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Copa Airlines: biggest US-Panama deal

Monday, April 20, 2015


In the biggest-ever commercial transaction between Panama and the United States, Panama-based Copa Airlines will buy 61 Boeing 737s for an amount valued at $6.6 billion at list prices.

Meanwhile, the Panamanian state-owned enterprise which owns and operates Tocumen International, is seeking funds to increase capacity at the country’s main airport by completing a new passenger terminal.

Copa will acquire a mix of 737 MAX 8 and MAX 9 aircraft, due to come into service in 2017, according to an announcement last week by the company.

A variation on the existing 737 series, the MAX versions are expected to cut fuel consumption and carbon dioxide emissions by at least 10 percent through the use of the high-bypass turbofan LEAP engine produced CFM International, a 50-50 joint venture between GE Aviation of the United States and Snecma of France.

In terms of revenue, Copa is Latin America’s fifth-largest airline, with 2013 revenues of $2.6 billion.

With more than 100 destinations in 30 countries in the Americas and the Caribbean, Copa is third in the continent, while both Gol of Brazil and Aeromexico focus largely on their respective internal markets.

Only Latam, based in Santiago, Chile, and Colombia-based Avianca, fly to more destinations than Copa.

Latam 2013 revenues were $13.3 billion, while Avianca reported $4.6 billion.

Copa will in the next few months start direct service to New Orleans, as well as the Mexican cities of Puebla and Villahermosa.

The airline last year started flights to Fort Lauderdale, Guyana and Montreal.

Copa shares have during the past nine months traded on the New York Stock Exchange in a range of $90 to $120.

This is down close to 25% from the average price during the previous two years, largely due to non-payment of accounts in Venezuela, which historically has been an important destination for Copa.

Recent share prices nevertheless are more than double the average for period 2011-2012.

In terms of airport development, Tocumen S.A. is seeking additional funding for a terminal project, the cost of which is projected at $850 million, compared with earlier estimates of less than $800 million.

An informal private-public partnership has seen the state consistently expanding both terminal facilities and runways at Tocumen, while Copa has invested in aircraft and routes.