Q4 2024 Copa Holdings S.A. Earnings Call
Yeah.
Speaker Change: Ladies and gentlemen, thank you for standing by welcome to Copa Holdings fourth 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 have to press star one one on your touch downtown.
Speaker Change: As a reminder, this call is being webcast and recorded on February 13th 2025, now I will turn the conference call over to Daniel W. Director of Investor Relations, Sir you may begin.
Daniel: Thank you Carmen.
Speaker Change: And welcome everyone to our fourth quarter and full year earnings call.
Speaker Change: Joining me today are pay Little Hill ROM <unk> CEO of Copa Holdings and theater Donger slot was recently appointed as the company's CFO.
Speaker Change: First Pedro will start by going over our fourth quarter and full year highlights afterwards, I will go over our financial highlights.
Speaker Change: Immediately after we will open the call for questions from analysts.
Speaker Change: Copa Holdings' financial reports have been prepared in accordance with international financial reporting standards in today's call. We will discuss non <unk> financial measures a reconciliation of the non I FRS.
Speaker Change: <unk> financial measures can be found in our earnings release, which has been posted on the company's website <unk> com.
Speaker Change: Our discussion today will also contain forward looking statements not limited to historical facts that reflect the company's current beliefs.
Speaker Change: These expectations and our intentions regarding future events or results.
Speaker Change: Forward looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC now I would like to turn the call over to our CEO Mr. Battle here.
Battle: Thank you Danielle.
Mr. Battle: Good morning to all and thanks for participating in our fourth quarter and full year earnings call.
Mr. Battle: Before I start I want to welcome Peter Bonkers right into his new role as CFO.
Mr. Battle: Peter has a strong record of leadership and strategic vision, having held key positions with full P&L responsibility in multiple countries across the continent for a large publicly traded company and for the last five years Escobar head of HR, where he has been an integral part of our success.
Mr. Battle: Coming out of the pandemic.
Mr. Battle: His understanding of our operations and company culture combined with his strong financial acumen.
Mr. Battle: Makes him uniquely qualified to lead our financial strategy as we continue to grow and evolve in a rapidly changing industry.
Mr. Battle: We're excited to have him step into this new role and look forward to the positive impact he will undoubtedly bring Peter.
Mr. Battle: Peter will officially joined the finance team on March 10.
Mr. Battle: Following his transition from his current role and an HR.
Mr. Battle: Peter and I will turn it over to you.
Speaker Change: Thank you Pedro.
Speaker Change: And thanks, everybody for joining our call today. It has been a great honor to lead corporate HR team for the last five years and I'm truly excited to take on the role of CFO.
Speaker Change: As Pedro mentioned in addition to my most recent experience leading the HIV I've worked in many countries to the continent as general manager as well as overseeing commercial operations logistics risk assessment and financial planning.
Speaker Change: As you can imagine as a Panamanian I'm very proud to be part of <unk> management team, especially given our track record of delivering.
Speaker Change: Duct and connectivity our customers value combined with strong financial results and industry, leading unit cost and eager to lead our finance team and building on the strong foundations and continue to delivering value to our shareholders back to you Pedro Thank you Peter.
Speaker Change: I want to start.
Pedro: By expressing my sincere appreciation to all of our coworkers.
Pedro: Their dedication and hard work have been essential to Cabot's leadership in Latin American aviation and strong financial results to them as always my highest regards and admiration.
Pedro: As detailed in our earnings release, we delivered another quarter and full year of solid financial performance, including strong operating margins.
Pedro: Despite despite facing several challenges throughout the year such as the partial grounding of our 737 Max nine fleet in January.
Pedro: And the southern cancellation of flight between Panama and Venezuela at the end of July we were able to deliver an operating margin of 21 point, 90% for the year.
Pedro: Our 2024 financial results are a testament.
Pedro: The disciplined execution of our business model.
Pedro: Our focus on LOE unit cost.
Pedro: Continued expansion of our leading and hopefully America.
Pedro: Passenger friendly product, including best on time performance.
Pedro: The combination of these factors has allowed us to deliver strong financial results on a consistent basis.
Pedro: Now I'll go over the main highlights for the fourth quarter, we increased capacity by seven 2% year over year.
Pedro: Unit revenues or RASM came in at 11, three cents, a 10, 4% decrease compared to Q4 'twenty three.
Pedro: Mainly driven by 10, 8% year over year decrease in passenger yields.
Pedro: <unk> reduction was mainly driven by weaker currencies in Latin America, as well as increased industry capacity in the region.
Pedro: Unit revenues were also impacted by the ongoing effect of it.
