Copa Airlines suffers from a falloff in Brazilian demand, forcing a capacity reduction in 2H2015

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One of the world' leading and most successful niche hub airlines, Panama’s Copa Airlines, is suffering the cost of declining South American market economies as air travellers keep their hands in their pockets. After battling tough conditions in Venezuela during 2014, deteriorating demand in the Brazilian market is creating special challenges for Copa Airlines in 2015. The rapid devaluation of the Brazilian Real has weakened demand, forcing Copa to cut capacity to Brazil during 2H2015.

Brazil’s tough economic conditions have triggered downward revisions by Copa to its operating margin and unit revenues in 2015 as it works to weather the shaky economies in South America, which represent nearly 35% of the company’s available seat miles.

Even with the latest revisions, Copa’s financial projections remain strong compared to many of its North American and South American peers. Its balance sheet also remains solid, which gives the airline some leverage as it navigates tough conditions in Brazil.

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