our profitability, and by the way, we haven't issued guidance for 2025 yet, so stay tuned for that one. You know, a preliminary There is

Pedro Heilbron: And maybe I'll follow up on this. You mentioned about ending 2025 with nearly 10% fluid addition. Does implied that we can assume a lower yield in 2025 when compared to 24 given additional capacity. Well, we're growing we're growing capacity in a measured way and we're actually growing probably half what others are growing in our part of the world. And we're growing according to the needs we have, the opportunities we see within our network, we're not trying to take land from anyone else.

Speaker Change: keep them flying, depending also on Boeing delivery, so we have a lot of flexibility.

Speaker Change: We feel.

Speaker Change: You know, we are a profitability-driven company, so we'll make the best decisions we can to make sure that to maximize our profitability. And by the way, we haven't issued guidance for 2025 yet, so stay tuned for that one.

Speaker Change: You know, a prelim guidance in November and then a full guidance in the February call. Very clear.

Guilherme Mendes: Very clear. Thank you both. Thank you.

Speaker Change: Thank you.

Stephen Trent: Our next question comes from the line of Stephen Trent from Citi.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Stephen Trent from Citi.

Pedro Heilbron: And again, it's measured to our opportunities and to our network have what the industry in general is growing. So we're very, very comfortable with that because we have a lot of flexibility to adjust along the way. We can park the 700 and harvest the engines or we can keep them flying depending also on going delivery. So we have a lot of a lot of flexibility we feel. And you know, we are a profitability driven company. So so we'll make the best decisions we can to make sure that to maximize our profitability.

Stephen Trent: I guess, good morning, gentlemen, and thanks for the time. And Jose, thanks, you know, best wishes to you. And thanks for all those, you know, times on the road and what have you. I really appreciate that. Thank you. And I was curious, just thinking about, to some extent, a follow-up to Guilherme's question in a different way. When you look at your opportunities to grow, any high-level view on, let's say, servicing new destinations versus increasing frequencies to existing destinations or maybe upgrading equipment or something along those lines?

Stephen Trent: Yes, good morning gentlemen and thanks for the time and and Jose thanks you know best wishes to you and and and thanks for all those you know times on the road and what-have-you. Really appreciate that.

Jose Montero: Thank you.

Speaker Change: And I was curious, just thinking about, to some extent a follow up on Guilherme's question in a different way, when you look at your opportunities to grow, any high level view

Speaker Change: on, let's say, servicing new destinations versus increasing frequencies to existing destinations or maybe upgrading equipment or something along those lines.

Operator: And by the way, we have an issue guidance for 2025 yet. So stay tuned for that one, you know, for lean guidance in November and then the full guidance, and the February call.

Pedro Heilbron: I don't think it's going to change much from what we've done in the past. Usually, you know, plus or minus 80% of our ASM growth comes from existing destinations but additional frequencies. And then the difference is new frequencies or new destinations, both, during the year. That ratio won't change much.

Operator: Very clear. Thank you both. Thank you.

Speaker Change: I don't think it's going to change much from what we've done in the past. Usually, you know, plus or minus 80% of our ASM growth comes from existing destinations but additional frequencies.

Stephen Trent: Our next question comes from the line of Stephen Trent from City.

Pedro Heilbron: Good morning, gentlemen, and thanks for the time and Jose. Thanks, you know, best wishes to you and thanks for all those, you know, times on the road and what have you. Really appreciate that. Thank you. And I was serious just thinking about, to some extent, a follow-up on Guilherme's question in a different way. When you look at your opportunities to grow, you know, any high-level view on, let's say, servicing new destinations versus increasing frequencies to existing destinations or maybe upgrading equipment or something along those lines.

Speaker Change: And then the difference are new frequencies or new destinations, both, during the year. That ratio won't change much this year.

Pedro Heilbron: This year, we've added three destinations so far. Maybe we'll add a fourth one by the end of the year. And we expect something similar in the coming years, somewhere between three and five new destinations each year. And as the region grows and our hub develops, we feel we have plenty of opportunities, including increasing our daily frequencies, where we also have opportunities, valuable opportunities.

Speaker Change: We've added three destinations so far, maybe we'll add a fourth one by the end of the year. And we expect something similar in the coming years, somewhere between three and five new destinations each year. And as the region grows and our...

Speaker Change: We feel we have plenty of opportunities, including increasing our daily frequencies, where we also have opportunities, valuable opportunities.

Stephen Trent: Okay, that's super helpful, Pedro. Thank you very much. And just one quick follow up here. I appreciate what you guys mentioned about Venezuela. Recently, there's been a bit of chop, you know, in Ecuador, and what have you, you know, at a high level? Do the other sort of broad markets you guys serve, are we talking about relatively calm situations where it's more business as usual?

Pedro Heilbron: I don't think this is, hey, Stephen Pedro here. I don't think it's going to change much from what we've done in the past. Usually, you know, plus or minus 80 percent of our ASM growth comes from existing destinations, but additional frequencies. And then the difference are new frequencies or new destinations both during the year. That ratio won't change much. This year, we've added three destinations so far. Maybe we'll add a fourth one by the end of the year.

Speaker Change: Okay, that's super helpful, Pedro. Thank you very much. And just the one quick follow-up here.

Speaker Change: I appreciate what you guys mentioned on Venezuela. Recently there's been a bit of chop, you know, in Ecuador and what have you. You know, at high level...

