Filipe Nielsen

Filipe Nielsen questioned the cost side guidance, specifically the CASM ex-fuel target of $0.057, asking about factors driving optimism and how this cost metric is expected to evolve quarterly.

Answer

CFO Peter Donkersloot attributed confidence in the $0.057 CASM ex-fuel to the full 2025 number being closer to the middle of the 5.7-5.8 range, ongoing and new initiatives (e.g., sales and distribution savings, densification projects, fixed cost leverage from growth), which are slightly offset by inflation. CEO Pedro Heilbron added that capacity growth is slightly front-loaded, leading to stronger growth in the first half of the year and moderating in the second half.

Filipe Nielsen asked for more details on the cost guidance, specifically the CASM ex-fuel target of $5.7, inquiring about factors contributing to this optimistic lower range and how CASM ex-fuel is expected to evolve throughout the year. Nielsen also asked about the quarter-by-quarter capacity evolution, anticipating stronger growth in the first half due to carry-over deliveries.

Answer

CFO Peter Donkersloot clarified that the 2025 CASM ex-fuel was numerically closer to $5.7, providing confidence for the 2026 target. He cited ongoing and new initiatives, including the full-year effect of sales and distribution savings, densification projects, and benefits from 11-13% growth on fixed costs, partially offset by inflation. CEO Pedro Heilbron confirmed that capacity growth is slightly front-loaded, with stronger growth in the first half and moderating in the second half.

Filipe Nielsen asked for clarification on the moving parts for the 2025 CASM guidance of $0.058, particularly after Q3's positive one-offs, and sought insight into the 2026 ex-fuel CASM expectation.

Answer

Peter Donkersloot, CFO of Copa Holdings, clarified that the $0.058 CASM guidance for 2025 represents a range. He explained that Q3's positive impact included a lease extension (one-third) and engine exchange transactions (two-thirds), noting the latter is not necessarily a one-off and may continue into 2026 due to longer turnaround times. For 2026, Donkersloot expressed confidence that Copa has sufficient cost initiatives to offset inflation and potentially lower CASM further, indicating the guidance reflects this directionality.

Filipe Nielsen asked for clarification on the 2025 CASM guidance of 5.8 cents, particularly regarding the impact of positive one-off items in the recent quarter, and whether the assumption might be too conservative.

Answer

CFO Peter Donkersloot clarified that the 5.8 cents is a range. He explained that the 'one-offs' included a lease extension (one-third of the effect) and engine exchange transactions (two-thirds), noting that engine exchanges are not necessarily one-off and may continue into 2026. Filipe also asked about the moving parts for the 2026 ex-fuel CASM expectation of 5.7-5.8 cents, questioning if it might be conservative given potential fixed cost dilution from capacity expansion.

Filipe Nielsen asked for a breakdown of Q4 costs, distinguishing between one-off impacts and potentially structural costs for 2026, and sought insight into the expected evolution of cargo yields in 2026.

Answer

Corporate Finance Director Andrés del Valle Eitel explained that $0.002 of the Q4 unit cost increase was due to US dollar weakness and another $0.002 from one-off costs like a special bonus, emphasizing that 2026 guidance reflects confidence in cost containment with no structural risks. CEO Roberto Alvo noted that while cargo unit revenues are not disclosed, potential changes in import/export mix due to currency appreciation might occur, but no significant issues in demand or material changes to unit revenues are anticipated for 2026.

Filipe Nielsen asked for a breakdown of Q4 2025 costs between one-off and structural impacts, particularly concerning currency effects, and sought insights into the expected evolution of cargo yields in 2026.

Answer

Corporate Finance Director Andrés del Valle Eitel explained that $0.002 of the unit cost increase was due to US dollar weakness and another $0.002 from one-off costs, emphasizing that no structural changes are expected to impact the 2026 cost guidance. CEO Roberto Alvo noted that while cargo unit revenues are not disclosed, a potential shift in import/export mix due to currency appreciation might occur, but no significant issues are foreseen in cargo demand or unit revenues for 2026.