Copa Holdings, S.A. Class A Aktie

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings' First Quarter Earnings Call. [Operator Instructions] As a reminder, this call is being webcast and recorded on August 6, 2026.

Now, I will turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Thank you, Alia, and welcome, everyone, to our second quarter earnings call. Joining me today are Mr. Pedro Heilbron, Executive Chairman and CEO of Copa Holdings; Mr. Robert Carey, Executive Vice President; and Mr. Peter Donkersloot, our CFO.

Pedro will begin with an overview of the quarter. Robert will then discuss commercial performance and operational highlights. Peter will conclude with a review of our financial results and outlook. Immediately after, we will open the call for questions from analysts. As a reminder, Copa Holdings' financial reports have been prepared in accordance with International Financial Reporting Standards.

In today's call, we will discuss certain non-IFRS financial measures. A reconciliation of these measures to comparable IFRS measures can be found in our earnings release, which is available on our website. Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC.

Now I would like to turn the call over to our Chairman and CEO, Mr. Pedro Heilbron.

Thank you, Daniel. Good morning, and thank you all for joining us for our second quarter earnings call. Before we begin, I would like to recognize and thank our more than 9,000 coworkers. Thanks to their commitment, professionalism and disciplined execution. Our team continued to deliver strong financial results while maintaining exceptional operational reliability and outstanding service to our passengers. They are the foundation of Copa's success and have my admiration and appreciation.

Our second quarter results demonstrate the resilience of our business model in a significantly higher fuel price environment and reinforce our ability to continue generating profitable growth through different market cycles. During the quarter, we delivered an operating profit of $91.7 million and an operating margin of 8.7%. These results were affected by an increase of 85% in the all-in fuel cost compared to Q2 '25, with approximately 40% of our bookings sold before the fuel cost increase.

In the quarter, we grew capacity 16.5% measured in ASMs while maintaining solid load factors. Our capacity additions in 2026 after years in which aircraft delivery delays slowed our growth, allow us to further consolidate our Hub of the Americas advantage, especially in an environment of strong passenger demand across our network.

Looking ahead, booking trends remain strong, which support our expectations for another year of high load factors and solid financial performance. As part of our continuous efforts to strengthen the Hub of the Americas, we recently set in place our transition from 6 to 8 connecting banks beginning in March 2027. This decision will improve connectivity throughout our network, provide greater travel options for our passengers, increase aircraft utilization, optimize the use of airport infrastructure and further strengthen Panama's position as the leading hub for intra-Americas travel.

Combined with our structurally low unit cost, best-in-class operational reliability, strong balance sheet and the unique advantages of our Hub of the Americas, we remain confident in our ability to successfully execute our growth plans and continue delivering value to our shareholders.

With that, I'll turn the call over to Robert, who will discuss the quarter's commercial and operational highlights.

Thank you, Pedro, and good morning, everyone. Before I start, I would also like to thank our coworkers across the organization for their continued dedication and outstanding execution throughout the quarter. I have now been here 2 years and Copa's culture is clearly one of our strengths.

Let me begin by reviewing some of the quarter's key commercial and operational highlights. Operating revenues increased 25.7% year-over-year to $1.1 billion. Passenger yields increased 8.7% compared to Q2 2025. Unit revenue or RASM increased 7.9% to $0.116 while capacity measured in ASMs increased 16.5% year-over-year. Load factor was 86.7% compared to 87.3% in Q2 2025.

Revenue performance for the quarter was partially impacted by the World Cup, which temporarily affected travel patterns during June. As a result, June load factors were 2.3 percentage points lower year-over-year, putting modest pressure on unit revenues. We estimate that the World Cup reduced second quarter RASM by approximately $0.001.

Despite this headwind, we delivered another quarter of solid revenue performance and continue to see strong demand trends throughout our network going forward. Demonstrating the strong demand, we published our July traffic numbers this week, reporting a load factor of nearly 90% on a year-over-year capacity increase of 16%. Furthermore, this load factor, one of our highest ever, came in a higher yield environment. As you can see from our full year guidance, we are expecting these strong load factors to continue.

On the operational side, we delivered industry-leading results. During the quarter, Copa Airlines delivered an on-time performance of 90.6% and a flight completion factor of 99.8%. These results position Copa Airlines among the very best airlines globally for operational reliability and represent a key differentiator of our passenger value proposition.

Turning to the network. Recently, we announced the addition of Porlamar in Isla de Margarita, Venezuela, a popular leisure destination, which will start in November. With this addition, Copa will serve 88 destinations in 32 countries throughout the Americas, further strengthening the breadth and convenience of our network and reinforcing the leadership position of our Hub of the Americas.

We also recently achieved an important milestone in enhancing our passenger experience with the launch of Starlink onboard internet. In July, Copa operated its first Starlink equipped flight, becoming the first airline in Latin America to offer high-speed Starlink connectivity. We expect the rollout of Starlink Wi-Fi across our fleet to be completed in the first half of 2027.

Finally, on the fleet side, we took delivery of 4 Boeing 737-MAX 8 aircraft during the quarter, ending the period with a fleet of 131 aircraft. For the remainder of the year, we expect to receive 1 additional 737-MAX 8. As always, we maintained significant flexibility in our fleet plan through delivery options, slide rights, lease expirations and a substantial base of unencumbered aircraft, which allows us to adjust the pace of growth if market conditions warrant.

To conclude, demand trends and booking patterns remain strong. With that, I will turn the call over to Peter, who will review our financial results and outlook in more detail.

Thank you, Robert, and good morning. I'd also like to start by recognizing our team's continued dedication to delivering industry-leading results. Their commitment remains essential to our strong operational and financial performance.

In the second quarter, we reported an operating profit of $91.7 million, resulting in an operating margin of 8.7% compared to 21.7% in the second quarter of 2025. Net profit totaled $68.2 million or $1.67 per share and a net margin of 6.4%. Unit costs, excluding fuel or Ex-Fuel CASM remained flat year-over-year to $0.057, reflecting our continuous focus on cost discipline. Including fuel, CASM increased 26% to $0.106, a result of significantly higher fuel prices.

During the quarter, average all-in jet fuel prices increased 85% year-over-year from $2.32 to $4.28 per gallon. Despite having approximately 40% of our second quarter bookings already sold before the increase in fuel prices. Strong demand and higher yields enables us to recover approximately 40% of the year-over-year increase in fuel expenses during the quarter.

Our fuel recovery calculation compares the year-over-year increase in revenues attributable to higher RASM with the year-over-year increase in fuel expenses resulting from higher all-in fuel prices, both calculated using 2026 capacity levels.

Turning to our balance sheet and liquidity. We ended the quarter with approximately $1.5 billion in cash, short-term and long-term investments, representing 39% of last 12 months revenue. Our balance sheet remains among the strongest in the airline industry and continues to be a key competitive advantage.

Total debt, including lease liabilities, stood at approximately $2.7 billion at quarter end, all of it related to aircraft financing. Our average cost of debt is currently 3.7%. And we ended the quarter with a net debt-to-EBITDA ratio of 0.9x. Our financial strength continues to provide substantial flexibility as we continue to execute our long-term strategy.

Turning now to shareholder returns. I'm pleased to announce that our Board of Directors ratified the company's third quarterly dividend payment of $1.71 per share. The dividend will be paid on September 15 to all shareholders of record as of August 31.

Looking ahead, while fuel prices remain elevated and volatile relative to prior year levels, underlying demand trends across our network continue to be strong. Based on these demand strengths and current fuel cost projections, we are updating our full year outlook and now expect an operating margin for 2026 to be in the range of 17% to 19% with a capacity growth of between 14% to 15%. This outlook assumes approximately a load factor of 87%, a RASM of $0.12, Ex-Fuel CASM of $0.057 and an all-in fuel price per gallon of $3.60.

To summarize, demand and revenue trends remain strong across our network. We are maintaining industry-leading cost discipline. Our balance sheet remains among the strongest in the industry. And our proven business model continues to position us well to navigate the current fuel environment while delivering profitable growth and long-term shareholder value.

Thank you. And we'll now open the call for questions from the analysts.

[Operator Instructions] Our first question comes from the line of Savi Syth from Raymond James.

I was kind of curious, I think, Pedro, I think you mentioned that the second quarter was 40% booked heading into -- prior to all the kind of the fare increases. I was curious how much of the third quarter was booked prior to the fare increases? And as you kind of look out, how much of the third and the fourth quarter are in the books today?

Okay. So in Q3 was pre-war, of course, we had about 20%, a little bit below 20% booked for Q3 and of course, much less for Q4, almost nothing for Q4.

And today, Pedro, how much is booked?

I'll let Robert answer.

Yes. And then, Savi, your question was what is the outlook right now for Q3 -- what is the booking level for Q3 and Q4, correct?

That's correct.

Yes. Right now, we're about 75% booked for Q3 and about 25% sold for Q4.

Perfect. And if I might, just curious, I saw the sort of slight changes in the delivery schedule here for '26, '27. Any early thoughts on how you're thinking about deliveries in 2028 as I'm guessing some of those discussions are happening now?

Yes. We published up to 2027, if I'm not mistaken. And we're getting 12 aircraft in 2027. And as always, we have some flexibility. We're going to let go 2 700s that come up for their 20-year check. So we won't do those 20-year checks. We'll let 2-700s go. So net, it will be 10 aircraft joining Copa Holdings in 2027. We still have another 5 700s, which we can let go. We can park at any time, we can harvest the engine. So we also have that flexibility, but we are expecting a strong 2027. Of course, we're not guiding to 2027 yet. But we are very comfortable with the aircraft we're having delivered next year and we think we need them all.

For 2028, the number -- again, we haven't shared that yet. It will be higher because it's like almost the end of the road for all the Boeing delays, delivery delays that we had in the last 4 years. However, we also have a number of lease expirations. We have 6 lease expirations plus the 5 700s. So we have like 11 aircraft that we could let go easily in 2028, depending on demand. And plus we have our unencumbered aircraft, which is over 40. So we have lots of flexibility. Again, we think we're going to need most of our 2028 deliveries. We'll share that information for the end of the year, but we have lots of flexibility.

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

So as you think about the full year unit revenue guidance up 7-ish percent on 15% capacity growth, so low 20s revenue growth. Just wondering if you can give some color on the balance of the back half. Which -- do you expect a big variation between third quarter unit revenue growth and the fourth quarter? Or is your expectation that they would look pretty similar at this point?

I'll let Robert answer that question. But I'll say that I think the #1 thing that's very important is that we're seeing strong demand right now. And also that makes us very comfortable with our projections, of course, that as of today. And -- but I'll let Robert to share some of the specifics.

Yes. Duane, at this point, we're seeing plus 10% on RASM in H2. I would say it's fairly consistent across Q3, Q4. In terms of year-over-year variation, it's broadly similar between the 2. So I think nothing really of note in either quarter that varies.

Great. That's very clear. And then just on the trajectory of non-op net interest expense. Anything to call out in that trajectory into the back half of the year?

Duane, this is Peter. I would say that it's pretty stable the net interest expense that we're going to see across the year. Nothing to highlight more than as more -- we receive more aircraft. We have a little bit more financing cost. But it's embedded in our fleet plan and pretty much straightforward on how to calculate it.

Our next question comes from the line of Guilherme Mendes of JPMorgan.

I have 2. The first is on the capacity guidance. So the upward revision that we saw this quarter, if you can share some details on what is behind it? It's just a matter of receiving more aircraft before -- earlier than expected or anything else in terms of utilization maybe?

