Copa Posts Strong Profits Amid Strategic Expansion and Stable Guidance

Date of Call: Feb 12, 2026

Financials Results

• EPS: $4.18 per share, up 5.3% YOY
• Operating Margin: 21.8% for Q4, or 22.5% excluding a non-cash adjustment

Guidance:

• Capacity (ASMs) growth expected in the range of 11%-13% YOY for 2026.
• Operating margin expected within the range of 22%-24% for 2026.
• Load factor expected approximately 87%.
• Unit revenues (RASM) expected approximately $0.112.
• CASM ex-fuel expected approximately $0.057, consistent with long-term target of 5.6 cents by 2028.
• All-in fuel price expected $2.50 per gallon.

Business Commentary:

Strong Financial and Operational Results:

• Copa Holdings reported a net profit of $172.6 million for Q4, with an operating margin of 21.8%. Excluding a non-cash adjustment and a foreign currency loss, the operating margin would have been 22.5%.
• The results reflect strong demand trends, disciplined cost execution, and a focus on operational excellence.

Capacity and Traffic Growth:

• The company increased capacity by 9.9% year-over-year in Q4, while passenger traffic increased by 10.1%, leading to a load factor increase of 0.2 percentage points to 86.4%.
• This growth was driven by strong demand across the region and the strategic addition of new routes and frequencies.

Network Expansion and Fleet Growth:

• Copa Holdings expanded its network by adding service to new destinations, including Los Cabos, Puerto Plata, Maracaibo, and Salvador Bahia, and took delivery of four Boeing 737 MAX 8 aircraft in Q4.
• The expansion is part of a strategy to strengthen its position as a leading connecting hub in the Americas and leverage its efficient hub operations.

Profitability and Margin Guidance:

• The company reported a full-year operating margin of 22.6% in 2025, with expectations to maintain an operating margin range of 22%-24% for 2026.
• This is supported by strong demand, a disciplined cost structure, and capacity growth from added frequencies and new destinations.

Financial Strength and Shareholder Returns:

• Copa Holdings ended the quarter with total cash and investments of $1.6 billion, representing 44% of last 12-month revenues, and an adjusted net debt to EBITDA ratio of 0.6 times.
• The company has approved a quarterly dividend payment of $1.71 per share, reflecting its commitment to returning value to shareholders.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "strong financial and operational results," "continued discipline in our cost execution," and "reaffirming the strength of our business model." CEO stated the company is "well positioned to deliver another year of profitable growth and strong margins." Guidance also reflects confidence with double-digit capacity growth and strong margin expectations.

Q&A:

• Question from Savi Syth (Raymond James): Concerns about shipping above consumption... (related to Venezuela demand impact and service outlook)
  Response: Copa is flying to Venezuela twice daily to Caracas and almost daily to Maracaibo, with plans to gradually add capacity and return to five cities throughout 2026.

• Question from Duane Pfennigwerth (Evercore ISI): Inquiry about early improvement from stronger local currencies on demand.
  Response: Management confirmed stronger currencies in South America improve demand and yields, a trend currently being observed.

• Question from Guilherme Mendes (J.P. Morgan): Surprise at flattish RASM guidance despite capacity growth and stronger currencies; requested details on assumptions.
  Response: The guidance is based on strong demand confidence, with 50% of ASM growth from 2025 capacity, 40% from new frequencies in existing markets, and catch-up on Boeing deliveries.

• Question from Felipe Nielsen (Citi): Inquiry on CASM ex-fuel guidance and evolution, and on quarter-by-quarter capacity growth.
  Response: CASM ex-fuel guidance of $0.057 is supported by initiatives like sales & distribution savings, densification projects, and cost growth discipline; capacity growth is front-loaded in H1, aligning with delivery schedules.

• Question from Michael Linenberg (Deutsche Bank): Questions about Venezuela service (including Wingo) and ability to fly to Cuba without a tech stop.
  Response: Copa flies to Venezuela twice daily from Panama, with Wingo operating separately; for Cuba, Copa can tanker fuel from Panama with minimal passenger impact, avoiding a tech stop.

• Question from Rafael Seminari (UBS BB): Asked about the status of the codeshare partnership with Volaris amid potential Volaris-Viva merger.
  Response: The codeshare with Volaris, launched in November, is expected to continue and is not a significant part of Copa's business.

