Copa Holdings Stock Rallies Following Robust Quarterly Performance and Expanded 2026 Guidance

Copa Holdings, S.A. (CPA) has delivered impressive returns recently, with shares climbing 6.1% in the month following its latest earnings announcement—a performance that has outpaced broader market benchmarks. The rally reflects investor confidence stemming from the company’s strong third-quarter 2025 results and an upgraded outlook for capacity expansion.

Third-Quarter Earnings Beat Market Expectations

The airline operator reported Q3 earnings per share of $4.20, exceeding analyst expectations of $4.03 and marking a 20% year-over-year improvement. While total revenues reached $913.1 million—slightly below the consensus estimate of $915 million—the top line showed solid growth of 6.8% compared to the prior year. This revenue performance underscores Copa’s ability to execute effectively despite competitive pressures in the aviation sector.

Passenger revenues, which accounted for 94.3% of total sales, advanced 5.2% year over year to $861.33 million. The growth was driven primarily by an 8% year-over-year surge in revenue passenger miles (RPMs), demonstrating the strength of Copa’s RPMs portfolio expansion strategy. However, this gain was partially offset by a 2.6% yield decline. Beyond passenger services, cargo and mail revenues surged 21.4% to $29.68 million, reflecting higher cargo demand. Other operating revenues jumped 86.3% to $22.13 million, bolstered by expanded ConnectMiles co-branded credit card revenues following a contract renewal.

Operational Metrics Show Improved Efficiency

On a consolidated basis, Copa’s traffic growth outpaced capacity additions, with revenue passenger miles climbing 8% while available seat miles expanded 5.8%. This favorable dynamic lifted the load factor to 88%, a 1.8 percentage point increase from the year-ago period, indicating strong seat utilization. Revenue per available seat mile (RASM) grew 1% year over year to 11.1 cents, while cost per available seat mile declined 2.7% year over year.

Operating expenses increased modestly at 2.9% year over year to $700.84 million, substantially lower than capacity growth rates—a testament to cost discipline. Lower fuel expenses proved instrumental, with average fuel costs dropping 6.1% year over year to $2.44 per gallon. The company ended Q3 with $248.82 million in cash, up from $236.17 million in the prior quarter. During the quarter, Copa took delivery of five Boeing 737 MAX 8 aircraft and added a second Boeing 737-800 freighter under an operating lease.

Management Raises Full-Year and 2026 Guidance

Copa’s leadership has demonstrated confidence by raising near-term capacity guidance to 8% year-over-year growth and refining operating margin expectations to a 22-23% range. For 2026, the company now anticipates even more robust expansion with capacity growth projected at 11-13% year over year. Fleet modernization remains on track, with 124 aircraft expected by year-end 2025 and 132 by end of 2026—both above prior expectations.

Valuation Scores and Forward Outlook

Despite recent estimate revisions trending downward, Copa Holdings maintains a solid Zacks VGM Score of A, driven by strong value metrics and impressive momentum. The stock carries a Zacks Rank of #3 (Hold), suggesting investors should anticipate in-line returns over the near term. Among airline peers, competitor LATAM Airlines (LTM) has outperformed with a 15.5% gain over the past month and holds a more bullish Zacks Rank of #2 (Buy), though LATAM also sports a VGM Score of A.

The trajectory of Copa’s RPMs portfolio expansion, combined with improved operational efficiency and fleet upgrades, positions the company well for sustained growth—factors that have clearly resonated with market participants this past month.