Good morning, ladies and gentlemen. If everyone could start taking their seats, we will begin our webcast shortly. Thank you.
Tell me now, baby, is it good for you? Can you do, do the things that I do? I can take you home.
Good morning. Hi, good morning, ladies and gentlemen. First of all, thank you for coming. Thank you for joining us today on our 2025 Investor Day. So it is a pleasure to have you here. I see a lot of familiar faces, but for those who don't know me, I'm Daniel Tapia, Director of Investor Relations for Copa. And before we begin, I would like to extend a very warm welcome and special thanks to our distinguished guests that are joining us today. We are honored to welcome the Minister of Economy and Finance of Panama, Mr. Felipe Chapman, who will be providing a special presentation during our lunch session. Mr. Chapman is joined today by his spouse, recognized businesswoman, Mrs. Mónica García de Paredes de Chapman. We also welcome the Vice Minister of Economy of Panama, Ms. Eida Sáiz.
I also want to welcome and acknowledge members of Copa Holdings Leadership, members of our Board of Directors and valued shareholders, Mr. Stanley Motta and Mr. Carlos Alberto Motta. Well, let me show us a video to start the event. So before we start, a quick reminder: please refer to our disclaimer on forward-looking statements, which are included at the beginning of our presentation. Now, please allow me to briefly walk you through our schedule for today. So we'll begin with presentations from our senior management team. Following the presentation, we'll open the floor for a dedicated Q&A session. We will then take a short 15-minute break as the lunch buffet is prepared. And finally, we will reconvene for today's special presentation by Mr. Chapman, followed by a short Q&A.
So now it's my pleasure to introduce you to our first speaker, our Executive Chairman and CEO, Mr. Pedro Heilbron.
Gracias. Thank you, Daniel, and welcome, everyone. We love videos in Copa, so you may get a few other videos. But since it's New York City, the videos are going to be like really short. New York patience short. And this month, we're celebrating 20 years of listing in the New York Stock Exchange. Time flies. Many of you were with us back then and were part of our first investor days and investor calls and roadshows and all of that. And the most amazing thing after 20 years is actually that I'm still here. More seriously, we have changed for the better. And this is aviation. And one of you was telling me a few minutes before we started that it's not normal for aviation to have consistency over 20 years.
I must say that all the things we promised back then during that initial roadshow, we have been able to surpass. We're, of course, very happy and proud of that. In terms of our fleet, our fleet is three times larger than it was in 2005. Our revenues have increased sixfold versus back then. Our net income, much more important, is 10 times what it was in 2005. Even better, dividends are 34 times higher than back then, than 2005. We have consistently produced double-digit margins during that period, with the exception of 2020, of course, the pandemic year, and 2021, when we were coming out of the pandemic. Even in 2021, we had profits. In the last 20 years, our only negative performance was in 2020. Except for 2021, every other year, every other of those 18 years, we had double-digit operating margins.
This is 2019 and then the last three years, how we compare with our peers, the airlines. We don't compete with all of them, but some of the leading airlines, public airlines in the world. As you can see, Copa is at the top of the chart in terms of operating margins. What I was mentioning at the beginning, this is the 20 years since we went public. The lower margins, because the thing with this 20 years and the thing with being in aviation and the thing with being in Latin America is that there's always something happening. It could have been H1N1. It could have been the economic crisis in 2008 and 2009, or the really tough period Latin America went through from 2015 to 2019.
Those five years averaged like close to negative GDP growth in Latin America, plus currency devaluation and all the other economic factors that can happen in our region. Still, we had double-digit margins each one of those five years. And of course, by the end of 2019, we're back in shape, strong, facing a bright future. And then came 2020. But we did not waste that crisis. And we set out to come out of it stronger than before. And that's what we've shown the last three years. And we keep on working at it. During this presentation, you'll have the opportunity to hear from some of our key executives. And they'll go into more detail, and you'll be able to ask questions at the end. But I'll just give you a quick overview of our business model. This might be a little bit boring.
We understand this because it hasn't changed in nearly maybe 30 years, so it hasn't changed, but we try to make it better every year, and that's our focus. As I tell employees in the company, the day it needs to change, we'll be ready to change, to adjust, and we talk about it every year, but as long as it's the right business model for us, we're just going to work to make it better, and it has four components: geography, the best geographic position in Panama, serving markets that need a hub with low unit cost, and a passenger-friendly product, so number one is Panama's geographic advantage. It cannot be replicated. I mean, the world has the geography it has, and there's no more geography that one can, unless you take over another country, but we're in a unique position.
We're in the middle of the Americas, no pun intended there, by the way. So don't ask me about that in the Q&A session. So we're in the middle. We're in a perfect position to connect South with North, with Central America, with the Caribbean. Other cities or airports that might have a similar position are hot and high. Panama is sea level with good airport infrastructure. And this is something we saw over 30 years ago. We were faster off the gate. We established the first connecting hub in Latin America. For 10 years, we were the only connecting hub in Latin America. And we worked hard to maintain that 10-year advantage, head start we had at the beginning.
As you can see there, Panama, which is a small country, compared to some of the largest hubs and cities in Latin America, has an advantage in terms of cities served with international cities, not domestic. International cities served with nonstop flights, and also in terms of frequency, by the way, this includes other airlines. The 98 is not only Copa. It includes other airlines serving Europe and other cities in Latin America and the U.S. Copa itself is about 85 of those 98 destinations, then the second component of our business model, which is not always easily understood, is that we focus on serving small cities that can only be served through a hub.
In other words, about 80% of the city pairs, or the combination of cities that we serve or connect through our Hub of the Americas in Panama, have less than 20 passengers per day each way, which means that those cities cannot be served with nonstop flights. They need to connect in a hub. We're no longer the only hub connecting them. There are other hubs looking to serve those, and actually, in some cases, serving those cities. But we are the best option. We're in a best geographic position. We have more connectivity, more flights, and other factors like sea level that makes it easier and makes us more competitive. So this remains, after so many years, this focus on connecting small cities. We do have some large cities, of course. Like São Paulo to New York, that is not what we focus on.
São Paulo to Guadalajara, Mexico, or São Paulo to Guatemala, yes. Check mark there. Recent additions, for example, these are routes we have either started serving or announced in 2025 to Argentina, Tucumán and Salta. Most people do not know that there's a city called Tucumán in Argentina. Both Tucumán and Salta are now connected with nonstop flights to Panama. Los Cabos in Mexico, that's well known in the U.S., not as much in Latin America. Two additional cities in the Dominican Republic, Santiago de los Caballeros and Puerto Plata. We're going back to Santiago. We used to serve it pre-pandemic, and Puerto Plata is a new destination. It will be our fourth city in the Dominican Republic. Salvador Bahia is like our ninth city in Brazil. We're going back. We stopped serving it during the pandemic, and we're coming back in January, if I'm not mistaken.
Our third pillar in our business model is our cost-efficiency culture. If we had to summarize, besides building the network and making the network stronger every day, is there two things we're obsessed with in Copa which affect everyone? Because the network is a small team that spends time on the network. But something that everybody's involved with and we're obsessed about is on-time performance and cost-efficiency. And that's in our DNA. And we can see here since I have my glasses somewhere. I should be wearing them. But we see since 2013, but if we go back, we could go back further, how we've been lowering our ex-fuel CASM. And even coming out of the pandemic, we're one of the very, very few airlines worldwide that has been able to lower its ex-fuel CASM. And we've been guiding to further improvements in that sense.
And in the right hand of the graph, we can see how we compare, again, with our peers. Some we compete with, others not as much. But we're in the lower end, in the positive lower end of that graph. And we are in the low-cost territory, but with a full-cost product, or a full-service product, which takes us to the fourth element in our business model, which is a passenger-friendly for business and leisure passengers product. Number one is on-time performance. I mentioned we are obsessed with that. For the last 10 years, we've been the most on-time airline in all of Latin America. For most of those 10 years, we've been number one in all of the Americas, counting North America also. In 2018, we're number one in the world. Last year, we were number three in the world. And this year, we are on track.
Dan Gunn is here, our SVP operations, so you hear him, Dan. We are on track to close above 90%, better than the last few years, and I'll knock on wood because there are other airlines that are working hard here also. Hopefully, we'll end up the year also on top of the Americas, and Dan is our SVP operations, so when we're doing great, which is often, he doesn't hear much from me. When we're not, I call him, so we also have, and I won't get into details, but there are other things. We've earned a bunch of awards yearly, and we also have a full product in terms of what we offer in our cabin, but Robert Carey, our new executive VP, is going to talk about that, so I won't steal his thunder. Now let's look forward briefly. We think we have a bright future.
Not only because of Copa's business model, but Latin America, we think, has a bright future. Traditionally, air traffic has grown at least times two or times three GDP growth in Latin America. This is not a future prediction. This is what has happened the last four years, including the forecast for 2025. Excluding 2023, which was like coming back from the pandemic, there was a lot of pent-up demand. 2024 and 2025 and the forecast for next year has traffic growing at a little bit over times two GDP growth. One of the reasons for that is we have a young population. The chart to the left, we have a very young population in Latin America, very different to more developed countries. Air trips, you've seen this before.
Like in every Latin America investor meeting, they show you that air trips per passenger, how it compares to developed nations. That's really, to me, it's not very significant because the economic, the income per capita is so different that that number is obvious. But the good news, if we go to the right, is that income per capita is forecast to grow quite a bit in the next 20 years in our region, especially for the middle class and above. And there's more people entering the middle class. And at least in Latin America, when people enter the middle class, they buy a home, number one. They buy a car, number two. So public transportation is not great, even though in Panama, it's actually quite okay right now and getting better. And number three, they want to travel. They want to travel abroad.
So the numbers play in our favor. And we feel we have the fleet on order, the right fleet on order, a fleet that matches the growth opportunities we see ahead. We still have 46 Boeing 737 MAX aircraft to be delivered in the next four years. So about a little bit over 10, something like 11 to 12 aircraft per year for the next four years. And we feel that's right for the opportunities that we see in the future. But the Copa way is that we build flexibility into our major investment decisions, and in particular, fleet. It's the only way we get it past our board. It's a, well, our very important shareholder until recently, former board members here, Stanley Motta. Many of you have met him.
I worked for him and with him like my whole life, like two jobs and my whole life with him. He always asks one question, or many questions. But the first question is always, what if things go bad? How will we deal with the investment, or how would we adjust our plans? So if things go bad, we can take our CAGR, our ASM CAGR related to the fleet I just showed you, from 8.5% to 2.5%. And that's just by returning operating leases, sliding. We have sliding rights in our Boeing order, getting rid of our 737-700, which we're still flying, nine of them, only because there's enough demand. But the value of the engines is more than the engines and the airframe together. And we can park over 20-year aircraft or sell them. So we have easy ways of bringing down growth, aircraft growth.
And it is what we did in those five years between 2015 and 2019. And it's also what we did right after the pandemic, which we had to backtrack as fast as we could when we saw traffic coming back strong. So there's always a conservative plan B. We never jump without a parachute. And that's just Copa DNA, for good and for bad. To wrap it up, my part. This is not something we often talk about, not in our quarterly calls with investors and analysts. We never touch upon this. Every so often, we bring it to an investor conference. Our employee culture is the true secret sauce of Copa, which might not be as well understood outside Copa. And it doesn't matter because it's something very, very internal to us.
Number one is that we're extremely well aligned in terms of how we align our vision, our corporate vision with our yearly objectives and the employees' own objectives and the work they do. So we have a vision that we haven't had to change in nearly 30 years. We have a set of corporate objectives that we call our path to success. They change every year. Some objectives are permanent, like on-time performance. Others might last a few years. And many change every year, but always under the same four pillars. And the four pillars are fight to win, generating market share and revenues, achieve competitive or low cost. Then there's one about the customer, strengthen our product. And then the fourth one is working as a team, is the human side.
The work we do to make our vision objectives very visible with our employees is based on constant communication, including quarterly town hall meetings where I go personally with other executives to every department. It's 12 town hall meetings in two days. There is also the ability to connect remotely. That results in numbers from our annual climate and organizational survey with our employees, which we're sharing with you. I'll highlight two questions. One is, I understand my impact and my team's impact in our corporate objectives. The RAI is the Spanish for Ruta al Éxito, which is the path to success. 91% of our employees understand our objectives and how they and their teams can impact our objectives. This is 91% counting ramp workers, baggage handlers, flight attendants, mechanics, pilots, office workers, everyone.
