Copa Holdings, S.A. (CPA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. First of all, thank you for coming. Thank you for joining us today on our 2025 Investor Day. So it is a pleasure to have you here. I see a lot of familiar faces. But for those who don't know me, I'm Daniel Tapia, Director of Investor Relations for Copa. And before we begin, I would like to extend a very warm welcome and special thanks to our distinguished guests that are joining us today. We are honored to welcome the Minister of Economy and Finance of Panama, Mr. Felipe Chapman, who will be providing a special presentation during our lunch session. Mr. Chapman is joined today by his spouse, recognized business woman, Mrs. Monica Garcia de Paredes de Chapman. We also welcome the Vice Minister of Economy of Panama, Ms. Eida Saiz. And I also want to welcome and acknowledge members of Copa Holdings leadership, members of our Board of Directors and valued shareholders, Mr. Stanley Motta and Mr. Carlos Alberto Motta. Before we start, please refer -- well, let me show a video of the -- to start the event. [Presentation]

So before we start, a quick reminder. Please refer to our disclaimer on forward-looking statements, which will be -- which are included at the beginning of our presentation. Now please me allow to briefly walk you through our schedule for today. So we'll begin with presentations from our senior management team. Following the presentation, we will open the floor for a dedicated Q&A session. We will then take a short 15-minute break as the lunch buffet is prepared. And finally, we will reconvene for today's special presentation by Minister Chapman, followed by a short Q&A. So now it's my pleasure to introduce you to our first speaker, our Executive Chairman and CEO, Mr. Pedro Heilbron.

Gracias, thank you, Daniel, and welcome, everyone. We love videos in Copa. So you may get a few other videos. But since it's New York City, the videos are going to be like really short. New York, [patient short]. And this month, we're celebrating 20 years of listing in the New York Stock Exchange. Times fly. Many of you were with us back then, and we were part of our first Investor Days and investor calls and road shows and all of that. And the most amazing thing after 20 years is actually that I'm still here. More seriously, we have changed for the better. And this is aviation. And one of you was telling me a few minutes before we started that it's not normal for aviation to have consistency over 20 years. And I must say that all the things we promised back then during that initial Roadshow, we have been able to surpass. And we're, of course, very happy and proud of that. In terms of our fleet, our fleet is times 3x larger than it was in 2005. Our revenues have increased sixfold versus back then. Our net income, much more important, is 10x what it was in 2005. Even better, dividends are 34x higher than back then than 2005. And we have consistently produced double-digit margins during that period with the exception of 2020, of course, the pandemic year, and 2021, we were coming out of the pandemic. But even in 2021, we had profits. So in the last 20 years, our only negative performance was in 2020. And except for '21, every other year, every other of those 18 years, we had double-digit operating margins. And this is 2019 and then the last 3 years, how we compare with our peers. The airlines, we -- well, we don't compete with all of them, but some of the leading airlines, public airlines in the world. And as you can see, Copa is at the top of the chart in terms of operating margins. And what I was mentioning at the beginning, this is the 20 years since when we went public, and the lower margins because the thing with this 20 years and the thing would been in aviation and the thing would been in Latin America is that there's always something happening. And it could have been H1N1. It can be -- it could have been the economic crisis in 2008 and 2009 or the really tough period Latin America went through from 2015 to 2019. Those 5 years averaged like close to negative GDP growth in Latin America plus currency devaluation and all the other economic factors that can happen in our region. Still, we had double-digit margins each one of those 5 years. And of course, by the end of 2019, we're back in shape, strong, facing a bright future and then came 2020. But we did not waste that crisis. And we set out to come out of it stronger than before. And that's what we've shown the last 3 years. And we keep on working at it. During this presentation, you'll have the opportunity to hear from some of our key executives, and they'll go into more detail, and you'll be able to ask questions at the end. But I'll just give you a quick overview of our business model. This might be a little bit boring. We understand this because it hasn't changed in nearly maybe 30 years. So it hasn't changed, but we make -- we try to make it better every year, and that's our focus. As I tell employees in the company, the day it needs to change, we'll be ready to change, to adjust, and we talk about it every year. But as long as it's the right business model for us, we're just going to work to make it better. And it has 4 components: geography, the best geographic position in Panama, markets -- serving markets that need a hub. With low unit cost and a passenger-friendly product. So number one is Panama's geographic advantage. It cannot be replicated. I mean, the world has the geography it has, and there's no more geography that one can -- unless you get -- unless you take over another country. But we're in a unique position. We're in the middle of the Americas, no pun intended there, by the way. So don't ask me about that in the Q&A session. So we're in the middle. We're in a perfect position to connect South with North, with Central America, with the Caribbean. Other cities or airports that might have a similar position are hot and high, Panama is sea level, with good airport infrastructure. And this is something we saw over 30 years ago. We were faster off the gate. We established the first connecting hub in Latin America. For 10 years, we were the only connecting hub in Latin America. And we work hard to maintain that 10-year advantage head start we had at the beginning. As you can see there, Panama, which is a small country compared to some of the largest hubs and cities in Latin America has an advantage in terms of cities served with international cities, not domestic. International cities served with nonstop flights and also in terms of frequency. By the way, this includes other airlines. The 98 is not only Copa, includes other airlines serving Europe and other cities in Latin America and the U.S. Copa itself is about 85 of those 98 destinations. Then the second component of our business model, which is not always easily understood, is that we focus on serving small cities that can only be served through a hub. In other words, about 80% of the city pairs or the combination of cities that we serve or connect through our hub of the Americas in Panama have less than 20 passengers per day each way, which means that those cities cannot be served with nonstop flights. They need to connect in a hub. We're no longer the only hub connecting them. There are other hubs looking to serve those -- and actually, in some cases, serving those cities, but we are the best option. We're in the best geographic position. We have more connectivity, more flights and other factors like sea level that makes it easier and makes us more competitive. So this remains after so many years, this focus on connecting small cities. And we do have some large cities, of course. But like Sao Paulo to New York, that is not what we focus on. Sao Paulo to Guadalajara, Mexico or Sao Paulo to Guatemala, yes, checkmark there. And recent additions, for example, these are routes we have either started serving or announced in 2025, 2 in Argentina, Tucuman and Salta. Most people do not know that there's a city called Tucuman in Argentina. Both Tucuman and Salta are now connected with nonstop flights to Panama. Los Cabos in Mexico, that's well known in the U.S., not as much in Latin America. Two additional cities in the Dominican Republic, Santiago de los Caballeros and Puerto Plata. We're going back to Santiago. We used to serve it pre-pandemic and Puerto Plata is our new destination, will be our fourth city in the Dominican Republic. And then Salvador de Bahia is like our ninth city in Brazil. We're going back. We stopped serving it during the pandemic, and we're coming back in January, if I'm not mistaken. Our third pillar in our business model. is our cost efficiency culture. If we had to summarize -- besides the network, besides building the network and making the network stronger every day, is there are 2 things we're obsessed with in Copa, which affect everyone because the network is a small team that spends time on the network. But something that everybody is involved with and we're obsessed about is on-time performance and cost efficiency. And that's in our DNA. And we can see here since -- I have my glasses somewhere, I should be wearing them. But we see since 2013, but if we go back, we could go back further, how we've been lowering our ex-fuel CASM. And even coming out of the pandemic, we're one of the very, very few airlines worldwide that has been able to lower its ex-fuel CASM. And we've been guiding to further improvements in that sense. And in the right hand of the graph, we can see how we compare again, with our peers, some we compete with, others not as much. But we're in the lower end -- in the positive lower end of that graph, and we are in the low-cost territory, but with a full cost product, which -- or yes, full service product, which takes us to the fourth element in our business model, which is a passenger-friendly for business and leisure passengers product. Number one is on-time performance. I mentioned we are obsessed with that. For the last 10 years, we've been the most on-time airline in all of Latin America. For most of those 10 years, we've been #1 in all of the America, counting North America also. In 2018, we're #1 in the world. Last year, we were #3 in the world. And this year, we are on track. Dan Gunn is here, our SVP of Operations. So you hear me Dan. We are on track to close above 90% better than the last few years. And I'll knock in wood because there are other airlines that are working hard here also. Hopefully, we'll end up the year also on top of the Americas. And that is our SVP operations. So we're doing great, which is often. He doesn't hear much from me. When we're not, I call him. So we also have -- and I won't go into details, but there are other things. We've earned a bunch of awards yearly, and we also have a full product in terms of what we offer in our cabin. But Robert Carey, our new Executive VP is going to talk about that. So I won't steal his thunder. Now let's look forward briefly. We think we have a bright future and not only because of Copa's business model, but Latin America, we think, has a bright future. Traditionally, air traffic has grown at least times 2 or times 3 GDP growth in Latin America. And this is not a future prediction. This is what has happened the last 4 years, including the forecast for 2025. So excluding 2023, which was like coming back from the pandemic, there was a lot of pent-up demand, '24 and '25 and the forecast for next year has traffic growing at a little bit over times 2 GDP growth. And one of the reasons for that is we have a young population, the chart to the left -- we have a very young population in Latin America, very different to more developed countries. Air trips -- you've seen this before, like in every Latin America investor meeting, they show you that air trips per passenger, how it compares to developed nations. That's really -- to me, it's not very significant because the economic -- the income per capita is so different that, that number is obvious. But the good news, if we go to the right, is that income per capita is forecast to grow quite a bit in the next 20 years in our region, especially for the middle class and above. And there's more people entering the middle class. And at least in Latin America, when people enter the middle class, they buy a home, #1; they buy a car, #2. So public transportation is not great, even though in Panama, it's actually quite okay right now and getting better. And #3, they want to travel. they want to travel abroad. So the numbers play in our favor. And we feel we have the fleet on order, the right fleet on order, a fleet that matches the growth opportunities we see ahead. We still have 46 Boeing 737 MAX aircraft to be delivered in the next 4 years. So about a little bit over 10, something like 11 to 12 aircraft per year for the next 4 years. And we feel that's right for the opportunities that we see in the future. But the Copa way is that we build flexibility into our major investment decisions and in particular, fleet is the only way we get it past our Board. It's -- well, our very important shareholder until recently former Board members here, Stanley Motta, many of you have met him. And I worked for him and with him like my whole life, like 2 jobs and my whole life with him. So -- and he always asked one question -- many questions. But the first question is always what if things go bad, how will we deal with the investment or how would we adjust our plans. So if things go bad, we can take our CAGR, our ASM CAGR related to the fleet, I just showed you from 8.5% to 2.5%. And that's just by returning operating leases, sliding, we have sliding rights in our Boeing order, getting rid of our 737-700s, which we're still flying 9 of them only because there's enough demand, but we could -- the value of the engines is more than the engines and the airframe together. And we can park over 20-year aircraft or sell them. So we have easy ways of bringing down growth, aircraft growth. And it is what we did in those 5 years between 2015 and 2019, and it's also what we did right after the pandemic, which we had to backtrack as fast as we could when we saw traffic coming back strong. So there's always a conservative plan B. We never jump without a parachute. And that's just Copa ADN for good and for bad. To wrap it up, my part. This is not something we often talk about, not in our quarterly calls with investors and analysts. We never touch upon this. Every so often, we bring it to an investor conference. Our employee culture is the true secret sauce of Copa, which might not be as well understood outside Copa, and it doesn't matter. because it's something very, very internal to us. Number 1 is that we're extremely well aligned in terms of how we align our vision, our corporate vision with our yearly objectives and the employees' own objectives and the work they do. So we have a vision that we haven't had to change in nearly 30 years. We have a set of corporate objectives that we call our path to success. They change every year. Some objectives are permanent like on-time performance, others might last a few years and many change every year, but always under the same 4 pillars. And the 4 pillars for flight to win is generating market share and revenues, achieve a competitive or low cost -- then there's one about the customer, strengthening our product. And then the fourth one is working as a team as the human side. So the work we do to make our objectives very -- our vision objectives very visible with our employees, it's based on constant communication, including quarterly town hall meetings where I go personally with other executives to every department. It's 12 town hall meetings in 2 days. And then there's also the ability to connect remotely. And that results -- we're sharing with you numbers from our annual climate survey, climate and organizational survey with our employees. And I'll highlight 2 questions. One is I understand my impact and my team's impact in our corporate objectives. The rise -- in the Spanish for [Foreign Language] which is the path to success. So 91% of our employees understand our objectives and how they and their teams can impact our objectives. This is 91% counting ramp workers, baggage handlers, flight attendants, mechanics, pilots, office workers, everyone. They understand our objectives and how they can influence that the achievement of our objectives. And then I also highlight the fourth one is in my department, we understand how we impact our customers, 89% of our -- again, baggage handlers, customer-facing handlers, agents, office people, 89% understand how their work impacts our customer. So that's a great start for achieving our objectives and staying true to our vision. We also work very hard in developing new talent because we are -- Panama is 4.5 million people, small country. We do not have the base of talent that you would get, of course, not like the U.S. or even Brazil, Mexico, even Colombia is 10x our size. So we have to work a little bit harder to develop talent. We have our own pilot school and [aviation] school. We have -- and that one is subsidized by Copa, high standards started together with Florida Tech, Florida International Institute, high standards, but totally subsidized by Copa. The students pay, but they pay mostly for the instructors and the flight hours, and we subsidize pretty much the rest. Our mechanic school, it's actually free for the student, and we actually pay them to study. So they don't have to quit because they -- these are talented students coming out of public schools. Flight attendance, we graduate 1 or 2 classes every month. And then we do a lot of other things for management and executives. We have a leadership academy for those that are promoted, and we have other interesting activities lately, a lot to do with data and innovation and AI and things down that line. We also have a strong culture of recognition of celebration and recognition. One of the most important things we do, of course, is the yearly profit sharing bonus, our success, we share with our employees. So they know that if we reach our targets, if we reach our profitability, it's profitability based, there are -- there is a reward for them. So everybody pushes for low cost and all the other things we talked about before because there's something in it for them. We also have a monthly incentive for operational employees based on KPIs. So some of them might get this monetary incentive if we hit the on-time target or if we hit our Net Promoter Score or our dispatch reliability in maintenance, pilots even have communications with passengers when there's an IROP and things like that. I won't mention everyone, but there's also for our -- the employees that make a difference or nominated, I have a lunch with them every quarter, and we raffle, I don't know what to call it, tickets or the right to go. Every new airplane we get from Boeing, we take a group of employees with their plus 1s. So we do that raffle during those lunches. And then all the other awards we celebrate Skytrax, Cirium on time and all of that. And we're always striving to be one of the best places to work. And this shows our turnover. Copa turnover last year was just 4.5%, for executive and managers, our turnover was only 3.7%. And the picture shows some of the other things we do, like the employees in Seattle receiving a new plane, a lot of them. It's not just a few. It's a big group. And I'll also highlight the activity on the upper right corner. We actually have health clinics for our employees. So they don't have to go stand in line for the whole day at a social security clinic. It's great for them, and it's also good for us because we gain productivity. They don't have to lose the whole day. So it's a win-win and highly appreciated. So in summary, I should allow the others to share even more interesting information, hopefully. But 20 years delivering value to our shareholders. still a simple and well-focused business plan. well, I should never say never, but there haven't been any surprises in all the meetings we've had because it's just the same, but hopefully better. A very strong corporate culture that I just shared with you and this expectation that travel demand will remain strong in Latin America for the coming years, and we should be prepared to take advantage of it. So with that, we have Robert Carey, our Executive VP.

