Grupo Aeromexico SAB de CV (AERO) 2011 Q3 法說會逐字稿

Good morning. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aeromexico earnings conference call.

After the speakers' remarks there will be a question and answer session. (Operator Instructions). Thank you.

Miss Paulina Alatorre from Aeromexico, you may begin your conference.

Thank you. Good morning, good afternoon, to our Group Aeromexico's third quarter conference call. My name is Paulina Alatorre and I will be your host today.

Once again, we have our CEO, Mr. Andres Conesa, and our CFO, Mr. Ricardo Sanchez Baker, presenting our third quarter 2011 results. We'll begin with a brief review of the most relevant events and the financial results, and then we will be happy to answer any questions you may have. Let me now introduce Mr. Andres Conesa.

Hello, good morning, good afternoon, and thank you for joining us today. I would like to start this call by underscoring our most relevant achievements for the quarter.

In the third quarter, we achieved records in passenger numbers, revenue, EBITDAR, and operating profit. This despite pressures related to a 46% increase in jet fuel prices in dollars.

We transported 3.8 million passengers during the quarter, and a total of 10.6 million in the first [nine months]; it's a 27% increase versus 2010. International passenger traffic increased 34% and domestic passenger traffic increased 11%.

We increased supply of ASKs, 19% year on year, due to nine additional airplanes compared to the third quarter of 2010, and improvements in our daily fleet utilizations, which reached 11.7 hours compared to 11.3 hours in the third quarter of 2010. Despite the significant increase in ASKs, we achieved the highest quarterly load factor in the Company's history at 80.8%.

We continue to consolidate our leadership position in the market. In the last month of September, we captured 40% of the domestic market share, and for the first time in our history, we became the leading airline in the international market with a record high 18.4% market share.

Total revenues increased 24% year on year. This result was largely due to an increase in passenger traffic, and an improvement in cargo revenues. Yield stayed relatively flat during the quarter.

On the cost side, we have maintained our commitment to a policy of expense rationalization and operating efficiency. As a result, the unit costs, or cost per ASK, excluding fuel costs, decreased 3.3% in nominal terms, or 6.5% in real terms.

In this quarter, we also recorded the highest EBITDAR in our history, reaching a total of MXN2 billion. Also, our operating profit achieved a record high of MXN1.1 billion. Operating income for the first nine months of the year increased more than 100%, year over year, reaching a total of MXN2.6 billion, were achieved during a quarter full of changes.

First, many economic indicators point to a slowdown of the global economy. Nonetheless, the growth forecast for the Mexican economy continues to be solid with a 3.8% growth estimate for 2011. Within this context, passenger travel demand remains strong in the Mexican industry as a whole. In September, we experienced a year-on-year increase of 16% in domestic traffic, and of 17% in international traffic.

Jet fuel prices remain higher than the 2010 levels. As I mentioned before, in the third quarter jet fuel prices increased 46% year over year. Ricardo will share with you later on where we stand in terms of fuel hedging.

At the end of the quarter, we saw significant exchange rate fluctuations. As of the end of September, the Mexican peso had depreciated almost 10% against the US dollar, compared to 2010. However, as we have mentioned before, the Company [financials], due to the fact that an important percentage of our US denominated revenues mitigate the impact of the exchange rate fluctuations on the cost side. As a result, we did not see any negative impact from exchange rate fluctuations in our financials.

In this environment, Group Aeromexico took several strategic steps that will contribute to the Company's future strength. First, during the quarter, we signed an agreement with Delta Airlines with the objective of creating a stronger alliance in the Mexico/US market, the most valuable international market for Mexico.

The agreement includes a long-term exclusive commercial alliance that will connect the largest domestic network in Mexico with Delta's extensive domestic and global networks. Also, it will allow us to take advantage of each other's commercial strengths in both territories to make joint sales efforts, and it will increase the benefits for the passengers, both premier and elite passengers.

In addition, Delta will invest $65 million in our shares at a price of MXN31 per share, and a seat on Aeromexico's Board of Directors. These transactions will be formalized in the next couple of weeks.

As a part of a separate agreement, Delta and Aeromexico will expand the MRO in a joint venture in a new facility, scheduled to open in the third quarter of next year (sic - see page 10).