They understand our objectives and how they can influence the achievement of our objectives. Then I'll also highlight the fourth one is, in my department, we understand how we impact our customers. 89% of our, again, baggage handlers, customer-facing handlers, agents, office people, 89% understand how their work impacts our customer. That's a great start for achieving our objectives and staying true to our vision. We also work very hard in developing new talent because Panama is four and a half million people, small country. We do not have the base of talent that you would get, of course, not like the U.S. or even Brazil, Mexico. Even Colombia is 10 times our size. We have to work a little bit harder to develop talent. We have our own pilot school, an aviation school. That one is subsidized by Copa.
High standards, started together with Florida Institute of Technology. High standards, but totally subsidized by Copa. The students pay, but they pay mostly for the instructors and the flight hours. And we subsidize pretty much the rest. Our mechanics school, it's actually free for the student. And we actually pay them to study so they don't have to quit because these are talented students coming out of public schools. Flight attendants, we graduate one or two classes every month. And then we do a lot of other things for management and executives. We have a leadership academy for those that are promoted. And we have other interesting activities. Lately, a lot to do with data and innovation and AI and things down that line. We also have a strong cultural recognition of celebration and recognition.
One of the most important things we do, of course, is the yearly profit-sharing bonus. Our success we share with our employees so they know that if we reach our targets, if we reach our profitability, it's profitability-based, there is a reward for them. So everybody pushes for low cost and all the other things we talked about before because there's something in it for them. We also have a monthly incentive for operational employees based on KPIs. So some of them might get this monetary incentive if we hit the on-time target or if we hit our net promoter score or our dispatch reliability in maintenance. Pilots even have communications with passengers when there's an irregular op and things like that. I won't mention everyone, but there's also for the employees that make a difference or are nominated. I have lunch with them every quarter.
And we raffle, I don't know what to call it, tickets or the right to go. Every new airplane we get from Boeing, we take a group of employees with their plus ones. So we do that raffle during those lunches. And then all the other awards we celebrate, Skytrax, Cirium on time, and all of that. And we're always striving to be one of the best places to work. And this shows our turnover. Copa turnover last year was just 4.5%. For executives and managers, our turnover was only 3.7%. And the picture shows some of the other things we do, like the employees in Seattle receiving a new plane. A lot of them. It's not just a few. It's a big group. And I'll also highlight the activity on the upper right corner. We actually have health clinics for our employees.
So they don't have to go stand in line for the whole day at a social security clinic. It's great for them. And it's also good for us because we gain productivity. They don't have to lose the whole day. So it's a win-win and highly appreciated. So in summary, I should allow the others to share even more interesting information, hopefully. But 20 years delivering value to our shareholders, still a simple and well-focused business plan. Well, I should never say never, but there haven't been any surprises in all the meetings we've had because it's just the same, but hopefully better. A very strong corporate culture that I just shared with you. And this expectation that travel demand will remain strong in Latin America for the coming years, and we should be prepared to take advantage of it.
So with that, we have Robert Carey, our Executive VP.
Great. Good morning, everybody. How's everybody doing? Good? All right. So as you saw just before, Pedro highlighted the slide showing the very low turnover. Luckily, there has been a little turnover so I could get a job. But by means of introduction, I'm the relatively new kid on the block, so I'll introduce myself at least because I haven't met most of you before. So Robert Carey, I joined Copa just over a year ago, moved to Panama with the family, and very excited to join Copa. I've obviously known the airline for a long time. Prior to Copa, I was three years with Wizz Air in Europe as the president of Wizz Air. Before that, four years at easyJet. Also spent three years at Delta.
And then I was also 11 years in McKinsey as a consultant, working with about 25 airlines all over the world in 11 years. So I've, you might say, a bit of a passion for the space. My job here at Copa, because again, that's also been a question I've gotten quite a bit, I oversee commercial operations, Wingo, and cargo. So what I thought I'd do today, I'm going to take you through the commercial elements. Pedro highlighted quite a bit of kind of the overview of the key points. But to keep it interesting, Pedro said, "We love videos in Copa." I thought, rather than me droning on first, let me show you a video. And I think this video will show you a lot of the elements that I think are really unique in what we bring that give us such a revenue advantage.
Sientes que volar ha perdido su encanto. Elige Copa Airlines. Great. So obviously, that was an ad specifically from Colombia, hence why you have the 11 destinations of Colombia. But I think what it highlighted in there, and just what we'll talk through a little bit, is, as you heard Pedro point out, we have a leading network connecting many other points that no other airline is able to connect. Our product is region-leading in what we bring with business class every flight, a very generous economy class product, a hub that works very well and is simple and seamless for the passenger, a frequent flyer program, etc. And so we'll go through all those elements as we go through. But I thought that was a pretty good overview to start with. All right. So first things first is just to lay the stage.
You saw the same chart, but now in bigger numbers. So this goes to show you where our revenue position is today. And as you can see, our PRASM today is equal roughly to LATAM. This is obviously stage-adjusted to our average stage length, significantly higher than what you see going on on the left with the LCCs. Clearly, there's a gap. I mean, I think Latin America is a different market than the US. So we're very happy with the position we've got in what is a competitive market in Latin America, with many of our competitors growing at significant rates. Now, the question that often comes, and we'll talk a little bit about it, is, is this sustainable over time? And we'll give you the factors behind it.
But I think one thing I would just call out is there was a note last week from Savanthi Syth at Raymond James. And to the point of our low-cost nature, we didn't put it in because we didn't want to pay a commission structure on it. But if you go back and look at the chart on your own, what you'll see is that over the last 25 years, in every year that we've grown capacity, and we've grown capacity almost all of those 25 years, there are only seven years where we grew capacity, but we did not increase RASM in the same year, excluding COVID. So we'll keep that aside. But I mean, that's a pretty impressive stat that you don't see often around the world, is the ability to deliver both capacity growth and at the same time, unit revenue improvement.
And so we think that puts us on a very unique plane. And let's talk a little bit about how we're able to achieve that. And it kind of comes in four strengths that sit at the core of what we do. And we'll go through each of these now. One is around the network. Copa today, we have a leading network. We still have a lot of growth of what to go do. I'll talk through in more detail what drives that network and why we're able to create that unique network. Two is the product. Three, we'll talk about as well as the direct customer relationship. And going to that, we've talked a lot about in the last two, three years, our distribution strategy and how direct we've gone and the cost benefits we've achieved.
But it has an equally important benefit on the customer side in that we've now managed to bring most of those customers to have a direct relationship with us, which offers unique advantages. And then fourth, we still see a lot of opportunities where we can grow unit revenue and new opportunities to extract additional value from the customer. Okay. So going into our network, Pedro already highlighted the seven new markets we've added in the last year. But I think those seven new markets really show the power of what the hub brings. And so I won't go through all of them again. But I think let me walk through an example of one, which was San Diego, which we launched in June. I figured most everybody here will know San Diego pretty well. Obviously, a top 10 U.S. market. It's in the top 40 airports of the U.S.
If you looked at it before our entry into San Diego, the only international service out of San Diego going southbound or the farthest southbound you could go internationally was Mexico City. That was as far as you could go. When we've now added in our service into San Diego, the first thing is we brought online 44 connections over the Panama hub, and when I say 44 connections, we're not talking about connections where you go all the way back and where a connection between San Diego and Atlanta over Panama. These are legitimate connections where we have an efficient routing to get passengers between point A and point B, and the second point that I think is interesting, back to this point we talked about of the size of the O&D, so San Diego is obviously a large market.
But if you look at it, out of the top 20 origin and destinations or points that we serve from San Diego, 18 of those points have less than 20 passengers per day. So again, it's not that we're carrying large trunk flows of passengers, as Pedro said, New York to São Paulo. We're connecting San Diego with Belo Horizonte in Brazil or San Diego with Manta in Ecuador. These are points that are very small flows, each one of them, but with the power of the hub and the 85-plus destinations we can bring, we can make these markets work. And we have a track record of making these markets successful. So if you look back since the pandemic, we've launched 22 markets. Of those markets, we've only exited three. Excluding Venezuela for the moment, that's a separate issue.
But where we've voluntarily left because we didn't see the economics working was only three. So it's not that we're again, this is back to the Copa nature. When we bring a market online, we are usually very, very confident that it's going to deliver as a market and we're going to be able to ramp it up and add it into our network. And then if you look as well, I think sometimes the question comes up, well, how are you able to digest such growth? So looking at the growth we plan for next year for a second, we've shared the guidance, which is we're going to grow between 11% and 13% in the ASMs. Now, of that 11% to 13%, 90% is simply the annualization of what we launched this year, so the full year impact of 2025, and additional frequencies into markets we already serve.
I think hopefully what will give you some comfort there is we announced our load factor today for November. We operated with a load factor of about 87%. Now, obviously, an 87% load factor is a high number that it means that we're operating a lot of flights that are full. Of course, there are going to be some flights that are going to always have lower capacity. This just goes to show the opportunity we have of adding capacity into our markets and absorbing that capacity. To show you why those frequencies work so well, to give you a sense, so if you look in that 50% that are getting additional frequencies, as an example, we have 33 markets today that have one or fewer flights per day, so indicating they may have two, three, four frequencies a week.
22 of those markets are getting an additional frequency in 2026. So again, we're adding capacity pretty much in line with demand. It's much better for the passenger. They now have more days of the week they can choose, so they can adjust their plans, and that gives new benefits and new passengers we can collect. And then as well, it improves connectivity in the hub because you're increasing those connections every day. So it's a multiplier effect as we bring it in. And we have plenty of room to keep this model going. As Pedro said earlier, I think we will change when we see the model needs to change. But the question comes, well, will we be able to see that growing?
As I like to think about it, I usually break it down into what potential exists in our markets and in our network, and then do we have the infrastructure to really make it work? So on the left side, what you have is, as I pointed out, 50% of our 85-plus markets today have one or less frequency per day. And so just think about your average routes here, U.S. or any city that's of medium size. You really want to scale those markets up beyond one flight a day. So that just goes to show the power and potential of just adding frequencies into markets we already have. And two, you'll see there we have what we put here. There's about 30 markets that we consider Copa ready. And what we mean that you heard reference earlier, we have a small network planning team.
When we go through the process every year of looking at markets, they come with a starting list of markets that they feel are ready. And I think if we had infinite planes, we could start most of those 30 markets relatively quickly. So it's really a process of narrowing it down to what's going to be the best choices each year. And that's how we get to the stat I shared earlier of launching 22 and only stopping three. So I think that goes to show we have lots of points in the network we can bring online. And coming to the infrastructure, I think the minister will talk a little bit about it later. Dan will also cover it in the operations section.
But just to give you a sense of where we are today in the hub in Panama. The first dimension we think about is around the runway capacity. How many arrivals and departures we can take. Today, we still have about 40% capacity that we could increase above where we are right now. I think that's something like if you were to play it out over the hours of the day of operation. It's like 1,000 either arrivals or departures you can take or 500 of each. That's not a limiting factor. To give you a ballpark today, we do somewhere in the neighborhood of 350 flights per day. If you think about gates, which is obviously the other key infrastructure element, we do have plans. There are plans to increase gates over the next few years.
So that's why we've put in here based on the current growth plans. But with those growth plans, again, you have about 25% available capacity. And so if you're trying to convert that into a number that may be more meaningful to you, 25% if you play it out over the course of the day means we could add somewhere in the neighborhood of 300 more flights than we do today, 300 more departures. So that's, again, roughly doubling the operation that we have today. So I think we feel pretty comfortable with the current plans in place, and especially a lot of we've had some really good support from the government in helping execute these. We have plenty of infrastructure left to grow. So that covers the network. I hope that gives you a sense of why we see it delivering, how it grows, and why we see potential.
Let's talk a little bit about the product. So again, I think we're very proud of the fact, and as you saw in the video, we have the only full suite of premium products on every flight we operate every day, and let me tell you a little bit. How many people have actually flown on Copa? Okay. How many of you? Pedro, I'm glad to see your hand went up. I was a little worried. In 37 years, if we didn't get him, we were in trouble. How many people have tried the Dreams product? Okay. That's much smaller. Okay. So let me explain to you what the Dreams is. That's a picture on the left. The Dreams product. You've seen a lot of talk from other airlines around the narrow-body full-service business class with a flatbed business class. This is one of the originals of the model.
