Copa revises downwards 2014 operating margin guidance

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Panama's Copa Airlines has revised downwards its operating margin guidance for the full year, due to yield softness it expects in the second half of 2014.

The Star Alliance carrier now forecasts that its 2014 operating margin will grow in the range of 18-20%, down from 19-21% previously. Copa reported a 19.8% operating margin in 2013.

Copa says the softening yields are mainly driven by further cuts to the carrier's capacity to Venezuela, as it continues to face challenges in repatriating local revenues from the country. The airline has cut capacity to Venezuela by 50%, 10 percentage points more than the 40% cut Copa said in May it would make over three months.

The airline is also seeing some "load weakness" in Argentina, says Copa chief executive Pedro Heilbron in an earnings call today. Chief financial officer Jose Montero says yields in Argentina are down 10% year-on-year.

Copa now expects full-year unit revenues to grow at a smaller increment than previously expected, and says revenue per available seat mile (RASM) is now forecasted to rise about 13.4%, down from the prior guidance of 13.7%.

The airline maintains its full-year capacity growth forecast of 10%, and cost per available seat mile (CASM) excluding fuel growth of 6-8%. Copa is also expecting its full-year average load factor to come in at around 77%.