• Question from Daniel McKenzie (Seaport Global): Request for partner revenue/passenger volume perspective vs. pre-pandemic levels.
  Response: Partner traffic (mainly United) has not grown above pre-pandemic levels; the partnership is healthy but not exceeding prior volumes.

• Question from Pablo Monsede (Barclays): Asked if Venezuela is included in guidance and if improved conditions could provide upside.
  Response: Venezuela service is not material to guidance; any upside from improved conditions is not expected to significantly change the outlook.

Contradiction Point 1

2026 Capacity Growth Composition

Mismatch in the breakdown of capacity growth sources between 2025Q4 and 2025Q3.

What are your key takeaways from the earnings report? - Guilherme Mendes (J.P. Morgan)

2025Q4: 50% of ASM growth comes from the full-year impact of 2025 capacity additions, 40% is new frequencies in existing markets, and the airline is now catching up on promised Boeing 737 MAX deliveries after previous delays. - Pedro Heilbron(CEO)

What's the rationale for the flat RASM guidance despite increased capacity and stronger currencies? - Savanthi Syth (Raymond James & Associates)

2025Q3: The 11% to 13% ASM growth for 2026 is projected to break down as follows: about half comes from the full-year effect of aircraft delivered in 2025; of the remaining half, 40 percentage points come from adding frequencies to existing destinations, and 10 percentage points come from new route additions. - Peter Donkersloot(CFO)

Contradiction Point 2

2026 Unit Revenue (RASM) Guidance

Contradiction on the expectation for unit revenue pressure from capacity growth.

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2025Q4: The guidance is based on a confident demand outlook... currency strength is not the basis of the plan. The outlook is based on a realistic assessment without assuming sustained currency tailwinds. - Pedro Heilbron(CEO)

Is the flat RASM amid capacity growth solely due to currency tailwinds, or are there other factors such as operational strengths or supply rationalization? - Michael Linenberg (Deutsche Bank)

2025Q3: The mix of growth (full-year effect and added frequencies on high-demand routes) should result in less unit revenue pressure than typically expected with double-digit ASM growth. - Pedro Heilbron(CEO)

Contradiction Point 3

2026 CASM Ex-Fuel Guidance

Contradiction on the confidence level and trajectory for CASM ex-fuel.

What is your outlook for the company's performance in the current quarter? - Felipe Nielsen (Citi)

2025Q4: The 2025 CASM ex-fuel of $0.058 is close to the middle of the $0.057-$0.058 range, providing confidence for the 2026 target. - Peter Donkersloot(CFO)

What is the CASM ex-fuel guidance and its expected evolution this year? - Filipe Ferreira Nielsen (Citigroup Inc.)

2025Q3: For 2026, the company is confident that cost initiatives will offset inflation and push CASM even lower. - Peter Donkersloot(CFO)

Contradiction Point 4

Currency Strength as a Factor in Financial Guidance

Contradiction on whether currency tailwinds are a basis for near-term revenue guidance.

What are your thoughts on the recent financial results, Rogério Rajão (Bank of America)? - Rogério Rajão (Bank of America)

2025Q4: Currency strength is not the basis of the plan. The guidance does not bank on it, as currencies are volatile. - Pedro Heilbron(CEO)

Is the flat RASM despite capacity expansion solely due to currency tailwinds, or are other strengths or supply rationalization factors involved? - Duane Thomas Pfennigwerth (Evercore ISI)

2025Q2: The strengthening of major Latin American currencies... is beneficial as most sales are from South to North. - Pedro Heilbron(CEO)

Contradiction Point 5

Wingo's Growth Strategy and Fleet Outlook

Contradiction on Wingo's planned capacity growth trajectory for 2026.

What are your thoughts on the recent partnership with Deutsche Bank? - Michael Linenberg (Deutsche Bank)

2025Q4: Wingo's growth in 2026 will be minimal, maintaining a stable fleet size. - Pedro Heilbron(CEO)

Is Wingo part of the Venezuela service, and what is its 2026 outlook? - Jens Spiess (Morgan Stanley)

2025Q2: A second 737-800 freighter will be added by the end of the month, but it will not significantly change cargo volume, just provide a modest increase. - Pedro Heilbron(CEO)