Copa Holdings (NYSE:CPA) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.
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Summary
Copa Holdings reported a record net profit of $212 million for Q1 2026, with earnings per share increasing by 20.5% year over year.
The company achieved an operating margin of 24.6%, with capacity increasing by 14% and passenger traffic by 15%, resulting in a load factor of 87.2%.
Copa Holdings resumed service to multiple Venezuelan cities, expanding its network to 87 destinations and placed a new order for 40 Boeing 737 Max aircraft to support long-term growth.
Despite higher jet fuel prices, the company maintained strong financial performance, supported by cost discipline and a robust demand environment.
For Q2 2026, Copa Holdings expects an operating margin of 8% to 12% with a capacity growth of approximately 16% year over year.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings first quarter earnings call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. At that time. If you have a question, you will have to press star 11 on your telephone. As a reminder, this call is being webcast and recorded on May 14, 2026. Now I will turn the conference over to Daniel Tapia, Director of Investor Relations. Daniel, you may begin.
Daniel Tapia (Director of Investor Relations)
Thank you, Carmen. And welcome everyone to our first quarter earnings call. Joining me today are Mr. Pedro Hedron, executive Chairman and CEO of COPA holdings and Peter Dunkersut, our CFO. First, Pedro will begin by going through our first quarter highlights followed by Peter who will discuss our financial results in more detail. Immediately after, we'll open the call for questions from analysts. As a reminder, COPA holdings financial reports have been prepared in accordance with International Financial Reporting standards. In today's call, we will discuss certain non IFRS financial measures. A reconciliation of these measures to comparable IFRS measures can be found in our earnings release which is available on our website. Our discussion today will also contain forward looking statements, not limited to historical facts that reflect 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 subject to change. Many of these are discussed in our annual report filed with the sec. Now I'd like to turn the call over to Our Chairman and CEO, Mr. Pedro Hedron.
Pedro Hedron (Executive Chairman and CEO)
Thank you, Daniel. Good morning and thank you all for joining us for our first quarter earnings call. Before we begin, I would like to recognize our more than 9,000 coworkers. Their commitment and professionalism continue to be key drivers of Copa's strong operational performance and leadership in our industry, especially in today's higher and volatile jet fuel price environment. Their consistent focus on execution and cost discipline has allowed us to enter the current fuel environment from a position of strength to them. As always, my sincere appreciation and respect. We delivered another quarter of strong financial and operational results reaffirming the strength and resilience of our business model and our ability to consistently deliver industry leading profitability. Our first quarter results reflect a strong demand environment across the region, continued discipline in cost execution and our relentless focus on delivering operational excellence to our passengers. Now I'll go over our first quarter highlights. Capacity increased 14% year over year while passenger traffic increased 15% resulting in a 0.8 percentage point increase in load factor to 87.2%. Passenger yield increased 1.6% year over year. RASM came in at 11.8 cents, 2.7% higher compared to Q1.25. Unit costs for QAASM increased 1.6% to 8.9 cents driven by higher fuel prices. QASM excluding fuel declined 1% to 5.8 cents reflecting our continued cost discipline and we delivered an industry leading operating margin of 24.6%, 0.8 percentage points higher than Q1 of last year. On the operational side, we delivered an on time performance for the quarter of 91.6% and a flight completion factor of 99.7%, once again positioning COPA among the very best in the industry. Turning to our network, we have resumed service to Valencia and Barquisimeto and have scheduled the restart of Barcelona in June. Together with our existing service to Maracaibo and Caraca. This returns us to serving 5 cities in Venezuela from our hub of the Americas in Panama. With these additions we will operate to 87 destinations in 32 countries, further strengthening our position as the most complete and convenient connecting hub for travel in the Americas. With regard to our fleet, during the quarter we took delivery of two Boeing 737 Max 8 ending Q1 with 127 aircraft. We have already received two additional Max 8s in the second quarter bringing our fleet total to 121 aircraft. Additionally, in April we announced a new Boeing 737 Max order for 40 firm aircraft and 20 options with delivery scheduled between 2030 and 2034. This new order, which begins as we complete deliveries from our existing order book in 2029, reinforces our long term growth strategy and ensures COPA Hub of the Americas continues to lead well into the next decade. As always, we maintain significant flexibility in our fleet plan thanks to options, flight rights, leased expiration and unencumbered aircraft which provide us the ability to adjust our growth plan if needed. Turning now to the current environment of higher and volatile jet fuel prices, throughout our history we have successfully navigated periods of increased fuel prices and volatility, consistently delivering strong financial results supported by the effectiveness of our business model, low cost and disciplined execution. I feel confident that we will demonstrate this once again. To summarize, we delivered strong industry leading profitability in the quarter. We continue to improve our already competitive cost structure. We keep delivering best in class on time performance and reliability. We continue expanding and strengthening our network, the most complete and convenient hub for intra America travel. The current demand environment remains strong supporting yield increases and our proven business model built on having the best geographic position, structurally low unit cost, a strong balance sheet and liquidity position and a superior passenger friendly product positions us well to navigate the higher jet fuel price environment and again in 2026 deliver strong and industry leading financial results. With that, I'll turn the call over to Peter who will walk us through the financials in more detail.