Speaker Change: Do the other sort of broad markets you guys serve, you know, are we talking about relatively common situations where it's, you know, more business as usual?

Pedro Heilbron: Yeah, I think in reality, there isn't really any other country that has any sort of non, you know, or political type of situation right now that is of concern.

Pedro Heilbron: And we expect something similar in the coming years somewhere between three and five new destinations each year. And as the region grows and our top develops, we feel we have plenty of opportunities, including increasing our daily frequencies, where we also have opportunities, valuable opportunities. Okay, that's that's super helpful, Pedro.

Speaker Change: Yeah, I think in reality there isn't really any other country that has any sort of non...

Pedro Heilbron: And, you know, there will always be something. There will always be something in our part of the world. We are born and raised in this part of the world, and we're used to all of this, and we've been successful in the highs and in the lows, and we're comfortable knowing that, you know, we're dealing with today's crisis. There will be a new one tomorrow, and we'll, you know, strive always to run a company that can succeed beyond that.

Speaker Change: You know or political type of situation right now that is of concern and and you know in There will always be something there will always be something in our part of the world

Speaker Change: We are born and raised in this part of the world, and we're used to all of this, and we've been successful.

Speaker Change: in the he and in the lows and were're comfortable a knowing

Pedro Heilbron: Thank you very much. And just the one quick follow-up here. I appreciate what you guys mentioned on Venezuela recently. There's been a bit of chop, you know, in Ecuador and what have you, you know, at high level, do the other sort of broad markets, you guys serve, you know, are we talking about relatively common situations where it's, you know, more business as usual? Yeah, even in reality, there isn't really any other country that has any sort of non, you know, or political type of situation right now that is of concern.

Speaker Change: That, you know, we're dealing with today's crisis, there will be a new one tomorrow. And we'll, you know, strive always to run a company that can succeed beyond that.

Stephen Trent: Great color, Pedro, and they're developed market carriers that would love to do half of what you guys do, so thanks very much.

Speaker Change: Oh great color Pedro and their developed market carriers that would love to do half of what you guys do so so thanks very much.

Joao Fritz: Our next question comes from the line of Joao Fritz from Goldman Sachs.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Joao Frito from Goldman Sachs.

Joao Fritz: Hey, good morning, guys. Thanks for taking my questions. I have two quick follow-ups. The first one relates to Venezuela.

Joao Frito: Hey, good morning guys. Thanks for taking my questions. I have two quick follow-ups. The first one relates to Venezuela. So, you put out on the release that capacity amount of roughly 2% of your total capacity. I just wanted to double-check if this is the same case for revenues or if it's a higher or lower amount.

Joao Fritz: So you put out on the release that capacity amount of roughly 2% of your total capacity. I just wanted to double-check if this is the same case for revenues or if it's a higher or lower amount. And then on the second point, related to the unredeemed ticket provisions. You guys did this revision to the recovery rate of the non-user tickets, but you have already sold a portion of the tickets for this year.

Pedro Heilbron: And you know, in the, there will always be something, there will always be something in our part of the world. We are born and raised in this part of the world, and we're used to all of this, and we've been successful in the highs and in the lows, and we're comfortable knowing that, you know, we're dealing with today's crisis, there will be a new one tomorrow, and we'll, you know, strive always to run a company that can succeed beyond that. Great color, Pedro, and their developed market tariffs that would love to do half of what you guys do, so thanks very much.

Operator: Thank you.

Speaker Change: And then on the second point, relating to the unredeemed ticket provisions.

Speaker Change: You guys did this revision in the recovery rate, right, of the non-used tickets.

Speaker Change: but you have already sold a portion of the tickets for this year. This revision in the second quarter is only related to the second quarter itself, or it already accounts for some of the tickets you guys sold for the second half,

Joao Fritz: This revision in the second quarter is only related to the second quarter itself, or it already accounts for some of the tickets you guys sold for the second half, meaning the impact could be lower in the second half of the year on the revenue side. Thank you very much.

Speaker Change: The impact could be lower in the second half of the year on the revenue side. Thank you very much.

Jose Montero: Yeah, Joe. I'll do the second part first. It is actually a catch-up on the first half of the year. The third quarter won't really have that much of a significant impact because, again, as I mentioned before, it's included in the guidance, but that's a good call-out and, indeed, the figure was also a little bit higher because, in the second quarter of 2024, we included the assumption for both the first and the second quarter of the year. In terms of your...

Speaker Change: yeah drawwal lis second part first it is actually a catchup the firsthalf of the year the second the third quarter won't really have

Joao Fritz: Our next question comes from the line of Joao Fritzel from Goldman Sachs. Good morning, guys. Thanks for taking my questions.

Speaker Change: That much of a significant impact because, again, as I mentioned before, it's included in the guidance. But that's a good call out, and indeed, the figure was also a little bit higher because in the second quarter of 2024, we included the assumption for both the first and the second quarter of the year.

Joao Fritz: I had two quick follow-ups. The first one relates to Venezuela. So you put out on the release that capacity amount of roughly 2% of your total capacity. I just wanted to double check if this is the same case for revenues or if it's higher or lower amounts.

Jose Montero: In terms of your first question, what's always going to happen in a network carrier like Copa is that when we talk about ASMs, we're talking about Panamanian and Venezuelan ASMs, and those are relatively short hauls. But when we talk about revenues, we're talking about network revenues, passengers originating in Venezuela or with destination Venezuela that go to or come from all over our network, so those are going to be much longer hauls. So revenues are going to always be much higher than ASMs in any similar situation.

