Copa Holdings Reports Net Income of US$63.9 Million and EPS of US$1.45 for the Third Quarter of 2010
Operating margin comes in at 19.5% on 14% capacity growth
PANAMA CITY, Nov. 11, 2010 /PRNewswire-FirstCall/ -- Copa Holdings, S.A. (NYSE: CPA), parent company of Copa Airlines and Copa Airlines Colombia, today announced financial results for the third quarter of 2010 (3Q10). The terms "Copa Holdings" or "the Company" refer to the consolidated entity, whose operating subsidiaries are Copa Airlines and Aero Republica (now operating under the Copa Airlines Colombia brand). The following financial and operating information, unless otherwise indicated, is presented in accordance with US GAAP. See the accompanying reconciliation of non-GAAP financial information to GAAP financial information included in financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the third quarter of 2009 (3Q09).
OPERATING AND FINANCIAL HIGHLIGHTS
- Copa Holdings reported net income of US$63.9 million for 3Q10, or earnings per share (EPS) of US$1.45. Excluding special items, Copa Holdings would have reported an adjusted net income of $54.9 million, or $1.25 per share, compared to an adjusted net income of US$52.5 million or US$1.20 per share for 3Q09. See the accompanying reconciliation of non-GAAP financial information to GAAP financial information included in the financial tables section of this earnings release.
- Operating income for 3Q10 came in at US$70.7 million, or 16.9% above 3Q09 adjusted operating income of US$60.5 million, which excludes special fleet charges of US$14.6 million. As a result, operating margin for 3Q10 came in at 19.5% or 0.9 percentage points above 3Q09 adjusted operating margin.
- In 3Q10, total revenues grew 11.8% to US$362 million on 13.8% capacity expansion. Consolidated operating revenue per available seat mile (RASM) decreased 1.8% from 12.7 cents in 3Q09 to 12.5 cents in 3Q10. However, RASM increased 5.4% over 2Q10 as a result of higher load factors and yields.
- Yield per passenger mile for 3Q10 decreased 1.4% to 15.7 cents. However, adjusted for length of haul, yields remained flat compared to 3Q09. Compared to 2Q10, yields increased 3.0%.
- For 3Q10, consolidated load factor decreased 0.3 percentage points to 75.5%, as consolidated passenger traffic grew 13.3% on 13.8% capacity increase. Compared to 2Q10, load factor increased 2.4 percentage points.
- Operating cost per available seat mile (CASM), excluding special charges, decreased 2.8% from 10.3 cents in 3Q09 to 10.1 cents in 3Q10. CASM, excluding fuel and special charges, decreased 3.9% from 7.2 cents in 3Q09 to 6.9 cents in 3Q10 mostly as a result of the dilution effect of capacity added in 3Q10.
- Cash, short term and long term investments ended 3Q10 at US$375.4 million, representing 28% of the last twelve months' revenues.
- Copa Holdings ended the third quarter with a consolidated fleet of 60 aircraft. The Company expects to receive three Boeing 737-800s in 4Q10, to end the year with 63 aircraft, composed of 20 Boeing 737-700s, 17 Boeing 737-800s and 26 Embraer-190s.
- During 3Q10, the Company entered into agreements for the long-term lease of ten new 737-800s to be operated by Copa Airlines. Five of these aircraft are scheduled for delivery in the second half of 2011, while the remaining aircraft are scheduled for delivery during 2012.
RECENT DEVELOPMENTS
- On October 4th, Copa Airlines Colombia launched new international service from Bogota to Mexico City. Copa Airlines Colombia now provides direct non-stop international service from Colombia to 5 international destinations, as well as connectivity through Copa's "Hub of the Americas" in Panama.
- On November 10th, Copa Airlines and Copa Airlines Colombia announced the unanimous approval by Star Alliance's Chief Executive Board to accept them as future members of the Star Alliance. Both airlines will now begin their work in order to achieve integration into the alliance by mid 2012. Star Alliance is the world's largest global airlines alliance, offering over 22,500 daily flights to 1,292 destinations in 188 countries.
