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United Continental Holdings Inc (UAL), The Boeing Company (BA): You Must Take a Look at This Airline!

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The airline industry has been critiqued and accused of being a lost investment for some time. However, overall the industry is rebounding, and most airlines are experiencing increasing passenger traffic as well as reducing costs of operation. Aside from describing the usual suspects such as Delta Air Lines, Inc. (NYSE:DAL) and US Airways Group Inc (NYSE:LCC), I will discuss a regional airline that offers appealing investment prospects, and it should be considered as a long position in a growth portfolio.

United Continental Holdings Inc (NYSE:UAL)

The little giant

Copa Holdings, S.A. (NYSE:CPA) is a regional airline based in Panama City, Panama. The company trades with a price-to-earnings ratio of 17.1, well below the industry’s average of 32.7. It also operates with an ROA of 10.2%, which is well above average, and an ROE of 21.9%, compared to the industry’s 2.1% and 15.9%, respectively.

Furthermore, the company’s revenue increased 18% to $641 million for the first three months ending in March 31. Operating income increased 28% to $142.6 million, and earnings resulted in $113 million, or $2.56 per share. The company saw stronger demand for passenger traffic in the first quarter of 2013. Its revenue seat miles (RSM) increased 19% to $3.5 million, and what’s more is that its costs of operation declined. Its cost per available seat mile (CASM) declined 3.6% from slightly higher than $0.11 to slightly less than $0.11.

I believe the company should continue to provide capital growth to its investors. Copa Holdings, S.A. (NYSE:CPA) took delivery of two The Boeing Company (NYSE:BA) B737-800s in the first quarter of 2013, and it is expected to introduce seven more this year. Not only will its available seat miles (ASM) increase, which is directly proportional to the revenue-generating ability of the carrier, but the company will also reduce its costs of operation as more fuel-efficient aircraft are put into use.

Another reason why I believe the company offers an interesting investment prospectus is because of its location. Copa Holdings, S.A. (NYSE:CPA) operates in Panama City, which acts as a bridge between flights between North America and South America. Through its alliance codes, the company should continue to have increasing passenger traffic through connecting flights.

A little help is always appreciated!

Copa Airlines is a member of Star Alliance in conjunction with 26 other airlines around the world, including United Continental Holdings Inc (NYSE:UAL) and US Airways Group Inc (NYSE:LCC). The code-share agreement should benefit the three carriers and improve revenue. Through Copa Airlines’ Hub of the Americas, passengers can comfortably connect to any city between Latin America and the U.S.

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