Incorporated: 1944 as Compañía Panameña de Aviación, S.A.
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation; 488119 Other Airport Operations
SIC: 4512 Air Transportation - Scheduled; 4581 Airports, Flying Fields & Services
Copa Holdings, S.A., is the parent company for Copa Airlines of Panama and AeroRepública of Colombia. Copa's niche lies in flying midsized aircraft to medium-sized cities in Latin America and the United States. Flying from the "Hub of the Americas" at Tocumen International Airport in Panama City, it operates no domestic flights within Panama. Copa has been described as a legacy carrier with a low-cost work ethic. AeroRepública, Colombia's second largest carrier, was added in 2005.
Partnerships have proved vital at various times in Copa's history. Originally an affiliate of Pan American World Airways, it was acquired by local investors in 1971 and flew more or less independently for a couple of decades until 1998, when Continental Airlines of the United States took a strategic interest in it. Copa joined the SkyTeam global alliance in 2007 and signed additional codeshare agreements with KLM and AeroMéxico.
Copa flies to about three dozen destinations in 21 countries from its Panama City hub; however, it offers no domestic service within tiny Panama. The 2005 acquisition of AeroRepública added a dozen destinations in Colombia. Copa has about three dozen planes in one of the youngest fleets in the Western Hemisphere. AeroRepública operates another dozen aircraft.
Early Origins
Compañía Panameña de Aviación, S.A., the precursor to Copa Holdings, S.A., was formed by the government of Panama in June 1944. Pan American World Airways acquired a 40 percent holding in the airline a couple of months later and added another 33 percent two years after that. (The remainder of shares were acquired by Pan Am in 1968.)
Copa did not begin flight operations for another three years. As was the case with many other postwar airline launches, the original fleet of three planes was comprised of war surplus C-47 transports. It was originally limited to domestic feeder services but soon shifted its emphasis to international routes.
Copa was not Panama's first airline. Pan Am had previously operated another subsidiary there called Panama Airways, Inc., from 1936 to 1941. In subsequent years several other carriers also flourished and in some cases eclipsed Copa before fading into oblivion.
Airline historian R. E. G. Davies notes that Copa was slow to embrace jets. Its Hawker Siddeley turboprops, first acquired in 1966, and Lockheed Electras added five years later allowed it to provide reliable and very economical service on short hops within the region. It began flying outside of Panama in the 1960s, with routes as far as the Caribbean and Colombia.
Local Ownership
A group of local investors acquired Copa from Pan Am in March 1971. In 1986 Copa became a part of CIASA (Corp. de Inversiones Aereas SA), a Panamanian holding company.
By this time, the company was focused on international routes exclusively. The company had begun to operate the midsize Boeing 737, variants of which would be its workhorse for decades.
Post-Invasion Commotion
Copa launched its service to Miami in December 1, 1989. Less than three weeks later, the United States invaded Panama to depose Manuel Noriega. Air Panama, Copa's state-owned rival, went bankrupt in the commotion that followed.
Air Panama dated back to 1966 and had been an affiliate of the Spanish airline Iberia. Its international network grew throughout the 1970s, and at the end of the decade it came under private ownership and took on British Airways as its new strategic partner. By the time of the invasion it had been reduced to a single plane, albeit a big one, a Boeing 747.
Copa and other airlines attempted to acquire Air Panama's routes but lost out to a private consortium called Panama Air International (PAI), which named Southwest Airlines cofounder Roland King as the relaunched airline's CEO. However, it lasted just a couple of years. The Air Panama name was carried a decade later by a small, tourist-oriented airline.
Copa's revenues were estimated at $35 million in 1991, and it was said to be profitable. It carried 220,000 passengers and eight million pounds of cargo during the year, its general manager told the Journal of Commerce and Commercial. Panama's large free trade zone made it a freight hub connecting the Caribbean, Central America, and Colombia, one of the country's largest trading partners.
The company then had three Boeing 737s and sometimes leased DC-8s. The fleet grew quickly, numbering 11 Boeing 737s by 1994. By this time, Copa had 650 employees.
Copa was participating in a loose alliance of Central American airlines, but it withdrew as its expansion plans brought it into conflict with the leader, El Salvador Grupo TACA.
1998 Continental Link
Seeking another strategic partner as its link with Grupo TACA unraveled, in 1997 Copa signed up to cooperate with American Airlines. However, the arrangement was short-lived.
Copa soon entered a more enduring relationship with another Texas-based carrier, Continental Airlines. In May 1998 Continental bought a 49 percent share of Copa for $53 million. It would prove to be a shrewd investment.
Business boomed for Copa on the strength of its alliance with Continental. At the same time, it was able to share in bulk purchasing savings on parts, fuel, and other items.
