##### Table of Contents



As filed with the Securities and Exchange Commission on May 17, 2011
   UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
 
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 001-32696
 
 COPA HOLDINGS, S.A.
  Not Applicable
 
 Republic of Panama
 Avenida Principal y Avenida de la Rotonda, Costa del Este
Complejo Business Park, Torre Norte
Parque Lefevre, Panama City
Panama    Joseph Putaturo
Complejo Business Park, Torre Norte
Parque Lefevre, Panama City, Panama
+507 304 2677 (Telephone)
+507 304 2535 (Facsimile)
 
 Securities registered or to be registered pursuant to Section 12(b) of the Act
 Title of Each Class:
    
    Name of Each Exchange On Which RegisteredClass A Common Stock, without par value
    
    New York Stock Exchange
 
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
 
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
 
 Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the annual report:
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. þYesoNo
 If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. o Yes þ No
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ Yes o No
 Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). o Yes o No
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and non-accelerated filer
in Rule 12b-2 of Exchange Act. (Check one):
 Large Accelerated Filerþ
    
    Accelerated Filero
    
    Non-accelerated Filer o
 Indicate by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
 U.S. GAAP o IFRS þ Other o
 If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow:
 o Item 17 o Item 18
 If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). o Yes þ No




---



##### 



TABLE OF CONTENTS
 Introduction
    
    iiMarket Data
    
    iiPresentation of Financial and Statistical Data
    
    iiiSpecial Note About Forward-Looking Statements
    
    iiiItem 1. Identity of Directors, Senior Management and Advisers
    
    
    1Item 2. Offer Statistics and Expected Timetable
    
    
    1Item 3. Key Information
    
    
    1Item 4. Information on the Company
    
    
    23Item 4A. Unresolved Staff Comments
    
    
    43Item 5. Operating and Financial Review and Prospects
    
    
    43Item 6. Directors, senior management and employees
    
    
    58Item 7. Major Shareholders and Related Party Transactions
    
    
    65Item 8. Financial Information
    
    
    69Item 9. The Offer and Listing
    
    
    70Item 10. Additional Information
    
    
    71Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    84Item 12. Description of Securities Other than Equity Securities
    
    
    85Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    85Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
    
    
    85Item 15. Controls and Procedures
    
    
    85Item 16. Reserved
    
    
    86Item 16A. Audit Committee Financial Expert
    
    
    86Item 16B. Code of Ethics
    
    
    86Item 16C. Principal Accountant Fees and Services
    
    
    87Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    87Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    87Item 16F. Changes in Registrants Certifying Accountant
    
    
    87Item 16G. Corporate Governance
    
    
    87Item 17. Financial Statements
    
    
    89Item 18. Financial Statements
    
    
    89Item 19. Exhibits
    
    
    89Index to Financial Statements
    
    
    F-1Exhibit 10.54Exhibit 10.55Exhibit 10.56Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
   i




---



##### Table of Contents



INTRODUCTION
   
    
    Aircraft utilization represents the average number of block hours operated
per day per aircraft for the total aircraft fleet.
 
    
    Available seat miles or ASMs represents the aircraft seating capacity
multiplied by the number of miles the seats are flown.
 
    
    Average stage length represents the average number of miles flown per
flight.
 
    
    Block hours refers to the elapsed time between an aircraft leaving an
airport gate and arriving at an airport gate.
 
    
    Break-even load factor represents the load factor that would have resulted
in total revenues being equal to total expenses.
 
    
    Load factor represents the percentage of aircraft seating capacity that is
actually utilized (calculated by dividing revenue passenger miles by available seat
miles).
 
    
    Operating expense per available seat mile represents operating expenses
divided by available seat miles.
 
    
    Operating revenue per available seat mile represents operating revenues
divided by available seat miles.
 
    
    Passenger revenue per available seat mile represents passenger revenue
divided by available seat miles.
 
    
    Revenue passenger miles represents the number of miles flown by revenue
passengers.
 
    
    Revenue passengers represents the total number of paying passengers
(including all passengers redeeming OnePass frequent flyer miles and other travel
awards) flown on all flight segments (with each connecting segment being considered a
separate flight segment).
 
    
    Yield represents the average amount one passenger pays to fly one mile.
 
 Market Data
   ii




---



##### Table of Contents



Presentation of Financial and Statistical Data
  First-time Adoption of International Financial Reporting
Standards
   
 Special Note About Forward-Looking Statements
  
    
    general economic, political and business conditions in Panama and Latin America and
particularly in the geographic markets we serve;
 
    
    our managements expectations and estimates concerning our future financial
performance and financing plans and programs;
 
    
    our level of debt and other fixed obligations;
 
    
    demand for passenger and cargo air service in the markets in which we operate;
 
    
    competition;
 
    
    our capital expenditure plans;
 
    
    changes in the regulatory environment in which we operate;
 
    
    changes in labor costs, maintenance costs, fuel costs and insurance premiums;
 
    
    changes in market prices, customer demand and preferences and competitive
conditions;
 
    
    cyclical and seasonal fluctuations in our operating results;
 
    
    defects or mechanical problems with our aircraft;
 
    
    our ability to successfully implement our growth strategy;
 
    
    our ability to obtain financing on commercially reasonable terms; and
 
    
    the risk factors discussed under Risk Factors beginning on page 4.
  iii




---



##### Table of Contents



PART I
 
   
   
  A. Selected Financial Data
 First-time Adoption of
International Financial Reporting Standards
  Year Ended December 31, (inthousands of dollars, except shareand per share data and operatingdata)2009
    
    
    2010INCOME STATEMENT DATAOperating revenue:Passenger revenue
    
    $
    1,189,706
    
    
    $
    1,338,581Cargo, mail and other
    
    
    66,370
    
    
    
    76,225Total operating revenues
    
    
    1,256,076
    
    
    
    1,414,806Operating expenses:Aircraft fuel
    
    
    300,816
    
    
    
    354,427Salaries and benefits
    
    
    157,045
    
    
    
    178,845Passenger servicing
    
    
    125,150
    
    
    
    133,718Commissions
    
    
    47,457
    
    
    
    45,331Reservations and sales
    
    
    56,280
    
    
    
    58,813Maintenance, materials and repairs
    
    
    55,720
    
    
    
    62,229Depreciation and amortization
    
    
    50,876
    
    
    
    62,962Flight operations
    
    
    60,873
    
    
    
    70,648Aircraft rentals
    
    
    46,538
    
    
    
    46,334Landing fees and other rentals
    
    
    33,628
    
    
    
    40,320Other
    
    
    62,190
    
    
    
    71,531Special fleet charges(1)
    
    
    19,417
    
    
    
    0Total operating expenses
    
    
    1,015,990
    
    
    
    1,125,158Operating income
    
    
    240,086
    
    
    
    289,648Non-operating income (expense):Interest expense
    
    
    (32,938
    )
    
    
    (29,981
    )Interest capitalized
    
    
    693
    
    
    
    0Interest income
    
    
    9,185
    
    
    
    4,759Other, net(2)
    
    
    58,955
    
    
    
    (4,403
    )Total non-operating expenses, net
    
    
    35,895
    
    
    
    (29,625
    )Income before income taxes
    
    
    275,981
    
    
    
    260,023Provision for income taxes
    
    
    26,894
    
    
    
    18,966Net income
    
    
    249,087
    
    
    
    241,057
  1




---



##### Table of Contents



Year Ended December 31, (inthousands of dollars, except shareand per share data and operatingdata)2009
    
    
    2010STATEMENT OF FINANCIAL POSITION DATATotal cash, cash equivalents and short-term
investments
    
    $
    352,068
    
    
    $
    402,603Accounts receivable, net
    
    
    80,791
    
    
    
    89,387Total current assets
    
    
    503,022
    
    
    
    594,383Purchase deposits for flight equipment
    
    
    198,697
    
    
    
    205,972Total property and equipment
    
    
    1,480,172
    
    
    
    1,772,528Total assets
    
    
    2,161,208
    
    
    
    2,555,997Long-term debt
    
    
    750,971
    
    
    
    888,681Total shareholders equity
    
    
    911,133
    
    
    
    1,109,969Capital stock
    
    
    51,782
    
    
    
    55,867CASH FLOW DATANet cash provided by operating activities
    
    $
    291,299
    
    
    $
    292,801Net cash used in investing activities
    
    
    (160,314
    )
    
    
    (445,432
    )Net cash (used in) provided by financing
activities
    
    
    (87,849
    )
    
    
    95,520OTHER FINANCIAL DATAEBITDA(3)
    
    
    313,838
    
    
    
    324,482Aircraft rentals
    
    
    46,538
    
    
    
    46,334Operating margin(4)
    
    
    19.1
    %
    
    
    20.5
    %Weighted average shares used in computing net
income per share (basic)
    
    
    43,910,929
    
    
    
    43,995,671Weighted average shares used in computing net
income per share (diluted)
    
    
    43,910,929
    
    
    
    43,995,671Net income per share (basic)
    
    $
    5.67
    
    
    $
    5.48Net income per share (diluted)
    
    $
    5.67
    
    
    $
    5.48Dividends declared per share
    
    $
    0.37
    
    
    $
    1.09OPERATING DATARevenue passengers carried(5)
    
    
    7,182
    
    
    
    7,998Revenue passenger miles(6)
    
    
    7,397
    
    
    
    8,416Available seat miles(7)
    
    
    9,911
    
    
    
    10,950Load factor(8)
    
    
    74.6
    %
    
    
    76.9
    %Break-even load factor(9)
    
    
    55.3
    %
    
    
    61.9
    %Total block hours(10)
    
    
    206,726
    
    
    
    221,298Average daily aircraft utilization(11)
    
    
    10.1
    
    
    
    10.16Average passenger fare
    
    
    167.0
    
    
    
    168.8Yield(12)
    
    
    16.08
    
    
    
    15.90Passenger revenue per ASM(13)
    
    
    12.00
    
    
    
    12.22Operating revenue per ASM(14)
    
    
    12.67
    
    
    
    12.92Operating expenses per ASM (CASM)(15)
    
    
    10.25
    
    
    
    10.28Departures
    
    
    88,294
    
    
    
    95,004Average daily departures
    
    
    241.9
    
    
    
    260.3Average number of aircraft
    
    
    56.3
    
    
    
    59.7Airports served at period end
    
    
    51
    
    
    
    52SEGMENT FINANCIAL DATACopa:Operating revenue
    
    
    1,013,136
    
    
    
    1,163,993Operating expenses
    
    
    780,466
    
    
    
    871,988Depreciation and Amortization
    
    
    46,691
    
    
    
    55,208Aircraft rentals
    
    
    25,507
    
    
    
    30,377Interest expense
    
    
    30,086
    
    
    
    27,075Interest capitalized
    
    
    (693
    )
    
    
    0Interest income
    
    
    (8,121
    )
    
    
    (3,908
    )Income before income tax
    
    
    271,997
    
    
    
    264,707Total assets
    
    
    1,984,358
    
    
    
    2,386,169Copa Colombia:Operating revenue
    
    
    254,685
    
    
    
    269,974Operating expenses
    
    
    248,178
    
    
    
    274,980Depreciation and amortization
    
    
    4,186
    
    
    
    7,753Aircraft rentals
    
    
    26,187
    
    
    
    27,199Interest expense
    
    
    2,852
    
    
    
    2,906Interest capitalized
    
    
    0
    
    
    
    0Interest income
    
    
    (1,064
    )
    
    
    (851
    )Income (loss) before income tax
    
    
    4,120
    
    
    
    (4,685
    )Total assets
    
    
    321,852
    
    
    
    340,923
  2




---



##### Table of Contents



Year Ended December 31, (inthousands of dollars, except shareand per share data and operatingdata)2009
    
    
    2010SEGMENT OPERATING DATACopa:Available seat miles(7)
    
    
    8,319
    
    
    
    9,228Load factor(8)
    
    
    76
    %
    
    
    77.9
    %Break-even load factor
    
    
    51.9
    %
    
    
    57.1
    %Yield(12)
    
    
    15.07
    
    
    
    15.16Operating revenue per ASM(14)
    
    
    12.18
    
    
    
    12.61CASM(15)
    
    
    9.38
    
    
    
    9.45Average stage length(17)
    
    
    1,214
    
    
    
    1,246On time performance(18)
    
    
    87.6
    %
    
    
    90.6
    %Copa Colombia:(19)Available seat miles(8)
    
    
    1,592
    
    
    
    1,722Load factor(9)
    
    
    67.5
    %
    
    
    71.1
    %Breakeven load factor
    
    
    67.6
    %
    
    
    72.3
    %Yield(13)
    
    
    22.04
    
    
    
    20.28Operating revenue per ASM(15)
    
    
    15.10
    
    
    
    15.06CASM(16)
    
    
    14.62
    
    
    
    15.30Average stage length(18)
    
    
    429
    
    
    
    435On time performance(19)
    
    
    90.1
    %
    
    
    86.9
    %
 
 (1)
    
    Represents expenses related to costs associated with terms negotiated for the early
termination its MD-80 aircraft as a result of Copa Colombias transition to a more fuel
efficient all Embraer-190 fleet in 2009.(2)
    
    Consists primarily of changes in the fair value of fuel derivative contracts and foreign
exchange gains/losses.(3)
    
    EBITDA represents net income (loss) plus the sum of interest expense, income taxes,
depreciation and amortization minus the sum of interest capitalized and interest income.
EBITDA is presented as supplemental information because we believe it is a useful indicator of
our operating performance and is useful in comparing our operating performance with other
companies in the airline industry. However, EBITDA should not be considered in isolation, as
a substitute for net income prepared in accordance with IFRS or as a measure of a companys
profitability. In addition, our calculation of EBITDA may not be comparable to other
companies similarly titled measures. The following table presents a reconciliation of our
net income to EBITDA for the specified periods: 2009
    
    
    2010Net income
    
    $
    249,087
    
    
    $
    241,057Interest expense
    
    
    32,938
    
    
    
    29,981Income taxes
    
    
    (9,185
    )
    
    
    (4,759
    )Depreciation
    
    
    50,876
    
    
    
    62,962Subtotal
    
    
    323,716
    
    
    
    329,241Interest capitalized
    
    
    (693
    )
    
    
    0Interest income
    
    
    (9,185
    )
    
    
    (4,759
    )EBITDA
    
    
    313,838
    
    
    
    324,482
 Aircraft rentals represent a significant operating expense of our business. Because we
leased several of our aircraft during the periods presented, we believe that when assessing our
EBITDA you should also consider the impact of our aircraft rent expense.(4)
    
    Operating margin represents operating income divided by operating revenues.(5)
    
    Total number of paying passengers (including all passengers redeeming OnePass frequent flyer
miles and other travel awards) flown on all flight segments, expressed in thousands.(6)
    
    Number of miles flown by scheduled revenue passengers, expressed in millions.(7)
    
    Aircraft seating capacity multiplied by the number of miles the seats are flown, expressed in
millions.(8)
    
    Percentage of aircraft seating capacity that is actually utilized. Load factors are
calculated by dividing revenue passenger miles by available seat miles.  3




---



##### Table of Contents



(9)
    
    Load factor that would have resulted in total revenues being equal to total expenses, excluding
the effect of fuel derivative mark-to-market and special fleet charges, this figure would have been
54.0% in 2009 and 61.2 in 2010.(10)
    
    The number of hours from the time an airplane moves off the departure gate for a revenue
flight until it is parked at the gate of the arrival airport.(11)
    
    Average number of block hours operated per day per aircraft for the total aircraft fleet.(12)
    
    Average amount (in cents) one passenger pays to fly one mile.(13)
    
    Passenger revenues (in cents) divided by the number of available seat miles.(14)
    
    Total operating revenues for passenger related costs (in cents) divided by the number of available seat miles.(15)
    
    Total operating expenses for passenger aircraft related costs (in cents) divided by the number of available seat miles.(16)
    
    Percentage of flights that arrive at the destination gate within fifteen minutes of scheduled arrival.(17)
    
    The average number of miles flown per flight.(18)
    
    Percentage of flights that depart within fifteen minutes of the scheduled departure time.(19)
    
    Has not historically distinguished between revenue passengers and non-revenue passengers. Revenue passenger information and other statistics derived from revenue
passenger data for the year ended December 31, 2009 and 2010 has been derived from estimates
that we believe to be materially accurate. B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  D. Risk Factors
 R isksR elating to Our Company
 Our failure to successfully implement our growth strategy may adversely affect our results of
operations and harm the market value of our Class A shares.
    4




---



##### Table of Contents



Our performance is heavily dependent on economic conditions in the countries in which we do
business.
  
    
    changes in economic or other governmental policies;
 
    
    changes in regulatory, legal or administrative practices; or
 
    
    other political or economic developments over which we have no control.
  The cost of refinancing our debt and obtaining additional financing for new aircraft has increased
and may continue to increase.
    5




---



##### Table of Contents



We are dependent on our alliance with United Continental Holdings and cannot assure you that it
will continue.
     We have decided to change our global airlines alliance, which could involve significant transition
and integration risks.
   6




---



##### Table of Contents



We operate using a hub-and-spoke model and are vulnerable to competitors offering direct flights
between destinations we serve.
  The Panamanian Aviation Act and certain of the bilateral agreements under which we operate contain
Panamanian ownership requirements that are not clearly defined, and our failure to comply with
these requirements could cause us to lose our authority to operate in Panama or to the
international destinations we serve.
   Autoridad de Aeronáutica Civil
  7




---



##### Table of Contents



Our business is subject to extensive regulation which may restrict our growth or our operations or
increase our costs.
 Unidad Administrativa Especial de Aeronáutica Civil
    The growth of our operations to the United States and the benefits of our code-sharing arrangements
with Continental are dependent on Panamas continued favorable safety assessment.
   8




---



##### Table of Contents



We are highly dependent on our hub at Panama Citys Tocumen International Airport.
    We are exposed to increases in landing charges and other airport access fees and cannot be assured
access to adequate facilities and landing rights necessary to achieve our expansion plans.
     9




---



##### Table of Contents



We have significant fixed financing costs and expect to incur additional fixed costs as we expand
our fleet.
   
