Copa Q1 2025 Earnings Report

Copa EPS Results

• Actual EPS: $4.28
• Consensus EPS: $3.77
• Beat/Miss: Beat by +$0.51
• One Year Ago EPS: $4.19

Copa Revenue Results

• Actual Revenue: $899.18 million
• Expected Revenue: $888.82 million
• Beat/Miss: Beat by +$10.36 million
• YoY Revenue Growth: +0.60%

Copa Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 11:00AM ET

Copa (NYSE:CPA) (NYSE: CPA) is a Panama-based holding company whose principal businesses encompass commercial air transportation and related services. Through its main subsidiary, Copa Airlines, the company operates scheduled passenger and cargo flights across a network that spans North, Central, and South America as well as the Caribbean. With its strategic hub at Tocumen International Airport in Panama City, Copa leverages its geographic position to offer efficient connections between over 80 destinations, underpinning its role as a key link between the United States and Latin America.

Founded in 1947 as Compañía Panameña de Aviación, S.A., Copa Airlines has grown from a regional carrier into one of the leading airlines in the Western Hemisphere. The company expanded its footprint in 2006 by launching Copa Airlines Colombia, which serves domestic routes within Colombia and provides international connections. Copa Holdings also operates Copa Express, a regional feeder airline that strengthens its network reach and supports seamless passenger transfers. In addition to passenger transport, the group offers cargo services, handling logistics for perishable goods, oversized freight and more, supported by modern Boeing 737-800 and 737 MAX fleets.

Membership in the Star Alliance since 2012 has enabled Copa Holdings to extend its global reach through codeshare agreements with international carriers, broadening travel options for its customers. The company emphasizes operational efficiency and customer experience, investing in digital platforms, in-flight amenities and airport lounge facilities. Its maintenance, repair and overhaul (MRO) operations at Tocumen Airport provide in-house technical support, helping to maintain high standards of aircraft reliability and safety.

Leadership under Chief Executive Officer Pedro Heilbron, who has helmed the company since 1998, has focused on network expansion, strategic partnerships and rigorous cost management. Copa Holdings continues to pursue growth in emerging markets throughout Latin America while maintaining its commitment to financial discipline, operational excellence and sustainable practices. By centering on its hub‐and‐spoke model and leveraging Panama’s geographical advantages, the company aims to strengthen its position as a premier connector between the Americas.

Copa Q1 2025 Earnings Call Transcript

Key Takeaways

• Strong operating margin: Q1 operating margin reached 23.8%, showcasing the resilience of Copa’s business model despite a challenging yield environment.
• Revenue headwinds: Unit revenues (RASM) declined 8.1% year-over-year, driven by a 9.1% drop in passenger yields amid higher industry capacity and FX pressures.
• Lower unit costs: CASM ex-fuel fell 4.3% in Q1 2025 versus Q1 2024, thanks to reduced sales/distribution expenses and ongoing overhead discipline.
• Robust balance sheet: Ended the quarter with $1.3 billion in cash and investments, an adjusted net debt/EBITDA ratio of 0.5x, and 39 unencumbered aircraft.
• Upgraded guidance: Raised 2025 operating margin outlook to 21–23%, underpinned by a lower fuel cost forecast and sustained passenger demand.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Copasor Holdings First Quarter Earnings Call. During the presentation, all participants will be in listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this call is being webcast and recorded on 05/08/2025.

[Operator]

Now I'll turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may begin.

[Daniel Tapia, Director of Investor Relations at Copa Holdings]

Thank you, Marvin, and welcome everyone to our first quarter earnings call. Joining me today are Pedro Heldron, CEO of Copa Holdings and Peter Dunkerslot, our CFO. First, Pedro will start by going over our first quarter highlights, followed by Peter, who will discuss our financial results. Immediately after, we will open the call for questions from analysts. Copa Holdings financial reports have been prepared in accordance with the International Financial Reporting Standards.

[Daniel Tapia, Director of Investor Relations at Copa Holdings]

In today's call, we will discuss non IFRS financial measures. A reconciliation of the non IFRS to IFRS financial measures can be found in our earnings release, which has been posted on the company's website, copaair.com. 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.

