Copa NYSE: CPA reported second-quarter operating profit of $91.7 million and an operating margin of 8.7%, as sharply higher fuel costs weighed on results despite continued demand strength and a 16.5% increase in capacity.
Net profit totaled $68.2 million, or $1.67 per share, while net margin was 6.4%, according to CFO Peter Donkersloot. The company said its results reflected an 85% year-over-year increase in average all-in jet fuel prices, which rose to $4.28 per gallon from $2.32 per gallon in the second quarter of 2025.
“Our second quarter results demonstrate the resilience of our business model in a significantly higher fuel price environment,” Executive Chairman and CEO Pedro Heilbron said. He added that the company continues to expect high load factors and solid financial performance for the full year as booking trends remain strong.
Revenue Growth and Fuel-Price Pressure
Operating revenue rose 25.7% from a year earlier to $1.1 billion. Passenger yields increased 8.7%, while revenue per available seat mile, or RASM, rose 7.9% to $0.116. Load factor was 86.7%, compared with 87.3% a year earlier.
Executive Vice President Robert Carey said the FIFA World Cup temporarily affected travel patterns during June. June load factor declined 2.3 percentage points year over year, creating modest pressure on unit revenue. Copa estimated that the event reduced second-quarter RASM by about $0.001.
Fuel costs were the principal factor behind the decline in profitability from the prior-year period. Operating margin was down from 21.7% in the second quarter of 2025. Donkersloot said roughly 40% of second-quarter bookings had already been sold before fuel prices increased, limiting the company’s ability to immediately pass the higher costs through to fares.
Still, stronger demand and higher yields enabled Copa to recover about 40% of the year-over-year increase in fuel expense during the quarter, according to the company. Excluding fuel, cost per available seat mile remained flat at $0.057. Including fuel, unit cost increased 26% to $0.106.
Demand Trends Support Updated Outlook
Copa raised its full-year capacity outlook and now expects available seat miles to grow between 14% and 15% in 2026. The company projects a full-year operating margin of 17% to 19%, assuming a load factor of about 87%, RASM of $0.12, ex-fuel CASM of $0.0570, and an all-in fuel price of $3.60 per gallon.
Carey said the company was seeing approximately 10% RASM growth in the second half, with broadly similar year-over-year performance expected in the third and fourth quarters. As of the call, Copa was about 75% booked for the third quarter and about 25% sold for the fourth quarter.
July traffic figures supported management’s view of strong underlying demand. Copa reported a nearly 90% load factor during the month, one of its highest ever, while capacity increased 16% year over year. Carey said that load factor was achieved in a higher-yield environment.
During the analyst question-and-answer session, Heilbron said demand was healthy across Copa’s network rather than concentrated in a single region. He said Brazil and North America were somewhat stronger, but characterized differences across markets as marginal.
Heilbron also said the company believes some of the fare increases associated with elevated fuel prices can be sustained even if fuel costs decline. He noted that average yields in Copa’s region and network had been below 2019 levels before the increase in fuel prices, without accounting for inflation.
Network, Fleet and Hub Expansion
Copa took delivery of four Boeing 737 MAX 8 aircraft during the quarter, ending the period with a fleet of 131 aircraft. The company expects one additional MAX 8 delivery during the remainder of 2026.
Management attributed the higher capacity forecast partly to aircraft deliveries arriving on time or slightly ahead of schedule, faster deployment of those aircraft and increased utilization. The company expects 12 aircraft deliveries in 2027, offset by the planned retirement of two Boeing 737-700 aircraft undergoing 20-year maintenance checks.
Copa also plans to launch service to Porlamar, Isla Margarita, Venezuela, in November. The addition will bring the company’s network to 88 destinations in 32 countries across the Americas. Heilbron said Copa expects to announce an 89th destination before the end of August, with service planned to begin in December.
Beginning in March 2027, Copa will transition its Panama City hub from six to eight connecting banks. Management said the change is intended to improve connectivity, increase aircraft utilization and make more efficient use of airport infrastructure. Carey said the revised structure should create additional capacity for growth while keeping average connection times broadly unchanged.
The company also began operating Starlink-equipped flights in July, becoming the first airline in Latin America to offer the high-speed internet service, according to Copa. The airline expects the fleetwide rollout to be completed in the first half of 2027. Business-class travelers, preferred members at the Gold, Platinum and Presidential levels, and Starlink subscribers will receive complimentary access, while other passengers will pay for the service.
Balance Sheet and Shareholder Returns
Copa ended the quarter with approximately $1.5 billion in cash and investments, equal to 39% of trailing 12-month revenue. Total debt, including lease liabilities, was about $2.7 billion, all related to aircraft financing. The company reported an average debt cost of 3.7% and a net debt-to-EBITDA ratio of 0.9 times.
The board ratified a quarterly dividend of $1.71 per share, payable Sept. 15 to shareholders of record as of Aug. 31. Donkersloot also said Copa had executed $45 million of its authorized share repurchase program year to date, with about $60 million remaining under the current authorization.
About Copa (NYSE:CPA)
Copa Holdings, SA NYSE: CPA is a Panama‐based aviation holding company that provides passenger and cargo air transportation across the Americas and the Caribbean. Through its principal subsidiary, Copa Airlines, the company operates a modern fleet of Boeing 737 aircraft, offering scheduled flights that connect passengers through its Tocumen International Airport hub in Panama City. The company also offers dedicated cargo services under the Copa Cargo brand, leveraging belly hold capacity on its passenger flights to transport freight throughout its network.
The roots of Copa Holdings trace back to 1947, when Compañía Panameña de Aviación began operations as the flag carrier of Panama.
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