Copa Holdings SA (CPA) 2008 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to today's Copa Holdings Fourth Quarter 2008 Earnings conference call.

During today's presentation, all participants will be in a listen-only mode.

Afterwards we will conduct a question and answer session.

(Operator Instructions).

Just as a reminder, today's call is being recorded and webcast for February 19, 2009.

Now I'd like to turn the conference over to Mr.

Joe Putaturo, Director of Investor Relations.

Please, go ahead sir.

Thank you very much, operator, and welcome, everyone, to our fourth quarter earnings call.

Joining us today are Pedro Heilbron, CEO of Copa Holdings and Victor Vial, our Chief Financial Officer.

First, Pedro will open up with an overview of our fourth quarter and full year highlights, followed by Victor who will discuss our financial results.

Immediately after, we will open up the call for questions from analysts.

We kindly request if you could limit yourself to one question with a brief follow-up so we can accommodate most questions.

In today's call, we will discuss non-GAAP financial measures.

A reconciliation of non-GAAP to GAAP financial measures can be found in our fourth quarter earnings release, which has been posted on the Company's website, copaair.com.

In addition, our discussion will contain forward-looking statements not limited to historical facts that reflect the Company's current beliefs, expectations, and our 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 that are subject to change.

Many of these risks and uncertainties are discussed in our Annual Report filed with the SEC.

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

Thank you, Joe.

Good morning to all and thank you for participating in our fourth quarter earnings call.

I would first like to begin by congratulating our coworkers for their efforts in delivering a great fourth quarter and another year of outstanding results despite a very difficult operating environment.

Looking back at '08, it was a year of many accomplishments and highlights.

Growth for '08 in terms of capacity was nearly 12% with our core business Copa earnings growing almost 17%.

Our consolidated operating margin for 2008 came in at 17.4% despite a 38% increase in our average effective price of jet fuel for the year.

So I'm pleased to say that our Company continues to consistently deliver above average growth and industry leading margins, even in the context of record fuel prices for the year.

In 2008, Copa Airlines expanded and consolidated its network, adding five new destinations.

Copa currently has the most complete and convenient network for intra-Latin American Travel, serving 45 destinations in 24 countries and the Americas.

At the same time, Aero Republica continued growing internationally and completed a consolidated network by initiating flights to Caracas, Venezuela, from Bogota and Medellin as well as adding new service from Pereira, Colombia into our hub of the Americas in Panama City.

During the course of the year, Copa Airlines received five aircraft, one Boeing 737-800 and four Embraer-190 to end the year with a fleet of 42 aircraft, with an average age of approximately four years.

In addition, Aero Republica continued modernizing and right sizing its fleet, receiving two new Embraer-190s to end the year with 13 aircraft of which all but four are E-190s.

As a result, COPS Holdings Consolidated fleet at year end reached 55 aircraft.

For 2008, both Copa Airlines and Aero Republica delivered outstanding on-time performance with Copa Airlines coming in at 87.5% and Aero Republica leading the Colombian market with an on-time performance of 84.5%.

During the year, Copa Airlines also received important rewards and recognition.

In September, Copa was named by Skytrax for the fifth consecutive year as Best Airline in Central America and the Caribbean as well as best cabin staff.

Now, looking at the main highlights for our fourth quarter results.

Copa Holdings recorded net income of $52 million or diluted earnings per share of $1.20.

However, net income excluding special items came in at $54m or diluted earnings per share of $1.48.

Our operating margin for the quarter came in at an industry leading 24.3%.

These results were driven by strong revenue growth which increased nearly 22% year-over-year on 15% capacity growth.

Also contributing to these results are our continuous efforts in maintaining a very competitive cost structure.

Unit costs for the quarter excluding fuel and adjusting for special items came in at $0.072 representing more than a 5% decrease year-over-year.

I'm also pleased to highlight that our Company ended the quarter with a very healthy balance sheet and a very strong liquidity position.

On the operational front in the fourth quarter, Copa Holdings took delivery of two aircraft, one 737-800 and one Embraer-190.

Additionally, Copa Airlines launched three new destinations during the quarter.

Aruba, Santa Cruz, Bolivia, and Valencia, Venezuela.

All three destinations were launched in the month of December.

Also in December Aero Republica started new service from Pereira, Colombia into Panama City.

Now, turning to our current business environment.

We continue to see healthy traffic growth across most of our network.

Our January traffic increased more than 15%, and our consolidated load factor came in at 78%.

