Copa Holdings SA (CPA) 2010 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Copa Holdings Third Quarter Earnings Call. (Operator instructions). As a reminder, this call is being Webcast and recorded November 12, 2010.

Now I'd like to turn the conference over to Joe Putaturo, Director of Investor Relations.

Thank you very much, operator, and welcome, everyone, to our third 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 third quarter highlights, followed by Victor, who'll discuss our financial results. Immediately after, we'll 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 all questions.

In today's call, we'll discuss non-GAAP financial measures. A reconciliation of non-GAAP to GAAP financial measures can be found in our third 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, and good morning to all. Thank you for joining us today.

As always, I want to start this call by congratulating all of my coworkers for another strong quarter and thanking them for their hard work and dedication.

Among the main highlights for the quarter, Copa Holdings reported net income of $64 million, or earnings per share of $1.45. Excluding special items, Copa Holdings' adjusted net income came in at $54.9 million, which represented earnings per share of $1.25.

Healthy demand led to a 12% increase in operating revenues on a nearly 14% capacity expansion.

Although load factors and yields came in slightly lower on a year-over-year basis, unit costs for the third quarter showed a very favorable trend, dropping almost 3% year over year. As a result, our adjusted operating margin came in at a very strong 19.5%.

On the operational front, Copa Holdings ended the third quarter with a consolidated fleet of 60 aircraft, with 45 aircraft at Copa Airlines and 15 at Copa Airlines Colombia.

On September 16, Copa Airlines started a third daily frequency from Panama to Mexico City. This additional frequency was initially approved for six months as a result of Mexicana ceasing operations. However, we expect this frequency to become permanent in the near future, as there is need for more capacity in the Mexican market.

We currently serve three Mexican destinations - Mexico City, three times daily; Cancun, twice daily, increasing to three daily in December; and Guadalajara, five times per week. It is worth highlighting that most of our 14% capacity growth for the third quarter was introduced in late June, when Copa Airlines added frequencies to Sao Paulo, Los Angeles, Guatemala, and Punta Cana, among others. Also in June, Copa Airlines Colombia expanded its international service by adding frequencies from Bogota and Medellin into Copa's hub in Panama.

For the third quarter, Copa Airlines maintained outstanding operational performance, with our on-time performance coming in at 90% and our flight completion factor at 99.5%. Copa's on-time performance has averaged above 90% for the first nine months of the year, placing constantly among the highest in the world and leaders in Latin America.

On a more recent note, on October 6, Aero Republica began operating under the Copa Airlines Colombia brand. The new brand is a result of Aero Republica's transition to a world-class airline, which began back in 2005. Today, Copa Airlines Colombia has a fully renovated fleet and the highest levels of customer satisfaction and on-time performance among Colombian Airlines. We're very proud of all the people who have made this a reality. Going forward, the Copa Airlines Colombia brand will leverage our presence and recognition in Colombia and the rest of the region as Copa Colombia continues to expand internationally.

In fact, on October 4, Copa Airlines Colombia launched daily flights to Mexico City from Bogota. Copa Colombia now provides direct, nonstop service to five international destinations, including Hub of the Americas in Panama City. In addition, in December Copa Airlines Colombia will launch scheduled, weekly, nonstop service from Bogota to Havana, Cuba and to Cancun, Mexico.

As you may recall, a year ago, we exited the SkyTeam Alliance, along with our long-time partner, Continental Airlines, who joined Star a few days later. A couple of days ago, on November 10, we formally announced our intention to enter the Star Alliance. Our membership in Star Alliance will enhance our global reach as we implement strong partnerships with the Alliance's 29 carriers and link Latin America's most efficient hub, our Hub of the Americas in Panama City, to start that global network. In addition, our participation in the Alliance will enhance are already-strong commercial alliance with Continental, now United, in place since 1998. But, more importantly, our passengers will benefit from seamless connectivity with a global network that offers over 21,000 daily flights to more than 1,000 airports in more than 180 countries, as well as access to leading frequent-flyer and airport lounge benefits with Star Alliance's member airlines around the world.

