##### Table of Contents



As filed with the Securities and Exchange Commission on May 6, 2009
   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, 2008
 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
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such
files).  Yes o No o
 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 Filero
 Indicate by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
 U.S. GAAP þ IFRS o 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




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##### 



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
    
    
    22Item 4A. Unresolved Staff Comments
    
    
    42Item 5. Operating and Financial Review and Prospects
    
    
    42Item 6.
Directors, Senior Management and Employees
    
    
    61Item 7. Major Shareholders and Related Party Transactions
    
    
    68Item 8. Financial Information
    
    
    71Item 9. The Offer and Listing
    
    
    73Item 10. Additional Information
    
    
    75Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    84Item 12. Description of Securities Other than Equity Securities
    
    
    85Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    86Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    86Item 15. Controls and Procedures
    
    
    86Item 16. Reserved
    
    
    88Item 16A. Audit Committee Financial Expert
    
    
    88Item 16B. Code of Ethics
    
    
    88Item 16C. Principal Accountant Fees and Services
    
    
    88Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    88Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    89Item 16F.
Change in Registrants Certifying Accountant
    
    
    89Item 16G. Corporate Governance
    
    
    89Item 17. Financial Statements
    
    
    93Item 18. Financial Statements
    
    
    93Item 19. Exhibits
    
    
    93Index to Financial Statements
    
    
    F-1Exhibit 10.49Exhibit 10.50Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
   i




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##### 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




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Presentation of Financial and Statistical Data
   
 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




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iv




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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 A. Selected Financial Data
 3⁄4
   Year Ended December 31,2004
    
    
    2005(21)
    
    
    2006
    
    
    2007
    
    
    2008(in thousands of dollars, except share and per share data and operating data)INCOME STATEMENT DATAOperating revenue:Passenger revenue
    
    $
    364,611
    
    
    $
    563,520
    
    
    $
    798,901
    
    
    $
    967,066
    
    
    $
    1,217,311Cargo, mail and other
    
    
    35,226
    
    
    
    45,094
    
    
    
    52,259
    
    
    
    60,198
    
    
    
    71,478Total operating revenues
    
    
    399,837
    
    
    
    608,614
    
    
    
    851,160
    
    
    
    1,027,264
    
    
    
    1,288,789Operating expenses:Aircraft fuel
    
    
    62,549
    
    
    
    149,303
    
    
    
    217,730
    
    
    
    265,387
    
    
    
    404,669Salaries and benefits
    
    
    51,701
    
    
    
    69,730
    
    
    
    91,382
    
    
    
    116,691
    
    
    
    139,431Passenger servicing
    
    
    39,222
    
    
    
    50,622
    
    
    
    64,380
    
    
    
    82,948
    
    
    
    98,775Commissions
    
    
    29,073
    
    
    
    45,087
    
    
    
    57,808
    
    
    
    65,930
    
    
    
    67,177Reservations and sales
    
    
    22,118
    
    
    
    29,213
    
    
    
    38,212
    
    
    
    48,229
    
    
    
    54,996Maintenance, materials and repairs
    
    
    19,742
    
    
    
    32,505
    
    
    
    50,057
    
    
    
    51,249
    
    
    
    66,438Depreciation
    
    
    19,279
    
    
    
    19,857
    
    
    
    24,874
    
    
    
    35,328
    
    
    
    42,891Flight operations
    
    
    17,904
    
    
    
    24,943
    
    
    
    33,740
    
    
    
    43,958
    
    
    
    56,425Aircraft rentals
    
    
    14,445
    
    
    
    27,631
    
    
    
    38,169
    
    
    
    38,636
    
    
    
    43,008Landing fees and other rentals
    
    
    12,155
    
    
    
    17,909
    
    
    
    23,929
    
    
    
    27,017
    
    
    
    32,467Other
    
    
    29,306
    
    
    
    32,622
    
    
    
    44,758
    
    
    
    55,093
    
    
    
    58,521Special fleet charges(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,309
    
    
    
    Gain from involuntary conversion(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,019
    )
    
    
    Total operating expenses
    
    
    317,494
    
    
    
    499,422
    
    
    
    685,039
    
    
    
    829,756
    
    
    
    1,064,798Operating income
    
    
    82,343
    
    
    
    109,192
    
    
    
    166,121
    
    
    
    197,508
    
    
    
    223,991Non-operating income (expense):Interest expense
    
    
    (16,488
    )
    
    
    (21,629
    )
    
    
    (29,150
    )
    
    
    (44,332
    )
    
    
    (42,071
    )Interest capitalized
    
    
    963
    
    
    
    1,089
    
    
    
    1,712
    
    
    
    2,570
    
    
    
    1,921Interest income
    
    
    1,423
    
    
    
    3,544
    
    
    
    7,257
    
    
    
    12,193
    
    
    
    11,130Other, net(3)
    
    
    6,063
    
    
    
    395
    
    
    
    185
    
    
    
    10,987
    
    
    
    (58,843
    )Total non-operating expenses, net
    
    
    (8,039
    )
    
    
    (16,601
    )
    
    
    (19,996
    )
    
    
    (18,582
    )
    
    
    (87,863
    )Income before income taxes
    
    
    74,304
    
    
    
    92,591
    
    
    
    146,125
    
    
    
    178,926
    
    
    
    136,128Provision for income taxes
    
    
    (5,732
    )
    
    
    (9,592
    )
    
    
    (12,286
    )
    
    
    (17,106
    )
    
    
    (17,469
    )Net income
    
    
    68,572
    
    
    
    82,999
    
    
    
    133,839
    
    
    
    161,820
    
    
    
    118,659
  1




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Year Ended December 31,2004
    
    
    2005(21)
    
    
    2006
    
    
    2007
    
    
    2008(in thousands of dollars, except share and per share data and operating data)BALANCE SHEET DATATotal cash, cash equivalents and short-term
investments
    
    $
    110,943
    
    
    $
    114,490
    
    
    $
    197,380
    
    
    $
    308,358
    
    
    $
    396,826Accounts receivable, net
    
    
    27,706
    
    
    
    46,533
    
    
    
    62,137
    
    
    
    74,169
    
    
    
    75,201Total current assets
    
    
    152,087
    
    
    
    184,351
    
    
    
    290,651
    
    
    
    435,736
    
    
    
    522,464Purchase deposits for flight equipment
    
    
    7,190
    
    
    
    52,753
    
    
    
    65,150
    
    
    
    64,079
    
    
    
    84,861Total property and equipment
    
    
    541,211
    
    
    
    637,543
    
    
    
    862,283
    
    
    
    1,166,262
    
    
    
    1,337,669Total assets
    
    
    702,050
    
    
    
    916,912
    
    
    
    1,255,015
    
    
    
    1,707,251
    
    
    
    1,954,225Long-term debt
    
    
    380,827
    
    
    
    402,954
    
    
    
    529,802
    
    
    
    732,209
    
    
    
    800,196Total shareholders equity
    
    
    174,155
    
    
    
    245,867
    
    
    
    371,669
    
    
    
    531,637
    
    
    
    632,432Capital stock
    
    
    29,223
    
    
    
    29,223
    
    
    
    32,563
    
    
    
    37,372
    
    
    
    42,964CASH FLOW DATANet cash provided by operating activities
    
    $
    98,051
    
    
    $
    115,368
    
    
    $
    193,468
    
    
    $
    221,941
    
    
    $
    198,105Net cash used in investing activities
    
    
    (85,738
    )
    
    
    (159,886
    )
    
    
    (258,980
    )
    
    
    (334,758
    )
    
    
    (322,780
    )Net cash provided by financing activities
    
    
    29,755
    
    
    
    38,929
    
    
    
    141,498
    
    
    
    228,295
    
    
    
    59,519OTHER FINANCIAL DATAEBITDA(4)
    
    
    107,685
    
    
    
    129,444
    
    
    
    191,180
    
    
    
    243,823
    
    
    
    208,039Aircraft rentals
    
    
    14,445
    
    
    
    27,631
    
    
    
    38,169
    
    
    
    38,636
    
    
    
    43,008Operating margin(5)
    
    
    20.6
    %
    
    
    17.9
    %
    
    
    19.5
    %
    
    
    19.2
    %
    
    
    17.4
    %Weighted average shares used in computing net
income per share (basic)(6)
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    42,907,967
    
    
    
    43,142,515Weighted average shares used in computing net
income per share (diluted)(6)
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    43,234,553
    
    
    
    43,463,759
    
    
    
    43,439,879Net income (loss) per share (basic)(6)
    
    $
    1.60
    
    
    $
    1.94
    
    
    $
    3.13
    
    
    $
    3.77
    
    
    $
    2.75Net income (loss) per share (diluted)(6)
    