Pedro: Rescheduling of flights due to the cancellation of the Panama, Venezuela operations at the end of July.
Pedro: Unit costs, excluding fuel CASM ex came in at five 9%.
Pedro: Two 6% improvement compared to Q4, 'twenty three mainly driven by the increase of direct sales in both copper dot com and our lower cost MVC travel agency channel.
Pedro: Our operating margin for the quarter came in at 23, 3%.
Pedro: As for the full year 2024.
Pedro: Capacity increased by eight 6% year over year in line with our last guidance.
Pedro: Unit revenues or RASM decreased by eight 2% compared to $28 23 to 11, 5%.
Pedro: CASM ex fuel.
Pedro: Came in at $5 83.
Pedro: 3% below 2023.
Pedro: This is a milestone achievement for us as we delivered our full year cash that makes target one year earlier than stated in our 2023 Investor day.
Pedro: And as I mentioned in my opening remarks, we achieved a 21, 9% operating margin for the year.
Pedro: On the operational front.
Pedro: Copa was recently recognized by cerium for the 10th time as the most on primarily in Latin America for 2024.
Pedro: Go back on time performance of 88, 2% was once again the highest of any carrier in the Americas and a third are best in the world.
Pedro: Additionally for 2020 for.
Pedro: Copper was recognized by Skytrax for the ninth consecutive year.
Pedro: The airline in Central America, and the Caribbean.
Pedro: These awards will belong to or more than 8000, coworkers, who day in and day out consistently deliver a world class travel experience for our customers.
Pedro: Turning it over to our expectations for 2025.
Pedro: In terms of demand we are projecting a continuation of the current demand environment in the region.
Pedro: On the cost front, we expect to deliver consistent unit costs year over year, maintaining our cost discipline.
Pedro: These two factors together lead us to once again expect to deliver strong margins for the year as well as continued growth as we anticipate growing our year over year capacity within a range of 7% to 8%.
Pedro: Daniel will provide more details regarding our full year guidance.
Pedro: To summarize we delivered strong fourth quarter and full year 2024 financial results.
Pedro: We continue to execute on our cost efficiency, which remain key to our strategy going forward.
Pedro: We will keep growing our network the most complete and convenient hub for travel in the Americas.
Pedro: We expect to deliver strong financial results in 2025.
Pedro: And as always our team continues to deliver world, leading operational results I mean passenger friendly product.
Pedro: Now I'll pass it over to Daniel who will go over our financial highlights.
Daniel W.: Thank you Barbara.
Daniel W.: We reported a net profit for Q4 of $166 2 million.
Our $3 99 per share for the full year, our net profit came in at $608 5 million.
Daniel W.: Our $14 56 per share.
Daniel W.: Terms of operating income we reported an operating profit for the quarter of $204 $2 million and an operating margin of 23, 3%.
Daniel W.: Our operating profit for the full year came in at $753 4 million and $21.
Daniel W.: 9% of operating margin.
Daniel W.: Turning now to our balance sheet.
Daniel W.: As of the end of the year, we had over $1 4 billion in cash short and long term investments, which represents 42% of the company's last 12 months' revenues.
Daniel W.: In terms of debt, we ended the year with $2 billion in debt and lease liabilities and adjusted net debt to EBITDA ratio of 0.5 titles.
Daniel W.: Our average cost of debt entirely related to aircraft financing remains highly competitive and an average rate of three 5%.
Daniel W.: Approximately 65% of this debt is fixed rate.
Daniel W.: Regarding our fleet, we received two additional <unk> in the fourth quarter 'twenty year with a total fleet of 112 aircraft.
Daniel W.: Looking ahead to 2025.
Daniel W.: Back to receive 13 additional 10% Max eight starting with two in June and one additional Boeing 700 800 freighter.
Daniel W.: These additions we expect to be year end fleet to reach 126 aircraft.
Daniel W.: As of now we have secured an operating lease agreement for the additional freighter and financing for three of deploying to understand them I take delivery via <unk> financing.
Daniel W.: Turning now to the return of value to our shareholders I am pleased to announce that for 2025. The board of directors has approved a quarterly dividend payment of $1 61 per share to be paid in the month of March June September and December subject to the board ratification each quarter.
Daniel W.: I'd like to highlight that this maintained last year's dividend payout.
Daniel W.: The first quarterly payment will be made on March 14th to all shareholders of record as a very 2020 February 28.
Daniel W.: Furthermore, during 2024, the company has repurchased $87 million of its ongoing $200 million share repurchase program, which represented approximately 2% of the total outstanding shares as of the end of 2024.