All right? So we launched this around 2018, 2019, give or take. And this is, again, it's a business class cabin. We have two configurations, 12 and 16 seats, but it is a full flatbed business class product. And we target it mostly in markets that are six-plus hours. There's a few exceptions in other places. For example, all of you here, yes, it does fly to New York, guaranteed once per day. Sometimes you can fly another flight. So book your next Copa flight with us or next flight with Copa, and you can try the product too. And really, again, this is a product designed to bring on those long flights where we know we have passenger demand. And where many other airlines might fly a wide body, we're coming in with a competitive business class product.
But then we also have in the second column the non-Dreams markets where we offer in every flight a dedicated business class cabin. So like you would see in most U.S. carriers, these are not European. We have three seats, and we only sell two. These are dedicated business class seats on every flight. We also, on every flight, offer an Economy Extra section. So these are the first between three and four rows of the cabin. Each of these seats have 38-39 inches of pitch. So it's an economy-plus product than what you're getting. And you get to board early. You have the cabin space, etc. And then for all our passengers in every seat, we have an industry-leading pitch or region-leading pitch at 30-31 inches. Every seat reclines. Free food and drink on board. You can still bring a free carry-on.
We have a form of entertainment on just about every flight, and by the end of 2026, we'll have it on every plane, coinciding with our densification product, so I think, again, we bring a product that is unmatched in the region. The good news is we've converted that more than just sounding good into actual premium revenue growth, so keep in mind, I mean, Panama. I've been there a year now. We're really enjoying it, and it's a great market, but it's not a market that is the size of, let's say, New York City or London, in terms of the amount of people that live there and inherent demand, and especially premium demand, so if you look at it, we're pretty excited to show if you look between 2019 to today, we've actually managed to grow our premium revenue share by 22%.
I mean, obviously, this is much bigger if you put it in absolute numbers of the growth. So this is of the revenue that we're bringing in, we've grown it to now where almost 40% of that revenue is premium revenue. What drives that? One is going to be the Dreams product that you saw earlier, which has allowed us to really start playing in a normal business class pricing and product on some of the key trunk flows. Two, we've launched a number of products. We'll talk about ancillaries around upgrading and how you can purchase upgrades. Three, our Economy Extra. There's still potential there to go, but again, that allows us to bring in another source of revenue.
Then I think the other piece, which Dan will cover a little bit in the operations section, is around the service elements we provide with our crew and execution on board. So again, we're pretty excited about what we've managed to do there, and we expect that to continue going. Now, the third element I talked about was the direct connection we have with customers. And as I said, over the last two to three years, I think we've shown you the chart on the left, which is how much, as we've managed to move our distribution to become direct, and we're now at 89% direct. We've managed to significantly lower our cost of sales and distribution, so in the order of 30%. Obviously, that's a huge benefit in what we're doing from the CASM perspective and our CASM mindset.
But I think equally important and almost a hidden gem of what we went into with this migration is that we now have a direct relationship with 89% of our customers. And that's a pretty powerful stat. If you think to any sort of retailing or merchandising environment, the fact that you now can offer your product directly, we're not going through the GDSs to 89% of our customers, is incredibly powerful. We communicate with the customers. We describe the products. We can bring other products online. We can market directly to them. And so again, at the end of the day, we own that relationship with them, and we can grow that relationship over time. I think we have a lot of potential, let's say, of what we can still go do over here.
So we're very early in this journey, but again, we see it as something unique we can continue building on, which is why we see a lot of potential of where to grow revenues going forward. So I mean, we have ticket revenue, and ticket revenue has shown good appreciation. But also, obviously, there's been a lot of growth in ancillaries around the world. So Copa is no exception. Over the last five years, six years, we've managed to increase ancillaries at a 34% CAGR. To put it in perspective, that's compared to ASM CAGR of 4%. All right? So quite a bit of gap. We've had a number of wins there. You can see on the right a few examples. We've done a lot around seat assignments and how we allow passengers to choose and pay for their seat assignments. Upgrades I talked about earlier.
We launched new products around instant upgrades and your ability to buy an upgrade from your seat. And then as well, bags and bring online baggage revenues and how we adjust pricing to best match customer demand on that. But I think the exciting thing too is there's still a lot to do. If you were to look, you can look at any one of the industry sources and compare our ancillary revenues today versus U.S. carriers or even European carriers. We sit at roughly about half the percentage. Now, again, we don't have the loyalty program yet that other airlines do. So a lot of that exists there. But that just goes to show you how much upside there is.
To give you a sense, I mean, what we see as things in the pipeline, we still have a lot of work to do around merchandising and how we present things to the customers, how we do A/B testing. Two, if you think about fare families and fare bundles, today we have three to four relatively static products that we bring to the market in fare families. We want to create new bundles and better customize those bundles to the markets we fly to, which we don't do yet. We also have the opportunity to expand our fare families. And then as well, a lot of additional work we can do around the algorithms we use to price and bring products to market. Another area of growth has been ConnectMiles.
I think most of you know the history here, but as of 10 years ago, we didn't have a frequent flyer program. We were part of MileagePlus with United, which was a vestige back to OnePass with Continental. We created our program back in 2015. We just celebrated our 10-year anniversary this year. And it's pretty impressive if you look at the statistics. Over the last 10 years, we've grown from nothing to 5.1 million members in the program. That's a CAGR of about 30%. And then as well, so that's creating the loyal relationship and a direct relationship with the customers. But then as well, if you think about what we can do, obviously, I think you are all familiar with the opportunities in terms of new programs you can bring online with frequent flyers and selling miles.
We've managed to grow our mileage sales to partners by a CAGR of 20% over the last five years, so again, lots of opportunities of what we can bring. If you look even today in ConnectMiles, we still have a number of markets where we don't yet have a credit card partner that we want to bring online. We think we can use the frequent flyer program to continue growing our premium revenue base and what we offer there, as well as more opportunities, for example, around redemption and making a currency in the program that is more liquid, so customers have more incentive to earn and earn in any sort of transaction they do, and the last piece I'd talk about in potential is unique products we continue to innovate with, so this is the piece we've talked about.
We mentioned it, I think, on the call a couple of times. It is the Panama Stopover program. This is a program that we've launched together with the Ministry of Tourism and with PROMTUR. Basically, the design of the program is that if you're flying through Panama on a connection, you can add a stay in Panama for anywhere from one to seven days with no difference in your fare, so for free. It is very much a win-win program. It creates more awareness for customers of Panama. It helps support priorities of the government, local businesses, and growing the tourism infrastructure, which obviously is one thing we want to do and is beneficial to us. In the competitive world of airlines today, it gives passengers just another reason to come choose Copa. To put it in perspective, this will be very close to 200,000 passengers this year.
That equates to almost 500 passengers per day taking advantage of the program. And again, we think it's another unique offering we can bring. And because I've got the commercial part of this presentation, I'm going video heavy. And we're going to give you one more video, also because this is going to entice you to come visit us in Panama on a stopover when you try the Dreams product. What if I told you that you can enjoy Panama and another destination for the price of one? With Panama Stopover, you can explore a vibrant colonial city nestled within an astonishing metropolis, where locks open to reveal unique traditions. And you can wear brand new shoes while wandering through ancient stories. Here, you can have breakfast in the Caribbean and lunch by the Pacific, all in the same day. Panama has everything very close.
With Panama Stopover, take a break on your next journey at no extra cost on your ticket. Two destinations, one fare. Great. This also is how my family and I have created the to-do list of what to do in Panama. So look, in summary on this section before I hand it over to Dan, hopefully, the points are fairly clear to you on why we think we have a very compelling revenue story with our model. One, we have an advantage network in that we can bring online lots of destinations that are unique that we can serve because they are small, and we can grow and leverage the power of our Hub of the Americas. Two, we have a full service, full product suite on every flight that we fly. And that, again, that is a unique offering in our region.
We're the only airline that offers it on every flight. And two, it really allows us to then customize better to the customers that are going to be on board and what they want to choose. Third, we have a direct customer relationship, which allows us to merchandise, and a lot of potential of what we can do over there, which will create the growth and upside of new revenue sources we can bring online over the next few years. And with that, let me hand it over to Dan.
Thanks, Robert Carey. And good morning, afternoon. I'm not sure what it is. It's right at afternoon to you all. Good to see some old friends. Not that you're old. Friends from a long time ago and some new faces. It's amazing.
It's been 20 years, and I'm seeing some people that have covered us or been with us, actually, in the IPO right from the beginning. So welcome, and thanks for spending a little piece of your day with us. Savi asked me at the beginning, "What's new?" The good news is not much. We're still killing it, and we plan to keep killing it. So that's the baseline. If you want to go to sleep now, if you already know the story, you can. First of all, we have a consistent history of really, really solid operational performance. Year after year after year, we put up great numbers. We'll talk about that briefly. We keep getting recognized for our service, but it's never enough. One of our values in Copa is continuous improvement.
So we're continuously trying to innovate and figure out better ways to serve our customers at reasonable expense, at reasonable cost, because the other part of the model, as Pedro has mentioned several times already, is always working on driving efficiencies. We talk a lot about CASM ex-fuel. I'm going to briefly touch on some of the things we've been doing with fuel. There's a lot more to do with fuel. Fuel is really expensive. It doesn't seem to be going away anytime soon. Hydrogen isn't real yet. Electric doesn't fly very far. So we are always trying to figure out ways to be even more efficient using fuel on our aircraft.
And then finally, as was already alluded to, we really think we're well set for future growth as well, both with the infrastructure and the growth of Panama itself, and also some of the things we can control internally, especially in the area of maintenance, which is a real challenge for most airlines right now. So three graphs on the slide here that show some very key operational metrics for airlines. First of all, on-time performance. As Pedro mentioned, we're well set to finish the year above 90% arrival performance. I don't believe he'll stop calling me until we get to above 100, but we're working on that. So I'm working on it, Pedro. We're going for 101 next year, okay? No, we'll end above 90. We're really well set to do that this year. It's been a good year.
Completion factor, the percentage of flights we don't cancel, also in the top probably 10% of airlines worldwide, maybe 5%. Customers can rely on the mission getting completed when they book a Copa ticket, and then the bottom right is the contribution of our maintenance organization to that reliability, and if you look at Boeing charts or Airbus charts or anybody's, but specifically, look at Boeing charts for the 737 family, Copa is always right there in the top 10 worldwide in terms of dispatch performance. And obviously, that leads us to being recognized both by Cirium and previously OAG. They no longer publish their punctuality league awards that they called them, but Cirium, as Pedro has already mentioned, recognized us year after year. This is an independent organization that is totally data-oriented. There's nothing made up here.
Copa just puts up the numbers that put us at the top of Latin America, the Americas, and in the top, usually top 10 in the world year after year after year. Skytrax, a well-known organization that predominantly focuses on the service side of the business, again, has recognized us many years for excellence in service and specifically for excellent staff. Then to the right, there was on one of Pedro's slides, but Condé Nast Traveler is a high-end travel magazine. I guess magazines still exist, at least online. But that was a surprise a few years ago. 2023, out of the blue, literally, we got this award that they had recognized us as one of the 15 best in the world and with some pretty exclusive company. Then Apex, the last one I'll mention here. Apex gives star ratings to different airlines.
We've been a five-star airline a number of years in a row now, and again, I think the most important part of the slide is not the specific logos. It's the number of years they keep showing up, so the story of Copa is a story of consistent, long-term performance year after year after year. I won't read all these. We don't talk about NPS publicly, but our customers say nice things about us. We give them the opportunity to say bad things about us too. They tell us what we can fix, and we listen very carefully, but our NPS is right there in the levels of the best airlines in the world. Some specific passenger comments. I just grabbed four kind of representative ones. Again, I won't read them, but they talk about themes like it's like the golden age of air travel again.
On time, people are friendly, people are nice, people are empathetic. They're trying to serve me. There's actually food, my seat reclines. So we've already touched on some of those points, but people are really the bottom line of the story. It's people serving people, and that's what Copa does, I think, really well every day. To Savvy's question, this is not 100% new, but we are continually trying to evolve, always with an eye on cost. So our drive is always to be the most efficient we can possibly be, producing the product we think our customers want from us. And specifically in the area of digital tools, we've brought more and more in-house. It gives us more control of the costs. It gives us more control of how agile, how quickly we can adapt to customer needs. And we've rolled out some neat new things.
None of these are earthshaking and the first one in the world to do it, but they're all things customers really need and want to make their travel experience more effective. So things like pushing upstream, pushing out of the airport, more transactions, being able to scan your passport before you get to the airport. So when you get to the airport, you go straight to your gate, and you're already validated, and you don't have to see anybody paying for your bags in advance so that the transaction at the airport is quicker. Again, trying to pull that friction out of the airport experience. Our mobile app, developed 100% in-house, has won the Webby Awards three years in a row, or has been recognized by Webby, been nominated in the awards process.
