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Copa Holdings (CPA) June Traffic Increases From May Levels

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In spite of recent improvement, traffic continues to be below pre-coronavirus levels. Copa Holdings’ (CPA - Free Report) traffic, measured in revenue passenger miles (RPMs), declined 45.6% from the 2019 levels (pre-pandemic) to 954.6 million in June 2021.

In response to this low-demand scenario, the airline is reducing capacity. Measured in available seat miles (ASMs), capacity plunged 41.4% from the 2019 levels to 1210.2 million. With traffic declining more than the amount of capacity contraction, load factor (percentage of seats filled with passengers) deteriorated 6.2 percentage points (p.p.) to 78.9% in June.

Despite being significantly below the pre-pandemic level, the company’s June traffic figures marked an improvement (due to increased vaccination programs) from May levels. Traffic moved up 26.7% month on month in June. In the same time frame, capacity rallied 24.6%. Since traffic surge was more than capacity expansion, load factor inched up 1.3 p.p. in June from May levels (77.6%).

With uptick in passenger demand, Copa Holdings is witnessing gradual increase in operations. The airline expects its capacity to reach approximately 2.9 billion in the second quarter of 2021 (detailed results will be published on Aug 4). This represents around 45% of second-quarter 2019 levels.  The upside is expected to support the airline’s top line by attracting traffic.

Zacks Rank & Stocks to Consider

Copa Holdings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Landstar System (LSTR - Free Report) , C.H. Robinson (CHRW - Free Report) and FedEx Corporation (FDX - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Landstar, C.H. Robinson and FedEx is projected at 12%, 9% and 12%, respectively.