Great. Good morning, everybody. How is everybody doing? Good? All right. So as you saw just before, Pedro highlighted the slide showing the very low turnover. Luckily, there has been a little turnover, so I could get a job. But by means of introduction, I'm the relatively new kid on the block, so I'll introduce myself at least because I haven't met most of you before. So Robert Carey, I joined Copa just over a year ago, moved to Panama with the family and very excited to join Copa. I've obviously known the airline for a long time. Prior to Copa, I was 3 years with Wizz Air in Europe as the President of Wizz Air. Before that 4 years at easyJet, also spent 3 years at Delta, and then I was also 11 years in McKinsey as a consultant working with about 25 airlines all over the world in 11 years. So I -- you might say a bit of a passion for this space. My job here at Copa because, again, that's also been a question I've gotten quite a bit. I oversee commercial operations, Wingo and Cargo. So what I thought I'd do is, I'm going to take you through the commercial elements. Pedro highlighted quite a bit of kind of the overview of the key points. But to keep it interesting, Pedro said, we love videos in Copa. I thought rather than me droning on first, let me show you a video. And I think this video will show you a lot of the elements that I think are really unique in what we bring that give us such a revenue advantage. [Presentation]

So obviously, that was an ad specifically from Colombia, hence, why you have the 11 destinations of Colombia. But I think what it highlighted in there and just what we'll talk through a little bit is, as you heard Pedro point out, we have a leading network connecting many other points that no other airline is able to connect. Our product is region leading in what we bring with business class every flight, a very, very generous economy class product, a hub that works very well and is simple and seamless for the passenger, a frequent flyer program, et cetera. And so we'll go through all those elements as we go through. I thought that was a pretty good overview to start with. All right. So first things first is just to lay the stage. You saw the same chart, but now in bigger numbers. So this goes to show you where our revenue position is today. And as you can see, our PRASM today is equal roughly to LATAM. This is obviously stage adjusted to our average stage length, significantly higher than what you see going on, on the left with the LCCs. Clearly, there's a gap. I mean, I think Latin America is a different market than the U.S. So we're very happy with the position we've got in what is a competitive market in Latin America with many of our competitors growing at significant rates. Now the question that often comes, and we'll talk a little bit about it is, is this sustainable over time? And we'll give you the factors behind it. But I think one thing I would just call out is there was a note last week from Savi at Raymond James. And to the point of our low-cost nature, we didn't put it in because we didn't want to pay a commission structure on it. But if you go back and look at the chart on your own, what you'll see is that over the last 25 years, and every year that we've grown capacity, and we've grown capacity almost all of those 25 years, there are only 7 years where we were able -- where we grew capacity, but we did not increase RASM in the same year, excluding COVID. So we'll keep it aside. But I mean, that's a pretty impressive stat that you don't see often around the world, is the ability to deliver both capacity growth and at the same time, unit revenue improvement. And so we think that puts us on a very unique plane. And let's talk a little bit about how we're able to achieve that. And it kind of comes -- it's 4 strengths that sit at the core of what we do, and we'll go through each of these now. One is around the network. Copa today, we have a leading network. We still have a lot of growth of what to go do. I'll talk through in more detail what drives that network and why we're able to create that unique network. Two is the product. Three, we'll talk about as well as the direct customer relationship. And going to that, we've talked a lot about in the last 2, 3 years, our distribution strategy and how direct we've gone and the cost benefits we've achieved. But it has an equally important benefit on the customer side and that we've now managed to bring most of those customers that have a direct relationship with us, which offers unique advantages. And then fourth, we still see a lot of opportunities where we can grow unit revenue and new opportunities to extract additional value from the customer. Okay. So going into our network. Pedro already highlighted the 7 new markets we've added in the last year. But I think those 7 new markets really show the power of what the hub brings. And so I won't go through all of them again. But I think let me walk through an example of one, which was San Diego, which we launched in June. I figured most everybody here will know San Diego pretty well. Obviously, a top 10 U.S. market. It's in the top 40 airports of the U.S. If you looked at it before our entry into San Diego, the only international service out of San Diego going southbound or the far the southbound you could go internationally was Mexico City. That was as far as you could go. When we've now added in our service into San Diego, the first thing is we brought online 44 connections over the Panama hub. And when I say 44 connections, we're not talking about connections where you go all the way back and where a connection between San Diego and Atlanta over Panama. These are legitimate connections where we have an efficient routing to get passengers between point A and point B. And the second point that I think is interesting, back to this point we talked about of the size of the O&D. So San Diego is obviously a large market. But if you look at it, out of the top 20 origin and destinations or points that we serve from San Diego, 18 of those points have less than 20 passengers per day. So again, it's not that we're carrying large trunk flows of passengers, as Pedro said, New York to Sao Paulo. We're connecting San Diego with Belo Horizonte in Brazil or San Diego with Manta in Ecuador. These are points that are very small flows, each of them, but with the power of the hub and the 85-plus destinations we can bring, we can make these markets work. And we have a track record of making these markets successful. So if you look back since the pandemic, we've launched 22 markets. Of those markets, we've only exited 3, excluding Venezuela for the moment, that's a separate issue. But where we voluntarily left because we didn't see the economics working, it was only 3. So it's not that we're -- again, this is back to the Copa nature. When we bring a market online, we are usually very, very confident that it's going to deliver as a market, and we're going to be able to ramp it up and add it into our network. And then if you look as well, I think sometimes the question comes up, well, how are you able to digest such growth? So looking at the growth we plan for next year for a second, we've given -- we've shared the guidance, which was we're going to grow between 11% and 13% in the ASMs. Now of that 11% to 13%, 90% is simply the annualization of what we launched this year, so the full year impact of 2025 and additional frequencies in the markets we already serve. And I think hopefully, what will give you some comfort there is we announced our load factor today for November. We operated with a load factor of about 87%. And now obviously, an 87% load factor is a high number. That it means that we're operating a lot of flights that are full. And of course, there are going to be some flights that are going to always have lower capacity. But this just goes to show the opportunity we have of adding capacity into our markets and absorbing that capacity. And what -- to show you why those frequencies work so well, to give you a sense. So if you look in that 50% where that are getting additional frequencies, as an example, we have 33 markets today that have 1 or fewer flights per day. So indicating they may have 2, 3, 4 frequencies a week. 22 of those markets are getting an additional frequency in 2026. So again, we're adding capacity pretty much in line with demand. It's much better for the passenger. They now have more days of week they can choose so they can adjust their plans, and that gives new benefits and new passengers we can collect. And then as well, it improves connectivity in the hub because you're increasing those connections every day. So it's a multiplier effect as we bring it in. And we have plenty of room to keep this model going. As Pedro said earlier, I think we will change when we see the model needs to change. But the question comes, will we be able to see that growing? And as I like to think about it, I usually break it down into what potential exists in our markets and in our network and then do we have the infrastructure to really make it work. So on the left side, what you have is, as I pointed out, 50% of our 85-plus markets today have 1 or less frequency per day. And so just think about your average routes here in U.S. or any city that's of medium size, you really want to scale those markets up beyond 1 flight a day. So that just goes to show the power and potential of just adding frequencies in the markets we already have. And two, you'll see there we have what we put here, there's about 30 markets that we consider COPA ready. And what we mean that? You heard reference earlier, we have a small network planning team. When we go through the process every year of looking at markets, they come with a starting list of markets that they feel are ready. And I think if we had infinite planes, we could start most of those 30 markets relatively quickly. So it's really a process of narrowing it down to what's going to be the best choices each year, and that's how we get to the stat I shared earlier of launching 22 and only stopping 3. So I think that goes to show we have lots of points in the network we can bring online. And coming to the infrastructure, I think the minister will talk a little bit about it later. Dan will also cover it in the operations section. But just to give you a sense of where we are today in the hub in Panama, so the first dimension we think about is around the runway capacity. So how many arrivals and departures we can take. Today, we still have about 40% capacity that we could increase above where we are for now. So I think that's something like if you were to play it out over the hours of the day of operation, it's like 1,000 either arrivals or departures you can take or 500 of each. So that's not a limiting factor. To give you a ballpark today, we do somewhere in the neighborhood of 350 flights per day. And then if you think about gates, which is obviously the other key infrastructure element, we do have plans. There are plans to increase gates over the next few years. So that's why we've put in here based on the current growth plans. But with those growth plans, again, you have about 25% available capacity. And so if you're trying to convert that into a number that may be more meaningful to you, 25%, if you play it out over the course of the day, means we could add somewhere in the neighborhood of 300 more flights than we do today, 300 more departures. So that's, again, roughly doubling the operation that we have today. So I think we feel pretty comfortable with the current plans in place and especially a lot of -- we've had some really good support from the government in helping execute these. We have plenty of infrastructure left to grow. So that covers the network. I hope that gives you a sense of why we see it delivering how it grows and why we see potential. Let's talk a little bit about the product. So again, I think we're very proud of the fact, and as you saw in the video, we have the only full suite of premium products on every flight we operate every day. And let me tell you a little bit, how many people have actually flown on Copa? Okay. How many of you -- Pedro, I'm glad to see your hand went up. I was a little worried. In 37 years if we didn't get him, we are in trouble. How many people have tried the DREAMS product? Okay. That's much smaller. Okay. So let me explain to you what the dreams is. It's a picture on the left. The DREAMS product is -- you've seen a lot of talk from other airlines around the narrow-body full-service business class with a flatbed business class. This is one of the originals of the model, all right? So we launched this around 2018, 2019, give or take. And this is -- again, it's a business class cabin. We have 2 configurations, 12 and 16 seats, but it is a full flatbed business class product. And we target it mostly in markets that are 6-plus hours. There's a few exceptions in other places. For example, all of you here, yes, it does flight in New York guaranteed once per day. Sometimes you can fly another flight. So book your next Copa flight with -- or next flight with Copa and you can try the product, too. And really, again, this is a product designed to bring on those long flights where we know we have passenger demand and where many other airlines might fly a wide-body, we're coming in with a competitive business class product. But then we also have in the second column, the non-DREAMS markets, where we offer in every flight a dedicated business class cabin. So like you would see in most U.S. carriers, these are not a European, we have 3 seats and we only sell 2. These are dedicated business class seats on every flight. We also, on every flight, offer an economy extra section. So these are the first between 3 and 4 rows of the cabin. Each of these seats have 38 to 39 inches of pitch. So it's an economy plus product than what you're getting and you get to board with early, you have the cabin space, et cetera. And then for all our passengers in every seat, we have an industry-leading pitch or region-leading pitch at 30 to 31 inches. Every seat reclines, free food and drink on board, you can still bring a free carry on. We have a form of entertainment on just about every flight. And by end of 2026, we'll have it on every plane, coinciding with our densification product. So I think, again, we bring a product that is unmatched in the region. And the good news is we've converted that more than just sounding good into actual premium revenue growth. So keep in mind, I mean, Panama, I've been there a year now. We're really enjoying it, and it's a great market. But it's not a market that is the size of, let's say, New York City or London in terms of the amount of people that live there and inherent demand and especially premium demand. So if you look at it, we're pretty excited to show -- if you look between 2019 to today, we have actually managed to grow our premium revenue share by 22%. I mean, obviously, this is much bigger if you put it in absolute numbers of the growth. So this is of the revenue that we're bringing in, we've grown it to now we're at almost 40% of that revenue is premium revenue. What drives that? One is going to be the Dreams product that you saw earlier, which has allowed us to really start playing in a normal business class pricing and product on some of the key trunk flows. Two, we've launched a number of products we'll talk about in ancillaries around upgrading and how you can purchase upgrades. Three, our economy extra. There's still potential there to go, but again, that allows us to bring in another source of revenue. And then I think the other piece, which Dan will cover a little bit in the operations section is around the service elements we provide with our crew and execution on board. So again, we're pretty excited about what we've managed to do there, and we expect that to continue going. Now the third element I talked about was the direct connection we have with customers. And as I said, over the last 2 to 3 years, I think we've shown you the chart on the left, which is how much -- as we've managed to move our distribution to become direct, and we're now at 89% direct, we managed to significantly lower our cost of sales and distribution, so in the order of 30%. Obviously, that's the huge benefit in what we're doing from the CASM perspective and our CASM mindset. But I think equally important and almost a hidden gem of what we went into with this migration is that we now have a direct relationship with 89% of our customers. And that's a pretty powerful stat. If you think to any sort of retailing or merchandising environment, the fact that you now can offer your product directly, we're not going through the GDS to 89% of our customers is incredibly powerful. We communicate with the customers. We describe the products. We can bring other products online. We can market directly to them. And so again, at the end of the day, we own that relationship with them, and we can grow that relationship over time. I think we haven't -- we have a lot of potential, let's say, of what we can still go do over here. So we're very early in this journey. But again, we see it as something unique we can continue building on, which is why we see a lot of potential where to grow revenues going forward. So I mean, we have ticket revenue and ticket revenue has shown good appreciation. But also, obviously, there's been a lot of growth in ancillaries around the world. So Copa is no exception. Over the last 5 years, 6 years, we've managed to increase ancillaries at a 34% CAGR. To put it in perspective, that's compared to ASM CAGR of 4%, all right? So quite a bit of gap. We've had a number of wins there. You can see on the right, a few examples. We've done a lot around seat assignments and how we allow passengers to choose and pay for their seat assignments. Upgrades, I talked about earlier, we launched new products around instant upgrades and your ability to buy and upgrade from your seat. And then as well bags and bring online baggage revenues and how we adjust pricing to best match customer demand on that. But I think the exciting thing, too, is there's still a lot to do. If you were to look -- you can look at any one of the industry sources and compare our ancillary revenues today versus U.S. carriers or even European carriers, we sit at roughly about half the percentage. Now again, we don't have the loyalty program yet that other -- other airlines do. So a lot of that exists there. But that just goes to show you how much upside there is. And to give you a sense, I mean, what we see as things in the pipeline, we still have a lot of work to do around merchandising and how we present things to the customers, how we do A/B testing. Two, if you think about fare families and fare bundles, today, we have 3 to 4 relatively static products that we bring to the market in fare families. We want to create new bundles and better customize those bundles to the markets we fly to, which we don't do yet. We also have opportunity to expand our fare families. And then as well, a lot of additional work we can do around the algorithms we use to price and bring products to market. Another area of growth has been Connect Miles. I think most of you know the history here, but as of 10 years ago, we didn't have a frequent flyer program. We were part of Mileage Plus with United, which was a vestige back to OnePass with Continental. We created our program back in 2015. We just celebrated our 10-year anniversary this year. And it's pretty impressive if you look at the statistics. Over the last 10 years, we've grown from nothing to 5.1 million members in the program. That's a CAGR of about 30%. And then as well -- so that's creating the loyal relationship and a direct relationship with the customers. But then as well, if you think about what we can do, obviously, I think you are all familiar with the opportunities in terms of new programs you can bring online with frequent flyers and selling miles. We managed to grow our mileage sales to partners by a CAGR of 20% over the last 5 years. So again, lots of opportunities of what we can bring. If you look even today in ConnectMiles, we still have a number of markets where we don't yet have a credit card partner that we want to bring online. We want to -- we think we can use the frequent flyer program to continue growing our premium revenue base and what we offer there as well as more opportunities, for example, around redemption and making a currency in the program that is more liquid. So customers have more incentive to earn and earn in any sort of transaction they do. And the last piece I'd talk about in potential is unique products we continue to innovate with. So this is the piece we've talked about, we mentioned it, I think, on the call a couple of times, is the Panama stopover program. This is a program that we've launched together with the Ministry of Tourism and with PROMTUR. And basically, the design of the program is that if you're flying through Panama on a connection, you can add a stay in Panama for anywhere from 1 to 7 days with no difference in your fare, so for free. And it's very much a win-win program. It creates more awareness for customers of Panama. It helps support priorities of the government, local businesses and growing the tourism infrastructure, which obviously is one thing we want to do and it's beneficial to us. And it gives -- in the competitive world of airlines today, it gives passengers just another reason to come choose Copa. To put it in perspective, this will be very close to 200,000 passengers this year. That equates to almost 500 passengers per day taking advantage of the program. And that's -- again, we think it's another unique offering we can bring. And because I've got the commercial part of this presentation, I'm going video heavy, and we're going to give you one more video also because this is going to entice you to come visit us in Panama on a stop over when you try the DREAMS product. [Presentation]