Again, not for earth-shattering things, but just for providing really good quality service to our customers on basic things customers need, like knowing where their bags are, like being able to make changes if something changes in their travel desire, being able to make that change on the web instead of calling or on their app instead of calling the call center. And again, we continue to unlock capabilities within the digital environment, be it the app or be it the website, which has two benefits: customers in control of their journey, and the second thing is it reduces call center and other costs to service those customers. So it's a win-win for both the customer and for Copa. And we continue to push really hard on notifying, keeping customers updated continuously throughout their journey on what's going on because traveling is, by nature, stressful, and things do change.
I'm going to switch gears here and talk about fuel for a moment. Obviously, the max performance is an important part of our fuel conservation story. The maxes have allowed us, the increasing percentage of maxes in the fleet have allowed us to reduce our fuel burn per ATK. A few of you may understand that if you're real industry geeks. If you're not, it's a simple way to measure something like fuel burn per block hour, but holding a bunch of other elements constant so you can compare over time more effectively based on payload and a few other factors that can skew the numbers.
So 8.1% improvement since 2021 and a clear path to keep going to achieve more, partly because of the MAX, but also because of a number of specific actions taken internally by Copa and/or in conjunction with our service providers, be they the airports or ATC. Another specific example, we've pushed down APU. APU is a little jet engine in the tail of an airplane that keeps the airplane cool when you're boarding, for example. We've pushed down that consumption by 21% since 2022. That's just basic blocking and tackling every single day, staying on top of the airport authorities to make sure that their services that are at the gate work so you can plug in the airplane and not have to keep your APU running.
Real-time alerts, a little tiny team of data analytics folks in my area has built real-time alerts that allow an airport manager to see that an APU has not been turned off when it was supposed to be turned off and send somebody to turn it off. So it's just attention to a lot of little details that add up to pennies, that add up to dollars, that add up at the end of the day to many, many gallons of fuel burn. The third bullet there, really, really solid work over the last one year plus with the leadership of air traffic control in Panama and with the airport and with Copa, the three parts working together on increasing efficiency in the air traffic management of Panama. There's also a process going on right now.
There's a public bid out right now for a complete redesign of the airspace of Panama, which will push this even further. And that hard work, a lot of hard work, monthly meetings, and a lot of detailed work has driven down taxi-out times by 6.9% in the hub. And that's just waste. Taxi-out is pure waste. So it's pulled that down. That's fuel burn. That's time for our customers. That's savings from every angle. And it's also reduced by about 5.3% the track miles, the distance spent inside of the airspace of Panama, kind of getting through that last 40 miles to the airport.
Just visually, for the non-pilots, non-aviation geeks in the room, visually on the right-hand side of the screen, what you see is a year and a half ago what the average arrival into Panama, flying in from the north, looping around to the south, and then landing towards the north at Tocumen, what it looked like before and what it looks like now. You can see that the amount of time that that little green line spends in the air is significantly reduced. Again, that's fuel burn. That's CO2. That's efficiency. Also, it's less variability than there was in the past, which allows our on-time performance to be more solid. We're never standing still. We're fiddling with testing, I guess is a nice way to say it, a bunch of new things.
We're bolting on some finlets on the five airplanes, and we'll be testing those starting early next year. They promise a pretty interesting fuel burn reduction on 737 NG aircraft. We'll see how it goes. If it goes well, we'll add them to the rest of the aircraft. Also looking at a fuel analytics tool. We do a lot of fuel analytics in-house today, looking to take that to the next level, and we have a test starting early next year. And also a couple of other technologies in the cockpit that will allow our pilots to be more efficient on specific flight paths and altitudes. Just a couple of quick examples of how we're using data and analytics. One is very hidden behind the scenes, in-house development. It's called Tango R-Opt. Tango is what we call drivers on the ramp in Panama.
These are the guys that drive the little tractors that make sure that your bags get either to bag claim or to the airplane if you're connecting. There's a lot of logistics that go into that, as you can imagine. Historically, it's been a very static process. Now using real-time feeds, knowing how many passengers, how many bags on each plane, where they're all going, and knowing the specific arrival and departure times of each of those planes, which all of that changes over time during the day. Using an internally developed model, we're able to be more efficient assigning drivers, actually saved a few drivers, be much more efficient ensuring that we get bags to the right place at the right time so they make their connecting flight and don't cause a delay.
And that has led us ultimately to saving about 5% or about a 5% improvement in missed bags, which missed bags, apart from the economic impact of having to then get the bag to the customer, it's a disservice to our customer. So again, just another example of all the little things we do day in, day out that as customers, you may never see, but are going on behind the scenes and every day now, more driven by data and analytics to make the experience more reliable and more effective. And then Connection Saver is a vendor product. It's a vendor tool that, without going into all the details, allows us real-time to see what's going on with every single flight, what passengers are in jeopardy of misconnecting. Panama lives on connections. The hub lives on connections.
Roughly 80% of our traffic is coming to Panama to connect or to enjoy stopover now and growing. But we don't want them to have an unintentional stopover. We want them to make their connection and get to their final destination as purchased. So Connection Saver allows us real-time to see who's in jeopardy and to make better decisions on hold or not hold the connecting flight based on what's going to happen, what the downline effect of holding or not holding that flight is. In the example to the right, there's going to be a 13-minute misconnect.
If we hold a flight 13 minutes, based on being able to see real-time the flight plan for the connecting flight that's going to fly a little faster because it's got a tailwind today, and knowing how long that airplane has to flip in the station, and knowing there's 5 to 10 minutes more than it actually needs to flip in that station, I know I can hold this connecting flight 13 minutes and not affect the 160 passengers that are on the inbound back into Panama with that same airplane later. So it just allows us to pull a lot of data together and make a decision any human being could make if you only had one airplane. But once you have a certain amount of airplanes, it's just too much to try to figure it out on the fly with real-time data.
So a lot of really cool stuff going on there. Tocumen. We're going to hear a little further at the end of the day here of the ministers talking about Panama and about Tocumen specifically. We're doing really well with Tocumen right now. There's a lot of good stuff going on in Tocumen. The airport is being well-managed right now. There's a lot of important maintenance projects going on. There are growth plans that are real that are being put in place. Terminal 2 opened in 2022. That brought 20 new gates online. We currently have 53 contact positions and 12 remote positions. So a total of 65 places to park airplanes in the peak moments of the day. Again, really important projects going on.
A complete resurfacing and lifetime extension of both runways in Panama is a real project that is already bid out and has been given to a vendor and will begin early next year. That will extend the life of those runways. And also, as part of that project, will allow us some additional high-speed exits, which, again, increase capacity in the existing two-runway infrastructure. And also, there are some specific apron infrastructure projects that will allow more agile ground movements and therefore better use of the two runways that already exist. Runways are really expensive. Panama will need a third runway. But the longer we can defer that need, the more one, we can prepare for it well, and the secondly, the more cost-efficiently we, as a country, can run the airport. There's a 10-gate expansion that's being discussed and hopefully will be bid next year.
The plan is to build it next year. Could be 10. It could be a little more, but 10-plus gates. And that will take us through about three years of construction to having at least 75 positions at the airport. Could be more again. And there's also plenty of space. The other thing we don't talk about here, but it's super important. The Panama Airport is not landlocked. Unlike the vast majority of airports in the world, it doesn't have a bunch of houses all around it. There's a place for the airport to grow, and that's super critical and super important. And then airside and terminal enhancements, the ones I've just mentioned, the gate expansion, etc., and a future gate expansion as well. There's space, and there's a plan that will allow us to accommodate 10-plus years of growth.
We think at that point, then the third runway will become necessary and a bunch more bigger infrastructure. We have a really effective, as I mentioned at the beginning, a really effective working relationship right now with the Tocumen management team, the AAC, our version of the FAA, our Civil Aviation Authority team, and Copa. A lot of coordination on the growth plans and what needs to happen when so that we are not spending money on infrastructure before it's needed, but at the same time, making sure we keep up with the growth. Then the last, I guess, future-looking comment here, it's past-looking, but it's also future-looking. A lot of airlines are very concerned, as they well should be, about maintenance costs. Maintenance is a huge expense item for airlines. It's an expense item that's difficult to control.
Post-pandemic, the big vendors, the big OEMs, they call them, have raised costs significantly. They're struggling themselves with supply chain issues, etc., still. So we feel like we're very well set to grow with at least cost stability. So Copa, as we've talked about in prior years, and I think a number of you have actually been to see our hangar in Panama, invested in our own hangar capacity a few years back. We are currently pretty much full on the three lines, three heavy check lines that we built. Picture doesn't show it. Usually, that hangar has three-plus airplanes in it. But we did this past or this year, we're still this year, 26 C-checks. That's about 74% of our heavy checks this year. The rest went out.
When we send them out, they cost a little bit more, but it doesn't make sense for us to build to the peak. So we're now to the point where we have a plan to add three more bays, a paint hangar, and then obviously all of the supporting shops on an ROI basis. If the economics make sense, we'll do it inside. If it doesn't make sense, we'll send it outside to grow that whole facility and all of the supporting shops further. And then finally, as I mentioned, the long-term sustainability of maintenance costs, especially with the OEMs, is really important. The LEAP engine from CFM that powers our MAX fleet is 100% under long-term power-by-the-hour contracts. That's really, really important. There's a lot of carriers today that don't have long-term stability on those costs, and it's a high-risk item.
And then a number of other expensive and critical components, APUs, other key components on the airplanes. We have both economic guarantees, but we also have reliability guarantees in terms of time at the shop and getting them back to us. So we feel very confident in our ability to keep maintenance costs in check over the upcoming years, unlike a number of other carriers. So in summary, we continue to put up great reliability numbers, specifically on-time performance. We don't plan to stop anytime soon. A whole team of a lot of very, very, very dedicated individuals. And again, I want to focus on the people, as Pedro did. It's all about people, and it's all about culture.
If you ask anybody at Copa at any level what Copa's calling card is, what makes us famous, if you want to put it that way, obviously service is critical, but they will say on-time performance. Because it doesn't matter how much you serve your customer. If you're not reliable, if they don't know they're going to get where they need to be for their child's event, their business meeting, their whatever, they're not flying Copa. So we're going to keep putting up great numbers there, and it's been a really good year and on top of 20 years of really good years. So we'll keep going there. Customer preference, I think we're doing some very interesting and good things, as Roberto described, to continue to evolve the product to make sure that we are an airline people want to fly. It's not just the network.
It's also the product and the service they get on board. We don't rest. We are relentless about not necessarily revolutionizing everything, but continuous improvement. We're always looking for a way to squeeze one more hundredth of a decimal out of cost and/or to squeeze one more half a point of NPS into the equation by just doing things a little bit better every day, smarter, more data, more analytics, and frankly, getting everybody very focused on the mission so they know what we're trying to accomplish.
And then finally, we really believe we're well set to continue growing, both from the standpoint of the infrastructure of Panama, ATC in Panama, the airport itself, and also we feel confident that our maintenance infrastructure and our maintenance contracts give us a solid platform to grow with reduced risk compared to a lot of the folks in the world who maybe have not locked down some of those costs as well as us. And with that, I'll pass it to Peter Donkersloot.
Thank you. Thank you, Dan, and thank you all for being here. I know some of you come from a couple of subway stations away, but some of you made a very long trip to being here. So thank you. Some come from all the way from Mexico, Brazil. So I really appreciate. We really appreciate all of you coming all the way here and spending part of the day with us. So thank you very much. For those of you who don't know me, my name is Peter Donkersloot. I'm the CFO of the company since March, and I'll guide you through our financial overviews and some targets for us to see today. The team has talked a little bit about our formula. Some of them might refer to it as a boring formula, doing the same thing we've done over and over, little new things. That is us.
You're going to see the same thing in our financial section. More boring, same as always, consistency, focus. We've all touched the same words: focus, consistency, continuous improvement. You're also going to see it here in the financial section. I'm going to guide you through a little bit about how that formula has translated into great financial results and what is the back end or the backbone of that formula from the financial section. Pedro talked about our EPS and how it has grown. It has grown since we've been public in 2005 at a CAGR of 11.4%. That is a very amazing story. Remember, we are an airline. That makes it even more amazing. It's been backed by the cash from operating activities, which has also grown 11.8% CAGR during this time. This is a 20-year track record of industry-leading reports.
