Copa Holdings SA ACPA

Morningstar Rating

Stock Research and Analysis

by Michael Pierson

Copa Holdings is well positioned at the crossroads of Latin American travel. Copa operates a hub-and-spoke network in Panama that focuses on intra-Latin American travel. Its network of more than 40 destinations in over 20 countries fits this niche focus, Read more

Bulls Say

Panama is the perfect location for a hub to service intra-Latin American travel--it is centralized among South, North, and Central America, and it has a strong, stable, dollarized economy and favorable tax treatment.

Copa's alliance with Continental was renewed through 2015. This will prove invaluable as Copa uses Continental's considerable aircraft and equipment purchasing power and gains access to its customers.

Because it serves multiple countries, Copa also benefits from a well-diversified revenue base, which many of its competitors lack. Read more

Bears Say

As air traffic increases in Copa's key markets, it may ultimately make economic sense to initiate nonstop service between important destinations. Point-to-point competitors and passengers could then easily bypass Copa's current hub-and-spoke network.

Copa's decision to fly Embraer ERJ 190s could lead to integration problems as additional costs, resources, and time are needed to hire and train new pilots, technicians, and other skilled personnel.

About 41% of revenue and 70% of expenses are denominated in non-U.S. currencies. Although these currencies are indexed to the U.S. dollar, some foreign exchange risk still exists. Read more

Strategy

Copa is expanding its network by increasing frequencies and adding new destinations. The company's five-year fleet expansion averages 7% growth per year. Additionally, cost management remains a key component Read more

Management

Copa's management team is extremely qualified, with an average of 20 years of airline industry experience among the top four executives. CEO Pedro Heilbron has held the top job for 19 years, and his family wields significant influence over the fate Read more

Profile

Copa is a leading Latin American airline, providing passenger and cargo services to dozens of destinations in more than 20 countries in North, South, and Central America Read more

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