And the second point is on the Starlink announcement. If you don't mind sharing some additional details on what is the expected CapEx or costs associated with implementing the Starlink? And if you intend to charge for it will be somehow a loyalty lever?

Yes. Thank you, Guilherme. In terms of the increased ASM guidance, if I heard correctly, I would say a few things. One, that we were conservative or careful with our original guidance, not being 100% sure on the Boeing delivery dates. As the year has gone through. And not only is Boeing delivering on time, but actually at least aircraft we got ahead -- one aircraft we got ahead by a month and a few other aircraft came in a few weeks before. So we've been able to deploy those aircraft much faster during the year, plus we have increased utilization. So we're also getting additional aircraft hours and ASM through utilization. So the combination of those factors allow us to increase our capacity guidance. And of course, the demand is there. We have strong demand. So we're really happy to be able to guide to higher ASM capacity.

In terms of Starlink, I'll let Robert complement the answer. But the CapEx was done many months ago. It's already in the books and in the guidance. It's there. And I don't know if you want to share something else, Robert?

Yes. Guilherme, on the business model, first, I mean, we're excited to be the first airline in Latin America to be offering this. The business model, complimentary access is going to be there for business class passengers, all of our preferred member Gold, Platinum and presidential members as well as Starlink subscribers. And then other passengers are going to pay for the service. That's the business model we set up.

And on the CapEx, I'll just add that it was prepaid, as Pedro said. And it will just start depreciating and run through depreciation once the service is installed. For the cash purposes, it's already sitting on our PP&E.

Our next question comes from the line of Filipe Nielsen of Citi.

So I have one follow-up regarding the delivery schedule and this is related to CapEx. Just wondering how this changes your view on CapEx for the year? How are you expecting CapEx to behave considering that you're receiving aircraft earlier?

And my second question is related to the fuel and capacity behavior. Like just wanted to hear a little bit about how is competition behaving to the fuel drops you're guiding to lower fuel in the back half of the year and everybody else is also guiding for that. Just wondering how is pricing and competition behaving in this environment?

Filipe, this is Peter. I'll address your first question regarding CapEx. And yes, we're seeing CapEx right now between $700 million and $750 million. So basically $50 million less than what we guided at the beginning of the year. And this is basically most of that is because there was -- we're expecting now one less delivery that moved a couple of weeks from December to January. So basically, that's what's guiding that difference.

And then I'll let Robert talk about and Pedro talk about the competition part.

Yes. So I don't want to, of course, talk much about pricing and competition. This is a delicate subject. But so far, what we see is a lot of discipline triggered by the fuel prices, of course, that fuel prices come down. We'll see what happens. We are comfortable with our guidance. And I must say, I think it's important to mention that pre-war, pre the high fuel prices, average fares, at least in our region and network were actually below. Average yields were below 2019 and that's without taking into consideration inflation. So we're comfortable that the yields can be sustained as oil comes down, if not at 100%, but enough for a positive effect going forward.

I don't know if Robert...

No, I think you covered it.

Our next question comes from the line of Rogerio Araujo of Bank of America.

I have one question on the second Q guidance. You said the margin guidance at 8% to 12%. My question is, what were the main uncertainties embedded in that range? And how did those factors ultimately play out such that results landed within the guidance but toward the lower end? If you could explore what was the drivers behind the guidance and what has happened during the quarter?

You're talking about the RASM guidance, right?

Actually, the EBIT margin guidance for the second Q.

Okay. EBIT, yes. So we ended up -- we had guided for an 8% to 12% range given all the uncertainty related to the war to fuel prices and even to how demand was going to respond to higher prices. So we gave a wider range than what we usually give.

We ended up within that range on the lower side of it, mostly due to RASM because our unit costs were within -- actually were at target, 100% in target. So it was mostly coming from RASM. Fuel was also pretty much were in the range we said, which was between 80% and 90% year-over-year. So the difference was RASM.

And I'll let Robert add to it. But I'll say that it was kind of very early, maybe mid-quarter when we spoke and that's where it ended up. I mean I don't think there's a lot of magic to it. It's just what happened.

Robert, I don't know if you want to add to that?

Yes. I think you covered most of it, Pedro. I mean, Rogerio, I think the only thing I would say is, as we highlighted, the World Cup did impact us a bit more than expected in June. And that's the most notable factor we call out in RASM being a bit on the lower side than we expected.

And there was -- everything else is kind of small factors. And I think the only other thing is, as Pedro highlighted, we had a wide range. It was still pretty early on in how we were trying to understand everything going on with the new fuel environment. And so nothing else of note to call out.

Yes. And Rogerio, I would also mention that, of course, we are guiding to very high margins for the year, which means that we're guiding for very strong margins in the second half of the year and especially as fuel eases. I mean fuel is still quite high because of crack, even more so than WTI and Brent, the crack spread is very high. And we're still guiding to very strong EBIT margins for the second half of the year and for the whole year.

Our next question comes from Michael Linenberg of Deutsche Bank.

I guess 2 here. Just the step-up in the growth rate for the year, the capacity growth rate. I know Pedro, you talked, you and Robert have both pointed to the stronger, better than the healthy demand. As we think about what's driving that or sort of the elements of the increased ASMs. How much of that is just an annualization of your growth from, call it, over the last 6 to 12 months as well as maybe increased utilization or stage length? And should we anticipate any additional new markets to be announced beyond Porlamar?

Okay. So let's get that information. So about 50%, 1/2 of the growth is full year effect from what was implemented last year. And then maybe a small percent, 10% will be new destinations. And the other -- the rest is new frequencies, additional frequencies. And yes, we expect to announce at least one more destination for year-end. That should come probably before the end of the month. Before the end of August, I think we'll be announcing what would be our 89th destination to be implemented in December.

Okay. Great. And then just my second question, just regarding the Hub for next year going from 6 to 8 connecting banks. Pedro, I can recall a time when I think it was either 1 to 2 or 2 to 3. So you've some huge advances here with respect to the Panama City Hub.

The question is, where are you on -- where are you from an infrastructure perspective? Going from 6 to 8, will you have tapped out all of the gates? Will you have to hard stand airplanes? How should we think about just the facility and its ability to accommodate those 8 connecting banks? How much more runway does that give you before you would have to maybe think shovels into the ground and build out the concourses?

Yes. Thank you, Mike. I'll let Robert to answer.

So I think, look, we're excited to take it from 6 to 8 banks, quite a growth story. Look, I think in terms of facilities, obviously, this helps us in freeing up capacity. We're not at the limit yet in the 6 bank structure, but we were starting to near the limits of it. This obviously creates more capacity for growth over the coming years and eases need for additional infrastructure. Plus we have the internal benefits. We get better utilization on the aircraft as well as a lot more options for our customers, which is what's most exciting.

I think in terms of the airport infrastructure and when it changes. There's still a number of investment plans here at the airport over the coming 5-year horizon, which will help with gates, which will help with runway capacity, et cetera, as well as just some other projects that are ongoing here. So the combination of those 2, pretty similar to I think what we talked about back in the Investor Day, give us pretty good runway going forward into the next, call it, 5, 10 years to keep growing comfortably.

Robert, to go from 6 to 8, does that at all change your connection rates and/or does it make it less likely that you would want to take on the MAX 10, which I know is going to be certified soon. And I know that you have the ability to exchange orders for MAX 8s and 9s into the 10s. Does that at all change that calculus?

No. I mean I think connectivity it actually gives more options and roughly the connectivity for the passenger in terms of time of connection. I think there's some that go down a little, some that go up a little. So on whole, the average is broadly the same. And aircraft decisions, no. I think no change. And we're evaluating the different fleet types that exist for our new order.

What the 8 bank will do and Robert mentioned most of them. I don't know if he mentioned that utilization is going to improve. And then they're going to be better schedule for passengers. Also, the airport assets are going to be better utilized. So it's also great for the airport, which is great for us. So we see it as a very, very positive development.

Absolutely. Great for the RASM improver and a CASM detractor is kind of how I should think about it.

Well, that's music for our ears.

Our next question comes from Jens Spiess of Morgan Stanley.

Yes. So I only have 2 basically small modeling questions. One is on the buyback program, the $200 million. I think you mentioned before that you had executed half of it. I think back on the envelope, we are getting to you executing around $35 million this quarter. So how much more or less do you have left? Is it around $65 million? Is it correct?

And secondly, on the 2 2027 deliveries, I think you were expecting to get 12 deliveries. You mentioned that one will be shifting from this year to next year. So are you still -- are you now expecting to receive 13 aircraft? And more or less throughout the year, how will you be receiving them? Is it more front or back loaded?

Jens, this is Peter. On the buyback program, just to clarify, we've executed $45 million year-to-date and we have around $60 million left from the program to be executed. And of course, as we always said, whenever we finish, we'll request the authorization to have an additional program. We always like to have a program open.

And then on the delivery schedule, I'll tell you that we have small movements as we get closer to deliveries and deliveries are updated. We have movements. And most of the movements we clarify about a week where deliveries expected in December and then they move to January. It doesn't change the ASM's count for -- at least this year doesn't change at all, because we didn't have that plane flying this year, so it doesn't change. And then the next year, we also have some deliveries moving from '27 to '28, but also was December deliveries that are moving to January '28. So again, nothing material. It's just a regular uptick that we get as we get closer to the delivery dates.

I don't know if you want to add something?

The only thing the other part, yes, the 12% next year are pretty evenly spaced throughout the year.

Our next question comes from Alberto Valerio of UBS.

I had one on our side. Oil price come up, your costs come up like 85% per gallon. You could pass through a part of it and look like you keep it this pass-through to the remainder of the year. If you could detail, or give some explanation where this demand is coming from? If it's strong around your network, South America, North America, Central? Or if there is any specific point? And the other point is about where were these yields before? It looked like airlines was leaving some profitability on the table. If you can tell us how resilient this is.

Alberto, I'll start. And then I'll let Robert to complement my answer and maybe add some color. But we see strength throughout our network. There isn't really one region that is doing much better or that is weak compared to the rest. Of course, we're always going to have certain markets that are going to be on the top end and then some that are going to be in between and maybe lower. But actually, every market is very healthy. And we're getting demand from our whole network. So that's, I would say, a very positive development, which is not always the case. And the diversity of our network is always an asset. And I guess it's a greater asset now that everything is doing well.

I don't know, Robert, if you want to add to that?

Yes, Alberto, I think the only thing, as Pedro said, across the board, it's pretty consistent that all the markets are reacting -- are showing positive demand signs and pretty evenly kind of the yield increases coming through. So I think that's a very positive sign to where things stand. Brazil, North America are slightly stronger, but it's kind of on the margin, everything is doing very well.

And Alberto, we answer your other question. We're pretty much positive on how sustainable the price increases are going to be because something I mentioned before that before the oil crisis, our yields, our average yields in the region were below 2019, and that's not even taking into account inflation. So as fuel comes down, even if there are some adjustments and some pricing comes down, we believe there will remain a positive impact. And I should also say that we had a record quarter in the first quarter of this year.

So going back to that, it's perfectly fine. But if there's -- and that was with the kind of lower than 2019 yields, we still had a record quarter. So if something is left, which we are pretty sure there will be something left from the price increases. Even if fuel comes down, it's just going to be net positive over an already strong base. So we're very positive about this.

This concludes the question-and-answer session. I would now like to turn it back to Pedro Heilbron, Chairman and CEO, for closing remarks.

Okay. Thank you. Thank you, operator. And thank you all for participating in our earnings call and our Q2 earnings call. Also, thank you for your continued support. As you know, you have a committed Copa team on this side, always working hard to make the results better and with a very, very positive attitude over how this year we think is going to turn out. So again, thank you and have a great day.

