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Copa Airlines stock

Monday, September 29, 2014

Shares of Panama-based Copa Airlines could be interesting, if the Panama-Venezuela relationship improves, and if the currencies of several Latin American countries stay strong.

Exchange rates are an issue for Copa, which gets most of its revenues in the currencies of several Latin American countries.

Many of these currencies have weakened during the last few months, including those of Brazil, Colombia and Chile.

Meanwhile, most of Copa’s expenses are in dollars.

As far as Venezuela is concerned, Copa last July cut back half of its flights to the country, which previously had embargoed payments to Panamanian companies, including the airline.

On the other hand, newly elected Panamanian president Juan Carlos Varela and his Venezuelan counterpart last July re-established bilateral diplomatic relations, broken during the administration of Ricardo Martinelli.

Stock in Copa Airlines fell from $160 in late July to $105 last week.

At the same time, Copa’s operating margin is the highest in the world - $0.22 per dollar for the year ending last June 30 – according to a report published last week by Airline Weekly.

Its price-earnings ratio last week was nine, while earnings per share over the past year were $11.

Copa has more connections within Latin America and the Caribbean than any other airlines.

Its main competitors include Colombia-based Avianca, which in 2013 acquired Taca, the leading Central American carrier, and Chile-based LatAm.