Jose Montero: And then on the second point, relating to the unredeemed ticket provisions. You guys did this revision in the recovery rate, right up the non-needed tickets, but you have already sold a portion of the tickets for this year. This revision in the second quarter is only related to the second quarter itself or it already accounts for some of the tickets you guys sold for the second half. The impact could be lower in the second half of the year on the revenue side.

Speaker Change: In terms of your first question, what's always going to happen in a network carrier like COPA is that when we talk about ASMs, we're talking Panama, Venezuela ASMs, and those are relatively short hauls.

Speaker Change: When we talk about revenues, we're talking about network revenues.

Speaker Change: passengers originating in Venezuela or with destination Venezuela that go to or come from all over our network. So those are going to be much longer hauls. So revenues are going to always be much higher than ASMs in any similar area.

Jose Montero: Thank you very much. Yeah, Joao, do the second part first. It is actually a catch-up of the first half of the year. So the third quarter won't really have that much of a significant impact because it's organized again. And as I mentioned before, it's included in the guidance, but that's a good call out. And indeed, the figure is also a little bit higher because in the second quarter of 2024, we included the assumption for both the first and the second quarter of the year.

Jose Montero: So we can say that revenues are going to be a little bit over double the ASMs, just because it's short haul connecting to long haul. And again, it's all in the guidance; the impact is all in the guidance.

Speaker Change: So, we can say that revenues are going to be, you know, a little bit or double the ASN just because it's short haul connecting to long haul.

Speaker Change: And again, it's all in the guidance. The impact is all in the guidance.

Speaker Change: Super clear, thank you.

Speaker Change: Thank you.

Michael Linenberg: Our next question comes from the line of Michael Linenberg from Deutsche Bank.

Jose Montero: In terms of your first question, what's always going to happen in a network carrier like Popeyes that we, when we talk about ASMs, we're talking Panama, Venezuela, ASMs. And those are relatively short hauls. When we talk about revenues, we're talking about network revenues, passengers originating in Venezuela or with destination Venezuela that go to or come from all over our networks. So those are going to be much longer hauls. So revenues are going to always be much higher than ASMs in any similar situation. So we can say that revenues are going to be, you know, a little bit over double the ASMs just because it's short hauls connecting to long hauls.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Michael Linenberg from Deutsche Bank.

Michael Linenberg: Oh, hey, good morning, everyone. And Jose, I echo what's been said previously. You're going to be missed by the investment community. So congratulations on your new move. Thank you, Mike.

Michael Linenberg: Oh, hey, good morning, everyone, and Jose, I echo what's been previously. You're going to be missed by the investment community, so congratulations on your new move.

Jose Montero: Thank you. My new movie is basically going to and doing a lot of yard work around my house and, you know, and, you know, even...

Jose Montero: Thank you, Mike. My new movie, basically going and do a lot of yard work in my house and, you know, and, you know, even have it and then lie on it.

Michael Linenberg: Sounds very nice. Anyway, back to the Q&A. I have a couple here.

Speaker Change: Sounds very nice. Anyway, back to the Q&A. I have a couple here.

Michael Linenberg: I didn't see anything in the release just around Boeing compensation for the MAX 9 grounding. I think last quarter, I think you had said that you had yet to reach an agreement. We're now looking at a year's loss of capacity. I think coming into this year, we thought your fleet was going to be 121 airplanes. It now looks like we're not going to get there until the end of 2025.

Speaker Change: I didn't see anything in the release, just around...

Speaker Change: Boeing compensation on the MAX 9 grounding. I think last quarter I think you had said that you

Speaker Change: We're now looking at a year's loss of capacity. I think coming into this year we thought your fleet was going to be 121 airplanes. It now looks like we're not going to get there until the end of 2025.

Jose Montero: Thank you. And again, it's all in the guidance. The impact is all in the guidance.

Operator: Thank you.

Michael Linenberg: How should we think about that compensation? Does it even ever show up in the numbers? You know, maybe it shows up in the cash flow. So I guess the question is, have you reached an agreement on that, or is that still in the works?

Michael Linenberg: Our next question comes from the line of Michael Linenberg from Deutsche Bank. Oh, hey. Good morning, everyone. And Jose I echo what's been previously. You're going to be missed by the investment community. So congratulations on your new move. Thank you. My new move is basically going and do a lot of yard work in my house and, you know, and, you know, keep an eye on it. Sounds very nice.

Speaker Change: How should we think about that compensation? Does it even ever show up in the numbers? You know, maybe it shows up in the cash flow So I guess the question is have you have you reached an agreement on that or is that still in the works?

Jose Montero: Yeah, Mike, that's a very important question. Yes, we have reached agreement. I think it's a fair agreement. The agreement is of a confidential nature, but it is a fair agreement. And the way that accounting works, unfortunately, you can't claim, like, a benefit in one particular quarter. You have to... So we'll see, you know, I think, in summarized terms, we'll see the impact on the DNA line, a smaller impact on the DNA line over the next, call it, four years.

Speaker Change: Yeah, Mike, that's a very important question. Yes, we have reached agreement. I think it's a fair agreement. The agreement is of a confidential nature, but it is a fair agreement.

Speaker Change: and the way that accounting works unfortunately you can't claim like the benefit in one particular order you have to so we ll see

Jose Montero: Anyway, back to the Q&A. I have a couple here. I didn't see anything in the release just around Boeing compensation on the Max9 grounding. I think last quarter, I think you had said that you had yet to reach an agreement. We're now looking at a year's loss of capacity. I think coming into this year, we thought your fleet was going to be 121 airplanes and now looks like we're not going to get there until the end of 2025.