Consolidated Financial & Operating Highlights |
3Q10 |
3Q09 |
% Change |
2Q10 |
% Change |
|
RPMs (millions) |
2,187 |
1,930 |
13.3% |
1,871 |
16.9% |
|
ASMs (mm) |
2,897 |
2,545 |
13.8% |
2,559 |
13.2% |
|
Load Factor |
75.5% |
75.8% |
-0.3 p.p. |
73.1% |
2.4 p.p. |
|
Yield |
15.7 |
15.9 |
-1.4% |
15.2 |
3.0% |
|
PRASM (cents) |
11.8 |
12.1 |
-1.9% |
11.1 |
6.4% |
|
RASM (cents) |
12.5 |
12.7 |
-1.8% |
11.9 |
5.4% |
|
CASM (cents) |
10.1 |
10.9 |
-7.9% |
10.6 |
-5.0% |
|
Adjusted CASM (cents) (1) |
10.1 |
10.3 |
-2.8% |
10.6 |
-5.0% |
|
CASM Excl. Fuel (cents) |
6.9 |
7.7 |
-11.1% |
7.4 |
-6.4% |
|
Adjusted CASM Excl. Fuel (cents) (1) |
6.9 |
7.2 |
-3.9% |
7.4 |
-6.4% |
|
Breakeven Load Factor (1)(2) |
60.9% |
59.7% |
1.2 p.p. |
64.9% |
-4.0 p.p. |
|
Operating Revenues (US$ mm) |
362.0 |
323.7 |
11.8% |
303.4 |
19.3% |
|
Operating Income (US$ mm) |
70.7 |
45.9 |
54.1% |
32.5 |
117.8% |
|
Adjusted Operating Income (US$ mm) (1) |
70.7 |
60.5 |
16.9% |
32.5 |
117.8% |
|
Operating Margin |
19.5% |
14.2% |
5.4 p.p. |
10.7% |
8.8 p.p. |
|
Adjusted Operating Margin (1) |
19.5% |
18.7% |
0.9 p.p. |
10.7% |
8.8 p.p. |
|
Net Income (US$ mm) |
63.9 |
43.1 |
48.2% |
18.6 |
243.4% |
|
Adjusted Net Income (US$ mm) (1)(2) |
54.9 |
52.5 |
4.4% |
26.3 |
109.0% |
|
EPS - Basic and Diluted (US$) |
1.45 |
0.98 |
48.0% |
0.42 |
243.3% |
|
Adjusted EPS - Basic and Diluted (US$) (1)(2) |
1.25 |
1.20 |
4.3% |
0.60 |
108.9% |
|
# of Shares - Basic and Diluted (000) |
43,999 |
43,946 |
0.1% |
43,983 |
0.0% |
|
(1) Adjusted Operating Income, Adjusted Operating Margin and Adjusted CASM for 3Q09 exclude special charges related to the accrual of costs associated with the retirement of four MD-80 aircraft as a result of Copa Colombia's fleet modernization plan. |
||||||
(2) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS (Basic and Diluted) exclude: a) For 3Q09, special charges related to the accrual of costs associated with the retirement of four MD-80 aircraft as a result of Copa Colombia's transition fleet modernization plan and b) For 3Q10, 3Q09 and 2Q10 non-cash charges/gains associated with the mark-to-market of fuel hedges. |
||||||
Note: Attached to this press release is a reconciliation of non-GAAP financial measures to the comparable US GAAP measures.