    
    limit our ability in the future to obtain additional financing for working
capital or other important needs;
 
    
    impair our liquidity by diverting substantial cash from our operating needs to
service fixed financing obligations; or
 
    
    limit our ability to plan for or react to changes in our business, in the
airline industry or in general economic conditions.
  Our existing debt financing agreements and our aircraft operating leases contain restrictive
covenants that impose significant operating and financial restrictions on us.
  
    
    create material liens on our assets;
 
    
    take certain actions that may impair creditors rights to our aircraft;
 
    
    sell assets or engage in certain mergers or consolidations; and
 
    
    engage in other specified significant transactions.
  If we fail to successfully take delivery of or reliably operate new aircraft, our business could be
harmed.
  
    
    manufacturers delays in meeting the agreed upon aircraft delivery schedule;
  10




---



##### Table of Contents




    
    difficulties in obtaining financing on acceptable terms to complete our purchase
of all of the aircraft we have committed to purchase; and
 
    
    the inability of new aircraft and their components to comply with agreed upon
specifications and performance standards.
   If we were to determine that our aircraft, rotable parts or inventory were impaired, it would have
a significant adverse effect on our operating results.
  We rely on information technology systems, and we may become more dependent on such systems in the
future.
  Our quarterly results can fluctuate substantially, and the trading price of our Class A shares may
be affected by such variations.
   11




---



##### Table of Contents



Our reputation and financial results could be harmed in the event of an accident or incident
involving our aircraft.
   Fluctuations in foreign exchange rates could negatively affect our net income.
   Our maintenance costs will increase as our fleet ages.
   12




---



##### Table of Contents



If we enter into a prolonged dispute with any of our employees, many of whom are represented by
unions, or if we are required to increase substantially the salaries or benefits of our employees,
it may have an adverse impact on our operations and financial condition.
   Our revenues depend on our relationship with travel agents and tour operators.
  
    
    the size of commissions offered by other airlines;
 
    
    changes in our arrangements with other distributors of airline tickets; and
 
    
    the introduction and growth of new methods of selling tickets.
 We rely on third parties to provide our customers and us with facilities and services that are
integral to our business.
   13




---



##### Table of Contents



We depend on a limited number of suppliers.
     We are dependent on key personnel.
   14




---



##### Table of Contents



Our operations in Cuba, which has been identified by the U.S. Department of State as a state
sponsor of terrorism, may adversely affect our reputation and the liquidity and value of our Class
A shares.
   Risks Relating to the Airline Industry
 The airline industry is highly competitive.
     15




---



##### Table of Contents



We may face increasing competition from low-cost carriers offering discounted fares.
  Significant changes or extended periods of high fuel costs or fuel supply disruptions could
materially affect our operating results.
    16




---



##### Table of Contents



We may experience difficulty finding, training and retaining pilots and other employees.
   Because the airline industry is characterized by high fixed costs and relatively elastic revenues,
airlines cannot quickly reduce their costs to respond to shortfalls in expected revenue.
  Our business may be adversely affected by downturns in the airline industry caused by terrorist
attacks, war or outbreak of disease, which may alter travel behavior or increase costs.
    17




---



##### Table of Contents



Increases in insurance costs and/or significant reductions in coverage would harm our business,
financial condition and results of operations.
  Failure to comply with applicable environmental regulations could adversely affect our business.
  Risks Relating to Panama and our Region
 We are highly dependent on conditions in Panama and, to a lesser extent, in Colombia.
    18




---



##### Table of Contents



ny increase in the taxes we or our shareholders pay in Panama or the other countries where we do
business could adversely affect the value of our Class A shares.
   Political unrest and instability in Latin American countries to which we fly may adversely affect
our business and the market price of our Class A shares.
   19




---



##### Table of Contents



Risks Relating to Our Class A Shares
 The value of our Class A shares may be adversely affected by ownership restrictions on our capital
stock and the power of our Board of Directors to take remedial actions to preserve our operating
license and international route rights by requiring sales of certain outstanding shares or issuing
new stock.
 (Pacto Social)
  Our controlling shareholder has the ability to direct our business and affairs, and its interests
could conflict with yours.
  The Class A shares will only be permitted to vote in very limited circumstances and may never have
full voting rights.
   20




---



##### Table of Contents



Substantial future sales of our Class A shares by CIASA could cause the price of the Class A shares
to decrease.
  Holders of our common stock are not entitled to preemptive rights, and as a result you may
experience substantial dilution upon future issuances of stock by us.
  You may not be able to sell our Class A shares at the price or at the time you desire because an
active or liquid market for the Class A shares may not continue.
  Our Board of Directors may, in its discretion, amend or repeal our dividend policy. You may not
receive the level of dividends provided for in the dividend policy or any dividends at all.
  To the extent we pay dividends to our shareholders, we will have less capital available to meet our
future liquidity needs.
   21




---



##### Table of Contents



Our Articles of Incorporation impose ownership and control restrictions on our company which ensure
that Panamanian nationals will continue to control us and that these restrictions operate to
prevent any change of control or some transfers of ownership in order to comply with the Aviation
Act and other bilateral restrictions.
  The protections afforded to minority shareholders in Panama are different from and more limited
than those in the United States and may be more difficult to enforce.
  Developments in Latin American countries and other emerging market countries may cause the market
price of our Class A shares to decrease.
   22




---



##### Table of Contents



Item 4. Information on the Company
 A. History and Development of the Company
 General
   sociedad anónima
   Capital Expenditures
   23




---



##### Table of Contents



B. Business Overview
        Our Strengths
  
    
    Our Hub of the Americas airport is strategically located.We believe that Copas base
of operations at the geographically central location of Tocumen International Airport in
Panama City, Panama provides convenient connections to our principal markets in North,
Central and South America and the Caribbean, enabling us to consolidate traffic to serve
several destinations that do not generate enough demand to
justify point-to-point service. Flights from Panama operate with few service disruptions due
to weather, contributing to high completion factors and on-time performance. Tocumen
International Airports sea-level altitude allows our aircraft to operate without
performance restrictions that they would be subject to at higher-altitude airports. We
believe that Copas hub in Panama allows us to benefit from Panama Citys status as a center
for financial services, shipping and commerce and from Panamas stable, dollar-based
economy, free-trade zone and growing tourism.
  24




---



##### Table of Contents




    
    We focus on keeping our operating costs low.In recent years, our low operating costs
and efficiency have contributed significantly to our profitability. Our operating cost per
available seat mile, excluding costs for fuel and fleet impairment charges, was 7.36 in
2009 and 7.52 in 2010. We believe that our cost per available seat mile reflects our modern
fleet, efficient operations and the competitive cost of labor in Panama.
 
    
    We operate a modern fleet.Our fleet consists of modern Boeing 737-Next Generation and
Embraer 190 aircraft equipped with winglets and other modern cost-saving and safety
features. Over the next several years, we intend to enhance our modern fleet through the
addition of at least 56 additional Boeing 737-Next Generation aircraft. We believe that our
modern fleet contributes to our on-time performance and high completion factor (percentage
of scheduled flights not cancelled). We expect our Boeing 737-700s, 737-800s and Embraer
190s to continue offering substantial operational cost advantages.
 
    
    We believe Copa has a strong brand and a reputation for quality service.We believe
that the Copa brand is associated with value to passengers, providing world-class service
and competitive pricing. For the year ended December 31, 2010, Copa Airlines statistic for
on-time performance was 90.6% and completion factor was 99.61%. Additionally, Copa
Colombias statistics for on-time performance was 85.85% and completion factor was 99.54%.
Baggage handling for Copa was 2.06 mishandled bags per 1000 passengers. Our focus on
customer service has helped to build passenger loyalty. We believe that our brand has also
been enhanced through our relationship with UAL, including our joint marketing of the
OnePass loyalty program in Latin America, the similarity of our aircraft livery and
aircraft interiors and our participation in UALs Presidents Club lounge program.
 
    
    Our management fosters a culture of teamwork and continuous improvement.Our management
team has been successful at creating a culture based on teamwork and focused on continuous
improvement. Each of our employees has individual objectives based on corporate goals that
serve as a basis for measuring performance. When corporate operational and financial
targets are met, employees are eligible to receive bonuses according to our profit sharing
program. See Item 6D. Employees. We also recognize outstanding performance of individual
employees through company-wide recognition, one-time awards, special events and, in the
case of our senior management, grants of restricted stock and stock options. Our
goal-oriented culture and incentive programs have contributed to a motivated work force
that is focused on satisfying customers, achieving efficiencies and growing profitability.
 Our Strategy
  
    
    Expand our network by increasing frequencies and adding new destinations.We believe
that demand for air travel in Latin America is likely to expand in the next decade, and we
intend to use our increasing fleet capacity to meet this growing demand. We intend to focus
on expanding our operations by increasing flight frequencies on our most profitable routes
and initiating service to new destinations. Copas Panama City hub allows us to consolidate
traffic and provide service to certain underserved markets, particularly in Central America
and the Caribbean, and we intend to focus on providing new service to regional destinations
that we believe best enhance the overall connectivity and profitability of our network.
 
    
    Continue to focus on keeping our costs low.We seek to reduce our cost per available
seat mile without sacrificing services valued by our customers as we execute our growth
plans. Our goal is to maintain a
modern fleet and to make effective use of our resources through efficient aircraft
utilization and employee productivity. We intend to reduce our distribution costs by
increasing direct sales, including internet and call center sales, as well as improving
efficiency through technology and automated processes.
  25




---



##### Table of Contents




    
    Emphasize superior service and value to our customers.We intend to continue to focus
on satisfying our customers and earning their loyalty by providing a combination of
superior service and competitive fares. We believe that continuing our operational success
in keeping flights on time, reducing mishandled luggage and offering convenient schedules
to attractive destinations will be essential to achieving this goal. We intend to continue
to incentivize our employees to improve or maintain operating and service metrics relating
to our customers satisfaction by continuing our profit sharing plan and employee
recognition programs and to reward customer loyalty with the popular OnePass frequent flyer
program, upgrades and access to Presidents Club lounges.
 
    
    Capitalize on opportunities at Copa Colombia.We are seeking to enhance Copa Colombias
profitability through a variety of initiatives, including, expanding its international
routes, capitalizing on aircraft interchange with Copa, further integrating its route
network with Copas and improving overall efficiency.
 Copa Colombia
    Industry
     26




---



##### Table of Contents



2009 IATA Traffic Results(1)Passengers
    
    
    
    
    
    
    PassengerCarried
    
    
    
    
    
    
    Miles(Thousands)
    
    
    Change (%)
    
    
    (Millions)
    
    
    Change (%)
    
    
    ASMs (Million)
    
    
    Change (%)
    
    
    Load FactorInternational Scheduled ServiceNorth America  Central America
    
    
    31,860
    
    
    
    -5.1
    %
    
    
    51,186
    
    
    
    4.6
    %
    
    
    67,242
    
    
    
    6.0
    %
    
    
    76.1
    %North America  South America
    
    
    10,985
    
    
    
    1.9
    %
    
    
    32,199
    
    
    
    -0.2
    %
    
    
    41,610
    
    
    
    0.0
    %
    
    
    77.4
    %Central America  South America
    
    
    1,692
    
    
    
    -16.5
    %
    
    
    3,327
    
    
    
    -3.1
    %
    
    
    5,011
    
    
    
    2.6
    %
    
    
    66.4
    %Within Central America
    
    
    2,741
    
    
    
    -10.1
    %
    
    
    1,500
    
    
    
    -6.0
    %
    
    
    2,263
    
    
    
    -7.3
    %
    
    
    66.3
    %Within South America
    
    
    13,068
    
    
    
    5.1
    %
    
    
    11,968
    
    
    
    -6.5
    %
    
    
    16,583
    
    
    
    8.7
    %
    
    
    72.2
    %Domestic Scheduled ServiceCentral America
    
    
    7,101
    
    
    
    -21.6
    %
    
    
    4,735
    
    
    
    -15.5
    %
    
    
    6,526
    
    
    
    -18.6
    %
    
    
    72.6
    %South America
    
    
    39,543
    
    
    
    3.7
    %
    
    
    22,757
    
    
    
    8.5
    %
    
    
    33,602
    
    
    
    12.55
    
    
    
    67.7
    %
 
 (1)
    
    IATA passenger traffic data is not yet available for 2010.  GDP
    
    
    GDP per Capita2010 GDP
    
    
    
    
    
    
    2010 GDP per CapitaCurrent Prices
    
    
    2010 Real GDP
    
    
    Current Prices(US$bn)
    
    
    (% Growth)
    
    
    (US$)Brazil
    
    
    2,023
    
    
    
    7.5
    %
    
    
    10,470Argentina
    
    
    351
    
    
    
    7.4
    %
    
    
    8,662Chile
    
    
    199
    
    
    
    5.0
    %
    
    
    11,587Mexico
    
    
    1,004
    
    
    
    4.9
    %
    
    
    9,243Colombia
    
    
    283
    
    
    
    4.7
    %
    
    
    6,220Panama
    
    
    27
    
    
    
    6.2
    %
    
    
    7,712USA
    
    
    14,624
    
    
    
    2.6
    %
    
    
    47,131
 
 Source:
    
    International Monetary Fund, World Economic Outlook Database,
October 2010; estimated GDP growth calculated in local currency  27




---



##### Table of Contents



Route Network and Schedules
 Copa
      28




---



##### Table of Contents



Revenue by Region
 Year Ended December 31,Region
    
    2009
    
    
    2010North America(1)
    
    
    15.2
    %
    
    
    15.1
    %South America
    
    
    58.5
    %
    
    
    55.0
    %Central America(2)
    
    
    19.5
    %
    
    
    23.4
    %Caribbean(3)
    
    
    6.8
    %
    
    
    6.5
    %
 
 (1)
    
    The United States, Canada and Mexico.(2)
    
    Includes Panama.(3)
    
    Cuba, Dominican Republic, Haiti, Jamaica, Puerto Rico, Trinidad and Tobago Copa Colombia
  Date ServiceDestinations Served
    
    CommencedBarranquilla
    
    Jun 1995Bogotá
    
    Jun 1993Bucaramanga
    
    May 1995Cali
    
    Jun 1993Caracas, Venezuela
    
    May 2008Cartagena
    
    Jun 1993Cúcuta
    
    Nov 2005Leticia
    
    Nov 1993Medellín
    
    Oct 1994Montería
    
    Jul 1994Panama City, Panama
    
    Dec 2005Pereira
    
    Mar 2003San Andrés
    
    Jun 1993Santa Marta
    
    Jun 1993Quito, Ecuador
    
    Dec 2009Guatemala, Guatemala
    
    Ago 2010Guayaquil, Ecuador
    
    Mar 2010Havana, Cuba
    
    Dec 2010México D.F., México
    
    Oct 2010San José, Costa Rica
    
    Jun 2010Cancún, México
    
    Dec 2010
  29




---



##### Table of Contents



Airline Operations
 Passenger Operations
   Cargo Operations
  Pricing and Revenue Management
   30




---



##### Table of Contents



Relationship with UAL
         31




---



##### Table of Contents



Sales, Marketing and Distribution
 Copa
 Sales and Distribution.
     Advertising and Promotional Activities.
 Copa Colombia
   32




---



##### Table of Contents



Competition
        Aircraft
 Copa Airlines
   33




---



##### Table of Contents



AverageTermof Lease
    
    
    AverageNumber of Aircraft
    
    
    Remaining
    
    
    Age
    
    
    SeatingTotal
    
    
    Owned
    
    
    Leased
    
    
    (Years)
    
    
    (Years)
    
    
    CapacityBoeing 737-700
    
    
    18
    
    
    
    14
    
    
    
    4
    
    
    
    2.3
    
    
    
    8.3
    
    
    
    124Boeing 737-800
    
    
    17
    
    
    
    14
    
    
    
    3
    
    
    
    4.7
    
    
    
    2.5
    
    
    
    160Embraer 190
    
    
    12
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    3.7
    
    
    
    94Total
    
    
    47
    
    
    
    40
    
    
    
    7
    
    
    
    3.3
    
    
    
    5.0
    
    
    
    
  Aircraft Type
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015737-700(1)
    
    
    18
    
    
    
    16
    
    
    
    16
    
    
    
    12
    
    
    
    12737-800(2)
    
    
    17
    
    
    
    39
    
    
    
    46
    
    
    
    50
    
    
    
    58Embraer 190
    
    
    12
    
    
    
    12
    
    
    
    12
    
    
    
    12
    
    
    
    9Total Fleet
    
    
    47
    
    
    
    67
    
    
    
    74
    
    
    
    74
    
    
    
    79
 (1)
    
    Assumes the return of leased aircraft upon expiration of lease contracts.(2)
    
    We have the flexibility to choose between the Boeing 737-700 and the Boeing 737-800
aircraft for most of the 737-700 aircraft deliveries.  
    
    They have simplified maintenance procedures.
 
    
    They require just one type of standardized training for our crews.
 
    
    They have one of the lowest operating costs in their class.
   34




---



##### Table of Contents



Clase
Ejecutiva
  Copa Colombia
  Maintenance
 Copa
    35




---



##### Table of Contents



Copa Colombia
  Safety
    Airport Facilities
  
    
    Panamas consistently temperate climate is ideal for airport operations. For
example, in recent years Tocumen was closed and unavailable for flight operations
for a total of less than two hours per year on average
 
    
    Tocumen is the only airport in Central America with two operational runways.
Also unlike some other regional airports, consistent modernization and growth of
our hub has kept pace with our needs. Tocumen airport is currently in the process
of completing phase 2 of an expansion project which is scheduled for September
2011, and there is ample room for further expansion.
 
    
    Panamas central and sea level location provides a very efficient base to
operate our narrow body fleet, efficiently serving short and long-haul destinations
in Central, North and South America, as well as the Caribbean.
 