On the labor front, we reached new agreements with our unions, including a new multiyear contract with Aeromexico Connect pilots, that settles wage increases equal to inflation for the next three years. Also, with all the ground personnel of Aeromexico, we achieved a multiyear agreement, also for the next three years, with wage increases equal to inflation. And as part of this agreement, new entrants will have more efficient and most competitive cost conditions, as is the case with the Aeromexico pilots.

Second, we made history with the first transatlantic wide body commercial flight, from Mexico to Madrid, using biofuel. And we began our Green Flight Program with one weekly flight from Mexico to San Jose, Costa Rica, using 85% jet fuel and 15% biofuel, and other on-board initiative to minimize the flight's environmental footprint.

We increased our international presence with new routes between Mexico and Guatemala, Cancun-Miami, Monterrey-Chicago, Monterrey-Brownsville, Guadalajara-San Francisco. And most recently, we added new flights daily service between Mexico City and Caracas, Venezuela, and between Guadalajara and Las Vegas.

Finally, we made significant progress in our fleet [numbers]. We received two Embraer 190s that were purchased through a credit line from the Brazilian National Development Bank. This was part of our plan to achieve a better balance between owned and leased aircraft during the quarter. Also, one Boeing 737-800 was received, this one under operating lease. In total, the Company has nine more airplanes than in the third quarter of 2010.

I'll now turn the call over to Ricardo, our CFO, for a more detailed explanation of our financial results.

Thank you, and thank you all for joining us on this call. Let me start with [revenue; as mentioned], we achieved a record level of MXN9.6 billion, that is 24% above the third quarter of 2010. This increase was driven by all of the different revenue items, which grew at double-digit rates.

Passenger revenue grew 23%, cargo revenue 52%, excess baggage charges 31%, and other operating revenue 29%. Revenues from charter flights was the only item that decreased year on year, with a 25% decrease. This is because, in 2010, we registered extraordinary revenues from the soccer World Cup operations to South Africa.

Our revenue per ASK, which captures both the effect of passenger volume and average fare trends, increased 3.7%, mainly driven by a higher passenger volume, which grew 20%. The yield, as Andres mentioned, we observed a slight decline of 0.3%.

In terms of the composition of our passenger revenues, 45% of these revenues derived from international operations, and 55% from domestic operations.

Turning to [CASK] expenses, during the period. As Andres mentioned, the cost per available seat kilometer, excluding fuel costs, decreased 3.3% in nominal terms, 6.5% in real terms. This is a direct result of the Company's expense control policy.

The cost per ASK, including fuel, increased 7%, due to the significant increase in fuel price. In this context, our total fuel expenses rose 58%, reflecting a price increase of 46%, and an increase in capacity of 19%, in terms of ASK. If we adjust for volume, the price increase generated a pressure of MXN809 million on the quarter's results.

As you know, we have a fuel hedging policy in place, which makes use of call and call spread instruments that amounts to at least 50% of the Company's estimated fuel consumption for the subsequent 12 months.

To date, we have a little bit more than 50% for October 2011, to September 2012, and a little bit more than 26% of the consumption for October to December of 2012. And we have been covering this with a mix of call and call spreads on Heating Oil and West Texas Intermediate.

75.5% of this hedging is in Heating Oil, and it has a weighted average strike price of [$3.10], and average cap prices of $3.60 per gallon. And, in terms of WTI, which represents 24.5% of our hedging program, the average strike price is $104 per barrel, and an average cap price of $124.3 per barrel. During the third quarter, we recorded a benefit of $675,000 from the hedging position (sic - see page 7).

As for wages and salaries, this increased 16% year over year. However, given the important increase in capacity, [the unit cost decreased 2%].

I would like to mention also that, in light of the incorporation of our two Embraers 190 that happened in the quarter, we increased our [pilots for our] Aeromexico Connect employees by 26 pilots. This happened during the quarter, but, because of the calendar, only one aircraft became operational in the last part of quarter, just in September. So it's reflected also in the costs. And in the following part of the year, we will see the productivity of these pilots.

Selling and administrative expenses grew 19%, due to an increase in travel agency commissions, resulting from the increased sales. Again, given the 23% increase in passenger revenues, selling and administrative expenses, as a proportion of total revenue, decreased from 10.3%, recorded in the third quarter of 2010, to 9.9% in 2011.

Other operating expenses, including maintenance, aircraft communication, and traffic services, rose 22%, resulting from the 19% increase in capacity, and the 18% increase in passenger traffic. This reflects a lot the fact that most of the operations that we increased during [the quarter] that tend to have slightly higher operating fees, take-off fees, gates, barriers, passenger service, and so on.