Full 3Q10 earnings release available for download at: http://investor.shareholder.com/copa/results.cfm
3Q10 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST |
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Date: |
November 12, 2010 |
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Time: |
11:00 a.m. EST (11:00 a.m. Local Time) |
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Conference Call: |
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Dial-in Number: |
888-708-5678 (U.S. Domestic Callers) |
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913-312-1425 (International Callers) |
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Webcast Link |
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About Copa Holdings
Copa Holdings, through its operating subsidiaries Copa Airlines and Copa Airlines Colombia, is a leading Latin American commercial aviation provider of passenger and cargo service. Copa offers more than 150 daily scheduled flights to 45 destinations in 24 countries in North, Central and South America and the Caribbean through its Hub of the Americas at Tocumen International Airport in Panama City, Panama. In addition, Copa Airlines provides passengers with access to flights to more than 120 other international destinations through codeshare agreements with Continental Airlines and other airlines. Copa Airlines Colombia, provides domestic service to 12 cities in Colombia as well as international connectivity with Copa Airlines' Hub of the Americas through flights from Bogota, Cali, Medellin, Cartagena, Bucaramanga, Pereira and Barranquilla. Additionally, Copa Airlines Colombia has non-stop international flights from Colombia to Caracas, Quito, Guayaquil and Mexico City.
This release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. The risks and uncertainties relating to the forward-looking statements in this release are among those disclosed in Copa Holdings' filed disclosure documents and are, therefore, subject to change without prior notice.
Copa Holdings, S.A. |
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Operating data |
||||||
Unaudited |
Unaudited |
% |
Unaudited |
% |
||
3Q10 |
3Q09 |
Change |
2Q10 |
Change |
||
Copa Holdings (Consolidated) |
||||||
Revenue passengers carried (thousands) |
1,626 |
1,475 |
10.2% |
1,430 |
13.7% |
|
Revenue passengers miles (RPMs) (mm) |
2,187 |
1,930 |
13.3% |
1,871 |
16.9% |
|
Available seat miles (ASMs) (mm) |
2,897 |
2,545 |
13.8% |
2,559 |
13.2% |
|
Load factor |
75.5% |
75.8% |
-0.3 p.p. |
73.1% |
2.4 p.p. |
|
Break-even load factor |
60.9% |
59.7% |
1.2 p.p. |
64.9% |
-4.0 p.p. |
|
Yield (cents) |
15.7 |
15.9 |
-1.5% |
15.2 |
2.9% |
|
RASM (cents) |
12.5 |
12.7 |
-1.9% |
11.9 |
5.3% |
|
CASM (cents) |
10.1 |
10.9 |
-7.9% |
10.6 |
-5.1% |
|
Adj.CASM - excl. special charges and fuel (cents) |
6.9 |
7.2 |
-4.0% |
7.4 |
-6.5% |
|
Fuel gallons consumed (mm) |
38.9 |
35.6 |
9.2% |
34.8 |
11.6% |
|
Average price of Fuel - Net of Hedges (US$) |
2.35 |
2.24 |
4.7% |
2.37 |
-0.7% |
|
Copa Segment |
||||||
Revenue passengers miles (RPMs) (mm) |
1,871 |
1,643 |
13.9% |
1,607 |
16.5% |
|
Available seat miles (ASMs) (mm) |
2,470 |
2,136 |
15.6% |
2,164 |
14.1% |
|
Load factor |
