Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings Fourth Quarter and Full Year Earnings Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder this call is being webcast and recorded on February 14, 2019. Now, I will turn the conference call over to Raul Pascual, Director of Investor Relations. Sir, you may begin.

Thank you very much Victor, and welcome everyone to our Fourth Quarter and Full Year Earnings Call. Joining us today are Pedro Heilbron, CEO of Copa Holdings and Jose Montero, our CFO. First, Pedro will start with our fourth quarter and full year highlights followed by Jose who will discuss our financial results. Immediately after, we will open up the call for questions from Analysts. Copa Holdings' financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earnings release which has been posted on the company's website copa.com. In addition, our discussion will contain forward-looking statements not limited to historical facts that reflects the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions that are subject to change. Many of these risks and uncertainties are discussed in detail in our annual report filed with the SEC. Now let's turn the call over to our CEO, Mr. Pedro Heilbron.

Thank you, Raul. Good morning to all and thanks for participating in our fourth quarter earnings call. First, I want to recognize all of our co-workers for their efforts during the year. Their ongoing dedication and commitment keep us at the forefront of Latin American aviation. As expected, during the fourth quarter we faced a soft unit revenue environment driven mostly by the continued yield weakness in Brazil and Argentina. Furthermore, we only saw a small benefit from the softening fuel prices as our effective jet fuel price started to decrease very late in the quarter. When compared to the fourth quarter of 2018 we had to close to $30 million of additional expenses due to fuel prices alone. Among the main highlights for the quarter, passenger traffic grew almost 5% percent year-over -year on a capacity growth of 5.5%. This resulted in an 82.8% load factor, 0.4 percentage points lower year-over-year. Yields came in at $11.08 or 7.7% lower than in the fourth quarter of 2017. Unit revenues or RASM decreased 7.7% year-over-year to $10.02. On the cost side our CASM, excluding the onetime non-cash fleeting permanent charge came in at $9.03, 0.5% higher year-over-year due to higher fuel costs. However, adjusted at fuel CASM came in at $6.2 or 5.8% lower year-over-year. The resulting operating margin excluding special items came in at 9%. On the operational front Copa Holdings delivered an on time performance of 89.7% and that completion factor of 99.8%, again industry leading results. Now turning to our main highlights for the full year 2018. Unit revenues at $10.4 came in close to 1.6% lower year-over-year driven by a 2.1% decrease in yields partly offset by a 0.2 percentage points increase in load factor. Adjusted CASM ex-fuel decrease 4.1% to $6.1 amongst the lowest for a…

Thank you, Pedro. Good morning everyone and thanks for joining us. As always, I'd like to join Pedro in acknowledging our great Copa team for all their achievements during a challenging year. I'll start by going over our full year highlights. We delivered a load factor of 83.4% on an 8% capacity growth. Yields however came under pressure in the second half of the year due to continued weakness in the Brazilian Real and Argentine Peso pushing unit revenues down 1.6% to $10.4. We decrease our fuel unit cost ex-fuel unit costs by 4.1% to $6.1, one of the lowest in the world for full service carrier. However, fuel prices increased about 25% year-over-year offsetting all of our ex-fuel CASM efficiencies and putting pressure on our operating margin which came in at 12.5% net of special items. On the operational front, we strengthened our network by adding five new destinations. We took delivery of our first 737MAX aircraft. We continued delivering a world class operating product and we're recognized as the most on time airline in the world. We have done this before, so it is gratifying for our entire team to achieve the number one spot. Reported net income for full year 2018 came in at $88.1 million which translates to earnings per share of $2.07 excluding special items namely the non-cash and one recurring term in charge of $188.6 million related to the Embraer-190 fleet. Adjusted net income came in at $276.7 million or adjusted earnings per share of $6.52, 23.5% lower than the adjusted net income of $361.2 million or adjusted earnings per share of $8.25 in 2017. Now turning to our fourth quarter results, we grew capacity by 5.5% year-over-year while revenue passenger miles increased 4.9% year-over-year which resulted in a consolidated load factor of 82.8%…

[Operator Instructions] Our first question comes from the line of Bruno Amora [Ph] from Goldman Sachs. You may begin.