Finally, in our earnings release yesterday, we announced that we have entered into operating leases for ten new aircraft, delivering in 2011 and 2012. So, next year, we expect to incorporate ten aircraft, five owned and five leased, ending 2011 with a consolidated fleet of 73 aircraft. For 2012, our current fleet plan calls for nine incremental aircraft. With these new leases, we will bolster our network expansion plans, taking the opportunity to strengthen even more our regional hub leadership by giving our passengers more destinations and connecting opportunities.

I'm also happy to say that this capacity ramp-up coincides with the expected conclusion of Panama's Tocumen Airport expansion, which will increase our airport capacity by more than 50% by mid-2011. I cannot overemphasize the advantage that this gives us with regards to our future growth plan.

So, as you can see, our third quarter results were very strong, and we continue to drive commercial, operational, and strategic initiatives to improve our long-term competitiveness, growth, and profitability, both at Copa Airlines and Copa Airlines Colombia.

At Copa Airlines, the initiatives will be mostly aimed at solidifying our network leadership and enhancing the passenger experience, while maintaining extremely competitive costs. At the same time, Copa Airlines Colombia will focus on increasing its international capacity by adding frequencies and new destinations from Colombia into Panama, as well as non-hub, regional flights, such as the recently launched Bogota-Mexico flight.

Going forward, a smaller proportion of Copa Airlines Colombia's capacity growth will be assigned to the Colombian domestic market, where very aggressive fare competition affects the profitability of that market. From 2005 until now, Copa Airlines Colombia has transitioned from being a fully domestic carrier to having approximately more than one-third of its capacity deployed in international. And, next year, we expect this number will be higher.

In terms of consolidating capacity for 2010, we have already taken delivery of five out of the eight Boeing 737-800 aircraft we will be receiving this year, which will drive our 10% consolidated capacity growth. This capacity comes mostly from Copa Airlines and is being deployed in the form of new frequencies, which we started adding in June, as well as additional frequencies we will be adding before yearend. In the fourth quarter, our growth accelerates, as we expect year-over-year capacity growth of nearly 20%.

As evidenced by our recently announced October traffic figures, the current demand environment is healthy. For the month, traffic grew almost 15%, and our consolidated load factor came in at 78%. So, as we expected, the market is assimilating most of the capacity we're adding while the yield environment gradually improves. Current bookings and demand trends lead us to expect strong load factors in November and December as well.

Our preliminary 2011 guidance, which Victor will talk more about, calls for capacity growth in the range of 17% to 19%. As I mentioned earlier, these growth plans incorporate several new destinations, as we will continue reinforcing what is currently the most complete and convenient intra-Latin America network.

We will also keep working on product and cost initiatives that will further improve our long-term competitive position. It is worth noting that this capacity increase is partially driven by longer stage length year over year and more high-gauge 737-800s in our fleet mix.

It is also important to highlight that next year's capacity is being introduced in an improving economic environment. In fact, Latin America is now on track to a solid economic expansion, now expected to grow a robust 5.7% in 2010, with continued expansion in 2011. Additionally, Panama is expected to grow between 6% and 7% this year and is forecast to be the fastest-growing country in Latin America between 2011 and 2015. In fact, Panama will be undergoing a significant transformation within the next three years as a result of aggressive public and private investment, which will improve Panama's competitiveness and long-term potential.

So, to summarize, we're very pleased with our third quarter results and how our business model keeps delivering industry-leading profit margins and growth. We're operating in a favorable and improving demand environment, where passenger traffic continues to grow. Our team continues to deliver a world-class product. We maintain an extremely competitive cost structure. And, last but not least, we're very confident in our Company's ability to seize future growth opportunities, maintain our regional leadership, and continue delivering world-class results.

Thank you. Now I will turn it over to Victor, who will go over our third quarter results.

Thank you, Pedro, and good morning, everyone. Thanks again for joining us.

First, congratulations, again, to all of our coworkers for another excellent quarter.

As Pedro mentioned, the Company posted another quarter of strong financial results with third quarter reported net income coming in at $64 million, or EPS of $1.45, which compares to last year's third quarter reported net income of $43 million, or EPS of $0.98. Excluding special items, adjusted net income for the quarter came in at $54.9 million, which represents a 4% increase compared to last year's adjusted net income for the quarter of $52.6 million. Special items for the quarter include mark-to-market gains of $9.1 million in Q3 2010 and $3.9 million in Q3 '09 related to fuel hedge contracts. In addition, Q3 '09 included a $14.6 million special fleet charge related to the termination of the MD-80 fleet from Copa Airlines Colombia.