Although January is a high season month, we consider these results encouraging at a time when there is significant traffic deterioration in other parts of the world.

However, our region is not isolated from the rest of the world.

And economic growth projections have been revised downward as the outlook for the global economy has deteriorated.

The latest December IMF figures call for regional GDP growth of 1.1%, down from the 2.5% projected in October 2008.

Panama, which represents approximately 60% of our [OMB] traffic, is still expected to report healthy GDP growth in '09, somewhere between 4% to 6%.

As we have mentioned before, there are several private and public sector mega projects already underway.

The biggest among them being the Panama Canal Expansion which will continue to stimulate the economy and mitigate the effect of the global crisis going forward.

Nevertheless, we have seen early signs of softening demand in some markets and even though our visibility beyond the first quarter is very limited at this point, w have taken the cautious approach of guiding to lower load factors and yields.

On the other hand, we expect lower projected fuel prices to offset its impact.

In terms of our fleet plan, we do maintain flexibility with regards to expiring leases and unexercised options to adjust our growth going forward if necessary.

In fact, we recently decided to return two 737-700s whose leases are expiring in October of this year.

As a result our consolidated fleet will now end '09 with 52 aircraft, one less than in '08.

Although these returns do not significantly impact '09 growth, they do provide us with more flexibility to manage capacity in 2010.

On a consolidated basis, we still expect to grow approximately 13% for the year.

This growth will be driven by Copa Airlines as Aero Republica's capacity will remain flat year-over-year.

Additionally, more than 80% of 2009 growth is a result of the full year effect of capacity introduced in '08.

With regards to Aero Republica, we are very encouraged with their financial results on a standalone basis and even more when we take into account the revenues that contribute to Copa Holdings through combining both airlines net worth.

For the fourth quarter, Aero Republica's operating earnings came in at $13.6 million, which represented an operating margin of 19.7%.

Furthermore, for full year '08, and despite record fuel prices and considerable maintenance costs associated with the MD-80 fleet, Aero Republica recorded operating earnings of $15.8 million for an operating margin of 5.9% and a small net profit.

Aero Republica's load factor and financial results are being positively impacted by their transition to a smaller gauge and more efficient Embraer fleet and growth in their international operations.

In the fourth quarter Aero Republica capacity flown in Embraer aircrafts reached 63% against 35% in Q407.

Additionally, for the fourth quarter, Aero Republica's international capacity as a percentage of total capacity reached 25% with international load factors reaching 67%, higher than its domestic load factor.

So as you can see, by all counts we consider our fourth quarter and full year '08 results extremely positive.

Our business model continued delivering growth and industry leading margins, even in an extremely challenging operating environment.

Although there is still much uncertainty on how this environment will play out in '09, we're very confident on our ability to meet the challenges ahead and take advantage of any opportunities that may arise.

Among the advantages that should help us navigate successfully though the year are our very strong liquidity position and limited financing requirements for '09, a very flexible fleet plan, which if needed allows us to scale back capacity growth going forward, continued strength of Panama's economy and the expected growth of Latin America's economy, and more importantly, the continued preference of our network and services for intra-Latin American travel.

With this, thank you.

Now, I will turn it over to Victor, who will go over our fourth quarter and full year financial results.

Thank you, Pedro, and good morning, everyone.

Thank you for joining us.

First and foremost, let me begin by joining Pedro in congratulating the whole team for another outstanding year, and this report that despite record high fuel prices, Copa Holdings delivered another year of strong financial results with '08 net income before special items reaching $172.4m or a 13% increase over '07 adjusted net income.

Including special items net income for '08 came in at $152.2m, which translates to earnings per share of $3.50.

For the fourth quarter, Copa Holdings' net income excluding special items increased 74% year-over-year to $64.1m.

Including special items, net income for the fourth quarter came in at $51.9m, which represents an increase of 46% and translates to diluted earnings per share of $1.20, well above consensus estimates for the quarter.

The fourth quarter was marked by strong underlying demand which resulted in both higher yields and load factors with yields increasing 6% year-over-year while load factors increased 0.3 percentage points to 74.1% on a 15% year-over-year capacity increase.

This led to another quarter of increased unit revenues with passenger revenue per available seat mile, or PRASM, rising 6.5% on a year-over-year-basis.

In terms of revenues, Copa Holdings fourth quarter operating revenues came in at $346m for a 22% year-over-year increase, with both segments showing revenue growth, Copa Airlines with a 26% increase and 6% for Aero Republica.