Great. This also is how my family and I have created a to-do list of what to do in Panama. So look, in summary on this section before I hand it over to Dan, hopefully, the points are fairly clear to you on why we think we have a very compelling revenue story with our model. One, we have an advantaged network in that we can bring online lots of destinations that are unique that we can serve because they are small and we can grow and leverage the power of our hub of the Americas. Two, we have a full service, full product suite on every flight that we fly. And that again, that is a unique offering in our region. We're the only airline that offers it on every flight. And two, really allows us to then customize better to the customers that are going to be on board and what they want to choose. Third, we have a direct customer relationship, which allows us to merchandise and a lot of potential of what we can do over there, which will create the growth and upside of new revenue sources we can bring online over the next few years. And with that, let me hand it over to Dan.

Thanks, Robert, and good morning, afternoon. I'm not sure what it is. It's right that afternoon to you all. Good to see some old friends, not that you're old. Friends from a long time ago and some new faces. It's amazing. It's been 20 years, and I'm seeing some people that have covered us or been with us actually in the IPO right from the beginning. So welcome, and thanks for spending a little piece of your day with us. Savi asked me at the beginning, what's new? The good news is not much. We're still killing it, and we plan to keep killing it. So that's the baseline. If you want to go to sleep now, if you already know the story, you can. First of all, we have a consistent history of really, really solid operational performance. Year after year after year, we put up great numbers. We'll talk about that briefly. We keep getting recognized for our service, but it's never enough. One of our values in Copa is continuous improvement. So we're continuously trying to innovate and figure out better ways to serve our customers at reasonable expense, at reasonable cost because the other part of the model, as Pedro has mentioned several times already, is always working on driving efficiencies. We talk a lot about CASM ex fuel. I'm going to briefly touch on some of the things we've been doing with fuel. There's a lot more to do with fuel. Fuel is really expensive. It doesn't seem to be going away anytime soon. Hydrogen isn't real yet. Electric doesn't fly very far. So we are always trying to figure out ways to be even more efficient using fuel on our aircraft. And then finally, as was already alluded to, we really think we're well set for future growth as well, both with the infrastructure and the growth of Panama itself and also some of the things we can control internally, especially in the area of maintenance, which is a real challenge for most airlines right now. So 3 graphs on the slide here that show some very key operational metrics for airlines. First of all, on-time performance. As Pedro mentioned, we're well set to finish the year above 90%, arrival performance. I don't believe he'll stop calling me until we get to above 100%, but we're working on that. So I'm working on it, Pedro. We're going for 101% next year, okay? No, we'll end above 90%. We're really well set to do that this year. It's been a good year. Completion factor, the percentage of flights we don't cancel also in the top probably 10% of airlines worldwide, maybe 5%. Customers can rely on the mission getting completed when they book a Copa ticket. And then the bottom right is the contribution of our maintenance organization to that reliability. And if you look at Boeing charts or Airbus charts or anybody, specifically look at Boeing charts, for the 737 family. Copa is always right there in the top 10 worldwide in terms of dispatch performance. And obviously, that leads us to being recognized both by Cirium and previously OAG, they no longer publish their punctuality league awards that they called them. But Cirium, as Pedro has already mentioned, recognized us year after year. This is an independent organization that is totally data-oriented. There's nothing made up here. Copa just puts up the numbers that put us at the top of Latin America, the Americas and in the top -- usually top 10 in the world year after year after year. Skytrax, a well-known organization that predominantly focuses on the service side of the business, again, has recognized us many years for excellence in service and specifically for excellent staff. And then to the right there it was on one of Pedro's slides, but Condé Nast Traveller, a high-end travel magazine. I guess magazine still exists, at least online. But that was a surprise a few years ago. They, 2023 out of the blue, literally, we got this award that they had recognized us as one of the 15 best in the world and with some pretty exclusive company. And then APEX, the last one I'll mention here, APEX gives star ratings to different airlines. We've been a 5-star airline a number of years in a row now. And again, I think the most important part of the slide is not the specific logos. It's the number of years they keep showing up. So the story of Copa is a story of consistent long-term performance year after year after year. I won't read all these. We don't talk about NPS publicly, but our customers say nice things about us. We give them the opportunity to say bad things about us, too. They tell us what we can fix, and we listen very carefully. But our NPS is right there in the levels of the best airlines in the world. Some specific passenger comments. I just grabbed 4 kind of representative ones. Again, I won't read them, but they talk about themes like it's like the golden age of air travel again, on time, people are friendly, people are nice, people are empathetic. They're trying to serve me. There's actually food, my seat reclines. So we've already touched on some of those points, but people are really the bottom line of the story. It's people serving people, and that's what Copa does, I think, really well every day. To Savi's question, this is not 100% new, but we are continually trying to evolve always with an eye on cost. So our drive is always to be the most efficient we can possibly be producing the product we think our customers want from us. And specifically in the area of digital tools, we've brought more and more in-house. It gives us more control of the costs. It gives us more control of how agile, how quickly we can adapt to customer needs. And we've rolled out some neat new things. None of these are earthshaking and the first one in the world to do it, but they're all things customers really need and want to make their travel experience more effective. So things like pushing upstream, pushing out of the airport, more transactions, being able to scan your passport before you get to the airport. So when you get to the airport, you go straight to your gate, you're already validated and you don't have to see anybody, paying for your bags in advance so that the transaction at the airport is quicker, again, trying to pull that friction out of the airport experience. Our mobile app developed 100% in-house is -- has won The Webby Awards 3 years in a row or has been recognized by Webby, been nominated in the awards process. Again, not for earth-shattering things, but just for providing really good quality service to our customers on basic things customers need, like knowing where their bags are, like knowing -- like being able to make changes if something changes in their travel desire, being able to make that change on the web instead of calling or on their app instead of calling the call center. And again, we continue to unlock capabilities within the digital environment, be it the app or be it the website, which has 2 benefits: customers in control of their journey. And the second thing is it reduces call center and other costs to service those customers. So it's a win-win for both the customer and for Copa. And we continue to push really hard on notifying, keeping customers updated continuously throughout their journey on what's going on because traveling is, by nature, stressful and things do change. So I'm going to switch gears here and talk about fuel for a moment. Obviously, the MAX performance is an important part of our fuel conservation story. So the MAXs have allowed us -- the increasing percentage of MAXs in the fleet have allowed us to reduce our fuel burn per OTK. A few of you may understand that if you're real industry geeks, if you're not, it's a simple way to measure something like fuel burn per block hour, but holding a bunch of other elements constant so you can compare over time more effectively based on payload and a few other factors that can skew the numbers. So 8.1% improvement since 2021 and a clear path to keep going to achieve more, partly because of the MAX, but also because of a number of specific actions taken internally by Copa and/or in conjunction with our service providers, either the airports or ATC. Another specific example, we've pushed down APU. APU is a little jet engine in the tail of an airplane that keeps the airplane cool when you're boarding, for example. We've pushed down that consumption by 21% since 2022. That's just basic blocking and tackling every single day, staying on top of the airport authorities to make sure that their services that are at the gate work, so you can plug in the airplane and not have to keep your APU running. Real-time alerts, a little tiny team of data analytics folks in my area has built real-time alerts that allow an airport manager to see that an APU has not been turned off when it was supposed to be turned off and send somebody to turn it off. So it's just attention to a lot of little details that add up to pennies that add up to dollars that add up at the end of the day to many, many gallons of fuel burn. The third bullet there, really, really solid work over the last 1 year plus with the leadership of air traffic control in Panama and with the airport and with Copa, the 3 parts working together on increasing efficiency in the air traffic management of Panama. There's also a process going on right now. There's a public bid out right now for a complete redesign of the airspace of Panama, which will push this even further. And that hard work, a lot of hard work, monthly meetings and a lot of detailed work has driven down taxi out times by 6.9% in the hub, and that's just waste. Taxi out is pure waste. So it pulled that down. That's fuel burn, that's time for our customers, that's savings from every angle. And it has also reduced by about 5.3% the track miles, the distance spent inside of the airspace of Panama kind of getting through that last 40 miles to the airport. And just visually for the non-pilots, non-aviation geeks in the room, visually on the right-hand side of the screen, what you see is 1.5 years ago, what the average arrival into Panama flying in from the north, looping around to the south and then landing towards the north at Tocumen, what it looked like before and what it