Copa Holdings SA Q4 FY2024 earnings call

• Welcomed Peter Donkersloot into his new role as CFO, highlighting his experience in HR and financial acumen.
• Delivered solid financial performance in Q4 2024 and full year 2024, including strong operating margins despite challenges like 737 MAX 9 grounding and Panama-Venezuela flight cancellations.
• On operational front, Copa was recognized as most on-time airline in Latin America for 2024 and best airline in Central America and the Caribbean for ninth consecutive year.
• Fleet updates: Received 2 additional 737 MAX 8s in Q4 2024, ended year with 112 aircraft; expected to receive 13 additional 737 MAX 8s and 1 Boeing 737-800 freighter in 2025.
• Board approved quarterly dividend of $1.61 per share for 2025.

Fourth Quarter 2024: Capacity increased by 7.2% year over year. Unit revenues (RASM) were 11.3 cents, a 10.4% decrease compared to Q4 2023, mainly due to yield reduction. CASM ex-fuel was 5.9 cents, a 2.6% improvement, with operating margin at 23.3%. Full Year 2024: Capacity increased by 8.6% year over year. RASM decreased by 8.2% to 11.5 cents. CASM ex-fuel was 5.8 cents, 3% below 2023, and operating margin was 21.9%.

• Expect to increase capacity in ASMs by 7%-8% year over year in 2025.
• Project operating margin to be in the range of 20%-22% for 2025.
• Assumptions: Load factor ~86.5%, unit revenues ~11.3 cents, CASM ex-fuel ~5.8 cents, all-in fuel price $2.00 per gallon.

• Currency volatility in Latin American markets impacting yields.
• Overcapacity in certain regions (e.g., Brazil, Colombia) affecting competition and yields.
• Geopolitical and tariff impacts on business travel demand in the region.
• Boeing delivery delays affecting fleet expansion and operational plans.

Q: Regarding fleet delivery schedule and CapEx, how is the Boeing delivery schedule and CapEx outlook?

A: Pedro Heilbron stated Boeing delivery schedule is okay, with 13 aircraft expected in 2025, mostly in second half; CapEx for 2025 is expected to be in $850 million range with cash CapEx ~$200 million, lower than previous year.

Q: Sequential trend in RASM and prospects for inflection in back half of 2025?

A: Pedro Heilbron mentioned RASM impacted by currency weakness and industry capacity, expecting similar trend with potential positive inflection in second half of 2025 if conditions improve.

Q: Regions or routes with excessive capacity impacting yields?

A: Pedro Heilbron noted regions like Brazil, Colombia, and parts of Central America seeing more capacity growth, including Copa's own growth, affecting yields.

Q: FX volatility impact and managing inventory/revenue management?

A: Pedro Heilbron explained FX volatility is mostly translational, with some hedging in Brazil, and net impact on P&L managed through hedging, with corporate client business travel demand flat year over year.

Q: Guidance considering January strong traffic and seasonality?

A: Pedro Heilbron noted January traffic impacted by 2024 MAX grounding, but full-year guidance based on scheduled aircraft deliveries and overall market conditions, expecting 7%-8% capacity growth.

Q: Wingo fleet and cargo operations?

A: Pedro Heilbron discussed Wingo's fleet adjustments for maintenance and cargo operations, with single freighter performing well but adding second freighter having limited significant impact on overall results.

Q: VFR in US and immigration concerns?

A: Pedro Heilbron stated US VFR traffic network is doing better, with no significant impact from immigration concerns.

Q: Buyback program acceleration?

A: Pedro Heilbron mentioned buyback program with $87 million executed out of $200 million, expected to be finalized in 2025, with dividend policy maintained.

Q: Jet fuel tariffs and alliances with United?

A: Pedro Heilbron stated no significant disadvantage in jet fuel tariffs in key markets and strong alliance with United, with collaboration already comprehensive.