Ladies and gentlemen, thank you for participating. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings First Quarter Earnings Call. [Operator Instructions]

As a reminder, this call is being webcast and recorded on May 14, 2026.

Now I will turn the conference over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Thank you, Carmen, and welcome, everyone, to our first quarter earnings call. Joining me today are Mr. Pedro Heilbron, Executive Chairman and CEO of Copa Holdings; and Peter Donkersloot, our CFO.

First, Pedro will begin by going through our first quarter highlights, followed by Peter, who will discuss our financial results in more detail. Immediately after, we will open the call for questions from analysts.

As a reminder, Copa Holdings financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss certain non-IFRS financial measures. A reconciliation of these measures to comparable IFRS measures can be found in our earnings release, which is available on our website.

Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations, and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC.

Now I'd like to turn the call over to our Chairman and CEO, Mr. Pedro Heilbron.

Thank you, Daniel. Good morning, and thank you all for joining us for our first quarter earnings call. Before we begin, I would like to recognize our more than 9,000 coworkers. Their commitment and professionalism continue to be key drivers of Copa's strong operational performance and leadership in our industry. Especially in today's higher and volatile jet fuel price environment, their consistent focus on execution and cost discipline has allowed us to enter the current fuel environment from a position of strength. To them, as always, my sincere appreciation and respect.

We delivered another quarter of strong financial and operational results, reaffirming the strength and resilience of our business model and our ability to consistently deliver industry-leading profitability. Our first quarter results reflect a strong demand environment across the region, continued discipline in cost execution, and our relentless focus on delivering operational excellence to our passengers.

Now I'll go over our first quarter highlights. Capacity increased 14% year-over-year, while passenger traffic increased 15%, resulting in a 0.8 percentage point increase in load factor to 87.2%. Passenger yield increased 1.6% year-over-year. RASM came in at $0.118, 2.7% higher compared to Q1 '25. Unit cost for CASM increased 1.6% to $0.089, driven by higher fuel prices. CASM, excluding fuel, declined 1% to $0.058, reflecting our continued cost discipline. And we delivered an industry-leading operating margin of 24.6% 0.8 percentage points higher than Q1 of last year.

On the operational side, we delivered an on-time performance for the quarter of 91.6% and a flight completion factor of 99.7%, once again, positioning Copa among the very best in the industry.

Turning to our network. We have resumed service to Valencia and Barquisimeto and have scheduled the restart of Barcelona in June, together with our existing service to Maracaibo and Caracas. This returns us to serving 5 cities in Venezuela from our Hub of the Americas in Panama. With these additions, we will operate through 87 destinations in 32 countries further strengthening our position as the most complete and convenient connecting hub for travel in the Americas.

With regard to our fleet. During the quarter, we took delivery of 2 Boeing 737-MAX 8, ending Q1 with 127 aircraft. We have already received 2 additional MAX 8s in the second quarter, bringing our fleet total to 121 aircraft. Additionally, in April, we announced a new Boeing 737-MAX order for 40 firm aircraft and 20 options with delivery schedules between 2030 and 2034. This new order which begins as we complete deliveries from our existing order book in 2029, reinforces our long-term growth strategy and ensures Copa's Hub of the Americas continues to lead well into the next decade.

As always, we maintain significant flexibility in our fleet plan. Thanks to options, flight rights, lease expiration and unencumbered aircraft, which provide us the ability to adjust our growth plan if needed.

Turning now to the current environment of higher and volatile jet fuel prices. Throughout our history, we have successfully navigated periods of increased fuel prices and volatility, consistently delivering strong financial results, supported by the effectiveness of our business model, low cost and disciplined execution. I feel confident that we will demonstrate this once again.

To summarize, we delivered strong industry-leading profitability in the quarter. We continue to improve our already competitive cost structure. We keep delivering best-in-class on-time performance and reliability. We continue expanding and strengthening our network, the most complete and convenient hub for intra-America travel. The current demand environment remains strong, supporting yield increases and our proven business model built on having the best geographic position, structurally low unit cost, a strong balance sheet, and liquidity position, and a superior passenger-friendly product positions us well to navigate the higher jet fuel price environment and again in 2026, deliver strong and industry-leading financial results.

With that, I'll turn the call over to Peter, who will walk us through the financials in more detail.

Thank you, Pedro. Good morning, everyone, and thank you for joining our call today. I would like to start by reinforcing Pedro's recognition of our team's continued dedication to delivering industry-leading results. Their commitment remains essential to our strong operational and financial performance.

Let me begin by going over our first quarter highlights. We reported a record net profit of $212 million or $5.16 per share, representing a 20.5% year-over-year increase in earnings per share. Net margin came in at 20.2%, 0.5 percentage points higher year-over-year. Operating profit came in at $258 million, resulting in an operating margin of 24.6%, a 0.8 percentage points higher than the first quarter 2025. Unit costs, excluding fuel, or ex-fuel CASM declined 1% to $0.058, reflecting the company's continued focus on cost discipline.

Including fuel, CASM increased 1.6% year-over-year to $0.089, driven by the increase in the average price of jet fuel. During the quarter, all-in jet fuel prices increased 7.5% year-over-year from $2.54 to $2.73 per gallon. While the average increase for the quarter was moderate, higher prices in the second half of March had a more pronounced impact on our results driving an approximately $20 million year-over-year impact on the first quarter performance.

Moving on to our balance sheet and liquidity. We ended the quarter with approximately $1.5 billion in cash, short-term and long-term investments, representing a 40% of last 12 months revenues. This number excludes approximately $700 million in predelivery deposits for new aircraft as well as 45 unencumbered aircraft and 15 unencumbered spare engines worth an estimate additional value of over $1 billion.

Total debt, including lease liabilities, stood at $2.4 billion, and we ended the quarter with an adjusted net debt-to-EBITDA ratio of 0.7x reflecting our strong financial position. I'd like to highlight that our average cost of debt comprised solely of aircraft-related financing remains highly competitive at 3.6%.

Turning now to the return of value to our shareholders. The Board of Directors has ratified the company's second quarterly dividend for the year of $1.71 per share to be paid on June 15 to all shareholders of record as of May 29. Additionally, during the quarter, we repurchased $45 million worth of shares representing approximately 1% of the total outstanding shares.

Finally, turning to our outlook. We continue to see a robust demand environment across the region. In our effective business model, combined with continued cost discipline, position us to continue sustaining strong financial performance. For the second quarter, we expect to deliver an operating margin in the range of 8% to 12% with a capacity growth in ASMs of approximately 16% year-over-year. These results are impacted by a projected year-over-year increase in the all-in jet fuel price per gallon in the range of 80% to 90% for which we expect to recover approximately 50% via higher revenues. This partial pass-through is a result of the already advanced booking levels.

For the full year, we expect to continue capacity growth -- we continue to expect our capacity growth within the range of 11% to 13%, a load factor of approximately 87% and unit costs excluding fuel of approximately $0.057. Based on the current future and assuming recent yield improvements are sustained, we expect to recover a substantial portion of the increased fuel cost expense for the year, reaching up to 100% by the end of the year. We will review our full year operating margin and RASM expectation as conditions stabilizes and visibility for the second half of the year becomes clearer.

In summary, despite the current fuel environment, we remain confident in our ability to deliver strong results supported by robust demand, disciplined cost management and our proven and resilient business model.

Thank you, and we'll now open the call for questions from the analysts.

[Operator Instructions]

And it comes from Savi Syth with Raymond James.

You're growing capacity 16% into a seasonally weak quarter here in the second quarter and the guidance seems to imply like a high single digit, low double-digit unit revenue. I was wondering if you could provide a little bit more color on kind of how much of the quarter was booked prior to the fare increases? And if there was any particular region that stands out as being stronger?

Thanks, Savi. I would say that we see strength across the network and not necessarily one region is stronger than other. I think we haven't maybe seen this in a while. There's always weakness somewhere. But right now, every region we serve is performing very well and is showing strength.

That's helpful. And maybe just following up on that. Some of the local currencies are much stronger lately. I know you priced your tickets in U.S. dollar and -- but just wondering what the purchasing power strength -- what kind of a tailwind that had in like 1Q and what you're thinking it is in 2Q?

Well, I think that, that will always play a positive role when currencies are stronger in Latin America. We've been asked that question before. And the answer has always been that we tend to benefit more from a stronger -- from stronger Latin American currencies than the opposite because we do generate a little bit higher percent of our traffic down south than in the other direction.

And if we look at the main currencies of Latin America compared to 1 year ago, most of the important ones of the larger markets are up double digits. So yes, that, of course, plays a positive role in what we're seeing.

Our next question comes from Duane Pfennigwerth from Evercore ISI.

Maybe just to continue right there. Can you quantify maybe the FX tailwind sequentially, what you would consider that to be in the second quarter versus what you realized in the first quarter?

I think it's -- I'm not sure if we can be very specific about that, but the currencies have remained strong. They've actually gained a little bit in the last months and 2 months. Some are stable. Others have gained a little. We are not seeing weakness in the currency. So I think it's a good environment for what we're seeing overall in terms of demand and even demand being resilient over yield increases that we've also seen from the whole industry in the last few months.

And then just for my follow-up, I think your CASM ex was down about 1% in the first quarter. You're guiding to down 1% for the year. Is that the right way to think about the trend consistently across the quarters? Or do you see easier comps, for example, in this 2Q, do you see an easier comp there? Or is it pretty much spread across the year?

Duane, this is Peter, and thank you for the question. I would say that we're guiding for a full year CASM of $0.057. And we always talk about CASM being pretty much in the range of the year, pretty stable. So I think that's what we should be expecting for the year relatively stable CASM and that's back on all the initiatives we talked that it should be stable across the year.

So no quarter sticks out in terms of like a massively easier comp versus the others?

No, not particularly.

Our next question comes from Julia Orsi with JPMorgan.

So we have 2 questions from our side. The first one, can you provide more details on this whole demand environment? I understand that demand has been trending well. But is there a specific segment where it has been more sensitive to the higher tariff prices?

And the second one, it's about -- it's a follow-up on the cost structure. You're implementing several initiatives to cost cutting. Can you provide more details on how these initiatives are trending?

Okay. Thank you, Julia. I'll start with the first question, then I'll ask Peter to help me with the cost question. So as I mentioned before, we're seeing strong demand across our network. All regions are carrying their own weight. And the way we are reflecting this is that, we've just shown our April numbers with ASM growth around 16% and RPMs were flat with 16% growth, and there's been yield adjustments done by the whole industry to compensate for fuel. So that combination of strong double-digit growth in spite of yield adjustments in the industry is, I think, a good testament of how strong is demand in our region right now.

Julia, this is Peter. So I'll talk about the cost structure. So mainly what we're seeing that is driving the cost down and some of the initiatives are back on and I go to main, one is our ASM growth back on the capacity and the densification project that we've been talking about. And of course, that helps us continue to lose part of our fixed cost. We can see a, let's say, 30% of our ex-fuel expenses are not exactly directly related to capacity. So we can make sure those grow less than ASMs and benefit from that growth.

And then I would say the other is we continue to seeing some benefits on our sales and distribution strategy and other initiatives that we have in that bucket. And those are, I would say, if I would give you color, those are the 2 main buckets that I would call out in the cost structure going forward.

Our next question is from Michael Linenberg with Deutsche Bank.

Just I saw that you did unveil your formalized, I guess, your 2027 fleet plan. And so we obviously are looking at very meaningful fleet growth this year and next year. Can you just remind us what's the CapEx number for this year? What's that number for next year since obviously, I know you're going to start incurring some of that CapEx this year as well for '27?