looks like now. And you can see that the amount of time that little green line spends in the air is significantly reduced. Again, that's fuel burn, that's CO2, that's efficiency. And also, it's less variability than there was in the past, which allows our on-time performance to be more solid. And we're never standing still. We're fiddling with testing, I guess, is a nice way to say it, a bunch of new things. We're bolting on some finlets on the 5 airplanes, and we'll be testing those starting early next year. They promised a pretty interesting fuel burn reduction on 737 NG aircraft. We'll see how it goes. If it goes well, we'll add them to the rest of the aircraft. Also looking at a fuel analytics tool. We do a lot of fuel analytics in-house today, looking to take that to the next level, and we have a test starting early next year. And also a couple of other technologies in the cockpit that will allow our pilots to be more efficient on specific flight paths and altitudes. Just a couple of quick examples of how we're using data and analytics. One is very hidden behind the scenes, in-house development. It's called Tango [indiscernible]. Tango is what we call drivers on the ramp in Panama. So these are the guys that drive a little tractors that make sure that your bags get either to bag claim or to the airplane if you're connecting. There's a lot of logistics that go into that, as you can imagine. And historically, it's been a very static process. So now using real-time feeds, knowing how many passengers, how many bags on each plane, where they're all going and knowing the specific arrival and departure times of each of those planes, which all of that changes over time during the day, using an internally developed model, we're able to be more efficient assigning drivers, actually saved a few drivers, be much more efficient, ensuring that we get bags to the right place at the right time so they make their connecting flight and don't cause a delay. And that has led us ultimately to saving about 5% or about a 5% improvement in missed bags, which missed bags apart from the economic impact of having to then get the bag to the customer, it's a disservice to our customer. So again, just another example of all the little things we do day in, day out that as customers you may never see that are going on behind the scenes and every day now more driven by data and analytics to make the experience more reliable and more effective. And then Connection Saver is a vendor product. It's a vendor tool that without going into all the details, allows us real time to see what's going on with every single flight, what passengers are in jeopardy of misconnecting. Panama lives on connections. The hub lives on connections. Roughly 80% of our traffic is coming to Panama to connect or to enjoy stop over now and growing. But we don't want them to have an unintentional stop over. We want them to make their connection and get to their final destination as purchased. So Connection Saver allows us real time to see who's in jeopardy and to make better decisions on hold or not hold the connecting flight based on what's going to happen, what the down line effect of holding or not holding that flight is. In the example to the right, there's going to be a 13-minute misconnect. If we hold a flight 13 minutes based on being able to see real time the flight plan for the connecting flight that's going to fly a little faster because it's got a tailwind today and knowing how long that airplane has to flip in the station and knowing there's 5 to 10 minutes more than it actually needs to flip in that station, I know I can hold this connecting flight 13 minutes and not affect the 160 passengers that are on the inbound back into Panama with that same airplane later. So it just allows us to pull a lot of data together and make a decision any human being could make if you only had one airplane. But once you have a certain amount of airplanes, it's just too much to try to figure it out on the fly with real-time data. So A lot of really cool stuff going on there. Tocumen, we're going to hear a little further at the end of the day here of the ministers talking about Panama and about Tocumen specifically. We're doing really well with Tocumen right now. There's a lot of good stuff going on in Tocumen. The airport is being well managed right now. There's a lot of important maintenance projects going on. There are growth plans that are real that are being put in place. Terminal 2 opened in 2022 that brought 20 new gates online. We currently have 53 contact positions and 12 remote positions. So a total of 65 places to park airplanes in the peak moments of the day. Again, really important projects going on, a complete resurfacing and lifetime extension of both runways in Panama is a real project that is already bid out and has been given to a vendor and will begin early next year that will extend the life of those runways. And also as part of that project will allow us some additional high-speed exits, which, again, increase capacity in the existing 2 runway infrastructure. And also, there are some apron, specific apron infrastructure projects that will allow more agile ground movements and therefore, better use of the 2 runways that already exist. Runways are really expensive. Panama will need a third runway. But the longer we can defer that need, the more one, we can prepare for it well. And the secondly, the more cost efficiently we, as a country, can run the airport. There's a 10-gate expansion that's being discussed and hopefully, will be bid next year. The plan is to bid it next year. It could be 10, it could be a little more, but 10-plus gates, and that will take us through about 3 years of construction to having at least 75 positions on the airport, could be more again. And there's also plenty of space. The other thing we don't talk about here, but it's super important. The Panama Airport is not landlocked. Unlike the vast majority of airports in the world, it doesn't have a bunch of houses all around it. There's a place for the airport to grow, and that's super critical and super important. And then airside and terminal enhancements, the ones I've just mentioned, the gate expansion, et cetera, and a future gate expansion as well. There's space and there's a plan that will allow us to accommodate 10-plus years of growth. And we think at that point, then the third runway will become necessary and a bunch more bigger infrastructure. And we have a really effective, as I mentioned at the beginning, a really effective working relationship right now with the Tocumen management team, the AAC, our version of the FAA, our Civil Aviation Authority team and Copa, a lot of coordination on the growth plans and what needs to happen when so that we are not spending money on infrastructure before it's needed, but at the same time, making sure we keep up with the growth. And then the last, I guess, future-looking comment here is past looking, but it's also future looking. A lot of airlines are very concerned as they well should be about maintenance costs. Maintenance is a huge expense item for airlines. It's an expense item that's difficult to control. Post pandemic, the big vendors, the big OEMs, they call them, have raised cost significantly. They're struggling themselves with supply chain issues, et cetera, still. So we feel like we're very well set to grow with at least cost stability. So Copa, as we've talked about in prior years, and I think a number of you have actually been to see our hangar in Panama, invested in our own hangar capacity a few years back. We are currently pretty much full on the 3 lines, 3 heavy check lines that we built. Picture doesn't show it usually that the hangar has 3-plus airplanes in it, but we did this past -- or this year, we're still this year, 26 C checks. That's about 74% of our heavy checks this year. The rest went out. And when we send them out, they cost a little bit more, but it doesn't make sense for us to build to the peak. So we're now to the point where we have a plan to add 3 more bays, a paint hangar and then obviously, all of the supporting shops on a ROI basis. If the economics make sense, we'll do it inside. If it doesn't make sense, we'll send it outside, to grow that whole facility and all of the supporting shops further. And then finally, as I mentioned, the long-term sustainability of maintenance costs, especially with the OEMs is really important. The LEAP engine from CFM that powers our MAX fleet is 100% under long-term power-by-the-hour contracts. That's really, really important. There's a lot of carriers today that don't have long-term stability on those costs, and it's a high-risk item. And then a number of other kind of expensive and critical components, APUs, other key components on the airplanes. We have both economic guarantees, but we also have reliability guarantees in terms of time at the shop and getting them back to us. So we feel a lot of -- we feel very confident in our ability to keep maintenance costs under check over the upcoming years, unlike a number of other carriers. So in summary, we continue to put up great reliability numbers, specifically on-time performance. We don't plan to stop anytime soon. A whole team of a lot of very, very, very dedicated individuals. And again, I want to focus on the people, as Pedro did. It's all about people and it's all about culture. If you ask anybody at Copa at any level, what Copa's calling card is, what makes us famous, if you want to put it that way, obviously, service is critical, but they will say on-time performance because it doesn't matter how much you serve your customer, if you're not reliable, if they don't know they're going to get where they need to be for their child's event, their business meeting or whatever, they're not flying Copa. So we're going to keep putting up great numbers there, and it's been a really good year and on top of 20 years of really good years. So we'll keep going there. Customer preference. I think we're doing some very interesting and good things, as Robert described, to continue to evolve the product to make sure that we are an airline people want to fly. It's not just the network, it's also the product and the service they get on board. We don't rest. We are relentless about not necessarily revolutionizing everything but continuous improvement. We're always looking for a way to squeeze one more 100th of a decimal out of cost and/or to squeeze 1 more 0.5 point of NPS into the equation by just doing things a little bit better every day, smarter, more data, more analytics and frankly, getting everybody very focused on the mission so they know what we're trying to accomplish. And then finally, we really believe we're well set to continue growing, both from the standpoint of the infrastructure of Panama, ATC in Panama, the airport itself. And also, we feel confident that our maintenance infrastructure and our maintenance contracts give us a solid platform to grow with reduced risk compared to a lot of the folks in the world who maybe have not locked down some of those costs as well as us. And with that, I'll pass it to Peter Donkersloot.