Daniel W.: $37 million of the $87 million were executed in the fourth quarter.
Daniel W.: And finally, turning to our outlook consistent with what <unk> shared we can provide the following guidance for the full year 2025, we expect to increase our capacity and ASM to within a range of 7% to 8% year over year.
Daniel W.: And we expect to deliver an operating margin within a range of 20% to 22%.
Daniel W.: We're basing our outlook on the following assumptions load factor of approximately $86 five 1% unit revenues of around 11 three.
Daniel W.: CASM ex fuel of approximately $5 eight.
Daniel W.: Okay.
Daniel W.: And we're expecting them.
Daniel W.: Steel price of $2.60 per gallon. Thank you and now we will open the call for questions from us.
Speaker Change: Thank you so much and as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to remove yourself first start one more and again we.
Daniel W.: Ask that you please limit your questions to one and one follow up.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: And our first question is from Savi <unk> with Raymond James. Please proceed.
Speaker Change: Hey, good morning, everyone and congratulations theory, we look forward to working with you.
Speaker Change: And just if I might on R&D and the suite details that you shared it looks like the Max still a little bit lower than you thought it in August.
Speaker Change: More is that kind of add the color that Boeing is giving you and then as you look to 2026, it looks like only six seven.
Speaker Change: So curious.
Speaker Change: Why does this spill like delivery expectation and just general thoughts on how youre thinking about this capacity growth.
Speaker Change: Right, so so without making you call Boeing.
Speaker Change: Yes.
Speaker Change: Oh, sorry.
Speaker Change: So that explains the delivery schedule.
Speaker Change: We're actually okay with the schedule, we're getting shows a 13 aircrafts.
Speaker Change: This year.
Speaker Change: Most in the second half of the year. So we'll get to in June and the other 11 in the second half of the year, but many will be in the fourth quarter and at least two of the aircraft we're going to fly early in 2026. So we could think it's 11 this year.
Speaker Change: In 2026 in terms of when we're going to activate them and we feel thats okay.
Speaker Change: In terms of the opportunities we see for additional frequencies.
Speaker Change: Destinations.
Speaker Change: Perfectly fine with that delivery schedule.
Speaker Change: That's helpful.
Speaker Change: Maybe really a follow up related to that on the Capex side just as is the.
Speaker Change: <unk> then still for this year, mostly unchanged or does that move up I think the last time. It was I think that gross capex, maybe closer to $900 million in cash Capex of 315 and is that like a good way to think about next year as well.
Doug: Hi, Doug So yes, capex for this year.
Speaker Change: Both no change there would be helpful.
Speaker Change: Lower within the $850 million range.
Doug: Cash capex.
Doug: Probably around $200 million for next year is going to be lower again.
Doug: Only six deliveries.
Sorry.
Doug: Only $450 million next year.
Doug: Very helpful. Thank you.
Doug: Thank you.
Speaker Change: Our next question comes from the line of Duane <unk> with Evercore ISI. Please proceed.
Duane: Hi, good morning.
Speaker Change: I Wonder if you could speak to.
Duane: The sequential trend in <unk>.
Speaker Change: Whereas them relative to.
Duane: The fourth quarter decline.
Duane: And the prospects for an inflection.
Duane: In the back half of this year.
Duane: Okay. So so.
Duane: As you know, we give yearly a RASM guidance.
Duane: Not not quarterly guidance.
Duane: But in general terms.
Duane: Our our guidance.
Duane: What we've seen especially in the second half of 'twenty 'twenty four what was the impact of currency weakness in our region in Russia and a few other countries countries, but also additional capacity.
Duane: Industry capacity in general and that includes our own growth.
Duane: Is there a length in the market that are relevant to Copa.
Duane: Which are the ones, we focus on and we're assuming kind of the same trend to continue this year may be a slightly improvement.
Duane: In the first quarter, but overall pretty much the same trend. So so you could say.
Duane: Rightly so that there could be a positive inflection point in the second half of the year if everything goes.
Duane: The right way. So we are guiding for kind of more of the same and not for a significant recuperation.
Duane: Currencies or strength of demand and our capacity is slowing down.
Duane: So, but as those things change.
Duane: Yes.
Duane: The second half could be better.
Duane: Thank you.
Duane: Thank you one moment for our next question. Please.
Giller Mendez: It is from the line of Giller Mendez with JP Morgan. Please proceed.
Speaker Change: Hey, Thanks, everyone and best wishes on to appear on this new role Pedro you May show some.
Speaker Change: Several times about the let's say excessive capacity in some of the regions that you compete.
Speaker Change: Potentially impact yields in raws into this year.