75.8% |
76.9% |
-1.1 p.p. |
74.2% |
1.5 p.p. |
|
Break-even load factor |
57.7% |
58.1% |
-0.4 p.p. |
61.3% |
-3.6 p.p. |
|
Yield (US$ cents) |
15.1 |
15.1 |
-0.2% |
14.8 |
1.6% |
|
RASM (cents) |
12.2 |
12.4 |
-1.8% |
11.8 |
3.2% |
|
CASM (cents) |
9.4 |
9.8 |
-4.2% |
10.0 |
-5.8% |
|
Adj.CASM - excl. special charges and fuel (cents) |
6.4 |
6.6 |
-3.7% |
6.9 |
-7.5% |
|
Fuel gallons consumed (mm) |
32.0 |
29.1 |
10.0% |
28.4 |
12.5% |
|
Average price of Fuel - Net of Hedges (US$) |
2.32 |
2.26 |
2.5% |
2.34 |
-0.8% |
|
Copa Airlines Colombia Segment |
||||||
Revenue passengers miles (RPMs) (mm) |
316 |
287 |
9.9% |
264 |
19.6% |
|
Available seat miles (ASMs) (mm) |
428 |
409 |
4.6% |
395 |
8.3% |
|
Load factor |
73.8% |
70.2% |
3.6 p.p. |
66.8% |
7.0 p.p. |
|
Break-even load factor |
76.0% |
65.6% |
10.4 p.p. |
82.5% |
-6.5 p.p. |
|
Yield (cents) |
19.3 |
20.6 |
-6.4% |
17.6 |
9.5% |
|
RASM (cents) |
15.5 |
15.7 |
-1.4% |
12.9 |
19.5% |
|
CASM (cents) |
15.3 |
18.1 |
-15.5% |
15.0 |
2.1% |
|
Adj.CASM - excl. special charges and fuel (cents) |
11.3 |
11.1 |
1.7% |
10.9 |
3.0% |
|
Fuel gallons consumed (mm) |
6.9 |
6.5 |
5.4% |
6.4 |
7.5% |
|
Average price of Fuel - Net of Hedges (US$) |
2.51 |
2.18 |
15.3% |
2.51 |
0.2% |
|
Copa Holdings, S.A. |
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Income Statement - USGAAP |
||||||||||
(US$ Thousands) |
||||||||||
Unaudited |
Unaudited |
% |
Unaudited |
% |
||||||
3Q10 |
3Q09 |
Change |
2Q10 |
Change |
||||||
Operating Revenues |
||||||||||
Passenger Revenue |
343,319 |
307,438 |
11.7% |
285,019 |
20.5% |
|||||
Cargo, mail and other |
18,682 |
16,297 |
14.6% |
18,382 |
1.6% |
|||||
Total Operating Revenue |
362,001 |
323,735 |
11.8% |
303,401 |
19.3% |
|||||
Operating Expenses |
||||||||||
Aircraft fuel |
91,800 |
80,812 |
13.6% |
82,613 |
11.1% |
|||||
Salaries and benefits |
45,056 |
39,059 |
15.4% |
42,970 |
4.9% |
|||||
Passenger servicing |
31,910 |
28,839 |
10.6% |
28,239 |
13.0% |
|||||
Commissions |
14,975 |
15,889 |
-5.8% |
12,160 |
23.2% |
|||||
Reservations and sales |
15,301 |
15,993 |
-4.3% |
13,453 |
13.7% |
|||||
Maintenance, material and repairs |
20,991 |
18,195 |
15.4% |
23,697 |
-11.4% |
|||||
Depreciation |
13,553 |
11,926 |
13.6% |
13,203 |
2.7% |
|||||
Flight operations |
18,943 |
15,511 |
22.1% |
16,492 |
14.9% |
|||||
Aircraft rentals |
11,627 |
11,911 |
-2.4% |
11,189 |
3.9% |
|||||
Landing fees and other rentals |
10,540 |
8,557 |
23.2% |
10,080 |
4.6% |
|||||
Other |
16,574 |
16,544 |
0.2% |
16,833 |
-1.5% |
|||||
Special fleet charges |
- |
14,599 |
-100.0% |
- |
0.0% |
|||||
Total Operating Expense |
291,270 |
277,835 |
4.8% |
270,929 |
7.5% |
|||||
Operating Income |
70,731 |
45,900 |
54.1% |
32,473 |
117.8% |
|||||
Non-operating Income (Expense): |
||||||||||
Interest expense |
(7,772) |
(8,090) |
-3.9% |
(7,482) |
3.9% |
|||||
Interest capitalized |
0 |
141 |
-100.0% |
0 |
- |
|||||
Interest income |
1,185 |
2,217 |
-46.5% |
1,149 |
3.1% |
|||||
Other, net |
8,948 |
6,139 |
45.8% |
(4,101) |
-318.2% |
|||||
Total Non-Operating Income/(Expense) |
2,361 |
407 |
480.4% |
(10,434) |
-122.6% |
|||||
Income before Income Taxes |
73,092 |
46,307 |
57.8% |
22,039 |
231.7% |
|||||