In terms of passenger revenue, fourth quarter consolidated passenger revenue increased 22% compared to Q4 '07 to $326m.

On the expense side, Q4 '08 operating expenses increased 11% compared to Q4 '07 operating expenses before special items while unit costs, or cost per available seat mile, CASM, excluding Q4 '07 special items decreased 3% year-over-year to $0.11.

Unit costs excluding fuel and special items decreased approximately 5% year-over-year to $0.072, mostly as a result of lower commissions and overhead expenses.

Now turning to Copa Holdings' main operating expenses compared to the fourth quarter of '07.

Fuel expense increased 17%, driven by a 13% volume increase due to increased capacity and a 4.5% increase in the average price per gallon of jet fuel including a realized hedge loss of $8.8m.

Salaries and benefits increased 17% mainly as a result of an overall increase in operating headcount to support increased capacity.

Passenger servicing increased 14%, driven by an increase in passengers carried.

Commissions decreased 20%, mostly as a result of lower average commission rate in both Copa Airlines and Aero Republica.

Reservation and sales increased 10% mainly due to more passengers carried by Copa Airlines.

Maintenance, materials, and repairs increased 33%, mainly due to higher capacity and more repairs and materials.

Depreciation increased 15% due to additional aircraft and spares.

Aircraft rentals increased 4%.

Flight operations, landing fees and other rentals combined increased 15%, mainly as a result of increased capacity.

And other operating expenses decreased by $1.5 million.

Other non-operating income and expense totaled a net non-operating expense of $22.9 million, the main components of which are net interest expense of $7.5m and a $12.2 million charge associated with mark-to-market of hedge contracts related to future quarters.

Regarding operating earnings, the Company produced a record $84 million of operating earnings, which excluding special charges recorded in Q4 '07, represents an increase of 71% while operating margins came in at 24.3%, 7 percentage points above Q4 '07 adjusted figures.

In terms of fuel hedges as part of a strategic hedging program, the Company had hedged 25% of its consolidated fourth quarter volume and currently has hedged 25% of '09 and 5% of 2010 consolidated volume through a combination of jet fuel and crude oil swaps and collars.

Now, moving on to the balance sheet.

Assets at the end of the year approached the $2b mark, while owner's equity reached $631m and debt plus capitalized leases totaled $1.2b.

The Company signed debt at the end of the year totaling $916m, 41% of which is US Ex-Im Bank guaranteed debt.

Half of our total debt balance has been fixed for up to 12 years and the average blended rate including fixed and variable rate debt for the fourth quarter came in at a very competitive 3.7%.

In terms of cash, the Company closed the year with a very strong cash position with $408m in cash, short term and long term investments, which represent approximately 32% of the last twelve months revenue.

This figure includes approximately $47m in restricted cash, of which $40m are collateral for out-of-money hedge contracts related to future quarters.

Additionally, the Company has committed lines of credit which total $31m.

So in summary, Copa Holdings had another year of outstanding financial and operational results.

Fourth quarter showed healthy top line growth on strong capacity expansion.

We continue to manage our costs very efficiently.

Our balance sheet and liquidity position are stronger than ever and we continue to be well positioned for both the challenges and opportunities '09 may bring.

In terms of our guidance for '09, while we remain positive on our prospects, given that there is still much uncertainty on how demand will be affected by lower economic growth projections, we continue to maintain a cautious stance on our outlook for the year.

As such, we are maintaining our guidance of consolidated capacity for the year in the range of 10b ASMs for a plus or minus 13% growth.

We are lowering our load factor guidance to plus or minus 74% compared to 76% in '08.

In light of a significant drop in fuel prices and consequently lower fuel surcharges and fares, in addition to some early signs of softening demand in some markets, we're adjusting our RASM guidance to $0.126 which represents a year-over-year decrease of 14%.

We are now assuming an average price of jet fuel per gallon net of certain hedges for the year of $2.11 compared to $3.24 for full year '08.

We're maintaining our CASM ex-fuel guidance of plus or minus $0.075, which is flat compared to '08.

And we are reaffirming our operating margin guidance in the range of 16% to 18%, compared to 17.4% in '08 as we expect lower fuel prices to offset lower RASM projections.

However, we are now expecting to come in at the high end of the range.

With that, I'll turn it over to Pedro for closing remarks.

Thank you, Victor.

And again, thank you all for joining us today.

Our fourth quarter and full year results are a testament of our Company's ability to deliver world-class results, both in favorable and challenging environments.

As you have seen from our updated guidance for 2009, we expect no less.