[Daniel Tapia, Director of Investor Relations at Copa Holdings]

Now I'd like to turn the call over to our CEO, Mr. Pedro Herren.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thank you, Daniel. Good morning to all and thanks for participating in our first quarter First, I would like to extend my sincere gratitude to all our coworkers for their commitment to the company. Their dedication and hard work have been instrumental in keeping Copa at the forefront of Latin American aviation. To them, as always, my highest regards and admiration.

[Pedro Heilbron, Director & CEO at Copa Holdings]

As you could see in our earnings release, we're pleased to report a strong start for the year, delivering solid first quarter financial results. Our twenty three point eight percent operating margin in Q1 is a testament to the resilience of the company's business model as we navigated lower year over year passenger yield environment. Our ongoing focus on maintaining low ex fuel unit costs, leading on time performance and a passenger friendly product, as well as continuing to expand our hub of The Americas in Panama remains key to consistently achieving industry leading margins and financial results. Among the main highlights for the quarter, capacity increased by 9.5% year over year. Adjusted for the MAX nine grounding in Q1 twenty twenty four, capacity would have increased by 4.6% for the quarter.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Passenger traffic grew by 10.1% compared to Q1 twenty twenty four. As a result, load factor for the quarter increased by 0.4 percentage points to 86.4%. Unit revenues or RASM came in at $0.01 $15 an 8.1% decrease compared to Q1 twenty twenty four, mainly driven by 9.1% decrease in passenger yields. Continuing the trend of the second half of twenty twenty four, passenger yields were affected by additional industry capacity in the region and a weaker currency environment in certain Latin American countries. Unit costs excluding fuel or CASM Ex came in at $0.58 in the quarter, representing a 4.3% decrease compared to Q1 twenty twenty four.

[Pedro Heilbron, Director & CEO at Copa Holdings]

This improvement was primarily driven by lower sales and distribution expenses, a reduction in passenger servicing costs related to the MAX nine grounding in the first quarter of twenty twenty four and continued discipline in managing headcount and overhead to fully benefit from the airline's growth. As mentioned before, operating margin for the quarter came in at 23.8%. On the operational front, Copa Airlines delivered an on time performance of 90.8% and a completion factor of 99.9%, once again positioning ourselves among the best in the industry. With regards to our network, we recently announced service to three new cities: San Diego, California starting in June and Salta and Tucuman in Argentina starting in September, as we continue strengthening our position as the most complete and convenient connecting hub for travel in The Americas. Turning over to Wingo.

[Pedro Heilbron, Director & CEO at Copa Holdings]

During the quarter, Wingo added one new domestic Colombia route between the cities of Bucaramanga and Santa Marta. As mentioned in the previous call, Wingo will receive an additional seven thirty seven-eight hundred from Copa during the second half of this year to end the year with a fleet of ten seven thirty seven-eight hundred. With regards to our expectations for the year, we're increasing our 2025 operating margin guidance to a range of 21% to 23%, mainly driven by a lower fuel cost outlook and steady passenger demand. While there are still many months before the end of the year, we feel confident that our robust business model based on our hub of The Americas in Panama, low unit cost, diversified network and passenger friendly product makes us the best positioned airline in our region to consistently deliver industry leading results. Now I'll pass it over to Peter, who will go over our financial results in more detail.

[Peter Donkersloot, CFO at Copa Holdings]

Thank you, Pedro. Good morning to all and thanks for joining our call today. First of all, I'd like to join Pedro in recognizing our team for their dedication to the airline and our passengers. For the quarter, we reported a net profit of $176,800,000 or $4.28 per share, representing a net margin of 19.7%. Operating profit for the quarter came in at $213,800,000 and we reported an operating margin of 23.8%.

[Peter Donkersloot, CFO at Copa Holdings]

In terms of our balance sheet, we ended the quarter with over $1,300,000,000 in cash, short and long term investments, which represents 39% of the company's last twelve month revenues. I like to highlight that this figure excludes over $600,000,000 in pre delivery deposits for new aircraft. We have also 39 unencumbered aircraft in our fleet. In terms of debt, we ended the quarter with $1,900,000,000 in debt and lease liabilities, and an adjusted net debt to EBITDA ratio of 0.5 times. I like to highlight that our average cost of debt, which is entirely related to aircraft financing remains at a highly competitive at an average rate of 3.5%, with approximately 65% of this debt at lower fixed rates.

