Copa Holdings, S.A.

Ladies and gentlemen, thank you for standing by. Welcome to COPA Holdings' fourth quarter earnings call. During the presentation, all participants will be on a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, you will have to press star then one one on your touchtone phone. As a reminder, this call is being webcast and recorded on February 16th, 2023. Now I will turn the conference over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

Thank you, Latif. And welcome everyone to our fourth quarter Air News Call. Joining us today are Pedro Hebron, CEO of Copa Holdings, and Jose Montero, our CFO. First, Pedro will start by going over our fourth quarter and full year highlights, followed by Jose, who will discuss our financial results. Immediately after, we will open the call for questions from analysts. COPA Holdings financial reports have been prepared in accordance with international financial reporting standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website, copaair.com. Our discussion today will also contain forward-looking statements, not limited to historical facts, that reflect the company's current beliefs, expectations, and or 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 subject to change. Many of these are discussed in our annual report file with the SEC. Now I'd like to turn the call over to our CEO, Mr. Pedro Hedron.

Thank you, Daniel. Good morning to all and thanks for participating in our fourth quarter earnings call. Before we begin, I would like to extend my sincere gratitude to all our coworkers for their commitment to the company. Their continuous efforts and dedication have kept COPPA at the forefront of Latin American aviation. To them, as always, my highest regards and admiration. We're proud to report solid fourth quarter and full year results, despite the pressure higher jet fuel prices have added to our operating costs and other headwinds common to our business. Among the main highlights for the quarter, in terms of capacity, although we had a similar number of daily departures compared to 2019, we achieved 6% more ASMs than in Q4 2019, due to a higher average gauge. Revenue passenger miles increased by 7.5%, which led to an 86.6% load factor, a 1.4 percentage point increase when compared to the same period in 2019. Passenger yields came in at 15.1 cents, or 20% higher than in the first quarter of 2019, while cargo revenue, including the contribution from the operation of our Boeing 737-800 freighter, was 69% higher, resulting in unit revenues, or RASM, of 13.7 cents, a 23% increase compared to the first quarter of 2019. Adjusted fuel CASM decreased by 7% compared to Q4 2019, from 6.6 cents to 6.1 cents. And our operating margin came in at 24.7%. Now turning to our main highlights for the full year 2022, unit revenues increased 12.6% year-over-year to 12.1 cents, mainly driven by a 10.8% increase in yields. Casa Mixed Fuel came in at 5.98 cents almost 5% lower than 2019, and the operating margin for the year came in at 15.2%. During the year, we started flights to Barcelona, Venezuela, Santa Marta, Colombia, and to the Felipe Angeles Airport in Mexico City, ending the year operating to 77 destinations in 32 countries in North, Central, South America, and the Caribbean. strengthening our position as the most complete and convenient hub in Latin America. We inaugurated our new Copa Club in Tucumán's new Terminal 2. This new and modern facility provides our business class and preferred members with a world-class experience while traveling through our Panama Hub of the Americas. We also reactivated our Panama Stopover program, which promotes our home country as a tourist destination and we're seeing good results. In September, we launched our new distribution strategy, including the new COPPA Connect option for travel agencies to access COPPA First and other content via the IATA New Distribution Capability, or NDC. At the same time, COPPA introduced a cost recovery search source for bookings made through the legacy GDS technology known as EDIFACT. During Q4, we were pleased with both the adoption of Copa Connect among our agency partners and the increase in direct sales via Copa.com. We're still at an early stage, but these changes are helping us gain more control over our distribution strategy and offset and eventually lower our distribution costs. On the operational front, Copa delivered an on-time performance of 87.4% and was recently recognized by the official airline guide as the most on-time airline in Latin America in 2022. In fact, according to OIG, Copa's on-time performance was again the highest of any carrier in the Americas. Additionally, last year Copa Airlines was recognized by Skytrax for the seventh consecutive year as the best airline and the best airline staff in Central America and the Caribbean. I would like to once again express my recognition to our more than 7,000 co-workers who day in and day out deliver a world-class travel experience for our customers. Their contributions are key to our success. With regards to Wingo, Wingo received one additional 737-800 from Copacabana and ended the year with a total of nine aircraft. Additionally, it continued its regional expansion and ended 2022 operating 31 routes with service to 20 cities in 10 countries. Turning now to our expectations for 2023. During our last call in November, we shared preliminary capacity guidance for the year of close to 16% compared to 2022. and we mentioned that we were expecting to receive 13 Boeing 737 MAX aircraft during the year. As you saw in our earnings release, we are reducing our capacity growth guidance to a range of 12 to 14%, as it now looks like Boeing won't be able to maintain its regularly scheduled delivery dates. We now expect to receive 12 aircraft during the year instead of 13. Additionally, As is the case for the industry worldwide, we're experiencing higher maintenance costs related to our engines and increased shop visits and turnaround times. We expect that this issue will add pressure on our unit costs for the year. Jose will provide more details about this. This year we expect to continue growing our hub in terms of frequencies and new destinations. So far we have announced new service to the cities of Malta and Ecuador, and Baltimore and Austin in the U.S. starting this summer. With these additions, we will be serving 80 destinations in North, Central, South America, and the Caribbean by July of this year. To summarize, we delivered strong results in Q4 and for the full year 2022. Our team continues to deliver world-leading operational results, including, again, the best on-time performance in the Americas, We're reducing our capacity assumptions for the year, given the current delays in the aircraft delivery stream. And as always, we will continue looking for efficiencies and savings to further reduce our unit costs and strengthen our competitiveness going forward. Lastly, we're as confident as ever in our business model. In 2022, we delivered competitive unit costs and solid margins. while continuing to offer a great product to our passengers, making us the best positioned airline in our region to consistently deliver industry-leading results. Now I'll turn it over to Jose, who will go over our financial results in more detail.