Peter Dunkersut (Chief Financial Officer)
Thank you Pedro. Good morning everyone and thank you for joining our call today. I would like to start by reinforcing Pedro's recognition of our team's continued dedication to delivering leading results. Their commitment remains essential to our strong operational and financial performance. Let me begin by going over our first quarter highlights. We reported a record net profit of $212 million for $5.16 per share, representing a 20.5 year over year increase in earnings per share. Net margin came in at 20.2%, 0.5 percentage points higher year over year. Operating profit came in at $258 million resulting in an operating margin of 24.6%, 0.8 percentage points higher than the first quarter 2025. Unit costs excluding fuel or exfuel chasm declined 1% to 5.8 cents, reflecting the company's continued focus on cost discipline. Including Fuel CASM (Cost per Available Seat Mile) increased 1.6% year over year to 8.9 cents, driven by the increase in the average price of jet fuel during the quarter. All in Jet Fuel prices increased 7.5% year over year from $2.54 to $2.73 per gallon, while the average increase for the quarter was moderate. Higher prices in the second half of March had a more pronounced impact on our results, driving an approximately $20 million year over year impact on the first quarter performance. Moving on to our balance sheet and liquidity, we ended the quarter with approximately $1.5 billion in cash, short term and long term investments representing 40% of last 12 month revenues. This number excludes approximately $700 million in pre delivery deposits for new aircraft as well as 45 unencumbered aircraft and 15 unencumbered spare engines worth an estimated additional value of over $1 billion. Total debt including lease liabilities stood at $2.4 billion and we ended the quarter with an adjusted net debt to ebitda ratio of 0.7x. Reflecting our strong financial position, I'd like to highlight that our average cost of debt, comprised solely of aircraft related financing remains highly competitive at 3.6%. Turning now to the return of value to our shareholders, the Board of Directors has ratified the company's second quarterly dividend for the year of $1.71per share to be paid June 15th to all shareholders of record as of May 29th. Additionally, during the quarter we repurchased $45 million worth of shares representing approximately 1% of the total outstanding shares. Finally, turning to our outlook, we continue to see a robust demand environment across the region and our effective business model combined with continued cost discipline position us to continue sustaining strong financial performance. For the second quarter, we expect to deliver an operating margin in the range of 8% to 12% with a capacity growth in ASMs of approximately 16% year over year. These results are impacted by a projected year over year increase in the all in jet fuel price per gallon in the range of 80 to 90% for which we expect to recover approximately 50% via higher revenues. This partial pass through is a result of the already advanced booking levels. For the full year we expect to continue capacity growth. We continue to expect our capacity growth within the range of 11 to 13%, a load factor of approximately 87% and unit cost excluding fuel of approximately 5.7 cents. Based on the current fuel curve and assuming recent yield improvements are sustained, we expect to recover a substantial portion of the increased fuel cost expense for the year reaching up to 100% by the end of the year. We will review our full year operating margin and RASM expectation as conditions stabilizes and this for the second half of the year becomes clearer. In summary, despite the current field environment, we remain confident in our ability to deliver strong results supported by robust demand, disciplined cost management and our proven and resilient business model. Thank you. And we'll now open the call for questions from the analyst.