Speaker Change: You know, I think in summarizing...

Speaker Change: terms, we'll see the impact on the DNA line, on a smaller impact on the DNA line over the next, call it four years. So that's how it works because you basically book.

Jose Montero: So that's how it works, because you basically book any benefit that you get from the agreement with them against the aircraft, you'd say, on the property line and equipment line, and then you... That flows through a P&L, through a DNA line, and we're expecting that to flow through the P&L over the next four years.

Speaker Change: Any benefit that you got from the agreement with them against the aircraft on the property plan equipment line, that flows through a P&L, through a DNA line, and we're expecting that to flow through the P&L over the next four years.

Jose Montero: How should we think about that compensation? Does it even ever show up in the numbers? You know, maybe it shows up in the cash flow. So I guess the question is, have you reached an agreement on that or is that still in the word?

Michael Linenberg: Jose, is it fair to say that it may be a smaller impact on the P&L but maybe a larger impact on the cash flow because things like PDPs get pushed back? I mean, the fact that you're not getting airplanes. Unfortunately, there as well, of course, so yes. Okay, great.

Speaker Change: Jose, is it fair to say that it may be a smaller impact on the P&L but maybe a larger on the cash flow because things like PDPs get pushed back? I mean, the fact that you're not getting airplanes.

Jose Montero: That's a very important question. Yes, we have reached agreement. I think it's a fair agreement. The agreement is a confidential nature, but it is a fair agreement. And the way that accounting works unfortunately you can't claim like the benefit in one particular quarter. You have to see, you know, I think in in summarize terms, we'll see the impact on the DNA learning. So that's how it works because you basically book any benefit that you got from the agreement with them against the paragraph to say on the property line that they use that flows through a P&L through a DNA line.

Jose Montero: There's a portion of it there as well, of course, so yes, you are totally correct.

Michael Linenberg: And then just my second question, when we look at kind of the competitive backdrop, I know there were a few questions asked about oversupply. I, you know, I look at the COPA network, and with the exception, I guess, of Puerto Alegre, you know, because of the floods and the airport closure, I don't see any route cancellations. But then when I look at, you know, Wingo, based in Colombia, and I kind of look at, you know, this year, there are a lot of routes that look like they're either being canceled, and there is a bit of churn there.

Speaker Change: Okay, great. And then just my second question, when we look at kind of the competitive backdrop, I know there were a few questions asked about oversupply.

Speaker Change: I look at the COPA network and with the exception of Porto Alegre because of the floods and the airport closure.

Speaker Change: I don't see any root cancellations, but then when I look at, you know, Wingo, based in Columbia, and I kind of look at, you know, this year...

Speaker Change: There are a lot of routes that look like they're either being cancelled, and there is a bit of churn there. And I presume that that's in response to just the competitive backdrop in Colombia, which may be a little bit more...

Michael Linenberg: And I presume that that's in response to just the competitive backdrop in Colombia, which may be a little bit more intense than, say, what you're seeing. Can you talk about that? Maybe what you're seeing in that market. Thank you.

Speaker Change: You know intense than say what you're saying. Can you can you talk about that? Maybe what you're seeing in that market? Thank you

Jose Montero: And we expect in that to flow through the P&L over the next four years. It was fair to say that it may be a smaller impact on the P&L, but maybe a larger on the cash flow because things like PDPs get pushed back. I mean, the fact that you're not getting their place. There's a portion of there as well, of course.

Pedro Heilbron: Yes, hi Mike, Pedro here, and you're right, you kind of answered the question. The Colombian market is very, very competitive, very intense, and lower yield, so WING is constantly adjusting to market trends and to competition and where the opportunities are. A year ago, they shifted a lot of capacity from international to domestic. And lately, they have readjusted that a little, put a little bit more international on, and reduced domestic somewhat. So they're always adjusting to market opportunities to remain profitable and successful and also conservative. Again, in a market that's been so volatile, they've tried to just be conservative and keep things under control. And that's been their formula to do well and fill a niche in that very competitive market.

Speaker Change: Yes, hi Mike, Pedro here. And you're right, you kind of answered...

Pedro Heilbron: The Colombian market is very, very competitive.

Speaker Change: Very intense and lower yield.

Speaker Change: So, WING was constantly adjusting to market trends and to competition and where the opportunities are. So, a year ago, they shifted a lot of capacity from international to domestic.

Michael Linenberg: Okay, great. And then just my second question, when we look at kind of the competitive backdrop, I know there were a few questions asked about oversupply. I, you know, I look at the COPA network and with the exception, I guess, of Porto Allegra, you know, because of the floods in the airport closure, I don't see any root cancellations. But then when I look at, you know, Wingo based in Columbia and I kind of look at, you know, this year, there are a lot of routes that look like they're either being canceled.

Speaker Change: And lately, they have readjusted that a little, put a little bit more international, reduced domestic somewhat. So they're always adjusting to the market opportunity to remain profitable and successful and

Michael Linenberg: And there is a bit of churn there. And I presume that that's in response to just the competitive backdrop in Columbia, which may be a little bit more, you know, intense than say what you're saying. Can you, can you talk about that? Maybe what you're seeing in that market?

Pedro Heilbron: Thank you.