    
    Travelers can generally make connections easily through Tocumen because of its
manageable size and Panamas policies accommodating in-transit passengers.
  36




---



##### Table of Contents



Fuel
  Aircraft Fuel Data2009
    
    
    2010Copa SegmentAverage price per gallon of jet fuel into
plane (excluding hedge) (in U.S. dollars)
    
    $
    1.84
    
    
    $
    2.35Gallons consumed (in thousands)
    
    
    112,401
    
    
    
    120,913Available seat miles (in millions)
    
    
    8,319
    
    
    
    9,228Gallons per ASM (in hundredths)
    
    
    1.35
    
    
    
    1.31Copa Colombia(1)Average price per gallon of jet fuel into
plane (excluding hedge) (in U.S. dollars)
    
    $
    1.97
    
    
    $
    2.53Gallons consumed (in thousands)
    
    
    25,617
    
    
    
    27,668Available seat miles (in millions)
    
    
    1,592
    
    
    
    1,722Gallons per ASM (in hundredths)
    
    
    1.61
    
    
    
    1.61
  37




---



##### Table of Contents



Insurance
  Environmental
  Regulation
 Panama
 Authorization and Licenses.
  38




---



##### Table of Contents



Safety Assessment.
 Ownership Requirements.
  Antitrust Regulations
 Noise Restrictions
  39




---



##### Table of Contents



Colombia
   U.S.
  Authorizations and Licenses.
   40




---



##### Table of Contents



Security.
 Passenger Facility Charges.
 Airport Access.
 Noise Restrictions.
 Other Regulation.
  41




---



##### Table of Contents



Other Jurisdictions
  C. Organizational Structure
  
 *
    
    Includes ownership by us held through wholly-owned holding companies organized in the
British Virgin Islands.  D. Property, Plants and Equipment
 Headquarters
  Other Property
   42




---



##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 A. Operating Results
 You should read the following discussion in conjunction with our consolidated financial
statements and the related notes and the other financial information included elsewhere in this
annual report.
       43




---



##### Table of Contents



Regional Economic Environment
  The Preliminary Overview of the Economies of Latin America and the
Caribbean
 Revenues
     44




---



##### Table of Contents



2009
    
    
    2010Copa SegmentCapacity (in available seat miles, in millions)
    
    
    8,319
    
    
    
    9,228Load factor
    
    
    76
    %
    
    
    77.9
    %Yield (in cents)
    
    
    15.07
    
    
    
    15.16Copa ColombiaCapacity (in available seat miles, in millions)
    
    
    1,592
    
    
    
    1,722Load factor
    
    
    67.5
    %
    
    
    71.1
    %Yield (in cents)
    
    
    22.04
    
    
    
    20.28
 Seasonality
  Operating Expenses
  Aircraft fuel.
 Aircraft Fuel Data2009
    
    
    2010Copa SegmentAverage price per gallon of jet fuel into plane
(excluding hedge) (in U.S. dollars)
    
    $
    1.84
    
    
    $
    2.35Gallons consumed (in thousands)
    
    
    112,401
    
    
    
    120,913Available seat miles (in millions)
    
    
    8,319
    
    
    
    9,228Gallons per ASM (in hundredths)
    
    
    1.35
    
    
    
    1.31Copa Colombia(1)Average price per gallon of jet fuel into plane
(excluding hedge) (in U.S. dollars)
    
    $
    1.97
    
    
    $
    2.53Gallons consumed (in thousands)
    
    
    25,617
    
    
    
    27,688Available seat miles (in millions)
    
    
    1,592
    
    
    
    1,722Gallons per ASM (in hundredths)
    
    
    1.61
    
    
    
    1.61
  45




---



##### Table of Contents



Salaries and benefits.
 Passenger servicing expenses.
 Commissions.
 Maintenance, material and repair expenses.
  Aircraft rent.
 Reservations and sales expenses.
  46




---



##### Table of Contents



Flight operations landing fees and other rentals
 Other
 Taxes
      Special Fleet Charges
    47




---



##### Table of Contents



Critical Accounting Policies and Estimates
   Goodwill and Intangible Assets.
 Maintenance Deposit.
    48




---



##### Table of Contents



Accounting for Property, Plant and Equipment
   49




---



##### Table of Contents



Lease accounting.
  Deferred taxes.
  50




---



##### Table of Contents



Recently Issued Accounting Pronouncements
 Standards issued but not yet effective
 
    
    IAS 24 Related Party Disclosures (Amendment)
 
    
    IAS 32 Financial Instruments: Presentation  Classification of Rights Issues (Amendment)
 
    
    IFRS 9 Financial Instruments: Classification and Measurement
 
    
    IFRIC 14 Prepayment of a minimum funding requirement (Amendment)
 
    
    IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
 Improvements to IFRSs (issued in May 2010)
  
    
    IFRS 3 Business Combinations
 
    
    IFRS 7 Financial Instruments: Disclosures
 
    
    IAS 1 Presentation of Financial Statements
 
    
    IAS 27 Consolidated and Separate Financial Statements
 
    
    IFRIC 13 Customer Loyalty Programmes
 Results of Operation
  2009
    
    
    2010Operating revenues:Passenger revenue
    
    
    94.7
    %
    
    
    94.6
    %Cargo, mail and other
    
    
    5.3
    %
    
    
    5.4
    %Total
    
    
    100
    %
    
    
    100
    %Operating expenses:Aircraft fuel
    
    
    (23.9
    )%
    
    
    (25.1
    )%Salaries and benefits
    
    
    (12.5
    )%
    
    
    (12.6
    )%Passenger servicing
    
    
    (10.0
    )%
    
    
    (9.5
    )%Commissions
    
    
    (3.8
    )%
    
    
    (3.2
    )%Reservation and sales
    
    
    (4.5
    )%
    
    
    (4.2
    )%Maintenance, materials and repairs
    
    
    (4.4
    )%
    
    
    (4.4
    )%Depreciation and amortization
    
    
    (4.1
    )%
    
    
    (4.5
    )%Flight operations
    
    
    (4.8
    )%
    
    
    (5.0
    )%Aircraft rentals
    
    
    (3.7
    )%
    
    
    (3.3
    )%Landing fees and other rentals
    
    
    (2.7
    )%
    
    
    (2.8
    )%Other
    
    
    (5.0
    )%
    
    
    (5.1
    )%Special fleet charges
    
    
    (1.5
    )%
    
    
    (0.0
    )%Total
    
    
    (80.9
    )%
    
    
    (79.5
    )%Operating income
    
    
    19.1
    %
    
    
    20.5
    %Non-operating income (expenses):Interest expense
    
    
    (2.6
    )%
    
    
    (2.1
    )%Interest capitalized
    
    
    0.1
    %
    
    
    0.0
    %Interest income
    
    
    0.7
    %
    
    
    0.3
    %Other, net
    
    
    4.7
    %
    
    
    (0.30
    )%Total
    
    
    2.9
    %
    
    
    (2.1
    )%Income/(loss) before income taxes
    
    
    22.0
    %
    
    
    18.4
    %Income taxes
    
    
    2.1
    %
    
    
    1.3
    %Net income
    
    
    24.1
    %
    
    
    19.7
    %
 Year 2010 Compared to Year 2009
   51




---



##### Table of Contents



Operating revenue
  Copas segment operating revenue
  Passenger revenue.
 Cargo, mail and other.
 Copa Colombia segment operating revenue
  Operating expenses
    Aircraft fuel.
 Salaries and benefits.
 Passenger .
  52




---



##### Table of Contents



Maintenance, materials and repairs.
  Copa segment operating expenses
  Year EndedDecember 31,
    
    
    Percent2009
    
    
    2010
    
    
    Change(in cents)Operating Expenses per ASM:Salaries and benefits
    
    
    1.49
    
    
    
    1.50
    
    
    
    0.1
    %Passenger servicing
    
    
    1.12
    
    
    
    1.09
    
    
    
    (2.0
    )%Commissions
    
    
    0.43
    
    
    
    0.40
    
    
    
    (6.1
    )%Reservation and sales
    
    
    0.50
    
    
    
    0.46
    
    
    
    (7.7
    )%Maintenance, materials and repairs
    
    
    0.51
    
    
    
    0.50
    
    
    
    (2.6
    )%Depreciation and Amortization
    
    
    0.56
    
    
    
    0.60
    
    
    
    6.6
    %Flight operations
    
    
    0.62
    
    
    
    0.63
    
    
    
    2.0
    %Aircraft rentals
    
    
    0.31
    
    
    
    0.33
    
    
    
    7.4
    %Landing fees and other rentals
    
    
    0.30
    
    
    
    0.32
    
    
    
    4.1
    %Other
    
    
    0.55
    
    
    
    0.54
    
    
    
    (1.8
    )%Total operating expenses per ASM before
aircraft fuel
    
    
    6.39
    
    
    
    6.36
    
    
    
    (0.4
    )%Aircraft fuel
    
    
    2.99
    
    
    
    3.09
    
    
    
    3.1
    %Total operating expenses per ASM
    
    
    9.38
    
    
    
    9.45
    
    
    
    0.7
    %
 Aircraft fuel.
 Salaries and benefits.
 Passenger servicing
 Commissions.
 Reservations and sales. sales
  53




---



##### Table of Contents



Maintenance, materials and repairs. Maintenance
 Depreciation.
 Flight operations, aircraft rentals and landing fees and other rentals.
 Aircraft rental.
 Other.
 Copa Colombia segment operating expenses.
 Non-operating income (expense)
  Copa segment non-operating income (expense)
  Interest expense.
 Interest capitalized.
 Interest income.
  54




---



##### Table of Contents



Other, net.
 Copa Colombia segment non-operating income (expense)
  B. Liquidity and Capital Resources
   Operating Activities
  Investing Activities
  Financing Activities
     55




---



##### Table of Contents



Capital resources.
   56




---



##### Table of Contents



C. Research and Development, Patents and Licenses, etc.
   D. Trend Information
     E. Off-statement of financial position arrangements
   57




---



##### Table of Contents



F. Tabular Disclosure of Contractual Obligations
  At December 31, 2010Less than 1
    
    
    1-3
    
    
    3-5Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    More than 5 Years(in thousands of dollars)Aircraft and engine purchase commitments
    
    
    1,632,071
    
    
    
    164,041
    
    
    
    383,382
    
    
    
    588,339
    
    
    
    496,309Aircraft operating leases
    
    
    360,102
    
    
    
    55,231
    
    
    
    111,134
    
    
    
    93,627
    
    
    
    100,110Other operating leases
    
    
    32,056
    
    
    
    10,270
    
    
    
    12,133
    
    
    
    7,013
    
    
    
    2,640Short-term debt and long-term debt(1)
    
    
    1,079,245
    
    
    
    143,617
    
    
    
    264,641
    
    
    
    284,453
    
    
    
    386,534Total
    
    
    3,103,474
    
    
    
    373,159
    
    
    
    771,290
    
    
    
    973,432
    
    
    
    985,593
 (1)
    
    Includes actual interest and estimated interest for floating-rate debt based on December 31, 2010 rates.   
 Item 6. Directors, senior management and employees
 A. Directors and Senior Management
   Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer and Director
    
    52Stanley Motta
    
    Chairman and Director
    
    65Osvaldo Heilbron
    
    Director
    
    85Jaime Arias
    
    Director
    
    76Ricardo Alberto Arias
    
    Director
    
    71Alberto C. Motta, Jr.
    
    Director
    
    64Douglas Leo
    
    Director
    
    51Joseph Fidanque III
    
    Director
    
    44Jose Castañeda Velez
    
    Director
    
    67Roberto Artavia Loria
    
    Director
    
    52Alfredo Arias Loredo
    
    Director
    
    64
 Mr. Pedro Heilbron
  58




---



##### Table of Contents



Mr. Stanley Motta
 Mr. Osvaldo Heilbron
 Mr. Jaime Arias
 Mr. Ricardo Arias
 Mr. Alberto Motta, Jr.
 Mr. Douglas Leo
 Mr. Joseph Fidanque III
 Mr. Roberto Artavia Loria
  59




---



##### Table of Contents



Mr. José Castañeda Velez
 Mr. Alfredo Arias Loredo
  Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer
    
    52Victor Vial
    
    Chief Financial Officer
    
    45Daniel Gunn
    
    Senior Vice-President of Operations
    
    43Leo Marchosky
    
    Vice-President of Human Resources
    
    54Joe Mohan
    
    Vice-President of Commercial and Planning
    
    41Ahmad Zamany
    
    Vice-President of Maintenance
    
    53Vidalia de Casado
    
    Vice-President of On-Board Services
    
    53David Lindskoog
    
    Vice-President of Flight Operations
    
    60Peter Diaz
    
    Vice-President of Airport Services
    
    44Glen Baker
    
    Vice-President of  Technology
    
    52Roberto Junguito Pombo
    
    Chief Executive Officer of Copa Colombia
    
    40
 Mr. Pedro Heilbron
 Mr. Victor Vial
 Mr. Daniel Gunn
 Dr. Leo Marchosky
 Mr. Joe Mohan
 Mr. Ahmad Zamany
  60




---



##### Table of Contents



Ms. Vidalia de Casado
 Captain David Lindskoog
 Mr. Peter Díaz
 Mr. Glen Baker
 Mr. Roberto Junguito Pombo
  B. Compensation
    61




---



##### Table of Contents



Incentive Compensation Program
       C. Board Practices
    62




---



##### Table of Contents



Committees of the Board of Directors
 Audit Committee.
 
    
    the integrity of financial reports and other financial information made
available to the public or any regulator or governmental body;
 
    
    the effectiveness of our internal financial control and risk management systems;
the effectiveness of our internal audit function, the independent audit process
including the appointment, retention, compensation, and supervision of the
independent auditor; and
 
    
    the compliance with laws and regulations, as well as the policies and ethical
codes established by management and the Board of Directors.
   Compensation Committee.
 Nominating and Corporate Governance Committee.
 Independent Directors Committee.
 
    
    any transactions in excess of $5 million between us and our controlling
shareholders,
 
    
    the designation of certain primary share issuances that will not be included in
the calculation of the percentage ownership pertaining to the Class B shares for
purposes of determining whether the Class A shares should be converted to voting
 shares under our Articles of Incorporation, and
 
    
    the issuance of additional Class B shares or Class C shares to ensure Copa
Airlines compliance with aviation laws and regulations.
  63




---



##### Table of Contents



D. Employees
   December 31,2008
    
    
    2009
    
    
    2010Pilots
    
    
    492
    
    
    
    529
    
    
    
    612Flight attendants
    
    
    719
    
    
    
    783
    
    
    
    949Mechanics
    
    
    247
    
    
    
    249
    
    
    
    252Customer service agents, reservation
agents, ramp and other
    
    
    2,270
    
    
    
    2,143
    
    
    
    2,376Management and clerical
    
    
    807
    
    
    
    1,068
    
    
    
    1,200Total employees
    
    
    4535
    
    
    
    4,772
    
    
    
    5,389
    64




---



##### Table of Contents



Asociación Colombiana de Aviadores Civiles Asociación Colombiana de Auxiliares de Vuelo
 E. Share Ownership
   
 Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  Class A SharesBeneficially OwnedShares
    
    
    (%)(1)CIASA(2)
    
    
    0
    
    
    
    Executive officers and directors as a group (20 persons)(4)
    
    
    334,407
    
    
    
    1.02
    %Tempus Quo Capital Management, LLC.(3)
    
    
    1,912,323
    
    
    
    5.9
    %Others
    
    
    30,412,827
    
    
    
    93.1
    %Total
    
    
    32,659,557
    
    
    
    100
    %
 
 (1)
    
    Based on a total of 32,659,557 Class A shares outstanding.(2)
    
    CIASA owns 100% of the Class B shares of Copa Holdings, representing 25.1% of our total capital stock.(3)
    
    Based on a Schedule 13G filed with the SEC, dated February 11, 2011, in which Tempus Quo Capital
Management, LLC. and certain related parties, reported beneficial ownership of 1,912,323 Class A
Shares.(4)
    
    Number of shares as of March, 2011.  65




---



##### Table of Contents



B. Related Party and Certain Significant Transactions
 Supplemental Agreement
  Registration Rights Agreement
   66




---



##### Table of Contents



Commercial Agreements with UAL
  Alliance Agreement.
 Services Agreement.
 Frequent Flyer Participation Agreement.
 Trademark License Agreement.
  67




---



##### Table of Contents



Agreements with our controlling shareholders and their affiliates
  Banco General, S.A.
  ASSA Compañía de Seguros, S.A.
  Petróleos Delta, S.A.
  Desarollo Inmobiliario del Este, S.A.
  Galindo, Arias & Lopez
   68




---



##### Table of Contents



Other Transactions
     C. Interests of Experts and Counsel
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information
  Legal Proceedings
  Dividends and Dividend Policy
   69




---



##### Table of Contents



B. Significant Changes
  
 Item 9. The Offer and Listing
 A. Offer and Listing Details
  Low
    
    
    High2006Annual
    
    
    20.31
    
    
    
    49.052007Annual
    
    
    30.25
    
    
    
    73.332008Annual
    
    
    18.00
    
    
    
    43.642009Annual
    
    
    20.36
    
    
    
    56.78First quarter
    
    
    20.36
    
    
    
    33.10Second quarter
    
    
    27.20
    
    
    
    42.17Third quarter
    
    
    38.15
    
    
    
    46.70Fourth quarter
    
    
    40.00
    
    
    
    56.782010Annual
    
    
    42.06
    
    
    
    63.08First quarter
    
    
    47.76
    
    
    
    61.74Second quarter
    
    
    43.56
    
    
    
    63.08Third quarter
    
    
    42.60
    
    
    
    55.95Fourth quarter
    
    
    46.97
    
    
    
    59.06Last Six MonthsNovember 2010
    
    
    49.04
    
    
    
    56.62December 2010
    
    
    55.62
    
    
    
    59.06January 2011
    
    
    55.88
    
    
    
    59.92February 2011
    
    
    50.95
    
    
    
    58.50March 2011
    
    
    56.01
    
    
    
    58.50April 2011
    
    
    49.54
    
    
    
    55.24
 B. Plan of Distribution
   70




---



##### Table of Contents



C. Markets
  D. Selling Shareholders
  E. Dilution
  F. Expenses of the Issue
  
 Item 10. Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
 (sociedad anónima)
 Objects and Purposes
  Description of Capital Stock
 The following is a summary of the material terms of Copa Holdings capital stock and a brief
summary of certain significant provisions of Copa Holdings Articles of Incorporation. This
description contains all material information concerning the common stock but does not purport to
be complete. For additional information regarding the common stock, reference is made to the
Articles of Incorporation, a copy of which has been filed as an exhibit to this Form 20-F .
 For purposes of this section only, reference to our or the company shall refer only to
Copa Holdings and references to Panamanians shall refer to those entities or natural persons that
are considered Panamanian nationals under the Panamanian Aviation Act, as it may be amended or
interpreted.
 Common Stock
   71




---



##### Table of Contents



Class A Shares
  
    
    a transformation of Copa Holdings into another corporate type;
 
    
    a merger, consolidation or spin-off of Copa Holdings;
 
    
    a change of corporate purpose;
 
    
    voluntarily delisting Class A shares from the NYSE;
 
    
    approving the nomination of Independent Directors nominated by our board of
directors Nominating and Corporate Governance Committee following our next annual
general shareholders meeting; and
 
    
    any amendment to the foregoing special voting provisions adversely affecting the
rights and privileges of the Class A shares.
    Class B Shares
  Class C Shares
   72




---



##### Table of Contents



Restrictions on Transfer of Common Stock; Conversion of Class B Shares
 
  Tag-along Rights
  Aviation Rights Protections
   73




---



##### Table of Contents




    
    authorize the issuance of additional Class B shares to Panamanians at a price
determined by the Independent Directors to reflect the current market value of such
 shares or
 
    
    authorize the issuance to Class B shareholders such number of Class C shares as the
Independent Directors Committee, or the Board of Directors if applicable, deems
necessary and with such other terms and conditions established by the Independent
Directors Committee that do not confer economic rights on the Class C shares.
 Dividends
 
 Shareholder Meetings
 Ordinary Meetings
  Extraordinary Meetings
  Vote required
  Notice and Location
    74




---



##### Table of Contents



Quorum
  Proxy Representation
 
 Other Shareholder Rights
    Listing
  Transfer Agent and Registrar
  Summary of Significant Differences between Shareholders Rights and Other Corporate Governance
Matters Under Panamanian Corporation Law and Delaware Corporation Law
   75




---



##### Table of Contents



Panama
    
    DelawareDirectorsConflict of Interest Transactions.
Transactions involving a Panamanian
corporation and an interested director or
officer are initially subject to the
approval of the board of directors.
    
