Healthy travel demand and lower jet fuel costs lifted Panama-based Copa Airlines results in the second quarter. The carrier reported Wednesday a second-quarter operating margin of 24%, the highest of any airline worldwide that Airline Weekly tracks.
“We’ve delivered solid second-quarter results and continue to see a healthy demand environment in the region. We continue growing and strengthening our network, the most complete and convenient hub for intra-Latin America travel,” Copa CEO Pedro Heilbron said.
The Star Alliance member exhibited a 16.7% revenue increase to $809 million, resulting in a second-quarter net profit of $17.5 million. Shares in Copa Holdings, the airline’s parent company, also highlight its dramatic post-pandemic recovery, surging by 31% since the year’s start.
During an earnings call Thursday — the airline reported Wednesday after markets closed and held a call with executives the day after — the airline attributed steady leisure demand as key to its performance.
“Leisure is behaving in a way that you can see in our results. Demand is strong, and yield is healthy, so we’re fine with how traffic has developed,” Heilbron said.
Leisure travel drives 40% of travel demand at Copa, visiting friends and family results in another 30%, and the remainder is from business and corporate sectors. The airline also noted that leisure travelers are not from any particular region and are a combination of their three biggest markets — South America, North America, and the Caribbean.
“There’s a little bit of everything into the mix of our leisure travelers, which I think is very, very good in terms of the sources that we have for demand,” Heilbron said.
The drop in jet fuel prices also played a large part in the company’s results. The airline shared that jet fuel fell 35.9% per gallon, resulting in an overall unit cost, or CASM, decrease of 17% compared to the same period last year.
However, a recent spike in fuel prices is expected to impact Copa’s full-year forecast. The company’s maintained its operating margin forecast of 22-24%, yet executives said it may come inn\ on the “lower side” of the estimate.
The continued financial success and positive outlook of Copa allows them to invest in their fleet. In the second quarter alone, the airline welcomed the addition of two Boeing 737-9s. Looking ahead, the airline anticipates the arrival of an additional five aircraft before the close of 2023, with even more slated for 2024.
“We’re going to receive 14 aircraft next year, and we see the demand to have opportunities for all of those airplanes to fly at our current daily utilization,” said Heilbron.