    $
    1.60
    
    
    $
    1.94
    
    
    $
    3.10
    
    
    $
    3.72
    
    
    $
    2.73Dividends declared per share
    
    $
    0.23
    
    
    $
    0.24
    
    
    $
    0.19
    
    
    $
    0.31
    
    
    $
    0.37OPERATING DATARevenue passengers carried(7)
    
    
    2,333
    
    
    
    4,361
    
    
    
    5,741
    
    
    
    6,015
    
    
    
    6,485Revenue passenger miles(8)
    
    
    2,548
    
    
    
    3,824
    
    
    
    5,017
    
    
    
    5,861
    
    
    
    6,717Available seat miles(9)
    
    
    3,639
    
    
    
    5,359
    
    
    
    6,866
    
    
    
    7,918
    
    
    
    8,845Load factor(10)
    
    
    70.0
    %
    
    
    71.4
    %
    
    
    73.1
    %
    
    
    74.0
    %
    
    
    75.9
    %Break-even load factor(11)
    
    
    52.6
    %
    
    
    57.9
    %
    
    
    58.0
    %
    
    
    58.6
    %
    
    
    67.1
    %Total block hours(12)
    
    
    70,228
    
    
    
    103,628
    
    
    
    130,818
    
    
    
    157,200
    
    
    
    182,692Average daily aircraft utilization(13)
    
    
    9.3
    
    
    
    9.8
    
    
    
    9.8
    
    
    
    9.6
    
    
    
    9.6Average passenger fare
    
    
    156.3
    
    
    
    129.2
    
    
    
    139.2
    
    
    
    160.8
    
    
    
    187.7Yield(14)
    
    
    14.31
    
    
    
    14.74
    
    
    
    15.92
    
    
    
    16.50
    
    
    
    18.12Passenger revenue per ASM(15)
    
    
    10.02
    
    
    
    10.51
    
    
    
    11.64
    
    
    
    12.21
    
    
    
    13.76Operating revenue per ASM(16)
    
    
    10.99
    
    
    
    11.36
    
    
    
    12.40
    
    
    
    12.97
    
    
    
    14.57Operating expenses per ASM (CASM)(17)
    
    
    8.72
    
    
    
    9.32
    
    
    
    9.98
    
    
    
    10.48
    
    
    
    12.04Departures
    
    
    27,434
    
    
    
    48,934
    
    
    
    65,471
    
    
    
    71,893
    
    
    
    79,664Average daily departures
    
    
    75.0
    
    
    
    156.6
    
    
    
    179.4
    
    
    
    197.0
    
    
    
    217.7Average number of aircraft
    
    
    20.6
    
    
    
    31.0
    
    
    
    38.6
    
    
    
    45.0
    
    
    
    52.0Airports served at period end
    
    
    29
    
    
    
    36
    
    
    
    42
    
    
    
    46
    
    
    
    51
  2




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Year Ended December 31,2004
    
    
    2005(21)
    
    
    2006
    
    
    2007
    
    
    2008(in thousands of dollars, except share and per share data and operating data)SEGMENT FINANCIAL DATACopa:Operating revenue
    
    $
    399,837
    
    
    $
    505,655
    
    
    $
    676,168
    
    
    $
    806,201
    
    
    $
    1,035,945Operating expenses
    
    
    317,494
    
    
    
    402,684
    
    
    
    509,540
    
    
    
    634,521
    
    
    
    827,714Depreciation
    
    
    19,279
    
    
    
    19,242
    
    
    
    23,732
    
    
    
    30,710
    
    
    
    38,108Aircraft rentals
    
    
    14,445
    
    
    
    22,096
    
    
    
    23,842
    
    
    
    27,756
    
    
    
    31,271Interest expense
    
    
    16,488
    
    
    
    19,424
    
    
    
    26,907
    
    
    
    36,300
    
    
    
    36,208Interest capitalized
    
    
    963
    
    
    
    1,089
    
    
    
    1,712
    
    
    
    2,570
    
    
    
    1,921Interest income
    
    
    1,423
    
    
    
    3,376
    
    
    
    6,887
    
    
    
    11,720
    
    
    
    10,514Net income (loss) before tax
    
    
    74,304
    
    
    
    89,745
    
    
    
    155,533
    
    
    
    165,571
    
    
    
    130,851Total assets
    
    
    702,050
    
    
    
    851,075
    
    
    
    1,168,121
    
    
    
    1,546,623
    
    
    
    1,823,512AeroRepública:Operating revenue
    
    
    3⁄4
    
    
    $
    103,016
    
    
    $
    175,883
    
    
    $
    226,042
    
    
    $
    264,912Operating expenses
    
    
    3⁄4
    
    
    
    96,839
    
    
    
    176,388
    
    
    
    200,474
    
    
    
    249,152Depreciation
    
    
    3⁄4
    
    
    
    615
    
    
    
    1,142
    
    
    
    4,618
    
    
    
    4,783Aircraft rentals
    
    
    3⁄4
    
    
    
    5,535
    
    
    
    14,604
    
    
    
    14,760
    
    
    
    22,732Interest expense
    
    
    3⁄4
    
    
    
    2,205
    
    
    
    2,243
    
    
    
    8,032
    
    
    
    5,863Interest capitalized
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Interest income
    
    
    3⁄4
    
    
    
    168
    
    
    
    370
    
    
    
    473
    
    
    
    616Net income (loss) before tax
    
    
    3⁄4
    
    
    
    2,846
    
    
    
    (9,408
    )
    
    
    13,354
    
    
    
    5,277Total assets
    
    
    3⁄4
    
    
    
    98,091
    
    
    
    132,872
    
    
    
    256,349
    
    
    
    258,562SEGMENT OPERATING DATACopa:Available seat miles(9)
    
    
    3,639
    
    
    
    4,409
    
    
    
    5,239
    
    
    
    6,298
    
    
    
    7,342Load factor(10)
    
    
    70.0
    %
    
    
    73.4
    %
    
    
    77.8
    %
    
    
    78.4
    %
    
    
    78.8
    %Break-even load factor
    
    
    52.6
    %
    
    
    56.8
    %
    
    
    56.1
    %
    
    
    58.7
    %
    
    
    67.2
    %Yield(14)
    
    
    14.31
    
    
    
    14.41
    
    
    
    15.49
    
    
    
    15.33
    
    
    
    16.81Operating revenue per ASM(16)
    
    
    10.99
    
    
    
    11.47
    
    
    
    12.91
    
    
    
    12.80
    
    
    
    14.11CASM(17)
    
    
    8.72
    
    
    
    9.13
    
    
    
    9.73
    
    
    
    10.08
    
    
    
    11.27Average stage length(19)
    
    
    1,047
    
    
    
    1,123
    
    
    
    1,158
    
    
    
    1,207
    
    
    
    1,216On time performance(18)
    
    
    91.8
    %
    
    
    91.7
    %
    
    
    91.0
    %
    
    
    86.9
    %
    
    
    87.5
    %AeroRepública:(22)Available seat miles(9)
    
    
    3⁄4
    
    
    
    950
    
    
    
    1,627
    
    
    
    1,620
    
    
    
    1,503Load factor(10)
    
    
    3⁄4
    
    
    
    62.0
    %
    
    
    57.9
    %
    
    
    57.2
    %
    
    
    61.7
    %Break even load factor
    
    
    3⁄4
    
    
    
    60.7
    %
    
    
    61.9
    %
    
    
    54.1
    %
    
    
    62.0
    %Yield(14)
    
    
    3⁄4
    
    
    
    16.53
    
    
    
    17.79
    
    
    
    22.74
    
    
    
    26.31Operating revenue per ASM(16)
    
    
    3⁄4
    
    
    
    10.84
    
    
    
    10.81
    
    
    
    13.95
    
    
    
    17.63CASM(17)
    
    
    3⁄4
    
    
    
    10.19
    
    
    
    10.84
    
    
    
    12.37
    
    
    
    16.58Average stage length(19)
    
    
    3⁄4
    
    
    
    360
    
    
    
    370
    
    
    
    398
    
    
    
    421On time performance(20)
    
    
    3⁄4
    
    
    
    70.4
    %
    
    
    80.3
    %
    
    
    72.8
    %
    
    
    84.2
    %
 
 (1)
    
    Represents expenses related to costs associated with terms negotiated for the early
termination of three MD-80 aircraft as a result of AeroRepúblicas ongoing transition to a
more fuel efficient all Embraer-190 fleet.(2)
    