But we don't do that with a couple of good years. It's been consistently delivering high-end results from the financial perspective. And the same formula has translated again into great operational performance. Great passenger experience performance has also translated into great financial performance, as you can see here. And what is the backbone of that from the financial perspective? We've been focusing on delivering operational excellence at the lowest cost possible. We've been focusing on maintaining a robust balance sheet and a discipline in shareholder-focused capital allocation. I'm going to go by each one of these. And to start with the first one, delivering operational excellence at the lowest cost. And we chose this word carefully. We're going to the lowest cost everywhere possible. We're going to make sure that the product we choose to deliver, we deliver at the best cost we can.
Then once we reach there, we continue improving that. That is our first part of the financial backbone, which is a permanent focus on cost efficiencies and continuous improvement. Yes, this is how we see it from 2013, the 6.7, the same graph that Pedro showed and how it has been coming down to 5.8 in 2024. We expect the same 5.8 this year is what we're guiding for. We did a guidance for 2026 to be in the neighborhood between 5.7 and 5.8. We did say last Investor Day, a set of initiatives that are going to drive us to 5.8. You see it there, the fleet simplification, the densification that is halfway through, the new distribution strategy, and the overhead cost and discipline. Those are a lot of top-down initiatives.
But this cost has been driven by also a culture that Pedro and Dan referred to, that is always looking for continuous improvement in our cost structure. These are top-down, as I said. But one of the things I like most is when we see bottom-up cost initiatives. When somebody in Dan's team comes up and says, "Hey, we can save some $100,000 here in reduction of food waste if we use this better data to reduce this." And then somebody in the fuel team comes and says, "Hey, there's an opportunity here to do this and reduce another $500,000." And we see those initiatives every day because this is not driven, again, by only top-down initiatives. This is a culture and a full team. And as Pedro alluded to when he talked about our culture, how everybody knows how they can impact our strategy.
This is one important part of our strategy. People are thinking each day, either a flight attendant, either a mechanic, if there are a manager in a station, how can we improve our cost structure? We see every day new initiatives coming in, and it's a culture that drives these initiatives. This trend, which obviously this is Copa's trend, has positioned us to be and maintain or improve our competitive cost advantage versus our peers, especially versus those we overlap the most. We have more than one cent of CASM ex-fuel advantage. We aim to maintain this relative advantage by continuing improving our cost structure, by having this continuous improvement mentality to make sure we maintain this cost advantage. This is the one thing we control. The external barriers, fuel, economic landscape will affect us all in similar ways.
But this is the one thing that we can control and that will make sure that we're in a better position regardless of how is the macroeconomic environment on the fuel price coming forward. And we're going to continue making sure that we have the strong competitive advantage that we have today. And that's on the CASM ex-fuel part. Dan talked a little bit about what we're doing also on the CASM on the fuel part of the cost, which is a significant part of our CASM, our total CASM. And he talked a little bit about how our fuel cost has been coming down on a relative basis. And here we can see we've invested a lot in this new technology to making sure that we have the best technology for the fuel consumption.
And here you see how the MAX fleet, as a percentage of our fleet, has been increasing. It was around 21% in 2022. It's around 37% in 2025. It should be around 41% next year and should continue growing as we continue getting deliveries of new MAX. And this should also be going forward, being helping us to reduce that part of our CASM, not only what we're doing on our CASM ex-fuel. So this is also something important to highlight from our cost perspective. Then the second thing that was a backbone in our financial strategy is our balance sheet. Balance sheet matters. It matters a lot, and it matters much more if you're an airline. The P&L, to use an analogy, will be like the engines. It can tell you how fast can you go.
The balance sheet, the balance sheet will be the airframe, and it can tell you how far you can go. In Copa, this year, this month, we're talking about 20 years. We want to make sure we go 20, 40, 60 more years. Our balance sheet is something very important for us and something we take with great seriousness. We positioned that balance sheet with strong liquidity. We've been working with about $1.3-$1.4 billion in cash. Last quarter, we ended at $1.3 billion. That's around 38% of last 12-month revenues, very good liquidity levels. We also have, on top of that, around $150 million of available unsecured and unused credit lines. Additionally to that, we have $600 million of our cash as pre-delivery payments for future deliveries. We don't finance those PDPs. We use our cash to put there.
That is cash that we will receive as we receive those aircraft. We finance our aircraft. To the right, I have an important fact that we like to own our assets. 78% of our fleet will be owned. That is helping our balance sheet being backed by tangible assets. Of that 78%, we've got 46 unencumbered assets, which is 37% of our fleet is unencumbered. That's valued at approximately $850 million. That is an additional source of liquidity. That is a strength in our balance sheet. That is important to highlight. How we structure this is normally we finance our aircraft for 10 years. At the end of that, 10 or 12, depending on the structure we use. At the end, we use a purchase option, and then the aircraft becomes unencumbered. In most cases, we do that purchase option in cash.
That is how we get to that balance of 46 unencumbered aircraft. Again, 78% of our fleet is what we use owned. So only around 22% of our fleet right now is lease. So this leads us to having one of the lowest leverage amongst our peers. This is the strength of our balance sheet. We're at 0.7 times net debt to EBITDA, a very strong balance sheet that we have. Our debt, 100% aircraft-related. As I said, we finance 100% of the aircraft when we receive it. We finance it for 10 years or 12, and then we do the purchase option. Our cost of debt lately is around 3.6%. And right now, we have around half of our debt fixed, half of our debts at variable rates. So we used to have 65% of our debt fixed at the beginning of the year.
We've been floating a little bit of our debt this year, and right now, we have around half and a half. We feel comfortable with that, so that's where we are, and that leads us to a 3.6%, but also, more importantly, a very strong balance sheet when you look compared to many of our competitors when you look at that 0.7x net debt to EBITDA. Our capital allocation, we're focusing on a very disciplined, again, consistent discipline and shareholder-focused capital allocation framework, and we're focusing on three priorities. One is we want to make sure we maintain a strong balance sheet. We like to have a very strong balance sheet. That is one of Copa's strengths. Together with our cost structure, with our hub, with all the things we talked about today, having a strong balance sheet is one of our competitive advantages and strengths.
So that is one of our priorities. Then we're going to reinvest in profitable growth. We have here three years that we use as CapEx. We're seeing that the cash CapEx, which is the non-new aircraft-related CapEx, should be around $300 million that we're expecting for the next couple of years. And then the aircraft CapEx will depend on Boeing deliveries, but that we finance 100% of it. And that's what we're expecting. And then we also see that we have another priority that is returning value to our shareholders. We discussed that EPS was growing 11.4%. Our dividend has a CAGR of 20.4%. And that is because it's compounded by the EPS growth, but also the payout ratio has increased over the years. So that's what has been increasing that CAGR to 20%. That has increased since 2006 into 2025, that dividend CAGR.
Our policy maintains consistently at paying out 40% of last year's net income as dividend for the next year on a quarterly basis. And we also have, as of our return value to our shareholders, we also have that still $100 million of a program approved by our board to do repurchase, share repurchase. We're doing that from an opportunistic perspective. We'll do it. It doesn't have an end date in place. Whenever we finish that, we're asked for another package to have on another program to always have a program available. But again, no fixed end dates. We'll do it when we feel it's right to do it based on a couple of factors. That's a little bit on our capital allocation. Going forward, and this is we talked again about 2025 guidance. 2025 should be our third year in a row with 20% plus margins.
We guided in November during our call to the capacity growth for the year, around 8% growth measured in ASMs and an operating margin between 22% and 23%. The assumptions have not changed a lot. 87% load factor, unit revenue RASM around $0.112, CASM ex-fuel in the 5.8 neighborhood, $0.058. Jet fuel prices, when we did the earnings call, was at $2.47. Today is a little lower. That leads us to reaffirming our guidance of between 22% and 23% operating margin. I could say that right now we feel that we should be in the upper end of that guidance. So that is what we're seeing as of today with, I don't know, like three weeks left in the year to go. We should be in the upper end of that guidance.
And then for 2026, we guided to an ASM growth of between 11%-13% and a CASM ex-fuel to be between $0.057 and $0.058. And more importantly, here's the trend of that CASM ex-fuel that should continue coming down. And we feel we have the tools and the initiatives and the culture to maintain that CASM ex-fuel coming down. And this is based on the assumptions on having eight MAX deliveries, of course, all the back-ended deliveries we have this year. And that 11%-13% ASM growth is, to give you a breakdown, and Roberto already alluded to this, should be around 50% of that should be a full-year effect of the ASMs we're already flying in this fourth quarter. So about 40% of that should be additional frequencies to markets we already operate.
Only 10% of that growth should be new dots in the map. I'm going to give you a little bit more context on this. That 50%, again, Roberto alluded to, of that full-year effect are basically operations we're already doing. We're already flying. Our October load factor came up around 87%. November load factor will come up in a couple of days, but shouldn't be much different than that. We feel very comfortable with that growth of that 50%. The additional frequencies, again, if we're operating at an 87%-88% load factor, that means there's a lot of places we're operating at 90% plus load factors. There's a lot of places we can put additional frequencies to. We feel pretty comfortable with that growth also. Only 10% is adding new dots on the map.
We feel very comfortable with this 11%-13% growth for next year. And of course, as Pedro said, we got the flexibility to change that growth if we feel like. But at this moment, we feel very comfortable at 11%-13% growth. We can do it in a profitable way. And as much of it is, again, fully effective this year. And then what's next on this going forward, I would say our priorities from a financial perspective, maintaining a robust balance sheet and trending our CASM ex-fuel even further down. We believe that for 2028, we can achieve a CASM ex-fuel of $0.056. And I'm going to go back on the story. Last investor day, we said that we were going to deliver a $0.058 CASM ex-fuel by 2025. We actually delivered one year early.
And we backed that on initiatives like the 800, the certification, the distribution strategy, engines, and overhead efficiencies. That is what we guided to back then. We delivered on everything we said, and we delivered on that 5.8 even a year early. Right now, we believe that we have enough initiatives, including the capacity growth. The other half of the densification, we've only done half of that densification. We still have half to go for one extra row in the 800s to put. So that's six additional seats. We have a pipeline of negotiations and procurement that we believe we have a decent upside to continue maturing these efficiencies. And then probably none of them as big as the NDC we talked last investor day. But the sum of all the initiatives we have are significant enough to help us continue achieving this reduction of an additional 0.20 cents.
Then we got a payment strategy. We believe that we have, with new technology and orchestrating to better send our payments to the most efficient channel. We also believe we can capture additional efficiencies here and something that is, for every airline, a big cost bucket when you have that payment channel. So we believe with this initiative, and again, more importantly, the culture that we're talking about, all those bottom-up initiatives that come up every so often, we can continue delivering a trend of CASM ex going down. We are confident of achieving our target of 5.6 CASM ex-fuel by 2028. And we're very confident we can achieve that and maintaining a strong balance sheet, the trend of our CASM going down. And this will continue helping us to that one variable that we control, have it under control.
Regardless of how the other factors come in that will affect us all in similar ways, we will be in a better position to capture all those external variables. And with that, I'll pass it for Pedro for closing remarks.
So we have a few minutes for Q&A. I want to wrap it up. We've talked about all of this in the last a little bit over an hour. So I think there's no need to repeat it. So let's get on with the Q&A. I think we're sitting up here, right? Where's Daniel? You. And okay, so who's going to help us with the Q&A? Because with the reflection from the sun, I can hardly see.
Okay. Michael Linenberg with Deutsche Bank. Thanks for a wonderful presentation. That 5.6 cents, I guess my question is, so which widebody airplane are you guys looking at? I'm kidding. I'm kidding.
Or who's putting his life on the line?
I guess that will be me. Is there a Boeing salesman in the room? Anyway, no, I wanted to ask actually just two questions here. One of your partners in the region, and you could argue also sort of one of your competitors, at least with respect to flows, looks like they're sort of changing their distribution strategy or making some changes there. And I'm curious, does that have any sort of impact on you in the sense that I don't know how much I know you code-share with them and they're an alliance partner, or is it something where it could end up flowing more share your way because it could be perceived as being somewhat disruptive?
I'm not sure I know exactly what's going on. Go ahead. Yeah.
So I mean, referring to Avianca's kind of move away from NDC towards traditional back to more traditional GDS-based distribution. Look, I think the short answer is we don't think it's going to impact us too much. I think maybe there's some opportunity that'll come out of it. But at this point, if you look over the last year, we've stabilized pretty much at this 89%, which is flowing through copa.com and through our NDC channels, which, to be clear, our NDC doesn't flow through a GDS-based NDC. It's more of a pure-play NDC. And we have been about 11% that's going to the GDS. And that's been fairly stable. So I mean, we're very comfortable with our strategy. I don't think we're going to change our strategy at all.
