Copa Airlines Expects to See Double-digit Growth in the Number of Passengers

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 percent, 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 percent from 75 percent in 2009. In February, Copa’s load factor was 81 percent.

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.

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. 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.