    Represents gain on involuntary conversion of non-monetary assets to monetary assets related
to insurance proceeds in excess of aircraft book value.(3)
    
    Consists primarily of changes in the fair value of fuel derivative contracts, foreign
exchange gains/losses and gains on sale of Boeing 737-200 aircraft. See Item 5. Operating
and Financial Review and Prospects and the notes to our consolidated financial statements.  3




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##### Table of Contents



(4)
    
    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 U.S. GAAP 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: Year Ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008(in thousands of dollars)Net income
    
    $
    68,572
    
    
    $
    82,999
    
    
    $
    133,839
    
    
    $
    161,820
    
    
    $
    118,659Interest expense
    
    
    16,488
    
    
    
    21,629
    
    
    
    29,150
    
    
    
    44,332
    
    
    
    42,071Income taxes
    
    
    5,732
    
    
    
    9,592
    
    
    
    12,286
    
    
    
    17,106
    
    
    
    17,469Depreciation
    
    
    19,279
    
    
    
    19,857
    
    
    
    24,874
    
    
    
    35,328
    
    
    
    42,891Subtotal
    
    
    110,071
    
    
    
    134,077
    
    
    
    200,149
    
    
    
    258,586
    
    
    
    221,090Interest capitalized
    
    
    (963
    )
    
    
    (1,089
    )
    
    
    (1,712
    )
    
    
    (2,570
    )
    
    
    (1,921
    )Interest income
    
    
    (1,423
    )
    
    
    (3,544
    )
    
    
    (7,257
    )
    
    
    (12,193
    )
    
    
    (11,130
    )EBITDA
    
    
    107,685
    
    
    
    129,444
    
    
    
    191,180
    
    
    
    243,823
    
    
    
    208,039
 Aircraft rentals represents 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, which was $14.4 million in 2004, $27.6 million in 2005, $38.2 million in 2006, $38.6 million in 2007 and
$43.0 million in 2008.(5)
    
    Operating margin represents operating income divided by operating revenues.(6)
    
    All share and per share amounts have been retroactively restated to reflect the current
capital structure described under Item 10.B Description of Capital Stock and in the notes to our
consolidated financial statements.(7)
    
    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.(8)
    
    Number of miles flown by scheduled revenue passengers, expressed in millions.(9)
    
    Aircraft seating capacity multiplied by the number of miles the seats are flown, expressed in
millions.(10)
    
    Percentage of aircraft seating capacity that is actually utilized. Load factors are
calculated by dividing revenue passenger miles by available seat miles.(11)
    
    Load factor that would have resulted in total revenues being equal to total expenses, excluding the effect of fuel derivative mark-to-market, this figure would have been 52.6% in
2004, 57.9% in 2005, 57.7% in 2006, 59.5% in 2007 and 63.0% in 2008.(12)
    
    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.(13)
    
    Average number of block hours operated per day per aircraft for the total aircraft fleet.(14)
    
    Average amount (in cents) one passenger pays to fly one mile.(15)
    
    Passenger revenues (in cents) divided by the number of available seat miles.(16)
    
    Total operating revenues for passenger aircraft related costs (in cents) divided by the number of available seat miles.(17)
    
    Total operating expenses for passenger aircraft related costs (in cents) divided by the number of available seat miles.(18)
    
    Percentage of flights that arrive at the destination gate within fifteen minutes of scheduled arrival.(19)
    
    The average number of miles flown per flight.(20)
    
    Percentage of flights that depart within fifteen minutes of the scheduled departure time.(21)
    
    For AeroRepública operating data, this period covers from April 22, 2005 until December 31,
2005 which corresponds to the period that AeroRepública was consolidated in our financial
statements.(22)
    
    AeroRepública has not historically distinguished between revenue passengers and non-revenue
passengers. Although we have implemented systems at AeroRepública to record that information,
revenue passenger information and other statistics derived from revenue passenger data for the
year ended December 31, 2005, 2006, 2007 and 2008 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
 An investment in our Class A shares involves a high degree of risk. You should carefully
consider the risks described below before making an investment decision. Our business, financial
condition and results of operations could be materially and adversely affected by any of these
risks. The trading price of our Class A shares could decline due to any of these risks, and you
may lose all or part of your investment. The risks described below are those known to us and that
we currently believe may materially affect us.
  4




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Risks Relating 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.
    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




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##### Table of Contents



We are dependent on our alliance with Continental and cannot assure you that it will continue.
   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.
   6




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##### Table of Contents



Autoridad de Aeronáutica Civil
 Our business is subject to extensive regulation which may restrict our growth or our operations or
increase our costs.
    7




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##### Table of Contents



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.
  We are highly dependent on our hub at Panama Citys Tocumen International Airport.
    8




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##### Table of Contents



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.
    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.
   9




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##### Table of Contents



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.
  
    
    difficulties or delays in obtaining the necessary certifications from the
aviation regulatory authorities of the countries to which we fly;
 
    
    manufacturers delays in meeting the agreed upon aircraft delivery schedule;
 
    
    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 the new aircraft and its 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.
 Accounting for the
Impairment or Disposal of Long-Lived Assets
  10




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##### Table of Contents



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.
   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.
   11




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##### Table of Contents



Our maintenance costs will increase as Copas fleet ages and as we perform maintenance on
AeroRepúblicas older fleet.
   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 cash flows.
   Our investment in AeroRepública may not generate the benefits we sought when we purchased the
company.
   12




---



##### Table of Contents



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.
  We depend on a limited number of suppliers.
   13




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##### Table of Contents



We are dependent on key personnel.
  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.
    14




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##### Table of Contents



Risks Relating to the Airline Industry
 The airline industry is highly competitive.
   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.
   15




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##### 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.
  Airline bankruptcies could adversely affect the industry.
   16




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##### Table of Contents



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.
    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.
   17




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##### Table of Contents



We have paid low taxes in the past, and any increase in the taxes we or our shareholders pay in
Panama or the other countries where we do business would adversely affect the value of our Class A
shares.
    Political unrest and instability in Colombia may adversely affect our business and the market price
of our Class A shares.
   18




---



##### 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.
   19




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##### 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.
   20




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##### 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.
   21




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##### Table of Contents



Item 4. Information on the Company
 A. History and Development of the Company
 General
   sociedad anónima
   Capital Expenditures
   22




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##### Table of Contents



B. Business Overview
         23




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##### Table of Contents



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.
 
    
    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 7.01 cents
in 2004, 6.53 cents in 2005, 6.81 cents in 2006, 7.13 cents in 2007 and 7.46 in 2008. See
Item 5. Operating and Financial Review and Prospects for a reconciliation of our
operating cost per available seat mile when excluding costs for fuel and fleet impairment
charges to our operating cost per available seat mile. We believe that our cost per
available seat mile reflects our modern fleet, efficient operations and the competitive
cost of labor in Panama.
 
    
    Copa operates a modern fleet.Copas 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 years, Copa intends to enhance its modern fleet through the
addition of at least 13 additional Boeing 737-Next Generation aircraft. We believe that
Copas modern fleet contributes to its 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 in terms of
fuel efficiency and maintenance costs. AeroRepública is currently implementing a fleet
modernization and expansion plan. Since December 2007, AeroRepública has taken delivery of
nine Embraer 190 aircraft and as of December 31, 2008 had firm lease commitments on two
additional Embraer 190s and purchase options and purchase rights for an additional five
Embraer 190 aircraft.
 
    
    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, 2008, Copa Airlines statistic for
on-time performance was 87.5%, completion factor was 99.6% and baggage handling was 2.1
mishandled bags per 1000 passengers. Our goal is to apply our expertise in these areas to
improve AeroRepúblicas service statistics to comparable levels. Our focus on customer
service has helped to build passenger loyalty. We believe that our brand has also been
enhanced through our relationship with Continental, 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 Continental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 at Copa has individual objectives based on corporate
goals that serve as a basis for measuring performance. When corporate operational and
financial targets are met, employees at Copa 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. Copas goal-oriented culture and incentive programs have contributed to a
motivated work force that is focused on satisfying customers, achieving efficiencies and
growing profitability. We seek to create a similar culture at AeroRepública.
  24




---



##### Table of Contents



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.
 