    Conflict of Interest
Transactions. Transactions
involving a Delaware
corporation and an
interested director of that
corporation are generally
permitted if:At the next shareholders meeting,
shareholders will then have the right to
disapprove the board of directors decision
and to decide to take legal actions against
the directors or officers who voted in favor
of the transaction.
    
    (1) the material facts as
to the interested
directors relationship or
interest are disclosed and
a majority of disinterested
directors approve the
transaction;(2) the material facts are
disclosed as to the
interested directors
relationship or interest
and the stockholders
approve the transaction; or(3) the transaction is
fair to the corporation at
the time it is authorized
by the board of directors,
a committee of the board of
directors or the
stockholders.Terms. Panamanian law does not set limits on
the length of the terms that a director may
serve. Staggered terms are allowed but not
required.
    
    Terms. The Delaware General
Corporation Law generally
provides for a one-year
term for directors.
However, the directorships
may be divided into up to
three classes with up to
three-year terms, with the
years for each class
expiring in different
years, if permitted by the
articles of incorporation,
an initial by-law or a
by-law adopted by the
shareholders.Number. The board of directors must consist
of a minimum of three members, which could
be natural persons or legal entities.
    
    Number. The board of
directors must consist of a
minimum of one member.Authority to take Actions. In general, a
simple majority of the board of directors is
necessary and sufficient to take any action
on behalf of the board of directors.
    
    Authority to take Actions.
The articles of
incorporation or by-laws
can establish certain
actions that require the
approval of more than a
majority of directors.Shareholder Meetings and Voting RightsQuorum. The quorum for shareholder meetings
must be set by the articles of incorporation
or the by-laws. If the articles of
incorporation and the notice for a given
meeting so provide, if quorum is not met a
new meeting can be immediately called and
quorum shall consist of those present at
such new meeting.
    
    Quorum. For stock
corporations, the articles
of incorporation or bylaws
may specify the number to
constitute a quorum but in
no event shall a quorum
consist of less than
one-third of shares
entitled to vote at a
meeting. In the absence of
such specifications, a
majority of shares entitled
to vote shall constitute a
quorum.
  76




---



##### Table of Contents



Panama
    
    DelawareAction by Written Consent. Panamanian law
does not permit shareholder action without
formally calling a meeting.
    
    Action by Written Consent.
Unless otherwise provided
in the articles of
incorporation, any action
required or permitted to be
taken at any annual meeting
or special meeting of
stockholders of a
corporation may be taken
without a meeting, without
prior notice and without a
vote, if a consent or
consents in writing,
setting forth the action to
be so taken, is signed by
the holders of outstanding
shares having not less than
the minimum number of votes
that would be necessary to
authorize or take such
action at a meeting at
which all shares entitled
to vote thereon were
present and noted.Other Shareholder RightsShareholder Proposals. Shareholders
representing 5% of the issued and
outstanding capital of the corporation have
the right to require a judge to call a
general shareholders meeting and to propose
the matters for vote.
    
    Shareholder Proposals.
Delaware law does not
specifically grant
shareholders the right to
bring business before an
annual or special meeting.
If a Delaware corporation
is subject to the SECs
proxy rules, a shareholder
who owns at least $2,000 in
market value, or 1% of the
corporations securities
entitled to vote, may
propose a matter for a vote
at an annual or special
meeting in accordance with
those rules.Appraisal Rights. Shareholders of Panamanian
corporation do not have the right to demand
payment in cash of the judicially determined
fair value of their shares in connection
with a merger or consolidation involving the
corporation. Nevertheless, in a merger, the
majority of shareholders could approve the
total or partial distribution of cash,
instead of shares, of the surviving entity.
    
    Appraisal Rights. Delaware
law affords shareholders in
certain cases the right to
demand payment in cash of
the judicially-determined
fair value of their shares
in connection with a merger
or consolidation involving
their corporation. However,
no appraisal rights are
available if, among other
things and subject to
certain exceptions, such
shares were listed on a
national securities
exchange or designated
national market system or
such shares were held of
record by more than 2,000
holders.Shareholder Derivative Actions. Any
shareholder, with the consent of the
majority of the shareholders, can sue on
behalf of the corporation, the directors of
the corporation for a breach of their duties
of care and loyalty to the corporation or a
violation of the law, the articles of
incorporation or the by-laws.
    
    Shareholder Derivative
Actions. Subject to certain
requirements that a
shareholder make prior
demand on the board of
directors or have an excuse
not to make such demand, a
shareholder may bring a
derivative action on behalf
of the corporation to
enforce the rights of the
corporation against
officers, directors and
third parties. An
individual may also
commence a class action
suit on behalf of himself
and other
similarly-situated
stockholders if the
requirements for
maintaining a class action
under the Delaware General
Corporation Law have been
met. Subject to equitable
principles, a three-year
period of limitations
generally applies to such
shareholder suits against
officers and directors.Inspection of Corporate Records.
Shareholders representing at least 5% of the
issued and outstanding shares of the
corporation have the right to require a
judge to appoint an independent auditor to
examine the corporate accounting books, the
background of the companys incorporation or
its operation.
    
    Inspection of Corporate
Records. A shareholder may
inspect or obtain copies of
a corporations shareholder
list and its other books
and records for any purpose
reasonably related to a
persons interest as a
shareholder.
  77




---



##### Table of Contents



Panama
    
    DelawareAnti-takeover ProvisionsPanamanian corporations may include in their
articles of incorporation or by-laws
classified board and super-majority
provisions.
    
    Delaware corporations may
have a classified board,
super-majority voting and
shareholders rights plan.Panamanian corporation laws anti-takeover
provisions apply only to companies that are:
(1) registered with the CNV for a period of
six months before the public offering,
(2) have over 3,000 shareholders, and
(3) have a permanent office in Panama with
full time employees and investments in the
country for more than $1,000,000.
    
    Unless Delaware
corporations specifically
elect otherwise, Delaware
corporations may not enter
into a business
combination, including
mergers, sales and leases
of assets, issuances of
securities and similar
transactions, with an
interested stockholder,
or one that beneficially
owns 15% or more of a
corporations voting stock,
within three years of such
person becoming an
interested shareholder
unless:These provisions are triggered when a buyer
makes a public offer to acquire 5% or more
of any class of shares with a market value
of at least $5,000,000. In sum, the buyer
must deliver to the corporation a complete
and accurate statement that includes
(1) the name of the company, the number of
the shares that the buyer intends to acquire
and the purchase price;
(2) the identity and background of the
person acquiring the shares;
(3) the source and amount of the funds or
other goods that will be used to pay the
purchase price;
(4) the plans or project the buyer has once
it has acquired the control of the company;
(5) the number of shares of the company that
the buyer already has or is a beneficiary of
and those owned by any of its directors,
officers, subsidiaries, or partners or the
same, and any transactions made regarding
the shares in the last 60 days;
(6) contracts, agreements, business
relations or negotiations regarding
securities issued by the company in which
the buyer is a party;
(7) contract, agreements, business relations
or negotiations between the buyer and any
director, officer or beneficiary of the
securities; and
(8) any other significant information. This
declaration will be accompanied by, among
other things, a copy of the buyers
financial statements.
    
    (1) the transaction that
will cause the person to
become an interested
shareholder is approved by
the board of directors of
the target prior to the
transactions;
(2) after the completion
of the transaction in which
the person becomes an
interested shareholder, the
interested shareholder
holds at least 85% of the
voting stock of the
corporation not including
shares owned by persons who
are directors and also
officers of interested
shareholders and shares
owned by specified employee
benefit plans; or
(3) after the person
becomes an interested
shareholder, the business
combination is approved by
the board of directors of
the corporation and holders
of at least 66.67% of the
outstanding voting stock,
excluding shares held by
the interested shareholder.
  78




---



##### Table of Contents



Panama
    
    DelawareIf the board of directors believes that the
statement does not contain all required
information or that the statement is
inaccurate, the board of directors must send
the statement to the CNV within 45 days from
the buyers initial delivery of the
statement to the CNV. The CNV may then hold
a public hearing to determine if the
information is accurate and complete and if
the buyer has complied with the legal
requirements. The CNV may also start an
inquiry into the case, having the power to
decide whether or not the offer may be made.Regardless of the above, the board of
directors has the authority to submit the
offer to the consideration of the
shareholders. The board should only convene
a shareholders meeting when it deems the
statement delivered by the offeror to be
complete and accurate. If convened, the
shareholders meeting should take place
within the next 30 days. At the
shareholders meeting, two-thirds of the
holders of the issued and outstanding shares
of each class of shares of the corporation
with a right to vote must approve the offer
and the offer is to be executed within 60
days from the shareholders approval. If the
board decides not to convene the
shareholders meeting within 15 days
following the receipt of a complete and
accurate statement from the offeror, shares
may then be purchased. In all cases, the
purchase of shares can take place only if it
is not prohibited by an administrative or
judicial order or injunction.The law also establishes some actions or
recourses of the sellers against the buyer
in cases the offer is made in contravention
of the law.Previously Acquired RightsIn no event can the vote of the majority
shareholders deprive the shareholders of a
corporation of previously-acquired rights.
Panamanian jurisprudence and doctrine has
established that the majority shareholders
cannot amend the articles of incorporation
and deprive minority shareholders of
previously-acquired rights nor impose upon
them an agreement that is contrary to those
articles of incorporation.
    
    No comparable provisions
exist under Delaware law.Once a share is issued, the shareholders
become entitled to the rights established in
the articles of incorporation and such
rights cannot be taken away, diminished nor
extinguished without the express consent of
the shareholders entitled to such rights. If
by amending the articles of incorporation,
the rights granted to a class of
shareholders is somehow altered or modified
to their disadvantage, those shareholders
will need to approve the amendment
unanimously.
  79




---



##### Table of Contents



C. Material Contracts
 Commercial Agreements with UAL Airlines
  Alliance Agreement between UAL and Copa Airlines.
 Services Agreement between UAL and Copa Airlines.
 Frequent Flyer Participation Agreement between UAL and Copa Airlines.
 Trademark License Agreement between UAL and Copa Airlines.
 Aircraft General Terms Agreement between The Boeing Company and Copa Airlines
  Purchase Agreement between Empresa Brasileira de Aeronautica, S.A. and Copa Airlines
   80




---



##### Table of Contents



Purchase Agreement between Empresa Brasileira de Aeronautica, S.A. and Copa Holdings, S.A.
  D. Exchange Controls
  E. Taxation
 United States
  
    
    a bank;
 
    
    a dealer in securities or currencies;
 
    
    a financial institution;
 
    
    a regulated investment company;
 
    
    a real estate investment trust;
 
    
    an insurance company;
 
    
    a tax-exempt organization;
 
    
    a person holding our Class A shares as part of a hedging, integrated or conversion
transaction, a constructive sale or a straddle;
 
    
    a trader in securities that has elected the mark-to-market method of accounting for
your securities;
 
    
    a person liable for alternative minimum tax;
 
    
    a person who owns 10% or more of our voting stock;
 
    
    a partnership or other pass-through entity for United States federal income tax
purposes; or
 
    
    a person whose functional currency is not the United States dollar.
  If you are considering the purchase, ownership or disposition of our Class A shares, you
should consult your own tax advisors concerning the United States federal income tax consequences
to you in light of your particular situation as well as any consequences arising under the laws of
any other taxing jurisdiction.
  
    
    an individual citizen or resident of the United States;
  81




---



##### Table of Contents




    
    a corporation (or other entity treated as a corporation for United States federal
income tax purposes) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia;
 
    
    an estate the income of which is subject to United States federal income taxation
regardless of its source; or
 
    
    a trust if it (1) is subject to the primary supervision of a court within the United
States and one or more United States persons have the authority to control all
substantial decisions of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a United States person.
 Taxation of Dividends
    
    
    have held Class A shares for less than a specified minimum period during which you
are not protected from risk of loss, or
 
    
    are obligated to make payments related to the dividends,
    82




---



##### Table of Contents



Passive Foreign Investment Company
  Taxation of Capital Gains
  Information reporting and backup withholding
   Panamanian Taxation
  Taxation of dividends
   83




---



##### Table of Contents



Taxation of capital gains
  Other Panamanian taxes
  F. Dividends and Paying Agents
  G. Statement by Experts
  H. Documents on Display
   I. Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures about Market Risk
  Aircraft Fuel.
 Interest.
  84




---



##### Table of Contents



Foreign Currencies.
 2010 Revenues and Expenses Breakdown by Currency
 Revenue
    
    
    ExpenseArgentinean Peso
    
    
    6.5
    %
    
    
    2.0
    %Brazilian Real
    
    
    8.3
    %
    
    
    4.2
    %Chilean Peso
    
    
    2.9
    %
    
    
    1.1
    %Colombian Peso
    
    
    15.7
    %
    
    
    11.5
    %Costa Rican Colon
    
    
    2.1
    %
    
    
    0.9
    %Mexican Peso
    
    
    3.2
    %
    
    
    1.6
    %U.S. Dollar
    
    
    42.0
    %
    
    
    66.7
    %Venezuelan Bolivar Fuerte
    
    
    11.1
    %
    
    
    8.5
    %Other(1)
    
    
    8.1
    %
    
    
    3.6
    %
 
 (1)
    
    Dominican Peso, European Euro, Guatemalan Quetzal, Jamaican Dollar,
Honduran Lempira, Haitian Gourde, Uruguayan Peso, Bolivian Boliviano,
Trinidad and Tobago Dollar 
 Item 12. Description of Securities Other than Equity Securities
  Part II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 Disclosure controls and procedures
   85




---



##### Table of Contents



Managements Report on Internal Control over Financial Reporting
     Changes in internal control
  Report of Independent Registered Public Accounting Firm
 The Board of Directors and
Shareholders COPA HOLDINGS, S.A. We have audited Copa Holdings,
S.A.(the
“Company”) and its subsidiaries’ internal control over
financial reporting as of December 31, 2010, based on criteria established
in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). Copa
Holdings, S.A. and its subsidiaries’ management is responsible for
maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s report. Our responsibility is
to express an opinion on the company’s internal control over financial
reporting based on our audit. We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provide a reasonable basis for our opinion. A company’s internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. In our opinion, Copa Holdings, S.A.
and its subsidiaries maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2010, based on the
COSO criteria. We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated statements of financial position of Copa Holdings,
S.A. and its subsidiaries as of December 31, 2010 and 2009 and January 1,
2009 and related statements of income, comprehensive income, changes in equity
and cash flows for each of the two years in the period ended December 31,
2010 and our report dated May 13, 2011 expressed an unqualified opinion
thereon. /s/ Ernst and Young May 13, 2011 
Panama City,
Republic of Panama 
 Item 16. Reserved
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 www.copaair.com
  86




---



##### Table of Contents



Item 16C. Principal Accountant Fees and Services
  2009
    
    
    2010Audit Fees
    
    $
    715,000
    
    
    $
    662,000Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    538,991
    
    
    
    205,000Total
    
    $
    1,253,991
    
    
    $
    867,000
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Pre-Approval Policies and Procedures
 de minimis de minimis
 
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  
 Item 16F. Changes in Registrants Certifying Accountant
  
 Item 16G. Corporate Governance
 Comisión Nacional de Valores
  87




---



##### Table of Contents



NYSE Standards
    
    Our Corporate Governance PracticeDirector Independence.
Majority of board of directors must be
independent. §303A.01
    
    Panamanian corporate governance
standards recommend that one in
every five directors should be an
independent director. The
criteria for determining
independence under the Panamanian
corporate governance standards
differs from the NYSE rules. In
Panama, a director would be
considered independent as long as
the director does not directly or
indirectly own 5% or more of the
issued and outstanding voting
shares of the company, is not
involved in the daily management
of the company and is not a
spouse or related to the second
degree by blood or marriage to
the persons named above.Our Articles of Incorporation
require us to have three
independent directors as defined
under the NYSE rules.Executive Sessions.Non-management
directors must meet regularly in
executive sessions without management.
Independent directors should meet alone
in an executive session at least once a
year. §303A.03
    
    There are no mandatory
requirements under Panamanian law
that a company should hold, and
we currently do not hold, such
executive sessions.Nominating/corporate governance
committee.Nominating/corporate
governance committee of independent
directors is required. The committee
must have a charter specifying the
purpose, duties and evaluation
procedures of the committee. §303A.04
    
    Panamanian corporate governance
standards recommend that
registered companies have a
nominating committee composed of
three members of the board of
directors, at least one of which
should be an independent
director, plus the chief
executive officer and the chief
financial officer. In Panama, the
majority of public corporations
do not have a nominating or
corporate governance committee.
Our Articles of Incorporation
require that we maintain a
Nominating and Corporate
Governance Committee with at
least one independent director
until the first shareholders
meeting to elect directors after
such time as the Class A shares
are entitled to full voting
rights.Compensation committee.Compensation
committee of independent directors is
required, which must approve executive
officer compensation. The committee must
have a charter specifying the purpose,
duties and evaluation procedures of the
committee. §303A.05
    
    Panamanian corporate governance
standards recommend that the
compensation of executives and
directors be overseen by the
nominating committee but do not
otherwise address the need for a
compensation committee. 
While we maintain a compensation
committee that operates under a
charter as described by the NYSE
governance standards, currently
only one of the members of that
committee is independent.Equity compensation plans.Equity
compensation plans require shareholder
approval, subject to limited exemptions.
    