Provision for Income Taxes |
9,170 |
3,168 |
189.5% |
3,425 |
167.7% |
|||||
Net Income |
63,922 |
43,139 |
48.2% |
18,614 |
243.4% |
|||||
EPS - Basic and Diluted |
1.45 |
0.98 |
48.0% |
0.42 |
243.3% |
|||||
Shares - Basic and Diluted |
43,999,213 |
43,946,321 |
0.1% |
43,982,983 |
0.0% |
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Copa Holdings, S.A. |
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Balance Sheet - USGAAP |
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(US$ Thousands) |
September 30, |
June 30, |
September 30, |
||||
2010 |
2010 |
2009 |
|||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
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ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ 208,904 |
$ 197,557 |
$ 264,976 |
||||
Short-term investments |
160,297 |
155,663 |
102,778 |
||||
Total cash, cash equivalents and short-term investments |
369,201 |
353,220 |
367,754 |
||||
Accounts receivable, net of allowance for doubtful accounts |
100,019 |
99,762 |
90,722 |
||||
Accounts receivable from related parties |
3,256 |
2,431 |
5,425 |
||||
Expendable parts and supplies, net of allowance for obsolescence |
40,086 |
27,750 |
23,138 |
||||
Prepaid expenses |
33,685 |
31,331 |
22,277 |
||||
Other current assets |
13,943 |
5,769 |
5,465 |
||||
Total Current Assets |
560,190 |
520,263 |
514,781 |
||||
Long-term investments |
6,224 |
6,145 |
8,577 |
||||
Property and Equipment: |
|||||||
Owned property and equipment: |
|||||||
Flight equipment |
1,620,177 |
1,623,718 |
1,436,216 |
||||
Other equipment |
67,242 |
64,678 |
61,379 |
||||
1,687,419 |
1,688,396 |
1,497,595 |
|||||
Less: Accumulated depreciation |
(257,046) |
(243,524) |
(210,067) |
||||
1,430,373 |
1,444,872 |
1,287,528 |
|||||
Purchase deposits for flight equipment |
194,971 |
164,551 |
165,370 |
||||
Total Property and Equipment |
1,625,344 |
1,609,423 |
1,452,898 |
||||
Other Assets: |
|||||||
Net pension asset |
2,299 |
2,022 |
2,003 |
||||
Goodwill |
27,090 |
25,442 |
25,369 |
||||
Intangible asset |
39,720 |
37,304 |
37,197 |
||||
Other assets |
41,693 |
39,911 |
34,413 |
||||
Total Other Assets |
110,802 |
104,679 |
98,982 |
||||
Total Assets |
$ 2,302,560 |
$ 2,240,510 |
$ 2,075,238 |
||||
LIABILITIES AND SHAREHOLDER'S EQUITY |
|||||||
Current Liabilities: |
|||||||
Current maturities of long-term debt |
$ 124,893 |
$ 145,085 |
$ 129,315 |
||||
Accounts payable |
50,743 |
47,840 |
49,825 |
||||
Accounts payable to related parties |
13,566 |
7,415 |
9,060 |
||||
Air traffic liability |
212,825 |
193,831 |
186,985 |
||||
Taxes and interest payable |
55,646 |
46,112 |
41,761 |
||||
Accrued expenses payable |
40,817 |
42,332 |
45,490 |
||||
Other current liabilities |
11,307 |
13,134 |
18,924 |
||||
Total Current Liabilities |
509,798 |
495,749 |
481,360 |
||||
Non-Current Liabilities: |
|||||||
Long-term debt |
815,020 |
836,116 |
771,184 |
||||
Post employment benefits liability |
2,560 |
2,630 |
2,326 |
||||
Other long-term liabilities |
16,776 |
14,748 |
12,844 |
||||
Deferred tax liabilities |
14,904 |
14,131 |
10,685 |
||||
Total Non-Current Liabilities |
834,356 |
867,625 |
797,039 |
||||
Total Liabilities |
1,359,058 |
1,363,373 |
1,278,399 |
||||
Shareholders' Equity: |
