Economic weakness in Latin America pauses the expansion of venerable Copa Airlines

Panama's Copa Airlines managed to remain profitable in 2015 in what was the most challenging year that the airline had faced in decades. A contracting economy in Latin America, driven by Brazil's crippling economic weakness, created significant challenges for all airlines operating in the region. Copa posted double digit declines in yields and passenger unit revenues for the year, which helped to erode the benefits of lower fuel costs on the airline's profitability. Its net income plummeted nearly 49% year-on-year.

Throughout 2015 and into 2016 Copa is making capacity and fleet adjustments to combat the economic realities in Latin America. But the airline is not taking an optimistic view with its passenger unit revenue guidance for 2016, which is lower than 2015's performance even though Copa anticipates some faint signs of stability emerging in 2H2016.

For now, it seems that all that any Latin American airline can do is attempt to reset their networks in order to diminish their exposure to the weakest areas in the region. Copa is making all the necessary moves to withstand the economic pressure, but in the short term its margins and profits will continue to fall below historical highs.