Lastly, looking at aircraft leasing costs. They reached MXN796 million in the quarter, MXP8 million above the third quarter of 2010. This is because we incorporated six additional airplanes into Aeromexico's fleet, under operating leases, compared to the third quarter of 2010. And we incorporated also three Embraer 190, as Andres mentioned, under financial lease.

With this, total EBITDAR for the third quarter reached MXN2.040 billion. This is the greatest quarterly EBITDAR recorded in our history. And the EBITDAR margin remained strong, with 21.3%.

In terms of operating profit, Grupo Aeromexico reported MXN1.14 billion for the third quarter, achieving, also, the highest ever level in the Company's history, and a margin of 11.9%, the highest recorded so far this year.

In terms of non-operating revenue and expenses during the quarter, we decreased our net financial expenses by MXN123 million. That's down 44% from the level recorded last year. This is a result of the reduced net financial liabilities, as well as improvements in the terms of some of our short-term liabilities.

It is important to note that, last year, in September of 2010, we recorded non-recurring revenues from the transaction that we did with Groupe Aeroplan, and as part of the investment in Groupe Aeroplan a non-recurring revenue of MXN480 million was recorded.

Now, exchange rate variation; it's an important item in this quarter. As Andres mentioned, we saw a lot of volatility. And during the third quarter, we recorded a net positive impact of MXN295 million in the foreign exchange item, derived from the exchange rate depreciation of the Mexican peso against the dollar.

This includes a positive effect of MXN370 million, resulting from the conversion of non-monetary items, associated to the US dollar, and a negative effect from the exchange rate fluctuation of MXN75 million, derived from a shortfall on US monetary items. This is due to the fact that we use the Mexican peso as our recording and reporting currency, but we use the US dollar as our functional currency.

It is important to mention that although we had this positive impact in the quarter, in the first half of the year, we had a negative exchange rate impact of MXN142 million, given that, in the first two quarters, we saw a revaluation of the peso against the dollar. Thus, if we take the first nine months of the year, the net positive impact has been MXN153 million from exchange rate fluctuations.

With this net income, resulting MXN874 million, which compares to MXN1.3 billion recorded last year. As we mentioned previously, last year we recorded a non-recurring profit of MXN480 million that resulted from Groupe Aeroplan's investment in Club Premier. After isolating this item, net income for the third quarter is similar to that recorded last year.

Now, let me provide you a few highlights on the balance sheet. We finished the quarter with an unrestricted cash position of MXN4.6 billion. It is important to mention that, this quarter, $53 million (sic - see page 9) from the BNDES credit line [resources to purchase our new Embraer airplanes].

And also, during the quarter, we made pre-delivery payments, and also, deposits of more than $25 million, associated with our expansion plan, including the acquisition of Boeing and Embraer airplanes.

Even with this transaction, net financial debt, that deducts unrestricted cash from financial debt, registered a negative MXN1.7 billion. That is MXN2 billion less than what we registered on September 30 of 2010.

And finally, in terms of stockholders' equity, we reached a level of MXN4.8 billion, MXN6.7 billion above the level of stockholders' equity that we recorded in September of 2010.

With this, I finish my remarks, and we welcome your questions. Thank you.

(Operator Instructions). Michael Linenberg, Deutsche Bank.

Two questions. Andres, can you give us a view on what your capacity plans are for the fourth quarter, how much we'll see ASKs change? And then, for 2012, based on deliveries and your current fleet plan, do you have an early read on capacity growth for 2012?

Well, for the rest of the [year, we plan to] operate two additional 737s, plus one additional Embraer 190, so three additional aircrafts. So in that sense, we will end the year with 106 planes, which is 13 planes more than what we had at the end of the summer of last year.

So estimating with what we -- the numbers, also, of the fleet at the end of last year, we have shown those before. That would mean roughly an increase in ASKs of around 15%, 16%, more or less, for the fourth quarter, compared to the fourth quarter of 2010.

As for next year, we are receiving the rest of the Embraer 190s, so our total of six additional planes. And we are also receiving the first [own] 737s. We're receiving three 737 engines as part of the deal we have with Boeing.

So in total, we expect the fleet, at the end of the year, to be around 115, 116 planes. That's the plan that we have today. And will mean an increase in capacity of around 12%, 13%, compared to 2011.

