Ladies and gentlemen, thank you for standing by, and welcome to Copa Holdings' second 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 one on your touch phone. As a reminder, this call is being webcast and recorded on August 6th, 2020. Now I will turn the conference call over to Raul Pascual, Director of Investor Relations. Sir, you may begin.
Thank you, Lawrence, and welcome everyone to our second quarter earnings call. Joining us today are Pedro Heilbron, CEO of Copa Holdings, and José Montero, our CFO. First, Pedro will start by going over the actions the company has taken to mitigate the impact of the COVID-19 crisis, followed by José, 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, copa.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 reports filed with the SEC. Now I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.
Thank you, Raul. Good morning to all, and thanks for participating in our second quarter earnings call. I hope that all of you and your families are doing well and staying safe. Before we begin, I'd like to thank all of our coworkers for their commitment to the company and recognize their efforts and many sacrifices during these very difficult times. To them, my utmost respect and admiration. Over the last several months, many countries, including Panama, extended air travel restrictions. We have not been able to provide scheduled commercial operations since March 22nd, and remain subject to the eventual easing of air travel restrictions in the region. During the second quarter, we completed a total of 86 humanitarian and charter operations, which although only provided a marginal revenue contribution, allowed us to demonstrate our readiness and ability to operate flights with effective biosafety measures.
This has been the most challenging quarter in our history. The current demand environment and operating restrictions have had a significant impact on our financial results. We recorded a net loss of $386 million, including significant non-cash and non-recurring charges, which José will explain in detail. Excluding special items, we would have reported a net loss of $114.6 million, our first quarterly loss on an underlying basis in 20 years. During this period, we have obtained new credit facilities, once again demonstrated our ability to control costs, and kept our cash burn below our original expectation. We closed the quarter with $1.3 billion in cash and undrawn committed credit lines. Our very strong liquidity position and great cost discipline, we believe, makes us one of the best-prepared airlines to withstand the crisis.
Assuming there are no further extensions to the air travel restrictions in Panama, we will restart our commercial operations on September 4th. The scaled-down schedule equivalent to less than 10% of our September 2019 capacity. In the meantime, for the month of August, we have obtained approval to operate a limited number of humanitarian flights. Initially, we will serve 10 cities for passengers departing and connecting via Panama, while arrivals in Panama will be subject to specific approvals by the Panamanian government. Subject to the easing of travel restrictions in the region and the demand environment, our plan is to gradually spool up our network so that by December 2020, we're at approximately 30%-40% of December 2019 capacity. To adjust to this reduced demand and capacity expectations, we continue making changes to our fleet.
We finalized the sale of all our Embraer aircraft, engines, and spare parts and have agreed to deliver these assets during the next 12 months. We're also marketing for sale our Boeing 737-700 fleet and plan to operate a simplified fleet of Boeing 737-800 and MAX 9s. In order to retain flexibility, we plan to keep several aircraft in long-term storage to be able to accelerate our capacity plans if needed. Lastly, a proven and very strong business model, which is based on operating the best and most convenient network for intra-Latin America travel from our Hub of the Americas. positioned with the region's lowest unit cost, best on-time performance, and strongest balance sheet. Going forward, we expect that our Hub of the Americas will be an even more valuable source of strategic advantage, especially if fewer intra-Latin America markets are able to sustain direct point-to-point service.
We believe the Hub of the Americas will be the best position to serve this market. Now, I'll turn it over to José, who will go over our financial results in more detail.
Thank you, Pedro. Good morning, everyone, and thanks for being with us today. I'd like to join Pedro in acknowledging our Copa team. Today, under very difficult circumstances, they are showing their great spirit. For the second quarter, we reported a net loss of $386 million, or $9.08 per share. As Pedro mentioned, our results include several non-cash special charges, so let me begin by first addressing those. During the quarter, we made the decision to place the Boeing 737-700 fleet for sale, and given the reduced capacity plans, determined that we would likely not operate those aircraft again. That decision triggered a $186.8 million non-cash and non-recurring charge, and the assets are now classified as held for sale on the balance sheet. During the quarter, we also negotiated the sale of all of our remaining 14 Embraer 190 aircraft, six spare engines, and the spare parts inventory.