    Under Panamanian law, shareholder
approval is not required for
equity compensation plans.
  88




---



##### Table of Contents



NYSE Standards
    
    Our Corporate Governance PracticeCode of Ethics.Corporate
governance guidelines and a code of
business conduct and ethics is required,
with disclosure of any waiver for
directors or executive officers.
§303A.10
    
    Panamanian corporate governance
standards do not require the
adoption of specific guidelines
as contemplated by the NYSE
standards, although they do
require that companies disclose
differences between their
practices and a list of specified
practices recommended by the CNV. 
We have not adopted a set of
corporate governance guidelines
as contemplated by the NYSE,
although we will be required to
comply with the disclosure
requirement of the CNV.Panamanian corporate governance
standards recommend that
registered companies adopt a code
of ethics covering such topics as
its ethical and moral principles,
how to address conflicts of
interest, the appropriate use of
resources, obligations to inform
of acts of corruption and
mechanism to enforce the
compliance with established rules
of conduct.
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 1.1
    **
    
    English translation of the Articles of Incorporation (Pacto Social) of the Registrant2.1
    *
    
    Form of Second Amended and Restated Shareholders Agreement among Copa Holdings, S.A., Corporación
de Inversiones Aéreas, S.A. and Continental Airlines, Inc.2.2
    *
    
    Form of Amended and Restated Registration Rights Agreement among Copa Holdings, S.A., Corporación
de Inversiones Aéreas, S.A. and Continental Airlines, Inc.10.1
    **
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank and Compañía
Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904710.2
    **
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement, dated October 1,
1998, between First Security Bank and Compañía Panameña de Aviación, S.A., in respect of One Boeing
Model 737-71Q Aircraft, Manufacturers Serial No. 2904710.3
    **
    
    Aircraft Lease Amendment Agreement dated as of May 21, 2004 to Aircraft Lease Agreement, dated
October 1, 1998, between First Security Bank and Compañía Panameña de Aviación, S.A., in respect of
Boeing Model 737-71Q Aircraft, Serial No. 2904710.4
    **
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank and Compañía
Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904810.5
    **
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement, dated as of
October 1, 1998, between First Security Bank and Compañía Panameña de Aviación, S.A., in respect of
Boeing Model 737-71Q Aircraft, Serial No. 2904810.6
    **
    
    Aircraft Lease Amendment Agreement dated as of May 21, 2003 to Aircraft Lease Agreement, dated
October 1, 1998, between First Security Bank and Compañía Panameña de Aviación, S.A., in respect of
Boeing Model 737-71Q Aircraft, Serial No. 2904810.7
    **
    
    Aircraft Lease Agreement, dated as of November 18, 1998, between Aviation Financial Services Inc.
and Compañía Panameña de Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 28607
  89




---



##### Table of Contents



10.8
    **
    
    Letter Agreement No. 1 dated as of November 18, 1998 to Aircraft Lease Agreement, dated November
18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing
Model 737-700 Aircraft, Serial No. 2860710.9
    **
    
    Letter Agreement No. 2 dated as of March 8, 1999 to Aircraft Lease Agreement, dated November 18,
1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing
Model 737-700 Aircraft, Serial No. 2860710.10
    **
    
    Lease Extension and Amendment Agreement dated as of April 30, 2003, to Aircraft Lease Agreement,
dated November 18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de
Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 2860710.11
    **
    
    Aircraft Lease Agreement, dated as of November 18, 1998, between Aviation Financial Services Inc.
and Compañía Panameña de Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 3004910.12
    **
    
    Letter Agreement No. 1 dated as of November 18, 1998 to Aircraft Lease Agreement, dated November
18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing
Model 737-700 Aircraft, Serial No. 3004910.13
    **
    
    Letter Agreement No. 2 dated as of March 8, 1999 to Aircraft Lease Agreement, dated November 18,
1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing
Model 737-700 Aircraft, Serial No. 3004910.14
    **
    
    Lease Extension and Amendment Agreement dated as of April 30, 2003, to Aircraft Lease Agreement,
dated November 18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de
Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 3004910.15
    **
    
    Aircraft Lease Agreement, dated as of November 30, 2003, between International Lease Finance
Corporation and Compañía Panameña de Aviación, S.A., New B737-700 or 800, Serial No. 3067610.16
    **
    
    Aircraft Lease Agreement, dated as of March 4, 2004, between International Lease Finance
Corporation and Compañía Panameña de Aviación, S.A., New B737-700 or 800, Serial No. 3280010.17
    **
    
    Aircraft Lease Agreement dated as of December 23, 2004, between Wells Fargo Bank Northwest, N.A.
and Compañía Panameña de Aviación, S.A., in respect of Boeing B737-800 Aircraft, Serial No. 2967010.18
    **
    
    Embraer 190LR Purchase Agreement DCT-006/2003 dated as of May 2003 between Embraer Empresa
Brasileira de Aeronáutica S.A. and Regional Aircraft Holdings Ltd.10.19
    **
    
    Letter Agreement DCT-007/2003 between EmbraerEmpresa Brasileira de Aeronáutica S.A. and Regional
Aircraft Holdings Ltd., relating to Purchase Agreement DCT-006/200310.20
    **
    
    Letter Agreement DCT-008/2003 between EmbraerEmpresa Brasileira de Aeronáutica S.A. and Regional
Aircraft Holdings Ltd., relating to Purchase Agreement DCT-006/200310.21
    *
    
    Embraer 190 Purchase Agreement COM 0028-06 dated February 2006 between EmbraerEmpresa Brasileira
de Aeronáutica S.A. and Copa Holdings, S.A. relating to Embraer 190LR aircraft10.22
    *
    
    Letter Agreement COM 0029-06 to the Embraer Agreement dated February 2006 between EmbraerEmpresa
Brasileira de Aeronáutica S.A. and Copa Holdings, S.A. relating to Embraer 190LR aircraft10.23
    **
    
    Aircraft General Terms Agreement, dated November 25, 1998, between The Boeing Company and Copa
Holdings, S.A.10.24
    **
    
    Purchase Agreement Number 2191, dated November 25, 1998, between The Boeing Company and Copa
Holdings, S.A., Inc. relating to Boeing Model 737-7V3 & 737-8V3 Aircraft10.25
    **
    
    Supplemental Agreement No. 1 dated as of June 29, 2001 to Purchase Agreement Number 2191 between
The Boeing Company and Copa Holdings, S.A.10.26
    **
    
    Supplemental Agreement No. 2 dated as of December 21, 2001 to Purchase Agreement Number 2191
between The Boeing Company and Copa Holdings, S.A.
  90




---



##### Table of Contents



10.27
    **
    
    Supplemental Agreement No. 3 dated as of June 14, 2002 to Purchase Agreement Number 2191 between
The Boeing Company and Copa Holdings, S.A.10.28
    **
    
    Supplemental Agreement No. 4 dated as of December 20, 2002 to Purchase Agreement Number 2191
between The Boeing Company and Copa Holdings, S.A.10.29
    **
    
    Supplemental Agreement No. 5 dated as of October 31, 2003 to Purchase Agreement Number 2191 between
The Boeing Company and Copa Holdings, S.A.10.30
    **
    
    Supplemental Agreement No. 6 dated as of September 9, 2004 to Purchase Agreement Number 2191
between The Boeing Company and Copa Holdings, S.A.10.31
    **
    
    Supplemental Agreement No. 7 dated as of December 9, 2004 to Purchase Agreement Number 2191 between
The Boeing Company and Copa Holdings, S.A.10.32
    **
    
    Supplemental Agreement No. 8 dated as of April 15, 2005 to Purchase Agreement Number 2191 between
The Boeing Company and Copa Holdings, S.A.10.33
    *
    
    Supplemental Agreement No. 9 dated as of March 16, 2006 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.34
    *
    
    Supplemental Agreement No. 10 dated as of May 8, 2006 to the Boeing Purchase Agreement Number 2191
dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.35
    **
    
    Maintenance Cost per Hour Engine Service Agreement, dated March 5, 2003, between G.E. Engine
Services, Inc. and Copa Holdings, S.A.10.36
    **
    
    English translation of Aviation Fuel Supply Agreement, dated July 18, 2005, between Petróleos
Delta, S.A. and Compañía Panameña de Aviación, S.A.10.37
    **
    
    Form of Guaranteed Loan Agreement10.38
    **
    
    Form of Amended and Restated Alliance Agreement between Continental Airlines, Inc. and Compañía
Panameña de Aviación, S.A.10.39
    **
    
    Form of Amended and Restated Services Agreement between Continental Airlines, Inc. and Compañía
Panameña de Aviación, S.A.10.40
    **
    
    Form of Amended and Restated Frequent Flyer Program Participation Agreement10.41
    **
    
    Form of Copa Holdings, S.A. 2005 Stock Incentive Plan10.42
    **
    
    Form of Copa Holdings, S.A. Restricted Stock Award Agreement10.43
    **
    
    Form of Indemnification Agreement with the Registrants directors10.44
    
    
    Supplemental Agreement No. 11 dated as of August 30, 2006 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.45
    
    
    Supplemental Agreement No. 12 dated as of February 26, 2007 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.46
    
    
    Supplemental Agreement No. 13 dated as of April 23, 2007 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.47
    
    
    Supplemental Agreement No. 14 dated as of August 31, 2007 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.48
    
    
    Supplemental Agreement No. 15 dated as of February 21, 2008 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.49
    
    
    Supplemental Agreement No. 16 dated as of June 30, 2008 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.
  91




---



##### Table of Contents



10.50
    
    
    Supplemental Agreement No. 17 dated as of December 15, 2008 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A.10.51
    
    
    Supplemental Agreement No. 18 dated as of July 15, 2009 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A10.52
    
    
    Supplemental Agreement No. 19 dated as of August 31, 2009 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A10.53
    
    
    Supplemental Agreement No. 20 dated as of November 19, 2009 to the Boeing Purchase Agreement
Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A10.54
    
    
    Supplemental Agreement No. 21 dated as of May 28, 2010 to the Boeing Purchase Agreement Number 2191
dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A10.55
    
    
    Supplemental Agreement No. 22 dated as of September 24, 2010 to the Boeing Purchase Agreement
Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A10.56
    
    
    Supplemental Agreement No. 23 dated as of October, 2010 to the Boeing Purchase Agreement Number
2191 dated November 25, 1998 between the Boeing Company and Copa Holdings, S.A12.1
    
    
    Certification of the Chief Executive Officer, pursuant to Rules 13a-14 and 15d-14 under the
Securities Exchange Act of 1934.12.2
    
    
    Certification of the Chief Financial Officer, pursuant to Rules 13a-14 and 15d-14 under the
Securities Exchange Act of 1934.13.1
    
    
    Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.13.2
    
    
    Certification of the Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.21.1
    **
    
    Subsidiaries of the Registrant
 *
    
    Previously filed with the SEC as an exhibit and incorporated by reference from
our Registration Statement on Form F-1, filed June 15, 2006, File No.
333-135031.**
    
    Previously filed with the SEC as an exhibit and incorporated by reference from
our Registration Statement on Form F-1, filed November 28, 2005, as amended on
December 1, 2005 and December 13, 2005, File No. 333-129967.
    
    The Registrant was granted confidential treatment for portions of this exhibit.
    
    The Registrant has requested confidential treatment for portions of this exhibit.  92




---



##### Table of Contents



SIGNATURES
  COPA HOLDINGS, S.A.By:
    
    /s/ Pedro Heilbron

Name: Pedro HeilbronTitle:   Chief Executive OfficerDated: May 13, 2011
  93




---



##### Table of Contents



Copa Holdings, S. A. and Subsidiaries
 Year ended December 31, 2010
with Independent Auditors Report




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
Contents
 PagesIndependent Auditors Report
    
    
    F-2Consolidated Statements of Financial Position
    
    
    F-3Consolidated Statements of Income
    
    
    F-5Consolidated Statements of Comprehensive Income
    
    
    F-6Consolidated Statements of Changes in Shareholders Equity
    
    
    F-7Consolidated Statements of Cash Flows
    
    
    F-8Notes to the Consolidated Financial Statements
    
    
    F-91. Corporate Information
    
    
    F-92. Summary of Significant Accounting Policies
    
    
    F-102.1 Basis of presentation
    
    
    F-102.2 New and Amended Accounting Pronouncements and Interpretations
    
    
    F-122.3 Principles of Consolidation
    
    
    F-122.4 Significant Accounting Judgments, Estimates and Assumptions
    
    
    F-122.5 Cash and Cash Equivalents
    
    
    F-132.6 Financial Instruments
    
    
    F-142.7 Impairment
    
    
    F-152.8 Derecognition
    
    
    F-172.9 Expendable Parts and Supplies
    
    
    F-182.10 Property, Plant and Equipment
    
    
    F-182.11 Goodwill
    
    
    F-192.12 Intangible Assets
    
    
    F-192.13 Maintenance Deposit
    
    
    F-212.14 Loans Payable
    
    
    F-212.15 Other Financial Liabilities
    
    
    F-222.16 Provisions
    
    
    F-222.17 Revenue Recognition
    
    
    F-222.18 Passenger Traffic Commissions
    
    
    F-232.19 Foreign Currency Transactions and Translation
    
    
    F-242.20 Leases
    
    
    F-242.21 Taxes
    
    
    F-252.22 Derivative Financial Instruments and Hedging Activities
    
    
    F-262.23 Monetary Unit
    
    
    F-26




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
Contents
 Pages3. Application of IFRS 1
    
    
    F-274. Cash and Cash Equivalents
    
    
    F-305. Investments
    
    
    F-316. Accounts Receivable
    
    
    F-317. Expendable Parts and Supplies
    
    
    F-338. Prepaid Expenses
    
    
    F-339. Other Currents Assets
    
    
    F-3410. Other Assets
    
    
    F-3411. Property, Plant and Equipment, Net
    
    
    F-3512. Purchase Deposits for Flight Equipment
    
    
    F-3713. Intangible Assets, Net
    
    
    F-3714. Loans Payable
    
    
    F-3915. Accrued Expenses Payable
    
    
    F-4116. Other Current Liabilities
    
    
    F-4217. Other Long-Term Liabilities
    
    
    F-4218. Accounts and Transactions with Related Parties
    
    
    F-4319. Exchange Rate Difference
    
    
    F-4620. Operating Leases
    
    
    F-4721. Income Taxes
    
    
    F-4822. Share-Based Payments
    
    
    F-5023. Earnings per Share
    
    
    F-5224. Dividends Paid
    
    
    F-5325. Commitments and Contingencies
    
    
    F-5326. Objectives and Policies for Managing Financial Risk
    
    
    F-5627. Special Fleet Charges
    
    
    F-6328. Subsequent Events
    
    
    F-6329. Segment Reporting
    
    
    F-64




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM The Board of Directors and
Shareholders COPA HOLDINGS, S.A. We have audited the accompanying
consolidated statements of financial position of Copa Holdings, S.A. and its
subsidiaries as of December 31, 2010 and 2009 and January 1, 2009,
and the related consolidated statements of income, comprehensive income,
changes in equity and cash flows for each of the two years in the period ended
December 31, 2010. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion. In our opinion, the financial
statements referred to above present fairly, in all material respects, the
consolidated financial position of Copa Holdings, S.A. and its subsidiaries at
December 31, 2010 and 2009 and January 1, 2009, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 2010, in conformity with International
Financial Reporting Standards, as issued by the International Accounting
Standards Board. We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the effectiveness of Company’s internal control over financial
reporting as of December 31, 2010, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated May 13, 2011
expressed an unqualified opinion thereon. /s/ Ernst and Young May 13, 2011 
Panama City,
Republic of Panama  F-2




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (In US$ thousands)
 As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,Notes
    
    2010
    
    
    2009
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    4
    
    $
    207,690
    
    
    $
    262,656
    
    
    $
    220,808Short-term investments
    
    5
    
    
    194,913
    
    
    
    89,412
    
    
    
    176,018Total cash, cash equivalents and
short-term investments
    
    
    
    
    402,603
    
    
    
    352,068
    
    
    
    396,826Accounts receivable
    
    6
    
    
    88,774
    
    
    
    76,392
    
    
    
    70,609Accounts receivable from related parties
    
    18
    
    
    613
    
    
    
    4,399
    
    
    
    4,592Expendable parts and supplies
    
    7
    
    
    45,982
    
    
    
    27,098
    
    
    
    22,049Prepaid expenses
    
    8
    
    
    31,789
    
    
    
    30,458
    
    
    
    24,470Other current assets
    
    9
    
    
    24,622
    
    
    
    12,607
    
    
    
    4,571Total Current Assets
    
    
    
    
    594,383
    
    
    
    503,022
    
    
    
    523,117Investments
    
    5
    
    
    6,224
    
    
    
    6,407
    
    
    
    11,145Property, Plant and Equipment:Flight equipment
    
    11
    
    
    1,782,070
    
    
    
    1,451,312
    
    
    
    1,375,042Other
    
    
    
    
    59,426
    
    
    
    45,126
    
    
    
    41,4151,841,496
    
    
    