Los Angeles service increased to a daily schedule in June 2000. Copa also added three weekly nonstop flights to São Paulo, Brazil. Copa was increasingly profitable in the coming years, a rarity among airlines immediately after the September 11, 2001, terrorist attacks on the United States.
2005 AeroRepública Purchase and Initial Public Offering
Copa bought a controlling interest in AeroRepública, the second leading airline in Colombia, in March 2005. Like Copa, AeroRepública eschewed the hub system for a point-to-point network of secondary markets. Its fleet was different, though: 12 MD-80s. A subsequent bid to buy Colombia's bankrupt Avianca SA in collaboration with Continental was unsuccessful, however; ultimately Avianca chose to partner with Delta Air Lines.
Copa had an initial public offering (IPO) on the New York Stock Exchange in December 2005. The IPO was described as one of the most successful to ever come out of Latin America. In addition to Copa's string of increasing profits, Copa had fewer expensive social obligations than U.S. legacy carriers, an analyst explained to Reuters.
In the process, Continental sold a large chunk of its shares for $172 million, a handsome profit on its original investment. This reduced its holdings to 32 percent of Copa's equity; CIASA held all the voting shares. A secondary offering in June 2006 further trimmed Continental's share to 10 percent. By this time, noted the Wall Street Journal, the Continental alliance had helped Copa nearly double its passenger count to three million a year.
After a comprehensive fleet renewal program, the airline ended the year with two dozen Boeing 737s and a half-dozen smaller regional jets made by Brazil's Embraer. The new planes helped keep maintenance and fuel costs down. A few more planes arrived in 2007, allowing Copa to end the year boasting three-dozen aircraft in one of the youngest fleets in the Western Hemisphere.
Copa posted more excellent results for 2006, but experienced a slump in its stock price on concerns it was running out of room to grow. The airline was looking for new traffic from new codeshare agreements with AeroMéxico and KLM Royal Dutch Airlines. The latter link had truly global implications, connecting the "Hub of the Americas" with the European market via Amerstam. Copa joined the SkyTeam global alliance in September 2007 as an associate member sponsored by Continental Airlines.
Principal Subsidiaries
Compañía Panameña de Aviación, S.A.; AeroRepública S.A. (Colombia; 99.8%); Oval Financial Leasing, Ltd. (British Virgin Islands); OPAC, S.A.
Principal Operating Units
Copa; AeroRepública.
Principal Competitors
Grupo TACA (Transportes Aereos del Continente Americano); AMR Corp.; Avianca SA; Mexicana de Aviación; DHL; GOL Linhas Aereas Inteligentes.
Further Reading
Assis, Claudia, "Panama Airline Copa Captures Wall Street Trio Imagination," Dow Jones International News, January 24, 2006.
Bocanegra, Nelson, "Continental Affiliate Copa Buys AeroRepública," Reuters News, March 7, 2005.
Cordle, Ina Paiva, "Copa Airlines' CEO Reflects on Company's Smooth Climb to Success," Miami Herald, November 13, 2006.
Cowan, Lynn, "Copa Holdings Opens Up 13% Post-IPO," Dow Jones News Service, December 15, 2005.
Davies, R. E. G., Airlines of Latin America Since 1919, Washington, D.C.: Smithsonian Institution Press, 1984.
Deagon, Brian, "Copa Doubles Profit, Clears Forecasts, but Weak Outlook Keeps Shares Falling," Investor's Business Daily, March 8, 2007, p. A1.
Hensel, Bill, Jr., "'A Dominant Player': Continental Alliance Gives It a Big Reach into Latin America; Panamanian Affiliate Helps Houston Airline Find Success in Region," Houston Chronicle, March 12, 2005, p. 1.
Higgs, Richard, "Panama Pickings," Airline Business, November 1991, p. 30.
"Interview--Copa to Aim for 50 Pct Hedge in 2007--CEO," Reuters News, December 22, 2005.
Kraul, Chris, "Latin Airline Finding Its Niche; Catering to Business Travelers, Copa Takes Off with Flights to Underserved Destinations via Its Hub in Panama City," Los Angeles Times, July 8, 2006, p. C1.
Lennane, Alex, "The Legacy Low Cost Carrier," Airfinance Journal, April 2006, pp. 34-37.
Lima, Evaldo Pereira, "Copa's Continental Aspirations," Air Transport World, November 1999, pp. 53-55.
Luxner, Larry, "A Tale of 2 Panamanian Airlines: 1 Profitable, 1 Looking for an Out," Journal of Commerce and Commercial, February 11, 1991, p. 5B.
Malone, Scott, "Copa Shares Take Off in Active U.S. IPO Market," Reuters News, December 15, 2005.
Millman, Joel, "As Rivals Crowd Copa Air, Continental Sells," Wall Street Journal, January 17, 2006, p. C1.
Shaw, Kirsten L., "COPA Gains from Panama's Economy," Air Cargo World, December 1991, p. 35.
— Frederick C. Ingram
