Latin American carrier Copa Holdings SA (NYSE:CPA) posted a rise in air traffic for the month of May this year. Traffic – measured in revenue passenger miles (RPMs) – came in at 1.41 billion, up 3.9% from 1.35 billion recorded in May 2015.
On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) declined 0.3% to 1.81 billion. Owing to the increase in traffic and reduction in capacity, load factor (% of seats filled by passengers) climbed 310 basis points (bps) to 77.6% in the month.
For the first five months of 2016, Copa Holdings generated RPMs of 7.1 billion (up 3.7% year over year) and ASMs of 9.13 billion (up 1.3%). Load factor registered a growth of 180 bps year over year to 77.2% during the period.
Despite the growth in traffic, Copa Holdings, like other Latin American carriers including GOL Linhas (NYSE:GOL) , is facing the brunt of the deterioration in the Brazilian economy and the weakening of real against the U.S. dollar.
In the first quarter of 2016, the top line at Copa Holdings contracted 11.9% on a year-over-year basis primarily due to a 12.4% decline in passenger revenues. Operating revenue per available seat mile (RASM: a key measure of unit revenue) decreased 13.9% to 10 cents. These factors have been primarily responsible for the 15% drop in the stock since the first-quarter earnings release in early May.
Zacks Rank & Stocks to Consider
Copa Holdings currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include SkyWest, Inc. (NASDAQ:SKYW) and Air France-KLM SA (OTC:AFLYY) . Both the stocks sport a Zacks Rank #1 (Strong Buy).
GOL LINHAS-ADR (GOL): Free Stock Analysis Report
COPA HLDGS SA-A (CPA): Free Stock Analysis Report
SKYWEST INC (SKYW): Free Stock Analysis Report
AIR FRANCE-ADR (AFLYY): Free Stock Analysis Report
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