Thank you. Thank you, Dan, and thank you all for being here. I know some of you come from a couple of subway stations away, but some of you made a very long trip to being here. So thank you. Some come from all the way from Mexico, Brazil. So I really appreciate -- we really appreciate all of you coming all the way here and spending part of the day with us. So thank you very much. For those of you who don't know me, my name is Peter Donkersloot. I'm the CFO of the company since March, and I'll guide you through our financial overviews and some targets for us to see today. The team has talked a little bit about our formula. Some of them might refer to as a boring formula, doing the same thing we've done over and over, little new things, that is us. And you're going to see the same thing in our financial section, more boring, same as always, consistency, focus. We've all touched the same words: focus, consistency, continuous improvement. You're also going to see it here in the financial section. So I'm going to guide you to a little bit about how that formula has translated into great financial results and what is the back end or the backbone of that formula from the financial section. So Pedro talked about our EPS and how it has grown. It has grown since we went public in 2005 at a CAGR of 11.4%. That is a very amazing story. And remember, we are an airline. So that makes it even more amazing. And it's been backed by the cash from operating activities, which has also grown 11.8% CAGR during this time. And this is a 20-year track record of industry-leading reports, but we don't do that with a couple of good years. It's been consistently delivering high-end results from the financial perspective. And the same formula has translated again into great operational performance, great passenger experience performance has also translated into great financial performance, as you can see here. And what is the backbone of that from the financial perspective? We've been focusing on delivering operational excellence at the lowest cost possible. We've been focusing on maintaining a robust balance sheet and a discipline and shareholder-focused capital allocation. I'm going to go by each one of these and to start with the first one, delivering operational excellence at the lowest cost, and we chose the words carefully. We are not -- we're going to the lowest cost everywhere possible. We're going to make sure that the product we choose to deliver, we deliver at the best cost we can. And then once we reach there, we continue improving that. And that is our first part of the financial backbone, which is a permanent focus on cost efficiencies and continuous improvement. And yes, this is how we see it from 2013, the 6.7%, the same graph that Pedro showed and how it has been coming down to 5.8% in 2024. We expect the same 5.8% this year is what we're guiding for, and we did a guidance for 2026 to be in the neighborhood between 5.7% and 5.8%. We did say last Investor Day a set of initiatives that are going to drive us to the 5.8%. You see it there, the fleet simplification, diversification that is halfway through, the new distribution strategy and the overhead cost and discipline. Those are a lot of top-down initiatives. But this cost has been driven by also a culture that Pedro and Dan referred to that is always looking for continuous improvement in our cost structure. These are top-down, as I said. But one of the things I like most of when we see bottom-up cost initiatives. When somebody in Dan team comes up and says hey, we can save some $100,000 here in reduction of food waste if we use this better data to reduce this. And then somebody in the fuel team comes and says, hey, there's an opportunity here to do this and reduce another $500,000. And we see those initiatives every day because this is not driven again by only top-down initiatives. This is a culture and a full team. And as Pedro alluded to when he talked about our culture, how everybody knows how they can impact our strategy, and this is one important part of our strategy. And people are thinking each day, if they're a flight attendant, if they're a mechanic, if there are a manager in a station, how can we improve our cost structure. And we see every day new initiatives coming in, and it's a culture that drives this initiative. So this trend, which obviously, this is Copa trend, has positioned us to be and maintain or improve our competitive cost advantage versus our peers, especially versus those we overlap the most. We have more than $0.01 of CASM ex fuel advantage. And we aim to maintain this relative advantage by continuing improving our cost structure by having this continuous improvement mentality to make sure we maintain this cost advantage. This is the one thing we control. The external barriers, fuel, economic landscape will affect us all similar ways. But this is one thing that we can control and that we will make sure that we're in a better position regardless of how is the macroeconomic environment on the fuel price coming forward. And we're going to continue making sure that we have the strong competitive advantage that we have today. And that's on the CASM ex fuel part. Dan talked a little bit about what we're doing also on the CASM on the fuel part of the cost, which is a significant part of our CASM, on total CASM. And he talked a little bit about how our fuel cost has been coming down on a relative basis. And here, we can see -- we've been investing a lot in this new technology to making sure that we have the best technology for the fuel consumption. And here, you see how the MAX fleet as a percentage of our fleet has been increasing. It was around 21% in 2022. It's around 37% in 2025. It should be around 41% next year and should continue growing as we continue getting deliveries of new MAX. And this should also be going forward, be helping us to reduce that part of our CASM, not only what we're doing on our CASM ex fuel. So this is also something important to highlight from our cost perspective. Then the second part I want to change that was a backbone in our financial strategy is our balance sheet. Balance sheet matters. It matters a lot, and it matters much more if you're an airline. The P&L, to use an analogy, will be like the engines. It can tell you how fast can you go, but the balance sheet, the balance sheet will be the airframe, and it can tell you how far can you go. And in Copa, this year, this month, we're talking about 20 years. We want to make sure we go 20, 40, 60 more years. So our balance sheet is something very important for us and something we take with great seriousness. And we positioned that balance sheet with strong liquidity. We have -- we've been working about $1.4 billion, $1.3 billion in cash. Last quarter, we ended at $1.3 billion. That's around 38% of last 12-month revenues. very good liquidity levels. We also have, on top of that, around $150 million of available unsecured and unused credit lines. And we have -- additionally to that, we have $600 million of our cash as predelivery payments for future deliveries. And we don't finance those PDPs. We use our cash to put there, and that is cash that we will receive as we receive those aircraft. We finance our aircraft. And to the right, I have an important fact that we like to own our assets. 78% of our fleet will be owned, and that is helping our balance sheet being backed by tangible assets. And of that, 78%, 46 -- we've got 46 unencumbered assets, which is 37% of our fleet is unencumbered, and that's valued at approximately $850 million. That is an additional source of liquidity, that is a strength in our balance sheet. That is important to highlight. So how we structure this is normally we finance our aircraft for 10 years. And at the end of that -- 10 or 12, depending on the structure we use. And at the end, we use a purchase option and then the aircraft becomes unencumbered. In most cases, we do that purchase option in cash. And that is how we get to that balance of 46 unencumbered aircraft. And again, 78% of our fleet is what we use own. So only about 22% of our fleet right now is leased. So -- this leads us to having one of the lowest leverage amongst our peers. This is the strength of our balance sheet. We're at 0.7x net debt to EBITDA, a very strong balance sheet that we have. Our debt 100% aircraft related. As I said, we finance 100% of the aircraft when we receive it. We finance it for 10 years or 12 and then we do the purchase option. Our cost of debt as of lately is around 3.6%. And right now, we have around half of our debt fixed, half of our debt at variable rates. So we used to have 65% of our debt fixed at the beginning of the year. We've been floating a little bit of our debt this year. And right now, we have around half and half. We feel comfortable with that. So that's where we are, and that leads us to 3.6%, but also more importantly, a very strong balance sheet when you look compared to many of our competitors when you look at that 0.7x net debt to EBITDA. And then our capital allocation. We're focusing on a very disciplined, again, consistent discipline and shareholder-focused capital allocation framework. And we're focusing on 3 priorities. One is want to make sure we maintain a strong balance sheet. We like to have a very strong balance sheet. That is one of Copa's strength together with our cost structure, with our hub, with all the things we talked about today, having a strong balance sheet is one of our competitive advantage and a strength. So that is one of our priorities. Then we're going to reinvest in profitable growth. We have here 3 years that we use as CapEx. We're seeing that the cash CapEx, which is the non-new aircraft-related CapEx should be around $300 million that we're expecting for the next couple of years. And then the aircraft CapEx will depend on Boeing deliveries, but that we finance 100% of it, and that's what we're expecting. And then we also see that we have another priority that is returning value to our shareholders. We discussed that EPS was growing 11.4%. Our dividend has a CAGR of 20.4%. And that is because it's compounded by the EPS growth, but also the payout ratio has increased over the years. So that's what has been increasing that CAGR to 20% that has increased since 2006 into 2025, that dividend CAGR. And our policy maintains consistently at paying out 40% of last year's net income as dividend for the next year in a quarterly basis. And we also have -- as of our return to -- return value to our shareholders, we also have that still $100 million of a program approved by our Board to do repurchase -- share repurchase. We're doing that from an opportunistic perspective. We'll do it. It doesn't have an end date on place. Whenever we finish that, we're asked for another package to have another program to always have a program available. But again, no fixed end date. We just -- we will do it when we feel it's right to do it based on a couple of factors. That's a little bit on capital allocation. Going forward, and this is -- we talked again about 2025 guidance. 2025 should be our third year in a row with 20% plus margins. We guided in November during our call to the capacity growth for the year around 8% growth measured in ASMs and our operating margin between 22% and 23%. The assumptions have not changed a lot. 87% load factor, unit revenue RASM around $0.112, CASM ex fuel $0.058. Jet fuel prices when we did the phone -- the earnings call was at $2.47. Today is a little lower. That leads us to reaffirming our guidance of between 22% and 23% operating margin. I could say that right now, we feel that we should be in the upper end of that guidance. So that is what we're seeing as of today with, I don't know, like 3 weeks left in the year to go, we should be in the upper end of that guidance. And then for 2026, we guided to an ASM growth of between 11% to 13% and a CASM ex fuel to be in between $0.057 and $0.058. And more importantly here, it's a trend of that CASM ex fuel that should continue coming down. And we feel we have the tools and the initiatives and the culture to maintain that CASM ex fuel coming down. And this is based on the assumptions on having 8 MAX deliveries, of course, all the back-ended deliveries we have this year. And that 11% to 13% ASM growth is to give you a breakdown, and Robert already alluded to this, should be around 50% of that, should be a full year effect of the ASMs we're already flying in this fourth quarter. So about 40% of that should be additional frequencies to markets we already operate and only 10% of that growth should be new dots in the map. And I'm going to give a little bit more context on this. So that 50%, again, Robert alluded to of that full year effect are basically operations we're already doing. We're already flying. Our October load factor came up around 87%. November load factor will come up in a couple of days, but shouldn't be much different than that. So we feel very comfortable with that growth of that 50%. The additional frequencies, again, if we're operating at an 87%, 88% load factor, that means there's a lot of places we're operating at 90% plus load factors. And there's a lot of places we can put additional frequencies to. So we feel pretty comfortable with that growth also. And then only 10% is adding new dots on the map. So we feel very comfortable with this 11% to 13% growth for next year. And of course, as Pedro said, we got the flexibility to change that growth if we feel like. But at this moment, we feel very comfortable with that 11% to 13% growth. We can do it in a profitable way. And as much of it is, again, full year effect of this year. And then what's next on this going forward, I would say our priorities from a financial perspective, maintaining a robust balance sheet and trending our CASM ex even further down. We believe that for 2028, we can achieve a CASM ex fuel of $0.056. And I'm going to go back on the story. Last Investor Day, we said that we were going to deliver a CASM -- $0.058 CASM ex fuel by 2025. We actually delivered 1 year early. And we backed that on initiatives like the 800 densification, the distribution strategy engines and overhead efficiencies. That is what we guided to back then. We delivered on most on everything we said, and we delivered on that 5.8 even a year early. Right now, we believe that we have enough initiatives, including the capacity growth. The other half of the densification, we've only done half of that densification. We still have half to go for one extra row in the 800s to put. So that's 6 additional seats. We have a pipeline of negotiations and procurement that we believe we have a decent upside to continue maturing these efficiencies. And then probably none of them as big as the NDC we talked in the last Investor Day, but the sum of all the initiatives we have are significant enough to help us continue achieving this reduction of an additional $0.20. And then we got a payment strategy. We believe that we have with new technology and orchestrating to better send our payments to the most efficient channel. We also believe we can capture additional efficiencies here and something that is for every airline, a big cost bucket when you have that payment channel. So we believe with these initiatives, and again, more importantly, the culture that we're talking about, all those bottom-up initiatives that come up every so often, we can continue delivering a trend of CASM ex going down. We are confident of achieving our target of $0.056 CASM ex fuel by 2028. And we're very confident we can achieve that and maintaining a strong balance sheet, the trend of our CASM going down, and this will continue helping us to -- that one variable that we control having it under control. And regardless of how the other factors come in that will affect us all in similar ways, we will be in a better position to capture all those external variables. And with that, I'll pass it for Pedro for closing remarks.

So we have a few minutes for Q&A. I want to wrap it up. This is -- we've talked about a lot of this in the last a little bit over an hour, so I think there's no need to repeat it. So let's get on with the Q&A. I think we're sitting up here, right? Where's Daniel? Okay. So who's going to help us with the Q&A? Because I -- with the reflection from the sun, I can hardly see.

Okay. Mike Linenberg with Deutsche Bank. That $0.056, I guess, my question is, so which wide-body airplane are you guys looking at? I'm kidding. I'm kidding.

Or who is putting his life on the line?

I guess that will be me.

Is there a Boeing salesman in the room? Anyway. No, I wanted to ask actually just two questions here. One of your partners in the region, and you could argue also sort of one of your competitors, at least with respect to flows, looks like they're sort of changing their distribution strategy, or making some changes there. And I'm curious, does that have any sort of impact on you in the sense that I don't know how much -- I know you co-share with them and they're an alliance partner? Or is it something where you could end up flowing more share your way because it could be perceived as being somewhat disruptive?

I'm not sure I know exactly -- do you know what's going on? Go ahead.

