Copa Holdings' (CPA) August Traffic Rises, Load Factor Down

Copa Holdings, S.A. CPA reported mixed traffic numbers for August 2018. In spite of traffic increasing substantially on the back of strong demand for air travel, load factor declined as traffic growth was outweighed by capacity expansion.

Consolidated traffic (measured in revenue passenger miles or RPMs) came in at 1.9 billion, up 2.8% from the year-ago figure. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 4.9% to 2.2 billion.

However, consolidated load factor (percentage of seats filled by passengers) contracted 1.7 percentage points (pp) to 83.4%.

At the end of the first eight months of 2018, Copa Holdings generated RPMs of 14.5 billion (up 9.5% year over year) and ASMs of 17.3 billion (up 8.4% year over year). Consequently, load factor registered a rise of 0.8 pp year over year to 83.9%.

Of late, the Panama City, Panama-based company has been suffering from several headwinds. In April, it had to cancel approximately 360 flights due to the political dispute involving Panama and Venezuela.

Moreover, rising fuel costs have been hurting Copa Holdings’ bottom line for the past few quarters, which is likely to continue going forward. Effective fuel price per gallon is estimated to be approximately $2.30 in 2018, higher than the $1.87 in 2017. The adverse scenario is reflected in the company’s price performance, where shares have lost 42.7% on a year-to-date basis compared with the industry’s decline of 14.6%.

Zacks Rank & Key Picks

Copa Holdings carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Transportation Sector are Trinity Industries, Inc. TRN, SkyWest, Inc. SKYW and Old Dominion Freight Line, Inc. ODFL. While Old Dominion carries a Zacks Rank #2 (Buy), SkyWest and Trinity sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Trinity, SkyWest and Old Dominion have gained 8.3%, 2.7% and 14.2%, respectively, in the past six months.

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