Copa Airlines is currently expecting to operate just 12% of its original schedule in June. The Panamanian airline also said yesterday that it might not have enough liquidity to survive the crisis. What does this mean for Central American aviation?
Is Copa the most affected airline in the region?
Unfortunately for Copa Airlines, it mostly depends on its international traffic. The Panamanian carrier has just one domestic route while it flew to almost every other country in America before the pandemic.
But, as the borders in the region began closing, Copa Airlines remained without countries to connect. Finally, the Panamanian Government also closed its borders on 22 March to battle against the pandemic.
During March, the airline saw a 43.4% fall in its revenue passenger miles (RPM). It also saw a plunge of 35.7% of its available seat miles (ASM). The load factor of Copa’s flights in March was 73.4%.
For April, we can expect an even more significant fall as the only flights the airline is currently operating are for cargo and repatriation. The scenario will repeat itself next month, in May.
Currently, Copa Airlines is expecting to resume its flights on 1 June. But this date depends on the Panamanian Government lifting its travel restrictions. “In the wake of a substantial drop in demand, the carrier reduced its June capacity to 12%,” reported Zacks Equity Research.
The liquidity is going to be a problem
Pedro Heilbron, Copa Airlines’ CEO, said a few weeks ago that the current situation would set Copa back almost 30 years. But this might not be the biggest problem the airline will face.
“Even after starting our saving-money initiatives, it is possible that we might not have enough liquidity to operate our business.”
Copa Airlines has $1,130 billion in cash but expects to spend $750 million in the next nine months. Consequently, the airline could burn up to 70% of its available money by December.
It could be worse, as Copa believes it might burn more cash of what it is currently expecting. With that in mind, the airline offered $350 million in senior notes due in 2025. Copa intents to use the net earnings from the offerings for general corporate purposes, it announced.
What does this mean for Central American aviation?
Last week, the International Civil Aviation Organization (ICAO) urged international cooperation in Central America and the Caribbean. ICAO said governments in the region must cooperate with their airlines to achieve a successful post-coronavirus recovery.
This petition is important as the two leading airlines in the area, Avianca and Copa Airlines, are already in deep trouble. Neither of these airlines are currently flying and neither expect to during the next month.
Additionally, other airlines that operate in Central America, like Volaris Costa Rica, are grounded.
American Airlines recently published its schedule and when it expects to fly in Latin America again. Of the 19 flights that were announced, the only one that has no resuming date so far is between Miami and Guatemala City. Aeromexico has also announced when it expects to fly back into Central America and has already slashed one destination: Panama.
So, the countries in the region might face less connectivity one the pandemic is over. As ICAO said, they should work together to prevent this scenario.
Do you think Copa Airlines is at risk of disappearing? Let us know in the comments.