Traffic growth during the quarter was strong throughout the network, as revenue passenger miles increased 13.3% on a year-over-year basis on 13.8% ASM growth. Notwithstanding this double-digit capacity growth, system-wide load factor came in strong, at 75.5%, while yields for the quarter were down 1.4% year over year, contributing to a 2% decline in unit revenues. However, lower unit costs fully compensated the impact of the decline.

In terms of total revenues, Copa Holdings' third quarter operating revenues came in at $362 million, representing almost 12% year-over-year growth, with Copa Holdings showing revenue expansion of 14%.

On the expense side, third quarter operating expenses, excluding special charges, increased close to 11% year over year, while, on a unit basis, costs per available seat mile decreased nearly 3% to $0.101. Excluding fuel and Q3 '09 special fleet charges, unit costs decreased approximately 4% year over year to $0.069.

In terms of our main operating expenses compared to the third quarter of '09, fuel expense increased 14%, driven by a 5% increase in the effective price for a gallon of jet fuel, including realized hedge losses, and a 9% increase in gallons consumed, resulting from capacity growth.

Salaries and benefits increased 15%, mainly driven by an increase in operating headcount to support capacity expansion.

Passenger servicing increased 11%, mainly as a result of passenger growth.

Commissions decreased 6%, mostly due to lower commission rates, partly offset by a higher revenue base. Reservations and sales decreased 4%, driven mostly as a result of lower average global distribution systems rates.

Maintenance, materials, and repairs increased 15%, mainly driven by additional capacity.

Depreciation increased 14% due to additional aircraft and spares.

Flight operations, landing fees, and rentals, combined, increased 14%, mainly as the result of increased capacity.

And other operating expenses came in flat compared to the third quarter of '09.

Other non-operating income and expense total a net non-operating gain of $2.4 million, composed mainly of a net interest expense of $6.6 million and a $9.1-million, noncash gain related to mark-to-market of hedge contracts.

Regarding operating earnings, the Company's operating earnings, excluding special fleet charges booked in Q3 '09, increased 17% year over year to $70.7 million, while operating margin came in at 19.5%, almost 1 percentage point above Q3 '09 adjusted operating margin.

With respect to fuel hedges during the third quarter, we had 25% of our volume hedged, using crude oil and jet fuel swaps at an average equivalent price of $80 a barrel.

And, looking forward, our hedge positions currently stand as follows - for the fourth quarter, 22% at an average equivalent price of $79 a barrel; for full-year 2011, 23% at $75; and for full-year 2012, 9% at $83.

Turning to the Company's balance sheet, we ended the quarter with $375 million in cash and short-term and long-term investments, which represent approximately 28% of the last 12-months' revenues. With respect to assets, at the end of the quarter, the Company reported $2.3 billion in total assets, while owners' equity increased to $943 million. And debt plus capitalized leases totaled approximately $1.3 billion. In terms of bank debt, we ended the quarter with $940 million in short-term and long-term debt, with an average blended rate of 3.3%, including fixed and variable-rate debt.

So, to recap, during the third quarter, we expanded capacity by almost 14% year over year; increased operating earnings by 17%; increased our operating profit margin to 19.5%, one of the highest in the industry; we have ample liquidity and a strong balance sheet; and, most importantly, we continue delivering our world-class service to our customers.

In terms of our guidance for full-year 2010, in light of our third quarter performance and recent demand trends, we are reaffirming our guidance as follows - capacity of plus or minus 10.9 billion ASMs for a 10% year-over-year increase; consolidated load factor of plus or minus 77%, compared to 74.6% in '09; RASM at plus or minus $0.127, compared to $0.126 in '09; CASM, ex-fuel, excluding special charges, of plus or minus $0.071 versus $0.072 in '09. With respect to fuel, our fuel price assumption for the year changes from $2.35 to $2.40 per gallon, including into-plane and net of current hedges. And we're narrowing our full-year operating margin from 19% to 21% to an operating margin in the range of 19%, compared to an adjusted operating margin of 19.4% in '09.

