Copa Holdings, S.A. (CPA) Q1 2026 Earnings Report, Transcript and Summary

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 Q&A session. At that time, if you have a question, you will have to press star-1-1 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. Sir, you may begin.

Thank you, Carmen, and welcome everyone to our first quarter earnings call. Joining me today are Mr. Pedro Heilbron, executive chairman and CEO of Copa Holdings and Peter Donkersloot Ponce, 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 will open the call for questions from analysts. 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 our intentions regarding future events and results. These forward looking statements involve risks and uncertainties that could cause 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 would like to turn the call over to our Chairman and CEO, Mr. Pedro Heilbron.

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 thousand coworkers' 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 for our passengers. Now I will 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¢, 2.7% higher compared to Q1 2025. Unit cost per CASM increased 1.6% to 8.9¢ driven by higher fuel prices. CASM, excluding fuel, declined 1% to 5.8¢ 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 Barquesimeto and have scheduled a restart of Barcelona in June. Together with our existing service to Maracaibo and Caracas, 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 at the most complete and convenient connecting hub for travel, in The Americas. With regard to our fleet, during the quarter, we took delivery of 2 Boeing 37 MAX 8 ending Q1 with 127 aircraft. We have already received 2 additional MAX 8s in the second quarter, bringing our fleet total to 121 aircraft. Additionally, in April, we announced a new Boeing 37 MAX order for 40 firm aircraft and 20 options. With delivery schedules 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's 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, lease expirations, 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 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 continued 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 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 positions 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 product environment And, again, in 2026, deliver strong and industry leading financial results. With that, I will turn the call over to Peter, who will walk us through the financials in more detail.

Thank you, Pedro. 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 industry 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 or $5.16 per share, representing a 20.5% year-over-year increase in earnings per share. Net margin came in at 20 point 2 percent 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 of 2025. Unit cost, excluding fuel, or ex fuel CASM declined 1% to 5.8¢. Reflecting the company's continued focus on cost discipline. Including fuel, CASM increased 1.6% year over year to 8.9¢ 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 March had a more pronounced impact on our results. Dropping 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 months 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 estimate 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 would like to highlight that the average cost of debt compromised 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, $1.71 per share to be paid June 2015 to all shareholders of record as of May 29. 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. In 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¢. Based on the current fuel 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 visibility for the second half of the year becomes clear. In summary, despite the current field environment, we remain confident in our ability to deliver strong results supported by robust demand disciplined cost management, our proven and resilient business model. Thank you, and we will now open the call for questions from the analyst.

Thank you. Simply press 1-1 to get in the queue and wait for your name to be announced. To withdraw your question, 1 moment for our first question. And it comes from Savi Syth with Raymond James. Please proceed.

Hey. Good morning, everyone. You know, your growing capacity is 16% into 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 kind of 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.

Hi, Savi. I would say that we see strength across the network and not necessarily 1 region stronger than others. I think-- we have not maybe seen this in a while. there is always weakness somewhere. But right now, every region we serve, is performing very well and is showing strength.

that is helpful, Peggy. And maybe just following up on that, you know, the some of the local currencies are much stronger lately. I know you price your tickets in US dollars, and but just wondering what the purchasing power strength, you know, what kind of a tailwind that had in, like, Q1 and what you were thinking it is in 2Q?

Well, I think that will always play a positive role when currencies are stronger Latin America. We have been asked that question before, and the answer has always been that we tend to benefit more from a stronger from stronger Latin American currency than the because we do generate a little bit higher percent of our traffic down south, than in the other than in the other direction. And if we look at the main currencies of Latin America compared to 1 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 are seeing.

that is helpful. Thank you.

Thank you. Our next question comes from Duane Pfennigwerth.

Duane Pfennigwerth from Evercore ISI. Hey. Good morning. Maybe just to continue, right there. Can you quantify maybe the FX tailwind sequentially, what you would consider that to be in the second quarter versus what you realized in the first quarter?

I think it is I am not sure if we can be very specific about that, but the currency have remained strong. They have actually gained a little bit in the last month and 2 months. Some are stable. Others have gained a little. We are not seeing weakness in the currency. So I think it is a it is a good environment for what we are seeing overall in terms of demand. Even demand being resilient, over yield increases that we have also seen from the whole industry in the last few months.

Thanks. And then just for my follow-up, I think your CASM ex was down about 1% in the first quarter, you are 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 Q2? Do you see an easier comp there? Or is it pretty much spread across the year? Thank you.