    
    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 AeroRepública.We are seeking to enhance AeroRepúblicas
profitability through a variety of initiatives, including modernizing its fleet,
integrating its route network with Copas and improving overall efficiency.
 AeroRepública
 Unidad Especial Administrative de Aeronáutica Civil
   Industry
   25




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##### Table of Contents



2007 IATA Traffic Results(1)Passengers
    
    
    
    
    
    
    PassengerCarried
    
    
    
    
    
    
    Miles(Thousands)
    
    
    Change (%)
    
    
    (Millions)
    
    
    Change (%)
    
    
    ASMs (Million)
    
    
    Change (%)
    
    
    Load FactorInternational Scheduled ServiceNorth America  Central America
    
    
    33,275
    
    
    
    4.9
    %
    
    
    48,551
    
    
    
    6.3
    %
    
    
    64,520
    
    
    
    3.6
    %
    
    
    75.3
    %North America  South America
    
    
    10,320
    
    
    
    8.4
    %
    
    
    30,642
    
    
    
    10.5
    %
    
    
    39,294
    
    
    
    8.5
    %
    
    
    78.0
    %Central America  South America
    
    
    1,628
    
    
    
    8.6
    %
    
    
    2,707
    
    
    
    17.1
    %
    
    
    3,738
    
    
    
    14.6
    %
    
    
    72.4
    %Within Central America
    
    
    2,538
    
    
    
    14.5
    %
    
    
    1,319
    
    
    
    12.5
    %
    
    
    1,949
    
    
    
    4.5
    %
    
    
    67.7
    %Within South America
    
    
    10,105
    
    
    
    25.4
    %
    
    
    9,852
    
    
    
    28.7
    %
    
    
    13,302
    
    
    
    24.9
    %
    
    
    74.1
    %Domestic Scheduled ServiceCentral America
    
    
    10,441
    
    
    
    -5.1
    %
    
    
    6,468
    
    
    
    -3.5
    %
    
    
    9,895
    
    
    
    -5.5
    %
    
    
    65.4
    %South America
    
    
    37,062
    
    
    
    7.3
    %
    
    
    19,555
    
    
    
    13.4
    %
    
    
    27,566
    
    
    
    15.2
    %
    
    
    70.9
    %
 
 (1)
    
    IATA passenger traffic data is not yet available for 2008.  GDP
    
    
    GDP per Capita2008 GDP
    
    
    
    
    
    
    2008 GDP per CapitaCurrent Prices
    
    
    2008 Real GDP
    
    
    Current Prices(US$bn)
    
    
    (% Growth)
    
    
    (US$)Brazil
    
    
    1,665
    
    
    
    5.2
    %
    
    
    8,676Argentina
    
    
    339
    
    
    
    6.5
    %
    
    
    8,522Chile
    
    
    181
    
    
    
    4.5
    %
    
    
    10,814Mexico
    
    
    1,143
    
    
    
    2.1
    %
    
    
    10,747Colombia
    
    
    250
    
    
    
    4.0
    %
    
    
    5,174Panama
    
    
    23
    
    
    
    8.3
    %
    
    
    6,883USA
    
    
    14,334
    
    
    
    1.6
    %
    
    
    47,025
 
 Source:
    
    International Monetary Fund, World Economic Outlook Database,
October 2008; real GDP growth calculated in local currency.  26




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Route Network and Schedules
 Copa
       27




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##### Table of Contents



Revenue by Region
 Year Ended December 31,Region
    
    2006
    
    
    2007
    
    
    2008North America(1)
    
    
    19.4
    %
    
    
    18.9
    %
    
    
    14.4
    %South America
    
    
    41.5
    %
    
    
    46.1
    %
    
    
    55.4
    %Central America(2)
    
    
    29.0
    %
    
    
    26.2
    %
    
    
    23.7
    %Caribbean(3)
    
    
    10.1
    %
    
    
    8.8
    %
    
    
    6.6
    %
 
 (1)
    
    The United States, Canada and Mexico.(2)
    
    Includes Panama.(3)
    
    Cuba, Dominican Republic, Haiti, Jamaica, Puerto Rico, Trinidad and Tobago AeroRepública
  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 1993
   28




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##### Table of Contents



Comunidad Andina
 Airline Operations
 Passenger Operations
   Cargo Operations
  Pricing and Revenue Management
 Copa
    29




---



##### Table of Contents



AeroRepública
  Relationship with Continental Airlines
        30




---



##### Table of Contents



Sales, Marketing and Distribution
 Copa
 Sales and Distribution.
     Advertising and Promotional Activities.
 AeroRepública
   31




---



##### Table of Contents



Competition
          32




---



##### Table of Contents



Aircraft
 Copa
   AverageTermof LeaseNumber of Aircraft
    
    
    Remaining
    
    
    Average Age
    
    
    SeatingTotal
    
    
    Owned
    
    
    Leased
    
    
    (Years)
    
    
    (Years)
    
    
    CapacityBoeing 737-700
    
    
    20
    
    
    
    14
    
    
    
    6
    
    
    
    2.2
    
    
    
    6.5
    
    
    
    124Boeing 737-800
    
    
    7
    
    
    
    6
    
    
    
    1
    
    
    
    3.9
    
    
    
    3.1
    
    
    
    155Embraer 190
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    1.6
    
    
    
    94Total
    
    
    42
    
    
    
    35
    
    
    
    7
    
    
    
    2.4
    
    
    
    4.2
    
    
    
    
  Aircraft Type
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013737-700(1)
    
    
    18
    
    
    
    16
    
    
    
    16
    
    
    
    15
    
    
    
    15737-800(2)
    
    
    10
    
    
    
    13
    
    
    
    18
    
    
    
    20
    
    
    
    20Embraer 190(3)
    
    
    13
    
    
    
    13
    
    
    
    13
    
    
    
    13
    
    
    
    13Total Fleet
    
    
    41
    
    
    
    42
    
    
    
    47
    
    
    
    48
    
    
    
    48
 (1)
    
    Assumes the return of leased aircraft upon expiration of lease contracts.(2)
    
    We have the flexibility to choose between the Boeing 737-700 or the Boeing 737-800 aircraft
for most of the 737-700 aircraft deliveries.(3)
    
    Assumes that two Embraer 190 aircraft from Copa are transferred to AeroRepublica during 2009.  33




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##### Table of Contents




    
    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.
   Clase
Ejecutiva
  AeroRepública
   34




---



##### Table of Contents



Maintenance
 Copa
   AeroRepública
  Safety
     35




---



##### Table of Contents



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, we are currently not constrained by a
lack of available gates/parking positions at Tocumen, and there is ample room to
expand.
 
    
    From Panamas central location, our Boeing 737-Next Generation can efficiently
serve long-haul destinations in South American cities such as Santiago, Chile;
Montevideo, Uruguay; Cordoba, Argentina; Buenos Aires, Argentina; Santa Cruz de la
Sierra, Bolivia; Belo Horizonte, Brazil; Rio de Janeiro, Brazil; and São Paulo,
Brazil as well as short-haul destinations in Central and South America.
 
    
    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 Data2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008CopaAverage price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    $
    1.32
    
    
    $
    1.87
    
    
    $
    2.10
    
    
    $
    2.29
    
    
    $
    3.21Gallons consumed (in thousands)
    
    
    50,833
    
    
    
    58,924
    
    
    
    70,770
    
    
    
    85,463
    
    
    
    100,266Available seat miles (in millions)
    
    
    3,639
    
    
    
    4,409
    
    
    
    5,239
    
    
    
    6,298
    
    
    
    7,342Gallons per ASM (in hundredths)
    
    
    1.40
    
    
    
    1.34
    
    
    
    1.35
    
    
    
    1.36
    
    
    
    1.37AeroRepública(1)Average price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    
    
    
    
    $
    2.12
    
    
    $
    2.24
    
    
    $
    2.43
    
    
    $
    3.49Gallons consumed (in thousands)
    
    
    
    
    
    
    17,887
    
    
    
    28,321
    
    
    
    26,984
    
    
    
    24,798Available seat miles (in millions)
    
    
    
    
    
    
    950
    
    
    
    1,627
    
    
    
    1,620
    
    
    
    1,503Gallons per ASM (in hundredths)
    
    
    
    
    
    
    1.88
    
    
    
    1.74
    
    
    
    1.67
    
    
    
    1.65
 
 (1)
    
    Since April 22, 2005.  Insurance
  Environmental
   37




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##### Table of Contents



Regulation
 Panama
 Authorization and Licenses.
   Safety Assessment.
 Ownership Requirements.
  38




---



##### Table of Contents



Antitrust Regulations.
 Noise Restrictions.
 Colombia
   U.S.
   39




---



##### Table of Contents



Authorizations and Licenses.
  Security.
 Passenger Facility Charges.
 Airport Access.
  40




---



##### Table of Contents



Noise Restrictions.
 Other Regulation.
 Other Jurisdictions
  C. Organizational Structure
  
 *
    
    Includes ownership by us held through wholly-owned holding companies organized in the British
Virgin Islands.   41