    1,496,438
    
    
    
    1,416,457Less: Accumulated depreciation
    
    11
    
    
    (274,940
    )
    
    
    (214,963
    )
    
    
    (168,802
    )1,566,556
    
    
    
    1,281,475
    
    
    
    1,247,655Purchase deposits for flight equipment
    
    12
    
    
    205,972
    
    
    
    198,697
    
    
    
    84,861Total Property and Equipment
    
    
    
    
    1,772,528
    
    
    
    1,480,172
    
    
    
    1,332,516Other Assets:Prepaid pension asset
    
    
    
    
    8,157
    
    
    
    6,831
    
    
    
    5,594Goodwill
    
    13
    
    
    25,475
    
    
    
    23,852
    
    
    
    21,732Other intangible assets
    
    13
    
    
    43,465
    
    
    
    42,593
    
    
    
    38,057Other assets
    
    10
    
    
    105,765
    
    
    
    98,331
    
    
    
    73,950Total Other Assets
    
    
    
    
    182,862
    
    
    
    171,607
    
    
    
    139,333Total Assets
    
    
    
    $
    2,555,997
    
    
    $
    2,161,208
    
    
    $
    2,006,111
 The accompanying notes are an integral part of these consolidated financial
statements.
  F-3




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
 (In US$ thousands)
 As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,Notes
    
    
    2010
    
    
    2009
    
    
    2009LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt
    
    
    14
    
    
    $
    100,860
    
    
    $
    94,550
    
    
    
    115,833Accounts payable
    
    
    
    
    
    
    66,005
    
    
    
    50,884
    
    
    
    54,066Accounts payable to related parties
    
    
    18
    
    
    
    13,895
    
    
    
    14,103
    
    
    
    11,510Air traffic liability
    
    
    
    
    
    
    208,735
    
    
    
    180,957
    
    
    
    178,818Taxes and interest payable
    
    
    
    
    
    
    49,852
    
    
    
    43,227
    
    
    
    37,194Accrued expenses payable
    
    
    15
    
    
    
    47,614
    
    
    
    49,058
    
    
    
    40,642Other current liabilities
    
    
    16
    
    
    
    10,934
    
    
    
    10,837
    
    
    
    60,349Total Current Liabilities
    
    
    
    
    
    
    497,895
    
    
    
    443,616
    
    
    
    498,412Non-Current Liabilities:Long-term debt
    
    
    14
    
    
    
    888,681
    
    
    
    750,971
    
    
    
    800,196Post employment benefits liability
    
    
    
    
    
    
    5,733
    
    
    
    5,285
    
    
    
    4,606Other long-term liabilities
    
    
    17
    
    
    
    33,703
    
    
    
    26,283
    
    
    
    18,176Deferred tax liabilities
    
    
    21
    
    
    
    20,016
    
    
    
    23,920
    
    
    
    15,377Total Non-Current Liabilities
    
    
    
    
    
    
    948,133
    
    
    
    806,459
    
    
    
    838,355Total Liabilities
    
    
    
    
    
    
    1,446,028
    
    
    
    1,250,075
    
    
    
    1,336,767Shareholders Equity:Class A common stock - 33,025,284 (2009 -
31,136,619) shares issued,
32,659,557 (2009 - 30,566,853) outstanding
    
    
    
    
    
    
    22,291
    
    
    
    20,864
    
    
    
    20,761Class B common stock - 10,938,125 (2009 -
12,778,125) shares issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and outstanding, no par value
    
    
    
    
    
    
    7,466
    
    
    
    8,722
    
    
    
    8,722Additional paid in capital
    
    
    
    
    
    
    26,110
    
    
    
    22,196
    
    
    
    17,613Retained earnings
    
    
    
    
    
    
    1,051,692
    
    
    
    858,543
    
    
    
    625,711Accumulated other comprehensive income (loss)
    
    
    
    
    
    
    2,410
    
    
    
    808
    
    
    
    (3,463
    )Total Shareholders Equity
    
    
    
    
    
    
    1,109,969
    
    
    
    911,133
    
    
    
    669,344Total Liabilities and Shareholders Equity
    
    
    
    
    
    $
    2,555,997
    
    
    $
    2,161,208
    
    
    $
    2,006,111
 The accompanying notes are an integral part of these consolidated financial
statements.
  F-4




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (In US$ thousands)
 Year Ended December 31,Notes
    
    2010
    
    
    2009Operating revenue:Passenger revenue
    
    
    
    $
    1,338,581
    
    
    $
    1,189,706Cargo, mail and other
    
    
    
    
    76,225
    
    
    
    66,3701,414,806
    
    
    
    1,256,076Operating expenses:Aircraft fuel
    
    
    
    
    354,427
    
    
    
    300,816Salaries and benefits
    
    22
    
    
    178,845
    
    
    
    157,045Passenger servicing
    
    
    
    
    133,718
    
    
    
    125,150Commissions
    
    
    
    
    45,331
    
    
    
    47,457Maintenance, material and
repairs
    
    
    
    
    62,229
    
    
    
    55,720Reservations and sales
    
    
    
    
    58,813
    
    
    
    56,280Aircraft rentals
    
    
    
    
    46,334
    
    
    
    46,538Flight operations
    
    
    
    
    70,648
    
    
    
    60,873Depreciation and amortization
    
    11,13
    
    
    62,962
    
    
    
    50,876Landing fees and other rentals
    
    
    
    
    40,320
    
    
    
    33,628Other
    
    
    
    
    71,531
    
    
    
    62,190Special fleet charges
    
    27
    
    
    
    
    
    
    19,4171,125,158
    
    
    
    1,015,990Operating income
    
    
    
    
    289,648
    
    
    
    240,086Non-operating expense (income):Interest costs
    
    
    
    
    29,981
    
    
    
    32,938Interest capitalized
    
    
    
    
    
    
    
    
    (693
    )Interest income
    
    
    
    
    (4,759
    )
    
    
    (9,185
    )Exchange rate difference
    
    19
    
    
    20,625
    
    
    
    (208
    )Mark to market fuel derivative
    
    
    
    
    (11,721
    )
    
    
    (58,040
    )Other, net
    
    
    
    
    (4,501
    )
    
    
    (707
    )29,625
    
    
    
    (35,895
    )Income before income taxes
    
    
    
    
    260,023
    
    
    
    275,981Provision for income taxes
    
    21
    
    
    18,966
    
    
    
    26,894Net income
    
    
    
    $
    241,057
    
    
    $
    249,087Earnings per share (Basic and
diluted)
    
    23
    
    $
    5.48
    
    
    $
    5.67
 The accompanying notes are an integral part of these consolidated financial statements.
  F-5




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (In US$ thousands)
 Year Ended December 31,2010
    
    
    2009Net income
    
    $
    241,057
    
    
    $
    249,087Other income and expense credited/charge to net
equity, net of taxNet change in fair value of derivative instruments
    
    
    (1,301
    )
    
    
    1,509Exchange effect on intercompany long term balance
    
    
    (1,062
    )
    
    
    (1,486
    )Foreign currency translation
    
    
    3,965
    
    
    
    4,248Other comprehensive income for the year
    
    
    1,602
    
    
    
    4,271Total comprehensive income for the year
    
    $
    242,659
    
    
    $
    253,358
 The accompanying notes are an integral part of these consolidated financial statements.
  F-6




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 (In US$ thousands)
 AccumulatedCommon Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other(Non-par value)
    
    
    Issued Capital
    
    
    Paid in
    
    
    Retained
    
    
    ComprehensiveNotes
    
    Class A
    
    
    Class B
    
    
    Class A
    
    
    Class B
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalAt January 1, 2009
    
    
    
    
    30,416,441
    
    
    
    12,778,125
    
    
    $
    20,761
    
    
    $
    8,722
    
    
    $
    17,613
    
    
    $
    625,711
    
    
    $
    (3,463
    )
    
    $
    669,344Issuance of stock
    
    
    
    
    150,412
    
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    (103
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,087
    
    
    
    4,271
    
    
    
    253,358Restricted stock plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,686
    
    
    
    
    
    
    
    
    
    
    
    4,686Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,255
    )
    
    
    
    
    
    
    (16,255
    )At December 31, 2009
    
    
    
    
    30,566,853
    
    
    
    12,778,125
    
    
    $
    20,864
    
    
    $
    8,722
    
    
    $
    22,196
    
    
    $
    858,543
    
    
    $
    808
    
    
    $
    911,133Issuance of stock
    
    
    
    
    2,092,704
    
    
    
    (1,840,000
    )
    
    
    1,427
    
    
    
    (1,256
    )
    
    
    (171
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241,057
    
    
    
    1,602
    
    
    
    242,659Restricted stock plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,085
    
    
    
    
    
    
    
    
    
    
    
    4,085Dividends declared
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,908
    )
    
    
    
    
    
    
    (47,908
    )At December 31, 2010
    
    
    
    
    32,659,557
    
    
    
    10,938,125
    
    
    $
    22,291
    
    
    $
    7,466
    
    
    $
    26,110
    
    
    $
    1,051,692
    
    
    $
    2,410
    
    
    $
    1,109,969
 The accompanying notes are an integral part of these consolidated financial statements.
  F-7




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In US$ thousands)
 Years Ended December 31,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    241,057
    
    
    $
    249,087Adjustments for:Provision for income tax
    
    
    18,966
    
    
    
    26,894Interest cost
    
    
    29,981
    
    
    
    32,938Interest income
    
    
    (4,759
    )
    
    
    (9,185
    )Depreciation and amortization
    
    
    62,962
    
    
    
    50,876Gain on sale of property and equipment
    
    
    (20
    )
    
    
    Special fleet charges
    
    
    
    
    
    
    8,923Provision for impairment
    
    
    (540
    )
    
    
    55Allowance for obsolescence
    
    
    36
    
    
    
    25Derivative instruments mark to market
    
    
    (13,555
    )
    
    
    (59,010
    )Stock compensation
    
    
    4,032
    
    
    
    4,686Impairment to the brand name
    
    
    1,500
    
    
    
    Currency translation adjustment
    
    
    62
    
    
    
    Income tax paid
    
    
    (13,041
    )
    
    
    (13,843
    )Interest paid
    
    
    (26,249
    )
    
    
    (32,076
    )Interest received
    
    
    3,319
    
    
    
    8,304Changes in:Accounts receivable
    
    
    (10,208
    )
    
    
    (4,280
    )Accounts receivable from related parties
    
    
    4,064
    
    
    
    524Other current assets
    
    
    (32,448
    )
    
    
    (12,997
    )Restricted cash
    
    
    182
    
    
    
    40,934Other assets
    
    
    (9,197
    )
    
    
    (23,002
    )Accounts payable
    
    
    13,207
    
    
    
    (3,666
    )Accounts payable to related parties
    
    
    (1,832
    )
    
    
    7,444Air traffic liability
    
    
    27,106
    
    
    
    1,039Other liabilities
    
    
    (1,824
    )
    
    
    17,629Net cash provided by operating activities
    
    
    292,801
    
    
    
    291,299Cash flows from investing activitiesAcquisition of investments
    
    
    (340,268
    )
    
    
    (217,905
    )Proceeds from redemption of investments
    
    
    234,768
    
    
    
    268,314Advance payments on aircraft purchase contracts
    
    
    (157,292
    )
    
    
    (151,676
    )Acquisition of property and equipment
    
    
    (191,437
    )
    
    
    (59,857
    )Disposal of property and equipment
    
    
    8,797
    
    
    
    810Net cash flows used in investing activities
    
    
    (445,432
    )
    
    
    (160,314
    )Cash flows from financing activitiesProceeds from loans and borrowings
    
    
    282,072
    
    
    
    103,780Payments on loans and borrowings
    
    
    (138,697
    )
    
    
    (175,374
    )Paid-in capital
    
    
    53
    
    
    
    Dividends declared and paid
    
    
    (47,908
    )
    
    
    (16,255
    )Net cash flows provided (used) in financing activities
    
    
    95,520
    
    
    
    (87,849
    )Effect of exchange rate change on cash
    
    
    2,145
    
    
    
    (1,288
    )Net (decrease) increase in cash and cash equivalents
    
    
    (54,966
    )
    
    
    41,848Cash and cash equivalents at January 1st
    
    
    262,656
    
    
    
    220,808Cash and cash equivalents at December 31
    
    $
    207,690
    
    
    $
    262,656
 The accompanying notes are an integral part of these consolidated financial statements.
  F-8




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 1. Corporate Information
       F-9




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 1. Corporate Information (continued)
    
 2. Summary of Significant Accounting Policies
  
 2.1 Basis of Presentation
 First-time Adoption of International Financial Reporting Standards
     F-10




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 Standards issued but not yet effective
  
    
    IAS 24 Related Party Disclosures (Amendment)The amended standard is effective for
annual periods beginning on or after 1 January 2011. It clarified the definition of a related
party to simplify the identification of such relationships and to eliminate inconsistencies in
its application. The revised standard introduces a partial exemption of disclosure
requirements for government related entities. The Company does not expect any impact on its
financial position or performance. Early adoption is permitted for either the partial
exemption for government-related entities or for the entire standard. The Company has not
early adopted this standard.
 
    
    IAS 32 Financial Instruments: Presentation  Classification of Rights Issues
(Amendment)The amendment to IAS 32 is effective for annual periods beginning on or after 1
February 2010 and amended the definition of a financial liability in order to classify rights
issues (and certain options or warrants) as equity instruments in cases where such rights are
given pro rata to all of the existing owners of the same class of an entitys non-derivative
equity instruments, or to acquire a fixed number of the entitys own equity instruments for a
fixed amount in any currency. This amendment will have no impact on the Company after initial
application.
 
    
    IFRS 9 Financial Instruments: Classification and MeasurementIFRS 9 as issued reflects
the first two phases of the IASBs work on the replacement of IAS 39 and applies to
classification and measurement of financial assets and financial liabilities as defined in IAS
39. The standard is effective for annual periods beginning on or after 1 January 2013. In
subsequent phases, the IASB will address hedge accounting and derecognition. The completion of
this project is expected in early 2011. The adoption of the first two phases of IFRS 9 will
have an effect on the classification and measurement of the Companys financial assets and
financial liabilities. The Company will quantify the effect in conjunction with the other
phases, when issued, to present a comprehensive picture.
 
    
    IFRIC 14 Prepayment of a minimum funding requirement (Amendment)The amendment to IFRIC
14 is effective for annual periods beginning on or after 1 January 2011 with retrospective
application. The amendment provides guidance on assessing the recoverable amount of a net
pension asset. The amendment permits an entity to treat the prepayment of a minimum funding
requirement as an asset. The amendment is not expected to have a material impact on the
financial statements of the Company.
  F-11




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.2 New and Amended Accounting Pronouncements and Interpretations (continued)
 
    
    IFRIC 19 Extinguishing Financial Liabilities with Equity InstrumentsIFRIC 19 is
effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies
that equity instruments issued to a creditor to extinguish a financial liability qualify as
consideration paid. The equity instruments issued are measured at their fair value. In case
that this cannot be reliably measured, the instruments are measured at the fair value of the
liability extinguished. Any gain or loss is recognized immediately in profit or loss. The
adoption of this interpretation is not expected to have a material effect on the financial
statements of the Company.
 Improvements to IFRSs (issued in May 2010)
 Improvements to IFRSs
 
    
    IFRS 3 Business Combinations
    
    IFRS 7 Financial Instruments: Disclosures
    
    IAS 1 Presentation of Financial Statements
    
    IAS 27 Consolidated and Separate Financial Statements
    
    IFRIC 13 Customer Loyalty Programmes
 
 2.3 Principles of Consolidation
  
 2.4 Significant Accounting Judgments, Estimates and Assumptions
  a) Judgments
   F-12




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 2.4 Significant Accounting Judgments, Estimates and Assumptions (continued)
  b) Estimates and Assumptions
     
 2.5 Cash and Cash Equivalents
    F-13




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.6 Financial Instruments  Initial recognition and subsequent measurement
     a) Held to maturity investments
  b) Receivable
    F-14




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.7 Impairment
 a) Impairment of Financial Assets
   b) Impairment of Financial Assets Carried at Amortized Cost
   c) Impairment of Non-Financial Assets
   F-15




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 c) Impairment of Non-Financial Assets (continued)
   d) Impairment testing of goodwill and intangibles with indefinite lives
   Key assumptions used in value in use calculations
  Discount rates
 Long-Term Growth Rate
  F-16




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 d) Impairment testing of goodwill and intangibles with indefinite lives (continued)
 Terminal Value
 
 2.8 Derecognition
 a) Derecognition of Financial Assets
  
    
    The rights to receive cash flows from the asset have expired;
 
    
    Company has transferred its rights to receive cash flows from the asset and
either has transferred substantially all risks and rewards of the asset, or has neither
transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
 
    
    Company retains the right to receive cash flows from the asset, but has assumed
an obligation to pay them in full without material delay to third party under a pass
through arrangement.
    b) Derecognition of Financial Liabilities
   F-17




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.9 Expendable Parts and Supplies
   
 2.10 Property, plant and equipment
   
    
    Airframe and engines
    
    30 years
    
    Aircraft components
    
    30 years
    
    Ground equipment
    
    10 years
    
    Furniture, fixture, equipment and other
    
    5 to 10 years
    
    Major maintenance events
    
    1 to 8 years
    
    Leasehold improvements
    
    lesser of remaining lease term or useful life
    F-18




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 2.10 Property, plant and equipment (continued)
   
 2.11 Goodwill
   
 2.12 Intangible assets
    F-19




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 2.12 Intangible assets (continued)
     a) Computer Software
      F-20




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 b) Brand name and routes
   
 2.13 Maintenance Deposit
  .
 
 2.14 Loans Payable
    F-21




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.15 Other Financial Liabilities
   
 2.16 Provisions
  
    
    The Company has a present legal or constructive obligation as a result of past events;
    
    It is more likely than not that an outflow of resources will be required to settle the obligation; and
  
 2.17 Revenue Recognition
  a) Passenger Revenue
    F-22




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 a)
    
    Passenger Revenue (continued)
  b) Cargo and Courier Services
  c) Other Revenue
  d) Frequent Flyer Program
  
 2.18 Passenger Traffic Commissions
   F-23




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.19 Foreign Currency Transactions and Translation
    
 2.20 Leases
   
    
    There is a change in contractual terms, other than a renewal or extension of
the arrangement;
 
    
    A renewal option is exercised or extension granted, unless the term of the
renewal or extension was initially included in the lease term;
 
    
    There is a change in the determination of whether fulfillment is dependent on a
specified asset; or
 
    
    There is a substantial change to the asset.
   F-24




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 2.21 Taxes
 a) Current Income Tax
  b) Deferred tax
  
    
    Where the deferred tax liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss.
 
