Copa sees increasing competition from low-cost carriers

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Panamanian carrier Copa Airlines admits that competitive pressure is building in Latin America from low cost carriers seeking to gain a foothold in the region.

In a filing with US regulators the carrier’s parent Copa Holdings cites Gol’s growth in Brazil and throughout South America, Fort Lauderdale-based Spirit Airlines, which is making inroads into Latin America and JetBlue, which recently won rights to fly between Orlando and Bogota.

“The low-cost carrier business model appears to be gaining acceptance in the Latin American aviation industry,” says Copa. “We may face new and substantial competition from low-cost carriers in the future which could result in lasting downward pressure on the fares we charge for flights on our routes.”

Copa highlighted the new competitive pressures from low-cost carriers in information detailing plans by Continental Airlines to sell off a 10% stake in the company. Previously, Copa executives have said the Houston-based carrier had the option to sell that stake this year.

Excluding various expenses associated with the sale, Continental expects $142 million in proceeds from the offering of 3.98 million non-voting Class A shares in Copa. Once the sale is complete Continental will hold 1.3% of outstanding Class A Copa shares

Copa executives are not concerned about the diminishing stake by Continental. “When they [Continental] went down from 49% to 10% nothing changed,” said CFO Victor Vial during a discussion of Copa’s first quarter earnings on 8 May. “Our relationship is a strong as ever”.

Continental SVP Asia Pacific CEO of Continental Micronesia Mark Erwin was recently re-elected to Copa’s Board of Directors.


Source: flightglobal.com's sister premium news site Air Transport Intelligence news