OPERATOR
Thank you. And as a reminder to ask a question, simply press star11 to get in the queue and wait for your name to be announced. To withdraw your question, press Star one one again. One moment for our first question and it comes from Savvy Seeds with Raymond James. Please proceed.
Savvy Seeds (Equity Analyst)
Hey, good morning everyone. You know you're growing capacity 16% into a seasonally weak quarter here in the second quarter and the guidance seems to imply like a high single digit, low double digit unit revenue. I was wondering if you could provide a little bit more color on how much of the quarter was booked prior to the fare increases and if there was any particular region that stands out as being stronger.
Pedro Hedron (Executive Chairman and CEO)
Hi Savvy. I would say that we see strength across the network and not necessarily one region is stronger than others. I think we haven't maybe seen this in a while. There's always weakness somewhere, but right now every region we serve is performing very well. And it's showing strength.
Savvy Seeds (Equity Analyst)
That's helpful, Pedro. And maybe just following up on that, some of the local currencies are much stronger lately. I know you priced your tickets in US dollar and but just wondering what the purchasing power strength, what kind of a tailwind that had in like 1Q and what you're thinking it is in 2Q?
Pedro Hedron (Executive Chairman and CEO)
Well, I think that will always play a positive role when currencies are stronger in Latin America. We've been asked that question before and the answer has always been that we tend to benefit more from a stronger from stronger Latin American currencies than the opposite because we do generate a little bit higher percent of our traffic down south than in the other direction. And if we look at the main currencies of Latin America compared to one year ago, most of the important ones or the larger markets are up double digits. So yeah, that of course plays a positive role in what we're seeing.
Savvy Seeds (Equity Analyst)
That's helpful. Thank you.
OPERATOR
Thank you. Our next question comes from Duane, Duane Penningworth from Evercore isi.
Duane Penningworth (Equity Analyst)
Hey, good morning. Maybe just to continue right there, can you quantify maybe the FX tailwind sequentially? You know what you would consider that to be in the second quarter versus what you realized in the first quarter?
Pedro Hedron (Executive Chairman and CEO)
I think it's. I'm not sure if we can be very specific about that. But the currencies have remained strong. They've actually gained a little bit in the last month and two months. Some are stable, others have gained a little. We are not seeing weakness in the currency. So I think it's a good environment for what we're seeing overall in terms of demand, even demand being resilient over yield increases that we've also seen from the whole industry in the last few months.
Duane Penningworth (Equity Analyst)
Thanks. And then just for my follow up, I think your CASM ex was down about 1% in the first quarter. You're guiding to down 1% for the year. Is that the right way to think about the trend consistently across the quarters or do you see easier comps, for example, in this 2Q, do you see an easier comp there or is it pretty much spread across the year? Thank you.
Peter Dunkersut (Chief Financial Officer)
Hello, Dwayne, this is Peter and thank you for the question. I would say that we're guiding for a full year chasm of 5.7 and we always talk about chasm being pretty much in the range across the year, pretty stable. So I think that's what we should be expecting for the year, a relatively stable chasm. And that's backed on all the initiatives we Talked, but it should be stable across the year.
Duane Penningworth (Equity Analyst)
Thanks. So no quarter sticks out in terms of like a massively easier comp versus the others. Thank you very much.
Peter Dunkersut (Chief Financial Officer)
Thank you, Dwayne.
OPERATOR
Thank you. Our next question comes from Julia Orsi with JP Morgan. Please proceed.
Julia Orsi (Equity Analyst)
Yes. Hello everyone. Good morning. Thanks for taking the time. So we have two questions on our side. The first one, can you provide more details on this whole demand environment? I understand that demand has been trending well, but is there a specific segment where it has been more sensitive to the higher tariff prices? And the second one, it's about, it's a follow up on the cost structure. You're implementing several initiatives to cost cutting. Can you provide more details on how these initiatives are trending? Thank you.