[Peter Donkersloot, CFO at Copa Holdings]

I like to emphasize that our robust liquidity and strong balance sheet remains key strength of the company. Turning now to our fleet, during the quarter, we exercise options for six additional Boeing seven thirty seven MAX eight aircraft to be delivered in 2028. With these confirmed options, our outstanding order book increased to a total of 57 aircraft. We plan to retire one of our nine Boeing seven 30 seven-700s during the second half of the year and we now expect to end 2025 with a total of 125 aircraft. During 2026, we expect to receive six Boeing seven 30 seven MAX eight and preliminary end the year with a total fleet of 131 aircraft.

[Peter Donkersloot, CFO at Copa Holdings]

Turning now to the return of value to our shareholders. I'm pleased to announce that the company will make its second dividend payment of the year of $1.61 per share on June 13 to all shareholders as of May 30. As to our 2025 outlook, we are increasing our operating margin guidance for the year to a range of 21% to 23%. We expect to grow year over year ASM capacity within the range of 7% to 8%. We're basing our outlook on the following assumptions load factor of approximately 86.5%, unit revenues of approximately $0.01 $12 CASM ex fuel of approximately zero five eight dollars and we're expecting an all in fuel price of $2.4 per gallon.

[Peter Donkersloot, CFO at Copa Holdings]

Of course, we remain mindful of the uncertain economic environment. But as of now, we see healthy passenger booking trends. But if this was to change, we're confident that we are in the best position to continue delivering industry leading results. Thank you. And we will now open the call to questions from the analysts.

[Operator]

Thank you. At this time, we'll conduct a question and answer session. Your line is now open.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Hey, good morning everyone. Think Peter, you mentioned that the demand environment is still healthy and clearly the headlines have changed quite a bit. I'm just curious if you've seen any kind of change in either US point of sales trends or any regional differences since the last earnings call or if it's just consistent with what you've been seeing before?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Hi, Savi. It's Pedro here. We haven't seen any material change in the last few weeks, let's say. So we're still seeing steady demand. But as we know, we only have visibility two to three months in the future.

[Pedro Heilbron, Director & CEO at Copa Holdings]

So what's coming in the second half of the year is hard to tell at this point.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Makes sense. And then if I might follow-up on that line. You mentioned, Pedro, the competitive the capacity in the region stepping up. I wonder if you can kind of talk a little bit about if you're seeing any changes on that front or if there is any certain regions where you're seeing more pressure?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. No, we have not seen any changes lately. Again, industry capacity, if we think of the next two quarters, which is where we have more visibility, overall industry capacity in our network, in our region for the second quarter is growing in the neighborhood of 6% and then a little bit higher close to 10% in the third quarter. That's what we're seeing right now. But that is an average.

[Pedro Heilbron, Director & CEO at Copa Holdings]

There are some competitors or maybe a single competitor that's growing two or three times this pace in this region and others that are flat. So it averages out to the numbers I just shared.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Understood. Thank you, Pedro.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Duane Pfennigwerth of Evercore ISI. Your line is now open.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Hey guys, good morning.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Good morning.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Just with respect to the distribution cost savings, can you remind us, sorry for the baseball analogy, what inning you're in that? Is there additional cost save to get? And are there other cost initiatives that can contribute incrementally from here?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Duane, I'll Peter answer, but with Panamanian, you can use the baseball analogy. No problem.

[Peter Donkersloot, CFO at Copa Holdings]

Hello, Duane. So thank you for the question. I would say that our distribution costs, we're still seeing some full year effect of what we saw during the later part of the year. So we're going to see some of that during the first quarter and during the first half of the year and more to come on savings on our distribution strategy, and that it will flatten out, but we're still looking for additional initiatives and we believe there is more. We are now at 85% direct or via MDC.

[Peter Donkersloot, CFO at Copa Holdings]

So we feel that that's a good place to be and we expect that to be steady for the coming quarters.

[Pedro Heilbron, Director & CEO at Copa Holdings]

I would add that we recently added Expedia to our NDC channel. So that's another positive development in the right direction.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Okay, great. And then just with respect to the fleet plan, the six deliveries that you called out next year. Can you just remind us where are you on your utilization relative to potential? And how do we think just big picture about the range of outcomes on growth into 2026? Thank you.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. We well, in terms of utilization, we're always around the twelve hours on average and that's where we were in the first quarter. We're about twelve hours of utilization and that should not change much with the future deliveries. Actually, we strive for that number or that in that range. And we're expecting 13 aircraft this year.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Most are going to come we haven't received any aircraft yet. Well, you know that none in the first quarter. And the first month, we should get in this month of May. We should get two in this month of May. Then the third one should come in July.

