Panama's Copa is accelerating fleet, network and capacity expansion next year in response to robust economic growth in the Latin America region.
The carrier has adjusted its 2011 fleet plan and will now take 10 Boeing 737-800s next year compared to earlier plans to add five 737-800s. The five incremental aircraft are being sourced from leasing companies as part of new lease deals covering five 737-800s to be delivered in the second half of next year and five more 737-800s in 2012. These are in addition to the five 737-800s and four 737-800s Copa already was committed to taking 2011 and 2012, respectively, as part of its existing order book.
Copa chief executive Pedro Heilbron says the additional leased aircraft will be used to accelerate capacity expansion. Overall capacity is now projected to increase at Copa Holdings by 17% to 19% in 2011 with most of the growth coming at its Panama City-based Copa Airlines unit rather than at its Copa Colombia unit.
After several years of rapid and profitable network expansion, Copa Airlines has not added a single new spoke from its "hub of the Americas" since late 2008. But next month Copa's network expansion will resume as Saint Maarten in the Caribbean becomes the Panamanian carrier's 46th destination. Heilbron says several new destinations will be added in the second half of next year, some of which will be announced in January.
"We took a break," Heilbron said in a recent interview with ATI and Flightglobal sister publication Airline Business Magazine. "We decided to consolidate our network and not invest in new markets. We had added in three years 15 markets and the economy was going through some uncertainty. We decided it was the right time to take a break from new destinations and consolidate what we had done in previous years."
He points out that so far this year Copa has added a fifth daily flight to Havana, a fourth daily flight to Guatemala City, a third daily flight to Sao Paulo and a second daily flight to Punta Cana. While Copa now plans to resume adding new destinations Heilbron says Copa at the same time will continue to add frequencies to existing destinations. "The whole region is growing so we have a lot of destinations that have less than daily service or just single daily service. We will add where there's need," he explains.
Latin America's GDP is now projected to grow almost 6% this year, including 6% to 7% growth in Panama. In 2011 growth in Panama, which Heilbron says is expected to be the fastest growing economy in Latin America over the next five years, and the overall region are expected to grow at least as fast as 2010.
Rather than follow some of its rivals in pursuing growth through mergers or acquisitions, Heilbron says Copa is content to continue expanding organically through "a combination of frequencies and destinations". While not increasing as much as it has in previous years and not as much as it will increase in 2011, Copa's capacity for 2010 is still projected to be 10% higher than 2009. This includes a 20% year-over-year capacity increase in the fourth quarter. Heilbron says "the current demand environment is very healthy". He points to Copa's recent traffic figures, including 15% traffic growth in October. "The market is assimilating most of the capacity we are adding," he says.
Copa's projected capacity increase for 2011 including first half growth of 20% to 21% followed by second half growth by 15% to 16%. The capacity increase is being driven by a combination of new frequencies, up-gauging existing flights to larger aircraft and a longer average stage length.
Copa's current fleet includes 18 737-700s, 14 737-800s and 13 E-190s at Panama's Copa Airlines and two 737-700s and 13 E-190s at Copa Colombia. In the current quarter Copa will take delivery of three additional 737-800s, giving it a year-end group fleet of 63 aircraft.
With the new lease deals, all of which were completed in the third quarter of this year, Copa now plans to end 2011 with a group fleet of 73 aircraft consisting of 27 737-800s, 20 737-700s and 26 E-190s. It is now slated to end 2012 with a fleet of 36 737-800s, 20 737-700s and 26 E-190s. All growth is now focused on the 737-800 as the carrier sees sufficient demand to up-gauage several of its routes.
Copa's current fleet plan does not have any aircraft exiting its fleet in 2011 or 2011 but Heilbron says the carrier retains the flexibility to return aircraft coming off lease should it decide later to slow down expansion.
Source: Air Transport Intelligence news