Speaker Change: Also conservative, they, again, in a market that's been so volatile, they've tried to just be conservative and keep things under control. And that's been their formula, to do well.

Pedro Heilbron: Yes, hi, Mike, Pedro here. And you're right. You kind of answered the question. The Columbia market is very, very competitive, very intense and lower yield. So Wingo is constantly adjusting to market trends and to competition and world, the opportunities are so a year ago, they shifted a lot of capacity from international to domestic. And lately, they have readjusted that a little, put a little bit more international reduced domestic somewhat. So they're always adjusting to the market opportunities to remain profitable and successful and also conservative. Again, in a market that's been so volatile, they try to just be conservative and keep things under control. And that's been reformulated to do well and feel in each in that very competitive market.

Michael Linenberg: Okay, that's helpful, Pedro. If I could just squeeze one last one in on the share repurchase program, It did look like the shares were down a little bit. Was there any activity in this quarter, Jose? And with your cash or liquidity at 35% of LTM revenue, shouldn't we be primed for maybe a follow-on? It may be a bit aggressive in my thinking. Thank you again. Thanks for everything. Uh, yeah, during the quarter, there was...

Speaker Change: and fill a niche in that very competitive market.

Speaker Change: okay that's helpful page okif i could dissqueeze lot one last one and on the share repurchase program it did look like the shares were down a little bit was there any activity in this quarter jose and with your cash

Speaker Change: or Liquidity at 35% of LTM revenue. Should we be primed for maybe a follow-on or is that...

Speaker Change: Maybe a bit aggressive on my thinking. Thank you again.

Jose Montero: Thanks for everything. Yeah. During the quarter, the problem was actually that we bought, I think there were $10 million worth of shares. And in the first quarter, we bought some more. So yeah.

Speaker Change: Thanks for everything. You're welcome.

Jose Montero: Yeah, during the quarter, there was, the program was active, we bought, I think there were $10 million worth of shares, and in the first quarter we had bought some more, so...

Jose Montero: And we're, of course, we have a lot of means by which we return value to our shareholders, including our dividend, but we also are a growing company, so we have a lot of aircraft coming over the next couple of years. We also have to make sure that we fund the PDPs and et cetera for growth. And we're also actively buying leases; we've been actively buying aircraft. So we've deployed capital in different ways or over the year 2024.

Speaker Change: So, yeah, and, you know, we're, of course, we have a lot of...

Speaker Change: means by which we return back to our shoulders including our

Speaker Change: Our dividend, but we also are a growing company, so we have a lot of aircraft coming over the next couple of years.

Speaker Change: And we also have to make sure that we, you know, we fund the PDPs and et cetera for our growth. So, and we're also been actively buying leases. We've been actively buying aircraft. So we've deployed capital in different ways.

Jose Montero: Okay, that's helpful, Pedro. If I could just squeeze one last one in on the share repurchase program. It did look like the shares were down a little bit. Was there any activity in this quarter Jose and with your cash or liquidity at 35% of LTM revenue? Should we be primed for maybe a follow on or is that? and maybe a bit aggressive on my thinking.

Speaker Change: over the year 2024.

Speaker Change: Great, thank you.

Alberto Valério: Our next question comes from the line of Alberto Valerio from UBS.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Alberto Valerio from UBS.

Alberto Valério: Hi, good morning, gentlemen, Pedro and Jose. Jose, good luck with the new cycle. I hope to see you around at some sports events, maybe F1.

Jose Montero: Thank you again. Thanks for everything. Yes, we're in the quarter. The program was active. We got, I think there were $10 million worth of shares. And in the first quarter, we had bought some more. So, yeah, and, you know, we're, of course, we have a lot of means by which we return voucher shareholders including our dividend. And then, but we also are a growing company. So, we, we have a lot of aircraft coming over the next couple of years.

Alberto Valério: Hi, good morning, gentlemen. Pedro and Jose. Jose, good luck for the new cycle. I hope to see you around.

Jose Montero: My question is regarding the redemption of tickets. Is there any specific event that causes this change in the behavior of the consumer? And my second question is whether your guidance is considering further deterioration in the American market and some shift of the aircraft to the Latin market. Thank you very much. Yeah, no particular consideration of a shift in the network.

Speaker Change: and some sports events, maybe that's one.

Alberto Valério: My questions regarding the redeemed tickets, if there is any specific event that caused this change in the behavior of the consumer. And my second question is whether your guidance...

Jose Montero: And we also have to make sure that that we, you know, we fund the PDPs and et cetera for our growth. So, and, and we're also been actively buying leases. We, we've been actively buying aircraft. So, we deployed capital in different ways over over the year 2024.

Speaker Change: is considering further deterioration in the American market and some shift of the aircraft to Latin market. Thank you very much.

Operator: Great. Thank you.

Jose Montero: And no particular consideration of a shift in the network in general terms. I think we expect the network to, you know, remain fundamental in the same way. And in terms of the first question, it wasn't really an event. I mean, this happens every year, but in particular, I think that the call was that we decided to make this sort of almost, I won't say retroactive because it's still part of 2024, but we just decided to, you know, actually be conservative in our approach in terms of the unredeemed ticket revenue factor that we...

Speaker Change: Yeah, no particular consideration of a shift in the network in general terms. I think we expect the network to be...

Speaker Change: You know remain

Alberto Valério: Our next question comes from a line of Alberto Valerio from UBS.

Speaker Change: Fundamental in the same way.

Speaker Change: And in terms of the first...

