Pablo Monsivais: Hi, thanks for taking my question. I have a quick question in terms of the demand and the macro environment. To what extent do you think that the strong local currencies — has helped in demand to be so resilient? And of course, if you think that a weaker FX might be a headwind, given that the central banks in the region might lower interest rates this year. And I just want to pick your brain on how do you see the FX and its direction versus the demand environment for Europe. Thank you.
Pedro Heilbron: Yes. Hi, Pablo, it’s been a positive, of course, in terms of generating more traffic, let’s say, from South America growing north. However, we’re well-positioned and very well diversified. And if the currency was to weaken in Latin America, meaning a stronger dollar, then I guess we would pull more traffic from the U.S. and more tourists and visitors from the U.S., which are — which is still a growing market with a lot of interest to serve our region. So we sit in the middle of the two trends, and we think one balances the other. And we have been able to succeed with strong and not so strong currencies.
JoséMontero: And I would say, after the pandemic, the traffic flows that we’ve seen are much more balanced, Pablo. And so that I think has helped in mitigating the impacts of currency fluctuations.
Pablo Monsivais: Perfect. Interesting to hear. Thank you.
Operator: Thank you. One moment for the next question. And our next question will be coming from Michael Linenberg of Deutsche Bank. Your line is open.
Michael Linenberg: Yes. Hey, good morning, everyone. Just rough numbers, just the impact of the MAX 9 grounding on the March quarter. I mean, you could even give me margin points or round numbers and dollars. And as sort of a tie to that, should we — I guess we should assume that you’ll probably receive some sort of offset from the OEM in some sort of form over time, which is typically.
José Montero: Mike, look, we’re not going to get into the financial details of the MAX impact at this time. There’s a pending negotiation with Boeing. However, we do expect to be fully and fairly compensated.
Michael Linenberg: Okay.
José Montero: The guidance that we issued includes sort of the, let’s say, negative impact of the grounding of the aircraft during the month of January and of the delays that we expect as of now for the rest of the year. And the issue with Q1 is that we don’t really publish per quarter guidance, so we’ll have to leave it at that for now.
Pedro Heilbron: And I would add, Mike that January is one of our strongest months of the year, if not the strongest month. So this happened in the middle of such an important month for us, which is a good and a bad, of course. So it’s a significant lost opportunity, not having 20%-plus of our capacity during that month, but at the same time, it’s a strong month. So the other 80% does very well.
José Montero: Yes.
Michael Linenberg: Should I take from what you’ve said, though, you’ve incurred all of the badness, but any sort of potential offset, José, as you sort of alluded know, being fully compensated, that is not in the quarter, right? Any sort of offset that you would get over time.
José Montero: It is not in any of our figures.
Michael Linenberg: That’s perfect. Okay. That’s actually that clarifies that. And then my second question, this is kind of an easier one, I guess Wingo, nine airplanes, but now that you’re only going to take 11 instead of 15, I guess Wingo is probably likely going to stay at nine. Or is Wingo going to see some growth this year anyway, any color on that? And thanks for taking my questions.
Pedro Heilbron: Yes. It seems that for now, Wingo is going to stay as is this year. And I think you put it very well. So it’s going to be a difficult year in terms of having additional capacity or planes available, even though their markets are doing quite okay.
Michael Linenberg: Okay. Thank you.
José Montero: Thanks, Mike.
Operator: Thank you. One moment for the next question. And the next question will be coming from Stephen Trent of Citi. Your line is open.
Stephen Trent: Good morning, gentlemen, and thanks very much for the time. I was curious on the first question, if you guys sort of have any broad geographical color on what might be happening to demand, given what we’re seeing from some of the U.S. airlines. I know there’s been some, a little bit of unrest in Ecuador and maybe you’re not much affected by that at all, but we just love to get the high level view on that. Thanks so much.
Pedro Heilbron: Okay. So, I mean, we are affected by what happens in Ecuador and in other countries, maybe not to an extreme level, because our — most of our market in and out of Ecuador is VFR and is business and it’s not that much leisure. So that kind of helps because leisure, as we know is the one that first stays away when there are disturbances and things like that, which is what has happened in Ecuador. So there is an impact, but not that significant. Overall, most markets in Latin America are okay in terms of our market, and where we do our business. Of course, some are always stronger, many are stable, a few might be weaker. So I would say there’s nothing specific to highlight besides the fact that we never give out like very specific details on regional demand.
Stephen Trent: Very helpful color, Pedro. I appreciate that. And just one more for my follow-up. When we look at goal and Brazil having some financial issues, I’m assuming this really doesn’t have much of an impact on you guys at all, given I think you may do some sort of limited code share with them, but does it create opportunities to the extent that gives any pullback from them on the international side? Maybe it’s not much of a look for you guys.
Pedro Heilbron: Yes, it doesn’t really have a much impact either way. But we do code share with gold in Brazil and we also have a frequent flyer relationship reciprocity. So gold operating in a complete and healthy way, it’s positive for us and we expect that to be the case, but we’re not direct competitors, so —
José Montero: Not much overlap [indiscernible]
Pedro Heilbron: Yes, there’s basically no overlap, so there’s no impact from that side.
Stephen Trent: Okay. Super helpful, gentlemen. Thanks so much.
Pedro Heilbron: Thank you, Steve.
Operator: Thank you. One moment for the next question. And our next question will be coming from Bruno Amorim of GS. Your line is open.
Bruno Amorim: Hi, thank you for taking my question. I have a follow-up on the outlook for this year related to the guidance as well, but more specifically related to the pricing environment. Now, you are guiding for unit revenues somehow below what we saw in the fourth quarter. Even if we adjust for seasonality, it seems that you’re guiding for lower unit revenues this year versus what we saw in the end of 2023. So it just — it would be great to understand the rationale behind that. Is it the result of some slight pressure on the competitive side, or are you being conservative? How do you get to this conclusion that unit revenues will fall, even if slightly during this year? Thank you so much.
José Montero: Yes. Bruno, I would say there’s three main components, I mean and most of this is related to the MAX grounding. So the $0.122 RASM guidance includes the effects of January of 2024. And then in addition to that, let’s say length of haul for the year 2024 is slightly higher than — we expected to be slightly higher than in 2023. So there’s a little bit of an impact there. And then finally, yes, well, we are in a lower fuel environment for the year versus 2023 in a competitive environment too, and we are growing in double digits, right, for the full-year. So there is a little bit of an impact there. But I would say the majority of the RASM impact, when you compare it year-over-year is related also to the fact that the guidance for 2024 has the MAX effect in it.
Bruno Amorim: Thank you. May I just ask for a quick follow-up? Can you please clarify how would the MAX groundings affect unit revenues? And couldn’t we also think of more groundings and eventually more delays on the production of new aircraft, which was kind of the marginal news over the past few months to be kind of a positive from capacity or supply and demand dynamics?
Pedro Heilbron: I’ll go first and I’ll let then José talk about the unit revenue part. But embedded in our guidance is the expectation of further delivery delays due to the MAX grounding. We have a few MAX 9 we’re expecting this month, which we’re not sure when we’re going to get. And we’re also expecting delays on the other MAX 8 we were — we are receiving this year. And we have reduced the number of aircraft from what we — from the numbers in our preliminary guidance last year to 11 deliveries this year. But we still have that risk of even more delays. So that’s still up in the air, I would say.