Our team is committed to taking on the challenges that may lie ahead, monitoring the demand environment and making adjustments as needed.

But very confident that our Company will once again deliver industry-leading results.

At this time we will be happy to open up the call for questions.

Thank you.

(Operator Instructions).

And our first question will come from Ray Neidl with Calyon Securities.

Hi, good morning.

Morning Ray.

Basically, just a couple of overview things.

One is LAN is talking about doing a freight carrier in Colombia and I heard rumors, I don't know if it's true or not, that they're thinking about starting a passenger carrier in Colombia.

And I'm just wondering if you heard anything and if so how would that affect your Aero Republica operations?

All we've heard is about the cargo carrier, which we understand it's set to go for later in this quarter.

And we've heard of no plans to start a passenger operation and we think the Colombian market is already saturated in terms of passenger carriers.

How the cargo operation is going to go for them, I don't know, but these are obviously challenging times for cargo.

Definitely, even though your cargo operations were up, congratulations on that.

Secondly, and I guess this is tied in with your cargo revenues being up, is the Panama economy.

You mentioned with the Canal construction it's going to pump dollars into the local economy.

What's the economic growth forecast for Panama right now?

Last I heard was 8% and I'm just wondering if that's come down or not?

It's come down to between 4% and 6% depending on who you ask.

But that's what the analysts and experts are coming up with.

There are a number of major projects, government infrastructure projects are going on.

Besides the Panama Canal expansion, of course, and even the construction sector is strong right now, it may slow down towards next year but right now the projects are being worked on, are going to be finalized.

So that's keeping the economy going.

Consumption, it's also okay, so we think that there is going to be a softer landing in Panama.

It's going to obviously slow down from double-digits to mid-single digits, but much better than what we're seeing in the rest of the world.

And that's supporting your cargo operations then, I take it?

Our cargo operation, I should add that it's not significant.

It's mainly based on using the belly space of our aircraft.

And we have usually have [spilled] cargo because the belly space is obviously limited.

And we do charter small narrow-body cargo aircraft, but that's just to complement our belly capacity.

So when we think of cargo profitability, which is not a number we disclose, but we don't see cargo as a big headache for us right now.

Again, because it's a small part of our business and it's not a lot of capacity, what we throw out there.

Okay, good.

Thank you very much.

And our next question will come from Mike Linenberg with Banc of America.

Hello, good morning, guys.

A couple of questions here.

The -- when we look at Aero Republica, very strong margin in the fourth quarter.

What -- can you just talk about over the last -- since you've purchased the Company we've seen improvement in the margins, certainly there is a seasonal benefit here.

But what else is driving that strong margin?

Is some of that the competitive backdrop in the sense that the capacity situation in Colombia is maybe a bit more stable today?

Is it also being -- or is a lot of it being driven by the new airplanes moving in, maybe it's the Embraer 190s or the right airplanes, the MD-80s were too big?

I mean any color on that would be helpful.

Okay, it's probably most of the above.

First, I would say that this is a company that over the last three years, has improved itself in all areas.

It's now a very well run company with high, on-time performance.

Very efficient in its overhead and structure, and all of that obviously results in better margins.

Obviously there is a big impact on the season, it's their highest season of the year so obviously that has to help.

And then we have been moving to the right sizing, to the smaller gauge Embraers, so I think for the quarter we said 63% or so of their capacity was flown on the Embraer aircraft.

There is a big advantage there, flying 63% on brand new Embraers.

By the end of this year it's going to be 100%.

And also, their move to more international flying.

25% of their flying or their revenues for the first quarter were international, where we have higher yields and better load factor.

So it's a combination of all of those things.

Okay.

Okay, good.

And then just my second question.

When we look out into -- now we're mid-February and you're probably getting a pretty good view on how March is shaping up.

How are revenue trends, how are they trending?

I realize that maybe the booking curve has shortened, that seems to be what we're hearing from a lot of other carriers.

What are you seeing on the pricing side?

And I guess we probably have to be mindful of the fact that maybe a sizable chunk of your fare structure did include a fuel surcharge and so as fuel prices come down that's obviously having some impact unless you've had successes in being able to roll that into the fare structure.

So any commentary on what you're seeing on the revenue trends and pricing would be great.

Okay, first of all, Mike, I should say that we are still seeing growth.

What we have guided to and what we have mentioned so far is that growth -- we see growth slowing down but it's still growth, it's still positive and I think that's important because it's not the same that's being seen in other regions of the world.

