A Copa 737-800 in Las Vegas. (Photo: AirlineGeeks | William Derrickson)
Article by AirlineGeeks’ Juan Pedro Sánchez Zamudio
After the Civil Aviation Authority of Panama declared a new 30-day extension in the suspension of all international flights, Copa Airlines CEO Pedro Heilbron announced this week that the airline will restart its operations on July 3, with 12% of its fleet capacity. The carrier expects to reach 40% of its fleet capacity by the end of the year.
Between January and March, Copa Airlines obtained $74.3 million in profits. However, the airline has estimated $2 billion losses for this year due to the pandemic. According to the carrier, it recorded a monthly expense of $85 million for keeping its 102 aircraft fleet stored. Copa Airlines has stopped its operations since March 15.
The carrier stated the implementation of health, sanitation and hygiene protocols required by Panamanian and International authorities, as well as a series of new procedures to improve these aspects that will be incorporated and announced with the restart of operations.
For this year, the airline has projected to retire 30 aircraft of its fleet, including 14 Boeing 737-700s and 16 Embraer E-190s. With this retirement, Copa Airlines will retain a fleet of 74 aircraft.
In 2015, the carrier ordered 71 Boeing 737 MAX 9, with only 7 of them delivered so far. Since March 2019, these delivered aircraft have been in storage, due to the global grounding of the 737 MAX models. For this reason, Copa Airlines started a negotiation between the carrier and the Boeing Company for the establishment of compensation for the airline, due to the losses registered for not being able to use its 7 Boeing 737 MAX9, and the delay in the delivery of the other aircraft.
Heilbron declared that “we will be operating far below that we were used to due to the impact on the economics and passenger budgets.” Before the pandemic, Copa Airlines flew to 80 international destinations in the Americas, and it expects to restart flying between 35 and 40 cities.
Heilbron clarified that the airline has no plan to leave empty seats on the planes between passengers. He stated: “Otherwise, the business will not be sustainable.” The CEO also declared that it has not ruled out the possibility to sell passengers the empty seats to maintain distance between passengers on flights.
It is important to note that the airline has not requested support from the Panamanian government to overcome the crisis. Instead, Copa Holding S.A., which is the Copa Airlines parent company, obtained lines of credit and offered bonds in the international market for a global amount of $350 million, deferred non-essential expenses and the distribution of dividends this year.
These bonds are convertible, with a term of five years, in which holders will have the option to convert them into shares of Copa Holdings S.A.
“This financing will allow the company to have more resources to face this crisis,” said Pedro Heilbron. “It also reflects the severity of how this situation has impacted us, since we have not received income from March 15, while maintaining high fixed costs,” concluded Heilbron.
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