Pedro Hedron (Executive Chairman and CEO)
Okay, thank you, Julia. I'll start with the first question, then I'll ask Peter to help me with the cost question. As I mentioned before, we're seeing strong demand across our network. All regions are carrying their own weight. And the way we are reflecting this is that we just shown our april numbers with ASN growth around 16% and RPMs were flat with 16% growth. And there's been yield adjustments done by the whole industry to compensate for fuel. So that combination of strong double digit growth in spite of yield adjustments in the industry is I think a good testament of how strong is demand in our region right now.
Peter Dunkersut (Chief Financial Officer)
This is Peter. So I'll talk about the cost structure. So mainly what we're seeing that is driving the cost down and some of the initiatives are backed on and outward remains. 1 is our ASM growth is backed by the capacity and the densification project that we've been talking about. And of course that helps us continue to dilute part of our fixed costs. We can see, let's say 30% of our fuel expenses are not exactly directly related to capacity. So we can make sure those grow less than ASMs and benefit from that growth. And then I would say the other is we continue seeing some benefits on our sales and distribution strategy and other initiatives that we have in the budget. And those are, I would say, if I would give you color, those are the two main buckets that I will call out in the cost structure going forward.
Julia Orsi (Equity Analyst)
Got it? Super clear. Thank you.
Peter Dunkersut (Chief Financial Officer)
Thank you.
OPERATOR
Thank you. Our next question is from Michael Lindenberg with Deutsche Bank. Please proceed.
Michael Lindenberg (Equity Analyst)
Yeah, hey, thanks for taking my questions. Just I saw that you did unveil your formalized, I guess your 2027 fleet plan. And so we obviously are looking at very meaningful fleet growth this year and next year can you just remind us what, what's the capex number for this year? What, what's that number for next year? Since obviously I know you're going to start incurring some of that capex this year as well.
Peter Dunkersut (Chief Financial Officer)
Hello, Mike, how are you? Thank you for the question. Our CASM for the year, our cash capex for the year, sorry, is in the neighborhood of 300 to $300 million. That's our cash capex. That will be mainly a maintenance. And then if I put up together the fleet capex, it will put us somewhere around the 750 to 800 million dollars for the year. We don't necessarily get for multi year capex, but the cash capex would be in the neighborhood and then the fleet or the aircraft capex would be related to that fleet growth that you're seeing for next year.
Michael Lindenberg (Equity Analyst)
Okay, great.
Pedro Hedron (Executive Chairman and CEO)
Let me add some. Mike. Hi. Let me add to that. Last year we took delivery of 13 aircraft. This year is seven aircraft. Eight aircraft were taking delivery this year. So a little bit less than last year. Going forward, we have a lot of flexibility like we've done in the past when we needed to adjust deliveries and adjust capacity. So we're very comfortable that we can adjust to the business environment as needed as we've done before. We never roll the dice without a parachute. I know those two things don't go together, but you know what I mean.
Michael Lindenberg (Equity Analyst)
Yes. No, no, no. And it's, it's, I like the context because it's now it seems like that you've sort of been at this level for the last couple years. This isn't really all that extraordinary now that you're getting airplanes. And then my second question is, look, we're, we're in a really high fuel price environment and you're still able to put up double digit operating margins. Even what will be your seasonally weakest quarter, you're at least the potential to hit that. And so you can grow in this environment. And I suspect that many of your competitors cannot. And I'm just curious from a competitive capacity perspective what you're starting to see in the market that you're sort of full steam ahead, maintaining your full year ASM growth. I suspect that we're going to see others scale back any color on what you're seeing in the region. I mean, obviously spirit going away, there will be some benefit there because there was some competitive at least on one stop flights. But anything else? Thanks for taking my question.
Pedro Hedron (Executive Chairman and CEO)
Yeah, thank you, Mike. Besides the obvious of spirit going away that you just mentioned, we haven't really seen any particular movement from the rest of the airlines serving the region. We haven't seen any capacity pullback in response to the current fuel crisis. That is not to say that it might not happen in the future, but we haven't really seen anything up to now.