Speaker Change: Can you please provide more color on which regions or which routes exactly are you seeing more let's say overcapacity or a tougher competitive environment. Thank you.
Speaker Change: Right so well.
Speaker Change: Usually when we've talked about in our region.
Speaker Change: Quarterly Amerigas, where we operate and it includes North America Central South on the Caribbean.
Speaker Change: It changes, obviously, there might be a country in particular, I guess more capacity at a given time, but it usually comes from from the whole region.
Speaker Change: It's hard to separate by bi specific countries.
Speaker Change: But what we have seen is that.
Speaker Change: Even even though overall.
Speaker Change: Industry capacity has been growing somewhere in between.
Speaker Change: <unk>, 10%, maybe in the 6% to 7%.
Speaker Change: Right, which is similar to what our growth what was our growth in <unk>.
Speaker Change: 24.
Speaker Change: In some in some markets in particular like for example.
Speaker Change: Brazil.
Speaker Change: Colombia.
Speaker Change: Maybe a little bit in Brazil, and Colombia, mostly I would say maybe Central America also.
Speaker Change: Have seen.
Speaker Change: Capacity growth more.
Speaker Change: Close to the 20% range.
Speaker Change: And that in some cases include some of our own capacity I must say.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Tom Fitzgerald with TD Cowen. Please proceed.
Tom Fitzgerald: Hi, Thanks, so much for the time would you just mind updating us how you think about <unk>.
Speaker Change: Managing your inventory and revenue management broadly just given.
Speaker Change: The FX volatility that we've seen in some of your major markets like Brazil or Mexico.
Speaker Change: Well it's.
Speaker Change: Yes.
Speaker Change: The FX volatility we were exposed to last year.
Speaker Change: It was.
Speaker Change: <unk> and <unk>.
Speaker Change: The impact to the bottom line greater than what we had seen in a while.
Speaker Change: The year before 'twenty three was almost nothing.
Speaker Change: And this year, we're actually off to a better start and we have made up for some of the losses.
Speaker Change: In 2000 and for its mostly translation of a trend.
Speaker Change: Yes.
Speaker Change: Translation sorry.
Speaker Change: I would say a hybrid of transaction.
Speaker Change: Translational so it's mostly translation franchise translation sorry for that again.
Speaker Change: And so it depends on our net asset value and our average net asset value.
Speaker Change: So some of the currencies have half strengthening this first months of the year. So a song we've made up but it's very hard to predict.
Speaker Change: We don't really and we I must say we price in dollars.
Speaker Change: We are definitely we price in dollars, but it's sold in the local currency and the dollar exchange rate for that day, but our our net asset get can get impacted in that translation. So so.
Speaker Change: We don't really plan for that and I don't think there's much we can do except for example in Brazil, where we sell in installments, we do hedge half of our Brazilian sales so.
Speaker Change: Although the loss that you've seen in our in our P&L.
Speaker Change: Close to $5 million is shows up in our different lines, because thats, our hedge gains from our Brazilian currency hedge.
Speaker Change: So the net impact is really closer to 28 for the year then 33.
Speaker Change: Okay. That's really helpful. Thanks, so much for that color and just as a follow up.
Speaker Change: What are you hearing from some of your corporate clients and the multinationals in the region, just how theyre thinking about business travel and demand just given all the.
Speaker Change: All the noise around tariffs and geopolitics. Thanks again for the time.
Speaker Change: Yes, we're very much.
Speaker Change: And intra intra Latin America U S to Latin America.
Speaker Change: What we're seeing I would say is in terms of percent of business traffic in our corporate accounts.
Speaker Change: Flat pretty March right now year over year.
Speaker Change: We're expecting we're not expecting growth. There. We think is going to remain flat I mean, there will be growth tied to our capacity, but not any share.
Speaker Change: The.
Speaker Change: Share of revenue so.
Speaker Change: What we're hearing it doesn't really change the picture intra Latin America, and U S to Latin America traffic.
Speaker Change: Thank you one moment for our next question. Please.
Speaker Change: And is from Alberto Valerio with UBS. Please proceed.
Joe: Joe Your line is open my question.
Joe: And you hear me now.
Speaker Change: Yes, yes, tayo merger, yes.
Joe: Okay.
Joe: Hi.
Speaker Change: Thank you. Thank you for taking my question I had one on traffic at the guidance that you guys provide.
Speaker Change: You just released the trust for January.
Speaker Change: Very strong.
Speaker Change: Nevertheless, we have some issues on <unk> last year.
Speaker Change: But looking forward the messages about its Dave.