Yes, hi good morning. I have a question on your cash position. I'd just like just to check with you if there is any of the countries where the currency has depreciated significantly in 2008 like Argentina, Venezuela, Brazil, where you have a significant cash position and if that is the case, what was the impact of the mark-to-markets in the cash position? And I also have a second question on your capacity growth. You have reduced your capacity growth guidance for this year is likely now together with the results, have you already made the adjustments that you had to make in the network in order to reach this new capacity level or is it something that you're going to do throughout the year and therefore could have an impact, not immediately, but throughout the year on your pricing power? Thank you very much.

Hello Bruno, this is Jose here. So in terms of cash basically all our cash is in U.S. dollars. So we don't really maintain amounts of cash in our currencies. Once we perform our sales we repatriate the currencies very quickly, so there is very little impact on our cash balance related to that. When you see the variation in our FX line mostly it is the translational aspects related to payables and receivables in the particular countries more than a specifically cash transactions related to the currencies. And in terms of the capacity, we've already started making some adjustments to the network, mostly for the first half of the year. We made it to frequencies in markets in South America we reduced some of our exposure to some of the South markets, again mostly driven by frequency into markets that we already serve. And so yes, that 2% at least for the first half which is kind of the first part of the year has already been out there and published.

Thank you so much.

Thank you. And our next question comes from the line of Savanthi Syth from Raymond James. You may begin.

Hey, good morning. I was wondering if you could share what the RASM declines were in Brazil and Argentina in the fourth quarter and with kind of tickets in an 1Q sold at so much stronger FX levels, what's the trend that you're seeing currently assuming nothing changes?

Yes, hi Savi, this is Pedro. So in the fourth quarter and both markets we saw in Argentina industry sales were around 40% down year-over-year and that was mostly yields, same with Brazil, with Brazil was around 20% industry sales, agency sales down in Brazil. I mean in that range and that was very similar to what we've been seeing in the first quarter also. And again, mostly yield. However, we have seen in our futures in our current sales for future travel we have seen network wide improvement in yields, a gradual improvement in yields and more recently we're starting to see actually positive yields year-over-year, but that's going to have an impact mostly in the second half of 2019.

Okay. And then if I, just regarding Venezuela, have you seen any kind of changes in the demand or supply there and just how you are thinking about it given the latest developments?

Right. So as usual it's like a roller coaster ride. So since the most recent crisis started, we have seen demand suffer quite a bit. And in fact, we had scheduled additional capacity towards the end of last year beginning of this year and we took out that additional capacity in this month of February, to react to the lower demand due to what's going on there.

Okay, got it. Thank you.

Yes, Savi one more thing here, this is Jose here. So Venezuela just in total in terms of the ASMs represents around 2% of our ASMs, so it's a minor portion of the total capacity that we have.

I was just wondering if there was opportunity there given that potentially things could improve, but it sounds like it's not there yet?

Yes, none right now. Yes, hopefully it will improve in the future.

Thank you.

Thank you. And our next question comes from the line of Duane Pfennigwerth from Evercore ISI. You may begin.

Hey, guys thanks. I wonder if you could just expand a little bit on what you expect in the first quarter. Do you expect a similar decline, greater decline or less of a decline into the March quarter? And if you could size the Easter shift as you see that in the first quarter?

Yes, Duane I’d say that the first quarter it's going to be a difficult comp because Q1 of 2018 was very strong and so we're seeing a gap in a year-over-year basis and in the low double digits kind of low teens in terms of our RASM on a year-over-year basis, so that's how we're seeing it. Having said that as Pedro mentioned, I think we're starting to see especially I think towards the latter part of the second quarter some better I think forward yields in the bookings that we're seeing. So I think that we're at least optimistic in the sense that perhaps towards the second half of the year we'll start seeing improvement on a year-over-year basis.

I appreciate that detail. And then just for my follow up, on the 190 fleet, if you had to guess how much longer will you be operating those 19 aircraft and what is the carrying value on the fleet today after the write-down? And thanks for taking the questions.

Right. So I'll take the first part, this is Pedro. By the end of this year the Embraer fleet will be down to 14 aircraft. We're selling five, well we have sold five of which we have delivered one and four more to be delivered. So we'll end the - we should end the year with 14 Embraers. We have not made a decision a firm decision yet in terms of a how long we're going to keep the Embraers or if they are going to be replaced by similar 100 seaters or just operate a single Boeing fleet, a 737 fleet. We have not made that decision. We're looking closely at the numbers and we will make a decision that is positive through our net results, but we're not there yet.

Yes and in terms of the carrying book value of the fleet it’s basically between the high 80s in terms of millions results. So yes that's kind of how it's left, but there's spare parts and spare engines, et cetera, as well in there. So there's some other components as well in there, was the figure that I just mentioned is purely aircraft.