---



##### Table of Contents



D. Property, Plants and Equipment
 Headquarters
  Other Property
   AeroRepública
  
 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.
    42




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##### Table of Contents



43




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##### Table of Contents



Regional Economic Environment
  The Preliminary Overview of the Economies of Latin America and the
Caribbean
 Revenues
      Year Ended December 31,2006
    
    
    2007
    
    
    2008Copa SegmentCapacity (in available seat miles, in millions)
    
    
    5,239.1
    
    
    
    6,297.9
    
    
    
    7,341.9Load factor
    
    
    77.8
    %
    
    
    78.4
    %
    
    
    78.8
    %Yield (in cents)
    
    
    15.49
    
    
    
    15.33
    
    
    
    16.81AeroRepública SegmentCapacity (in available seat miles, in millions)
    
    
    1,627.1
    
    
    
    1,620.4
    
    
    
    1,502.7Load factor
    
    
    57.9
    %
    
    
    57.2
    %
    
    
    61.7
    %Yield (in cents)(1)
    
    
    17.79
    
    
    
    22.74
    
    
    
    26.31
 
 (1)
    
    AeroRepública has not historically distinguished between revenue
passengers and non-revenue passengers. We are implementing
systems at AeroRepública to record that information.
  44




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##### Table of Contents



Seasonality
  Operating Expenses
  Aircraft fuel.
 Aircraft Fuel Data2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Copa SegmentAverage price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    $
    1.32
    
    
    $
    1.87
    
    
    $
    2.10
    
    
    $
    2.29
    
    
    $
    3.21Gallons consumed (in thousands)
    
    
    50,833
    
    
    
    58,924
    
    
    
    70,770
    
    
    
    85,463
    
    
    
    100,266Available seat miles (in millions)
    
    
    3,639
    
    
    
    4,409
    
    
    
    5,239
    
    
    
    6,298
    
    
    
    7,342Gallons per ASM (in hundredths)
    
    
    1.40
    
    
    
    1.34
    
    
    
    1.35
    
    
    
    1.36
    
    
    
    1.37AeroRepública(1)Average price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    
    
    
    
    $
    2.12
    
    
    $
    2.24
    
    
    $
    2.43
    
    
    $
    3.49Gallons consumed (in thousands)
    
    
    
    
    
    
    17,887
    
    
    
    28,321
    
    
    
    26,984
    
    
    
    24,798Available seat miles (in millions)
    
    
    
    
    
    
    950
    
    
    
    1,627
    
    
    
    1,620
    
    
    
    1,503Gallons per ASM (in hundredths)
    
    
    
    
    
    
    1.88
    
    
    
    1.74
    
    
    
    1.67
    
    
    
    1.65
 
 (1)
    
    Since April 22, 2005. Salaries and benefits.
 Passenger servicing expenses.
  45




---



##### Table of Contents



Commissions.
 Maintenance, material and repair expenses.
  Aircraft rent.
 Reservations and sales expenses.
 Flight operations landing fees and other rentals
 Other
  46




---



##### Table of Contents



Taxes
      Critical Accounting Policies and Estimates
   Revenue recognition.
  47




---



##### Table of Contents



Frequent flyer program.
 Goodwill and indefinite-lived purchased intangible assets.
 Derivative instruments and hedging activities.
      48




---



##### Table of Contents



Maintenance and repair costs.
  Recently Issued Accounting Pronouncement
    49




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##### Table of Contents



Gain from Involuntary Conversion
  Special Fleet Charges
  Results of Operation
  Year Ended December 31,2006
    
    
    2007
    
    
    2008Operating revenues:Passenger revenue
    
    
    93.9
    %
    
    
    94.1
    %
    
    
    94.5
    %Cargo, mail and other
    
    
    6.1
    %
    
    
    5.9
    %
    
    
    5.5
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Aircraft fuel
    
    
    (25.6
    )%
    
    
    (25.8
    )%
    
    
    (31.4
    )%Salaries and benefits
    
    
    (10.7
    )%
    
    
    (11.4
    )%
    
    
    (10.8
    )%Passenger servicing
    
    
    (7.6
    )%
    
    
    (8.1
    )%
    
    
    (7.7
    )%Commissions
    
    
    (6.8
    )%
    
    
    (6.4
    )%
    
    
    (5.2
    )%Reservation and sales
    
    
    (4.5
    )%
    
    
    (4.7
    )%
    
    
    (4.3
    )%Maintenance, materials and repairs
    
    
    (5.9
    )%
    
    
    (5.0
    )%
    
    
    (5.2
    )%Depreciation
    
    
    (2.9
    )%
    
    
    (3.4
    )%
    
    
    (3.3
    )%Flight operations
    
    
    (4.0
    )%
    
    
    (4.3
    )%
    
    
    (4.4
    )%Aircraft rentals
    
    
    (4.5
    )%
    
    
    (3.8
    )%
    
    
    (3.3
    )%Landing fees and other rentals
    
    
    (2.8
    )%
    
    
    (2.6
    )%
    
    
    (2.5
    )%Other
    
    
    (5.3
    )%
    
    
    (5.4
    )%
    
    
    (4.5
    )%Special fleet charges
    
    
    
    
    
    
    (0.7
    )%
    
    
    Gain from involuntary conversion
    
    
    
    
    
    
    0.8
    %
    
    
    Total
    
    
    (80.5
    )%
    
    
    (80.8
    )%
    
    
    (82.6
    )%Operating income
    
    
    19.5
    %
    
    
    19.2
    %
    
    
    17.4
    %Non-operating income (expenses):Interest expense
    
    
    (3.4
    )%
    
    
    (4.3
    )%
    
    
    (3.3
    )%Interest capitalized
    
    
    0.2
    %
    
    
    0.3
    %
    
    
    0.1
    %Interest income
    
    
    0.9
    %
    
    
    1.2
    %
    
    
    0.9
    %Other, net
    
    
    0.0
    %
    
    
    1.1
    %
    
    
    (4.6
    )%Total
    
    
    (2.3
    )%
    
    
    (1.8
    )%
    
    
    (6.8
    )%Income/(loss) before income taxes
    
    
    17.2
    %
    
    
    17.4
    %
    
    
    10.6
    %Income taxes
    
    
    (1.4
    )%
    
    
    (1.7
    )%
    
    
    (1.4
    )%Net income
    
    
    15.7
    %
    
    
    15.8
    %
    
    
    9.2
    %
  50




---



##### Table of Contents



Year 2008 Compared to Year 2007
  Operating revenue
  Copa segment operating revenue
  Passenger revenue.
 Cargo, mail and other.
 AeroRepública segment operating revenue
  Operating expenses
    51




---



##### Table of Contents



Aircraft fuel.
 Salaries and benefits.
 Passenger servicing.
 Commissions.
  Copa segment operating expenses
  Year EndedDecember 31,
    
    
    Percent2007
    
    
    2008
    
    
    Change(in cents)Operating Expenses per ASM:Salaries and benefits
    
    
    1.45
    
    
    
    1.48
    
    
    
    2.4
    %Passenger servicing
    
    
    1.09
    
    
    
    1.11
    
    
    
    1.6
    %Commissions
    
    
    0.74
    
    
    
    0.71
    
    
    
    (3.6
    %)Reservation and sales
    
    
    0.57
    
    
    
    0.55
    
    
    
    (2.6
    %)Maintenance, materials and repairs
    
    
    0.62
    
    
    
    0.63
    
    
    
    0.6
    %Depreciation
    
    
    0.49
    
    
    
    0.52
    
    
    
    6.4
    %Flight operations
    
    
    0.58
    
    
    
    0.64
    
    
    
    8.7
    %Aircraft rentals
    
    
    0.44
    
    
    
    0.43
    
    
    
    (3.4
    %)Landing fees and other rentals
    
    
    0.32
    
    
    
    0.33
    
    
    
    1.8
    %Other
    
    
    0.61
    
    
    
    0.55
    
    
    
    (8.8
    %)Total operating expenses per ASM before
aircraft fuel
    
    
    6.90
    
    
    
    6.94
    
    
    
    0.5
    %Aircraft fuel
    
    
    3.17
    
    
    
    4.33
    
    
    
    36.7
    %Total operating expenses per ASM
    
    
    10.08
    
    
    
    11.27
    
    
    
    11.9
    %
 Aircraft fuel.
  52




---



##### Table of Contents



Salaries and benefits.
 Passenger servicing.
 Commissions.
 Reservations and sales.
 Maintenance, materials and repairs.
 Depreciation.
 Flight operations, aircraft rentals landing fees and other rentals.
 Other.
 AeroRepública segment operating expenses
  Non-operating income (expense)
  Copa segment non-operating income (expense)
  Interest expense.
  53