Too many questions. I would say, our CASM for the year, our cash -- our cash CapEx for the is year, sorry, is in the neighborhood of $300 million to $300 million. That's our cash CapEx that will be mainly a maintenance. And then if I put up together the fleet CapEx, it will put us somewhere around the $750 million to $800 million for the year. We don't necessarily guide for multiyear CapEx, the cash CapEx would be in the neighborhood, and then the fleet -- the aircraft CapEx would be related to that fleet growth that you're seeing for next year.

Let me add some -- Mike, let me add to that. Last year, we took delivery of 13 aircraft. This year is 7 aircraft -- 8 aircraft we're taking delivery of this year. So a little bit less than last year. Going forward, we have a lot of flexibility like we've done in the past when we needed to adjust deliveries and adjust capacity. So we're very comfortable that we can adjust to the business environment as needed as we've done before. We never roll the dice without a parachute. I know those 2 things don't go together. But you know what I mean.

Yes. No, no, no. I like the context because it's now -- it seems like that you've sort of been at this level for the last couple of years. This isn't really all that extraordinary now that you're getting there...

Exactly.

And then my second question is, look, we're in a really high fuel price environment. And you're still able to put up double-digit operating margins even what will be your seasonally weakest quarter or at least the potential to hit that. And so you can grow in this environment. And I suspect that many of your competitors cannot. And I'm just curious from a competitive capacity perspective, what you're starting to see in the market that you're sort of full steam ahead maintaining your full year ASM growth, I suspect that we're going to see others scale back. Any color on what you're seeing in the region? I mean, obviously, Spirit going away. There will be some benefit there because there was some competitive, at least on one-stop flights. But anything else?

Yes. Thank you, Mike. Besides the obvious of Spirit going away, as you just mentioned, we haven't really seen any particular movement from the rest of the airlines serving the region. We haven't seen any capacity pullback in response to the current fuel prices. That is not to say that it might not happen in the future, but we haven't really seen anything up to now.

And is from Alberto Valerio with UBS.

Congrats for the results. My question is mainly 2. The first one on the crack spread, we noticed that this quarter, crack spread below historical levels. If we can consider that for going forward or if it is just for this quarter, if you have any benefit in Panama.

The second one is about the guidance for the year. Can you consider it as a nominal pass-through on the fuel price? Or can you reconsider it as recovering the margins of 22%, 23% for the full year?

So Alberto, I'll take the first one. On the fuel and the crack, we're obviously seeing similar as everybody else in the fuel environment. We do have a 15-day lag on how they pass-through increase and probably that's one of the reasons we're seeing an average in the first quarter lower than the expectation. But going forward, we are using U.S. Gulf Coast jet fuel future curves. And that's what we're basing on and similar to everybody. So we're seeing similar trends like everybody else. And then with that, we add our inter-plane cost that should be in the neighborhood $0.30 per gallon. That's what gives us our guidance on the fuel for the rest of the year. And then I'll let Pedro talk about the recovery.

Yes. Well, the -- I think when we talk about guidance for the year or the rest of the year for that matter, there's still many, many unknowns and many variables that come into play. Starting with fuel, which is what's having the greatest impact right now. We don't really know in which direction fuel is going to go for the rest of the year. We're following the guidance I mean the fuel curve, we're following the fuel curve.

And if we go by the fuel curves that we have right now, the yield increases that are already in place and the fact that for the second half of the year, bookings are much lower because that's just how the booking curve works, means that those yield increases that are already in place are going to have a more significant impact in the second half of the year than what they were able to have in the second quarter.

We were already sold or booked around 40% in the second quarter when this conflict and fuel prices hit us. So we could not do anything about that 40% for the second half of the year it's much different. Bookings were much lower. So our guidance is based on that. Current yield adjustments that are already in place, a fuel curve, which no one controls and is very volatile. And the bookings that were already in place for the yield adjustments. Those are all variables. Well, the booking is not a variable that's going to change because I mean it's going to -- that's going to improve at the new yield. The yields depend on competition and demand, which right now demand looks very strong and competition has been rational. And then the fuel curve might be the one variable that no one really can predict.

Our next please, is from Daniel McKenzie of Seaport Global.

A couple of questions here. Just going back to Mike's question, just the high-priced fuel environment, is it your sense that there could be some strategic opportunities that come from this, like, let's say, if fuel prices continue to rise. And then related to that, if we just kind of think about the supply chain of Latin America, are there any -- are the refineries in some countries that are disproportionately reliant on Iran that sort of are catching your radar?

Well, from what we can see and from speaking to our fuel suppliers, we think we're in a good position in terms of supply. Our oil comes mostly -- oil that gets refined and turned into jet fuel comes mostly from the U.S., from Mexico and other countries, Venezuela, Colombia, et cetera. So it all comes from this part of the world. It's not affected by the Strait of Hormuz. Of course, fuel prices are international. And so regional supplies don't make -- don't change the WTI or Brent prices. But in terms of having the availability of the jet fuel, we're in a good position and the times we're living, that's actually great.

Yes. And then the second question came directly from an investor. It's actually something I wonder about in the past. But have you -- ties to an earlier question. But have you guys ever looked at your RASM results in constant currency? And does that even make sense? And I guess, the reason I'm wondering is just given how many countries you serve and just given how sensitive demand seems to be to foreign currencies. I'm just curious what that would look like if it were done on a constant currency basis.

Not sure. I'm not sure if I understood the question. because the reality is what we built with it or we built without it. We price in dollars, as you know, strong currencies tend to favor us, even though we do well also when currencies are not so strong. Currency hit usually move in the same direction like it's happening now, but sometimes there are particular issues in countries that make it different. I mean, that makes them stand out in a maybe negative way. But I'm not sure exactly what -- what are you looking for in the question, Dan?

Well, yes, it's not the convention in the airline industry report on a constant currency basis. So I get that it's kind of an odd question, but in other industries, they'll look at their revenue sort of based on a constant currency. So just putting in last year's foreign exchange rate and kind of looking at the revenue sort of from a demand perspective. But I get -- it makes perfect sense that when currencies are strengthening, you add capacity and capacity moves around. So it gets pretty complicated for airlines. So I just thought I would throw it out there and see if it's something, and I appreciate the response.

Thank you, Dan. We love your easy questions.

And our last question comes from Filipe Nielsen with Citi.

Congrats on results. Just wondering back on the capacity subject. Trying to understand here how are you allocating this capacity between the multiple regions and trying to understand it within this growth of capacity -- strong growth of capacity in the first half of the year, second half a little bit lower as per your guidance. Are you seeing any maybe shifts from one region to another in order to accommodate for higher pricing? And to my second question and related to that, how is your Venezuelan operations developing? And is this having an important matter in this whole pricing environment?

Okay. Thank you, Filipe. A few things. If we go back and we look back a few years, we have been growing capacity much less than our competitors. Just for lack of enough deliveries, we would have liked to have grown capacity faster in 2024 and 2025. We just didn't have enough planes coming in. So this year is different, and we needed that capacity from before. And it coincides with strong demand on top of it. So we have so many options in terms of where to fly our planes.

But given the current crisis, we are shifting capacity a little bit, not in a significant way, but shifting it towards more profitable. Our whole network is very profitable, of course, as you know. But we're trying to shift towards needed most or where it can be even more profitable. So that helps us also compensate for the higher fuel. But nothing is very significant because we have demand -- strong demand in most of our network.

Venezuela, you mentioned Venezuela. Thank you, yes. We're going back -- well, first of all, I should say that we are the only -- the very only airline, international airline, I say must say, there's very only international airline that never stopped flying to Venezuela. Except for like a 10-day window that had to do with the whole military operation that was going on, and it was not safe to operate during that window. But we've been constant -- we've had a constant presence in that market. And I'm glad to say that by June of this year in a few weeks, we're going to be back to the same capacity we had a little bit over a year ago. We will go back to 5 cities and over 40 weekly flights in Venezuela.

In terms of impact in unit revenues or yields, nothing significant because the Venezuela is going to be in the average.

And this concludes our Q&A session for today. I will pass it back to Pedro Heilbron for his final comments.

Okay. Thank you, all. This concludes our earnings call. Before we leave, I want to mention that Copa operates the strongest network. We have a strong and diversified set of cities and regions we serve, the lowest unit cost for a full-service airline, and a superior product to most of our narrow-body competitors. So we feel we are in a really good position to deal with the current crisis and come out ahead as we've been able to do in the past. So thank you for your continued support. Thank you for participating in our call, and hope you have a great day. Thank you.

Ladies and gentlemen, thank you for participating. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings Fourth Quarter Earnings Call. [Operator Instructions] As a reminder, this call is being webcast and recorded on February 12, 2026. Now I'll turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Thank you, Marvin, and welcome, everyone, to our fourth quarter and full year earnings call. Joining me today are Mr. Pedro Heilbron, CEO of Copa Holdings; and Peter Donkersloot, our CFO. First, Pedro will go both through our fourth quarter and full year highlights, followed by Peter, who will discuss our financial results in more detail. Immediately after, we will open the call for questions from analysts.

As a reminder, Copa Holdings' financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss certain non-IFRS financial measures, A reconciliation of these measures to comparable IFRS measures can be found in our earnings release, which is available on our website.

Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change.

Many of these are discussed in our annual report filed with the SEC. Now I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.

Thank you, Daniel. Good morning, and thank you for joining us for our fourth quarter earnings call. Before we begin, I want to recognize our more than 8,000 coworkers. Their hard work and commitment are fundamental to Copa's strong operational performance and continued leadership in our industry.

To them, as always, my sincere appreciation and respect. We delivered another quarter and full year of strong financial and operational results, reaffirming the strength of our business model and the structural advantage of operating the best position and most efficient hub for international travel in the Americas.

Our results reflect strong demand trends across the region. Continued discipline in our cost execution and our relentless focus on operational excellence. As a testament to our operational performance in January, [indiscernible] was recognized by Cerium for the 11th time as the most on-time airline in Latin America in 2025 with an on-time performance of 9.75%.

The highest of any carrier in the Americas and the second best in the world. Once again, I want to recognize our Copa team without their commitment and dedication it will not be possible to consistently deliver this level of excellence, which our customers expect from us.

Now I'll go over our fourth quarter highlights. We increased capacity by 9.9% year-over-year, while passenger traffic increased by 10.1%. As a result, our load factor increased. 0.2 percentage points to 86.4%. RASM came in at $11.3, flat versus fourth quarter 4. We reported cash ton of $8.8 and an ex fuel case of $5.9, a 1.6% and 0.7% year-over-year increase. respectively. Excluding a $7.2 million noncash adjustment to the provision for future lease return obligations ex fuel CASM for the quarter would have been $5.8 Operating margin came in at 21.8%. Excluding the noncash maintenance adjustment, we would have reported an operating margin of 22.5%.

Turning now to the main highlights for the full year 2025. Capacity in ASMs grew 7.8% year-over-year while passenger traffic measured in RPMs increased by 8.6%. As a result, our load factor increased 0.7 percentage points to 87%.

Unit revenues or RASM decreased 2.6% to $11.2. Unit costs for CASM decreased 3.6% to $8.6 and CASM, excluding fuel, decreased 0.7% to $5.8

And as mentioned before, we delivered full year operating margin of 22.6%. Turning now to our network between December and January, we started service from our Hub of the Americas in Panama to Los Cabos, Mexico. [indiscernible] and Santiago in the Dominican Republic, Maracaibo, Venezuela and Salvador Bahia in Brazil, further strengthening our position as the most complete and convenient connecting hubs for travel within the Americas.

