In Latin America, the scheduled passenger service market consists of three principal groups of travelers: strictly leisure, business and travelers visiting friends and family. Leisure passengers and passengers visiting friends and family typically place a higher emphasis on lower fares, whereas business passengers typically place a higher emphasis on flight frequency, on-time performance, breadth of network and service enhancements, including loyalty programs and airport lounges.

According to data from the International Air Transport Association, or IATA, Latin America comprised approximately 7% of worldwide passengers flown in 2004, or 94 million passengers. The majority of this traffic consisted of passengers flying between the United States and Latin America.

The Central American aviation market is dominated by international traffic. According to data from IATA, international traffic represented more than 61.6% of passengers carried and 79.2% of passenger miles flown in Central America in 2004. International passenger traffic is concentrated between North America and Central America. This segment represented 61.9% of international passengers flown in Central America in 2004, compared to 20.0% for passengers flown between Central America and South America and 18.1% for passengers flown within Central American countries. Total passengers flown on international flights in Central America grew by 7.3% in 2004, and load factors on international flights to and from Central America were 68.9% on average.

Domestic traffic, or flights within Central American countries, represented approximately 38.4% of passengers carried and 20.8% of passenger miles flown in 2004. According to data collected by IATA, domestic passenger miles in Central America grew by 2.6% in 2004 while passengers flown grew by 1.6%. Average load factors on domestic flights within Central America were 63.7% in 2004.

The Company schedules a morning bank and an evening bank of flights, with flights timed to arrive at the hub at approximately the same time and to depart a short time later. Over the next few years the Company intends to increase the number of destinations and frequencies. As a part of its strategic relationship with Continental, the Company provides flights through code-sharing arrangements to over 110 other destinations. To a limited extent, the Company also provides flights through tactical and regional code-sharing arrangements with Mexicana, Gol and Gulfstream International Airlines.

The Company does not currently provide any domestic service in the Republic of Panama, choosing instead to focus entirely on international traffic both regionally and around the Americas. The Company divides its sales and marketing into the following regions: North America; South America; Central America (excluding Panama); the Caribbean; and Panama. In addition, AeroRepública periodically operates charter flights to Margarita Island, Venezuela; Havana, Cuba; Punta Cana, Dominican Republic and Montego Bay, Jamaica.

Passenger revenues accounted for approximately $364.6 million or 91.2% of the Company’s total revenues in 2004, all earned from international routes. Leisure traffic, which makes up close to half of the Company’s total loads, tends to coincide with holidays, school schedules and cultural events and peaks in July and August and again in December and January.

AeroRepública’s business is more concentrated on passenger service, which in 2004 accounted for approximately 97% of its total revenues. The majority of AeroRepública’s customers are leisure travelers and travelers visiting friends and family, and traffic is heaviest during the vacation months of July, August and the holiday season in December.

In addition to its passenger service, the Company makes efficient use of extra capacity in the belly of its aircraft by carrying cargo. The Company’s cargo business generated revenues of approximately $23.2 million in 2002, $24.1 million in 2003 and $28.2 million in 2004, representing 7.7%, 7.0% and 7.0%, respectively, of its operating revenues. The Company sold its remaining dedicated Boeing 737-200 Freighter aircraft in April 2002. However, the Company still wet-leases freighter capacity from time to time to reliably meet itsr cargo customers’ needs. In 2004, the Company’s cargo business consisted of approximately 69.5% in mail and freight; 28.3% in wet leases; and 2.2% in courier service.

Consolidated revenue totaled $428.9 million in the nine months ended September 30, 2005, a 46.3% increase over operating revenue of $293.2 million in the same period in 2004.

Consolidated operating expenses totaled $346.6 million for the first nine-months of 2005, a 53.6% increase over operating expenses of $225.7 million for the same period in 2004.

Consolidated non-operating expenses totaled $8.7 million for the first nine-months of 2005, a 42.2% increase over non-operating expenses of $6.1 million for the same period in 2004.

Interest income totaled $2.2 million in the nine months ended September 30, 2005, a 150.3% increase over interest income of $0.9 million in the same period in 2004.