This transaction was concluded last week. You might remember those assets were already booked as held for sale since our fourth quarter 2019 results. Even though the agreed sale price was lower than our original estimates, which resulted in a $50 million non-cash and non-recurring loss, given the current market conditions, we believe this was a good deal for us. We also recorded a non-cash $22.2 million unrealized mark-to-market loss on the implicit derivative instrument related to the cash settlement option of the senior convertible notes issued in April 2020. Finally, a $12.3 million non-cash reversal of unredeemed ticket revenue provisions booked during the first quarter of 2020, given the uncertainty in future passenger behavior related to the COVID-19 crisis. Excluding these special items, our underlying net loss for the second quarter came in at $114.6 million, or a loss of $2.70 per share.
Our cash burn for the second quarter came in at $232 million, an average of $77 million per month, which is lower than our prior estimates as we mainly focused on reducing our fixed expenses and had a lower number of cash ticket refunds than forecasted. This figure only excludes proceeds and payments from extraordinary financing activities. In terms of capacity for the remainder of the year, our operating plan for the month of September represents less than 10% of 2019 capacity for the month, and could build up to a range of 30%-40% of 2019 ASM levels by December. Assuming this gradual restart of operations, we should be able to further reduce our average monthly cash outflow to around $66 million for the second half of 2020.
This figure assumes that our leased aircraft and debt commitments are paid in full, and that we stay current in all of our obligations. The improvement in our cash burn estimate for the remainder of the year is a function of our sharp focus in the reduction of our cost base, as well as the gradual restart of our operations. I'm going to spend some time now discussing our balance sheet and liquidity. As of the end of the second quarter, assets total $4.1 billion. Owner's equity was almost $1.7 billion. Our debt plus our lease liabilities total $1.6 billion. Our lease liability adjusted net debt to EBITDA ratio came in at 0.9 times, and our debt to equity ratio ended the quarter at 1.1 times.
We closed the quarter with approximately $1.3 billion in debt, more than 78% of which is fixed, with a blended rate including fixed and floating rate debt of approximately 3%. This debt balance includes $50 million in revolving short-term credit lines, which we drew on during the month of March, as well as the convertible notes issued in April. During the quarter, we also repaid $95 million of our short-term credit facilities. As to cash, short, and long-term investments, we closed the quarter with $1.14 billion.
As previously reported, during the second quarter, the company took aggressive actions to further bolster its liquidity position, including raising $343 million in cash net of expenses through a senior unsecured convertible note offering maturing in 2025, and adding new committed credit facilities for an aggregate amount of $150 million, taking our total available liquidity up to almost $1.3 billion at the end of the quarter. Furthermore, during the month of July, we closed a secured revolving credit facility for an initial aggregate amount of $105 million. Including this facility, we now have an aggregate amount of $255 million in unutilized committed credit facilities.
Let me close by saying that once this most challenging situation passes, we believe Copa's Hub of the Americas will remain as the best connecting point for travel in the region. With a privileged location, an even more efficient business model, and the best team in the industry. We are working harder than ever with these goals in mind. Thank you, and with that, we'll open the call to some questions.
Your first question comes from the line of Savanthi Syth from Raymond James. Excuse me, Savi.
I guess we can go to the next one while Savi fixes her connection.
Your next question comes from the line of Hunter Keay. Your line is open.
Thank you, everybody. Good morning.
Morning.
You can hear me? Okay, great. Hey, Jorge. I'd be curious to hear your views on the competitive landscape, given the use of the U.S. bankruptcy process by a couple of your major competitors. I'm curious what you view as key for Copa to being competitive in a backdrop where your competitors are going to come out with potentially leaner cost structures. Thank you.