Okay guys. Thank you.

Thank you, Duane.

And our next question comes from the line of Hunter Keay from Wolfe Research. You may begin.

Hi, this is actually Mike Aaron for Hunter. So base economy you said that's going to be coming in 4Q, just a couple of thoughts if that's going to be limited to certain geographies, if it will come out at all once if it's going to be in various like, all the buckets or just a couple of them, any thoughts you'd be willing to share? Thanks.

Yes, we haven't finalized what exactly it is going to look like, so we know we're going to have the right technology and we're implementing firm magic [ph] technology which should be implemented by the fourth quarter. That's going to allow us to implement the basic fares and that's something we're going to do. We'll know exactly how it's going look, but I would expect it to be in most markets for sure. And we also expect a kind of very positive impact from being able to up-sell from our up-selling but also and more effectively a sale ancillary.

Great. Thank you.

And our next question comes from the line of Helane Becker from Cowen. You may begin.

Hey guys it's actually [indiscernible] for Helane. Is it safe to assume that the capacity adjustments are happening on the off days, and if so, can you just talk about the unit revenue trends first peak, first off peak? Thanks.

Yes, I think that, yes could you can make an assumption that we are very aggressive in our capacity management during the low season periods, but we, what we've also done is shifted some of the capacity away from some of the Brazilian and Argentinean markets and put it to fly in our Portugal network, so there's also a little bit of that as well so there's a part of the ASM ship that's been driven by just simply a shift in the shape of the network, but also indeed there is a very active management of our capacity during low season periods.

And I would add to that, that some of our second Brazilian and Argentinean markets, five of those markets in both countries have capacity reductions in Q1 year-over-year in the 20% range.

Okay, and that actually kind of speaks to my follow up. Can you - if you exclude Brazil and Argentina, how is the rest of your network performing? I mean obviously you're putting more capacity into new markets, so is there unit revenue headwind that you're kind of seeing there overall? Thanks.

Yes, so I’ll say two things or maybe three things. So in terms of capacity we're actually slowing growth and that 2% ASM growth where we are guiding to for 2019, is pretty much across the board. I mean we are reinforcing capacity in some markets that are stronger, but not by a significant amount. So it's pretty much a kind of a network thing. There are certain other markets that have not obviously a collapse like Brazil and Argentina they have not been subject to the currency devaluations and economic conditions, but that are under more capacity pressure. Like for example in and out of Colombia, Colombia to North America to South America to the Caribbean there's has been a lot of capacity growth, not by us by others, also from North America to Central America there has been quite a bit of capacity growth and we're talking you know from the middle of last year and including this first quarter. So those markets are under more competitive pressure and of course yields have suffered.

Okay and then just a quick follow up on Duane’s question about the 190 fleet. Can you just talk about the earnings drag of operating two separate fleet types and if you do make a decision for that to go away what would the positive impact there? Thank you.

So look when we issued notice of the Embraers, leasing five Embraer leasing we were talking about there's a cash positive benefit of about at least $10 million per year we made it through to the replacement of those aircraft with 737 capacity, so we're very bullish about that. And of course there are further opportunities once the fleet if we decided the fleet goes when we go to a slow [ph] fleet, yes there is some complexity of course that will go away as well. So yes, those are certainly advantages that we will seek to do while operating just the 737 fleet.

Great. Thank you.

And our next question comes from the line of Mike Linenberg from Deutsche Bank. You may begin.

Yes, hey everybody. Just a couple here. I guess Jose, you just highlighted the cash benefits of removing the E-190s and the reduction in complexity. Are there any markets there that you serve of the 80 plus markets today where if you get rid of the E-190 that the 737-700 is just not suited for that market, I don't know if it's someone else or some of these flights that are less than daily?

Yes, I think that the first thing we have to say is that we have not made the decision, the final decision yet to exit the fleet. So these are things that we are looking at very closely right now. And of course in light of what you mentioned of what is the impact of E-190 in certain secondary markets where that is the right size of aircraft. So we are very carefully evaluating what the particular impact would be of half of that and it could be that if we decide, you know you have to take into account that if you decide to replace with 737-700 for E-190 that you have to look at how the man would act on the per trip benefit or profitability of a particular flight would improve or not with the 737. So these are very thorough analysis that we perform on an ongoing basis and we haven't finalized a decision, so I would have to say that that's something we're still looking at.