Speaker Change: Question. It wasn't really an event. I mean, this happens every year and but in particular, I think that the call was that

Jose Montero: Good morning, gentlemen. Pedro and José. José, good luck for the new cycle. I hope to see you around in some sports events, maybe as one. My questions regarding the redimate, redimate tickets. If there is any certificate event that calls this changing the behavior of the consumer. And my second question is whether your guidance is considering further deterioration in the American market and some shift of the aircraft to Latin market.

Speaker Change: We decided to...

Speaker Change: make this

Speaker Change: I don't want to say retroactive because it's still part of 2024, but we just decided to

Speaker Change: You know, should be conservative in our approach in terms of the unredeemed ticket revenue factor that we use.

Speaker Change: Okay, thank you very much.

Operator: Our next question comes from the line of Danielle McKenzie from CPOR Global.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Danielle McKenzie from CPOR Global.

Danielle McKenzie: Oh, hey. Hi Jose, congrats on going out on a great run. It's been great working with you over the years, so enjoy.

Danielle McKenzie: Oh, hey. Hi. Jose, congrats on going out on a great run. It's been great working with you over the years, so enjoy.

Danielle McKenzie: A couple of questions here. The plan to use the balance sheet and liquidity position to strengthen your competitive position, reinforce the network, and product, going back to the press release. My first question is, if this might mean an investment in another airline that might be in distress right now, first question, and then what opportunities are you seeing? And then how would you assess, how are you valuing these potential opportunities? It would be great if you could just elaborate a little bit more here.

Jose Montero: Thank you very much. Yeah, no particular consideration of a shift in the network in general terms. I think we expect the network to, you know, remain fundamental in the same, in the same way. And in terms of the first question, it wasn't really an event. I mean, this happens every year, but in particular, I think that the call was that we decided to make this sort of almost, I don't say retroactive because it's still part of 2024, but we just decided to, you know, should be conservative in our approach in terms of the unredient ticket revenue factor that we use.

Speaker Change: theringine homms

Danielle McKenzie: Yeah, a couple questions here. The plan to use the balance sheet and liquidity position to strengthen your competitive position, reinforce the network and product. Going back to the press release, my first question is,

Operator: Okay, thank you very much. Thank you.

Speaker Change: If this might mean an investment in another airline that might be in distress right now, first question, or what opportunities are you seeing, and then how are you valuing these potential opportunities? It would be great if you just elaborate a little bit more here.

Pedro Heilbron: I'll answer that one, Dan. We usually don't play in that market, but we wouldn't comment either if we were doing something. But if you look at our track record, we've always been very conservative and grown organically. So I don't see that changing much in the future. But of course, we're always alert for any opportunity, and we did purchase an heirloom in Colombia 19 years ago, which is now Wingo. So we've done it before, and we always are alert, but we're a conservative operator when we look to our past.

Speaker Change: We'll answer that one then.

Speaker Change: We usually don't play in that market.

Speaker Change: But we wouldn't comment either if we were doing something. But if you look at our track record, we've always been very conservative and grown organically.

Danielle McKenzie: Our next question comes from the line of Danielle McKenzie from Seaport Global.

Danielle McKenzie: Oh, hey, I was, hey, congrats on going out on a great run. It's been great working with you over the years, so enjoy. Yeah, the couple of questions here, the plan to use the balance sheet and liquidity position to strengthen your competitive position, reinforce the network and product, going back to the press release.

Speaker Change: So I don't see that changing much in the future, but of course, we always be, you know, we always be alert for any opportunity, and we did purchase an airline in COVID-19 years ago.

Speaker Change: which is now Wingo. So we've done it before and we will always be alert, but we're a conservative operator when we look, you know, to our past.

Jose Montero: My first question is, if this might mean an investment in another airline that might be in distress right now, first question. And then, you know, what, or what opportunities are you seeing? And then how would you be, how are you valuing that, you know, these potential opportunities? It would be great if you just elaborate a little bit more here.

Danielle McKenzie: Yep, I understand. Okay.

Speaker Change: Yep, understood. Okay, second question here is, I'm wondering if you can elaborate a little bit more on NDC. It seems to be driving revenue and cost savings, so I'm curious, what percent of the tickets you're upselling today, what percent of the revenue it is, and what the growth rate is in this particular segment at this point?

Pedro Heilbron: I'll answer that one then. We usually don't play in that market, but we wouldn't comment either if we were doing something. But if you look at our track record, we've always been very conservative and grown organically. I don't see that changing much in the future. But of course, we always be alert for any opportunity. And we did purchase an Irland in Colombia 19 years ago, which is now Wingo. So we've done it before and we always be alert. But we're a conservative operator when we look to our path. Yep, understood. Okay.

Speaker Change: Right, so our direct connect strategy has been a huge success.

Speaker Change: And it has driven some of our CASM competitiveness.

Speaker Change: and our lower chasm, so it's been very successful.

Speaker Change: talking about the specific numbers.

Speaker Change: You know, in general terms...

Speaker Change: The traditional GDS channel was over two-thirds of our bookings when we started towards the end of 2022.

Speaker Change: and today

Jose Montero: The second question here is, I'm wondering if you can elaborate a little bit more on NDC. It seems to be driving revenue and cost savings. So I'm curious, what percent of the tickets you're upselling today? What percent of the revenue it is? And what the growth rate is in this particular segment at this point? Right. So our direct connect strategy has been a huge success. And it has driven some of our cash and a competitive business and our lower cash and so it's been very successful.