Hello, Duane. This is Peter, and thank you for the question. I would say that we are guiding for a full year CASM of 5.7¢, and we always talk about CASM not being pretty much in the range of roughly a year, pretty stable. So I think that is that is what we should be expecting for the year. Relatively stable CASM, and that is backed on, you know, all the initiatives we have talked. And it should be stable across the across the year.

Thanks. So no quarter sticks out in of like a massively easier comp versus the others?

Nope. Not particularly.

Thank you very much.

Thank you, Duane. Have a good day. Thank you. Our next question comes from Julio Osorio with JPMorgan. Please proceed.

Yes. Hello, everyone. Good morning. Thanks for taking the time. So we have questions on our side. The first 1, 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 1, it is about-- it is a follow-up on the cost structure. You meant you are implementing several cost-cutting initiatives. Can you provide more details on how these initiatives are trending?

Thank you. Okay. Thank you, Julio. I will start with the first question, then ask Peter to help me with the cost question. So as so as I mentioned before, we are 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 ASM growth around 16% and RPMs were flat with 16% growth. And there is 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.

Hello, Julio. This is Peter. So I will I will talk about the cost structure. So mainly, what we are seeing that is driving the cost down and some of the initiatives are backed on and our work remains. 1 is our ASM growth backed on the capacity and the densification project that we have been talking about. And, of course, that helps us continue to dilute part of our fixed cost. We can see let's say, 30% of our ex 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 would say the other is we continue seeing some benefits on our sales and distribution strategy and other initiatives that we have in that bucket. And those are would say, if I would give you color, those are the 2 main buckets that I would call out in the cost structure going forward.

Got it. Super clear. Thank you.

Thank you. Our next question is from Michael Linenberg with Deutsche Bank. Please proceed.

Yes. 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 is the CapEx number for this year? what is that number for next year since obviously, I know you are gonna start incurring some of that CapEx this year as well?

For 2027. Hello, Mike. How are you? Thank for the questions. I would say our CASM for the year our cash CapEx for the year, sorry, is the neighborhood of $300 million. that is our cash CapEx. There will be mainly a maintenance And then the I put up together the fleet CapEx, it will be somewhere around the $750 million to $800 million for the year. We do not necessarily guide for multiyear CapEx spend. The cash CapEx would be in the neighborhood. And then the fleet the fleet, you know, the aircraft CapEx would be related to that fleet growth rate. You are seeing for next year.

Okay. Great.

Let me add something, Mike, hi. Let me add to that. Last year, we took delivery of 13 aircraft. This year, it is 7 aircraft 8 aircraft we are taking delivery of this year. So a little bit less, than last year. Going forward, we have a lot of flexibility like we have done in the past when we needed to adjust deliveries and adjust capacity. So we are very comfortable that we can adjust to the business environment as needed as we have done before. We never roll the dice without a parachute. Now I know I know those 2 things do not go together, but you know what I mean.

Yes. Yeah. No. No. No. And it is it is I like the context. Because it is now it seems like that you have sort of been at this level for the last couple of years. This is not really all that extraordinary. Now that you are getting everything. it is likely my second question is, look, we are we are in a really high fuel price environment. And you are still able to put up double digit operating margins even what will be your seasonally weakest quarter. You are 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 am just curious from a competitive capacity perspective, what you are starting to see in the market that you are sort of full steam ahead maintaining your full year ASM growth I suspect that we are gonna see others scale back. Any color on what you are seeing in the region? I mean, obviously, Spirit going away, there will be some benefit there because there was some competitive, at least on 1 stop flights. But anything else, thanks for taking my question.

Thank you, Mike. Besides the obvious of Spirit going away that you just mentioned, we have not really seen any particular movement from the rest of the airlines serving the region. We have not 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 have not really seen anything up to now.

Okay. Okay. Thank you.

Thank you. 1 moment for our next question, please. And it is from Alberto Valerio with UBS. Please proceed.

Hi, gentlemen. Thanks for taking my question. Congrats for the results. My question mainly to the first 1 on the crack spread, we noticed that this product, crack spread below historical levels. If we can consider that for going forward or if it is just for the quarter, if we have any benefit in Panama. The second 1, it is 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.

So, Patrick, I will take the first 1. On the fuel and the crack, we are obviously seeing similar as everybody else in the fuel environment. We do have a 15-day lag on how they pass through the increase. And probably that is 1 of the reasons we are seeing an average in the first quarter lower than the expectation. But going forward, we are using US Gulf Coast jet fuel future curves, and that is what we are basing on. And similar to everybody. So we are seeing similar trends like everybody else. And then with that, we add our input lane cost that should be in the neighborhood of 30¢ per gallon. And that is what gives us our guidance on the fuel.