Okay great. And then just a sort of second strategic type question, why the shifts on the 737-700 to the 800 for Wingo or was the 800 maybe the right airplane from day one but you needed MAX9s to come in to free up enough 800s to go into that business? And sort of a related question, you indicated that you're going to base one of the Wingo airplanes in Panama. Now is that Panama Pacifico or are you’re actually going to put in a Wingo air craft at Tecomán?

Right. So this is Pedro, Mike.

Hi, Pedro.

Yes, the 800, we always knew the 800 was the right aircraft for Wingo. It has the right seat capacity and more importantly it has the right unit costs for an airline like Wingo. We started with the 700 for two reasons, one that it would reduce the risk, the downside risk of a start up and it did. So the first year we did not have load factors that were so high that the 700 was not enough. So it did reduce the risk and reduce losses during the first year. And the second reason we started with the 700 because we knew we could switch fleets at any time because we have enough 800s and we have use for 700, especially now that we've sold Embraers. So the Embraers we're selling we're replacing with the Wingo 700. So it's not a big growth in capacity. So yes the 800 is the right aircraft for Wingo and we're doing it now when we're confident about the load factors and the future demand for Wingo. In terms of basing an aircraft in Panama, it is going to be in Panama Pacifico where Wingo has all of its operations and it's actually going to take registering a new airline in Panama. So it can operate in and out of Panama Pacifico with its own route rights.

Okay, Should we assume that that airplane is going to be used for Panama to route to the south which is mostly Wingo? I mean I know I think you do fly Wingo up to Cancun and I believe Mexico City or is this something where you're going to be looking more northward with the Panama based aircraft?

Right. So we think there, I won't be able to give you a firm answer, but what I can say is, this is not an exact answer but there are a few markets that can sustain non-stop a point to point service from Panama. The rest depend on connectivity which is what we do. So only a few can sustain, that's our opinion. So Wingo was going to start operating a few of those markets and it could be to the north, it could be to the south, that's totally open. Where we see opportunities in those markets where non-stop can be sustained, then Wingo might fly it.

Okay, great and if I could just squeeze in just one more as it relates to IFRS 16. I know most airlines are going to be moving over to that convention in 2019. Presumably you will be doing that as well. I know for some airlines because of the punitive nature of capitalizing it seven times, some carriers have actually seen an improvement in their balance sheet and leverage moving over to the new accounting standard. I'm not sure Jose, if you've done any early work on this, what's your initial read, whether or not you're coming out with a potential benefit from a deleveraging perspective by moving to IFRS 16, any thoughts or comments or is it still too early?

Yes, that's a great question and actually IFRS 16 is a mandated standard, so everybody is going to have to move even under it, a revised whether you're under IFRS or on the U.S. GAAP comparable accounting standard as well, so all companies are going to have to go into this. Not only airlines by way. And yes, for us we're doing still the work preliminarily and having discussions with the auditors. There's a lot of debate in the industry related to the application of this standard. But in our case preliminarily we're seeing yes, there is a deleveraging effect on the balance sheet related to the capitalization of the leases.

That's great to hear. Thanks Jose. Thanks everyone.

And our next question from the line of Joseph Donati from Stifel. You may begin.

Yes. Good morning everybody. Pedro, can you just talk about as it relates to Brazil some of the key milestones politically or from a reform standpoint that, that you're kind of keeping an eye on over the next few months to kind of gauge whether some of the enthusiasm down there is actually going to yield good positive results longer term?

Well, I think you could probably tell me. We are obviously hopeful. And we've seen how the currency has stabilized, actually since like the middle of last year is going pretty stable and the economic growth prospects for this year are close to double what it was in 2018. So we think Brazil is going to recuperate much faster than maybe some people think, we're seeing a little bit of that right now. But we're cautiously optimistic. Still, there's still a lot going on and I don't have to be the Brazilian expert, but we're cautiously optimistic right now.

Okay, yes, fair enough. And then Pedro, if you look out three or four years it seems like you know a significant amount of capacity between the U.S. and South America is going to be controlled by three or so joint ventures. And I'm just wondering if you could talk about how you think you fit into that longer term, whether that's good for you or bad for you. Yes, just kind of what are your thoughts and it seems like a very significant change occurring over the next few years. I'm just wondering how you fit into that. Thank you.