With respect to our preliminary guidance for 2011, in view of economic growth prospects for Panama and the region, expected demand trends for air travel, and the strength of our hub and network, we expect another year of strong growth and solid financial results for the Company. As such, we're currently estimating capacity growth for the year in the range of 17% to 19% in terms of ASMs. We estimate load factors will come in at plus or minus 74%. We expect full-year RASM to come in at plus or minus $0.118, or 7% below 2010. I should add that approximately two-thirds of this decline relates to the impact in yields of an 8% year-over-year increase in length of haul. On the other hand, we expect CASM, ex-fuel, to come in at plus or minus $0.064, approximately 10% below 2010, compensating for the lower RASM. And, in terms of operating margin, we expect full-year operating margin to come in within the range of 18% to 20%, in line with operating margins reported for 2009 and projected for 2010. Our 2011 preliminary guidance assumes a price per gallon of jet fuel, including into-plane costs and net of current hedges, of $2.50, which is 4% higher than the forecasted price for 2010.

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

Thank you, Victor. Now we'll open up the call for some questions.

(Operator instructions). Ray Neidl, Maxim Group.

Congratulations. Excellent outlook here. One small thing here, going back to Colombia, is-- well, two things. One is LAN will be entering the domestic Colombian market through an acquisition - a very powerful South American carrier. Is that going to create more competition for your Colombian operations? Or, conversely, I was thinking that it might help you because the airline they're acquiring has been discounting deeply. This might bring some price rationalization to that market, the domestic Colombian market.

Ray, I tend to agree with you in the sense that it's-- One, it's better to have two competitors than three. So it's better for them to replace AIRES and to have AIRES and, on top of AIRES, LAN. Secondly, we know they like-- They're a public company. They like to turn profits and show decent margins to you guys. So I don't see them discounting as deeply as AIRES, which should also be a better yield environment. But who knows? However, at Copa Airlines and Copa Airlines Colombia, we haven't been emphasizing growth in Colombia domestic. We're focusing mainly in niche international markets and, especially, in our Hub of the Americas in Panama. That's our core strength. And we're going to continue doing that.

Great. And the second part of the question was the other big competitor down there, Avianca, with their combination with TACA, coming at you from both sides of your Panama City hub. What kind of effect is that going to have when those guys get the benefits from United?

Well, our hub-- Actually, they have to try to attack it from many angles. But it's very, very difficult to compare to the strength of our geographic position, airport facilities, and, also, what Panama as a destination represents in terms of overall business and tourist traffic. So we're in a very unique position, which we continue to strengthen, and we're going to continue strengthening in the future. So we're not going to just let that advantage go away. And we feel it's an advantage we can expand. In their case, they can do as much as they can with their limited infrastructure at their different airports. And, as you know, spreading growth among four airports is never as powerful as concentrating all your guns in one strong, growing hub, which is what we do. So we're very, very confident in the future prospects of our business. We're extremely confident on the strength of our hub and business model and very bullish about our future. Them joining Star Alliance, which is kind of what you're referring to, together with us-- our numbers tell us that it's going to be positive for us, us joining together. And that's the only reason why we're doing it. So, yes, they'll have some advantages, and we'll have others. And, at the end of the day, it's probably going to be positive for both. And it's going to be positive for us, for sure.

Great. Thank you very much. Congratulations again.

Caio Dias, Santander.

My question is specifically regarding your entrance in Star Alliance. Now that it has been approved by the Star Alliance board, what are the next steps? And how long should it take until you are fully integrated with the broad Alliance?

It's an 18-month joining process-- at least 18 months. That's what we have agreed to with Star Alliance. We have no doubt that we'll be ready before the 18 months. However, again, it will be an 18-month joining process. The reason why we have no doubt that we'll be ready is because, in a way, we're already partially in. Our frequent-flyer program is OnePass. As you well know, it's our in-house program outsourced to Continental, of course. And OnePass is already part of Star Alliance. So that is already taken care of. Also, many of our systems are the same or very similar to Continental's systems, which have already been linked up with the Star carriers. So, again, we're well advanced in that process.

The other thing I should mention is that, even though the official joining date is in 18 months, we will be turning on some frequent-flyer and coach-sharing relationships with the Star carriers that are of a most interest to us. So that's going to happen along the way, starting, probably, in Q1 2011.

Very good. Thank you very much.

Jim Parker, Raymond James.