Speaker Change: Yes.
Speaker Change: The guidance was a little bit conservative.
Speaker Change: Yes.
Speaker Change: All of these assumptions.
Speaker Change: The tragic.
Speaker Change: Yes.
Speaker Change: Maybe January or Gen Y January was one off.
Speaker Change: A stronger than usual.
Speaker Change: Okay.
Speaker Change: Yes January.
Speaker Change: Impacted by the Max grounding in January 24, so what we saw and it's a footnote in our traffic release.
Speaker Change: Because of course.
Speaker Change: 20 something percent.
Speaker Change: ASM growth.
Speaker Change: Only because of that they grew grounding in January but for the year. When we average out of that for the whole year, we are guiding to 7% to 8%.
Speaker Change: Gross that's based on the deliveries of the <unk>.
Aircraft deliveries.
Speaker Change: We have scheduled for this year, we are not expecting that to change much and since most of the deliveries are at the end of the year. Even if there were additional delays the impact will be small in our in our.
Speaker Change: ASM guidance for this year.
Speaker Change: And my second one for me, it's about the yields you guys had been performed better than the peers lately.
Speaker Change: Right.
Speaker Change: And you Wonder why Nathan I'd say like the past three years after that and you mentioned that the mix.
Speaker Change: What changed between the U S travelers and Latam or stragglers, but.
Speaker Change: Change is all loan space.
We had four more U S travelers that you used to have default pandemic at this moment.
Speaker Change: Yes.
Speaker Change: Yes, My Asher.
Speaker Change: Meant to say or to refer to the mix between business and leisure and VFR and year over year from 2024% to 2025, we're not seeing a change there.
Speaker Change: From pre pandemic there have been changes.
Speaker Change: And there is more U S traffic.
Speaker Change: Youre right writing that.
Speaker Change: And we did have a bump up in yields which were a significant right after the pandemic.
Speaker Change: When there was limited capacity and strong demand.
Capacity has caught up with demand pretty much.
Speaker Change: So right now we are.
Speaker Change: Kind of back right now we are back to 2019 yields in a way but.
Speaker Change: But of course, our unit costs are much better.
Speaker Change: So so we're delivering much better margins and seeing.
Speaker Change: <unk>.
Speaker Change: Since the third quarter in 2022, we've been delivery margin delivering margins over 20%, which is what we're guiding to for 2025 again.
Speaker Change: Fantastic.
Peter: And welcome Peter.
Peter: Thank you one moment for our next question.
Speaker Change: Is from the line of Michael Lindenberg with Deutsche Bank. Please proceed.
Speaker Change: Yeah, Hey.
Speaker Change: Good morning, everyone and welcome aboard Peter.
Speaker Change: I got to tell you Pedro you are probably one of the few airlines on this planet that Youre seeing 2019 yields but lower costs. So.
Speaker Change: It's almost as if youre from another place.
Speaker Change: But with that said.
Speaker Change: I guess two questions here.
Speaker Change: When I look at the schedule for Wingo in 2025, it seems like.
Speaker Change: Supply is actually running down a bit.
Speaker Change: And I'm not sure is is window, what there's one airplane is one airplane going into maintenance or something or you're shrinking that fleet or you're just lowering the utilization given the fact that.
Speaker Change: <unk> overall has been an oversupplied market.
Speaker Change: Well two things.
Speaker Change: That have that are going on with the window.
Speaker Change: One is that.
Speaker Change: They may be flying more and they are actually flying a little bit more domestic capacity.
Speaker Change: Which is shorter hauls, so overall less.
Speaker Change: And they do have some maintenance.
Speaker Change: So they will have some aircraft in maintenance, which they do during the low season and reduced reduce their schedules.
Speaker Change: Adjust their schedules to compensate for.
Speaker Change: Maintenance aircraft.
Speaker Change: So thats probably going on.
Speaker Change: But they are getting a.
Speaker Change: Turning 90, 737, eight hundreds and they are getting a tan.
Speaker Change: 737, 800 in the second half of the year under ASX overall should be up.
Speaker Change: For the 10th aircraft and the utilization is not coming up is not coming down excuse me utilization should be high highly amin slightly ARPA.
Speaker Change: But anyway, we of course, we own we own.
Speaker Change: We do not disclose specific.
Speaker Change: Windowing information.
Speaker Change: And Thats, what you are probably looking at their published schedules.
Speaker Change: It changes the changes should just be that so maybe low season cards to cover for maintenance.
Speaker Change: But overall in the year, they will fly more especially with the 10th aircraft. We are getting in the second half of the year.
Speaker Change: Okay, and then just I guess.