I think probably the impact, I guess, potentially for us is as they start putting more surcharges in the market, that could shift some agencies to look at other options. And I think we'll be there with a competitive product if they're out looking.
Okay. Great. And then just, Pedro, when you were giving the presentation, you showed Panama versus I think you had five other airports. I think it was Bogotá, Mexico City, Lima, São Paulo. And then San Salvador. Of those five, I mean, you have real estate where you can add another runway, you can add more gates. But of those five, any of them, maybe other than San Salvador, I mean, is there any space where they could even grow? Aren't they?
Yeah. Apparently, some do have space, but the bureaucracy in those places makes any growth of the infrastructure a problem.
So I think there's a few that might have space. Not all of them do. And again, we're trying to punt the need for a third runway. And I think it can be, with all the work that Dan explained, it can be punted over 10 years, which is actually a good thing because a more efficient use of the infrastructure is best for all, for the airport authority, for the government, for the airline. So we think we can punt 10 years. We can have 10 years of strong growth without needing a third runway. And when it's needed, there's land, as Dan also mentioned. So I don't know exactly who can add infrastructure, but for sure, not all of them. But it sounds like over time, it looks like you're actually going to gain at the expense of these other airports. We're in a better position.
We're in a better position, for sure.
Okay. Great. Thank you.
Hi. Pablo Monsivais from Barclays. I wanted to understand a little bit your thought process in adding those cities because if you think about the dynamics of Tucumán or many other cities in Argentina, Brazil, Chile, are very similar, and they follow regional economics. So I guess that you might have hundreds of these cities that are potentially targets for you. How do you decide whether you accelerate those new destinations or stop or add frequencies? We'd love to understand what's your decision process there and the addressable market of just covering these smaller cities because I guess in Latin America, we have so many of these smaller cities with probably less than one million passengers with a very low penetration and that just this service is not there. So I'll say a few things.
One is we cannot do them all at the same time because not all work the same as others. I mean, they don't work out the same way. So some might become very profitable in the first three or six months, and others might take us a year or maybe a little bit longer. So we don't want to be doing like 10 of them at the same time. We pick them by priority. And as the economies and as our countries grow, cities that might not have been viable 10 years ago are viable today. So they become priorities X years later. So we don't do them all. We look at the size of the markets. We look at where they travel. We look at corporations that might be based in those cities or if they're receptive or emissive. So there's a long list of things we look at.
And again, I think the key is that we don't do them all at the same time.
I would just add one other point, which is it's also about balance. So we always try to keep the hub in a relative balance because that's how you continue to build the connectivity at any given time. Because if we were to add, for example, all points in deep south, it would create an imbalance into the hub. So keeping that balance is important.
Hey. Good morning. Dan McKenzie with Seaport Global here. A couple of questions. One of the slides that I thought, by the way, thanks for the presentation. It's great to be reminded of what a great airline you guys are. But one of the slides that interests me was the loyalty slide, 5.1 members.
I'm wondering if you can just share a little bit more average credit card spend, average growth in that credit card spend, any dynamics that you can share about that. And then hopefully you can hold on to that question. And then the second question I had is just the penetration into your partners' corporate travel programs. Are you getting your fair share of corporate travelers from your partners connecting t
hrough your network? Yeah. So look, I think on the ConnectMiles piece, we're not in a position to really disclose all the details of the customer set that's going over there. I think what I would say is, look, if you look at the when we look at the metrics on those customers, A, they're a very loyal set of customers.
So the amount of trips we're getting from those customers when we compare them to what we see from competitors is we're doing stronger on that dimension. I think when you think about credit card spend, etc., that's probably where we have more opportunity still to go. Obviously, our credit card in Panama does really, really well because a lot of people, we're the natural home market carrier. In other markets, we have to work harder to build our position in those markets because we're not necessarily the natural market choice, but we do have a very compelling international offer. So I think that's why we said there's still a lot of upside of where to go, but demographics are attractive, and we don't really keep track of corporate travel from our partner airlines originating from their corporate contracts.
We don't keep track of that.
We wouldn't know other than knowing that we do have frequent flyer reciprocity. So if we're covering a region that is not covered by, let's say, a United or someone like that, there's a high probability that they're going to fly with us. But if we don't have a contract with those corporations, we will not have that information.
Thank you. This is from Morgan Stanley. Just one question regarding next year's capacity increase and your confidence on increasing prices. You mentioned that you had only seven years where you're not able to do so. So my question is, obviously, to a certain degree, you already answered it by saying that most of the capacity increase is a full-year effect, plus the flexibility you have to reduce capacity if needed.
But looking at it today, how confident do you feel that prices will indeed increase with the capacity guidance you're providing? Thank you. I'll say I'll start, and if someone wants to add. I'm not sure that we're saying that prices will increase. And it's not as much the capacity growth because 90%, as I think both Robert Carey and Pedro Heilbron showed, is either frequencies or full-year effect of what we've done this year. And it's going mostly the frequency towards markets where we have or routes where we have very high load factor. So we're confident we'll do well on those. But we also have competition. We have quite a bit of competition. So it's not necessarily that fares will go up. We're hoping that they'll be at least stable.
But where there's a big opportunity, which Robert showed, is in ancillary revenues, is in our upgrade product, our seat product, in the potential of our premium economy product, which I think we're only touching the surface of what we can do there. And then we combine that with lowering our unit cost. And at the end of the day, if we can grow 12%, if we can keep yields, the regular yields more or less in a stable ground, and if we can keep improving in ancillary revenues and our unit cost under control, it should result in good numbers.
If I just add one question regarding the premium revenues you have as total revenues. You mentioned, I think, 39%. How much room is there to increase that number further, or are we reaching a limit there?
We're not at a plateau.
I mean, I think, look, as I said, we're not New York or London. So I don't think you're going to see, I think, Delta statistic is something like 65% or 70%. I mean, I would not put that as where we're going to get to. But that said, we still have quite a few opportunities to go after. Our business class cabin today, we have quite a bit of available capacity still to sell in many flights. And so that's incremental premium revenue. As I said, fare bundles, it's a little bit in ancillaries, but more fare bundles and more fare products. I'll give you an example. Tonight, we're going back on most of us on a JFK flight at 1 o'clock this morning.
1:00 A.M.
1:00 A.M. Yes. Yes. Because, by the way,
so that we don't pay an extra hotel night. Exactly.
It's a cost and revenue strategy. And I was going to check in for my flight last night at 1:00 A.M. And I looked at the seat map. And if you looked at our economy extra cabin on my flight tonight, I think out of the four rows, 30% was pre-booked. So quite a bit of capacity. And I think that's another area where we've got a lot of opportunity of what we can do. So there's still a lot we can do. There'll be a top, but we're not at the top yet.
We can get better. We're kind of still in a learning process in terms of the whole thing with ancillary revenues is relatively new at Copa. And it gained strength after the pandemic.
So we're still not as good as, let's say, the major airlines in the US, which done an amazing job there compared to where they came from. So we still have a lot to learn, and that's why we think we have interesting upside.
Hey, guys. Thank you. It's Duane from Evercore ISI. Thanks for the presentation. If I look at the level of your margins and the consistency of your margins and your balance sheet, which really doesn't need any deleveraging, and I look at the historical metrics, you look like a compounder. I think the one element that might be missing is the fact that you're so heavy on the dividend. And so I wonder maybe Stanley could speak to this too. Is there any frustration with the valuation at a board level?
Have you evaluated maybe leaning heavier into buyback as opposed to the extra heavy dividend?
Okay. We haven't heard you, so.
Yeah. I get the tough question. I was hoping I got a free ride here. No. I think that we like our dividend policy. It's 40%, and we're going to maintain it. It's consistent with what I think it's good for the company. It's what we've done. Hopefully, the market will understand that and value it as they can. We won't lose too much sleep on that. We want the market to value us. I mean, we will continue delivering the excellent results that we talked about. We will continue getting that CASM going down, maintaining that growth, and returning value to our shareholders with a strong balance sheet. Eventually, the market will reward us for that, I believe.
I'll just make a suggestion.
I think you should just take a peek at consumer compounders and the kind of revaluation you can get from having an always-on buyback, which it seems like your business model supports. Thank you.
Just one comment since you asked me. Look, I think we've done our buybacks where we've seen the opportunity really very strong. So if the markets go crazy and it goes we see the value go way down, more than likely, somebody will wake up at Copa and say, "Maybe we should do this." The other thing that I was going to comment is internally in our own several investments, one of the things that we talk about is which investment pays us the weight. Pay us the weight is the dividend we get.
And when you get dividends along the way and then you do your IRR later on, it's a big difference of just having an expansion of multiples or the market going up. So we think of dividends as sort of payment to shareholders to wait for the opportunity for the share to be even better.
So thanks for the presentation, Filipe Nielsen from Citi Research. I just wanted to explore a little bit more about this capital allocation perspective. So combining all the metrics, the trajectory that you showed us in the presentation, with the flexibility of the fleet, these decreases in CASM ex, all the opportunities in premium, in ancillaries, we should expect at least an increase, a significant increase in cash generation and in all this cash growth that you're suggesting.
Just wanted to understand how leverage should trend going in this direction, given your 40% policy on all the comments that you already did in dividends, because this is one point that we get a lot of from investors. They should continue generating even more cash. What should we expect them to use this cash for?
So I think your question in a way aligns with Duane's. And I hear you. We hear you both. And Duane had a strong recommendation at the end. You're asking a very strong recommendation. You're asking a question down that line also. And I think those are valid points. We've been very traditional in how we approach capital allocation and return to shareholders, traditional in our own way.
And if the market is not valuing that enough, and we should look at a different way of doing things, I think it's worth giving it a lot of consideration and having a hard and long look at our strategy up to now. And we're never close at anything. So two, if the third person asks a similar question right now, then we're going to go back to the office right now and start working on it. But we hear you. And there are reasons behind what you're saying, of course.
Great. And just one follow-up on my side regarding the pricing and this whole dynamics with capacity and flexibility that you have.
Just wanted to understand if with this trajectory of bringing costs down and keeping at least flat yields, should we expect even more margin expansion going forward, or you're probably leaning into increasing more capacity and being a little more aggressive, not aggressive in a bad way, but aggressive to extend those markets further and continue with a solid margin, but growing more in the future?
Yeah. Well, you want to take it? I see you're eager. Go ahead.
No, I'll start, and then I think you guys can do it. I mean, I would say the following, which is I think the way we think about it, which you heard probably a few points in the presentation, but just to call out, cost is one of the things we know we can control in any of these scenarios.
So that's part of the reason we anchor there and make sure we're delivering there first. Now, I think we've got a lot of things we can do on the revenue side. I would have loved to have a chart that said out of the 25 years, all 25 years, we managed to grow and show revenue growth. As Pedro said earlier, competition is a reality. We can't control what our competitors are going to do in our markets. That's part of life and business. So I think that's a bit the, let's call it the variable that we can't control that does put pressure on revenues at points. We do everything we can to offset it. Is it going to be flat or up every year? No. I don't think we're going to deliver that.
But I think that's probably more what I would say. I don't think we're going to look to go gangbusters in growth because we think we have super high margins.
Hello? Hi. By the way, I agree with Stanley's opinion about the dividend. I think it's a great thing. It makes us wait for the opportunity to the repricing of the stock. So I agree 100% with you.
But I have a question. When we have a great business, why do you think that the two-class structure is the easiest that is impeding the stock from re-rating?
Not sure that the yeah, no, I'm clear. Yeah, no, I'm clear what you mean. I know it's not business class and economy. I'm clear. It is not. Yeah. Actually, I haven't given a lot of thought to that question.
And I would think no because the B shares are not out in the market causing dilution. And we've been very stable in keeping that ownership. And actually, I think the B shares bring a lot of stability and consistency to Copa because we are a New York Stock Exchange public airline with real ownership that cares about our bottom line and our results beyond just what management wants to do. And so we don't act for the benefit of top management. So it brings stability. It makes us perform. And the rest, the other 75% that floats in New York Stock Exchange, it's better for that. So I'm not sure if I'm answering exactly what you were looking for, but I don't see a negative there.
Let me just give you a little story 20 years ago.
