This past weekend saw Air New Zealand launch nonstop flights from Auckland to New York City, ushering in nonstop service…
Copa Airlines Expanding Network with Increased Frequencies to the United States
After a year and a half of COVID-related challenges, Copa Airlines is starting to ramp up its operations in the United States. Beginning this June, the airline will offer new flight frequencies to six major cities along the East Coast and West Coast, expanding its network to over 55 destinations throughout the Americas via Panama.
Opportunity for Expansion With New Frequencies
In a memo from Copa, the airline outlined its new daily flight frequencies to six cities in the US. The airline will operate 9x daily to Miami; 5x daily to Orlando; 4x daily to New York; and 2x daily to Fort Lauderdale, Los Angeles and Washington Dulles each.
Copa said in a statement, “In June, Copa Airlines will offer new flight frequencies to and from the United States, connecting to more than 55 destinations in the Americas through Panama. With these additional flights, Copa looks forward to re-connecting you with these cities with the rest of the Americas.”
Copa’s strategy to increase its service to several high-demand cities in the US is not surprising. Like many other airlines recovering from the pandemic, the Star Alliance member created a bustling summer schedule focusing on sunny beach destinations and recovering tourist hotspots. Plus, it’s no secret that people are itching for a vacation now that countries are loosening travel restrictions, so Copa is preparing for an immanent travel boom.
Copa’s “Hub of the Americas” Is An Prime Location
Copa’s increased flight frequencies will help it expand its vast network from its Tocumen International Airport base in Panama City. Known as the “Hub of the Americas,” the airport has been Copa’s gateway to North America and South America, and it served over 80 international destinations pre-pandemic. However, its favorable location in Panama will enable nonstop point-to-point service that other Latin American markets may not sustain due to shrinking operations. There is also hope that the increased service will enable more feed United Airlines, Copa’s codeshare partner.
Copa explained, “The Company has a proven and very strong business model, which is based on operating the best and most convenient network for intra-Latin America travel from its Hub of the Americas based in Panama’s advantageous geographic position, with the region’s lowest unit costs, best on-time performance, and strongest balance sheet. Going forward, the Company believes that its Hub of the Americas will be an even more valuable source of strategic advantage, especially if fewer intra Latin America markets are able to sustain direct point to point service. We believe our hub will be the best positioned to serve these markets.”
In addition to shrinking markets, Copa also has the opportunity to seize on the gaps left open by its regional competitors Avianca, Aeromexico and LATAM Airlines. All three filed for Chapter 11 bankruptcy last year, and Aeromexico and LATAM are still in the process of filing their restructuring plans, so Copa will likely tap into the dropped markets.
Good Financial Position for Post-COVID Recovery
Now that things are looking up in terms of COVID-19’s spread and vaccine rollout, Copa is optimistic about the future. According to the airline, when the pandemic disrupted the industry last year, it focused on finding ways to lower its fixed and variable costs and bring down its monthly cash consumption. Impressively, the company managed to reduce its cash disbursement from $77 million at the end of the second quarter in 2020 to $23 million at the end of the first quarter in 2021. Furthermore, during Q1 2021, the company increased its total liquidity to $1.5 billion by financing recently-delivered aircraft and collecting proceeds from asset sales.
Copa believes its cash-saving strategies and decision not to defer costs during the pandemic will drive its post-COVID recovery. The carrier said in its quarter one earnings release, “The Company expects to leverage its strong balance sheet, leading liquidity position and lower cost base to continue strengthening its long-term competitive position and to implement initiatives to further strengthen its network and product in the post Covid-19 world.”
While the industry isn’t entirely out of the woods in terms of COVID-19, Copa appears to be in a promising financial position going forward. Hopefully, its cost-saving efforts and increased flight service will enable it to expand its network and rebuild to pre-pandemic levels.
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