Speaker Change: As a follow up low season, Columbia, what are those months.
Speaker Change: Close to the equator, I always get a little confused what.
Speaker Change: What would be the low season.
Speaker Change: Right now okay.
Speaker Change: Thank you Brendan.
Speaker Change: Okay.
Speaker Change: And you have demonstrated at CIT.
Speaker Change: Good demand.
Speaker Change: Yeah.
Speaker Change: Then the second half of the year is usually better than the first half of the year.
Speaker Change: There is less.
Speaker Change: Theres less low season in the second half of the year. Okay. And then I know you said you don't really provide results, but we know that again its an oversupply situation in that market, but we also know wingo is a lower cost platform. So there may be an incentive.
Speaker Change: Even with additional capacity in the region. There's other markets you can serve with window that it may be there may be a natural incentive to grow window given that it has maybe a better cost structure than Copa mainline is that is that accurate.
Speaker Change: So it is it is accurate not by a bunch by the way.
Speaker Change: Yes.
Speaker Change: About five eight.
Speaker Change: Pretty competitive so.
Speaker Change: Not by a bunch of we haven't grown wingo in two years state.
Speaker Change: State because there is that overcapacity.
Speaker Change: Joining bye bye, one claim and which is not significant it's about 10% in the second half of the year.
Speaker Change: And just because of all the dynamics in the Colombian market lower yields over capacity or new capacity and the fact that Copa Holdings, We love Bottomline profit. We we just don't do Crazy things. Okay. Okay, and then my real follow up because I know, we've got down that wingo rabbit hole.
Speaker Change: Just on cargo.
Speaker Change: To see that Youre, adding another airplane.
Speaker Change: The tariff situation in global trade and all of that notwithstanding.
Speaker Change: The fact is you must be very pleased with the one airplane willing to double the capacity.
Speaker Change: How should we think about cargo revenue is is that is that doubling.
Speaker Change: Over the next couple of years with the second airplane and can you give us a sense of just like the margins or the profitability on cargo.
Speaker Change: This pure freighter I guess I should say versus your passenger business. Thanks for taking my question.
Speaker Change: Okay, Yes.
Speaker Change: A few things with car, where we operate a single 737 Boeing converted freighters. So it's a single claim.
Speaker Change: Most of our cargo revenue come from the base of it.
Speaker Change: Passenger fleet over the past year fly so most of that revenue comes from that.
Speaker Change: Cargo plane has been very successful the margins are very high for the cargo planes.
Speaker Change: Yes.
Speaker Change: Much better than our last few planes flying the less profitable route.
Speaker Change: But it's just one aircraft going to soy.
Speaker Change: So it won't be a significant impact our current single freighter, a flying over 300 hours per month on average Wichita.
Speaker Change: <unk> is a lot for a single plane. So why do we have to plan the hour. The average hours per claim will not be nearly as high and we will have more.
Speaker Change: Backup and so it will be profitable in the mall.
Speaker Change: <unk> are good but not.
Speaker Change: Not going to be necessarily a significant impact because overall in the scheme of things is one aircraft out of 120 plus.
Speaker Change: Okay and is that one of your airplanes have been converted or is that coming from the outside.
Speaker Change: Actually that's a good way.
Speaker Change: Yes.
Speaker Change: Good catch.
Speaker Change: It's coming from the outside so because of what you said theres a lot of availability.
Speaker Change: A lot of things were converted and there's not that much market right. Now there is in our niche because our our freighters in each operation, which produces cargo that we also distributed in our passenger flight. So although we do have the demand, but there was availability. So we're doing an operating lease.
Speaker Change: Our freighter and that way, we can keep our passenger aircraft, which we need because of the Boeing delays, we all know about it.
Speaker Change: Great. Thanks, sorry for the long questions, but really thank you very much.
Speaker Change: Okay.
Speaker Change: Our next question is from the line of Jan Spears with Morgan Stanley. Please proceed.
Jan Spears: Yes Hello.
Speaker Change: Congrats congrats on the appointment of Peter.
Speaker Change: Looking forward to working with you too and meeting you in person.
Speaker Change: That's all I have I have a question on the VFR and the U S. We had a Mexican airlines.
Speaker Change: Mentioning that they saw a bit of weakness since the U S. The new.
Speaker Change: Administration came into office something related to like immigration concerns.
Speaker Change: And I was wondering obviously you have a very different network, but if youre seeing anything along those lines along your booking curve and.
Speaker Change: Also.
Speaker Change: Yeah.
Speaker Change: Let me first start with that thank you.