When we were doing this, the lawyer said that we were going to Panamanian companies and we were going to have the shareholders' meeting in Panama, and he says, "You guys are going to go crazy looking for proxies every year in order to have the shareholders' meeting and have the quorum for it," and so I don't know if you know this, but the chairman of the board gets to vote the B shares unless somebody asks for them two weeks in advance, so I think the good news is nobody's asked for them, so I think what I'm saying is the A shares are representing the B shares very well, well, the B shares are representing the A shares very well. Sorry, the reverse.
But I mean, I just think that what you all do on a quarterly basis, the analysts and all that is much more important than a shareholders meeting. But if we were doing something wrong, I think there would be more people showing up. Thank you.
May I? Alberto Valerio from UBS. Thank you very much for the presentation. I was about the dividends. No. I'll change a little bit the subject. You're very clear about the five years, ten years from now. But between now and five years, what we have seen is return from COVID and then some companies re-IPOing like Aeroméxico just did, LATAM just did. We may see Azul in some couple of months, and maybe we see Abra and Aerolíneas Argentinas. What should we expect in terms of competition? What do you see these companies propose different to attract this new capital?
In terms of also some benefits that the airlines gained on COVID, like some discount on lease and so forth, how you see them use this benefit to decrease cost, increase capacity, fares? How have you seen this new environment? This is my first one.
Right. A few things. Actually, all those earnings you mentioned have been growing aggressively for the past three years. Going forward, I actually expect at least in the year-over-year comparison for the growth rate to come quite a bit down. Both LATAM and Avianca have been growing like high double digits for the last two or three years. And of course, they benefited from Chapter 11 and from, well, I won't use a bad word, blank their shareholders. And they have come out with a better debt structure and some lower cost, but we're still more competitive than them.
And of course, competition is a lot stronger than what it would have been before, but we're dealing quite well with that. So it's life, it's reality, and we like where we are right now, even in terms of stronger competitors thanks to everything you mentioned.
Perfect. And my second one, if I may, about the engines new generation that we have on the MAX and the NGs. It's a trade-off, isn't it? Because you have low fuel on MAX, but you have high maintenance as well. How have been these working? How is the cycle at the moment? If I'm not mistaken, they were expecting 5,000 cycles for the MAX, but it was a little bit lower. And the old generation, it's close to 8,000 to 10,000 cycles. How have been these working? How have been these mathematical working for Copa? Why are you looking at me?
You need to look at Dan.
Why did you spoil my lunch? No, I'm kidding. Actually, the LEAP, as you mentioned, the LEAP has not been a problem-free engine out of the box. Happens with every engine. The original engine CFM56 on the NGs also had teething issues. The simple answer to your question is yes, the LEAP life at this point is not what it will be and is not what it was sold to be, but without getting into details that I can't get into, contractually, Copa covered itself by having cost per hour agreements. Therefore, when that engine goes to the shop, matters a lot less to me than having the right number of engines and having stability of cost and also the ability to get those engines back into the fleet in a predictable flow so that I don't have operational disruption.
A lot of carriers did not cover with long-term maintenance contracts, and they're living the volatility not only of cost, but also of operational pain.
And it's a contract that was signed in 2015, something like that? We negotiated for about four years, and it was signed in 2015. Yeah. So before all the issues.
And this is going to be our last question. Thanks. Have a good day. Maybe I can ask the growth question in a slightly different manner. If I look at your growth, you haven't grown double digits outside of kind of coming out of COVID since, I think, like 2014, 2013 timeframe. So how do you manage growth and keeping that cost discipline? Because if I look at, you mentioned those carriers have been growing a lot faster, and some of the carriers got in trouble because of the growth.
So how do you manage that?
Yeah. It's not really a problem because what we need to remember, this is like pent-up growth. If we had had all the Boeing deliveries on time that we needed and we had opportunities for, growth would have been maybe 9% per year the last three years, and we couldn't get there. And then after next year, it will come down again. Well, there will be a little bit of full-year effect, but a lot of what we're seeing next year to get to 12% is full-year effect from 2025. And again, it's pent-up growth. It's deliveries that are coming together that we wish we would have had years before. And to get to 87% load factors, as a few of you have mentioned, there are some markets that are in the strong 90%, and that's where most of our capacity is going.
So we are not really worried. We wish we would have had those planes before, and we think we're not late, but we wish we had been doing this before. So we're not really worried. The additional ASM should be good for overhead CASM, and we can absorb that capacity. It won't be noticeable in a significant way.
I guess maybe I'm asking it in a different way, Pedro, not on the revenue side, but on the getting in trouble on the cost structure side as you try to kind of do faster growth. Yeah. No, we won't get in trouble there because if we have the problem with the cost side is when there's no demand, there's not enough demand, and then you end up with empty planes and low yields to make up for those empty seats. So it's all tied together.
We feel we have the demand. It's going in the right places. The cost should be covered by the demand. In the worst case, if we think we were long X number of planes, we would love to park some of our 737-700s and harvest those engines. CFM56 engines are in high demand and very expensive for lack of and all the other things and the whole kind of supply chain with MROs and OEMs and all of that after the pandemic. We would love to park like four 700s and harvest the engines if we did not have enough demand for the eight aircraft we're getting next year, which is not a big deal. We're super comfortable.
I would add that a lot of the spending, as Pedro said, are getting late.
So we've been working for this growth for the last couple of years. So I mean, the pilots are there. I mean, we've been working for it. We've been preparing. And actually, our problem has been the opposite. We've been preparing, and then the planes don't come. And so we have that downstream. It's been working for that growth, and it's actually not been there. Now it's coming. So it has been a timing effect that Pedro mentioned. So we have been preparing for that growth for a long time.
Got it. Maybe last question then. On the commercial side, you talk about unlocking a lot of these things. Are there tech investments that need to be done for this, or how are you addressing some of those unlocking with the commercial opportunities?
Yeah. I mean, I would put it this way.
I think, yes, there is obviously some technical investments, but it's no major systems. It's more what I would call ordinary course of retailing, for lack of a better term, which is, I mean, it's not like we've got to change PSS systems. It's not like we have to invest in a new digital system. All the infrastructure is there. It's more about dedicating our resources to go after the big. So how do we put online a product to sell instant upgrades in our booking flow? Things like that. That's what we're investing. It's not big tech platform investments. Go ahead. Thank you.
Thank you, gentlemen. I guess that's not a lot. Here's this one. I just want to say that that concludes the Q&A session, and the lunch buffet is open. So we're going to take a break, and everyone can go and serve themselves a nice lunch.
If we can please reconvene at 1:30 P.M., we'll continue with the program at that time. If you're connected via the webcast, we'll be back at 1:30 P.M. with the rest of the presentation. Thank you. Okay. I need them back for. The back.
Hello everyone. Good afternoon. So hope you enjoyed the management presentation. So as we continue the program, we are now turning our focus to a special part of our Investor Day, and I'd like to invite Mr. Stanley Motta, who will do the honors of introducing our distinguished lunchtime speaker, the Minister of Economy and Finance. Thank you.
Good afternoon. Now it is afternoon, and before I introduce our speaker, I'm going to take a minute first to tell you a story. Twenty years ago, when we were doing the IPO and we did our first breakfast of the roadshow, I was not on the program. They got up and everybody made their presentation, and at the end, I got up. I think the whole team sweated, not being sure what I'm going to say, as Pedro's lived this many times before.
A couple of things. Pedro has had four bosses in his life: his mother, his father, his wife, and me. So I wanted to keep that clear that it didn't only work for me. The other thing that happened to me the other day that I was going to just sort of give a comment, somebody said to me, "Stanley, will a Copa plane wait for you?" And I said, "As long as I'm on time." That's the way the airline works. That's what it's going to do. There's another thing that they haven't revealed to you that I will tell you, that internally in Copa, regarding the culture and the emphasis on cost and on time and everything else, internally, they have something they call a 180-day, 180-day. That's if we flew 90% on time with a 90% load factor.
So that's a 180-day in Copa. We get to celebrate them once in a while, not every day, but that shows you how the culture really even has a slang, which is the 180. I have the pleasure of introducing our Minister of Economics, who I have known a little while in his lifetime. Felipe went to Brown University and then he did an MBA at the INCAE in Costa Rica. He was involved in a firm and still is in, but they did a lot of economic studies and advice in Panama and in the region. He has also served on many boards, including the Banco Nacional de Panamá and a few others, even a bank, Banistmo, and so forth. So he's had a lot of experience before he took this job. I'm very happy he did it.
It wasn't an easy decision at the moment, but every once in a while, he can still smile, even though his days are very rough, trying to keep the budget in line, lower the deficit, and make everybody happy at the same time, which is not necessarily what you can do. I've had the pleasure of working with Chapman twice. I want to clarify that Felipe doesn't have a two-face. He only has one face. But I'm old enough that when his father was Minister of Economy and Finance, I also interacted with his father as Minister. So I've had the pleasure of working with two Chapmans in my lifetime. His father was in the mid-90s and Felipe now in the mid-20s. So Felipe, thank you very much for coming, and you can tell him the Panama story.
Thank you. Thank you, Stanley.
It was very nice not to say that he knows me when I probably was a teenager. I don't know, maybe before that. Panama is a small place. First of all, Pedro, thank you. Thank you so much for the invitation. It's a pleasure to be here. As Stanley said, it's great to have the opportunity to be out of town nowadays, even so that I'm truly enjoying the weather, and I had forgotten about the traffic and how busy can New York get in the month of December. I thought that only happened in a small city like Panama. As I say, when something's moving slow, well, it's moving like a line or traffic in December, so it seems like in New York, it's probably even harder than that.
Nowadays, well, like Pedro, I also used to have, let's see, my mother used to be my boss as well as my father. Now my current boss is here with me, my wife, and obviously the President of Panama. They compete to see who gets my attention, but both of them do a very good job. Full disclosure, actually, my first job out of college after Brown was in Copa with Pedro 36 years ago. It's like time has flown, and it was a long time ago. We were a bit younger, as you can imagine. I still remember we had back then like three planes, and the first flight to North America was in Miami. It was fun times.
I mention that because if it wasn't for the opportunity and the convincing of him, Stanley, and Stanley's father, especially Alberto, I would probably stay here in New York. I had some job offers, and I was about to stay here. I'm glad they convinced me to go back to Panama because I don't know if I would be married to my current boss. Things go around that way, no? The story of Panama, it's pretty much like Copa. I mean, Panama has a great story to tell. We have a great story to tell for the past 30 years. Somehow it's very much related, interrelated with Copa.
I mean, an airline that has developed a hub and operation like Copa. I don't know if it could be as successful in a country that's failing and has the stability in terms of economic, rule of law, political, social. So it's fundamental for a corporation like Copa or like the Panama Canal or like the banks, which all have great success stories to tell, which are leveraged on the Republic of Panama story, and Stanley reminded me that I had very big shoes to fill after my father in the 1990s making a lot of reforms for the country. Probably misunderstood back then, but as time went by, people understand them. I probably have the challenge to do something like that. I've got to live up to expectations.
I said that about Panama. I believe it's important to put that into perspective of the contribution of the country for these great companies to prosper a long time. As Pedro mentioned, there is one advantage, which is the most important competitive advantage of Panama. And before I forget, I was glad to see that some of the people get as many questions as I do. So in places like this and in other places in Panama, as Pedro said, the geographical position of Panama is not replicable. So it's unique. And actually, Panama fought 100 years to gain full control of our geographical position. So we're just starting. It's only been about 25 years or so in a history of more than 100 years. So Panama, I would say it's about starting. So it's a pleasure to let me backtrack here.
To join the Copa Holdings Investor Day today, I would like to provide a clear and comprehensive perspective on how Panama's macroeconomic strength, its unique connectivity platforms, and the strategic role of Copa Airlines are converging to shape one of the most compelling investment narratives in the Western Hemisphere. We've been at a time when global economies are undergoing profound realignment. Growth is slowing, geopolitical risks are rising, and supply chains are being redesigned. Yet in the midst of this uncertainty, Panama and its great players, just as the ones I mentioned, stand out as rare anchors of reliability, opportunity, and long-term value. As a colleague of mine was saying in a meeting that we had a couple of months ago, we're not living in a time of changes. We're living in a change of time.
He said it in Spanish sounds a bit better, but not everyone has realized that the world has changed tremendously in the past few months and in the past few years. Regarding the punctuality of Copa, I can vouch for that. We had an inconvenience going to the airport in Panama, and we were three minutes late to check in, and they told, "No, the flight is closed." It's like, "I need my bags to get to New York." "No, you can board the plane." "Well, we don't know if you can get your bags." It's like, "Well, I have to talk to an investor of Copa tomorrow." "Sir, the flight's been closed." So I had to bother Pedro and some other people who helped out for me to be properly dressed before you today. Changing global landscape. The world economy is shifting.
