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Will Copa Holdings' Operating Margin Continue to Be Robust in 2025?
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Key Takeaways
Copa Holdings posted adjusted operating margins of 23.5% in 2023 and 21.9% in 2024.
CPA expects 2025 adjusted operating margins between 21% and 23%. We project it to be 22.8%.
Efficient cost control, low fuel costs and strong on-time performance continue to support CPA's margins.
Latin America’s carrier, Copa Holdings (CPA - Free Report) , has excelled in a key area, operating margin, which indicates the amount of profit a company generates from its primary business activities. The metric indicates how efficiently a company manages its operating costs, such as raw materials, labor and other expenses related to production and sales.
Copa Airlines has been able to sustain operating margins of more than 20%, making it one of the most profitable airlines globally. For example, the carrier reported an operating margin (on an adjusted basis) of 23.5% in 2023 and 21.9% in 2024. Management expects the carrier to end 2025 with an adjusted operating margin in the 21-23% range. Our expectation of 22.8% is at the higher end of the company’s guided range.
CPA has excelled in the area of cost management, driving operating margin. Copa Holdings has taken steps to streamline operations and reduce unnecessary expenses, demonstrating resilience in a challenging market environment. This focus on efficiency helps maintain a healthy balance sheet, allowing the company to navigate fluctuations in demand more effectively. Factors like low fuel costs, focus on maintaining a strong on-time performance and a passenger-friendly approach support CPA’s margins. The carrier’s low-cost base, highlighting efficiency, should enable it to maintain excellent margins. CPA carries a Zacks Rank #2 (Buy) at present.
How Are Other Airlines Performing in Respect of Operating Margin?
Delta Air Lines (DAL - Free Report) reported an operating margin (on an adjusted basis) of 4.6% in the first quarter of 2025, down from the year-ago figure of 5.1%. The U.S. airline expects adjusted operating margins in the 11-14% band in the second quarter of 2025. Given the economic uncertainty, DAL is focusing on reducing planned capacity growth apart from actively managing costs and capital expenditures to drive margins this year.
American Airlines (AAL - Free Report) performed dismally with respect to adjusted operating margins in the first quarter of 2025 due to the increase in operating expenses led by the expenditure on salaries and benefits. Adjusted operating margin in the June quarter is expected to be in the 6-8.5% range. Our estimate is currently pegged at 7.8%.
CPA’s Price Performance, Valuation and Estimates
Shares of CPA have gained 17.4% in the past six months, outperforming its industry’s 12.4% decline in the same timeframe.
Image Source: Zacks Investment Research
From a valuation perspective, CPA appears undervalued. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.02, down from the industry’s 10.65.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CPA’s 2025 and 2026 EPS has moved up in the past 30 days.
Image Source: Zacks Investment Research
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Will Copa Holdings' Operating Margin Continue to Be Robust in 2025?
Key Takeaways
Latin America’s carrier, Copa Holdings (CPA - Free Report) , has excelled in a key area, operating margin, which indicates the amount of profit a company generates from its primary business activities. The metric indicates how efficiently a company manages its operating costs, such as raw materials, labor and other expenses related to production and sales.
Copa Airlines has been able to sustain operating margins of more than 20%, making it one of the most profitable airlines globally. For example, the carrier reported an operating margin (on an adjusted basis) of 23.5% in 2023 and 21.9% in 2024. Management expects the carrier to end 2025 with an adjusted operating margin in the 21-23% range. Our expectation of 22.8% is at the higher end of the company’s guided range.
CPA has excelled in the area of cost management, driving operating margin. Copa Holdings has taken steps to streamline operations and reduce unnecessary expenses, demonstrating resilience in a challenging market environment. This focus on efficiency helps maintain a healthy balance sheet, allowing the company to navigate fluctuations in demand more effectively. Factors like low fuel costs, focus on maintaining a strong on-time performance and a passenger-friendly approach support CPA’s margins. The carrier’s low-cost base, highlighting efficiency, should enable it to maintain excellent margins. CPA carries a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Are Other Airlines Performing in Respect of Operating Margin?
Delta Air Lines (DAL - Free Report) reported an operating margin (on an adjusted basis) of 4.6% in the first quarter of 2025, down from the year-ago figure of 5.1%. The U.S. airline expects adjusted operating margins in the 11-14% band in the second quarter of 2025. Given the economic uncertainty, DAL is focusing on reducing planned capacity growth apart from actively managing costs and capital expenditures to drive margins this year.
American Airlines (AAL - Free Report) performed dismally with respect to adjusted operating margins in the first quarter of 2025 due to the increase in operating expenses led by the expenditure on salaries and benefits. Adjusted operating margin in the June quarter is expected to be in the 6-8.5% range. Our estimate is currently pegged at 7.8%.
CPA’s Price Performance, Valuation and Estimates
Shares of CPA have gained 17.4% in the past six months, outperforming its industry’s 12.4% decline in the same timeframe.
From a valuation perspective, CPA appears undervalued. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.02, down from the industry’s 10.65.
The Zacks Consensus Estimate for CPA’s 2025 and 2026 EPS has moved up in the past 30 days.