Okay. That's very helpful. My second question, regarding the Delta investment for shares in Aeromexico, that would equate to about 3%, 3.5%. Those would be additional shares. So once that transaction has closed, we should just assume your share count goes up by that percent, right? Is that for the purposes of calculating earnings per share? Is that how we should think about it?

Yes, that's correct. It's a primary offering. So this $65 million, it's MXN31 per share. The amount they will have of Aeromexico's capital [though] will depend on the exchange rate, at the time we do the transaction, which, again, we expect that to happen. We are finishing the contract within the next two or three weeks.

So with today's exchange rate, the one that we have today, at MXN13.2 per $1, will mean roughly 4% of Aeromexico capital, 3.9%, 4%, around that. But that, again, can change, because what we have fixed is MXN31 per share, but the closing will depend on the exchange rate. And, as you know, that has been fluctuating significantly in the past weeks.

Okay. And then, just if I could ask one more? You finished up the contract negotiations with the pilots; you recently completed the mechanics; I know that you were going to start the process with the flight attendants; there was a change in leadership. Where are we in that, and if so, what sort of timing do you think we'll have to see through the process before you can actually come to a new agreement with the flight attendants?

Yes, the change of leadership happened around a couple of months ago, and we've been speaking with them since then. And our idea is to finish a new agreement before the end of the year; that's our target; that's what we are aiming for. And what we are working with them is no changes to the contract for the current flight attendants, but a new agreement for every new entrant, in line with what we sign with the pilots in December of last year. So we're working with them, and we're going to report periodically where the advances in that are, in that negotiation.

Okay, very good and nice quarter. Thank you.

[Pablo Duarte, Activair].

One of my questions has already been answered regarding capacity. But the other question may be regarding deferred taxes at the net income level, what can we expect from these within the next several quarters? Thank you.

Before Ricardo answers the second question, let me just compliment what I mentioned before. We have this important increase in capacity for the fourth quarter, and also for all of 2012. But let me remind all of you that we have a very well managed, in terms of risk, policy with our lessors. So we have all the flexibility, in case there is a downturn in the economic activity to bring down capacity, by not extending some of the leases that are due in 2012.

For example, we have eight airplanes that leases expire in 2012. Our plan is to -- but in case we need that, we can let go those [even though our] increase in capacity could be smaller. Again, we are not thinking to do that, but just to keep in mind that we have a very well risk management process in terms of capacity.

And let me now turn to Ricardo, please.

Thank you. In terms of deferred taxes and the tax position so far, the first half of the year, for example, we had a tax burden of around 9%. Then, in the third quarter, that increased significantly, as we mentioned before, because the numbers that we had been seeing had been substantially above our program.

So far, in the first nine months of the year, the tax burden has been of around 16%, around 15.6%, and what we expect to have for the full year is around 17%/18%. So this is for the full year, the tax burden will be -- and most of it is really, as I said, the deferred taxes as current taxes is just [Vieto] and some of the subsidiaries, but really no income tax in Aeromexico, the mainland carrier, because of the fiscal losses that we've had in the last few years. So for the overall year, our estimation is that the tax burden will be around 17%/18%.

Thank you.

Darren Shannon, Aviation Week.

Can you please provide some more details about the Delta MRO deal? Do you have a schedule for airframe expansion, 75s and I notice you guys said that wide bodies would eventually be introduced, could you tell us when you expect that to happen?

And secondly, is there any chance that you guys can purchase, or gain access to, Mexicana MRO, or is that off limits for you?

In terms of the Delta MRO, today we have a facility in Guadalajara where we have four lines of production, and the idea is to increase that to seven in the next three quarters. So we are planning to be fully functional by the end of next year. Today, we are doing mainly narrow bodies; we are doing work on 737s and MDs. We're going to start doing regional jets as well in that facility. And by growing from four to seven, we will have the capacity to do at least, if we wanted, we want first to concentrate on Delta and Aeromexico's narrow body fleet. But with fuel prices as high as they are, getting a plane ferried to Asia or to Europe from the US, it's very expensive in terms of fuel consumption.

So we think there is a very good opportunity to also expand on the wide body fleet. Again, that will be probably the second stage; again, we will concentrate on narrow bodies. Total investment there will be of around -- additional to what we have today, another maybe $30 million/$35 million in total.