Yes. So you're referring to Avianca's kind of move away from NDC towards traditional -- back to more traditional GDS-based distribution. Look, I think the short answer is we don't think it's going to impact us too much. I think maybe there's some opportunity that will come out of it. But at this point, if you look over the last year, we've stabilized pretty much at this 89%, which is flowing through copa.com and through our NDC channels, which, to be clear, our NDC doesn't flow through a GDS-based NDC. It's more of a pure-play NDC. And we have them about 11% that's going to GS, and that's been fairly stable. So I mean, we're very comfortable with our strategy. I don't think we're going to change our strategy at all. I think probably the only the impact, I guess, potentially for us is as they start putting more surcharges in the market, that could shift some agencies to look at other options. And I think we'll be there with a competitive product when they -- if they're out looking.

Okay. Great. And then just, Pedro, when you were giving the presentation, you showed Panama versus -- I think you had 5 other airports. There's Bogota, Mexico City, Lima, Sao Paulo and then Salvador. Of those 5, I mean you have real estate where you can add another runway, you can add more gates, but of those 5, any of them, maybe other than San Salvador, I mean, do they -- is there any space where they could even grow? Aren't they...

Yes. Apparently, some do have space, but the bureaucracy in those places makes any growth of the infrastructure a problem. So I think there's a few that might have space, not all of them do. And again, we're trying to punt the need for a third runway. And I think it can be -- with all the work that Dan explained, it can be punted over 10 years, which is actually a good thing because a more efficient use of the infrastructure is best for all, for the airport authority, for the government, for the airlines. So that's -- we think we can pun -- we can have 10 years of strong growth without needing a third runway. And when it's needed, there's land, as Dan also mentioned. So maybe some -- I don't know exactly who can add infrastructure, but for sure, not all of them.

But it sounds like over time, it looks like you're actually going to gain at the expense of these other airports...

We're in a better position, for sure.

Pablo Monsivais from Barclays. I wanted to understand a little bit your thought process in adding those cities because if you think about the dynamics of Tucuman or many other cities in Argentina, Brazil, Chile are very similar, and they follow regional economics. So I guess that you might have hundreds of these cities that are potentially targets for you. How do you decide whether you accelerate those new destinations or stop or add frequencies? I would love to understand what's your decision process there and the addressable market of just covering these smaller cities because I guess in Latin America, we have so many of these smaller cities with probably less than 1 million passengers with a very low penetration and that just the service is not there.

So I'll say a few things. One is we cannot do them all at the same time. Because not all work is the same as others. I mean, they don't work out the same way. So some might become very profitable in the first 3 or 6 months and others might take us a year or maybe a little bit longer. So we don't want to be doing like 10 of them at the same time. We pick them by priority. And as the economies and as our countries grow, cities that might not have been viable 10 years ago are viable today. So they become priorities x years later. So we don't do them all. We look at the size of the market. We look at where they travel. We look at a corporation that might be based in those cities or they're receptive for a message. So there's a long list of things we look at. And again, I think the key is that we don't do them all at the same time.

I would just add one other point, which is it's also about balance. So we always try to keep the hub in a relative balance because that's how you continue to build the connectivity at any given time because if we were to add, for example, all points in Deep South, it would create an imbalance into the hub. So keeping that balance is important.

Dan McKenzie with Seaport Global here. A couple of questions. One of the slides that I thought -- and by the way, thanks for the presentation. It's great to be reminded of what a great airline you guys are. But one of the slides that interested me was the loyalty slide, 5.1 members. I'm wondering if you can just share a little bit more average credit card spend, average growth in that credit card spend, -- any dynamics that you can share about that? And then if you can hold on to that question. And then the second question I had is just the penetration into your partners' corporate travel programs. Are you getting your fair share of corporate travelers from your partners connecting through your network?

So look, I think on the ConnectMiles piece, we're not in a position to really disclose all the details of the customer set that's going over there. I think what I would say is, look, if you look at the -- when we look at the metrics on those customers, a, they're a very loyal set of customers. So the amount of trips we're getting from those customers when we compare them to what we see from competitors is we're doing stronger on that dimension. I think on -- when you think about credit card spend, et cetera, that's probably where we have more opportunities still to go. Obviously, our credit card in Panama does really, really well because a lot of people -- we're the natural home market carrier. In other markets, we have to work harder to build our position in those markets because we're not necessarily the natural market choice, but we do have a very compelling international offer. So I think that's why we said there's still a lot of upside of where to go. But demographics are attractive.

And we don't really keep track of corporate travel from our partner, [ link ] originating from their corporate contracts. We don't keep track of that. And we wouldn't know other than knowing that we do have frequent flyer reciprocity. So if we're covering a region that is not covered by, let's say, a United or someone like that, there's a high probability that they're going to fly with us. But if we don't have a contract with those corporations, we will not have that information.

Jens Spiess from Morgan Stanley. Just one question regarding next year's capacity increase and your confidence on increasing prices. You mentioned that you had only 7 years where you're not able to do so. So my question is, obviously, to a certain degree, you already answered it by saying that most of the capacity increase is a full year effect plus the flexibility you have to reduce capacity if needed. But looking at today at it, how confident do you feel that prices will indeed increase with the capacity guidance you are providing?

I'll say -- I'll start and if someone wants to add. I'm not sure that we're saying that prices will increase. And it's not as much the capacity growth because 90%, as I think both Robert and Peter showed, is either frequency or full year effect of what we've done this year. And it's going mostly the frequency towards markets where we have -- or routes where we have very high load factor. So we're confident we'll do well on those. But we also have competition. We have quite a bit of competition. So it's not necessarily that fares will go up. We're hoping that they'll be at least stable. But where there's a big opportunity, which Robert showed is in ancillary revenues is in our upgrade product, our seed product and the potential of our premium economy product, which I think we're only touching the surface of what we can do there. And then we combine that with lowering our unit cost. And at the end of the day, if we can grow 12%, if we can keep yields -- the regular yields more or less in a stable ground and if we can keep on improving in ancillary revenues and our unit cost under control, it should result in good numbers.

If I just add one question regarding the premium revenues you have as total revenues. You mentioned, I think, 39%. How much room is there to increase that number further? Or are we reaching like a limit there?

We're not at a plateau. I mean, I think, look, we're not -- as I said, we're not New York or London. So I don't think you're going to see, I think Delta statistic is something like 65% or 70%. I mean I would not put that as where we're going to get to. But that said, we still have quite a few opportunities to go after. Our business class cabin today, we have quite a bit of available capacity still to sell in many flights, and so that's incremental premium revenue. As I said, fare bundles, it's a little bit in ancillaries, but more fare bundles and more fare products. And I'll give you an example. Tonight, we're going back on, most of us, on the JFK flight at 1:00 this morning.

1:00 a.m.

1:00 a.m. Yes. Yes. Because by the way...

So that we don't pay an extra hotel night. Very important.

Exactly. It's a cost and revenue strategy. And I was going to check in for my flight last night at 1:00 in the morning, and I looked at the seat map. And if you looked at our economy extra cabin on the flight of my flight tonight, I think out of the 4 rows, 30% was prebooked. So quite a bit of capacity. And I think that's another area where we've got a lot of opportunity of what we can do. So there's still a lot we do. There'll be a top, but we're not at the top yet.

We can get better. We're kind of like in a learning -- still in a learning process in terms of -- the whole thing with ancillary revenues is relatively new at Copa, and it gained strength after the pandemic. So we're still not as good as, let's say, the major airlines in the U.S., which has done an amazing job there from -- compared to where they came from. So we still have a lot to learn, and that's why we think we have interesting upside.

It's Duane from Evercore ISI. If I look at the level of your margins and the consistency of your margins and your balance sheet, which really doesn't need any deleveraging and I look at the historical metrics, you look like a compounder. I think the one element that might be missing is the fact that you're so heavy on the dividend. And so I wonder, maybe Stanley could speak to this, too. Is there any frustration with the valuation at a Board level? And have you evaluated maybe leaning heavier into buyback as opposed to the extra heavy dividend?

We haven't heard from you, so.

Yes. So I get the tough question. I was hoping I get a free right here. No. So I think that we like our dividend policy. It's 40%, and we're going to maintain it. It's consistent with what I think it's good for the company. It's what we've done. Hopefully, the market will understand that and value as they can. We won't lose too much sleep on that. We want the market to value us, but I mean, we will continue delivering the excellent results that we talked about. We will continue getting that CASM going down, maintaining that growth and returning value to our shareholders with a strong balance sheet. And eventually, the market will reward us for that, I believe.

I'll just make a suggestion. I think you should just take a peek at consumer compounders and the kind of revaluation you can get from having an always-on buyback, which it seems like your business model supports.

Just one comment since you asked me. Look, I think we've done our buybacks where we've seen the opportunity really very strong. So if the markets go crazy and it goes -- we see the value go way down, more than likely, somebody will wake up at Copa and say, maybe we should do this. The other thing that I was going to comment is internally in our own several investments, one of the things that we talk about is which investment pays us to wait and pay us to wait is the dividend we get. And when you get dividends along the way and then you do your IRR later on, it's a big difference of just having an expansion of multiples or the market going up. So we talk -- we think of dividends as sort of payment to shareholders to wait for the opportunity for the share to be even better.

Filipe Nielsen from Citi Research. I just wanted to explore a little bit more about this capital allocation perspective. So combining all the metrics, the trajectory that you showed us in the presentation, like with the flexibility of the fleet, this decreases in CASM ex all the opportunities in premium in ancillaries, we should expect at least an increase like a significant increase in cash generation and all this cash growth that you're suggesting. Just wanted to understand how leverage should trend going in this direction given your 40% policy on all the comments that you already did in dividends because this is one point that we get a lot from investors, they should continue generating even more cash. What should we expect them to use this cash for?

So I think your question in a way aligns with Duane's and I hear you, we hear you both. And Duane had a strong recommendation at the end. You're asking a very strong recommendation. You're asking a question down that line also. And I think those are valid points. We've been very, very traditional in how we approach capital allocation and return to shareholders, traditional in our own way. And if the market is not valuing that enough, and we should look at a different way of doing things. I think it's worth giving it a lot of consideration and having a hard and long look at our strategy up to now. And we're never closed at anything. So it's -- two, if the third person ask a similar question right now, then we're going to go back to the office like right now and start working on it. But we hear you, and there are reasons behind what you're saying, of course.

Great. And just one follow-up on my side regarding the pricing and this whole dynamics with capacity and flexibility that you have. Just wanted to understand if with this trajectory of bringing costs down and keeping at least flat yields, should we expect even more margin expansion going forward? Or you're probably leaning into increasing more capacity and being a little more aggressive, not aggressive in a bad way, but aggressive to extend those markets further and continue with a solid margin, but growing more in the future?

You want to take it? I see you eager. Go ahead.

No, I'll start and then I think you guys can -- I mean I would say the following, which is I think the way we think about it, which you heard probably a few points in the presentation, but just to call out is cost is one of the things we know we can control in any scenario. And so that's part of the reason we anchor there and make sure we're delivering there first. Now I think we've got a lot of things we can do on the revenue side. And I would have loved to have a chart that said out of the 25 years, all 25 years, we managed to grow and show revenue growth. But as Pedro said earlier, competition is a reality. We can't control what our competitors are going to do in our markets, and that's part of life in business. And so I think that's a bit the -- let's call it, the variable that we can't control that does put pressure on revenues at points, and we do everything we can to offset it. Is it going to be flat or up every year? No. I don't think we're going to deliver that. But I think that's probably more what I would say. I don't think we're going to look to go gangbusters in growth because we think we have super high margins.

By the way, I agree with Stanley's opinion about the dividend. I think it's a great thing. It makes us wait for the opportunity to the pricing of the stock. So I agree 100% with you. But I have a question. When we have a great business, why -- if you -- do you think that the 2-class structure is the issues that is impeding the stock from rerate?

Not sure that -- yes. No, I'm clear. Yes, I'm clear what you mean. I know it's not business class and economy. I'm clear. Yes. Actually, we -- I haven't given a lot of thought to that question. And I would think no because the B shares are not out in the market causing dilution, and we've been very stable in keeping that ownership. And actually, I think the B shares bring a lot of stability and consistency to Copa because we are a New York Stock Exchange public airline with real ownership that cares about our bottom line and our results, beyond just what management wants to do. And so we don't act for the benefit of top management. So it brings stability. It makes us perform. And the rest -- the other 75% that floats in New York Stock Exchange, it's better for that. So I'm not sure if I'm answering exactly what you were looking for, but I don't see a negative there.