Would you tell us the distribution of your ASMs in 2011?

Sure. Basically, what you're looking at is, during the first half of the year-- I'm talking now Copa Holdings. We should be growing 20% to 21% year over year. And then, if you look at the second half of the year, the growth comes down a little, to approximately 15% to 16%. That's in terms of ASMs.

Okay. And I believe your tax rate was 14% in the quarter, and it's been running, I think, about 10%. What's the right--? Why is it 14%, and what's the rate going forward?

Looking forward, Jim, the effective tax rate should be in the range of 12% to 13%, which is not too different from what we've seen-- not in 2009 but what we've seen in the past five years, which has fluctuated between as low as 8% or 9% but as high as 13%.

And, just to elaborate on the previous response that I gave you, Jim, with respect to the growth, when you look at our growth next year, you have several factors affecting our growth. You have part of it being stage length. Our stage length is going up significantly year over year, some 8% or so. You have part of it being gauge. We're bringing more 737-800s to our fleet. We did it this year, and we're doing it next year. And we also have new service. If you break it down, new service represents roughly 50% or so of the additional ASMs. Gauge-- higher-gauge aircraft represents roughly 30% to 33%. And then another 13% to 15% has to do with stage length.

Okay. That's great. Thanks, Victor.

(inaudible), Deutsche Bank.

I actually work with Mike Linenberg at Deutsche Bank. First off, I just wanted to say congratulations on a great quarterly result. I was just wondering-- You mentioned Panama's strong GDP outlook, including robust 6% or 7% growth expected in 2011. I was just hoping you can elaborate on how often you sort of evaluate those economic forecasts and how quickly you sort of adjust your ASM forecast to reflect any changes there.

We're constantly looking at the economic forecasts for Panama and the region. And, as Pedro mentioned earlier, Panama has been running on all cylinders. We're having another year of very strong GDP growth, north of 5%. And, next year, I actually expect it to be even higher. And the region as a whole is doing quite well.

With respect to adjusting the ASMs, for the year, there will be much of that, because, there, you rely on aircraft orders. But, certainly, on your five-year plan, which is something that we review on a yearly basis, we would be adjusting, depending on economic growth prospects and the markets that we want to include in our hub. We would be adjusting our ASM growth accordingly.

And I would add that we do have flexibility in our fleet plan in the sense that we have leased aircraft. And what we tend to do is renew or return leased aircraft, depending on how we see the economic prospects of Panama and the market we're serving. And our experience in recent years is that we're always renewing aircraft that we thought we were going to return. But we could actually return some leased aircraft if things were to slow down. But we do not see a slowdown in our future right now.

Okay. Perfect. Thank you very much.

Stephen Trent, Citi.

I just have a question about infrastructure in Panama, and I'm sticking to your one-question rule here, looking at both the Panama Tocumen Airport expansion and the Panama Canal expansion itself. To what degree is the timing of these projects sort of a strong basis for your growth expectations? And how do you see each project developing at the current time? Thank you.

I think we are very lucky to be based in Panama in the sense that-- not only the private and public investment going on in Panama, but, in terms of airport infrastructure, the airport is being expanded and modernized at the same pace that we need it. And that's been the experience for the past seven or so years. And the government is already in the initial stages of planning the next expansion. So this current expansion is going to be ready in May 2011, which is just when we need it because we usually ramp up flights in December and June, which are the start of our high seasons. So, next year, it will be June, and it's going to be ready in May at 50% capacity expansion. So it's just what we need. It's perfect timing. It's going to give us at least three to four years of unconstrained growth. But, again, as mentioned a second ago, the government is already planning. It has already hired a specialized firm to plan the next expansion phase of the airport. So we're ahead of the game and, for sure, ahead of most countries in our continent.

In terms of what else is going-- The Canal expansion is going according to schedule, within budget. They're now ramping up the, let's say, heaviest phase of construction. And it means a lot to business in our country. But there's also a Metro project. It's going to build our first Metro, and that's going to start next year. There are around 7,000 hotel rooms being built, major highway projects, and I could continue for a number of minutes. Panama is really strengthening itself as a leading, regional business and tourist hub.

Great color. Thank you, Pedro.

Nic Sebrell, MSSB.