Regarding our fleet. During the quarter, we took delivery of 4 Boeing 737 MAX 8 aircraft and ended the year with a total of to 125 aircraft. Earlier this year, Boeing updated the fleet delivery schedule for 2026, and we now anticipate adding 8 Boeing 737 MAX 8 this year and now expect to end the year with a total fleet of 133 aircraft.

We continue to see a strong demand environment across our networks as we enter 2026. Booking trends remained solid, supported by healthy travel activities throughout the region, which allow us to leverage the advantages of our hope Americas.

The current demand environment gives us confidence in our growth plan and reinforces the foundation for another year of strong margins in 2026.

Consistent with the guidance shared in our earnings release, we expect to grow capacity in the range of 11% to 13% in the year, as detailed in December at our Investor Day, approximately half of the growth is the full year impact of capacity added in 2025 with an additional 40% coming from added frequencies in existing markets and the remaining 10% from new destinations.

To summarize, we delivered strong fourth quarter and full year results for 2025. Copa was recognized for the 11th time by Cirium serum as the most on-time airline in Latin America second best in the world. We continue to improve our already low and competitive cost structure, which remains a core pillar of our business model.

We continue expanding our network adding frequencies and new cities to our hub of the Americas, and we're well positioned to deliver another year of profitable growth and strong margins in 2026.

Now I'll turn the call over to Peter, who will walk us through the financials in more detail.

Thank you, Pedro. Good morning, everyone, and thank you for joining the call today. I'd like to start by reinforcing titles recognition of our team's continued dedication to delivering industry-leading results. Their commitment remains essential to our strong operational and financial performance. .

Let me begin by going over the fourth quarter highlights. We reported a net profit for the quarter of $172.6 million or $4.18 per share. A 5.3% increase in earnings per share compared to fourth quarter 2024.

Operating profit came in at $209.6 million and we delivered an operating margin of 21.8% for the quarter. I would like to highlight that our fourth quarter results include a $7.2 million noncash adjustment in the maintenance material and repairs line related to the provision for future lease aircraft return obligation.

This adjustment was driven by a reduction in the discount rate used to calculate the present value of expected end of lease costs. As the applicable reference rate decline during the period.

Additionally, during the quarter, we reported a foreign currency loss of $6 million, mainly related as a result of the devaluation of the Brazil [indiscernible] which has since recovered in early 2026.

Excluding these 2 items, we would have reported a net profit for the quarter of $184.1 million or $4.46 per share, and we would have reported an operating profit of $216.8 million and an operating margin of 22.5%.

With regards to our costs for the quarter, unit cost for CASM decreased 1.6% year-over-year to $8.8 and CASM excluding fuel increased 0.7% year-over-year to $5.9. Excluding the noncash maintenance-related adjustment, we would have reported an ex-fuel CASM of $0.058, flat year-over-year.

Moving on to our full year 2025 financial highlights. We reported a net profit of $671.6 million, or $16.28 per share, which represented an 11.9% year-over-year increase in earnings per share. Operating income reached $819 million, 8.8% higher year-over-year. Operating margins came in at 22.6%, 0.8 percentage points higher than in 2024. Our consistent delivery of industry-leading operating margins underscores the strength of our business model and disciplined execution.

Now I'd like to spend some time discussing our balance sheet and liquidity. As of the end of the fourth quarter, total cash, short-term and long-term investments stood at $1.6 billion, representing 44% of last 12 months revenues. Further demonstrating our financial strength and flexibility, we also have approximately $500 million in predelivery deposits and we currently have 4,700 encumbered aircraft in our fleet.

Total debt stood at $2.3 billion, and we ended the quarter with an adjusted net debt-to-EBITDA ratio of 0.6x, reflecting our strong financial position. I'd like to highlight that our average cost of debt comprised solely of aircraft-related financing remains a highly competitive at 3.6%.

Turning now to return of value to our shareholders. I am pleased to announce that for 2026, the Board of Directors has approved the quarterly dividend payment of $1.71 per share to be paid in March, June, September and December subject to Board ratification each quarter.

The first quarterly payment will be made on March 13 to all shareholders of record as of February '27. Finally, turning to our outlook. We can provide the following guidance for the full year 2026.

We expect to increase our capacity in ASMs within the range of 11% to 13% year-over-year. And as Pedro said earlier, around 90% of this growth comes from the full year impact of capacity added in 2025 in additional frequencies in existing markets. And we expect to deliver an operating margin within the range of 22% to 24%.

We are basing our outlook on the following assumptions: a load factor of approximately 87% unit revenues of approximately $11.2 CASM ex fuel of approximately $5.7 consistent with our long-term target of delivering a CASM [indiscernible] of $5.6 by 2028. And we're expecting an all-in fuel price of $2.50 per gallon. Thank you, and we'll now open the call from questions from the analysts.

[Operator Instructions]

And our first question comes from the line of Savi Syth of Raymond James.

Just wondering if you could -- with the developments in Venezuela, just talk about if there was any demand impact in the region and then what your service there is and kind of the view for that?

Okay. So Savi, we're back flying to Venezuela, of course. And actually, we only exited the market for a short period. We are flying twice daily to [indiscernible] and we're also flying to Maracaibo, which is almost daily, a little bit less than daily. Before we had to stop flying to Venezuela last year, we were serving 5 cities. And we expect to go back to those cities gradually. It won't happen right away, but we'll be adding capacity throughout the 2026.

That's helpful. And if I might, you mentioned announced offering WiFi. Have you chosen the provider? And is that you're going to be -- is that for paid WiFi or free or any kind of thoughts on how you provide the WiFi service?

Yes. We have chosen a provider. We haven't made it public yet. Will do so I think in April, end of April, we'll make it public, but we are confident that our product is going to satisfy all the needs and expectations of our clients.

We'll move for our next question. And our next question comes from the line of Duane Pfennigwerth worth of Evercore.

I wanted to ask you about stronger local currencies. Currencies move, maybe people don't feel it right away, but over time, purchasing power improves and you might see some demand pickup in relation to that in some of the markets that you serve.

So I wonder, are you seeing any early improvement from stronger local currencies in some of your markets?

So yes, 2 answers to that. And we've talked about this before in previous calls. And we've always said and it holds true today, that we do better when currencies are stronger in South America, in particular. And yes, we're seeing improved demand and better yields as a result of the stronger currencies right now.

Okay. And then maybe just as a follow-up with respect to your full year guidance, which I think assumes flattish unit revenue. Is that what you're seeing now or are you starting the year stronger than flattish?

Well, we are guiding for the full year. And the first quarter is usually a strong quarter. The first and -- I mean, all of our 4 quarters are strong, of course. We have -- we don't have the huge seasonal swings. But quarter 1 and quarter 3 are usually the strongest and quarter 1 lately has been the strongest quarter.

So of course, we're seeing stronger numbers but we're guiding for the full year, and it's really early. So we are standing by our RASM guidance. And we're also adding double-digit capacity this year. So we take that into account also.

Our next question comes from the line of Guilherme Mendes of JPMorgan.

Yes. Pedro, Peter, Daniel. I have a follow-up on the RASM guidance. We were possibly surprised to see the flattish numbers in spite of the increase in capacity and the more appreciated local currencies. Pedro, do you mind sharing more details on what's behind that assumption for example?

Yes. It's a few things. Of course, we're confident on our demand outlook right now, and that is behind our RASM guidance but also there are a few other factors. One is that 50% of that ASM growth in 2026 is the full year effect of our growth in 2025 and so that has already pulled up most of it.

Another 40% is new frequencies which are going to go mostly or all of it in markets where we need additional capacity. And we need to keep in mind also that we've been catching up in terms of Boeing deliveries.

Now we're getting the deliveries that we need and that have been promised but in previous years, in particular in 2024 and 2023, we were behind quite a bit in delivery. So we also had some catch-up to do in markets that , in many cases, are unique to us, and we were not able to deploy enough capacity.

Our next question comes from the line of Filipe Nielsen of Citi.

Sorry, I was on mute. I wanted to explore in a little more detail the guidance on the cost side. Remember, I remember in third quarter, you guided for CASMx fuel between 5.7% and 5.8% and now you're assuming a 5.7% sense in the guidance. Just wondering how -- if there are any factors that made you a little more optimistic about targeting the lower range of the previous guidance? And how do you see this CASMex evolving throughout the year.

Thank you, Fillipe. This is Peter. So for 2025, we reported a CASM ex fuel of 5.8%. But of course, we will post to 1 decimal when you look at the full number and you add a couple of decimals, you see, we would be close to the middle of the range between 5.7 and 5.8 so that also gains us confidence for the 5.7. And we have a lot of initiatives, some going on and some new initiatives, like we talked about the full year effect of the sales and distribution that still help some extra savings to come in.

We got a full year effect of some densification projects that are going in we got a growth, 11% to 13% growth is something dilute fixed costs. And we also have new initiatives that we're working on. And despite the fact that none of them make the headlines, the combinations of all these initiatives do add a couple of additional a couple of additional points.

So I would say what's embedded in the guidance is all those initiatives. It's slightly offset by some inflation and some effects headwinds that we're seeing.

Great. And just one follow-up. I just wanted to hear a little more from you. How do you see capacity evolving on a quarter-by-quarter basis? We know that there's some carry from the deliveries that you took late last year -- just wondering how if we should see stronger growth in the first half of the year and then moderating in second half. Maybe if you give a little color on that.

Yes, you're right. As most of the -- 50% of the capacity comes from full year effect of last year's deliveries and service we launched. There is -- it is slightly farloaded. So we are going to see being more above the range in the first half and then slightly on the lower end of the range in the second half.

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

Yes. Pedro, just on the Venezuela service when you listed the markets, does that actually include Wingo? And I have sort of a question tied to Wingo on how you see that business this year? Is it sort of steady on the fleet size? Or is there potential growth in 2026 at Wingo?

Okay. So sorry for that. I'm sorry to do our Wingo workers. I let Wingo, Wingo has gone back in with their own daily frequencies from Bogota to [ Karaka ] and they'll be implementing -- restarting medicine to [indiscernible] in the very near future. So I did not include Wingo. Wingo received a 10 737 800 in the second half of last year. .

And then they went through a number of [indiscernible] checks. So they had to use that aircraft back up for the check. So we'll see the impact of their 10 aircraft this year. But otherwise, it's stable. Wingo will be growing much this year, and they'll continue in that same path we saw last year.

Great. And then just a quick second one here, Pedro. I know that Cuba is not the biggest market for you, but you've always had long-standing service there. We're seeing a lot of international carriers either cut the service or maybe being forced to make tech stops.

Can you -- do you have the ability to fly in with enough fuel from Panama City, so you do not have to make a tech stop on a round trip flight to Cuba. Where are you on that?

Yes. Thank you, Mike. We -- given that Panama is C level and the distance from here to Cuba to Havana we fly 2 cities, but mostly to Havana. We can tanker in Panama and not take any fuel in Cuba. And that's what we're doing with a minimal impact to our passenger capacity.

So we do have to reduce the number of passengers but very little. I think it's by 10, 10 or 15, something like that passenger. And then we're holding back from sending belly cargo. So those are the 2 things, the 2 adjustments to be able to tanker in Panama. Then Wingo, I won't miss Wingo this time, Wingo flight from Bogota to Havana and they need to make a [indiscernible] to in somewhere in Colombia and Barranquilla, which is C-level and that's because volatile is hot and high. So it makes a stop in Barranquilla at sea level.

