Impressive Air Travel Demand at Copa Holdings: Sign of More Upside?

Copa Holdings CPA, based in Panama City, Panama, is gaining from upbeat passenger volumes. Driven by the buoyant air-travel demand scenario, revenue passenger miles (RPMs: a measure of traffic) increased 10.1% year over year in the first quarter of 2025.

Load factor (percentage of seats filled by passengers) increased 0.4 percentage points to 86.4% in the March quarter, with traffic growth outpacing the 9.5% capacity expansion in the three-month period. RPMs increased 23.6%, 2.3% and 5.2% year over year in January, February and March, respectively, the three months of the first quarter of 2025. Despite economic uncertainties, RPMs increased an impressive 5.5% in April, on a year-over-year basis.

The impressive air-travel demand scenario is primarily responsible for Copa Holdings’ shares gaining a handsome 19% over the past six months, outperforming the Zacks Transportation - Airline industry and its U.S. counterparts, United Airlines UAL and American Airlines AAL. The double-digit increase in the share price of CPA against the double-digit declines of United Airlines and American Airlines seems to suggest that it has navigated the recent tariff-induced volatility well.

Despite uncertainties, traffic growth has remained intact at Copa Holdings. With passenger volumes likely to remain strong, we anticipate passenger revenues to increase 4% in 2025 on a year-over-year basis.

Copa Holdings seems to have performed better with respect to air travel demand than its U.S. counterparts due to factors like regional economic expansion, better adaptation to market trends and focus on innovative strategies. The impressive air travel demand scenario is also behind Copa Holdings’ estimates for 2025 and 2026, moving north.

As regional economies recover from the COVID-induced slump and middle-class populations expand in Latin America, demand for air travel is likely to remain healthy, which bodes well for CPA. Copa’s strong brand presence and efficient operations position it well to capitalize on this potential growth.

CPA’s Valuation Picture

From a valuation perspective, Copa Holdings is still trading cheaper than the industry. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.21X, much lower than the industry average of 11.14X. The company has a Value Score of A, like its U.S. counterparts, American Airlines and United Airlines.

CPA’s Zacks Rank

Copa Holdings currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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