Copa Holdings, S.A. (NYSE:CPA) Q1 2026 Earnings Call Transcript

Copa Holdings, S.A. (NYSE:CPA) Q1 2026 Earnings Call Transcript May 14, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings First Quarter Earnings Call. [Operator Instructions] 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.

Daniel Tapia: 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, 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. 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 Heilbron.

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 9,000 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 $0.118, 2.7% higher compared to Q1 ’25. Unit cost for CASM increased 1.6% to $0.089, driven by higher fuel prices. CASM, excluding fuel, declined 1% to $0.058, 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.

Q&A Session

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 Caracas. This returns us to serving 5 cities in Venezuela from our Hub of the Americas in Panama. With these additions, we will operate through 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 2 Boeing 737-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 737-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 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 Donkersloot Ponce: 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 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 20.2%, 0.5 percentage points higher year-over-year. Operating profit came in at $258 million, resulting in an operating margin of 24.6%, a 0.8 percentage points higher than the first quarter 2025.

Unit costs, excluding fuel, or ex-fuel CASM declined 1% to $0.058, reflecting the company’s continued focus on cost discipline. Including fuel, CASM increased 1.6% year-over-year to $0.089, 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 a 40% of last 12 months revenues.

This number excludes approximately $700 million in predelivery 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’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 $1.71 per share to be paid on June 15 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 costs excluding fuel of approximately $0.057. Based on the current future 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 clearer. In summary, despite the current fuel 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 analysts.

Operator: [Operator Instructions] And it comes from Savi Syth with Raymond James.

Savanthi Syth: 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 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?

Pedro Heilbron: Thanks, Savi. I would say that we see strength across the network and not necessarily one region is stronger than other. 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 is showing strength.

Savanthi Syth: That’s helpful. And maybe just following up on that. Some of the local currencies are much stronger lately. I know you priced your tickets in U.S. 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 Heilbron: Well, I think that, 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 1 year ago, most of the important ones of the larger markets are up double digits. So yes, that, of course, plays a positive role in what we’re seeing.

Operator: Our next question comes from Duane Pfennigwerth from Evercore ISI.

Duane Pfennigwerth: 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?

Pedro Heilbron: 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 months and 2 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 and even demand being resilient over yield increases that we’ve also seen from the whole industry in the last few months.

Duane Pfennigwerth: 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?

Peter Donkersloot Ponce: Duane, this is Peter, and thank you for the question. I would say that we’re guiding for a full year CASM of $0.057. And we always talk about CASM being pretty much in the range of the year, pretty stable. So I think that’s what we should be expecting for the year relatively stable CASM and that’s back on all the initiatives we talked that it should be stable across the year.

Duane Pfennigwerth: So no quarter sticks out in terms of like a massively easier comp versus the others?

Pedro Heilbron: No, not particularly.

Operator: Our next question comes from Julia Orsi with JPMorgan.

Julia Orsi: So we have 2 questions from 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?

Pedro Heilbron: Okay. Thank you, Julia. I’ll start with the first question, then I’ll ask Peter to help me with the cost question. So 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’ve just shown our April numbers with ASM 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 Donkersloot Ponce: Julia, 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 back on and I go to main, one is our ASM growth back on the capacity and the densification project that we’ve been talking about. And of course, that helps us continue to lose part of our fixed cost. We can see a, 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 I would say the other is we continue to seeing some benefits on our sales and distribution strategy and other initiatives that we have in that bucket. And those are, I 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.

Operator: Our next question is from Michael Linenberg with Deutsche Bank.

Michael Linenberg: 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’s the CapEx number for this year? 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 for ’27?

Peter Donkersloot Ponce: Too many questions. I would say, our CASM for the year, our cash — our cash CapEx for the is year, sorry, is in the neighborhood of $300 million 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 million to $800 million for the year. We don’t necessarily guide for multiyear CapEx, the cash CapEx would be in the neighborhood, and then the fleet — the aircraft CapEx would be related to that fleet growth that you’re seeing for next year.

Pedro Heilbron: Let me add some — Mike, let me add to that. Last year, we took delivery of 13 aircraft. This year is 7 aircraft — 8 aircraft we’re taking delivery of 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 2 things don’t go together. But you know what I mean.

Michael Linenberg: Yes. No, no, no. I like the context because it’s now — it seems like that you’ve sort of been at this level for the last couple of years. This isn’t really all that extraordinary now that you’re getting there…

Pedro Heilbron: Exactly.

Michael Linenberg: And then my second question is, look, 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 or 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?

Pedro Heilbron: Yes. Thank you, Mike. Besides the obvious of Spirit going away, as 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 prices. That is not to say that it might not happen in the future, but we haven’t really seen anything up to now.

Operator: And is from Alberto Valerio with UBS.

Alberto Valerio: Congrats for the results. My question is mainly 2. 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 is just for this quarter, if you have any benefit in Panama. The second one is about the guidance for the year. Can you consider it as a nominal pass-through on the fuel price? Or can you reconsider it as recovering the margins of 22%, 23% for the full year?

Peter Donkersloot Ponce: 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 U.S. Gulf Coast 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 add our inter-plane cost that should be in the neighborhood $0.30 per gallon. 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 Heilbron: Yes. Well, the — 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 for the rest of the year. We’re following the guidance I mean the fuel curve, we’re 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 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 it’s 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 at the new yield. The yields depend on competition and demand, which right now demand looks very strong and competition has been rational. And then the fuel curve might be the one variable that no one really can predict.

Operator: Our next please, is from Daniel McKenzie of Seaport Global.

Daniel McKenzie: A couple of questions here. Just going back to Mike’s question, just the high-priced fuel environment, 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, if we just kind of think about the supply chain of Latin America, are there any — are the refineries in some countries that are disproportionately reliant on Iran that sort of are catching your radar?

Pedro Heilbron: 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 — oil that gets refined and turned into jet fuel comes mostly from the U.S., from Mexico and other countries, Venezuela, Colombia, et cetera. So it all comes from this part of the world. It’s not affected by the Strait of Hormuz. Of course, fuel prices are international. And so regional supplies don’t make — 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 the times we’re living, that’s actually great.

Daniel McKenzie: Yes. And then the second question came directly from an investor. It’s actually something I wonder about in the past. But have you — 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 demand seems to be to foreign currencies. I’m just curious what that would look like if it were done on a constant currency basis.

Pedro Heilbron: Not sure. I’m not sure if I understood the question. because the reality is what we built with it or we built without it. 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. Currency hit 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 makes them stand out in a maybe negative way. But I’m not sure exactly what — what are you looking for in the question, Dan?

Daniel McKenzie: Well, yes, 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 at the revenue sort of from a demand perspective. But I get — it makes perfect sense that when currencies are strengthening, you add capacity and 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 Heilbron: Thank you, Dan. We love your easy questions.

Operator: And our last question comes from Filipe Nielsen with Citi.

Filipe Ferreira Nielsen: Congrats on 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 related to that, how is your Venezuelan operations developing? And is this having an important matter in this whole pricing environment?

Pedro Heilbron: Okay. Thank you, Filipe. 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 towards 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, you mentioned Venezuela. Thank you, yes. We’re going back — well, first of all, I should say that we are the only — the very only airline, international airline, I say must say, there’s very only international airline that never stopped flying to Venezuela. Except for like a 10-day window that had to do with the whole military operation that was going on, and it was not safe to operate during that window. But we’ve been 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 5 cities and over 40 weekly flights in Venezuela. In terms of impact in unit revenues or yields, nothing significant because the Venezuela is going to be in the average.

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

Pedro Heilbron: 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. Thank you.

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