Our next question comes from the line of Rafael Simonelli of UBS.

It's a simple question regarding the share with Valaris I wanted to know if the partnership remains with the potential deal between Valaris and [indiscernible]

Yes. Well, our code share with Volaris started in November. So still spooling up. And we haven't really addressed the Valaris JVA merger at least, I'm not aware that we have addressed that. We expect the culture to continue. And in any case, it's not going to be a significant part of our business.

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

Pedro, I'm wondering if you can provide some partner perspective. So either the percent of revenue or the volume of passengers from your partners in 2025. versus what it was, say, pre-pandemic. And what I'm trying to get at is how big a piece of the revenue story are the portfolio of partners? Is it more than 10%, less than 10%? Anything you can share?

Yes. That's not a number we share. But what I can say is that our numbers are not above pre pandemic. If anything, they are below or slightly below. Our main partner, of course, is United. We could share in many U.S. routes. .

And we're also partners in Star Alliance, but we had a partnership even before that. And that partnership is healthy, it's strong and well United is doing extremely well themselves, so we know that. But no, the numbers have not change have not grown really rent, I mean, post pandemic.

Yes, United, definitely a healthy partner. Okay. Second question here, just going back to Venezuela. As you think about the risk/reward of the country as part of the network, and I'm wondering what its size as a percent of overall flying could ultimately look like, say, in 2 to 3 years.

So of course, we have been born and raised in the middle of Latin America. So there's something -- we know how to do, is how to deal with changing situations, crisis of very kind. We've proven to be very resilient in every market we serve. And I think we were the better airline managing this whole Venezuela crisis that's taking quite a while.

And we're also very loyal to the countries and sales research because we're loyal to our passengers, and we understand the importance of the connectivity we provide through the top of the Americas in Panama and sorry for this promo.

But we're confident that we're managing capacity the right way that we understand the market -- and we're going to be there in the future in a successful way. But along the way, we might need to make adjustments. And that's kind of part of our day today in Latin America, making adjustments.

And we have enough opportunities to move around capacity right now is from other markets to Venezuela before was from Venezuela to other markets and we have continued returning strong demand, even though we always have to make those adjustments. It's kind of our daily living. And this is not like I don't have the magic one, but we have a team that knows how to deal with changing times and changing situations.

Our next question comes from the line of Pablo Monsivais of Barclays.

Again, on Venezuela, is any of this destination included differently in this year guidance? Or it's just basically business as usual now. Just wanted to understand if perhaps if things improve [indiscernible] we might see some upside there or probably we'll have some incremental cost if you're thinking about expanding Venezuela at some point this year. So I just wanted to understand the impact of Venezuela in your guidance on the unit cost .

Yes. Thank you, Pablo. It's not material. I mean it's -- we're not guiding to Venezuela changing our results. There won't be any material changes either way. I mean there could be upside, of course, but not what we're expecting right now, we're expecting our service to Venezuela to be very similar to the rest of the things we do throughout our network. And if we grow there, we grow in another market, it won't change our guidance in a significant way.

Perfect. And if I can add one follow-up. Just out of curiosity, have you seen any interesting trends on the work for this over.

Yes. Well, that's an interesting topic because World Cups in our region don't happen even every 4 years. So demand patterns are going to change due to the World Cup. And it's going to be different to what we're used to dealing with.

And we're working hard to try to minimize the potential surprises from flights being very full in one direction, maybe not in the other. And then passengers that we're going to have vacation in Cancun or Punta Cana and we're going to go to the World Cup in the U.S. or Mexico or Canada. So all of those changing patterns are a challenge to deal with -- and we have a team working on that right now.

We will fly extra sections to Toronto, where Panama explained its first 2 games. Our third game is in New York. Not sure where we'll play after that, if we qualify and keep on moving, not sure we're how the finance are in New York. So hopefully, we'll be there. But we have does not last. You'll never know. But of course, there are other things that are the favorites. So I'm not changing that. The favorites are very strong. So anyway, we will have extra sections, quite a number of extra sections to Toronto.

And then we are managing the rest of the network in the best possible way. And hopefully, on the final, at least, even if it's not Panama, there are 2 countries that we serve. That will be fantastic.

There are many

Our next question comes from the line of Jens Spiess of Morgan Stanley.

So we have noticed that you are planning to increase capacity in Argentina and actually reducing a bit of capacity in Colombia. So I have like a 2-part question here. First, if you could please comment on like the demand dynamics you're seeing in both of those countries.

I think you already alluded a bit on Colombia, but also interesting to see what you're seeing in Argentina and how excited you are about those routes and demand in that market? And secondly, considering like how nimbly you're allocating capacity is it may be fair to assume that all else equal, your load factor guidance actually conservative? Just putting that out.

Okay, I'll start with the second one first. because some team members, especially from the commercial department are here on the call, and they already feel challenged by our goals. So we think it's -- our guidance tends to be -- our guidance tends to be realistic.

And that we are always very close to guidance year in and year out because we make it realistic and it's the same guidance that our team has and a chunk of their compensation is based on of reaching those goals. So everything is well aligned. And for that reason, we need to be realistic.

So I would say our guidance are realistic. When there's upside, it's because there are other external factors that made tailwinds that make things easier. So once in a while that happens, of course.

In terms of Colombia and Argentina, I should say that right now, all of our markets are looking well. Argentina is fine. Of course, it's not as strong as a year ago because as we -- as I mentioned in the previous call, a lot of capacity came in during 2025, but it's still a very strong market. It's still doing well only that year-over-year.

There's a lot more capacity from everyone. But we're doing well in Argentina. We serve number of cities or new cities, which started last year are doing well, too and Colombia, it's also doing okay also.

Our next question comes from the line of Rogério Araújo of Bank of America.

I have a couple here. First one, you already mentioned that the local currencies have been supporting yields -- is this the only reason why Copa had expectations for a flat resin despite of a double-digit capacity expansion. Or in your view, there are other strengths in the region that could explain that or maybe some supply rationality. If you could give some color on that? That's my first one.

Yes. The currency, the potential currency strength or tailwind is not something that we're banking on for the full year. We know the volatility of our currencies, well, a lot of currencies in our region. And when we put together our growth plan, currencies were not as strong as they are right now.

So no, it's not only not part of the plan. It could be a windfall, it could be it's a tailwind right now. but it's not what we're betting on for growth or for having a strong year.

Okay. Perfect. And also, it felt to me a little bit challenging on rising to the CAS x fuel guidance looking at my model and playing with the variables. So any color you could provide on which lines we could reduce further or that you see more opportunities? Anything you could share here would be greatly appreciated as well.

So thank you. Thank you for the question. This is Peter again. I would say that our guidance, what has embedded is some benefit for the growth. So those lines that are fixed or semi takes will see a better benefit, part of the salary wages and benefits, that part that is not operational-driven, and we're very disciplined to not grow overhead in the same line that we grow a capacity.

So we're going to see some benefits in there. and we should be able to see additional benefits in the cell and distribution. So I think if I would call out, I would say those were 2 particular lines that we could call out right now.

And our next question comes from the line of Guilherme Mendes of JPMorgan.

But the second one is regarding the buyback program, Peter, if you could remind us where you are on the buyback program? How much have executed so far? .

Yes. Thank you, Guilherme we have the buyback program approved by the Board of $200 million. We have executed more or less half of it. And we have the other half remaining open. Now when that's in place. And whenever we do finalize it, we ask for a new one.

And our last question comes from the line of Alberto Valerio of UBS.

Pedro and Peter, thank you for taking my question. My question comes from Brazil here, we heard that there is a project to suspend the law 400 in Brazil, which would be good for the lines in terms of law suits from the consumers to the airline. I would like to see if you already see any positive impact on the liabilities of copper with the Brazilian consumers. And if get approval, this resolution 400, what we can see in terms of upside to the future.

Yes. Thanks, Albert. So the impact is going to be on cost, of course. And many may not be aware of this, but I think something close to like 90% of passenger/consumer lawsuits in the world come out of Brazil. .

And so that's going to be welcomed by the industry because the numbers just don't make sense and are not fair to airlines or to the reality of our industry. So there will be cost savings from that if it does pass.

Thank you, Pedro. If I'm not mistaken, it's a right to spend isn't it? You are not being charged for the lawsuit since the end of last year. you correct me if you're wrong. Do you have any impact already from this or not?

Well, we have the impact from the lawsuits we all have impact from the losses. So is that -- I mean, to be transparent, I'm not very familiar with the specifics of the law, the resolution and what's going to change.

Of course, I'm aware of it, and it's been discussed, but 1 of those things that I want to see to believe it. And it will be a positive. I haven't been very involved in the details of it, but it will be really important for the industry. It will be very positive and especially it would be fair to the industry. And it will result in savings, of course.

Fantastic, fantastic.

This concludes the question-and-answer session. I would like to turn it back to Pedro Heilbron for closing remarks.

Thank you. So thank you all. This concludes our earnings call. Of course, thank you for being with us. And as always, thank you for your continued support. Have a great day.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

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.

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings Third Quarter Earnings Call. [Operator Instructions] As a reminder, this call is being webcast and recorded on November 20, 2025. I will now turn the conference over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Thank you, Michelle, and welcome, everyone, to our third quarter earnings call. Joining me today are Pedro Heilbron, CEO of Copa Holdings; and Peter Donkersloot, our CFO. Pedro will begin with an overview of our third quarter highlights, followed by Peter, who will walk us through the financial results. After that, we'll open the call for questions from analysts.

Copa Holdings' financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss non-IFRS financial measures which are reconciled to IFRS figures and our earnings release available on our website, copaair.com. Our discussion today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC.

With that, I will turn the call over to our CEO, Mr. Pedro Heilbron.

Thank you, Daniel. Good morning, and thank you for joining us today. Before we begin, I want to thank all of our coworkers across the organization. As always, the dedication and hard work are instrumental in our financial and operational success. Copa delivered another strong quarter reinforcing the strength of our business model and our competitive advantages in Latin America. During the quarter, we achieved industry-leading profitability with an operating margin of 23.2%, up 2.9 percentage points year-over-year and a net margin of 19%, up 1.9 percentage points year-over-year. These results are driven by our continued focus on cost discipline and a healthy demand environment in the region.

Now over to the key highlights for the quarter. Capacity in ASMs increased 5.8% compared to Q3 '24. Load factor increased by 1.8 percentage points to 88%. Passenger yields came in 2.6% lower year-over-year. Unit revenues or RASM increased 1% to $0.111 compared to Q3 '24. On unit cost, our CASM decreased 2.7% to $0.085 compared to Q3 '24, while CASM, excluding fuel, decreased 0.8% to $0.056. Operationally, Copa Airlines delivered an on-time performance of 89.7% and a flight completion factor of 99.8%, maintaining our position among the best in the industry.

During the quarter, we started flights to Salta and [ Tucuman ] in Argentina. And as mentioned in our previous call, in the next few months, we expect to add service to [ Los Cabos ] to Mexico, Puerto [ Plata ] and Santiago in the Dominican Republic and Salvador [ Bahia ] in Brazil, further strengthening our position as the most complete and convenient connecting hub for travel in the Americas.

With regards to our fleet, during the quarter, we took delivery of five 737 MAX 8 aircraft. We added a second Boeing 737-800 [ trainer ] under an operating lease and Copa transferred an aircraft to Wingo, growing its fleet to 10 Boeing 737-800 NGs. We closed the quarter with 121 aircraft and we have since incorporated 2 additional MAX 8, bringing our fleet to 123 aircraft. We expect to receive 1 more MAX 8 before year-end finishing 2025 with 124 aircraft. For 2026, we anticipate adding 8 more 737 MAX 8, two of which we previously expected to receive in December 2025, ending 2026 with a total projected fleet of 132 aircraft.