---



##### Table of Contents



Interest capitalized.
 Interest income.
 Other, net.
 AeroRepública segment non-operating income (expense)
  Year 2007 Compared to Year 2006
  Operating revenue
  Copa segment operating revenue
  Passenger revenue.
 Cargo, mail and other.
 AeroRepública segment operating revenue
   54




---



##### Table of Contents



Operating expenses
    Aircraft fuel.
 Salaries and benefits.
 Passenger servicing.
 Commissions.
  Copa segment operating expenses
  Year EndedDecember 31,
    
    
    Percent2006
    
    
    2007
    
    
    Change(in cents)Operating Expenses per ASM:Salaries and benefits
    
    
    1.43
    
    
    
    1.45
    
    
    
    1.4
    %Passenger servicing
    
    
    1.03
    
    
    
    1.09
    
    
    
    5.2
    %Commissions
    
    
    0.77
    
    
    
    0.74
    
    
    
    (4.5
    )%Reservation and sales
    
    
    0.58
    
    
    
    0.57
    
    
    
    (2.1
    )%Maintenance, materials and repairs
    
    
    0.52
    
    
    
    0.62
    
    
    
    18.8
    %Depreciation
    
    
    0.45
    
    
    
    0.49
    
    
    
    7.6
    %Flight operations
    
    
    0.54
    
    
    
    0.58
    
    
    
    7.4
    %Aircraft rentals
    
    
    0.46
    
    
    
    0.44
    
    
    
    (3.2
    )%Landing fees and other rentals
    
    
    0.35
    
    
    
    0.32
    
    
    
    (9.4
    )%Other
    
    
    0.64
    
    
    
    0.61
    
    
    
    (4.3
    )%Total operating expenses per ASM before
aircraft fuel
    
    
    6.78
    
    
    
    6.90
    
    
    
    1.8
    %Aircraft fuel
    
    
    2.95
    
    
    
    3.17
    
    
    
    7.6
    %Total operating expenses per ASM
    
    
    9.73
    
    
    
    10.08
    
    
    
    3.6
    %
  55




---



##### Table of Contents



Aircraft fuel.
 Salaries and benefits.
 Passenger servicing.
 Commissions.
 Reservations and sales.
 Maintenance, materials and repairs.
 Depreciation.
 Flight operations, aircraft rentals landing fees and other rentals.
 Other.
 AeroRepública segment operating expenses
   56




---



##### Table of Contents



Non-operating income (expense)
  Copa segment non-operating income (expense)
  Interest expense.
 Interest capitalized.
 Interest income.
 Other, net.
 AeroRepública segment non-operating income (expense)
  B. Liquidity and Capital Resources
   Operating Activities
   57




---



##### Table of Contents



Investing Activities
  Financing Activities
        58




---



##### Table of Contents



Capital resources.
   59




---



##### Table of Contents



C. Research and Development, Patents and Licenses, etc.
   D. Trend Information
     E. Off-balance sheet arrangements
   60




---



##### Table of Contents



F. Tabular Disclosure of Contractual Obligations
  At December 31, 2008Less than 1
    
    
    1-3
    
    
    3-5
    
    
    More than 5Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years(in thousands of dollars)Aircraft and engine purchase commitments
    
    
    470,646
    
    
    
    156,946
    
    
    
    268,722
    
    
    
    44,978
    
    
    
    Aircraft operating leases
    
    
    254,263
    
    
    
    41,197
    
    
    
    77,827
    
    
    
    60,208
    
    
    
    75,031Other operating leases
    
    
    43,445
    
    
    
    10,124
    
    
    
    14,407
    
    
    
    11,011
    
    
    
    7,903Short-term debt and long-term debt(1)
    
    
    1,050,557
    
    
    
    149,167
    
    
    
    204,623
    
    
    
    201,896
    
    
    
    494,871Total
    
    
    1,818,911
    
    
    
    357,434
    
    
    
    565,579
    
    
    
    318,093
    
    
    
    577,805
 (1)
    
    Includes actual interest and estimated interest for floating-rate debt based on December 31, 2008 rates.   
 Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
   Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer and Director
    
    51Stanley Motta
    
    Chairman and Director
    
    63Osvaldo Heilbron
    
    Director
    
    83Jaime Arias
    
    Director
    
    74Ricardo Alberto Arias
    
    Director
    
    69Alberto C. Motta, Jr.
    
    Director
    
    62Mark Erwin
    
    Director
    
    53Joseph Fidanque III
    
    Director
    
    42Jose Castañeda Velez
    
    Director
    
    65Roberto Artavia Loria
    
    Director
    
    50Alfredo Arias Loredo
    
    Director
    
    62
 Mr. Pedro Heilbron 3⁄4
 Mr. Stanley Motta
  61




---



##### Table of Contents



Mr. Osvaldo Heilbron
 Mr. Jaime Arias
 Mr. Ricardo Arias
 Mr. Alberto Motta, Jr.
 Mr. Mark Erwin
 Mr. Joseph Fidanque III
 Mr. Roberto Artavia Loria
 Mr. José Castañeda Velez
 Mr. Alfredo Arias Loredo
  62




---



##### Table of Contents



Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer
    
    51Victor Vial
    
    Chief Financial Officer
    
    43Daniel Gunn
    
    Senior Vice-President of Operations
    
    41Jaime Aguirre
    
    Vice-President of Maintenance
    
    46Vidalia de Casado
    
    Vice-President of Passenger Services
    
    52David Lindskoog
    
    Vice-President of Flight Operations
    
    58Leo Marchosky
    
    Vice-President of Human Resources
    
    52Joe Mohan
    
    Vice-President of Commercial and Planning
    
    39Roberto Junguito Pombo
    
    Chief Executive Officer of AeroRepública
    
    39
 Mr. Pedro Heilbron
 Mr. Victor Vial
 Mr. Daniel Gunn
 Mr. Jaime Aguirre
 Ms. Vidalia de Casado
 Captain David Lindskoog
 Dr. Leo Marchosky
  63




---



##### Table of Contents



Mr. Joe Mohan
 Mr. Roberto Junguito Pombo
  B. Compensation
   Incentive Compensation Program
    64




---



##### Table of Contents



C. Board Practices
    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.
   65




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##### Table of Contents



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.
  D. Employees
   66




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December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Pilots
    
    
    224
    
    
    
    235
    
    
    
    299
    
    
    
    375
    
    
    
    492Flight attendants
    
    
    372
    
    
    
    448
    
    
    
    514
    
    
    
    575
    
    
    
    719Mechanics
    
    
    189
    
    
    
    200
    
    
    
    155
    
    
    
    213
    
    
    
    247Customer service agents, reservation
agents, ramp and other
    
    
    1,470
    
    
    
    1,626
    
    
    
    1,861
    
    
    
    1,898
    
    
    
    2,270Management and clerical
    
    
    499
    
    
    
    587
    
    
    
    675
    
    
    
    742
    
    
    
    807Total employees
    
    
    2,754
    
    
    
    3,096
    
    
    
    3,504
    
    
    
    3,803
    
    
    
    4,535
    Asociación Colombiana de Aviadores Civiles Asociación Colombiana de Auxiliares de Vuelo
  67




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##### Table of Contents



E. Share Ownership
   
 Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  Class A SharesBeneficially OwnedShares
    
    
    (%) (1)CIASA (2)
    
    
    
    
    
    
    Executive officers and directors as a group (20 persons)
    
    
    282,246
    
    
    
    0.9
    %Bank of America Corp.(3)
    
    
    2,872,549
    
    
    
    9.4
    %Orbis group (4)
    
    
    2,665,800
    
    
    
    8.8
    %Others
    
    
    24,595,846
    
    
    
    85.1
    %Total
    
    
    30,416,441
    
    
    
    100
    %
 
 (1)
    
    Based on a total of 30,416,441 Class A shares outstanding.(2)
    
    CIASA owns 100% of the Class B shares of Copa Holdings, representing 29.2% of our total capital stock.(3)
    
    Based on a Schedule 13G filed with the SEC, dated February 12, 2009, in which Bank of America Corp.
and certain related parties, reported beneficial ownership of 2,872,549 Class A Shares.(4)
    
    Based on Schedule 13G filed with the SEC, dated February 17, 2009, in which Orbis Investment
Management Limited and Orbis Asset Management Limited reported beneficial ownership of 2,645,230 and
20,570 Class A Shares, respectively.     68




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##### Table of Contents



B. Related Party Transactions
 Supplemental Agreement
  Registration Rights Agreement
  Commercial Agreements with Continental
  Alliance Agreement.
 Services Agreement.
  69