[Pedro Heilbron, Director & CEO at Copa Holdings]

And then the rest are mostly towards the end of the year. So we won't see most of that growth impact this year. We'll see it in 2026 for sure. I don't think we've shared 2026 ASM growth numbers yet, right? But you can do your numbers.

[Pedro Heilbron, Director & CEO at Copa Holdings]

I mean, of the aircraft come towards the end of the year.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Okay. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Guido Hernandez of JPMorgan. Your line is now open.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Hi, Pedro, Peter, Daniel. Good morning. Thanks for taking my question. First one is a follow-up to the first question in terms of demand. If you could break it down between leisure, VFR and corporate, how each of the segments have been performing?

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

And the second point on the ROS and performance, you also mentioned that we have been seeing that effects and competition has been impacting it, But can you try to better understand the breakdown between the two of them, the two effects, which was it's put more pressure on into RAS? Thank you.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. Okay. So I'll give you the breakdown then if Peter needs to add anything. So business is around 20% right now in Q1. And then leisure is about 45%, I believe.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes, so it's 20% business, 45% leisure, then the difference, of course, is VFR in terms of the breakdown. In terms of our routes, well, I'll give you like an overview, a quick overview. So South America is doing fine with the exception of Brazil, where we still have some yield weakness because of the currency situation. Load factors are healthy in Brazil, better than last year, but yields are still down in Brazil. The rest of South America is okay.

[Pedro Heilbron, Director & CEO at Copa Holdings]

North America and The Caribbean, it's okay also. Demand yields are fine. Where we see a little bit more weakness, mostly due to competitive capacity is in Mexico and Central America.

[Operator]

Thank you. One moment for our next question. And our next question comes from the line of Stephen Trent of Citi. Your line is now open.

[Stephen Trent, Analyst at Citigroup]

Good morning, gentlemen, and thanks very much for taking my question. Actually, first, just a quick follow-up on what Guillermo was asking. I appreciate the color on business versus leisure and VFR. Any high level view on how that may have changed versus a year ago, considering now, for example, that there's no feed from, the Venezuelan market? Or is is Venni just too small to move the needle? Thank you.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Right. It changed much. It hasn't really changed much. And actually, the Venezuela feed would have fit well with this breakdown. So no, we haven't seen any material changes.

[Stephen Trent, Analyst at Citigroup]

Oh, great. Thank you, Pedro. Appreciate that. And just another question as well when we think about the flow on the cash from investing side. I guess, the quarter itself, appreciate the color that you mentioned that most of the planes haven't come in yet.

[Stephen Trent, Analyst at Citigroup]

But the one q cash from investing was basically sort of financial transactions from you guys, but just wanted to make sure.

[Peter Donkersloot, CFO at Copa Holdings]

Yes. Most of it was financial investments and we did pay PDPs of around $150,000,000 during the quarter. The rest of it was mostly cash investments.

[Stephen Trent, Analyst at Citigroup]

Okay, super. Thanks very much gents.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thank you, Steve.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Jens Spies of Morgan Stanley. Your line is now open.

[Jens Spiess, Vice President at Morgan Stanley]

Hello. Thank you for taking my questions and congrats on the strong results. Just want to ask like a hypothetical question. In case that you do see a bit more weakness across markets, like how much flexibility do you have to potentially reduce capacity or not grow to the same extent?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. Okay. So I'll say a few things there. Number one, we do have a lot of flexibility. We have 39 unencumbered aircraft, including the seven thirty seven-seven hundred, nine of them.

[Pedro Heilbron, Director & CEO at Copa Holdings]

We're actually going to part out of one in the second half of the year because we have enough seven thirty seven MAX eight deliveries. And we actually will make money parting out of that aircraft. We will need the extra capacity and the engines and other components are extremely valuable right now. So it can be a good business to part out of an aircraft if the capacity is not needed. But we will save on the twenty year check.