Yeah, Hunter. First of all, I have to say that we're very happy to be able to avoid a Chapter 11 proceeding, which we all know that one never know how it turns out, and it can be a lot more complicated than what one would think. We're very happy to be able to stay away from that. It's good for our shareholders also, of course. We had such an advantage in terms of balance sheet strength, liquidity, and unit cost that we're very confident that after we get out of this crisis, even if our competitors have a successful Chapter 11 process, we will retain maybe not the same advantage as before. The gap might close, but we will still have an advantage in that sense. Plus, of course, our very strong intra-American network, we hope that will also remain as an advantage.
We're confident on that.
Okay. Thank you. José, can you elaborate a little more on the $12 million revenue reversal charge? Kind of curious, what were the assumptions that triggered it, and what does this mean for revenue assumptions going forward that tie to whatever issue drove it? Thank you.
Hunter. The revenue standard, accounting standard, calls for you to make an estimation every month on how much of your sales are going to actually expire a year from the period where you sell, and then you basically perform a reconciliation once that moment passes, and you make that a accounting entry based on past behavior or past observed behavior that you see via mathematical formula. In the first quarter, we're still business as usual, so we follow the accounting rule and perform that entry. But the reality is that given our changes in policy for reaccommodating passengers, et cetera, you cannot determine that those tickets are going to expire a year from the first quarter. We reverse that expiration entry. That's the nature of that.
Okay. Thank you very much.
Your next question comes from the line of Duane Pfennigwerth. Your line is open. You may ask your question.
Hey, thanks. Just a question on fleet. You're retiring the 190s. It looks like you're exiting your 700s. Post those two moves, if you fully flexed up your capacity, what would that look like relative to 2019 levels?
Duane, I think that our capacity for the next couple of years, I think we still have some flexibility in terms of lease expirations with the remainder of the fleet. We are at now trying to make sure that our fleet matches what could be a demand environment in the next couple of years. More likely than not, we're expecting to return a majority of the lease surplus that we have once those contracts expire, to be able to match our fleet size to what we have. What we have right now, even with the
retirement of the 700s and the E190s is that we still probably see there's further fleet moves left to match to where demand is. That's I think what we can say about that and just keeping our flexibility open. On the downside, more anything, just simply to adapt our fleet to where demand could be.
Yeah, what I'll add to that, Duane, is that we've always talked about our flexible fleet plans, and this is an occasion where that becomes very, very valuable. We have a large order for MAX 9, as we know, we can work with deliveries. We can accelerate, we can defer, as José mentioned, we can return leases or renew them depending on how demand behaves going forward. Right now we're making sure that we're protected on the downside. If things stay low, stay weak, we will have a fleet that can adjust to that demand, knowing that it's not very difficult for us to increase the fleet if needed, given the flexibility that's embedded in our plans.
That makes sense. If I could ask just if you have a baseline in mind as we think about 2021 and 2022 relative to 2019, how much smaller do you think the airline would be over that timeframe?
It's hard to tell right now. Very hard to tell right now because it depend on so many unknown factors. In terms of our fleet, our plan is to bring down our fleet to a number that's going to be in the high 70s, but some of those planes are going to be in long-term storage, depending on demand forecast. We can bring them out of storage at any time if demand improves. Again, we have the leases we can renew, we have the MAX 9 deliveries. There's plenty of flexibility there.
Got it. Just for a follow-up, in terms of reopening, which countries would you expect to reopen or what do you think your network will look like on that first kind of 10% that you're targeting in September? What data are you guys watching that gives you any change in confidence that this late August timeframe is the right timeframe and appreciate you taking the questions.
Right. Well, the right timeframe, I think no one knows that, to be very honest. We're going by when countries are lifting the restrictions, the flight restrictions. What I also mentioned at the beginning of this earnings call is that we have been approved to start flying, what we could call some sort of a mini-hub starting mid-August, the 14th of August. We're going to start serving 10 destinations. That's Miami, New York, Mexico, Ecuador, I mean in Ecuador, Guayaquil and Quito. We're going to fly Santo Domingo, we're going to fly Santiago, Chile, São Paulo, and I think Havana and San José. We're going to fly around 10 destinations mid-August. We're going to offer connections, connectivity among those destinations.