Let me just give you a little story 20 years ago. When we were doing this, the lawyer said that we're a Panamanian company, so we're going to have the shareholders' meeting in Panama. And he says, you guys are going to go crazy looking for proxies every year in order to have the shareholders meeting and have the quorum for it. And so I don't know if you know this, but the Chairman of the Board gets to vote the B shares unless somebody asked for them 2 weeks in advance. So I think the good news is nobody has asked for them. So I think what I'm saying is the A shares are representing the B shares very well. Well, the B shares are representing the A shares very well, sorry, the reverse. But I mean, I just think that what you all do on a quarterly basis, the analysts and all that is much more important than the shareholders' meeting. But if we were doing something wrong, I think there would be more people showing up.

Alberto Valerio from UBS. I asked about the dividends. I changed a little bit the subject. You're very clear about the 5 years, 10 years from now. But between now and 5 years, why we have seen return from COVID and some companies re-IPO-ing like Aeromexico just did, LATAM just did. We may see Azul in some couple of months and maybe we see Abra and Aerolineas Argentinas. What should we expect in terms of competition? What you see these companies propose different to attract these new capital. And in terms of also some benefits that the airlines gain on COVID like some discount on lease and so forth, how are you seeing them use this benefit to decrease cost, increase capacity, fares? How have you seen this new environment? This is my first one.

Right. So a few things. Actually, all those airlines you mentioned have been very -- have been growing aggressively for the past 3 years. So going forward, I actually expect at least in the year-over-year comparison for the growth rate to come quite a bit down. Both LATAM and Avianca have been growing like high double digits for the last 2 or 3 years. And of course, they benefited from Chapter 11 and from I won't use a bad word, blank their shareholders, and they have come out with a better debt structure and some lower cost, but we're still more competitive than them. And of course, competition is a lot stronger than what it would have been before, but we're dealing quite well with that. So it's life, it's reality, and we like where we are right now, even in terms of stronger competitors, thanks to everything you mentioned.

Perfect. And my second one, if I may, about the engines, new generation that we have on the MAX and the NGs -- is a trade-off, isn't it? Because you have lower fuel on MAX, but you have high maintenance as well. How have been this work? How is the cycle at the moment? If I'm not mistaken, they were expecting 5,000 cycles for the MAX, but was a little bit lower than the old generation. It's close to 8,000 to 10,000 cycles. How have been this work? How have been this mathematical working for Copa?

And why are you looking at me? You need to look at Dan.

Why did you spoil my lunch? No, kidding. Actually, the LEAP, as you mentioned, the LEAP has not been a problem-free engine out of the box, happens with every engine. The original engine CFM56 on the NGs also had teething issues. The simple answer to your question is, yes, the LEAP life at this point is not what it will be and is not what it was sold to be. But without getting into details that I can't get into, contractually, Copa covered itself by having cost per hour agreements. Therefore, when that engine goes to the shop matters a lot less to me than having the right number of engines and having stability of cost and also the ability to get those engines back into the fleet in a predictable flow so that I don't have operational disruption. So a lot of carriers did not cover with long-term maintenance contracts, and they're living the volatility not only of cost, but also of operational pain.

And it's a contract that was signed in 2015, something like that.

Negotiated for about 4 years, and it was signed in 2015.

Yes. So before all the issues.

And this is going to be our last question. Savi Syth from Raymond James. Maybe I can ask the growth question in a slightly different manner. If I look at your growth, you haven't grown double digits outside of kind of coming out of COVID since I think, like 2014, 2013 time frame. So how do you manage growth and keeping that cost discipline? Because if I look at -- you mentioned those carriers have been growing a lot fast and some of the carriers that got trouble -- got in trouble because of the growth. So how do you manage that?

It's not really a problem because what we need to remember, this is like pent-up growth. If we had all the Boeing deliveries on time that we needed and we had opportunities for, growth would have been maybe 9% per year the last 3 years, and we couldn't get there. And then after next year, it will come down again. Well, there will be a little bit of full year effect, but a lot of what we're seeing next year to get to 12% is full year effect from 2025. And again, it's pent-up growth is deliveries that are coming together that we wish we would have had years before. And to get to 87% load factors, as a few of you have mentioned, there are some markets that are in the strong 90%, and that's where most of our capacity is going. So we are not really worried. We wish we would have had those planes before, and we think we're like not late, but we wish we had been doing this before. So we're not really worried. The additional ASM should be good for overhead CASM and we can absorb that capacity. It won't be noticeable in a significant way.

I guess maybe I'm asking it in a different way, Pedro, not on the revenue side, but on the -- getting in trouble on the cost structure side as you try to kind of do faster growth?

Yes. No, we won't get in trouble there because if we have -- the problem with the cost side is when there's no demand, there's not enough demand. And then you end up with empty planes and low yields to make up for those empty seats. So it's all tied together. So we feel we have the demand. It's going in the right places. So we -- the cost should be covered by the demand. And in the worst case, if we think we were long x number of planes, we would love to park some of our 737-700s and harvest those engines. Engines, CFM56 engines are in high demand and very expensive for lack of -- and all the other things and the whole kind of supply chain with MROs and OEMs and all of that after the pandemic. So we would love to park like 4 700s and harvest the engines if we did not have enough demand for the 8 aircraft we're getting next year, which is not a big deal. So we're super comfortable.

And I would add that a lot of the spends, as Pedro said, are getting late. So we've been working for this growth for the last couple of years. So I mean, the pilots are there. The cost -- I mean, we've been working for -- we've been preparing. And actually, our problem has been the opposite. We've been preparing and then the planes don't come. And so we have that Dan's team, it's been working for that growth, and it's actually not been there. Now it's coming. So it has been a timing effect that was [indiscernible] over. So we have been preparing for that growth for a long time.

Okay. Maybe last question then on the commercial side, you talked about unlocking a lot of these things. Are there tech investments that need to be done for this? Or how are you addressing some of those unlocking the commercial opportunities?

Yes. I mean I would put it this way. I think there -- yes, there's obviously some technical investments, but it's no major systems. It's more what I would call ordinary course of retailing, for lack of a better term, which is -- I mean, it's not like we've got to change PSS systems. It's not like we have to invest in a new digital system. All the infrastructure is there. It's more about dedicating our resources to go after the big. So how do we put online a product to sell instant upgrades in our booking flow, things like that. That's where we're investing. It's not big tech platform investment.

Go ahead. Thank you.

I just want to say that, that concludes the Q&A session and the lunch buffet is open. So we're going to take a break and everyone can go and serve themselves a nice lunch. And if we can please reconvene at 1:30, we'll continue with the program at that time. And if you're connected via the webcast, we'll be back at 1:30 with the rest of the presentation. Thank you. [Break]

Hello, everyone. So as -- good afternoon. So I hope you enjoyed management presentation. So as we continue the program, we are now turning our focus to a special part of our Investor Day. And I'd like to invite Mr. Stanley Motta, who will do the honors of introducing our distinguished luncheon speaker, the Minister of Economy and Finance.

Thank you. Good afternoon. Now it is afternoon. And -- before I introduce our speaker, I'm going to take a minute first to tell you a story. 20 years ago, when we were doing the IPO and we did our first breakfast at the road show, I was not on the program. And they got up and everybody made their presentation. And at the end, I got up. And I think the whole team sweated, not being sure what I'm going to say as Pedro has led this many times before. A couple of things. Pedro has had 4 bosses in his life, his mother, his father, his wife and me. So I wanted to keep that clear. It didn't only work for me. So -- and the other thing that happened to me the other day that I was going to just sort of give a comment. Somebody said to me, Stanley, will a Copa plane wait for you. And I said, as long as I'm on time. So that's the way the airline works. That's what it's going to do. And there's another thing that they haven't revealed to you that I will tell you that internally in Copa regarding the culture and the emphasis on cost and on time and everything else, Internally, they have something they call a 180-day, 180 day. And that's if we flew 90% on time with a 90% load factor. So that's a 180-day in Copa. We get to celebrate them once in a while, not every day, but that shows you how the culture is really even -- has a [ slang ], which is the 180. I have the pleasure of introducing our Minister of Economics, who I have known a little while in his lifetime. Felipe went to Brown University, and then he did an MBA in INCAE in Costa Rica. He was involved in a firm and still is in -- that did a lot of economic studies and advice in Panama in the region. He's also served on many boards, including the Banco Nacional de Panama and a few others, even a bank, Banistmo and so forth. So he's had a lot of experience before he took this job. I'm very happy he did it. It wasn't an easy decision at the moment. But every once in a while, he can still smile even though his days are very rough, trying to keep the budgeting in line, lower the deficit and make everybody happy at the same time, which is not necessary what you can do. I've had the pleasure of working with the Chapman twice. I want to clarify that, that Felipe doesn't have a 2 face. He only has 1 face. But I'm old enough that when his father was Minister of Economic and Finance, I also interacted with his father as minister. So I've had the pleasure of working with 2 Chapmans in my lifetime. His father was in the mid-'90s and Felipe now in the mid-20s. So Felipe, thank you very much for coming, and you can tell them the Panama story.