Slower global growth, rising geopolitical tensions, and supply chains being redesigned around security and proximity rather than pure efficiency. Nationalism, protectionism, and industrial policies are reshaping global flows. I never thought in my lifetime I was going to see that. It's like going 100 back. I lived this learning about it in school. I never thought I was actually going to live it. For investors, this means the center of gravity is moving from globalized networks to regional hubs of stability and reliability. So that makes it even more interesting of what we're discussing today. Despite this volatility, Panama stands out as a stable, predictable, and resilient economy. Some might call it boring, but boring is good when you're talking about a country and a company, as they said before, as some of the speakers said. Panama's economic resilience has been one of the most consistent performers in the hemisphere.
The numbers speak for themselves. The IMF now projects 4% growth for 2025, up from an earlier estimate and double the expected regional growth. Recent indicators are strong. GDP grew by 4.4% in the first half of 2025, and the monthly economic activity indicator up 4.3% accumulated through September. Nominal GDP is expected to surpass $100 billion by 2027, signaling scale and maturity for a population of under five million people. Proportionally speaking, it's a quite important economy. Actually, when you divide it by per person, it puts us, depending on when you take the picture, in the first or second place in Latin America. Fiscal consolidation is fully aligned with the updated fiscal responsibility law, which is quite important. Revenue-enhancing measures, expenditure discipline, and anti-evasion initiatives are showing results, which doesn't necessarily make you popular when you have to do these things, no?
Direct taxes are increasing close to 26%. Payroll taxes, 53%. Property taxes, 87%. Capital gains, 201%. The 2026 budget of next year is going to be a little bit below $35 billion, which keeps with a deficit target of 3.4%. We are aiming at a trajectory to have, talking about airlines, to have a smooth landing or basically not to do sudden changes that might be traumatic for the country. Our aim is that by the end of this decade, to have substantially changed the fiscal framework. Actually, next year, we're shooting at a primary surplus, which we haven't seen in almost 15 years in Panama. I'm glad I'm talking to an audience that understands this because usually people don't. Credibility is visible in the yield curve, which now shows lower country risk as consistency reduction yields.
We can see it in the next probably sorry. I'll have it probably further down the presentation. You're going to see how market risk premiums have decreased tremendously or in an important matter in the past year, especially in the past few months. In terms of growth, there is an important story also to share, not only about our expectations, but by the forecasts like the IMF, the IDB, the World Bank, that make a strong case for Panama's future. The credit continues to be anchored by strong dynamic, which, as I said, 4% this year, the fiscal consolidation efforts, and actual fiscal execution shows full commitment to these plans. Macroeconomic fundamentals that matter to investors. Panama's dollarized economy insulated from monetary policy-driven inflation and offers a predictability environment for long-term investments. The financial system remains strong, well-regulated, and anchored by institutional stability.
Connectivity, maritime, air, digital gives Panama a unique competitive advantage in the Americas. What I was mentioning regarding the risk premium, Panama's in the red, so you can see from last year in 2024, we had the highest premium risk among these peers, and as we started executing our plan, it started a downward trend, and we're looking, and our goal is to have the lowest risk premium in the near future, which is obviously quite important for companies that operate out of Panama because it becomes a reference in terms of the cost of leverage and the cost of equity. In terms of some of the, just to mention some of the important reforms we made, pension reform. I was the other day in a meeting with some former presidents of Latin America, and I'm going to quote President Duque from Colombia.
He says, "Minister, have you realized what you've done, you guys, with the pension reforms?" Like, what are you referring to, presidents? Like, nine or more, nine and a half out of 10 countries that pursue a reform, they fail in the process. And you've done it in a democratic way. It's like, well, you're right. Probably we're busy looking at other problems that we haven't gone out to tell the story. Well, first you do, and then you have to tell the story. It's like, well, you're right. We have to go out and tell the story. Here we can see, as I mentioned, the GDP that would be surpassing $100 billion by 2027 in terms of the deficit, the downward trend that we're aiming for eventually that would lead us to 1.5% of deficit.
And the purpose there is to slow down the growth of debt and the leverage of the country. And this is what we're aiming by the end of this decade to reduce from 65% to close to 55% of the leverage the country is facing. And in the meantime, reducing the cost. A lot of management, I'm sorry, liability management that we have reduced in an important way the cost of debt. And that's an important job that the Vice Minister of Economy that is here with us has done with her team. The budget, as I mentioned, is anchoring the government fiscal consolidation. As I mentioned, boost revenues for digitalization, expenditure organization, provision of special laws and subsidies. The expectations are positive to expand the economy in 4.2%.
It's leveraged on maritime air, logistics, new gas pipeline, new reservoir, which is quite important for not only people, for the Panama Canal. Some of the major infrastructure projects, including a fourth bridge over the canal, also a tunnel under the canal for the expansion of the subway or the metro, energy projects supporting competitiveness. This is not necessarily going to be the driver looking in midterm or long-term economic activity. This is basically public policy hand in hand with investments to provide the ecosystem and to facilitate economic growth driven by the private sectors, which represent over 80% in terms of GDP in Panama and also in employment. This I mentioned already. The rise of nearshoring and friendshoring. It's quite interesting to see all these changes taking place. In terms of Copa, look at not only Copa, but also in terms of maritime transportation.
Panama has a preferred distribution center for the Americas, geographic proximity to North and South America, connecting East to West, growing demand for regional and also, I would add, maritime connectivity. You probably follow the news lately. Panama has become quite the center of attention in terms of maritime and ports. I'm not going to mention much about Copa because they have already gone through this in detail. But still, I must mention that air travel is about one of modern supply chains, even with the changes going in the global economy. Growing corporate and logistics travel. Copa's network is aligned with regional integration trends, and Panama is a facilitator there. Copa leads the passenger movement into Tocumen International Airport, as you can see in the right side of this chart.
And obviously, with that come opportunities in terms of growing faster in terms of the infrastructure and the opportunities that come in the near future. It's been a connection model in a global benchmark, inherently the highest connection efficiency in the hemisphere with 89 destinations that provides comprehensive air bridge in the Americas. And in terms of the airport, it's an interesting example of public-private symbiosis, Copa and Tocumen. Copa's growth drives Tocumen's expansion, and Tocumen's capacity enables Copa's network in this mutually reinforcing system and also permits the attraction of new players who are operating mainly to Europe and why not in the future to Asia. Infrastructure to enable the next phase of growth. Airport capacity is the most critical constraint for Copa's future expansion. The government is committed to extending the main runway.
All of these, I'm passing this round because you already saw them in the presentation of Copa. The government is committed to extending, as I said, the main runway, adding 10 new gates, also mentioned previously, strengthening Tocumen and Civil Aviation Authority. Long-term plans include a new runway, terminal expansions, regulatory and technical upgrades. These are not just airport investments. They are growth multipliers of Panama's entire economy. That includes cargo, includes cargo and e-commerce, a high potential for tier. Panama's geographic and connectivity position is to become a regional e-commerce hub. Tocumen and Copa and Panama's logistics ecosystem create a unique platform for fast-growing cargo segment. In terms of cargo, we're talking about, probably further ahead, some key operators in the cargo sector that also become a complement to the maritime hub that Panama is still developing.
As I said, we are far away from truly exploiting our geographical position, not only as an air hub, but also in the maritime industry. In terms of attracting global corporations for multinational companies, connectivity is a decisive factor in choosing regional headquarters, not only in tourism, as Pedro mentioned, and actually, tourism, as we were speaking before, it's a great opportunity because Panama can probably have a GDP participation in tourism like 10 times higher of what we have here in two days. Not only the participation of the economic production, but also in terms of employment, and it's an industry that can create jobs quite fast, comparatively speaking, with others. Copa strengthens Panama's value proposition by providing reliable continent-wide access to business and travel efficiency, supporting Panama's role as a regional base for supply chains, logistics, operators, and corporate services industries.
And in closing or summing up, as we have mentioned this morning, and I fully agree, Panama is uniquely positioned to lead the new era of regionalization. Copa happens to be strategically aligned to capture the opportunities created by this realignment, as are ports, as is the Panama Canal and others. And together, public and private sectors, we share a long-term commitment to connectivity, competitiveness, and investment-driven growth. For investors, this is a story of resilience, alignment, and sustained value creation. Thank you.
Now we have a brief Q&A session.
Thank you for that, Mr. Minister. That was fantastic on everything going on in Panama. I see a lot of excitement. One just quick question. You put up the master plan for the airport, and there was a big spot there for Terminal 3. And I didn't know the 10 gates that Copa is planning to add.
Is that Terminal 3, or is that an extension of Terminal 2?
Well, as Pedro mentioned, luckily, we don't have the pressure to do this in the short term. And as we speak, different options are being considered. Probably, actually, there are more pressing or more important decisions to be made, which can be easier and faster to execute than actually having a new terminal or a new runway. But we must not only look at the end of this decade, but also 10 years down the road, 15, 20 years down the road.
But from that picture, it sounds like that's land that the airport currently controls, right?
Some of that. Not all, but there is enough land in other places that somehow we can swap or do some kind of transactions that would allow to have enough land.
The important part there is that there's plenty of land that is not being fully used or is pretty much empty, maybe some cows now and there. But we don't have the problem to have a city right next to the airport. So there's the opportunity to have plenty of space for Panama's or Tocumen's airports to grow vis-à-vis the other airports you mentioned in your question before, no? And don't have the constraints, for instance, that you've seen in Heathrow regarding another new runway day that they've been trying to do so for many years unsuccessfully.
Great. Well, thank you for that.
Anyone else have questions?
Don't ask me about dividends.
Thank you again, Minister. Can you comment on the port sector in Panama? And there's been an announcement about the Panama Canal putting out for bid new ports.
I don't know if it's only on the Pacific side, but can you comment on both sides? Can you comment on that?
The port industry is fascinating, and it's undergoing probably the most exciting time I've ever seen in terms of ports. So Panama has fought to gain control of the area and the Panama Canal waiting for this moment. So everyone's looking at it. All the major players are knocking at the door. And there you have two entities that will manage this expansion. You have the Maritime Authority, which has the responsibility to oversee some areas alongside the canal and outside the canal where several ports will be developed. And there are other areas which are more within the Panama Canal area that the main responsible for that would be the Panama Canal Authority. Yet the Panama Canal Authority is not interested in running ports.
It's not its expertise. They basically manage. They pass ships through the locks on the Panama Canal, so what they are contemplating is bidding out, making tender offers for several ports. When we combine the Maritime Authority and the Panama Canal, we're talking about several opportunities on the Pacific side and on the Atlantic side. Panama nowadays is moving around 9.9 million TEUs. Actually, we were just a couple of days ago with some experts from the Netherlands, which they believe in the next 10 years, in the next few years, Panama has the opportunity to at least double that, which includes operations both in the Atlantic and the Pacific. The opportunities are there. At the beginning, with all of these changes in geopolitics, trade, and the economy, I was a bit skeptical about that.
When I sat with the major liners, probably the five largest ones that we've met with, I was surprised to learn about their optimism about trade in the future, so much that they're buying ships probably faster than you're buying planes. They're putting their money where their mouth is. I believe, probably one of those ships costs a little more than one plane. I was happy to learn that. They are quite optimistic about the future. Regarding the gas pipeline, yes. Panama Canal is considering a tender offer to have an independent private operator. Again, they are not interested in operating a gas pipeline, yet to use the land they have next to the canal on the west side of the canal for a specialized operator to basically manage a gas pipeline.
You would think, "Why would you do that?" Because one of the major new customers for the Panama Canal after the expansion, it's been gas. So if you open up another alternative for these liners to transship that gas that basically gives you more space or liberate space within the canal so you can basically serve more ships. So in those 36 ships, the ships that go through every day in Panama, some of those are gassers. And so you can basically take those spaces and offer them to container ships.
Any other questions? No? Thank you.
On behalf of the entire team at Copa Holdings, I want to express our sincere gratitude to Mr. Chapman for being with us today and sharing this presentation with us. Thank you all for your attendance today. Please don't hesitate to contact me if you have any questions.
That concludes our Investor Day for 2025. We have souvenirs on the registration table on the way out, so please stop by. Happy holidays, and hope you have a good start of 2026. Goodbye.