Even if the date of September gets delayed, just the fact that we're already offering this mini-hub starting in August, even though it's going to be, yeah, only a few percentage points, we can add destinations as the countries lift restrictions and as demand improves. Once we're up in the air flying with a small network, it's very easy to take it from there and just increase service as demand shows up. That's the plan right now.
Okay. Thank you.
Thanks, Duane.
Thanks.
Your next question comes from the line of Joseph DeNardi. Your line is open.
Yeah. Hey, good morning. José, can you talk a little bit about your expectations for non-fuel costs over the next few quarters as you bring back capacity? Then what level of capacity you think you need to get CASM ex back to 2019 levels, just in the context that you'll likely emerge from this a little leaner. Can you get back to 2019 CASM ex with a substantially smaller ASM base? Thank you.
Okay. I'll start and then I'll let José complement me. Maybe I'll start with the second part of your question. Of course, for an airline, it's very difficult to bring down unit cost to pre-crisis level unless capacity is up at a similar %. We're not focusing so much on unit cost on ex-fuel CASM right now. We're focusing mostly on bringing down our fixed costs, renegotiating contracts, making costs more variable than fixed, and of course, with two eyes set on our cash burn and our liquidity. That's our focus right now. We think we're being quite successful in doing that, which leaves us in a good spot for when traffic starts recuperating, whenever that starts happening. If I had to give you a number, we think that when we get to the 70% range of capacity, let's say of 2019 capacity.
70, when we're in the 70% range of 2019 capacity, our unit costs are also going to be in the range of what we had before this crisis, what we had in 2019, and that's going to be a result of the efforts we're making to lower our fixed costs, to renegotiate contracts, and to make sure that we can have the success we had before at a smaller capacity size.
Yeah. Joe, in terms of where we see these costs in the second half, I'd say, as Pedro mentioned, our focus is on fixed costs. I think where you add all that, it's probably going to be a 40% reduction versus baseline at the very least. Here we're talking about kind of trying to shed from the baseline most of the unnecessary fixed costs that we might have, and we're doing a lot in renegotiating contracts with suppliers and just simply getting rid of items that we don't need under a reduced operation scenario. I would say that's the range.
Super helpful. José, can you just update us, sorry if I missed this in your prepared remarks, but just on unencumbered assets and kind of your appetite to raise additional liquidity going forward. Thank you.
Yeah. We have around $300 million in unencumbered assets in the balance sheet right now. I think that from now, as you saw in July, we concluded our $105 million revolving credit facility. That has an accordion feature to it. I think we can expect that facility will grow as time passes, and I expect that to grow anywhere between $50 million-$100 million more over the next several months in terms of the availability that we will have for additional liquidity using that facility.
Thank you very much.
Your next question comes from the line of Matthew Wisniewski. Your line is open.
Yeah, thanks for taking my questions. The $66 million cash burn, am I understanding that's the average from September to December? Maybe you could share what it could look like under the 30%-40% capacity by the end of the year. Is it possible to hypothetically break even at that level? Is it not necessarily prudent to take that much cost out of the business given it impairs you going forward? Any thoughts on that?
Matthew, this is José here. Just to clarify, the $66 million monthly cash burn figure is for the second half of the year. It's the average from July until December of this year. With the estimates that we have right now, we still will be even under a 30% operational or 30%-40% range operation, we'll still be burning a figure of cash.
Okay. That's helpful. Quickly, can you remind us where you're at with Boeing as far as delivery schedule and the MAX? Should we just assume that that's still kind of in flux and kind of being negotiated with Boeing going forward?
It's still being negotiated. This is Pedro here. I should say that we have seven built but not delivered aircraft somewhere in Seattle. There's also seven, what they call [intemented aircraft], which still need to be built, but everything has been ordered. Maybe parts of it have already been manufactured by Boeing suppliers. It's to be expected that those 14 aircraft will be delivered, I would say, in the 18 months after the MAX starts delivering again. In that 18-month period, it is expected that we could be taking delivery of 14 aircraft, even though we're still negotiating with Boeing. That's not a given right now. We're still in the middle of those negotiations.