[Pedro Heilbron, Director & CEO at Copa Holdings]

So we have nine seven hundred that we could park, use the engines, use the components. We have another 30 on encumbered aircraft. So that gives us a lot of flexibility in terms of what we do with our fleet. But I think as important to that is that we have a very diversified network and we have a number of markets or routes where we actually could use more capacity. So if we see a slowdown in certain markets, it's probably not going to be everywhere and we can shift capacity around.

[Pedro Heilbron, Director & CEO at Copa Holdings]

One of the advantages we have is we have a single seven thirty seven fleet and our aircraft can serve any of our routes. So we can move aircraft around in case one region slows down more than others. So we feel pretty comfortable. And I think we have demonstrated in the past that we can be flexible, we can adjust and continue delivering strong results under different environments.

[Jens Spiess, Vice President at Morgan Stanley]

Perfect. Yes, think you're already proving that. So yes, congrats. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Vergio Arujo of Bank of America. Your line is now open.

[Rogerio Araujo, Director at Bank of America]

Hello, Pedro, Peter. Congratulations on the results. I have a couple here. First one, you're guiding at $2.4 of fuel per gallon, but we estimate the current oil price curve would point to a little bit 10% lower than that. Does it make sense?

[Rogerio Araujo, Director at Bank of America]

And if so, would there be about two percentage points of incremental margin if oil remains as it is? That's the first one. Thank you.

[Peter Donkersloot, CFO at Copa Holdings]

Thank you. So when we built our guidance, we took a curve. It was a we use a recent curve. And as you know, fuel is very volatile. So it can go up or down and we don't adjust our estimates daily.

[Peter Donkersloot, CFO at Copa Holdings]

We feel comfortable right now with our fuel and RASM that we publish on the guidance. And we feel that that should go very well with our guidance on margins at this moment. And that's what we see. Of course, everything can change tomorrow. But right now with the current information we have, we feel comfortable with that combination of RASM and fuel.

[Pedro Heilbron, Director & CEO at Copa Holdings]

And I will add, of course, if fuel stays where it is today and RASM stays where it is today, yes, margins would be better. But that's not in our guidance.

[Rogerio Araujo, Director at Bank of America]

Okay. Fair enough. Thank you. And the second one is on dividends. We estimate now a payout ratio of 36% for the year, including the announced dividends.

[Rogerio Araujo, Director at Bank of America]

Is there further room for incremental payments or share repurchasing?

[Peter Donkersloot, CFO at Copa Holdings]

We pay dividends based on last year's earnings. So right now we're paying a dividend around we have policies paying 40% of last year's net income. And right now we decided to maintain the dividend flat. So we're more or less at 44% of last year's net income.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Then in terms of the buyback, we do have a plan that has been approved by the Board. It's a $200,000,000 plan. We bought $87,000,000 last year. So we still have 113,000,000 less what was purchased in Q1, which was a smaller amount, was like 3,000,000 I believe. So we have around $110,000,000 left of that plan.

[Pedro Heilbron, Director & CEO at Copa Holdings]

And we will gradually do some buyback within what's approved by the Board, which it's an amount we're comfortable with.

[Rogerio Araujo, Director at Bank of America]

Okay. Perfect. Very clear. Thanks so much. Have a great one.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thanks.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Michael Linenberg of Deutsche Bank. Your line is now open.

[Michael Linenberg, Managing Director at Deutsche Bank]

Hey, good morning, Pedro, Peter and Daniel. I want to go back to the just your assumptions for 2025. I thought it was interesting that even though we're going to see greater than a 10% cut in fuel, that's the new assumption, that the RASM change, it's only a modest deterioration. And I know that you called out yield pressures as being an issue in the March. You talked about competitive capacity and FX is pressuring yields.

[Michael Linenberg, Managing Director at Deutsche Bank]

Peyton in the past, when we would see energy prices move up, when they were a function of improving global economy, for the most part, you would always be able to pass on, call it 100% of that fuel price increase into the fare structure. And now we're seeing it in reverse, but it looks like that you're actually holding the line on pricing. I'm curious what gives you the confidence and maybe the fact that you are growing very slowly this year, you're only going to grow about 6% in the back half of the year. Is that giving you the cushion and the ability to really maintain pricing firm despite the fact that things may be actually slowing down? Just

[Pedro Heilbron, Director & CEO at Copa Holdings]

I'll say a few things. First, that it's still early in the year. It's early in May. We have a lot of runway ahead of us to cover. So we're not getting ahead of ourselves.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Our RASM guidance is based on what we can see right now for the next two to three months. It's where we see some weakness, we have lowered our RASM, but not significantly, as you well said. But it's the visibility we have today. Fuel in our curve is not as low as what it is today. Rogerio mentioned that, but it's that is what we saw kind of two weeks ago or a little bit more.