It's -- we have visibility 45 days out and that's kind of the best we can do and hope to be accurate.

But it's very difficult right now because historical information, which is what we base ourselves to make a future forecast, it's not maybe as relevant as it used to be when -- in a changing environment, it's very volatile.

We may see from week-to-week our projections changing.

But we are seeing growth slowing down.

We also had the impact of Easter week shifting from March last year to April this year, on this year, so that's also going to have an impact.

But overall, there are many countries where the currency has devaluated around 30%.

We see somewhat of a shift from business class to economy class and that's obviously affecting revenues.

And obviously with fuel dropping so much, some of the fuel surcharges are coming off.

So I'll ask, Victor, maybe finish the answer?

Well, Mike, I would just add to that that obviously when you look at the fuel curve back in November, when we had our third quarter earnings call and we gave preliminary guidance for '09 and you look at the fuel curve now, recently, there has been a drop of some 30% in the fuel curve.

So obviously, when we look ahead and we are providing guidance in terms of RASM or yield, embedded in the RASM guidance, we are assuming that yields will decrease as some of those fuel surcharges are given back to passengers.

However, we do also expect that the drop in fuel charges will more than offset that drop in yield or RASM.

So what we're seeing right now, is we see some markets with lower yields, nothing that we didn't really expect.

So our guidance is more based on the forward-looking curve and our expectation of yields following that drop in fuel prices.

Okay.

All right, very good.

Nice quarter, thank you.

And our next question will come from Morgan Stanley, we will hear from Nic Sebrell.

Hi, guys.

First, an admin question.

You've had 55 jets at the end of the year and the fleet plan now is to have 54 aircraft by year-end '09, is that correct?

And then the second one, if you could just discuss a little more about the competitive environment that you're seeing now given the difficult financing conditions.

I understand some of your competitors are having cash issues, particularly in Colombia.

And given that Avianca appears to be for sale, is there any opportunity for you to grab market share there, I don't mean on the M&A side, but maybe taking advantage of the fact that Avianca is -- has other things to worry about?

Yes, that's it, thanks.

Okay, in terms of fleet, yes, we did decide to return two leased 737s at the end of this year, in the fourth quarter.

And so that's going to have a minimal impact on our growth in '09, but it will make us end the year with one less aircraft, with 54 instead of 55.

We are doing this -- we think it's a good move that it will allow us to better manage 2010 capacity growth.

We have the flexibility now to have cheap capacity flat in 2010, or grow it.

Because there are options and there is aircraft availability now that was not there six months or a year ago.

So we think it's a cautious approach which will allow us to again keep capacity flat or grow next year depending on what happens with our markets.

In terms of competition, what we've heard from basically all of our competitors is they're not going to grow next year.

And we know -- we have the best balance sheet and liquidity position of anyone in the Americas.

So we're in a good position and our markets are still growing, even if slowing down.

So we feel good about that but we're still being cautious and prudent.

So we have no plans to take advantage of any weakness that we're actually not aware of right now, in Colombia, to try to gain market share.

We're keeping capacity tight this year, for Colombia and in our markets, in our other markets we're growing at already, that we guided for.

Excellent.

Thanks.

Anything further, sir?

No.

Thank you.

Thank you.

And our next question will come from Duane Pfennigwerth with Raymond James.

Hi, thanks.

Just to follow up on Mike's question.

In terms of the bookings that you have and what you can see.

What does RASM feel like relative to the down 14 that you've provided in the guidance?

So, if you're looking at first quarter RASM on a year-over-year basis there is a decrease, it's mostly related to yields.

But some of it is also related to load factor.

But you're talking about 10%, 15% or so, 10%, in that range, in the first quarter.

Okay.

That's helpful.

And then on your CASM ex-fuel guidance, why would -- I guess you're at $0.075 cents versus $0.072 in the fourth quarter, why would CASM ex-fuel go up next year?

Yes, don't forget that we have the return of the MD-80s during 2009, there are still four MD-80s in the Aero Republica's fleet.

So that's part of the reason.

We're accounting for the possible cost-of-return conditions, meaning return conditions on those four aircraft.

Okay, that's helpful.

And then could you just review your hedge detail by quarter, your percentage and price?

Yes, for the first quarter of '09 we have approximately 36% of our volume hedged and it's a combination of zero cost dollars with a floor of $112, $113.

We also have some swaps, jet fuel swaps, in the range of 260 and we also have some crude oil swaps more or less around $84.