---



##### Table of Contents



Frequent Flyer Participation Agreement.
 Trademark License Agreement.
 Agreements with our controlling shareholders and their affiliates
  Banco General, S.A.
  ASSA Compañía de Seguros, S.A.
   70




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##### Table of Contents



Petróleos Delta, S.A.
  Desarollo Inmobiliario del Este, S.A.
  Galindo, Arias & Lopez
  Other Transactions
     C. Interests of Experts and Counsel
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information
 3⁄4
  71




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##### Table of Contents



Legal Proceedings
  Dividends and Dividend Policy
    B. Significant Changes
   72




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##### Table of Contents



Item 9. The Offer and Listing
 A. Offer and Listing Details
  Low
    
    
    High2005Annual(1)
    
    
    21.95
    
    
    
    27.402006Annual
    
    
    20.31
    
    
    
    49.052007Annual
    
    
    30.25
    
    
    
    73.33First quarter
    
    
    46.70
    
    
    
    66.47Second quarter
    
    
    50.54
    
    
    
    71.00Third quarter
    
    
    38.31
    
    
    
    73.33Fourth quarter
    
    
    30.25
    
    
    
    45.242008Annual
    
    
    18.00
    
    
    
    43.64First quarter
    
    
    30.00
    
    
    
    41.97Second quarter
    
    
    27.53
    
    
    
    43.64Third quarter
    
    
    24.69
    
    
    
    42.00Fourth quarter
    
    
    18.00
    
    
    
    34.00Last Six MonthsNovember 2008
    
    
    18.00
    
    
    
    27.00December 2008
    
    
    21.60
    
    
    
    30.90January 2009
    
    
    25.48
    
    
    
    32.00February 2009
    
    
    25.35
    
    
    
    33.10March 2009
    
    
    20.36
    
    
    
    28.99April 2009
    
    
    27.20
    
    
    
    34.31
 
 (1)
    
    Period beginning December 14, 2005 through
December 31, 2005. B. Plan of Distribution
  C. Markets
   73




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##### Table of Contents



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 our registration
statement.
 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
   74




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##### 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
   75




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##### Table of Contents



Class C Shares
  Restrictions on Transfer of Common Stock; Conversion of Class B Shares
   Tag-along Rights
  Aviation Rights Protections
   76




---



##### 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
   77




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Notice and Location
   Quorum
  Proxy Representation
  Listing
  Transfer Agent and Registrar
  Other Shareholder Rights
     78




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##### Table of Contents



Summary of Significant Differences between Shareholders Rights
and Other Corporate Governance Matters Under Panamanian Corporation Law and Delaware Corporation Law
 sociedad anónima
 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.
  79




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##### Table of Contents



Panama
    
    DelawareShareholder 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.Action 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.
  80




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##### Table of Contents



Panama
    
    DelawareInspection 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.Anti-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.
  81




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##### 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.
  82




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##### Table of Contents



C. Material Contracts
 Commercial Agreements with Continental Airlines
  Alliance Agreement between Continental and Copa Airlines.
 Services Agreement between Continental and Copa Airlines.
 Frequent Flyer Participation Agreement between Continental and Copa Airlines.
 Trademark License Agreement between Continental 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
  Purchase Agreement between Empresa Brasileira de Aeronautica, S.A. and Copa Holdings, S.A.
  D. Exchange Controls
   83




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##### Table of Contents



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;
 
    
    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.
  84




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##### Table of Contents



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,
    85




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##### Table of Contents



Passive Foreign Investment Company
  Taxation of Capital Gains
  Information reporting and backup withholding
   Panamanian Taxation
  General principles
  Taxation of dividends
   86




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##### 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.
  87




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##### Table of Contents



Interest.
 Foreign Currencies.
 2008 Revenues and Expenses Breakdown by Currency
 Revenue
    
    
    ExpenseArgentinean Peso
    
    
    6.4
    %
    
    
    2.5
    %Brazilian Real
    
    
    7.1
    %
    
    
    4.4
    %Chilean Peso
    
    
    3.2
    %
    
    
    1.5
    %Colombian Peso
    
    
    19.5
    %
    
    
    11.7
    %Costa Rican Colon
    
    
    2.7
    %
    
    
    1.4
    %Mexican Peso
    
    
    3.3
    %
    
    
    1.8
    %U.S. Dollar
    
    
    40.9
    %
    
    
    69.7
    %Venezuelan Bolivar
    
    
    8.8
    %
    
    
    3.0
    %Other(1)
    
    
    8.1
    %
    
    
    3.9
    %
 
 (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
   88




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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
  Managements Report on Internal Control over Financial Reporting
     Changes in internal control
   89




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF DIRECTORS AND SHAREHOLDERS
COPA HOLDINGS, S.A. We have audited Copa Holdings, S.A. and subsidiaries (the Company) internal control over financial reporting as
of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Companys 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 on Internal Control over Financial
Reporting. 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
provides 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, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2008, based on the COSO criteria. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of the Company as of December 31, 2008 and 2007, and related consolidated
statements of income, shareholders equity, and cash flows for each of the three years in the period ended December 31,
2008, and our report dated May 5, 2009 expressed an unqualified opinion thereon. /s/ Ernst and Young May 5, 2009

Panama City, Republic of Panama  90




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Item 16. Reserved
 
 Item 16A. Audit Committee Financial Expert
 3⁄4
 
 Item 16B. Code of Ethics
 3⁄4
 
 Item 16C. Principal Accountant Fees and Services
  2007
    
    
    2008Audit Fees
    
    $
    823,085
    
    
    $
    769,860Audit-Related Fees
    
    
    3⁄4
    
    
    
    3⁄4Tax Fees
    
    
    3⁄4
    
    
    
    3⁄4All Other Fees
    
    
    3⁄4
    
    
    
    3⁄4Total
    
    $
    823,085
    
    
    $
    769,860
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Pre-Approval Policies and Procedures
 de minimis de minimis
  91




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##### Table of Contents



Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  Item 16F. Change in Registrants Certifying Accountant
  Item 16G. Corporate Governance
  Comisión Nacional de Valores
 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.
  92




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##### Table of Contents



NYSE Standards
    
    Our Corporate Governance PracticeExecutive 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
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.Code 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.
  93




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##### Table of Contents



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
    
    
    Supplemental Agreement, dated May 13, 2008, among Copa Holdings, S.A., Corporación
de Inversiones Aéreas, S.A. and Continental Airlines, Inc. (Incorporated by reference to our Registration Statement on Form F-3ASR filed on May 13, 2008)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. 2860710.8
    **
    
    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. 30049
  94




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##### Table of Contents



10.12
    **
    
    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.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.
  95




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##### Table of Contents



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. (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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.  (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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.  (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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. (Incorporated by reference to our Annual Report on Form 20-F filed on May 9, 2008)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. (Incorporated by reference to our Annual Report on Form 20-F filed on May 9, 2008)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.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.
  96




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##### Table of Contents



12.1
    
    
    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.  97




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##### Table of Contents



SIGNATURES
  COPA HOLDINGS, S.A.By:
    
    /s/ Pedro HeilbronName:
    
    Pedro HeilbronTitle:
    
    Chief Executive Officer
   98




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PagesAudited Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    F-3Consolidated Statements of Income for each of the three years
in the period ended December 31, 2008
    
    
    F-5Consolidated Statements of Shareholders Equity for each of the three years
in the period ended December 31, 2008
    
    
    F-6Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2008
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
  F-1




---



##### 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 balance sheets of Copa Holdings, S.A. and subsidiaries (the Company) as
of December 31, 2008 and 2007, and the related consolidated statements of income, shareholders equity, and cash flows
for each of the three years in the period ended December 31, 2008.  Our audits also included the financial statement
schedule included in Item 18.These financial statements and schedule are the responsibility of the Companys
management.  Our responsibility is to express an opinion on these financial statements and schedule 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 consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of the Company at December 31, 2008 and 2007, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with
U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the
information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Companys internal control over financial reporting as of December 31, 2008, 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 5, 2009 expressed an unqualified opinion thereon. /s/ Ernst and Young May 5, 2009

Panama City, Republic of Panama  F-2




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In US$ thousands, except share and per share data)
 As of December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    220,808
    
    
    $
    285,858Short-term investments
    
    
    176,018
    
    
    
    22,500Total cash, cash equivalents and short-term investments
    
    
    396,826
    
    
    
    308,358Accounts receivable, net of allowance for doubtful accounts of
of $5,002 and $8,157 as of December 31, 2008 and 2007, respectively
    
    
    70,609
    
    
    
    73,389Accounts receivable from related parties
    
    
    4,592
    
    
    