Okay. That's helpful. If I could sneak one more in. Just to understand, as you start up the operation again, should we assume that there's some one-time cost to bring aircraft back into service or restarting operations? Could there be a blip in cost as well as you kind of ramp things back up?
Nothing really that is major in nature. In any event, all that will be in the $66 million cash burn figure. There isn't really anything particularly significant in the restart.
Okay, cool. Thanks for the time.
Thank you.
Your next question comes from the line of Alejandro Vanacona. Your line is open.
Hello, panel. This is Alejandro. Can you listen to me?
We can hear you.
Thank you.
Good morning.
Hope everyone is staying safe. We have a question regarding the air travel restrictions. I know that you have a good relation with the Panama government. Based on your ongoing conversations, do you feel confident this time to restart operations by September 4th?
Well, the way we look at it right now is that this approval we just got to start operating mid-August, with this, you can call it a humanitarian mini hub, or it doesn't really matter, but we can grow that as other countries open up, lift travel restrictions, and as demand materializes. The September 4th restart date we have is not as critical as maybe a week ago, before we got approval to start operating in mid-August. Again, it's in a limited and controlled way at first, but we can build on that. It won't be that significant if the August 22nd restart date for Panama, opening date for lifting of restriction date for Panama gets extended, because we will continue building on this operation we're going to start mid-August.
Okay, thanks. A second question, if I may, regarding yields. Is it fair to expect lower yields as demand incentives? Thank you.
Yes. Alejandro, the expectation is that yields are going to be affected once we restart operations. I think ultimately, when you look at unit revenues in the restart, there will be an impact both on load factor and on yields, definitely, even with the lower capacity.
Do you have any kind of expectation on the magnitude of the potential yield?
I'd say that it's too early to tell. I think the data has still, I would say, not too much clarity in what we're seeing. Certainly, what we are seeing is that there is a drop, and it's going to be a drop versus what we had been seeing prior to COVID in terms of the yield environment.
It's going to be significant. It's not going to be small numbers. Right now, there's not enough demand to know for how long and how severe. It's just very hard to predict.
Okay. Thank you.
Thanks.
Just a reminder, analysts, please limit your question to only one. Your next question comes from the line of Rogério Araujo. Your line is open.
Yeah, thank you. Thank you so much for the opportunity. I know it's pretty difficult to talk about demand recovery at this moment, can you speak a little bit about the mix of passengers of Copa concerning leisure, corporate travelers, transit passengers, the main routes? What is your thought so far on what is going to be a sustainable drop in traffic? What is going to recover faster? Compare this to Copa's exposure. Again, I know it's pretty difficult at this moment, but I would really appreciate if you could share your thoughts so far. Thank you.
Yes. We actually feel that the way our business and network is structured, we're in a good position to deal with what's, of course, the most difficult crisis ever for our industry. I say this because our passenger is evenly segmented, or a third leisure, a third VFR, and a third business. Also our network. We have a vast, the most complete network, where also there's a combination of leisure markets and business and VFR. We expect VFR, visiting friends and relatives, to recuperate faster, probably followed by leisure. Business will reach a plateau. Maybe that won't take that much, but it's going to take maybe longer to go back to what it used to be. I think we can balance the fact that we have such a diversified market and network to just put more emphasis and capacity where it's needed most.
In any way, we will also have to adjust total size, and we're preparing for that also.
Very clear. Thank you so much. Have a great day, everyone.
Thank you, Rogério.
Thank you.
Your next question comes from the line of Victor Mizusaki. Your line is open.
Hi, thank you. I have two questions here. The first one is kind of a follow-up on the question related to the yields in this period that you need to reconstruct the network. I'd like to understand, I mean, I don't know if you can comment, maybe go in detail, but if you can comment about the pricing strategy. I mean, what are your thoughts at this time? If the idea is to, let's say, have a positive margin of contribution, think about cash and not necessarily on margins. If you can also go a little bit deeper and comment a little bit how your forward bookings look like today. My second question, which is related to your fleet. I mean, in this environment, with the jets and with the 737-700, if there are any plans to [turn on off] how to finance the aircraft fleet.