So for the first quarter we have 64% of our volume unhedged.

If you look at the second quarter of '09, around 30% has been hedged.

Again, you have zero cost collars using crude oil, with the same floor, $113.

We have another tranche of jet fuel of crude oil swaps at $84 and then that means that 70% of the volume is unhedged.

Moving on to the third quarter, basically 20% has been hedged.

Crude oil swaps, around 10% of it at $80 -- $92 or so.

And you have some collars, crude oil collars, with a floor of $112.

And as for the fourth quarter we have hedged around 12% of the total volume.

And most of it is basically swaps, crude oil swaps, in the range of $80 or so.

For 2010 there is very little hedged, it's like 5% right now.

And that's again using oil swaps at $83.

Thank you.

And I think Jim has a question.

Yes, good morning.

It's Jim Parker.

Just to pursue where you are seeing some softness in your business, in which parts of your region are you seeing this?

I guess in some of the countries where the currency dropped 30% that means your fare went up 30%, is that correct?

That is correct.

It's hard to say that it's one specific region and it's -- you know certain countries and again, it's very volatile so it's -- it almost depends on the week we're looking at.

But I think it's very much overall in most of our system we're seeing growth growing at a slower pace.

And regarding your capacity growth for 2010, you say currently you can have zero growth or you can have some growth.

I would like to know what range you think you could achieve and what's your best guess on what capacity will grow, what rate you will grow at in 2010?

Yes, the range right now, that we have this flexibility to introduce goes from zero to a low double-digit.

And I think we're probably going to end up like in the middle if everything goes well.

Okay.

Thanks.

And our next question will come from Jamie Baker with JP Morgan.

Good morning, gentlemen.

Victor, just to follow up, you identified three leases that were -- or three aircraft that were coming off lease this year, do you know offhand who those are being returned to and does this reflect all of the lease expirations that you are expecting in both units for 2009?

Yes, we --

DO you have any additional aircraft that comes off of lease?

Yes, we were mentioning the MD-80s at Aero Republica.

They are being returned to Boeing Capital.

And that's something that we're still in discussions with them, that's something that we still have to negotiate with Boeing Capital in terms of timing and return conditions.

And do you have a schedule of lease expirations for 2010, I'm just trying to get a handle on your ability to downsize the plan if conditions require it.

Yes, there are two [G-class] aircraft being returned this year, '09, and there are two more aircraft in 2010, 737 NGs that will be returned in 2010, that's where the flexibility is coming from.

Excellent, okay, thanks for the clarification.

Appreciate it.

(Operator Instructions).

And we do have a follow-up question from Nic Sebrell.

Thanks for taking the follow-up.

I wanted to ask a little bit more about the jet financing.

You said in your press release that you've got, at the very least, commitments lined up for the aircraft that you've got coming this year.

What -- can you discuss a little bit about the financing environment now, how hard is it to finance, how many jets do you currently have on order next year that you still need to line up financing, and what goes into the buy versus lease decision?

Well, generally speaking the financing environment, I guess it's an underestimate to say that it's as tough as we've ever seen it.

However, having said that, the aircraft that are coming in are aircraft from Boeing, purchased straight from Boeing.

For the two Boeings that we're taking delivery of, purchased from Boeing, this year, we already have preliminary commitments and they should be turning into final commitments in the foreseeable future.

The deliveries are in July and December.

And we're in discussions already to arrange the long-term financing and given the fact that we have support from Ex-Im, I don't expect any major issues there, especially given the fact that Copa, as Pedro mentioned, has a very strong balance sheet and liquidity position.

So in terms of the aircraft next year, we are also in discussions with Ex-Im.

We will be seeking preliminary commitments for those aircraft towards the middle of this year.

The initial indication from Ex-Im is that we can count on their support.

So again, I don't foresee major difficulties in arranging financing for the 2010 delivery season.

Okay, great.

And how many aircraft do you have on order from Boeing, looking out forward?

Right now -- yes, it's two aircraft this year and there is three more aircraft next year.

Okay, and that's as far as it goes?

It grows after that.

Yes, and it's four more in -- and 2011 you have another six aircraft.

And we just took delivery of one NG a week ago.

Right, right.

Great.

Thanks, guys.

Thank you.

(Operator Instructions).

Okay.

I think that's it.

Thank you, everyone, for joining us.

We look forward to having you back for our first quarter earnings call.

So have a great week.

Thank you.

That does conclude our teleconference for today.

We would like to thank everyone for your participation and have a wonderful day.