Thank you. Thank you, Stanley. It was very nice not to say that he knows me when I probably was a teenager. I don't know, maybe before that. Panama is a small place. First of all, Pedro, thank you. Thank you so much for the invitation. It's a pleasure to be here. As Stanley said, it's great to have the opportunity to be out of town nowadays, even so that I'm truly enjoying the weather. And I had forgotten about the traffic and how busy can New York get in the month of December. I thought that only happened in a small city like Panama. So I say, when something is moving slow, well, it's moving like a line or traffic in December. So it seems like in New York, it's probably even harder than that. Well, nowadays, well, like Pedro, I also used to have, let's say, my mother used to be my boss as well as my father. Now my current boss is here with me, my wife. And obviously, the President of Panama. They compete to see who gets my attention. But both of them do a very good job. Full disclosure. Actually, my first job out of college after Brown was in Copa with Pedro. 36 years ago. It's like time has flown. And it was a long time ago. We were a bit younger, as you can imagine. I still remember, we had back then like 3 planes and first flight to North America was in Miami. So it was fun times. And I mentioned that because if it wasn't for the opportunity or and the convincing of him, Stanley and Stanley's father, especially Alberto, I would probably stay here in New York. I had some job offers, and I was about to stay here. So I'm glad they convinced me to go back to Panama because I don't know if I would be married to my current boss. So things go around that way. So the story of Panama, it's pretty much like Copa. I mean Panama has a great story to tell. We have a great story to tell for the past 30 years. And somehow, it's very much related -- interrelated with Copa. I mean, an airline that has developed a hub an operation like Copa, I don't know if it could be as successful in a country that's failing, and it's not -- it has the stability in terms of economic, rural law, political, social. So it's fundamental for a corporation like Copa or like the Panama Canal or like the banks, which all have great success story to tell, which are leveraged on the Republic of Panama story. And I have very -- Stanley remind me that I have very big shoes to fill after my father [indiscernible] is making a lot of reforms for the country, not probably misunderstood back then, but as time went by, people understand them. So I probably have the challenge to do something like that. So I got to live up to expectations. So said that about Panama, it's -- I believe it's important to put that into perspective of the contribution of the country for these great companies to prosper a long time. As Pedro mentioned, and there is one advantage, which is the most important competitive advantage of Panama. And before I forget, I was glad to see that some other people get as many questions as I do. So in places like this and in other places in Panama. As Pedro said, the geographical position of Panama is not replicable. So it's unique. And actually, Panama for 100 years to gain full control of our geographical position. So we're just starting. It's only been about 25 years or so in a history of more than 100 years. So Panama, I would say it's about starting. So it's a pleasure to -- let me backtrack here. To join the Copa Holdings Investor Day today, I would like to provide a clear and comprehensive perspective on how Panama's macroeconomic strength, its unique connectivity platforms and the strategic role of Copa Airlines are converging to shape one of the most compelling investment narratives in the Western Hemisphere. We've been at a time when global economy is undergoing profound realignment. Growth is slowing, geopolitical risks are rising and supply chains are being redesigned. Yet in the midst of this uncertainty, Panama and its great players, just as the ones I mentioned, stand out as rare anchors of reliability, opportunity and long-term value. As a colleague of mine was saying in a meeting that we had a couple of months ago, we are not living in a time of changes. We're living in a change of time. He said in Spanish sounds a bit better, but it's -- not everyone has realized that the world has changed tremendously in the past few months and in the past few years. And regarding punctuality of Copa, I can vouch for that. We had some -- an inconvenience going to the airport in Panama, and we were 3 minutes late to the check in and they told no, the flight is closed. It's like I need my bags to get to New York. You can board the plane. We don't know if you can get your bags. It's like, well, I have to talk to an Investor Day of Copa tomorrow. Sir, the flight has been closed. So I had to bother Pedro and some other people who help out for me to be properly addressed before you today. Changing global landscape. The world economy is shifting, slower global growth, rising geopolitical tensions and supply chains being redesigned around security and proximity rather than pure efficiency. Nationalism, protectionism and industrial policies are reshaping global flows. I never thought in my life, I was going to see that it's like going 100 back. I leave this learning about in school. I never thought I was actually going to leave it. For investors, this means the center of gravity is moving from globalized networks to regional hubs of stability and reliability. So that makes it even more interesting of what we're discussing today. Despite this volatility, Panama stands out as a stable, predictable and resilient economy. Some might call it boring, but boring is good when you're talking about a country and a company, as I said before, I hear some of the speakers said it, Panama's economic resilience has been one of the most consistent performers in the hemisphere. The numbers speak for themselves. The IMF projects 4% growth for 2025, up from an earliest estimate and double the expected regional growth. Recent indicators are strong. GDP grew by 4.4% in the first half of '25 and the monthly economic activity indicator up 4.3% accumulated through September. Nominal GDP is expected to surpass $100 billion by 2027, signaling scale and maturity for a population of under 5 million people, it's -- proportionally speaking, it's a quite important economy. Actually, when you divide it by per person, puts us depending on when you take the picture in the first or second place in Latin America. Fiscal consolidation is fully aligned with the updated fiscal responsibility law, which is quite important. Revenue-enhancing measures, expenditure discipline and [ anti-vention ] initiatives are showing results, which doesn't necessarily make you popular when you have to do these things. Direct taxes are increasing close to 26%. payroll taxes, 53%. Property taxes 87%, capital gains 201%. The 2026 budget of next year is going to be a little bit below $35 billion, which keeps with a deficit target of 3.4%. We are aiming on a trajectory to have a -- talking about airlines to have a smooth land or basically not to do sudden changes that might be traumatic for the country. So our aim is that by the end of this decade to have substantially changed the fiscal trend. Actually, next year, we're looking at -- we're shooting at a primary surplus, which we haven't seen in almost 15 years in Panama. So I'm glad I'm talking to an audience that understands this because usually people don't. This credibility is visible in the world curve, which now shows lower country risk as consistency reduction yields. And we can see it in the next probably -- sorry, I'll have it probably further down the presentation. You're going to see how market risk premiums have decreased tremendously or -- in an important matter in the past year and in the past -- especially in the past few months. In terms of growth, there is an important story also to share not only by our expectations, but by the forecast like the IMF, the IDB, the World Bank that make a strong case for Panama's future. The credit continues to be anchored by strong dynamic, which, as I said, 4% this year, the fiscal consolidation efforts and actual fiscal execution shows full commitment to these plans. Macroeconomic fundamentals that matter to investors. Panama's dollarized economy insulated from monetary policy-driven inflation and offers a predictability environment for long-term investments. The financial system remains strong, well regulated and anchored by institutional stability, connectivity. Maritime, air, digital gives Panama a unique competitive advantage in the Americas. What I was mentioned regarding the risk premium, Panama is in the red. So you can see from last year in '24, we were -- we had the highest premium risk among these peers. And as we started executing our plan, it started a downward trend, and we're looking -- and our goal is to have the lowest risk premium in the near future, which is obviously quite important for companies that operate at a Panama because it becomes a reference in terms of the cost of leverage and the cost of equity. In terms of some of the -- just to mention some of the important reforms we made, pension reform. I was the other day in a meeting with some former Presidents of Latin America, and I'm going to quote President Duque from Colombia. I said, Minister, have you realized what you've done you guys with the pension reforms? What are you referring to Presidents, like 9 or more 9.5 out of 10 countries that pursue a reform, they fail in the process. And you've done it in a democratic way. It's like, well, you're right. Probably we're busy looking at other problems that we haven't gone out to tell the story. Well, first, you do and then you have to tell the story. It's like, well, you're right. We have to go out and tell the story. Here, we can see, as I mentioned, the GDP that would be surpassing $100 billion by '27. In terms of the deficit, the downward trend that we're aiming for eventually that would lead us to 1.5% of deficit. And the purpose there is to slow down the growth of debt and the leverage of the country. And this is our -- what we're aiming by the end of this decade to reduce from 65% to close to 55% of the leverage the country is facing. And in the meantime, reducing the cost, a lot of management -- I'm sorry, liability management that we have reduced in an important way, the cost of debt, and that's -- that's an important job that the Minister of Economy that is here with us has done with her team. The budget, as I mentioned, is anchored in the government fiscal consolidation, as I mentioned, boost revenues, digitalization, expenditure rationalization, reduction of special loss and subsidies. The expectations are positive to expand the economy 4.2% and it's leverage on maritime air logistics, new gas pipeline, new reservoir, which is quite important for not only people for the Panama Canal, some of the major infrastructure projects, including a fourth bridge over the canal, also a tunnel under the canal for the expansion of the subway or the metro, energy projects supporting competitiveness. This is not necessarily going to be the driver looking in midterm or long-term economic activity. This is basically public policy hand-in-hand with investments to provide the ecosystem and to facilitate economic growth driven by the private sectors, which represent over 80% in terms of GDP in Panama and also in employment. This I mentioned already. The rise of nearshoring and French shoring, it's quite interesting to see all these changes taking place. In terms of Copa, look at -- not only Copa, but also in terms of maritime transportation. Panama has a preferred distribution center for the Americas, geographic proximity to North and South America, connecting East to West, growing demand for regional and also, I would add maritime connectivity. You probably follow the news lately, Panama has become quite the center of attention in terms of maritime and ports. I'm not going to mention much about Copa because they've gone -- they have already gone through this in detail. But still, it's -- I must mention that air travel as a [ backbone ] of other supply chains, even with the changes going in the global economy. Growing corporate and logistics travel, Copa's network is aligned with regional integration trends and Panama is a facilitator there. Copa leads the passenger movement in Tocumen Airport, as you can see in the right side of this chart. And obviously, with that come opportunities in terms of growing faster in terms of the infrastructure and the opportunities that come in the near future. Its bank connection model in a global benchmark, enabling the highest connection efficiency in the hemisphere with 89 destinations that provides comprehensive air bridge in the Americas. And in terms of the airport, it's an interesting example of public private symbiosis, Copa and Tocumen. Copa's growth drives Tocumen's expansion and Tocumen's capacity enables Copa's network in this mutually reinforcing system and also permits the traction of new players who are operating mainly to Europe and why not in the future to Asia. Infrastructure to enable the next phase of growth. Airport capacity is the most critical constraint for Copa's future expansion. The government is committed to extending the main runway. All this -- well, I'm passing this slide because you already saw them in the presentation of Copa. The government is committed to extending, as I said, the main runway, adding 10 new gates, also mentioned previously, strengthening Tocumen and civil aviation authority. Long-term plans include a new runway, terminal expansions, regulatory and technical upgrades. These are not just airport investments. They are growth multipliers of Panama in the entire economy. That includes cargo and e-commerce, a high potential for [indiscernible]. Panama's geographic connectivity position is to become a regional e-commerce hub, Tocumen and Copa and Panama's logistics ecosystem create a unique platform for fast-growing cargo segment. In terms of cargo, we're talking about probably further ahead, some key operators in the cargo sector that also become a complement to the maritime hub that Panama is still developing. As I said, we are far away from truly exploiting our geographical position, not only as an air hub, but also in the maritime industry. In terms of attracting global corporations for multinational companies, connectivity is a decisive factor in choosing regional headquarters, not only in tourism, as Pedro mentioned. And actually, tourism, as we were speaking before, it's a great opportunity because Panama can probably have GDP participation in tourism like 10x higher of what we have here, in 2 days, not only the participation of the economic production, but also in terms of employment and it can -- it's an industry that can create jobs quite fast comparing comparatively speaking with others. Copa strengthens Panama value proposition by providing reliable continent-wide access to business and travel efficiency, supporting Panama's role as a regional base for supply chains, logistics, operators and corporate services industries. And in a closing or summing up, as we have mentioned this morning, and I fully agree, Panama are uniquely positioned to lead the new era of regionalization. Copa happened to be strategically aligned to capture the opportunities created by this realignment as our ports, as is the Panama Canal and others. And together, public and private sectors, we share a long-term commitment to connectivity, competitiveness and investment-driven growth. For investors, this is a story of resilience, alignment and sustained value creation. Thank you.

Now we have a brief Q&A session.

Mr. Minister. That was fantastic on everything going on in Panama. I see a lot of excitement. One just quick question. You put up the master plan for the airport, and there was a big spot there for Terminal 3. And I didn't know the 10 gates that Copa is planning to add, is that Terminal 3? Or is that an extension of Terminal 2?

As Pedro mentioned, luckily, we don't have the pressure to do these in the short term. And as we speak, all different options are being considered. Probably there are -- I mean, actually, there are more pressing or more important decisions to be made, which can be easier and faster to execute than actually having a new terminal or a new runway. But we must not only look at the end of this decade, so -- but also 10 years down the road, 15, 20 years down the road.

So -- but from that picture, it sounds like that's land that the airport currently controls, right?

Yes. Some of -- not all. But there is enough land in other places that somehow we can swap or do some kind of transactions that would allow to have enough land. The important part there is that there's plenty of land that has not been fully used or is pretty much empty, maybe some cows now and there. But we don't have the problem to have a city right next to the airport. So there's the opportunity to have plenty of space for Panama or Tocumen Airports to grow vis-a-vis the other airports you mentioned in your question before. And don't have the constraints, for instance, that you can -- you've seen in Heathrow regarding another new -- runway day that they've been trying to do so for many years unsuccessfully. Don't ask me about dividends.

Minister. Can you comment on the port sector in Panama? And there's been an announcement about the Panama Canal putting out for bid new ports. I don't know if it's only on the Pacific side, but can you comment on both sides, can you comment on that?

The port industry is fascinating, and it's undergoing probably the most exciting time I've ever seen in terms of ports. So Panama has fought to gain control of the area and the Panama Canal waiting for this moment. So everyone is looking at it. All the major players are knocking at the door. And there, you have 2 entities that will manage this expansion. You have the Maritime Authority, which has the responsibility to oversee some areas alongside the canal and outside the canal where several ports will be developed. And there are other areas which are more within the Panama Canal area that the main responsible for that would be the Panama Canal Authority. Yet the Panama Canal Authority is not interested in running ports. It's not its expertise. They basically -- they manage -- they pass ships through the [indiscernible] and the Panama Canal. So what they are contemplating is bidding out, making tender offers for several ports. And when we combine the Maritime Authority and the Panama Canal, we're talking about opportunities, several opportunities on the Pacific side and on the Atlantic side. Panama nowadays is moving around 9-point so million TEUs. And actually, we were just a couple of days ago with some experts from the Netherlands, which they believe in the next 10 years, Panama -- in the next few years, Panama has the opportunity to at least double that, which includes operations both in the Atlantic and the Pacific. So the opportunities are there. And at the beginning, with all of these changes in geopolitics, trade and the economy, I was a bit skeptical about that. And when I sat with the major liners, probably the 5 largest ones that we've met with, I was surprised to learn about their optimism about trade in the future so much that they're buying ships probably faster than you are buying planes. So they are putting their money where their mouth is. I believe probably one of those ships cost a little more than one plane. So I was happy to learn that. So they are quite optimistic about the future. Given the -- regarding the gas pipeline, yes, Panama Canal is considering a tender offer to have an independent private operator. Then again, they are not interested in operating a gas pipeline. Yet to use the land they have next to the canal on the west side of the canal for a specialized operator to basically manage a pipeline and a gas pipeline, you would think, why would you do that? Because one of the major new customers for the Panama Canal after the expansion, it's been gas. So if you open up another alternative for these liners to transship that gas that basically gives you more space or liberate space within the canal. So you can basically serve more ships. So in those 36 ships, the ships that go through every day in Panama, some of those are [indiscernible]. And so you can basically take those spaces and offer them to container ships.

Any other question?

Thank you.

Well, on behalf of the entire team at Copa Holdings, I want to express our sincere gratitude to Mr. Chapman for being with us today and sharing this presentation with us. Thank you all for your attendance today. Please don't hesitate to contact me if you have any questions. And that concludes our Investor Day for 2025. We have souvenirs on the registration table on the way out. So please stop by. Happy holidays, and hope you have a good start of 2026. Goodbye.