So you know we announced in the latter part of last year, we joined and we signed a JBA a joint business agreement with United and Avianca from Colombia, that has to go for approval. The approval process has not yet started, but it will start sometime this year. And it usually takes upwards to a year and a half or so to get approved. So we're talking of end of 2020, maybe beginning of 2021, hard to predict. But we're going to be part of one of the three major JBAs in Latin America and we think that will level the playing field and given our strategic position in Panama right in the middle of Latin America we think it's going to be net positive for us.

Yes, okay, I mean if you think about the potential benefits of it. Do you think it's stability, does it improve you’re the returns that you get going to North America, does it allow you to grow more in North America? You mentioned it kind of levels the playing field, maybe you can expand on that just because your returns are kind of better than everybody else's, so I'm not sure what leveling of the playing field means for you guys.

Well, what I mean by leveling the playing field is not being left out and not having let’s say United who is our major partner even before we both joined Star Alliance, working with someone else. And then the other major U.S. carriers working with some of our competitors and having that advantage of working together in the U.S. market and being able to cooperate in expanding their networks and offering more advantages to the passengers. So we would probably given the way our next network is structured which is basically international hub and spoke full service we will be in a way left out of the benefits of working together and the benefits for the passengers also, so they would find probably more and more options in the other joint venture agreements or joint business agreement. So that's what I mean by leveling the playing field, not having to work against a much greater entity. So we're going to be at par, but we retain and this only applies to Latin America to U.S. not to the rest of our networks and we will also retain our cost advantage and other efficiencies including our world leading on time performance. So we will still be part of that, but network wise and marketing wise we'll be able to have some advantages that we think are going to be positive going forward.

That's helpful. Thank you.

Thanks

And our next question comes from the line of Josh Milberg from Morgan Stanley. You may begin.

Good morning everyone. Thank you for the call. Just two quick ones from me The first is that you mentioned the shift in capacity away from Brazil and Argentina in some markets within those countries seeing cuts as big as 20% early in the year if I'm not mistaken. I was hoping you could just give a little more detail on that? And also maybe give an indication on what might be the full year capacity evolution in those two markets because I were just trying to reconcile your point about potential cuts with the other message that the overall growth should be uniform across different markets.

Yes. So this is Pedro. I'll start and maybe Jose can pitch in. So in terms of Argentina and Brazil, most of our ASM reductions or capacity reductions have been in secondary markets, so like five, three secondary markets in Brazil, two in Argentina with about 20% ASMs in the first quarter of this year versus first quarter of the year before and overall in those markets even adding the older the trunk routes which are doing better, capacity is down in Brazil, is down in the high single digits in Argentina is flat. But I should say that right before the crisis in Argentina and currency devaluation, we had grown quite a bit opening destinations and adding frequency. So we have pretty much backed down all of that additional capacity and we'll have flat growth this year.

And I think that complementing that the growth that we're seeing or that we're shifting away from these South American from Brazil, Argentina secondary markets and granted these are all frequencies that we fly into these markets, the capacity that we're replacing is mostly in the northern parts of South America. So the fact that these are shorter station flights creates a net reduction or a very slight growth and those were essentially flat year-over-year it seems and that's kind of how we project the overall behavior of ASMs throughout the year. And actually for example in the first half of the year for the first quarter we're expecting ASM or all ASM growth to be kind of in line with that 2% that we're guiding to for the full year and then Q2 might be flattish to slightly down, Q3 basically that that one point flat range. So that's kind of how the year is going to be overall.

Okay. That was very clear. And my second question relates to the Embraer fleet impairment charge. It looked like that the impairment itself was boosted to around $190 million from the $160 million level and I just wanted to make sure that was right and also if it is right, understand what drove that?

Yes, Josh, so the prior figure that we had issued back was a preliminary figure and that was, we're still performing very detailed analysis around it. And the only thing that we had concurrent with that was componentization of aircraft analysis related to the maintenance policy that we had. So once we concluded both analyses, the impact on the 190 fleet was higher than what we had calculated initially. So it was a little bit of kind of when both calculations were performed a little bit more came into E190 impairment and versus the company indication adjustment that we had to make as well. So that was the reason for it. It is mostly was a preliminary figure and still under adjustment.

Understood. Thank you.

And our next question comes from the line of Dan Mckenzie from Buckingham Research. You may begin.

Hey, thanks guys. Just going back to the revenue commentary, the full year revised outlook probably for 2019 was a hair weaker than the last outlook and given the trim to capacity I would have expected it to be just a little stronger. So is the incremental weakness tied to some of the prior Q&A primarily that you've already answered or is it something new or is it really just a rounding error?