|||||||
Class A - 32,656,660 shares issued and outstanding |
22,291 |
22,291 |
20,858 |
||||
Class B - 10,938,125 shares issued and outstanding |
7,466 |
7,466 |
8,722 |
||||
Additional paid in capital |
22,836 |
21,283 |
17,292 |
||||
Retained earnings |
889,866 |
825,944 |
747,597 |
||||
Accumulated other comprehensive income (loss) |
1,044 |
153 |
2,372 |
||||
Total Shareholders' Equity |
943,502 |
877,137 |
796,841 |
||||
Total Liabilities and Shareholders' Equity |
$ 2,302,560 |
$ 2,240,510 |
$ 2,075,239 |
||||
NON-GAAP FINANCIAL MEASURE RECONCILIATION
This press release includes the following non GAAP financial measures: Adjusted CASM, Adjusted CASM Excluding Fuel, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income and Adjusted EPS. This supplemental information is presented because we believe it is a useful indicator of our operating performance and is useful in comparing our performance with other companies in the airline industry. These measures should not be considered in isolation, and should be considered together with comparable U.S. GAAP measures, in particular operating income and net income. The following is a reconciliation of these non-GAAP financial measures to the comparable U.S. GAAP measures:
Reconciliation of Operating Income |
|||||||
Excluding Special Items |
3Q10 |
3Q09 |
2Q10 |
||||
Operating Income as Reported |
$70,731 |
$45,900 |
$32,473 |
||||
Special Items (adjustments): |
|||||||
Special fleet charges (2) |
- |
14,599 |
- |
||||
Adjusted Operating Income |
$70,731 |
$60,499 |
$32,473 |
||||
Reconciliation of Net Income |
|||||||
Excluding Special Items |
3Q010 |
3Q09 |
2Q10 |
||||
Net income as Reported |
$63,922 |
$43,139 |
$18,614 |
||||
Special Items (adjustments): |
|||||||
Unrealized (gain) loss on fuel hedging instruments (1) |
(9,068) |
(5,214) |
8,602 |
||||
Special Items, net (2) |
- |
14,599 |
(965) |
||||
Adjusted Net Income |
$54,854 |
$52,523 |
$26,251 |
||||
Shares used for Computation (in thousands) |
43,999 |
43,946 |
43,983 |
||||
Adjusted EPS |
1.25 |
1.20 |
0.60 |
||||
Reconciliation Operating Costs per ASM |
|||||||
Excluding Fuel and Special Items |
3Q10 |
3Q09 |
2Q10 |
||||
Operating Costs per ASM as Reported |
10.1 |
10.9 |
10.6 |
||||
Aircraft fuel per ASM |
(3.2) |
(3.2) |
(3.2) |
||||
Operating Costs per ASM excluding fuel |
6.9 |
7.7 |
7.4 |
||||
Special Items (adjustments): |
|||||||
Special Items per ASM, net (2) |
- |
(0.4) |
- |
||||
Operating expenses per ASM excluding fuel and special items |
6.9 |
7.3 |
7.4 |
||||
FOOTNOTES: (1) Includes unrealized (gains) losses resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments. For 3Q10 and 3Q09 the Company recorded unrealized fuel hedge gains of US$9.1 million and US$5.2 million, respectively. For 2Q09 the Company recorded an unrealized fuel hedge gain of US$8.6 million. (2) Special fleet charges for the 3Q09 period include a US$14.6 million special charge related to the accrual of costs associated with the retirement of four MD-80 aircraft as a result of Copa Airlines Colombia's fleet modernization plan. |
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CPA-G
SOURCE Copa Holdings, S.A.
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