To conclude, in the third quarter, we again reported strong operational and financial results. Going forward, our guidance demonstrates confidence in our future performance driven by healthy demand in the region and the strength of our business model, which consists of the best geographic position with our hub of the Americas in Panama, structurally low unit cost and a strong balance sheet and a passenger-friendly product with industry-leading on-time performance. Our focus on these pillars enables us to consistently deliver industry leading results.

Now I'll turn the call over to Peter, who will walk us through the financials in more detail.

Thank you, Pedro, and good morning to all. I'd like to start by reinforcing Pedro's recognition of our team's continued dedication to achieving industry-leading performance.

Let me provide some detail on our financial results for the quarter. Net profit came in at $173 million or $4.20 per share compared to $146 million or $3.50 per share in the third quarter of 2024, representing a year-over-year increase of 18.7% and 20.1%, respectively. Operating income reached $212 million or 22.2% higher year-over-year and an industry-leading operating margin of 23.2%, 2.9 percentage points higher than the third quarter of 2024.

On the cost side, CASM decreased 2.7% year-over-year to $0.085, driven primarily by lower fuel cost and maintenance expense. CASM, excluding fuel, came in at $0.056, down 0.8% compared to third quarter 2024. This figure reflects a realized gain from engine exchange transactions and a benefit related to the extension of 1 lease aircraft. Regarding our balance sheet, we ended the quarter with $1.3 billion in cash, short-term and long-term investments, representing 38% of the last 12-month revenues.

Further demonstrating our financial strength and flexibility, we also have approximately $600 million in predelivery deposits for future aircraft. Additionally, we currently have 45 unencumbered aircraft. Total debt stood at $2.2 billion, entirely related to aircraft financing. Our adjusted net debt-to-EBITDA ratio came in at 0.7x and our average cost of debt continues to be highly competitive at 3.5%. Regarding the return of value to our shareholders, I'm pleased to announce that the company will make its fourth dividend payment of the year of $1.61 per share on December 15 to all shareholders of record as of December 1.

As for our 2025 outlook, we remain confident in our full year performance. We are reaffirming our guidance and narrowing the operating margin range to the upper end now expected between 22% and 23%, with a full year capacity growth projected at approximately 8%. This outlook reflects a healthy demand environment in the region as well as our continued cost discipline. Our outlook is based on the following assumptions: load factor of approximately 87%, RASM of approximately $0.112, ex-fuel CASM of approximately $0.058 and an all-in fuel price of $2.40 per gallon.

Looking ahead to 2026, we preliminary expect full year ASM capacity growth in the range between 11% to 13%, with an ex-fuel CASM in the range of $0.057 to $0.058. To conclude, we remain confident that our proven business model, robust balance sheet and disciplined execution provides a solid foundation to continue delivering consistent growth, strong financial results and industry-leading margins. Finally, I'd like to remind everyone that our Investor Day will take place at the New York Stock Exchange on December 11 at 11:00 a.m. Eastern Time. We look forward to sharing more about our company during this event.

Thank you, and we'll now open the call for questions from the analysts.

[Operator Instructions] Our first question will come from the line of Savi Syth with Raymond James.

Could you talk a little bit about the timing and nature of the kind of core benefited card renewal that you noted in third quarter? And just about the opportunity that you see in loyalty in general?

Yes. Thank you, Savi. And yes, we had a renewal of our Visa agreement during the third quarter, and that's part of what you see an 86%. We cannot disclose too much on that due to the confidentiality of the deal. But if we take that out, if the growth of the loyalty program would have been similar to the second quarter, there was over 30% growth year-over-year.

Great. Anything around the loyalty program initiatives? Is that just because of the normal renewal? Any other kind of thoughts on how that program can kind of contribute in the future?

So it's an important growth, 30% year-over-year over a small basis. We continue to grow. The program is maturing. We expect the program to continue to grow. There's a lot of new non-air partners in the program, and we expect the brand to continue maturing and to continue growing at a decent rate going forward, and it's one of the priorities that we have for coming years. So the 30% growth, I mean, it's over a smaller base, and we expect that growth to continue and slightly going down as the program matures.

Got it. And if I can ask just a clarification question on the growth next year. Could you tell like the 11% to 13%, how much of that is kind of gauged, staged versus [ speed ]?

Yes. So the full year growth that we are projecting between 11% to 13%, I would first say that half of that growth comes from the full year effect of the backloaded aircraft that we received this year. Of the other half, I would say, that 50%, 40 percentage points of that will come from adding frequencies to current destinations. And then the other 10% will come from adding new dots on the map. Some of them Pedro alluded to during his intervention. That's more or less the breakdown of our 11% to 13% growth in ASM for next year.

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

Yes. Just -- Peter, maybe to pick up on Savi's question on that growth for next year, sort of half of it is just the annualization of 2025 and then another large chunk of that remaining half 40 points of frequencies. As we see that type of growth, what is the view on unit revenue trends? Normally, when we see a step-up in growth, we tend to see pressure, especially when you move into new markets. But it seems like if you're just focused on really strengthening what is already a strong position in the region, we should assume that unit revenue next year could be maybe somewhat flattish. What -- any thoughts on that or how you think about it for 2026?

Mike, it's Pedro here. Yes. So I think in a way, you helped us answer the question. I mean we're not giving yet guidance on unit revenues. But you're right, most of the growth comes either full year effect or from adding frequencies. And of course, we're adding those frequencies in high-demand routes. When we averaged 88% for a quarter like we did in Q3, that means that many, many routes, many markets are above 90%. And that's where we're adding frequency. So the impact on unit revenues should be much less than one we would expect from double-digit ASM growth.

Great. And then just second question, since it is frequencies, when we look at the number of gates at Panama City and how full up you are and the number of banks. Where are you? When we think about banks and connectivity, I see some markets like you have 8 flights a day to Miami, you have 10 flights to Bogota. I recall where it was 2 banks, 3 banks, 4 banks. How many defined banks are you -- do you have today? And how much actually additional room do you have to add these additional frequencies because presumably, they're all in and out of Panama City. When do you start topping off or where do you start running out of connecting banks?

Yes. Pedro here again, Mike. And so 2 things I'll say. First is that the airport is already working on its next phase of expansion. They're coming out with bids by the end of this year or early next year to expand the new T2 terminal and also to do some work on the taxiways and runways, one of those contracts actually has already been assigned. And then our civil aviation authorities is also bidding a redesign of the aerospace. So all of this is going to happen in the next 3 to 4 years, and it's going to be done in a very pragmatic, I would say, way. That's going to be very good for the airport and for our hub. So we're really happy with that. .

In terms of frequencies, we're running 6 defined banks today, 6. Our first arrivals are like at 6 in the morning and our last departures are nearly at 11:00 p.m. And we do run [ wing ] tips, sometimes even triple wing tips. At certain times of the day, like early in the morning, we run wingtips to the Caribbean, to Miami and places like that. And depending on the banks, we might run wing tips to maybe South America and other points. So they're still with this new phase of expansion that we're very, very involved with the airport authorities and the design even as there's an international institution also very involved. We're going to have plenty of room to add wing tips if needed or even if it comes to adding banks, there will be room for that also.

Our next question comes from the line of Duane Pfennigwerth with Evercore ISI.

This is [ Jake Gunning ] on for Duane. To ask a question about next year a little differently, not looking for guidance, but could you maybe talk about how you're preliminary thoughts on 2026 margins and earnings have changed over the last quarter?

Yes. Pedro again. They haven't really changed. I mean in terms of our -- what we expect for unit cost, unit revenues, et cetera, we are kind of in the same place. Maybe the only wild card is what happens to fuel. And we've seen in the last few weeks, an increase in the crack spread for jet fuel, but that could change again in the next 2 weeks, and it has a lot to do with the conflict in Russia and mainly that and a few other reasons. So I would say that the only wild card, and we haven't modeled how yields would react to that when there's -- when jet fuel is higher, usually, there's more pressure for everyone to adjust fares, but we haven't really modeled that.

Okay. And then just given the really healthy leverage, is there any debate or discussion on leaning more heavily into share buybacks versus dividends?

Yes. So Peter, now, and thank you for the question. And I'm going to talk a little bit about all the capital allocation plan that we have and basically, we have, after this year around 46, 47 planes pending delivery from the order book we have. And given the fact that we are performing as Pedro said, 88% load factors for a [ decent ] margins. One of our top priorities that [ announced ] continue to reinvesting in the business. We believe the business can continue delivering healthy margin at growth. So that's one of our priorities for the capital allocation. .

And secondly, of course, we'll continue returning value to our shareholders as part of our capital allocation plan, and we have 2 ways to do that. One is our dividend policy that, as you know, it's 40% of last year's net income. We will maintain that dividend policy and maintain those quarterly payments. And then the second is we have a buyback -- a share buyback program open that was approved by the Board. It was approved around $200 million. We have executed half of it, and we'll continue executing on the other half on an opportunistic basis. We don't have an end date for the plan. We will just continue doing it when we see the opportunity to do so.

Our next question comes from the line of [ Philippe Nielsen ] with Citi.

I have 2 questions on CASM [ ex ]. Looking at this year, you're continuing guiding to $0.058. And just trying to understand what are the moving parts after this quarter's one-off positive one-offs if maybe you're being too conservative on this assumption?

And the second one, looking for 2026. Maybe if we could -- you could like guide us on the moving parts of this expectation. Maybe for us, sounded a little too conservative given that you potentially could increase fixed cost dilution from the capacity expansion. Just trying to understand those points.

Thank you, Philippe, Peter here. So yes, on the CASM x, we're guiding to approximately $0.058 for the quarter, of course, [ we own ] for the year. We only use 1 decimal. So there's a range to that $0.058 that we are alluding to, it's not necessarily going to be exactly 5.80 for the full year. And I would say that -- I would also like to comment on the 2 items that we highlighted on our earnings release yesterday.

First, we did highlight those 2 items more to make it easier to compare. And to give some color, the return conditions, it's every time we do a lease extensions, what happens is we spread the provision for a longer period of time. So we did execute one, a lease extension during the quarter, and that's what you see that. That's around 1/3 of the effect of what we call out there. And the other 2/3, which I may say that are not necessarily one-offs, is the engine exchange and mainly due to the longer turnaround time that we have been seeing, the team is sending some engines to do engine exchange instead of sending into engine restoration.

This transaction usually see some accounting benefits due to the difference between the book value and the transaction price. This transaction is something that we're doing this year, and most will continue doing next year. So I wanted to highlight that it's not necessarily a one-off transaction for the engine exchange. And for the year -- for the 2025, I addressed it's a range of the 5.80. So we would need to model what is within that range of that decimal. And for 2026, we feel pretty comfortable what we wanted to guide is that we have enough levers in our tool of cost initiatives to offset inflation at the least and push the CASM even lower. So I think that's the guidance we're giving to CASM. It's directionality of the CASM that we have enough initiatives to address inflation and push the CASM at least even lower. That's the main point we want to address.

Our next question comes from the line of Daniel McKenzie with Seaport Global.

A couple of questions here. First, going back to the script, the healthy demand backdrop in the region. I'm wondering if you can elaborate on that. Macro has been especially volatile this year. And Latin America, just seems to be completely disregarding it, plowing through it. And so I'm just sort of what is driving that? And -- or is it just that the demand is inelastic, given the wealth demographic of your customers. I'm just wondering if you can break it apart for us?