I'd say that it's mostly related Dan to the specific performance of the early part of 2019 of our Q1, and yes these were in sharp changes that we saw. Good but yes, the unit I'd say performance very close into the beginning of 2019 has been affected and yes it's been a challenge in Q1. But as we mentioned before, December was seeing our bookings and the yields that are coming with our bookings especially during the second part of the second quarter improving and yielding close to year-over-year gap for the RASM for Q2. We've seen that only for the second half of the year potential for improvement right now.

Yes, so making basically the sales are coming in right now for future travel are coming at better year-over-year yields, but obviously we have sold maybe a good percentage of the second quarter at a lower yield. But we're seeing that throughout this year. We have seen a gradually improvement in yields year-over-year closing the gap we had at the beginning of the year and we're seeing positive trends for the second half of the year.

Got it. And then with respect to those positive trends in the back half of the year that you've seen is that broad or wide spread across all the network or is that simply is it tied primarily to Brazil and Argentina.

Its overall, it's net it is pretty much the whole network. There is always going to be ups and downs of positives and not so positives, but it's pretty much throughout the network.

Very good. And I could just squeeze one last one in here, the - with respect to the commentary on lie-flat seats and the positive impact to yields that you referenced in the opening remarks and I’m wondering if you could just help us peel back the onion a little bit there. I'm just kind of wondering what percent of the flying to the premium seats represent today, what percent timing would they represent at the end of the year and what percent would they represent once you're fully up and running? I'm just trying to get a trend rate for how this premium revenue would come in.

Yes. So right now it is very little. I think it is 1% or 2% something like that very little. It will be 10% by year end. And a growth year-after-year, but it won't be let’s say that the whole premium network that will happen like in three or four years and even then it's going to be maybe that will be a third of our flying four years down the line. So by the end of this year it will be 10%.

Thanks Pedro. Perfect.

Thanks Dan.

And our next question comes from the line of Victor Mizusaki from Bradesco BBI. You may begin.

Hi, thank you. I have lots questions about your [indiscernible]. The first one how much are you paying for jet fuel in the first quarter? And the second question also volatile fuel cost, how does this compare with your guidance, I mean for the year you are assuming $2.15 per gallon. So I'd like to understand how much you are paying today and how does it compare with your guidance?

I think that it's really close to where we are right now. I think it's in line with the full year 2015 that we've seen. So it's not, it might be a little higher than what we have, but it's not significantly higher than where we are guiding for, for the full year. Yes. It’s only just seeing here, it's basically about a nickel below the full year. So Q1 is basically about $2.10 and the full year is about $2.15. So it's, but it's not significantly different from what we've guided to.

Okay, and I don’t know if you kind of disclosed this, but what’s the [indiscernible] forecast to support the $2.15 per gallon for this year?

Yes, so you're talking about the jet fuel basis that we're using for the $2.15 is about $1.87 of jet fuel per gallon and that, you add to that $0.28 of inter plane fees and that creates that $2.15 guidance for fuel.

Okay, thank you.

Thanks a lot Victor.

Thank you. And our last question comes from the line of Stephen Trent from Citi. You may begin.

Thanks very much guys and I appreciate the time. Just one or two for me actually, the first is a follow up from Mike Linenberg's question, when we think about IFRS 16 and we look at your margin guidance for this year versus last years, any indication as to whether the accounting adjustment made a material difference or can we assume that there's basically no margin difference because of the accounting?

Yes, Steve there is a tiny portion of leases that the lease expenses that will become non-operating, but it is really very tiny. So as I would imagine, I would assume though, I would just say that the guidance for 2019 has that the IFRS 16 included in there, but is very, very minor on an operating versus non-operating basis.

Okay, I appreciate that. And just one other last question, can you give us an update as to where we are now with Tecomán Airport's self link?

Yes. Okay. So Steve we have seen some progress there, progress over the last several months. We expect first four gates to be operational in the month of April and we expect the terminal right now, I mean it is still under construction and there are still some milestones to be completed though. We're talking about something for the latter part of the year, Q4 of this year for the terminal to be fully operational.

Okay. I appreciate that Jose. Thank you.

Thanks a lot Steve.

Okay, I think that concludes our earnings call. Thank you all. Thank you for being with us and thank you for your continued support. Have a great day.

Ladies and gentlemen, thank you for your participation. That concludes the presentation and you may all disconnect and have a wonderful day.