Speaker Change: And no we're not we're not our U S traffic it has VFR and the VFR seasons vacations et cetera would also have year round leisure traffic and actually our our U S network is doing better than than before.
Speaker Change: Okay, perfect and just one follow up in terms of buybacks I mean, considering where your leverage is in the cash you're generating do you see any chance of accelerating a bit to your buyback program.
Speaker Change: The pace so we have.
Speaker Change: Two ways, we return value.
Speaker Change: We have a dividend dividend policy, which which.
Speaker Change: It's usually 40% over the previous year's net income this.
Speaker Change: This year as we announced in the earnings release yesterday, we're keeping dividends at the same level as last year, which means that it wont be 40% of last year's net income it will be 44%.
Speaker Change: And then we have a buyback program of which we also communicated that we have executed 80 $87 million narrowed the $200 million.
Speaker Change: There is approved so we have another $113 million.
Speaker Change: Available for what we do in terms of.
Speaker Change: Your question is that.
Speaker Change: We look at our dividend policy, we look at our available liquidity taking into account our our capex.
Speaker Change: Image <unk>.
Speaker Change: Given that we've had delays in Boeing deliveries.
Speaker Change: We have more liquidity than we had when we had projected and what we had projected maybe a year or two years ago.
Speaker Change: So thats a reason for our <unk> program, which is in place.
Speaker Change: And I expect that buyback program to be.
Speaker Change: The final ice or executed throughout this year.
Speaker Change: Okay perfect. So the $200 million would be completed this year.
Speaker Change: Does it have.
Speaker Change: Limit the time limit.
Speaker Change: There is no time limit.
Speaker Change: There is a time limit.
Speaker Change: Alright, great. Thank you.
Speaker Change: You bet.
Speaker Change: Thank you. Our next question comes from the line of Daniel Mckenzie with Seaport Global. Please proceed.
Daniel Mckenzie: Oh, Hey, guys. Thanks for the time here.
Daniel Mckenzie: A couple of questions first off with respect to growth. This year can you share any perspective on the percent of growth tied to frequencies versus newer markets or just some of the thought process behind where that growth is going perhaps maybe the stronger economies in the region.
Speaker Change: Hi, Dan Ronny on here. So yes, so the 7% to 8% growth is around two thirds is going to be full year effect, that's better alluded to them around.
Daniel Mckenzie: Another 20%.
Speaker Change: With these in market, we fly today and then the rest of it is.
Speaker Change: Some gauge because we have a higher seat count in paragraph.
Speaker Change: In Southern Europe, and Asia of course.
Speaker Change: Okay second question here I guess, you know Pedro.
Speaker Change: Going back to the earnings overhangs that have been called out over the past year and today.
Speaker Change: I know you have been through a lot of cycles, and just sticking to what's public and the local news there with respect to the Panamanian Venezuelan governments first off is the Panamanian government working with Venezuela for normalized relations at this point and again whatever is publicly available and then just on FX.
Speaker Change: Is it as simple as just letting it annualize or are there economic is there an economic growth dynamic that could offset some of that that weakness faster than perhaps you would you would think.
Speaker Change: Well in terms of Venezuela.
Speaker Change: Where is.
Speaker Change: Are there any conversations to normalize relations.
Speaker Change: We would like to see that of course, but.
Speaker Change: Thats kind of like above our paycheck and so no I don't think theres anything going on right now hopefully before the year silver.
Speaker Change: We'll be able to return to that very important market, where we had service to five cities 42 flights per week before the sudden cancellation at the end of July so so I'm hopeful that in there.
Speaker Change: At some point, but there's no light at the end of the tunnel.
Speaker Change: Now.
Speaker Change: The FX question, yes.
Speaker Change: Yes.
Speaker Change: Next question.
Speaker Change: Yes.
Speaker Change: Yes, sorry, I was just asking if it's.
Speaker Change: As simple as just letting it annualized before we see an improvement.
Speaker Change: Or whether there was economic growth drive a dynamic they could offset some of that FX weakness.
Speaker Change: Right I mean it could.
Speaker Change: It's something that's going to it's going to happen at the end of every quarter.
Speaker Change: So so so there could be there could be.
Speaker Change: A good guy at the end of this quarter, depending on the currencies, but then at the end of the year, we will have the final number.
Speaker Change: I see okay. Thanks for the time guys.
Speaker Change: Thank you and our last question one moment please.
Speaker Change: Comes from Stephen Trent with Citi. Please proceed.
Stephen Trent: Good morning, gentlemen, and thank you very much for your time and Peter as well welcome and looking forward to working with you.
Speaker Change: Thank you chip.