Jose Montero: Second question here is, I'm wondering if you can elaborate a little bit more on NDC. It seems to be driving revenue and cost savings. So I'm curious, what percent of the tickets you're upselling today? You know, what percent of the revenue it is, and you know, what the growth rate is in this particular segment at this point.

Speaker Change: much less than a quarter of our business.

Speaker Change: So talking like in general terms, we're over 80% either direct or NDC channels.

Jose Montero: Right, so our direct connect strategy has been a huge success, and it has driven some of our CASM competitiveness and our lower chasm, so it's been very successful. Talking about the specific numbers, you know, in general terms, GDS, so traditional, the traditional GDS channel was over two-thirds of our bookings when we started towards the end of 2022. And today is... much less than a quarter of our business. So, talking in general terms, we're over 80% either direct or NDC channels today. Over 80% of the travel agency connecting through NDC or Copa.com bookings. And the traditional high-cost GDS channel is really a small percentage of our business, relatively speaking. Ehh...

Speaker Change: Today, over 80% travel agencies connecting through NDC or Copa.com bookings, and the traditional high-cost GDS channel is really a small percentage of our business, relatively speaking.

Danielle McKenzie: Okay, so being able to upsell on 80% of the bookings now versus, you know, maybe a third in the past is the way to kind of think about that.

Speaker Change: Okay, so able to upsell on 80% of the bookings now versus, you know, maybe a third in the past is the way to kind of think about that.

Jose Montero: Talking about the specific numbers, you know, in general terms, GDS, so traditional, the traditional GDS channel was over two thirds of our bookings when we started towards the end of 2022. And today is much less than a quarter of our business. So talking like in general terms, we are, we're over 80% either direct or NDC channels today, over 80% travel agency connecting to NDC or dot com bookings and the traditional high cost GDS channel is really a small percentage of our business, relatively speaking.

Jose Montero: Not sure if I understand exactly what you're asking, but Copa.com plus NDC Connections, so direct NDC Connections are over 80% below, 80% of our business. Two years ago, it would have been only Copa.com and other direct channels, which would have been in the 30% range.

Speaker Change: I'm not sure if I get exactly what you're asking.

Speaker Change: Two years ago, it would have been only Copa.com and other direct channels, which would have been in the 30% range. Understood. Okay. Thanks for the time, you guys.

Danielle McKenzie: I understand. Okay, thanks for the time, you guys.

Danielle McKenzie: I understand. Okay. Thanks for the time.

Speaker Change: I think that's pretty good.

Tom Fitzgerald: Our last question comes from the line of Tom Fitzgerald from TD Cowen.

Speaker Change: Thank you.

Speaker Change: Our last question comes from the line of Tom Fitzgerald from TD Cowen.

Tom Fitzgerald: Hi, everyone. Thanks very much for the time. And I just want to echo everyone's congratulations to Jose. Would you mind updating us on just putting some numbers on bookings and traffic for your corporate revenues and just kind of where things stand versus pre-COVID and maybe any color you'd add on sectors, sector demand across the different sectors that you service out of Panama?

Tom Fitzgerald: Hi, everyone. Thanks very much for the time and I just want to echo everyone's congrats to Jose.

Jose Montero: Okay. So able to upsell on 80% of the bookings now versus, you know, maybe a third in the past is the way to kind of think about that. Not sure if I get exactly what you're asking. But but a copa dot com plus NDC connections. So direct NDC connections are over 80% below 80% of our business. And two years ago, it would have been only copa dot com and other direct channels, which would have been in the 30% range. Understood. Okay.

Tom Fitzgerald: Would you mind updating us on, um, just putting some numbers on bookings and traffic for, for, uh, for your corporate revenues and just kind of where things stand versus pre-COVID and maybe any color you're, you're to add on just sectors, um, sector demand across the different sectors that you, that you service out of Panama?

Jose Montero: Yeah, so I would say that, in general terms, business travel is probably a quarter of our total revenue base. These are people who travel for business purposes, not necessarily people traveling in business class.

Speaker Change: Yeah, so I would say that in general terms, business travel is probably a quarter of our total.

Speaker Change: These are people who travel for business purposes, not necessarily people traveling business class.

Jose Montero: And then the remainder is in leisure and in business and first class travel. I would say leisure represents about 40 percent, and then business and first class travel is about, you know, call it 35 percent. So there is a bit of a shift because before the pandemic, it was kind of a third, a third, a third. And so it's still business travel is still a little bit less than where it was back in 2019.

Operator: Thanks for the time you guys. Thank you.

Speaker Change: And then the remainder is in Leisure and in BFR. I would say Leisure represents about 40% and then BFR is about, you know, call it 35%.

Tom Fitzgerald: Our last question comes from the line of Tom Fitzgerald from TD Cowan. Hi everyone, thanks very much for the time and I just want to echo everyone's congrats to Jose.

Speaker Change: So there is a bit of a shift, because before the pandemic, it was kind of a third, a third, a third. And so it's still, business route was still, you know, a little bit less than where it was back in 2019.

Jose Montero: Would you mind updating us on just putting some numbers on bookings and traffic for corporate revenues and just kind of working stand versus pre-COVID and maybe any color you're going to add on just sectors, sector demand across the different sectors that you service out of Panama? Yeah, so I would say that in general terms, business travel is probably at the bottom of our total derivative base. These are people who travel for business purposes, not necessarily people traveling in business class.

