Copa Holdings, S.A. CPA reported traffic numbers for August 2024 on the back of upbeat air-travel demand. Driven by high passenger volumes, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in August.

To match the demand swell, CPA is increasing its capacity. In August, available seat miles (a measure of capacity) increased 8.2% year over year. Revenue passenger miles increased 5.8% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 85.1% from 87% in August 2023.

Apart from Copa Holdings, we find another airline company -- Ryanair Holdings RYAAY, a European carrier -- who has also reported traffic numbers for August 2024.

The number of passengers transported on Ryanair flights was 20.5 million in August 2024, reflecting an 8% year-over-year increase. RYAAY’s traffic in August was much more than the July reading of 20.2 million, June reading of 19.3 million, May reading of 18.9 million, April reading of 17.3 million and March reading of 13.6 million.

The August load factor (percentage of seats filled by passengers) of 96% remained flat sequentially, as well as on a year-over-year basis. The figure was higher than the load factor of 95% reported in June and May, 92% reported in April 2024 and 93% reported in March 2024.

RYAAY operated more than 111,800 flights in August 2024. This marks an improvement from 110,500 flights in July 2024, 106,000 flights operated in June 2024, 105,000 flights in May 2024, 98,400 flights in April 2024 and 77,000 flights in March 2024.

Notably, RYAAY’s impressive August 2024 traffic numbers reflect improvement at a six-month stretch from March 2024.

To meet the upbeat demand, Ryanair expects its traffic view to grow 8% on a year-over-year basis for fiscal 2025, subject to Boeingdeliveries returning to contracted levels before the year-end.

CPA’s Zacks Rank & Price Performance

CPA currently carries a Zacks Rank #3 (Hold).

Shares of CPA have plunged 17.3% so far this year against 13.7% growth of the Zacks Airline industry.

Image Source: Zacks Investment Research

Copa Holdings is currently mired in multiple headwinds, which, we believe, have led to its unimpressive price performance. Escalating operating expenses are hurting Copa Holdings’ bottom line. In the first half of 2024, total operating expenses increased 3.8% year over year, owing to higher capacity.

Expenses on wages, salaries and benefits rose 10% year over year in first-half 2024 due to an increase in operational staff to support current capacity and cost of living salary adjustments. High fuel costs (up 2.4% in first-half 2024) are pushing up operating costs as well.