Okay. So Pedro here, Dan. I'm not going to say we have all the answers or that we can share all the answers we might have. There might be something with demographics, as you will explain. We have a lower percent of people that travel in Latin America versus what you would find in Europe or the U.S. but the traveling class does have, on average, the resources to travel so. And they're traveling more than before. I must say that before the pandemic, that's noticeable and that's very clear.

So an analysis of the demographic is not going to be easy. But demand remains healthy, continues to grow. There's a lot of capacity coming in, but load factors are holding up. And I would say that, that's what we're seeing in most regions and the regions where maybe that won't be the case, are easy to point out. For example, we had the strong devaluation in Brazil last year, starting in mid last year, but the currency has been stable and even recuperated some ground since. So we see Brazil slowly coming back, maybe not all the way back to what it was in 2023, but it's on its way.

The rest of South America looks fine, the [ ambiance ] back looks fine. The U.S. is pretty stable. Maybe just slightly down, but with a lot more capacity. So -- and I'm saying load factors, of course, demand is up. It's up double digits. Argentina has seen a lot of capacity come in. So still a strong market, but not nearly as strong as before because of all that capacity. But I think that's going to taper down. We ourselves are going to grow. We've grown quite a bit in Argentina. We won't be growing that much, if at all, in the future. So we're also adjusting our capacity and putting our capacity where it makes the most sense. So yes, I mean, in general, it's a healthy demand environment. Sometimes the additional $0.08 hit on yields a little bit, but even that has not been significant.

Yes. Very impressive. The second question here. I'm wondering if you could speak to the durability of growth opportunities beyond 2026. So should we be thinking low double digits for the foreseeable future? Or how should we be thinking about growth longer term, say, 3 years out or so?

Yes. I'll go with our aircraft order, which I think the better way of understanding our growth plans. And as you know, we've always been very rational, very pragmatic. We never do crazy things. But for -- yes, you know us well. Like for the last years, we have delivered plus 20% margins every quarter. One quarter we missed, we were 19.5%. So okay, we're right there. And that's because we're really careful. I mean, we focus on our business model. We focus on our low-cost and we grow capacity by what makes sense to us, not necessarily in response to anything else.

So if you look at our fleet plan, it follows that same pattern. And it points to somewhere between 7% and 8% per year consistently. We have a little bit over 40 planes pending delivery for the next 4 years. And if you do the math, it's going to be around 7%, 8% average growth CAGR for that period. And I think that we have the opportunities, given the strength of our hub and network, our leading unit costs and customer service on time performance. When we put everything together, we think that's really reasonable growth that we can sustain in a profitable way.

I would just add that, as Pedro alluded to, that's our plan of growth and should be around the 6%, 7% as Pedro alluded to the next couple of years. Pedro said it very well, we're not obsessed with growth. We will only grow if there's profitability in that growth. We'll be more focused on making sure we can get the most profitability. And we have a lot of flexibility for that growth on the downside. And we have the lease aircraft. We have 4,500 [indiscernible] aircraft. We have the 700 that by any point demand softens, we can decide to park, harvest the engines and even help us grow in the CASM. So there are a lot of tools we have to address whatever market comes to us, and we'll try to make the best out of it.

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

One more on my side in terms of yields. Was -- you see a healthy environment that I think market was expecting a little bit more in terms of yields for this quarter as well for the next one, maybe revising revision on the guidance. If there is any specific detail that make you guys be a little bit more conservative.

And another one, if I may, in terms of competition in the region, we see an IPO in Mexico, we may see another IPO next year in Latin America and also in Brazil, Azul come back from [ Chapel ]. What is the perspective? And how is the market in the region, if you can take some details in terms of competition?

Okay. A few things. So I think we already spoke quite a bit about 2026 yield. You're asking about fourth quarter. We do not give a quarter-by-quarter yield guidance but we did narrow our operating margin guidance to somewhere between 22% and 23%. So we narrowed to the higher end of our previous guidance. So that's what we can share now.

In terms of competition, it's something that we've lived with for a long time, always, I would say, but even more so in the last 4 years, in the last 4 years or 3 years, and we work on the -- on our competitive advantages to make them stronger. And that's our product, our unit costs and the strength of our network. So we're confident that we can continue delivering in 2026 and beyond the strong margins you've seen before.

And the IPOs you alluded to, well, those are companies that were public before. So they're going back to where they were before they went through bankruptcy and all the other troubles they got into. We work hard to avoid that kind of situation and try to be a little bit more steady on everything we do.

Our next question comes from the line of Tom Fitzgerald with TD Cowen.

Just kind of going back to the high-level conceptually for next year. How do you think about like how -- from the incremental frequencies and then the 10 points for the new [ dots ], just like in a normal year, how would you think about how those should theoretically compare to like system RASM?

Yes. So normally, in a regular year, most of our growth goes to adding frequencies and then we always have a little of that growth to put on new markets. And then for those new markets for the next year, normally mature, and then they go in the first category of adding frequencies to those new markets as we normally open markets with 3 to 4 weekly flights and then we go building up. So that's more or less how we have deployed growth in the past years and how we've done it. Most of it going to frequencies and then smaller portion going to new markets.

Got it. Okay. I mean normally like just thinking about like the maturity ramp for like the incremental like departures, do you think that like is a decent discounting a 10-point discount to system average or pretty much in line with the system that you're producing?

I would say it's pretty much in line. And kind of a related factor is that as we all know, Boeing deliveries were -- have been delayed quite a bit for the last 2 years. This year, they've been on time even earlier so there's a noticeable improvement there. But overall, we're still behind where we thought we were going to be if we had talked 3 years ago. So these are kind of overdue deliveries and we feel we have the demand for those aircraft, especially that we're adding frequencies as Peter mentioned.

Okay. That's really helpful color. And then just as a follow-up, I was wondering if you could talk -- you've talked in the past about some of your -- some of the kind of lower-hanging fruit you guys have with technology and your ability to maybe price better. Incorporating more dynamic pricing or upselling products like economy extra. I'm just wondering if you could -- maybe it's more of a preview for Investor Day, but I love the latest thinking there.

Yes, we have to keep something for the Investor Day, you're right. You just help me answer that question. There's still a lot of opportunities. We continue investing quite a bit in our digital tools and especially -- actually not necessarily in new digital tools, but making better what we already have. And there's an opportunity we have in doing better merchandiser -- merchandising, I'm sorry, better UX, better user experience. Those products we're offering make them more visible to our customers, especially in the booking flow and in the checking flow.

We're working on that and focusing on 3 things and 3 ancillary categories. Baggage, of course, upgrades to business class, and we're having a lot of success there. And also our premium economy cabin, which we call economy extra. We haven't given that enough visibility and there's nice upside there. So yes, that's where we're focusing, and we expect to continue increasing revenues in those categories.

Our next question comes from the line of Guilherme Mendes with JPMorgan.

First one is just a follow-up on the competition. Pedro, you mentioned about Argentina being especially competitive and you also mentioned about Brazil. But which other regions do you see, let's say, higher-than-average competitive environment? And the second one, Pedro, you also mentioned about fuel being in the white card for 2026. Given that a potential environment, do you see Copa changed its hedging policy in some way?

Okay. Yes. So yes, what I said in general terms is demand is healthy. It's growing at the pace of capacity in all of Latin America. So load factors are holding up well. I highlighted a few regions. Brazil got hit hard last year and at the beginning of this year because there was a sudden devaluation of the currency and a lot of capacity had come in because of that success, that was during the first half of 2024. Since the currency, and you know that very well, the currency has been stable, actually has improved since 12 months ago. And that market is coming back little by little. Less capacity has come in compared to the first half of last year.

So we're seeing an improvement in our Brazil load factors and in our Brazil PRASM. So we're seeing improvement in those. And Q4 should be better in Q3 and Q3 was better in Q2. So it's going in the right direction. Not all the way back toward was at the end of 2023, but it's in the right direction. And then Argentina has been booming, has been quite a market with all the economic changes that the new government has implemented in Argentina has been booming in general terms. The devaluation has been more predictable and not as significant as before. Inflation has been a lot more under control and traveling public in a country that loves to trouble -- loves to travel, it has been growing at a very strong pace. That has attracted a lot of capacity from us and from everyone. And when that happens, will yield soften a little bit, but they're still very strong. And what I said is that we will not be growing so much in Argentina as we've done in the past, let's say, 12 months. And that's probably going to be the case with most other airlines serving the country. So it's going to stabilize, I would say.

Pedro, maybe on the hedging policy?

Okay. The hedging policy. I forgot about hedging because we haven't done hedging in so long that it's -- yes. No, that's not going to change. What -- and usually the hedges -- many hedges are on WTI or Brent. And this what has shot up lately is the crack spread as so as jet fuel and I don't know for how long that's going to happen. That's going to stay up there. So we're not planning to change our hedging strategy. We're happy with not hedging. It has worked well for us and it's going to remain that way.

Our next question comes from the line of Savi Syth with Raymond James. Savi, you may be on mute?

Sorry about that. Just can I give an update on the densification plan, just how many aircraft are yet to go and just curious on how much of next year's unit costs might be driven by that and if there's anything kind of further that it will drive in '27?

Yes. Thank you, Savi. We've done around half of the densification that we've planned to. And that was one additional row. So around 6 more seats per plane. We've done half of it. So around 25 of -- let's call it 50 that we said we were going to do, and we have another 25 left that we are planning to do during 2026.

Great. That's helpful. And just a clarification on the credit card benefit this quarter. Is that something that's just onetime this quarter? Or is that something that now is layered on and kind of continues going forward?

So the -- again, on the credit card benefit, we saw 2 separate pieces and let's call it, to oversimplify half and half. Half is related to the extension of our agreement with Visa, and that is onetime every x amount of years. And then the other one is the growth of the program by itself, and that's the other half, and that's similar to what we saw in the second quarter, and that should be continued -- that growth should be continued and stable in that program.

And our last question will come from the line of Jen Spiess with Morgan Stanley.

Sorry, I joined late, so if you already answered this question, please disregard. I just wanted to get a sense of how much conservatism is built into your guidance. So backing out like fourth quarter at the midrange of your annual guidance for 2025, we get to an operating margin of around 22% and the yield of 11.4%. So I just wanted to get a sense of how comfortable you feel with that number in the fourth quarter? And how much at the end, conservatism is built into it?

So our hedging. Our fourth quarter 2025 guidance was narrowed down to between 22% and 23%, which was like the upper part of our previous guidance, which was 21% to 23%. And we're very comfortable with that range between 22% and 23%.

All right. Perfect. And just in terms of yields, it does imply a deceleration of yields versus the third quarter. So I just wanted to get a sense of that and how you looking into the next few quarters may?

Yes, that question was asked before, and the response was that we do not guide a yield on a quarterly basis.

Sorry, yes. I mean, looking at your RASM guidance for the full year, we are able to back out like the fourth quarter RASM, right, which does imply, I think, 11.4%? And does imply deceleration quarter-over-quarter. So I just want to get a sense of -- do you think there's potential upside to that or you feel quite comfortable with that number?

I believe that our RASM guidance for the year is 11.2%, and we haven't changed that guidance.

Got it. So you feel comfortable with that.

Thank you. I would now like to hand the conference back over to Pedro Heilbron for closing remarks.

Okay. Thank you all for your questions and for joining us today. We appreciate your continued interest and support. Of course, I look forward to seeing you in person at our Investor Day and answer even more questions. So as always, you can feel confident that we will keep working really hard to strengthen and develop our competitive advantage, and I'm confident we'll continue delivering very strong results in years to come. So thank you, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.