Michael Lindenberg (Equity Analyst)
Okay. Okay, thank you.
OPERATOR
Thank you. One moment for our next question please. And it's from Alberto Valerio with ubs. Please proceed.
Alberto Valerio (Equity Analyst)
Hi gentlemen. Thank you for taking my question. Congrats on the results. My question mainly the first one on the crack spread. We noticed that this quarter crack spread below historical levels. If we can consider that for going forward or if it's just for this quarter, if we have any benefit in Panama. The second one, it's about the guidance for the year. Can you consider it as nominal pass through on the fuel price or can you reconsider it as recovering the margins of 22, 23% for the full year? Thank you very much.
Peter Dunkersut (Chief Financial Officer)
So Alberto, I'll take the first one. On the fuel and the crack, we're obviously seeing similar as everybody else in the fuel environment. We do have a 15 day lag on how they pass through increase and probably that's one of the reasons we're seeing an average in the first quarter lower than the expectation. But going forward we are using US gold jet fuel future curves and that's what we're basing on. And similar to everybody. So we're seeing similar trends like everybody else. And then with that we had our into plane cost that should be in the neighborhood of 30 cents per gallon. And that's what gives us our guidance on the fuel for the rest of the year. And then I'll let Pedro talk about the recovery.
Pedro Hedron (Executive Chairman and CEO)
Yeah, well, I think when we talk about guidance for the year, or the rest of the year for that matter, there's still many, many unknowns and many variables that come into play, starting with fuel, which is what's having the greatest impact right now. We don't really know in which direction fuel is going to go the rest of the year. We're following the guidance. I mean the fuel curve. We're fighting following the fuel curve. And if we go by the fuel curve that we have right now, the yield increases that are already in place and the fact that for the second half of the year bookings are much lower because that's just how the booking curve works, means that those yield increases that are already in place are going to have a more significant impact in the second half of the year than what they were able to have. In the second quarter. We were already sold or booked around 40% in the second quarter when this conflict and fuel prices hit us. So we could not do anything about that. 40% for the second half of the year is much different. Bookings were much lower. So our guidance is based on that. Current yield adjustments that are already in place, a fuel curve which no one controls and is very volatile, and the bookings that were already in place for the yield adjustments, those are all variables. Well, the booking is not a variable that's going to change because I mean it's going to, that's going to improve the new yields. The yields depend on competition and demand, which right now demand looks very strong and competition is being rational. And then the fuel curve might be the one variable that no one really can predict.
Alberto Valerio (Equity Analyst)
Fantastic. Thank you very much.
OPERATOR
Thank you for our next question, please, is from Daniel McKenzie of Seaport Global. Please proceed.
Daniel McKenzie (Equity Analyst)
Oh, hey, good morning. A couple questions here. You know, just going back to Mike's question. Just given the high priced fuel environment, you know, is it your sense that there could be some strategic opportunities that come from this, like let's say if fuel prices continue to rise? And then related to that, you know, if we just kind of think about the supply chain of Latin America, are there any, are there refineries in some countries that are disproportionately reliant on Iran that sort of are catching your radar?
Pedro Hedron (Executive Chairman and CEO)
Well, from what we can see and from speaking to our fuel suppliers, we think we're in a good position in terms of supply. Our oil comes mostly. The oil that gets refined and turned into jet fuel comes mostly from the US from Mexico and other countries, Venezuela, Colombia, etc. It all comes from this part of the world is not affected by this trade of Hormuz. Of course fuel prices are international and regional supplies don't change the WTI or Brent prices. But in terms of having the availability of the jet fuel, we're in a good position. And in the times we're living, that's actually great.
Daniel McKenzie (Equity Analyst)
Yeah. And then this second question came directly from an investor. It's actually something I've wondered about in the past, but have you ever. It ties to an earlier question, but have you guys ever looked at your rasm results in constant currency and does that even make sense? And I guess the reason I'm wondering is just given how many countries you serve and just given how sensitive, you know, demand seems to be to, you know, foreign currencies. I'm just curious what that would look like if it were Done on a constant currency basis.