Regarding the Mexicana MRO, as you know Mexicana is under the Mexican Chapter 11. In fact, there was an announcement yesterday that the clock associated to this process just restarted today. If there is no buyer for the company by November 18, what the judge and the authorities have mentioned is that it will start a process of liquidation. In that case, it's a valuable asset that they have, and we will certainly be taking a look about the possibility of doing something and extending our MRO capacity by adding that service. But again, it's too soon to say because it will depend what happens in the next three or four weeks.

Thank you very much, gentlemen.

[Brandon Selby, KAPA].

Nice quarter again. First of all on the wide bodies, I noticed you're still at 767s, and you didn't mention any increases on that for this year or next year, are you not planning to stay with the same amount of wide body capacity until the 787s come in 2013 rather than add some in-term aircraft?

Yes, in terms of the wide bodies, we are adding one 767 before the end of the year, but we're going basically to use that plane to support the operation of the rest of the wide body fleet. So we are not planning in flying that plane extensively as we fly the rest of the wide body fleet.

We have been looking in the market for additional [triple 7s] to get, because it's very specific to Mexico because we need triple 7s with the highest thrust in the engines, and we need 200. So we haven't yet been able to find any additional ones, so that's why we have been adding a couple of 767s.

We are receiving, and we have been confirmed by Boeing, that our first 787 is going to be here in the month of August 2013. As we have mentioned before, we have already committed to five 787s, and we just found an additional two, so we have today a total of seven 787s to be incorporated into Aeromexico in the two years, basically 2013 and 2014.

So we expect that all the 767s will be phased out, the seven that we have, and we will be able to replace all of them with 787s within the next three years, which we think is very positive news, very good for our passenger experience, and for the economics of the Company.

Right, I also had a question about the Delta deal, are you going to be looking at antitrust immunity with that, or is that a possibility though?

We think there is no need to look for ATI. In the future, if we want to do some revenue sharing, profit sharing in its routes, definitely we would need both Open Skies and ATI.

Right. And just a question about Mexicana and the possible launch of charter business, would that have any impact on Aeromexico Travel at all, would you expect or --?

No, not at all. If they restart operations through a chartered company, we do not expect any -- basically negligible. We have, obviously, a charter business, but we think, even if they start on that, that we won't have any impact. If they restart to fly on itineraries, and also that has been mentioned recently, at least in the Mexican press this week, some of the routes that they have, have been granted to both Polaris and Interjet on a temporary basis.

So if they fly again, who will be affected if they restart operations to the US, basically because of the conditions of a bilateral agreement between Mexico and the US, those routes that were granted on that temporary condition to our competitors, we needed to go back to Mexicana for that. So in that case, we won't be affected, because we also have all the rights -- we have been flying to the US since many, many decades, and our story does not depend at all on whether Mexicana flies or not.

You increased after Mexicana to the US? But rights don't [fade] at all then, they're all permanent rights that you have a right to permanently?

Our rights for our international routes, all of them, are permanent. We have zero risk of losing any of those if Mexicana flies again, which, again, that's not the case with our competitors, as they have clearly said that they were granted those rights on a temporary basis.

Right. Just one last question. The 12% to 13% capacity increase for next year, would you expect equal increases in domestic transport on international? Would you expect some to be more than others, especially in the US, where maybe the Mexicana capacity hasn't been completely -- the void hasn't been completely filled just yet?

Yes, because Mexicana was more heavily leveraged towards international markets, particularly in the US, what we have been doing in the past 14, 15 months is adding more capacity in international markets. So our increasing ASK so far has been more directed to international travel rather than domestic travel.

We expect a more balanced composition next year. More balanced between domestic and international markets, close to 50/50. Because, again, looking at the past 14 months it has been 70/30 more in international. So we are looking at maybe two or three service to additional cities in the US that are not served today, which we're working together and the alliance with Delta will be key in making those successful.

With the addition of Caracas earlier this month, we basically have all Central and South America covered, as compared to the service that was present 14 months ago. And our idea is to fly the Embraer 190s mainly in the domestic market, because also there are some markets we serve today with a 50 seater with the ERJ-145. It's not a large enough plane for some of the cities. So we're going to mix more E-190s in those cities, and reduce some of the seats that we offer in the 50 seaters.

Okay. Thanks a lot, Andreas. Great quarter, and I hope to see you at [Alta in Rio].

Marco Montanez, Vector.

Ricardo already explained the main reason of the salaries increase during the quarter, but going forward, when do you expect, in the long-term, that salaries expenses tend to be normalized and aligned to the expected inflation?

I understand that the latest agreements with the unions are going to take time to be reflected in reductions in the short term, but if you could give us some color on that that would be very helpful. Thank you.