[Pedro Heilbron, Director & CEO at Copa Holdings]

So we're not like every day adjusting our guidance and our outlook because of the volatility in fuel. So if we think of where is our fuel guidance and we think of our bookings right now, two three months in the future, Our RASM is in our RASM takes that into account. And there's still other developments that can happen in the year. For example, we're growing not that fast, which is a point you raised, which is very true. So we're not actually dealing with overcapacity.

[Pedro Heilbron, Director & CEO at Copa Holdings]

We're actually tight in capacity. We wish we had a few more planes, but that's not our reality right now. And then Brazil could strengthen, who knows? And one day Venezuela could come back. And so it's early in the year. We're not getting ahead of ourselves.

[Michael Linenberg, Managing Director at Deutsche Bank]

Okay, great. Now thanks for that Pedro. And then just one quick follow-up. You did call out weakness in Mexico. And I'm curious, I know on the Valaris call, did talk about the new agreement that they had with you.

[Michael Linenberg, Managing Director at Deutsche Bank]

And I don't know if you can give us some details on it, maybe it's just the codeshare. But I guess that agreement, in theory, should help mitigate some of the weakness that you're seeing in Mexico, right? If you're able to codeshare to many of Valaris' markets from, I guess, what do you serve? Four gateways in Mexico?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Four, yes, correct. Yes. Monterrey, Guadalajara, Mexico City and Cancun, our four gateways in Mexico. And yes, our weakness in Mexico comes mostly from competitive capacity because we're not in the Mexico U. S.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Market. We're in the Mexico to Latin America and Caribbean market, which is very different and is not affected in the same way. But there is more capacity in that market and that's why we've seen some weakness. Although load factors are quite okay still. Yes, the Volaris agreement is very positive.

[Pedro Heilbron, Director & CEO at Copa Holdings]

We'll get feed to Mexico is the second largest market in Latin America after Brazil. And it has many, many large cities that we're not going to be flying to, but connecting through the Volaris network, especially out of places like the city of Mexico and Guadalajara is going to be a very positive development, no doubt.

[Michael Linenberg, Managing Director at Deutsche Bank]

Okay, great. Great numbers this quarter.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thank you.

[Operator]

Thank you. One moment for our next questions. Our next question comes from the line of Alberto Valerio of UBS. Your line is now open.

[Alberto Valerio, Director - Equity Research at UBS Group]

Good afternoon from Brazil. Pedro and Peter, thank you for taking my question. A follow-up on the previous questions on about capacity. We see with the tariffs some uncertainty on American carriers about receiving aircraft this year. Can this benefit Copa, also China, if they do not receive the Boeing seven thirty seven MAX that they're expecting to receive, can COPPA anticipate some deliveries for this year or the beginning of next year?

[Alberto Valerio, Director - Equity Research at UBS Group]

Thank you and congrats for the call for the results.

[Pedro Heilbron, Director & CEO at Copa Holdings]

We're not seeing that right now. Our deliveries are going to be what we have communicated. We don't really see an opportunity to advance. We would love to do so, but and what the information we get from Boeing is that our deliveries are not really going to change. At least they're not going to be earlier.

[Pedro Heilbron, Director & CEO at Copa Holdings]

I mean, might be earlier by a few weeks or something if Boeing has a little bit more available capacity, but nothing significant. Those are not the signals we're getting.

[Operator]

You. Thank you. One moment for our next question. Our next question comes from the line of Thomas Fitzgerald of TD Cowen. Your line is now open.

[Thomas Fitzgerald, Analyst at TD Cowen]

Hi, thanks so much for the time. Quick one on other operating revenue. You called out an increase in Connect miles from non air partners. Would you just want to elaborate on was that like one partner in particular or who what were some of the drivers behind that?

[Peter Donkersloot, CFO at Copa Holdings]

Yeah. So we're, we are, our connect mouse program has been mature and it has been growing at a decent rate and not necessarily with one air partner in particular. It has been a non air partner. It has been growing with different partners across the region and open up in different countries. So we see that it's been growing steady and we're happy to see that growth continue.