    
    In respect of taxable temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, where the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
  
    
    Where deferred tax asset relating to the deductible temporary difference arises from
initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
 
    
    In respect of deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized
only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary
differences can be utilized.
    F-25




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 2.21 Taxes (continued)
    
 2.22 Derivative financial instruments and hedging activities
      
 2.23 Monetary unit
   F-26




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 3. Application of IFRS 1
    (a) Maintenance
  (b) Engine Overhaul under power by the hour agreements
  (c) Leased Aircraft Return Conditions
  (d) Stock Compensation
   F-27




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 3. Application of IFRS 1 (continued)
 (e) Revenue Recognition
  (f) Seniority Plan and Indemnity Plan
   (g) Deferred Tax
    F-28




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 3. Application of IFRS 1 (continued)
 3.1.1 Reconciliation of net equity as of December 31, 2009
 US GAAP
    
    $
    865,628Passenger revenue
    
    
    13,464Stock compensation
    
    
    (3,539
    )Additional paid in capital
    
    
    3,539Pension
    
    
    1,711Passenger servicing
    
    
    (14,382
    )Maintenance events
    
    
    15,122Overhaul repair
    
    
    54,345Return conditions
    
    
    (11,576
    )Depreciation
    
    
    (5,709
    )Provision for income taxes
    
    
    (7,929
    )Other
    
    
    459Effect of transition to IFRS
    
    
    45,505Net equity according to IFRS
    
    $
    911,133
 3.1.2 Reconciliation of net equity as of January 1, 2009
 US GAAP
    
    $
    632,432Passenger revenue
    
    
    1,000Stock compensation
    
    
    (4,132
    )Additional paid in capital
    
    
    4,132Pension
    
    
    1,477Maintenance Events
    
    
    5,508Overhaul repair
    
    
    40,280Return conditions
    
    
    (8,911
    )Depreciation
    
    
    (1,797
    )Provision for income taxes
    
    
    (645
    )Effect of transition to IFRS
    
    
    36,912Net equity according to IFRS
    
    $
    669,344
  F-29




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 3. Application of IFRS 1 (continued)
 3.1.3 Reconciliation of comprehensive income for the period ended December 31, 2009
 US GAAP-Net income
    
    $
    240,359Passenger revenue
    
    
    12,462Stock compensation
    
    
    594Pension
    
    
    235Passenger servicing
    
    
    (14,382
    )Maintenance Events
    
    
    9,614Overhaul repair
    
    
    14,065Return conditions
    
    
    (2,665
    )Depreciation
    
    
    (3,912
    )Provision for income taxes
    
    
    (7,283
    )Effect of transition to IFRS
    
    
    8,728Net income according to IFRS
    
    
    249,087Comprehensive income according to US GAAP
    
    
    4,271Comprehensive income according to IFRS
    
    $
    253,358
 
 4. Cash and Cash Equivalents
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Checking and saving accounts
    
    $
    89,889
    
    
    $
    49,345
    
    
    $
    74,530Time deposits of no more
than ninety days
    
    
    91,958
    
    
    
    174,310
    
    
    
    111,940Overnight deposits
    
    
    17,097
    
    
    
    18,271
    
    
    
    16,972Others
    
    
    8,746
    
    
    
    20,730
    
    
    
    17,366$
    207,690
    
    
    $
    262,656
    
    
    $
    220,808
    F-30




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 5. Investments
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Short-term investments:Time deposits between 90
and 365 days
    
    $
    194,913
    
    
    $
    89,412
    
    
    $
    176,018$
    194,913
    
    
    $
    89,412
    
    
    $
    176,018Long-term investments:Time deposits of more than
365 days
    
    $
    
    
    
    $
    
    
    
    $
    3,500Restricted cash
    
    
    6,224
    
    
    
    6,407
    
    
    
    7,645$
    6,224
    
    
    $
    6,407
    
    
    $
    11,145
 
 6. Accounts Receivable
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Travel agencies and airlines
clearing house
    
    $
    29,900
    
    
    $
    39,894
    
    
    $
    41,711Credit cards
    
    
    32,248
    
    
    
    19,966
    
    
    
    13,043Cargo and other travel agencies
    
    
    13,540
    
    
    
    7,876
    
    
    
    8,289Mail
    
    
    2,035
    
    
    
    2,019
    
    
    
    1,738Other
    
    
    15,241
    
    
    
    11,367
    
    
    
    10,61392,964
    
    
    
    81,122
    
    
    
    75,394Provision for impairment
    
    
    (4,190
    )
    
    
    (4,730
    )
    
    
    (4,785
    )$
    88,774
    
    
    $
    76,392
    
    
    $
    70,609
  F-31




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 6. Accounts Receivable (continued)
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Current
    
    $
    57,484
    
    
    $
    44,959
    
    
    $
    44,349Past due 0 to 30 days
    
    
    15,076
    
    
    
    10,711
    
    
    
    7,553Past due 31 to 60 days
    
    
    10,684
    
    
    
    8,483
    
    
    
    4,504More than 60 days
    
    
    9,720
    
    
    
    16,969
    
    
    
    18,988$
    92,964
    
    
    $
    81,122
    
    
    $
    75,394
  As of
    
    
    As ofDecember 31,
    
    
    December 31,2010
    
    
    2009Balance at beginning of year
    
    $
    4,730
    
    
    $
    4,785Additions
    
    
    4,797
    
    
    
    2,354Write-offs
    
    
    (5,337
    )
    
    
    (2,409
    )Balance at end of year
    
    $
    4,190
    
    
    $
    4,730
  F-32




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 7. Expendable parts and supplies
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Material for repair and
maitenance
    
    $
    35,096
    
    
    $
    23,405
    
    
    $
    18,458Purchases in transit
    
    
    9,930
    
    
    
    3,771
    
    
    
    3,644Other inventories
    
    
    1,071
    
    
    
    
    
    
    
    46,097
    
    
    
    27,176
    
    
    
    22,102Allowance for obsolescence
    
    
    (115
    )
    
    
    (78
    )
    
    
    (53
    )$
    45,982
    
    
    $
    27,098
    
    
    $
    22,049
 
 8. Prepaid expenses
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Prepaid taxes
    
    $
    10,662
    
    
    $
    11,135
    
    
    $
    8,221Prepaid commissions
    
    
    3,038
    
    
    
    2,634
    
    
    
    3,319Prepaid insurance
    
    
    6,136
    
    
    
    6,509
    
    
    
    5,577Prepaid rent
    
    
    1,772
    
    
    
    1,046
    
    
    
    1,260Prepaid  other
    
    
    10,181
    
    
    
    9,134
    
    
    
    6,093$
    31,789
    
    
    $
    30,458
    
    
    $
    24,470
  F-33




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 9. Other current assets
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Derivative financial instruments
    
    $
    21,946
    
    
    $
    10,016
    
    
    $
    Others
    
    
    2,676
    
    
    
    2,591
    
    
    
    4,571$
    24,622
    
    
    $
    12,607
    
    
    $
    4,571
 
 10. Other assets
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Guaranty deposits
    
    $
    11,130
    
    
    $
    12,149
    
    
    $
    10,016Deposits for litigation
    
    
    16,347
    
    
    
    12,291
    
    
    
    6,679Maintenance deposits
    
    
    69,475
    
    
    
    63,036
    
    
    
    48,051Other assets
    
    
    8,813
    
    
    
    10,855
    
    
    
    9,204$
    105,765
    
    
    $
    98,331
    
    
    $
    73,950
    
  F-34




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 11. Property, plant and equipment, net
  Ramp and
    
    
    
    
    
    
    
    
    
    
    Furniture,Miscellaneous
    
    
    
    
    
    
    
    
    
    
    Fixtures,Aircraft
    
    
    Flight
    
    
    
    
    
    
    
    
    
    
    Equipment
    
    
    Leasehold
    
    
    ConstructionComponents
    
    
    Equipment
    
    
    Airframe
    
    
    Engines
    
    
    and Other
    
    
    Improvements
    
    
    in Progress
    
    
    TotalAt January 1, 2010, net of accumulated
depreciation and amortization
    
    $
    62,787
    
    
    $
    8,009
    
    
    $
    725,758
    
    
    $
    463,697
    
    
    $
    4,851
    
    
    $
    8,296
    
    
    $
    8,077
    
    
    $
    1,281,475Additions
    
    
    12,008
    
    
    
    3,924
    
    
    
    196,836
    
    
    
    127,687
    
    
    
    2,561
    
    
    
    54
    
    
    
    10,411
    
    
    
    353,481Reclassifications
    
    
    25
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,170
    
    
    
    (2,170
    )
    
    
    0Disposals
    
    
    (331
    )
    
    
    (389
    )
    
    
    0
    
    
    
    0
    
    
    
    (488
    )
    
    
    
    
    
    
    (7,215
    )
    
    
    (8,423
    )Disposals depreciation
    
    
    54
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    351
    
    
    
    
    
    
    
    
    
    
    
    802Depreciation and amortization
    
    
    (2,516
    )
    
    
    (2,335
    )
    
    
    (35,422
    )
    
    
    (16,295
    )
    
    
    (2,243
    )
    
    
    (1,968
    )
    
    
    
    
    
    
    (60,779
    )At December 31, 2010, net of accumulated
depreciation and amortization
    
    $
    72,027
    
    
    $
    9,581
    
    
    $
    887,172
    
    
    $
    575,089
    
    
    $
    5,032
    
    
    $
    8,552
    
    
    $
    9,103
    
    
    $
    1,566,556At January 1, 2010At cost
    
    $
    74,206
    
    
    $
    23,746
    
    
    $
    837,217
    
    
    $
    522,507
    
    
    $
    17,023
    
    
    $
    13,662
    
    
    $
    8,077
    
    
    $
    1,496,438Accumulated depreciation and amortization
    
    
    (11,419
    )
    
    
    (15,737
    )
    
    
    (111,459
    )
    
    
    (58,810
    )
    
    
    (12,172
    )
    
    
    (5,366
    )
    
    
    
    
    
    
    (214,963
    )Net carrying amount
    
    $
    62,787
    
    
    $
    8,009
    
    
    $
    725,758
    
    
    $
    463,697
    
    
    $
    4,851
    
    
    $
    8,296
    
    
    $
    8,077
    
    
    $
    1,281,475At December 31, 2010At cost
    
    $
    85,908
    
    
    $
    27,256
    
    
    $
    1,034,054
    
    
    $
    650,194
    
    
    $
    19,099
    
    
    $
    15,882
    
    
    $
    9,103
    
    
    $
    1,841,496Accumulated depreciation and amortization
    
    
    (13,881
    )
    
    
    (17,675
    )
    
    
    (146,882
    )
    
    
    (75,105
    )
    
    
    (14,067
    )
    
    
    (7,330
    )
    
    
    
    
    
    
    (274,940
    )Net carrying amount
    
    $
    72,027
    
    
    $
    9,581
    
    
    $
    887,172
    
    
    $
    575,089
    
    
    $
    5,032
    
    
    $
    8,552
    
    
    $
    9,103
    
    
    $
    1,566,556
  F-35




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 11. Property, plant and equipment, Net (continued)
  Ramp,miscellaneous
    
    
    
    
    
    
    
    
    
    
    Furniture,Flight equipment
    
    
    
    
    
    
    
    
    
    
    Fixtures,Aircraft
    
    
    and other
    
    
    
    
    
    
    
    
    
    
    Equipment
    
    
    Leasehold
    
    
    ConstructionComponents
    
    
    Equipment
    
    
    Airframe
    
    
    Engines
    
    
    and Other
    
    
    Improvements
    
    
    in Progress
    
    
    TotalAt January 1, 2009, net of accumulated
depreciation
    
    $
    56,661
    
    
    $
    7,362
    
    
    $
    723,196
    
    
    $
    441,428
    
    
    $
    4,519
    
    
    $
    7,164
    
    
    $
    7,325
    
    
    $
    1,247,655Additions
    
    
    12,402
    
    
    
    3,586
    
    
    
    28,677
    
    
    
    35,714
    
    
    
    1,879
    
    
    
    106
    
    
    
    3,434
    
    
    
    85,798Reclassifications
    
    
    (1
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    2,682
    
    
    
    (2,682
    )
    
    
    0Disposals
    
    
    (4,640
    )
    
    
    (1,954
    )
    
    
    (1,496
    )
    
    
    (884
    )
    
    
    (1,210
    )
    
    
    
    
    
    
    
    
    
    
    (10,184
    )Disposals depreciation
    
    
    888
    
    
    
    1,083
    
    
    
    2,240
    
    
    
    1,739
    
    
    
    1,202
    
    
    
    
    
    
    
    
    
    
    
    7,152Depreciation
    
    
    (2,523
    )
    
    
    (2,059
    )
    
    
    (26,859
    )
    
    
    (14,300
    )
    
    
    (1,549
    )
    
    
    (1,656
    )
    
    
    
    
    
    
    (48,946
    )At December 31, 2009, net of
accumulated
depreciation
    
    $
    62,787
    
    
    $
    8,009
    
    
    $
    725,758
    
    
    $
    463,697
    
    
    $
    4,851
    
    
    $
    8,296
    
    
    $
    8,077
    
    
    $
    1,281,475At January 1, 2009At cost
    
    $
    66,446
    
    
    $
    22,226
    
    
    $
    807,938
    
    
    $
    485,805
    
    
    $
    15,880
    
    
    $
    10,837
    
    
    $
    7,325
    
    
    $
    1,416,457Accumulated depreciation
    
    
    (9,785
    )
    
    
    (14,864
    )
    
    
    (84,742
    )
    
    
    (44,377
    )
    
    
    (11,361
    )
    
    
    (3,673
    )
    
    
    
    
    
    
    (168,802
    )Net carrying amount
    
    $
    56,661
    
    
    $
    7,362
    
    
    $
    723,196
    
    
    $
    441,428
    
    
    $
    4,519
    
    
    $
    7,164
    
    
    $
    7,325
    
    
    $
    1,247,655At December 31, 2009At cost
    
    $
    74,206
    
    
    $
    23,746
    
    
    $
    837,217
    
    
    $
    522,507
    
    
    $
    17,023
    
    
    $
    13,662
    
    
    $
    8,077
    
    
    $
    1,496,438Accumulated depreciation
    
    
    (11,419
    )
    
    
    (15,737
    )
    
    
    (111,459
    )
    
    
    (58,810
    )
    
    
    (12,172
    )
    
    
    (5,366
    )
    
    
    
    
    
    
    (214,963
    )Net carrying amount
    
    $
    62,787
    
    
    $
    8,009
    
    
    $
    725,758
    
    
    $
    463,697
    
    
    $
    4,851
    
    
    $
    8,296
    
    
    $
    8,077
    
    
    $
    1,281,475
   F-36




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 12. Purchase deposits for flight equipment
  Pre-Delivery PaymentsAt January 1, 2009
    
    $
    84,861Additions
    
    
    265,512Capitalize Transfers
    
    
    (151,676
    )Year ended December 31, 2009
    
    $
    198,697Additions
    
    
    164,566Capitalize Transfers
    
    
    (157,291
    )Year ended December 31, 2010
    
    $
    205,972
 
 13. Intangible assets, net
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Routes
    
    $
    31,371
    
    
    $
    29,373
    
    
    $
    26,763Brand name
    
    
    4,482
    
    
    
    5,600
    
    
    
    5,102Software and licenses
    
    
    7,612
    
    
    
    7,620
    
    
    
    6,192Intangible balance
    
    $
    43,465
    
    
    $
    42,593
    
    
    $
    38,057
   F-37




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 13. Intangible assets, net (continued)
  Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009Balance at beginning of year
    
    $
    34,973
    
    
    $
    31,865Changes in exchange rates
    
    
    2,380
    
    
    
    3,108Impairment of brand name
    
    
    (1,500
    )
    
    
    Balance at end of year
    
    $
    35,853
    
    
    $
    34,973
  Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009Balance at beginning of year, net
of amortization
    
    $
    7,620
    
    
    $
    6,192Additions  internal development
    
    
    946
    
    
    
    951Additions  acquired separately
    
    
    893
    
    
    
    3,764Intangibles in process  completed
    
    
    (1,839
    )
    
    
    (4,712
    )Intangibles in process  additions
    
    
    2,175
    
    
    
    3,355Disposals
    
    
    (652
    )
    
    
    (1,021
    )Disposals amortization
    
    
    652
    
    
    
    1,021Amortization
    
    
    (2,183
    )
    
    
    (1,930
    )Balance at end of year, net of
amortization
    
    $
    7,612
    
    
    $
    7,620Intangibles, at cost
    
    $
    15,803
    
    
    $
    14,617Intangibles in process
    
    
    1,933
    
    
    
    1,596Accumulated amortization
    
    
    (10,124
    )
    
    
    (8,593
    )Net value
    
    $
    7,612
    
    
    $
    7,620
  F-38




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 13. Intangible assets, net (continued)
  Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009Balance at beginning of year
    
    $
    23,852
    
    
    $
    21,732Change in exchange rates
    
    
    1,623
    
    
    
    2,120Balance at end of year
net of exchange rates
    
    $
    25,475
    
    
    $
    23,852
 
 14. Loans Payable
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Long-term fixed rate debt
(secured fixed rate indebtedness due
through 2022 effective rates ranged from
3.95% to 6.75%)
    
    $
    526,288
    
    
    $
    347,246
    
    
    $
    363,709Long-term variable rate debt
(secured variable rate indebtedness due
through 2022 effective rates ranged from
1.00% to 2.80%)
    
    
    463,253
    
    
    
    498,275
    
    
    
    504,363Medium-term variable rate debt (unsecured
variable rate indebtedness due in 2009
effective rates ranged of 2.52% to 4.89%)
    
    
    
    
    
    
    
    
    
    
    47,957Sub-total
    
    
    989,541
    
    
    
    845,521
    
    
    
    916,029Less current maturities
    
    
    100,860
    
    
    
    94,550
    
    
    
    115,833Long-term debt less current maturities
    
    $
    888,681
    
    
    $
    750,971
    
    
    $
    800,196
  F-39




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 14. Loans Payable (continued)
  Year ending December 31,2011
    
    $
    100,8602012
    
    $
    112,7232013
    
    $
    82,1612014
    
    $
    117,0602015
    
    $
    113,837Thereafter
    
    $
    462,900
         F-40




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 15. Accrued expenses payable
 Labor Related Provisions
  GDS Expenses and Miscellaneous Provisions
   As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Provisions and estimations
    
    $
    27,332
    
    
    $
    30,429
    
    
    $
    25,597Labor related provisions
    
    
    20,282
    
    
    
    18,629
    
    
    
    15,045$
    47,614
    
    
    $
    49,058
    
    
    $
    40,642
  F-41




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 16. Other current liabilities
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Derivative financial instruments
    
    $
    6,503
    
    
    $
    5,472
    
    
    $
    54,690Vacation payable
    
    
    1,439
    
    
    
    1,027
    
    
    
    886Others
    
    
    2,992
    
    
    
    4,338
    
    
    
    4,773$
    10,934
    
    
    $
    10,837
    
    
    $
    60,349
 
 17. Other long-term liabilities
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Provision for contingencies
    
    $
    378
    
    
    $
    303
    
    
    $
    680Provision for litigations
    
    
    16,684
    
    
    
    12,534
    
    
    
    6,806Provision for return conditions
    
    
    14,680
    
    
    
    11,576
    
    
    
    8,911Other long term liabilities
    
    
    1,961
    
    
    
    1,870
    
    
    
    1,779$
    33,703
    
    
    $
    26,283
    
    
    $
    18,176
  F-42




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 18. Accounts and Transactions with Related Parties
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 01,2010
    
    
    2009
    
    
    2009Accounts Receivable from related parties:ASSA Compañía de Seguros, S.A.
    