Okay, start with the first part, and then I'll let José address the second part of your question. I won't get into pricing strategy. We think that pricing strategy is probably going to be different post-crisis, at least for a while. We always strive to have the lowest cost so we can be as competitive as needed in terms of pricing and pricing reaction to our competitors. There will be lower yields as we mentioned before, and that's going to be a way of stimulating new traffic, even though we also know there are segments that will travel because they need to and not tied to pricing. We'll try to make the best decisions in what will be a new way of doing business, at least for a while. In terms of future demand, it's early.
We're talking about much smaller numbers than before, so it's hard to predict right now. Short-term demand is down 90%, and if we look, let's say five, six months ahead, it's down 75%. That's what we're seeing right now, and of course, our capacity is going to match demand, and it's going to get adjusted accordingly.
Victor, this is José here. In terms of aircraft financing, as Pedro mentioned before, we're currently in negotiations with Boeing for the MAX situation there. As Pedro mentioned, there are seven airplanes that are already manufactured, and once the return to service of the fleet starts at one point over the next 18 months, we expect to take delivery of a certain number of aircraft. For that, we are preparing. We're in the process of running an RFP for the financing, and so far, we've gotten good offers both on the sale leaseback side and also on the U.S. Ex-Im Bank guarantee side. There are attractive financing options available still for us.
Okay. Thank you.
Your next question comes from the line of Conor Cunningham. Your line is open.
Hey, everyone. Thanks for the time. On the $10 million cash burn improvement from 2Q through the remainder of the year, can you say which portion of that is better revenue than what's cost in general? I would think that the majority of it is revenue-related, but just curious if it just seems like you've achieved a lot of your cost reduction stuff already.
Yes, absolutely, Conor. The majority is cost related. I would say, call it six out of 10 is probably cost related, and then you are right, there's a minor portion, four probably, related to the assumption of restarting the operation.
Okay. Just a little revenue, mostly cost. Okay.
Yeah.
On the 10 markets that you're restarting in August, did you go to the government with the list of those 10 markets saying, "Here's where we think demand is," or did they come to you? Just curious on how those are determined overall. Thanks for the time.
Yeah. It's Pedro. Hey, Conor. The markets we pick, and if the markets are open, of course, that's kind of rule number one, the market needs to be open, and where we're seeing the most demand and need for travel, both out of Panama and connections. We can add cities to that list. The government is not really involved with that. The government's main concern has to do with passengers entering Panama, which they're limiting to Panamanians and residents of Panama, and that's what they will control. Otherwise, in terms of connectivity and cities, we have total flexibility there, and that's why I said before that even if Panama extends the closure past the end of August, our September 4th restart date is no longer so critical because we can grow this operation that we're going to start mid-August as other countries open up and as demand materializes.
Yeah, great. Thank you.
Thank you.
Your next question comes from the line of Michael Linenberg. Your line is open.
Hi, this is Kate on for Mike. We were just wondering, with the Avianca bankruptcy, are you reconsidering maybe your strategy in the Colombian operation? Adding on to that, can you just give a little bit of an update on Wingo, please?
I'll address the first.
Wingo please.
We didn't get the second part of your question, an update on what?
On Wingo, please.
Oh, okay. Okay, Wingo. Yeah, thank you. We're very careful in not assuming the weakness of others, even under a Chapter 11 procedure. We obviously have the assets. We have the aircraft. We have the team. We can be very flexible to take advantage of opportunities, but we usually don't jump the gun. Wingo has the fleet and has the flexibility. Their priority is going to be to put together the network they flew before the crisis, because they're not operating either. Colombia is closed until the end of August, so they're not operating either. That's going to be their priority, and since their operation is only four aircraft right now, we think that by the end of this year, Wingo can be very close to pre-COVID operational levels.
If there are opportunities, if any airline drops markets or struggles more than expected, they will have the capacity and the ability to take advantage of that. Right now, we'll probably be more reactive than proactive in that sense.
Okay, thank you. Then just for my second question, when you do restart your services, can you just talk a little bit about the safety measures you might be taking? Are you planning on blocking the middle seat? Anything along those lines?