For the for the rest of the year. And then I will I will let Pedro talk about the recovery. Yeah. Well, the I think I think when we talk about guidance for the year, or the rest of the year for that matter, And there is still many, many unknowns and many variables that come into play. Starting with fuel, which is what is having the greatest impact right now. We do not really know in which direction food is gonna go. The rest of the year, we are following the guidance I mean, the fuel curve. We are following the fuel curve. following the fuel curve. And if we go by the fuel curves that we have right now, the yield increases that are already in place and the fact that for the second half of the years, of the year, bookings are much lower because that is just how the booking curve works. Means that those yield increases that are already in place are gonna 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. it is much different looking for much lower And so our guidance is based on that. Current yield adjustments that are already in place a fuel curve, which no 1 controls, and is very volatile. And the bookings that were already in place for the yield adjustment. The those are all variables. Well, the booking is not a variable that is going to change because I mean, it is gonna that is gonna improve at the new yield. The yield 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 1 variable that no 1 really can predict.

Fantastic. Thank you very much.

Thank you. Thank you. For our next question, please. Is from Daniel McKenzie of Seaport Global. Please proceed.

Oh, hey. Good morning. 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, 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, you know, sort of are, you know, catching your radar?

Well, from what we can see and from speaking to our fuel suppliers, we think we are in a good position in terms of supply. Our oil comes mostly oil that gets refined and turned into jet fuel comes mostly from The US. From Mexico, and other countries, Venezuela, Colombia, etcetera. So it all comes from this part of the world. it is not affected by this by the Strait Of Hormuz. Of course, fuel prices are international, and so, you know, regional supply supplies do not make do not change the WTI or Brent prices. But in terms of having the availability of the jet fuel, in a good position. And, you know, in the times we are living, that is actually great.

Yeah. And then, you know, this second question came, you know, directly from an investor. it is actually something I wondered about in the past. But you know, 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, you know, I guess, the reason I am wondering is just you know, just given how many countries you serve and just given how sensitive you know, demand seems to be to, you know, foreign currencies. I am just curious what that would look like if it were done on a constant currency basis.

I am not sure if I am not sure if I understood the question. Because the reality we the reality is what we built with it with we built 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 moved in the same direction like it is happening now, but sometimes they are particular issues in countries that make it different. I mean, that make them stand out in a in a maybe negative way. But I am not sure exactly what you are looking for in the question, Dan?

Well, yeah. it is yeah. Some it is not the convention in the airline industry report on a constant currency basis, so I get that it is kind of an odd question. But in other industries, they will look at their revenue sort of based on a constant currency. So just putting in, you know, last year's foreign exchange rate and kind of looking at the revenue 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 is something, and I would appreciate the response.

Thank you, Daniel. We love your easy questions. Sorry.

Guys, have a great day. Thank you so much.

And our last question comes from Filipe Ferreira Nielsen with Citi. Please proceed.

Hey. Hi, everyone. Thanks for taking my question and congrats on the results. Just wondering back on capacity subject. Trying to understand here, how are you, allocating this capacity, between the multiple regions, and trying to understand 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 shift from 1 region to another in order to accommodate for higher pricing. And, and to my second question, and related to that, how are your Venezuelan operations developing? And if this is having an important matter in this whole pricing environment. Thank you.

Yeah. Okay. Thank you, Philippe. A few things. If we look 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 did not have enough planes coming in. So this year this year is different. And we needed that capacity from before. And it coincide with strong demand on top of it So we have so many options. In terms of where to fly our plane. 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 are trying to shift towards where it is 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 in most of our network. Venezuela. You mentioned Venezuela. Thank you. Yeah. We are going back well, first of all, I should say that we are the only, the very only airline, international airline, I must say must say, the 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. It was not safe to operate during that window. But we have been a constant we have had a constant presence in that market. And I am glad to say that by June, from now, in a few weeks, we are gonna be back to the same capacity we had a little bit over a year ago, we will go back to 5 cities and over 40 weekly flights in Venezuela. In terms of impact in unit revenues or yields, Nothing significant because it is Venezuela is gonna be in the average.

This is all very clear. Thank you. Thank you so much.

And this concludes our Q and A session for today. I will pass it back to Pedro Heilbron for his final comments.

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 have been able to do in the past. So thank you for your continued support. Thank you for participating in our call, and you have a great day.

Thank you. Ladies and gentlemen, thank you for participating. You may now disconnect.