UPDATE: Copa Air: Star Alliance Entry Delayed; Stock Up After 1Q
May 10 2012 - 1:47PM
Dow Jones News
The head of Copa Airlines said Thursday that its entry to the
Star alliance had been delayed by up to two months, though he
forecast minimal financial impact as the three global airline
marketing groups jostle for position in Latin America.
Copa was due to join in late April but already derives most of
its alliance benefits from an existing partnership with United
Continental Holdings Inc. (UAL), with further gains expected from
linking its frequent-flier program with other Star members.
The airline has turned its Panama hub into a profitable fortress
linking cities in North, South and Central America that had no
connections a decade ago, and will be a useful addition to the Star
pact led by United and Deutsche Lufthansa AG (LHA.XE).
Pedro Heilbron, chief executive of Copa Holdings SA (CPA), said
on a postearnings call that it expected to join Star "very soon"
after the delay of "one or two months." AviancaTaca Holding SA
(PFAVTA.BO), formed by the merger of carriers in Colombia and El
Salvador, is also due to join Star shortly.
Copa shares soared following a rise in first-quarter profit, and
were recently up 11.3% at $85.97, and reached an all-time high of
$86.50 in the session.
Star's expansion in Latin America comes as the industry awaits
the final outcome of deliberations between LAN Airlines SA (LFL,
LAN.SN) and merger partner TAM S/A (TAM, TAMM4.BR) over which
alliance they will join.
Chile's LAN is a member of the Oneworld alliance led by American
Airlines and British Airways, and the enlarged carrier is widely
expected by analysts to drop TAM's existing membership of Star.
The third global alliance, SkyTeam, includes Aerolineas
Argentinas and Grupo Aeromexico S.A.B. de C.V. (AEROMEX.MX) in its
ranks, while founder Delta Air Lines Inc. (DAL) this year added a
minority stake in Brazil's GOL Linhas Aereas Inteligentes SA
(GOL).
Copa was formerly a member of SkyTeam, but left after former
parent Continental Airlines joined Star following its merger with
United.
The airline late Wednesday reported an expectation-beating
profit of $95.9 million compared with $94.4 million a year earlier,
with per-share earnings rising two cents to $2.16. It also boosted
capacity guidance by a percentage point and expects to grow by 23%
this year.
Heilbron also said that Copa hadn't seen any reduction in demand
from Brazil despite the strength of the real, and though it raised
revenue guidance for the year, this wasn't because of any expected
reduction in capacity by American, a unit of AMR Corp. (AAMRQ).
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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