At Least A Couple More Quarters Before Copa Is In The Clear

I’ve been cautious on the near-term prospects for Copa Holdings (CPA), and holding off on buying for my own account, because of what I’ve seen as substantial near-term operating risks from challenging economic conditions in key markets like Brazil and Argentina. Those risks have continued to show themselves, with a weak third quarter and guidance leading to meaningfully lower expectations for 2019, as unit revenue and margin growth prospects seem muted for at least a couple more quarters.

And yet, I still keep this name high up on my watch list. I believe Copa is a well-run airline with a proven ability to grow capacity and manage costs effectively. Longer term, I believe the opportunities providing air service to Latin America are considerable and can support a higher share price for Copa. Fuel costs and further economic deterioration in key markets are both significant risks, but Copa could already be in a bottoming-out process.

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At Least A Couple More Quarters Before Copa Is In The Clear