Could you talk a little bit about the yield and the impact of the increase in stage length? How much is the stage length increasing, because, if my math is close to right, yield should go down-- I don't know-- 4% or 5%. Is that completely due-- Obviously, this is a projection, so maybe there's some conservatism in there or something. But is that completely due to stage length, or are you also being maybe a little bit conservative on potential demand for next year and the pricing environment?

Well, it is preliminary guidance, so we tend to be a little bit more on the conservative side when we're giving preliminary guidance. And then, as we get closer to the year and in our next earnings call, we'll take another look. And then we'll either reaffirm or adjust the guidance with respect to RASM as we see fit.

Right now what we're giving you-- the impact with respect to length of haul is roughly two-thirds of the decrease. The other factor is the fact that we are adding very strong capacity growth, as we mentioned earlier, to the tune of 17% to 19% ASM growth year over year.

On the other hand, when you look at it on a per-departure basis, we're talking more in the range of 9% or 10% or maybe as high as 11%. But I think, if you question is - Is there a little bit of upside there? I think there is, especially if domestic Colombia starts turning for the better in terms of the yield environment. And, if it continues to see the improvements, and we've seen some of it out of Venezuela, which-- When you look at our yield in the third quarter as reported, if you take out domestic Colombia and Venezuela, actually, we had a pretty strong year-over-year increase in yield.

Thank you. And what do you expect your length of haul, if you have an estimate for that, in 2011?

The increase on a year-over-year basis is roughly 8%.

Great. Thank you very much.

(Operator instructions). Bob McAdoo, Avondale Partners.

Could you spend a little more time talking about the Colombian International expansion and what the competitive world is like? I understand the beauties of flying from Bogota to Mexico City when you have one less Mexican carrier. But going off to Havana and to Cancun, I guess, to some extent-- Are there other Colombian carriers in those markets? Are these markets that will be monopolies? What's the likelihood that these are going to be positive generators right away as compared to other things you might do in Panama, for example?

I think what we need to, first of all, keep in mind is that, obviously, our focus is in Panama. And we will not deploy an aircraft in Colombia International if we don't think it either complements or, at least, it does not cannibalize Panama and/or if we think that it's not going to make a buck. So it has to be a profitable operation that will not cannibalize Panama.

The Cancun and Havana flights you mentioned are once per week. So it's not a significant service. But there is a substantial tourist market in Colombia that travels on a weekly basis. You could call it part charters in a way. Aero Republica has been actually serving many Caribbean destinations on a charter basis. So this is like making your charter a scheduled operation. And we see again a niche there.

The Bogota-Mexico complements our Panama hub in the sense that frequencies between our hub and Mexico are bilateral restricted. So one way of growing is serving them from Bogota. Those are going to be profitable flights.

And, if it ever makes less sense or no sense, we'll just deploy those aircraft in Panama. So it won't be, again-- It's not a massive international expansion. It's capacity deployed in what we think is an appropriate way in markets that need that service, where we an opportunity for Aero Republica to make a buck. And we're also emphasizing Colombia to our hub in Panama, of course, and not growing domestically, where it's really difficult to make a consistent profit.

Then further thinking about your growth next year, then, as we look at the substantial growth in the first half and the expansion of the airport not being until May, where do the planes go? How much of the growth that we're seeing is going to be new destinations--? First half or last half, how much is going to be new destinations versus additional capacity in existing spokes?

Perhaps-- Maybe I should start by saying that a significant portion of the growth next year is simply the full-year effect of what we're doing in 2010. Roughly 30% to 40% or 35% to 45% of the additional ASMs is simply full-year effect of what we are operating today. So, with respect to gates in Tocumen Airport in Panama, we're fine, and we will be fine until we see the expansion, which should be ready in the second quarter of next year. And that will then take us through the next phase of growth.

In terms of additional destinations, we're going to be seeing the additional destinations come in in the second half of the year. We're basically looking at, for the most part, additional frequencies from now until late third quarter or fourth quarter of next year.

Okay. Thank you.

Thank you. And, with no further questions in queue, I'd like to turn the program back over to Mr. Heilbron for any additional or closing comments.

Okay. Thank you. This concludes our third quarter earnings call. Thank you, all, for being with us. Thank you for your questions and for your continued support. Have a great day, and we'll see you at the next call.

That does conclude today's call. Thank you for your participation.