Pedro Hedron (Executive Chairman and CEO)
I'm not sure if I understood the question because the reality, the reality is what we dealt with it with what we dealt with. Always we price in dollars. As, you know, strong currencies tend to favor us even though we do well. Also, when currencies are not so strong, currencies usually move in the same direction like it's happening now. But sometimes there are particular issues in countries that make it different. I mean, that make them stand out in a maybe negative way. But I'm not sure exactly. What are you looking for in the question, Dan?
Daniel McKenzie (Equity Analyst)
Well, yeah, it's not the convention in the airline industry report on a constant currency basis. So I get that it's kind of an odd question, but in other industries, they'll look at their revenue sort of based on a constant currency. So just putting in last year's foreign exchange rate and kind of looking the revenue, you know, sort of from a demand perspective. But I get, you know, it makes perfect sense that when, you know, currencies are strengthening, you add capacity and, you know, capacity moves around. So it gets pretty complicated for airlines. So I just thought I would throw it out there and see if it's something. And I appreciate the response.
Pedro Hedron (Executive Chairman and CEO)
Thank you, Dan. We love your easy questions.
Daniel McKenzie (Equity Analyst)
Sorry guys. Have a great day.
OPERATOR
Thank you so much. And our last question comes from Philippe Nielsen with Citi. Please proceed.
Philippe Nielsen (Equity Analyst)
Hey. Hi everyone. Thanks for taking my question and congrats on the results. Just wondering back on the capacity subject, trying to understand here, how are you allocating this capacity between the multiple regions and trying to understand it within this growth of capacity, strong growth of capacity in the first half of the year, second half a little bit lower as per your guidance, are you seeing any maybe shifts from one region to another in order to accommodate for higher pricing? And to my second question and to related to that, how is your Venezuelan operations developing? And is this having an important matter in this whole pricing environment? Thank you.
Pedro Hedron (Executive Chairman and CEO)
Okay, thank you, Philippe. A few things. If we go back and we look back a few years, we have been growing capacity much less than our competitors just for lack of enough deliveries. We would have liked to have grown capacity faster in 2024 and 2025. We just didn't have enough planes coming in. So this year is different and we needed that capacity from before and it coincides with strong demand on top of it. So we have so many options in terms of where to fly our planes. But given the current crisis, we are shifting capacity a little bit. Not in a significant way, but shifting it towards more profitable. Our whole network is very profitable, of course, as you know. But we're trying to shift to where it's needed most or where it can be even more profitable. So that helps us also compensate for the higher fuel. But nothing is very significant because we have demand, strong demand in most of our network. Venezuela. Oh, Venezuela. You mentioned Venezuela. Thank you. Yeah, we're going back. Well, first of all, I should say that we are the only, the very only airline, international airline. I must. The very only international airline that never stopped flying to Venezuela, except for like a 10 day window that had to do, you know, with the whole military operation that was going on. And it was not safe to operate during that window. But we've been a constant, we've had a constant presence in that market. And I'm glad to say that by June of this year, in a few weeks, we're going to be back to the same capacity we had a little bit over a year ago. We will go back to five cities and over 40 weekly flights in Venezuela. In terms of impact in unit revenues or yields, nothing significant because Venezuela is going to be in the average.
Philippe Nielsen (Equity Analyst)
This is all very clear. Thank you.
OPERATOR
Thank you so much. And this concludes our Q and A session for today. I will pass it back to Pedro Hellbrom for his final comments.
Pedro Hedron (Executive Chairman and CEO)
Okay, thank you all. This concludes our earnings call. Before we leave, I want to mention that COPA operates the strongest network. We have a strong and diversified set of cities and regions. We serve the lowest unit cost for a full service airline and a superior product to most of our narrow body competitors. So we feel we are in a really good position to deal with the current crisis and come out ahead as we've been able to do in the past. So thank you for your continued support. Thank you for participating in our call and hope you have a great day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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