[Pedro Heilbron, Director & CEO at Copa Holdings]

And it's mainly bank of course, bank partners, which we are opening up relationships in new countries.

[Thomas Fitzgerald, Analyst at TD Cowen]

Okay, thanks. That's really helpful. And then just another quick one on the fleet. Just with the options in 2028, I know it's far off and fluid, but just any sense of how we should think about the size of the fleet in 2027 and 2028 just as people kind of start looking out beyond 2026? Thanks again for the time.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. We have fifty seven seven thirty seven MAXs pending delivery. This year, we're supposed to get 13. And then the following year, in 2026, the number is six. So you can deduct those from the 57 and the others are going to come mostly in the following four years. Actually, all in the following four years.

[Operator]

Thank you. One moment for our next question. And our last question comes from the line of Daniel McKenzie of Seaport Global. Your line is now open.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Hey, thanks for squeezing me in you guys. A couple of questions here. Going back to Savi's question, a follow-up on The U. S. Can you remind us of how it's performed historically, say, under a garden variety downturn, so stable, more volatile?

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

And I think what's new, by the way, today is just a deeper relationship to STAR, which I think is contributing to some premium revenue as well as investments in Latin America from other countries that are driving some growth in the region. So just trying to get a sense of puts and takes on U. S. Demand and how that could potentially be offset elsewhere.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. We're optimistic for cautiously optimistic. We never get too excited about anything. When sometimes when The U. S.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Slows down, it becomes better and more affordable to fly shorter distances to our part of the world versus going to Europe or Asia. So that's one way we could see demand less affected than what one would expect. Also, if the currencies in Latin America strengthen, we sell more in, let's say, in South America than in North America, although it's not as in balance as before. It's much more balanced. But then so if the currency strengthened in South America and the economies are doing well, then we can get more traffic going south to north.

[Pedro Heilbron, Director & CEO at Copa Holdings]

So we're very diversified in the type of our markets and the type of our traffic, the countries we serve and very spread out also in a way. So in the past, we've been able to adjust capacity and the market has demand has adjusted in the market by itself also has rebalanced. So we feel we're in a good position. And also, I should add that we have industry leading low cost, which also allow us to be very competitive under any circumstance.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

And then second question here, to the extent that you can comment on Star Premium revenue as well, but the second question here on the schedules data, I am seeing some growth to some vacation destinations or at least it looks like that. So just a couple of questions on that. Can you remind us if Copa has a vacations package? And then if so, how that's contributing to the financials? And how would you think about the opportunity of that product in the future?

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. We don't really have I mean, we have within our commercial department, we have a team that looks after our, let's say, vacation wholesalers. And we have good relationship with a group of wholesalers in South America mainly, but in other countries in The U. S. Also.

[Pedro Heilbron, Director & CEO at Copa Holdings]

But we don't have a specific vacation focus. We do deal with the wholesalers and we're very active. Yes, so nothing that I could highlight.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Thanks so much for the time, you guys.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thank you, Dan.

[Operator]

Thank you. I'm showing no further questions at this time. I'll now turn it back to Pedro Hellbron for closing remarks.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Yes. Thank you. Thank you, Fred. So thank you all. This concludes our earnings call.

[Pedro Heilbron, Director & CEO at Copa Holdings]

Thank you for being with us, and thanks for your continued support as always. Have a great day. Thank you.

[Operator]

Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may disconnect and have a wonderful day.

Participants

Executives

• Daniel Tapia, Director of Investor Relations
• Pedro Heilbron, Director & CEO
• Peter Donkersloot, CFO

Analysts

• Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial
• Duane Pfennigwerth, Senior Managing Director at Evercore ISI
• Guilherme Mendes, ED - Equity Research Analyst at JP Morgan
• Stephen Trent, Analyst at Citigroup
• Jens Spiess, Vice President at Morgan Stanley
• Rogerio Araujo, Director at Bank of America
• Michael Linenberg, Managing Director at Deutsche Bank
• Alberto Valerio, Director - Equity Research at UBS Group
• Thomas Fitzgerald, Analyst at TD Cowen
• Daniel McKenzie, Equity Research Analyst at Seaport Research Partners