    $
    563
    
    
    $
    4,367
    
    
    $
    4,506Others
    
    
    50
    
    
    
    32
    
    
    
    86$
    613
    
    
    $
    4,399
    
    
    $
    4,592
 As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 01,2010
    
    
    2009
    
    
    2009Accounts Payable to related partiesUnited Continental
    
    $
    2,955
    
    
    $
    1,922
    
    
    $
    1,835ASSA Compañía de Seguros, S.A.
    
    
    6,393
    
    
    
    6,082
    
    
    
    5,670Petróleos Delta
    
    
    4,281
    
    
    
    5,149
    
    
    
    3,353Desarrollo Inmobiliario del Este, SA
    
    
    32
    
    
    
    33
    
    
    
    28Galindo, Arias & López
    
    
    6
    
    
    
    
    
    
    
    15Motta Internacional & Global Brands
    
    
    54
    
    
    
    59
    
    
    
    59RD Nexos
    
    
    88
    
    
    
    123
    
    
    
    227Call Center Corporation
    
    
    
    
    
    
    393
    
    
    
    Telecarrier, S.A.
    
    
    11
    
    
    
    71
    
    
    
    60BDM Internacional
    
    
    19
    
    
    
    57
    
    
    
    263Others
    
    
    56
    
    
    
    214
    
    
    
    $
    13,895
    
    
    $
    14,103
    
    
    $
    11,510
  F-43




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 18. Accounts and Transactions with Related Parties (continued)
  Amount of
    
    
    Amount oftransaction
    
    
    transactionRelated Party
    
    Transaction
    
    2010
    
    
    2009United Continental
    
    Commercial Alliance
    
    $
    50,258
    
    
    $
    36,392Received Payments
    
    
    37,576
    
    
    
    30,874Banco General
    
    Debt
    
    
    1,515
    
    
    
    2261Interest received
    
    
    100
    
    
    
    398Interest paid
    
    
    988
    
    
    
    170ASSA Compañía de
Seguros, S.A.
    
    Insurance
    
    
    30
    
    
    
    30Petróleos Delta
    
    Purchase Jet Fuel
    
    
    170,727
    
    
    
    116,120Desarrollo
Inmobiliario del Este,
SA
    
    Property
    
    
    2,018
    
    
    
    1,947Galindo, Arias & López
    
    Legal Services
    
    
    608
    
    
    
    367Motta Internacional &
Global Brands
    
    Payments
    
    
    821
    
    
    
    637RD Nexos
    
    Advertising
    
    
    616
    
    
    
    1,000Call Center Corporation
    
    Call center
    
    
    3,869
    
    
    
    3,312Telecarrier, S.A.
    
    Payments
    
    
    754
    
    
    
    863
 United Continental:
 Banco General:
 ASSA Campania de Seguros, S.A.:
 Petróleos Delta:
  F-44




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 18. Accounts and Transactions with Related Parties (continued)
 Desarrollo Inmobiliario del Este, SA:
 Galindo, Arias & López:
 Motta Internacional & Global Brands:
 RD Nexos:
 Call Center Corporation:
 Telecarrier, S.A.:
   Year endedDecember 31,
    
    
    December 31,2010
    
    
    2009Short-term employees benefits
    
    $
    3,500
    
    
    $
    2,700Post-employment pension
    
    
    68
    
    
    
    52Stock based compensation
    
    
    4,000
    
    
    
    4,661$
    7,568
    
    
    $
    7,413
   F-45




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 19. Exchange Rate Difference
      F-46




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 20. Operating Leases
   EnginesAircraft
    
    
    and OtherUp to one year
    
    $
    55,231
    
    
    $
    10,270One to five years
    
    
    204,761
    
    
    
    19,147Over five years
    
    
    100,110
    
    
    
    2,640Total minimum lease rental payments
    
    $
    360,102
    
    
    $
    32,057
   F-47




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 21. Income Taxes
  As of
    
    
    As ofDecember 31,
    
    
    December 31,2010
    
    
    2009Current tax expenseCurrent period
    
    $
    26,460
    
    
    $
    15,794Under provided in prior periods
    
    
    1,151
    
    
    
    27,611
    
    
    
    15,794Deferred tax expenseOrigination and reversal of
temporary differences
    
    
    (8,645
    )
    
    
    11,100Total income tax expense
    
    $
    18,966
    
    
    $
    26,894
  As of
    
    
    As of
    
    
    As ofDecember 31,
    
    
    December 31,
    
    
    January 1,2010
    
    
    2009
    
    
    2009Deferred tax liabilitiesIntangible assets
    
    $
    (11,831
    )
    
    $
    (11,541
    )
    
    $
    (10,515
    )Reserve for maintenance
    
    
    (4,567
    )
    
    
    (4,446
    )
    
    
    (4,037
    )Prepaid dividend tax
    
    
    (1,324
    )
    
    
    (7,060
    )
    
    
    Others
    
    
    (2,294
    )
    
    
    (873
    )
    
    
    (825
    )(20,016
    )
    
    
    (23,920
    )
    
    
    (15,377
    )Deferred tax assetsReturn conditions
    
    
    2,976
    
    
    
    1,761
    
    
    
    1,212Property and equipment
    
    
    
    
    
    
    
    
    
    
    3,482Others
    
    
    5,497
    
    
    
    2,555
    
    
    
    2,7008,473
    
    
    
    4,316
    
    
    
    7,394Net deferred tax liabilities
    
    $
    (11,543
    )
    
    $
    (19,604
    )
    
    $
    (7,983
    )
  F-48




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 21. Income Taxes (continued)
   For the year ended
    
    
    For the year endedDecember 31,
    
    
    December 31,2010
    
    
    2009Net Income
    
    
    
    
    
    
    241,057
    
    
    
    
    
    
    
    249,087Total income tax expense
    
    
    
    
    
    
    18,966
    
    
    
    
    
    
    
    26,894Profit excluding income tax
    
    
    
    
    
    
    260,023
    
    
    
    
    
    
    
    275,981Income taxes at Panamanian statutory
rates
    
    
    27.5
    %
    
    
    71,506
    
    
    
    30.0
    %
    
    
    82,794Panamanian gross tax election
    
    
    0.0
    %
    
    
    
    
    
    
    (1.7
    %)
    
    
    (4,630
    )Effect of tax rates in non-Panamanian
jurisdictions
    
    
    (9.2
    %)
    
    
    (23,992
    )
    
    
    (7.3
    %)
    
    
    (20,086
    )Exemption in non-taxable countries
    
    
    (11.4
    %)
    
    
    (29,699
    )
    
    
    (11.3
    %)
    
    
    (31,184
    )Under (over) provided in prior periods
    
    
    0.4
    %
    
    
    1,151
    
    
    
    0.0
    %
    
    
    Provision for income taxes
    
    
    7.3
    %
    
    
    18,966
    
    
    
    9.7
    %
    
    
    26,894
  F-49




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 22. Share-Based Payments
  Share-Based Payment
  Non-vested Stock
   Number of
    
    
    
    
    ContractualGrand Date
    
    Instruments
    
    
    Vesting Conditions
    
    lifeMarch, 2006
    
    
    847,625
    
    
    15% first three anniversaries, 25% fourth and 30% fifth anniversary
    
    5 yearsMarch, 2006
    
    
    88,025
    
    
    Second anniversary
    
    2 yearsMarch, 2007
    
    
    16,955
    
    
    One-third every anniversary
    
    3 yearsMarch, 2008
    
    
    73,374
    
    
    One-third every anniversary
    
    3 yearsMarch, 2009
    
    
    113,714
    
    
    One-third every anniversary
    
    3 yearsMarch, 2010
    
    
    52,567
    
    
    One-third every anniversary
    
    3 years
  F-50




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 22. Share-Based Payments (continued)
   Shares2010
    
    
    2009Non-vested at January 1st
    
    
    569,766
    
    
    
    614,688Granted
    
    
    52,567
    
    
    
    113,714Vested
    
    
    (252,704
    )
    
    
    (150,412
    )Forfeited
    
    
    (3,902
    )
    
    
    (8,224
    )Non-vested at December 31st
    
    
    365,727
    
    
    
    569,766
  Stock Options
    F-51




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 22. Share-Based Payments (continued)
 Stock Options (continued)
  SharesOutstanding at January 1, 2010
    
    
    33,629Granted
    
    
    Exercised
    
    
    (990
    )Forfeited or expired
    
    
    Outstanding at December 31, 2010
    
    
    32,639
   
 23. Earnings per share
    F-52




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 23. Earnings per share (continued)
  As of
    
    
    As ofDecember 31,
    
    
    December 31,2010
    
    
    2009Net income
    
    $
    241,057
    
    
    $
    249,087Denominator for basic and diluted earnings
per shareWeighted average common shares outstanding
    
    
    43,534
    
    
    
    43,308Non-vested shares
    
    
    462
    
    
    
    603Total shares for basic and diluted earnings per share
    
    
    43,996
    
    
    
    43,911Earnings per shareBasic and diluted
    
    $
    5.48
    
    
    $
    5.67
  
 24. Dividends paid
  
 25. Commitments and Contingencies
   F-53




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 25. Commitments and Contingencies (continued)
 Covenants
   Labor Unions
      F-54




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 25. Commitments and Contingencies (continued)
  Lines of Credit for Working Capital and Letters of Credit
    Litigation
 Adicional das Tarifas
Aeroportuárias
  F-55




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 26. Objectives and Policies for Managing Financial Risk
 26.1 Fuel Price Risk
          F-56




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26. Objectives and Policies for Managing Financial Risk (continued)
 26.2 Market Risk
 Foreign Currency Risk
      F-57




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26.2 Market Risk (continued)
 Foreign Currency Risk (continued)
  As of
    
    
    As ofDecember 31,
    
    
    December 31,2010
    
    
    2009AssetsCash and cash equivalents
    
    $
    344,890
    
    
    $
    265,396Documents and accounts receivables, net
    
    
    58,719
    
    
    
    36,358Prepaid expenses
    
    
    28,660
    
    
    
    24,968Other assets
    
    
    46,003
    
    
    
    41,331Total assets
    
    $
    478,272
    
    
    $
    368,053LiabilitiesLoans
    
    $
    2,905
    
    
    $
    13,188Accounts payables suppliers and agencies
    
    
    144,157
    
    
    
    86,946Accumulated taxes and expenses payables
    
    
    51,284
    
    
    
    53,330Air traffic liability
    
    
    7,766
    
    
    
    5,035Other liabilities
    
    
    41,684
    
    
    
    19,197Total liabilities
    
    
    247,796
    
    
    
    177,696Net position
    
    $
    230,476
    
    
    $
    190,357
  F-58




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26.3 Credit Risk
   26.4 Interest Rates and Cash Flow Risk
    F-59




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26.4 Interest Rates and Cash Flow Risk (continued)
    26.5 Liquidity Risk
   F-60




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26.5 Liquidity Risk (continued)
  Less  than
    
    
    
    
    
    
    More thanDecember 31, 2010
    
    twelve months
    
    
    1 to 4 years
    
    
    four yearsLong term debt
    
    
    100,860
    
    
    
    425,781
    
    
    
    462,900Accounts payable
    
    
    66,005
    
    
    
    
    
    
    
    Air traffic liability
    
    
    208,735
    
    
    
    
    
    
    
    Accounts payable to related parties
    
    
    13,895
    
    
    
    
    
    
    
    Other liabilities
    
    
    108,400
    
    
    
    59,452
    
    
    
    December 31, 2009Long term debt
    
    
    94,550
    
    
    
    326,593
    
    
    
    424,378Accounts payable
    
    
    50,884
    
    
    
    
    
    
    
    Air traffic liability
    
    
    180,957
    
    
    
    
    
    
    
    Accounts payable to related parties
    
    
    14,103
    
    
    
    
    
    
    
    Other liabilities
    
    
    103,122
    
    
    
    55,488
    
    
    
    
 26.6 Capital Risk Management
    2011Total loans payable (Note 14)
    
    $
    989,541Less: cash and cash equivalents (Note 4)
    
    
    (402,603
    )Net debt
    
    
    586,938Total equity
    
    
    1,109,969Total capital
    
    $
    1,696,907Gearing ratio
    
    
    35
    %
  F-61




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 26.7 Fair value measurement
  Financial Instruments: Disclosures;
     Fair Value Measurement at Reporting Date UsingDecember 31,Description
    
    2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3AssetsFuel derivatives
    
    $
    21,785
    
    
    
    
    
    
    $
    21,785
    
    
    
    Currency derivatives
    
    
    209
    
    
    
    
    
    
    
    209
    
    
    
    Total assets
    
    $
    21,994
    
    
    
    
    
    
    $
    21,994
    
    
    
    LiabilitiesInterest rates
hedges
    
    
    6,504
    
    
    
    
    
    
    
    6,504
    
    
    
    Total liabilities
    
    $
    6,504
    
    
    
    
    
    
    $
    6,504
    
    
    
    
  F-62




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 27. Special Fleet Charges
   
 28. Subsequent Events
 Stock Grants
  Dividend distribution
   F-63




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 
 29. Segment Reporting
   2010
    
    
    2009North America
    
    $
    215.3
    
    
    $
    192.6Central America and Caribbean
    
    
    208.2
    
    
    
    188.1South America
    
    
    784.4
    
    
    
    740.2Panama
    
    
    206.9
    
    
    
    135.1$
    1,414.8
    
    
    $
    1,256.0
  
  F-64




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010
(In US$ thousands)
 29. Segment Reporting
  2010
    
    
    2009Operating revenues:Copa segment
    
    
    1,164.0
    
    
    
    1,013.1Copa Colombia segment
    
    
    270.0
    
    
    
    254.6Eliminations
    
    
    (19.2
    )
    
    
    (11.7
    )Consolidated
    
    
    1,414.8
    
    
    
    1,256.0Depreciation:Copa segment
    
    
    55.2
    
    
    
    46.7Copa Colombia segment
    
    
    7.7
    
    
    
    4.1Consolidated
    
    
    62.9
    
    
    
    50.8Aircraft rentals:Copa segment
    
    
    30.4
    
    
    
    25.5Copa Colombia segment
    
    
    27.2
    
    
    
    26.2Eliminations
    
    
    (11.3
    )
    
    
    (5.2
    )Consolidated
    
    
    46.3
    
    
    
    46.5Operating income:Copa segment
    
    
    292.0
    
    
    
    232.7Copa Colombia segment
    
    
    (5.0
    )
    
    
    6.5Eliminations
    
    
    2.6
    
    
    
    0.9Consolidated
    
    
    289.6
    
    
    
    240.1Interest expense:Copa segment
    
    
    27.0
    
    
    
    30.0Copa Colombia segment
    
    
    2.9
    
    
    
    2.9Consolidated
    
    
    29.9
    
    
    
    32.9Interest income:Copa segment
    
    
    3.9
    
    
    
    8.1Copa Colombia segment
    
    
    0.9
    
    
    
    1.0Consolidated
    
    
    4.8
    
    
    
    9.1Income before income taxes:Copa segment
    
    
    264.7
    
    
    
    271.8Copa Colombia segment
    
    
    (4.7
    )
    
    
    4.1Consolidated
    
    
    260.0
    
    
    
    275.9Total Assets at End of Period:Copa segment
    
    
    2,386.1
    
    
    
    1,984.4Copa Colombia segment
    
    
    340.9
    
    
    
    321.8Eliminations
    
    
    (171.1
    )
    
    
    (145.0
    )Consolidated
    
    
    2,555.9
    
    
    
    2,161.2Capital Expenditures:Copa segment
    
    
    (270.4
    )
    
    
    (155.7
    )Copa Colombia segment
    
    
    (58.5
    )
    
    
    (55.8
    )Consolidated
    
    
    (328.9
    )
    
    
    (211.5
    )Total Liabilities at End of Period:Copa Segment
    
    
    1,277.5
    
    
    
    1,082.0Copa Colombia segment
    
    
    273.3
    
    
    
    246.8Eliminations
    
    
    (104.8
    )
    
    
    (78.7
    )Consolidated
    
    
    1,446.0
    
    
    
    1,250.1
  F-65