Yeah. We've been flying humanitarian flights. In the quarter, we did over 80 operations, many of which had multiple stops. Probably around 200 flight segments have been flown in the quarter using our new biosafety protocols with great success. We haven't had any reports of issues with passengers or crews, we're very glad about that. The measures are, there's social distancing at the airport, extreme cleaning of the aircraft cabin, a reduced onboard service to limit the interaction between crews and passengers. Every passenger has to wear a mask inside the airplane and at our Panama hub also, other airports, depending on the own airport's regulations. On board, 100% mask, temperature check before boarding. The aircraft are modern aircraft, also have the HEPA filters, which are very, very effective in filtering 99.7% of particles.
We think we're offering quite a safe flight environment. Obviously, there's still a ways to go in terms of getting passengers confident enough. So far, I think we've done well in that regards.
Thank you.
Thanks.
Your next question comes from the line of Stephen Trent. Your line is open.
Good morning, gentlemen, and thanks very much for taking my question. I just had a quick follow-up. You guys mentioned your conversations with Boeing, that you're going to keep some of your planes in storage, and these kind of things. I'm just wondering, when I look at this, are you suggesting perhaps over the long term that Copa will lean towards owning its fleet as opposed to leasing its fleet? Maybe given your views about the asset risk of holding planes, and the financial advantages of owning versus leasing. Was just curious if I got that correctly.
Steve, this is José here. We historically have had a mix of owned airplanes versus leased airplanes. Our historical ratio has been two-thirds, one-third owned versus leased. I think that the definition, it depends on several factors in terms of what decision we make. It depends on just simply keeping the flexibility, the pricing on a particular moment in terms of the markets for financing. That decision gets made, I think, in each individual sort of campaign that we perform for the financing of each individual airplane. Always keeping a balance and trying to maintain flexibility. I think that the fact that we have had a portion of the fleet as leased has provided flexibility in the past. That's been okay. At the same time, ownership of aircraft has been much cheaper for us. I think it's a balance.
I would say that going forward, probably our preference is to own aircraft. It's something that we consider depending on what market conditions are at the time.
Very helpful, José. If I could just squeeze in one other quick one. I know it's been since 2005 when you guys acquired AeroRepública. Just to ask again, if given the massive dislocation in the space, that you see any kind of medium to longer term opportunities to buy a competitor?
Well, it's Pedro here. Stephen, good hearing from you. We won't comment on that specific question. We've always been very comfortable with the strength of our Panama-based hub model, that allows us to serve in a very effective way, all of the Americas. For that reason, we've never been in a rush to get into M&A transactions with other airlines in the region. The Colombia opportunity 15 years ago was very unique and has been very valuable for us. At the same time, we're always open. We're always open and willing to listen and consider. If those opportunities come along, we'll take a long and hard look at it.
Very helpful, Pedro. Thanks very much. You guys stay safe and healthy.
Thank you.
Thank you, Steve. The same to you.
Your last question comes from the line of Matt Roberts, your line is open.
Hey, good morning. Thanks for squeezing me on here. I'm filling in for Savi. Appreciate the color around the cash burn, and I apologize if I missed this. Could you talk about what you're expecting in terms of refunds reflected in that second half cash burn, as well as any differing assumptions between 3Q and 4Q?
Yeah. I'll stick to the second half of it, Matt. So far, we've seen the ticket reimbursements in the range of around $9 million-$10 million. I think that's a fair figure for the remainder on a per month basis.
Great. Thank you. Maybe lastly, in terms of the unencumbered assets you mentioned, the accordion feature on that revolving credit facility, does that impact that initial number? Or is that all embedded in that?
Yeah. Correct. If we draw on the facility, then of course, the level of unencumbered assets would come down. Just on the moment where we draw on it. Yeah.
Good. Thank you all very much.
Mm-hmm. Thank you, Matt.
Excuse me, presenters. No more phone questions.
Okay. Thank you all. This concludes our earnings call. Thank you for being with us, and thank you for your continued support. Have a great day. Thank you.
Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may now disconnect. Have a wonderful day.