Tom Fitzgerald: Okay, that's really helpful. And then would you mind just kind of running through some of the tailwinds and levers you'll have next year to drive CASM-X lower? Thanks again for the time, everyone.

Speaker Change: Okay, that's really helpful. And then, would you mind just kind of running through some of the tailwinds and levers you'll have next year to drive CASM-X lower? Thanks again for the time, everyone.

Jose Montero: Yeah, there are still several items out there. The first one is densification of the fleet. You know, we still have a 737-800 fleet that is undergoing densification of the Y-class cabin. There are, you know, some of the headwinds that we've seen over the last couple years in maintenance are still being worked on, you know, as the engines mature. Additionally, of course, there's growth. If we had growth of, you know, in the low double-digit range, that would also aid in terms of our CASM.

Speaker Change: Yeah, there's still several items out there. The first one is densification of the fleet. You know, we still have a 737-800 fleet that is undergoing a densification of the Y-class cabin. There's, you know, some of the headwinds that we had seen over the last couple years in maintenance are still...

Speaker Change: being worked on, you know, as the engines mature.

Jose Montero: And then the remainder is in leisure and in BFR. I would say leisure represents about 40% and then BFR is about, you know, called 35%. So there is a bit of a shift because before the pandemic it was kind of a third or third or third. And so business travel is still, you know, a little bit less than where it was back in 2019.

Speaker Change: Additionally, of course, there's growth, you know, if we have growth of, you know, in the low double-digit range, that would also aid in terms of our CASM.

Jose Montero: And there's maybe a tad more that can be done in the sales and distribution line with Copa Connect as well. So those are, I would say, three buckets of tailwinds in terms of CASM-X that we have on the table.

Speaker Change: And there's maybe a tad more that can be done in the sales and distribution line with Copa Connect as well. So those are, I would say, three buckets of...

Jose Montero: have on the table. Right. Plus, of course, keeping overhead under check and growing ASMs. Yeah, yeah. That formula usually works.

Speaker Change: of Tailwinds in terms of CASM-X that we have on the table. Right. Plus, of course, keeping overhead under check and growing ASMs. That formula usually works. Yep.

Operator: Okay, that's really helpful.

Jose Montero: And then would you mind just kind of running through some of the tailwinds and levers that you'll have next year in a drive-casm, next lower? Thanks again for the time everyone. Yeah, there's still several items out there. The first one is densification of the fleet. You know, we're still out of Central Sinai, 100 fleet that is undergoing a densification of the White Class cabin. There's, you know, some of the headwinds that we had seen over the last couple of years in maintenance are still being worked on, you know, at the engines, the tour.

Pedro Heilbron: At this time, I would now like to turn the conference back over to Pedro Heilbron for his closing remarks.

Speaker Change: Thank you. At this time, I would now like to turn the conference back over to Pedro Heilbron for closing remarks.

Operator: Okay, thank you. Thank you all for participating in our Q2 earnings call. Thank you also for your continuous support. Have a great day, and you know where to find us. So, thanks for your support.

Pedro Heilbron: Okay, thank you. Thank you all for participating in our Q2 earnings call. Thank you also for your continued support. Have a great day and you know where to find us. So thanks for your support.

Operator: Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may disconnect and have a wonderful day.

Jose Montero: Additionally, of course, there's growth. You know, if we have growth of, you know, in the low-double-digit range, that would also aid in terms of our work-casm. And there's maybe an attack more that can be done in the sales and distribution line with Copa Connect as well. So those are, I would say, three buckets of tailwinds in terms of catamax that we have on the table. Right, plus, of course, keeping overhead under check and growing ASM. Yeah, that formula usually works.

Operator: Thank you.

Speaker Change: Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may disconnect and have a wonderful day.

Pedro Heilbron: At this time, I would not like to turn the conference back over to Pedro, Hail Boron, for closing remarks. Okay, thank you. Thank you all for participating in our Q2 earnings call. Thank you also for your continued support. Have a great day, and you know where to find us. So thanks for your support. Ladies and gentlemen, thank you for your participation.

Operator: That concludes the presentation. You may disconnect and have a wonderful day. Thank you. Michael Linenberg, Daniel Prelis, Thomas Fitzgerald, Thomas Fitzgerald, Daniel Tapia[inaudible] Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald,[inaudible] Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald,[inaudible] Fitzgerald, Thomas Fitzgerald, Thomas Fitzgerald, Thomas[inaudible] Michael Linenberg, Michael Linenberg, Daniel Tapia, Savanthi[inaudible] Rogrio Arajo, Daniel Tapia, Savanthi[inaudible] Arajo, Daniel Tapia, Savanthi Rogrio Arajo, Daniel Tapia, Savanthi Prelis, Bruno Amorim[inaudible] Arajo, Daniel Tapia, Savanthi Prelis Bruno Amorim, Rogrio Arajo, Daniel Tapia, Savanthi Prelis, Michael Linenberg, Duane Pfennigwerth, Daniel Tapia, Jose Montero Michael Linenberg, Duane Pfennigwerth, Daniel Tapia, Jose Montero, Michael Linenberg, Duane Pfennigwerth, Daniel Tapia, Savanthi Prelis, Michael Linenberg, Duane Pfennigwerth, Daniel Tapia, Savanthi Prelis,[inaudible] . . [inaudible] . .

Speaker Change: Go to Beadaholique.com for all of your beading supply needs! Go to www.beadaholique.com for all of your beading supply needs!

Speaker Change: all all