Speaker Change: One or two for me.
Speaker Change: First I was curious when you guys think about your jet fuel kerosene expense I know you don't service like Brazil, domestic jet fuel kerosene Super high, but do you have any sort of outlier markets where.
Speaker Change: Jet fuel kerosene has sort of measurably more expensive than sort of.
Speaker Change: The general level.
Speaker Change: I think I think.
Speaker Change: <unk> Stephen is that we're not at a disadvantage.
Speaker Change: Anywhere.
Speaker Change: There isn't like a market.
Speaker Change: I mean, the one market that will be critical for us is our home market.
Speaker Change: Sure our hub market here in Panama, Panama is a competitive market due to.
Speaker Change: Geographic location.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: The logistics of Panama.
Speaker Change: We are a shipment.
Speaker Change: On that point.
Speaker Change: There is there is a lot of storage capacity again.
Speaker Change: Oil companies social so we are not at a disadvantage where it's most important.
Speaker Change: We're actually in a competitive market. So we are okay in that sense.
Pedro: Pedro I appreciate that.
Speaker Change: And maybe another China about follow up to what Dan was asking what do we think about sort of.
Pedro: The.
Pedro: Geopolitical changes are political changes in the Americas and one thing people are are kind of looking at our M&A and alliance says and what have you and I know you and United Airlines have a very good one.
Pedro: Do you see.
Pedro: Any parts of the ability to.
Pedro: Make any tidbits here in terms of.
Pedro: How much you can collaborate with them or maybe there are.
Pedro: Additional layers you could add to that today.
Speaker Change: What did you say.
Pedro: Over the previous four years, perhaps.
Speaker Change: Yes, we have.
Speaker Change: As you mentioned, we have a very strong relationship with United It goes back.
Speaker Change: 25 years.
Speaker Change: From the Continental days.
Speaker Change: And I think it's pretty complete.
Speaker Change: And we could share.
Speaker Change: We have total Richard prostate and our frequent flyer programs.
Speaker Change: We win at times.
Speaker Change: Can plan capacity additions.
Speaker Change: The San Francisco PD, why service that United is going to start in May and it is going to connect.
Speaker Change: They're strong Asian network with Panama from here, well connected with South America.
Speaker Change: So is this expertise is not as good.
Speaker Change: GBA or anything like that but we're very happy with the relationship.
Speaker Change: I think thats really fine and in a good place.
Speaker Change: Yeah.
Speaker Change: In terms of some of the other stuff.
Speaker Change: That's going on.
Speaker Change: We're always happy with where we are we've cooperated with European carriers, we cooperate with the Brazilian carriers.
Speaker Change: Yeah.
Speaker Change: In that sense.
Speaker Change: We tend to do what's best for their business and are very open minded way knowing that to cooperate is a two way street.
Speaker Change: And we try to make us better and same for ourselves, especially with earnings we do not compete against and we.
Speaker Change: We can be complementary I wonder if I'm answering your question I'm going against a run circles, but.
Stephen Trent: It can be more specific if you're one Stephen.
Speaker Change: No no.
Speaker Change: That was great Pedro just sort of wanted to get a high level view on that that was perfect. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you and this concludes our Q&A session and I will turn it back to pivotal Hal Brown for his final comments.
Speaker Change: Okay. Thank you.
Speaker Change: As always thanks for participating in our in our quarterly call for your continued support.
Speaker Change: Sure.
Speaker Change: Peter will start March 10.
Speaker Change: And he.
Speaker Change: He'll be very available of course, and he knows Copa very well he has been with us.
Speaker Change: Five years, and I know you will enjoy working with him and of course Danielle.
Speaker Change: They are an excellent backup to wholesale today. Thank you Daniela.
Speaker Change: Very well so it is also available.
Speaker Change: I am myself and.
Speaker Change: Maybe just to emphasize as I've mentioned in previous calls.
Speaker Change: We've been preparing for years.
Speaker Change: To be a more competitive carrier to be able to compete with success.
Speaker Change: Under any.
Speaker Change: Any manageable condition of course.
Speaker Change: And that's why we've been able to lower our unit cost we have total focus on lowering our unit costs and strengthening our network and having a product that is today a great advantage.
Speaker Change: For Ko Burlington this whole region.
Speaker Change: And that's why we've been able to deliver strong results.
Speaker Change: It's something that we're confident we can continue doing in 2025 and beyond.
Speaker Change: Thank you all.
Speaker Change: We're here for you in the next call.
Speaker Change: And ladies and gentlemen, thank you for your participation that concludes the presentation. You may now disconnect and have a wonderful day.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].