Panama's Copa To Fly
More Passengers As Economy Recovers
PANAMA - Panama-based airline Copa Holding
SA expects to see double-digit growth in the
number of passengers this year as the
carrier adds airplanes and flight
frequencies with Latin American economies
recovering, according to a top official.
Copa Chief Executive Pedro Heilbron said in
an interview that the company will increase
its capacity by 10%, with eight new Boeing
737-800 jets, and step up its number of
flights to Guatemala City, Los Angeles,
Punta Cana in the Dominican Republic, and
Sao Paulo.
He expects the average passenger load
factor--or percentage of seats occupied on
flights by paying customers--to rise to 76%
from 75% in 2009. In February, Copa's load
factor was 81%.
"We will have more flights, and they will be
fuller," Heilbron said. Copa will also seek
to expand the number of destinations it
serves in the region "from Canada to
Argentina."
Through its hub in Panama City, Copa flies
to the main cities in Central America, the
Caribbean, and South America. The business
model allows the carrier to service
low-density routes between Latin American
cities with daily flights.
"If you want to fly between Maracaibo,
Venezuela, and San Salvador, you don't have
many options," said Stephen Trent, a New
York-based analyst with Citigroup.
Copa, which also owns Colombian domestic
carrier Aero Republica, posted net profit of
$240 million in 2009, up from $119 million
in 2008 when airlines were hurt by soaring
fuel prices.
The airline's net profit is bound to rise as
business travel picks up in the region, and
higher demand will allow fares to rise,
Trent said.
Load factors are also expected to benefit
from a weak comparison, since in the
May-June period of 2009, the A/H1N1
influenza outbreak discouraged travel.
Trent has a buy recommendation on Copa
shares, with a $70 price target, compared
with Friday's close of $55.04.
Copa's Heilbron said he doesn't see any
competitive threat from low-cost airlines,
or from the merger between Colombian airline
Avianca and El Salvador-based airline Grupo
Taca.
"Instead of having two competitors, now we
will have only one," he said. Pressures on
fares may even ease a bit, he added.
Copa plans to invest $250 million this year,
mainly to buy new jets, and has preliminary
capital expenditure estimates of $158
million for 2011 and $151 million for 2012.
The airline finances the acquisitions with a
mix of cash flow and bank loans with
guarantees from the U.S. Export-Import Bank.
A group of Panamanian investors has a
controlling stake in Copa, which trades on
the New York stock market. U.S. airline
Continental Airlines Inc. had a minority
stake in the airline, but sold it over the
past few years. |
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