The increases in the wage cost has really been more associated with the volume of workers. There was, of course, a wage increase equivalent to inflation. As Andres has mentioned, the agreements that we have with the different unions are long-term agreements, not multiannual agreements with the [pace of] inflation.

Hiring some of the pilots that had been in training and were not ready very productive in the quarter that, we expect, will tend to be normalized by the fourth quarter. But next year. with the incorporation of pilots, we will have some of these effects as well.

But next year, the pilots that will be hired in Aeromexico, that we expect to start hiring in Aeromexico next year, with the 737s that will come into operation, will be now under the new contracts that are significantly cheaper to the pilots that we have. We think that will allow us to have an increase in the labor cost, but it's much lower than increase in capacity.

Just to complement, Marco, as well. All the increase in capacity that we experienced in 2011 in Aeromexico has happened without hiring not a single additional pilot. Because of the productivity changes that we've got in December of last year, that has allowed us to fly the pilots -- our pilots are flying today more than 70 hours per month, around 75, where they were flying 55 hours before the change in that contract. So this is mainly reflected if they fly more, obviously, you need to pay more for their daily service in terms of hotels, in terms of their (inaudible). Everything is included in that account.

And, again, as Ricardo mentioned, with the expansion next year, we will start now hiring some pilots in Aeromexico, but under the new contract, so that will help us to continually reduce further the cost per ASK associated to wages.

Also, as Andres mentioned, since we will start using more the 190s compared to the Embraer 145s, in terms of the pilot costs per day we will also see important savings next year. We will start phasing out some of the 145s, and we will use more of the 190s, we expect that the trend in terms of labor costs to ASK (inaudible).

Okay. That was very clear and helpful. Thank you very much, and congratulations for the results.

[Pablo Abraham, BBVA].

Could you give us more color about the expectations you have in terms of the Mexican market? Maybe new routes, or the flow between Mexico and the US, especially in the California route. Thank you.

Well, we started our new service recently within Mexico to cities, for example, like Colima. We have added new capacity to many, many other cities, not necessarily new service. Our plans for the rest of the year, in terms of adding new service within Mexico, we're not going to move on that direction. However, for the start of -- there are around four or five cities that, today, we're not serving. For example, [Mantillos] that could be one; [Manzanillo] could be another one.

We are planning to start servicing those basically to cover the whole of the Mexican territory as of the first quarter of next year. And, as well, as we expect some growth in the markets we will be adding new capacity to the markets that we are serving.

In terms for the US, as I mentioned, we are exploring to open service in maybe three cities. Again, it will depend on the success that we expect to have on the new relationship with Delta. For sure, we are starting service to Atlanta, both also from Mexico City and from Monterrey; that will happen also in the first quarter of next year. But additional service, particularly to the East Coast, again, that probably will be there around maybe the summer or the third quarter of 2012.

Okay. Thank you very much.

Michael Linenberg.

This is actually [Rachel Tyler] from [Mike's team]. You may not be able to answer this, but I thought I'd try my luck. I was wondering if you could give us a bit more color on that MXN600 million repurchase program you announced earlier this year. Just wanted to hear if you had a formal implementation date in mind, or any additional information you have on the program and rationale for starting it would be very helpful.

Yes, we have this repurchase program that was approved by the Assembly, it was approved by the Board. We have been formalizing the contracts with the brokerage houses here in Mexico, and we think we might be able to announce a formal initiation of this program in the next few weeks.

This is a program that we think will be important for us in terms of -- . Signaling the fact that we believe that sometimes that it's not reflective of the fundamental. But we are not planning to use it [extensively], and, of course, it's not an instrument that will be used just on the Company and certainly doesn't have that (inaudible). So it's something that will be implemented probably by mid-November.

Okay, great. That's all I have. Thank you.

There are no further questions. Do you have any closing remarks?

Well, before passing the phone to Paulina, just thank all of you, for being here in the call. We will continue again to report in a few weeks with the traffic for October, which, again, as I mentioned during the call, the economic perspective in Mexico remains relatively solid, so we are expecting traffic and factor loads to remain as they've been in the year for the months still ahead in 2011.

Let me know move to Paulina again.

Thank you for you for joining us today. The investor relations team, with Ricardo, [Andres] and I, will be very happy to answer any questions you may have.

Thank you, and have a good day.

This concludes today's conference call. You may now disconnect.