    780Expendable parts and supplies, net of allowance for obsolescence of
of $53 and $35 as of December 31, 2008 and 2007, respectively
    
    
    18,405
    
    
    
    14,088Prepaid expenses
    
    
    26,694
    
    
    
    25,574Other current assets
    
    
    5,338
    
    
    
    13,547Total Current Assets
    
    
    522,464
    
    
    
    435,736Investments
    
    
    11,145
    
    
    
    17,038Property and Equipment:Owned property and equipment:Flight equipment
    
    
    1,372,352
    
    
    
    1,188,641Other
    
    
    55,291
    
    
    
    50,9091,427,643
    
    
    
    1,239,550Less: Accumulated depreciation
    
    
    (174,835
    )
    
    
    (137,367
    )1,252,808
    
    
    
    1,102,183Purchase deposits for flight equipment
    
    
    84,861
    
    
    
    64,079Total Property and Equipment
    
    
    1,337,669
    
    
    
    1,166,262Other Assets:Prepaid pension asset
    
    
    1,486
    
    
    
    1,034Goodwill
    
    
    21,732
    
    
    
    24,201Other intangible assets
    
    
    31,865
    
    
    
    35,484Other assets
    
    
    27,864
    
    
    
    27,496Total Other Assets
    
    
    82,947
    
    
    
    88,215Total Assets
    
    $
    1,954,225
    
    
    $
    1,707,251
   F-3




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS (continued)  (In US$ thousands, except share and per share data)
 As of December 31,2008
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt
    
    $
    115,833
    
    
    $
    110,658Accounts payable
    
    
    54,066
    
    
    
    57,468Accounts payable to related parties
    
    
    11,510
    
    
    
    10,824Air traffic liability
    
    
    182,490
    
    
    
    153,422Taxes and interest payable
    
    
    37,194
    
    
    
    36,644Accrued expenses payable
    
    
    40,642
    
    
    
    52,233Other current liabilities
    
    
    60,349
    
    
    
    3,740Total Current Liabilities
    
    
    502,084
    
    
    
    424,989Non-Current Liabilities:Long-term debt
    
    
    800,196
    
    
    
    732,209Post employment benefits liability
    
    
    2,072
    
    
    
    1,894Other long-term liabilities
    
    
    8,694
    
    
    
    9,775Deferred tax liabilities
    
    
    8,747
    
    
    
    6,747Total Non-Current Liabilities
    
    
    819,709
    
    
    
    750,625Total Liabilities
    
    
    1,321,793
    
    
    
    1,175,614Shareholders Equity:Class A common stock  31,031,129 and 30,966,430 shares issued,
30,416,441 and 30,159,719 outstanding in 2008 and 2007
    
    
    20,761
    
    
    
    20,586Class B common stock  12,778,125 shares issued
and outstanding, no par value
    
    
    8,722
    
    
    
    8,722Additional paid in capital
    
    
    13,481
    
    
    
    8,064Retained earnings
    
    
    594,004
    
    
    
    491,599Accumulated other comprehensive (loss) Income
    
    
    (4,536
    )
    
    
    2,666Total Shareholders Equity
    
    
    632,432
    
    
    
    531,637Total Liabilities and Shareholders Equity
    
    $
    1,954,225
    
    
    $
    1,707,251
   F-4




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
(In US$ thousands, except share and per share data)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Operating Revenue:Passenger revenue
    
    $
    1,217,311
    
    
    $
    967,066
    
    
    $
    798,901Cargo, mail and other
    
    
    71,478
    
    
    
    60,198
    
    
    
    52,2591,288,789
    
    
    
    1,027,264
    
    
    
    851,160Operating Expenses:Aircraft fuel
    
    
    404,669
    
    
    
    265,387
    
    
    
    217,730Salaries and benefits
    
    
    139,431
    
    
    
    116,691
    
    
    
    91,382Passenger servicing
    
    
    98,775
    
    
    
    82,948
    
    
    
    64,380Commissions
    
    
    67,177
    
    
    
    65,930
    
    
    
    57,808Maintenance, material and repairs
    
    
    66,438
    
    
    
    51,249
    
    
    
    50,057Reservations and sales
    
    
    54,996
    
    
    
    48,229
    
    
    
    38,212Aircraft rentals
    
    
    43,008
    
    
    
    38,636
    
    
    
    38,169Flight operations
    
    
    56,425
    
    
    
    43,958
    
    
    
    33,740Depreciation
    
    
    42,891
    
    
    
    35,328
    
    
    
    24,874Landing fees and other rentals
    
    
    32,467
    
    
    
    27,017
    
    
    
    23,929Other
    
    
    58,521
    
    
    
    55,093
    
    
    
    44,758Special fleet charges
    
    
    
    
    
    
    7,309
    
    
    
    Gain from involuntary conversion
    
    
    
    
    
    
    (8,019
    )
    
    
    1,064,798
    
    
    
    829,756
    
    
    
    685,039Operating Income
    
    
    223,991
    
    
    
    197,508
    
    
    
    166,121Non-operating Income (Expense):Interest costs
    
    
    (42,071
    )
    
    
    (44,332
    )
    
    
    (29,150
    )Interest capitalized
    
    
    1,921
    
    
    
    2,570
    
    
    
    1,712Interest income
    
    
    11,130
    
    
    
    12,193
    
    
    
    7,257Other, net
    
    
    (58,843
    )
    
    
    10,987
    
    
    
    185(87,863
    )
    
    
    (18,582
    )
    
    
    (19,996
    )Income before Income Taxes
    
    
    136,128
    
    
    
    178,926
    
    
    
    146,125Provision for Income Taxes
    
    
    17,469
    
    
    
    17,106
    
    
    
    12,286Net Income
    
    $
    118,659
    
    
    $
    161,820
    
    
    $
    133,839Earnings per share:Basic
    
    $
    2.75
    
    
    $
    3.77
    
    
    $
    3.13Diluted
    
    $
    2.73
    
    
    $
    3.72
    
    
    $
    3.10
   F-5




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In US$ thousands, except share and per share data)
 AccumulatedCommon Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other(Non-par value)
    
    
    Issued Capital
    
    
    Paid in
    
    
    Retained
    
    
    ComprehensiveClass A
    
    
    Class B
    
    
    Class A
    
    
    Class B
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalAt December 31, 2005
    
    
    30,034,375
    
    
    
    12,778,125
    
    
    
    20,501
    
    
    
    8,722
    
    
    
    
    
    
    
    217,862
    
    
    
    (1,218
    )
    
    
    245,867Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133,839
    
    
    
    
    
    
    
    133,839Other comprehensive
loss:Net change in fair
value of
derivative
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,998
    )
    
    
    (3,998
    )Foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,861
    
    
    
    1,861Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,702Restricted stock Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,340
    
    
    
    
    
    
    
    
    
    
    
    3,340Actuarial loss
(Adoption of
FAS 158), net of
tax of $84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (929
    )
    
    
    (929
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,311
    )
    
    
    
    
    
    
    (8,311
    )At December 31, 2006
    
    
    30,034,375
    
    
    
    12,778,125
    
    
    
    20,501
    
    
    
    8,722
    
    
    
    3,340
    
    
    
    343,390
    
    
    
    (4,284
    )
    
    
    371,669Issuance of stock
    
    
    125,344
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    (85
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,820
    
    
    
    
    
    
    
    161,820Other comprehensive
income (loss):Net change in fair
value of
derivative
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,998
    
    
    
    3,998Foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,954
    
    
    
    2,954Actuarial loss, net
of amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168,770Restricted stock plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,809
    
    
    
    
    
    
    
    
    
    
    
    4,809Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,561
    )
    
    
    
    
    
    
    (13,561
    )At December 31, 2007
    
    
    30,159,719
    
    
    
    12,778,125
    
    
    
    20,586
    
    
    
    8,722
    
    
    
    8,064
    
    
    
    491,599
    
    
    
    2,666
    
    
    
    531,637Issuance of stock
    
    
    256,722
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    (175
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,659
    
    
    
    
    
    
    
    118,659Other comprehensive
income (loss):Net change in fair
value of
derivative
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,713
    )
    
    
    (6,713
    )Exchange effect on
intercompany
long term
balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,155
    
    
    
    2,155Foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,503
    )
    
    
    (2,503
    )Actuarial loss, net
of amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141
    )
    
    
    (141
    )Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,456Restricted stock plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,592
    
    
    
    
    
    
    
    
    
    
    
    5,592Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,207
    )
    
    
    
    
    
    
    (16,207
    )At December 31, 2008
    
    
    30,416,441
    
    
    
    12,778,125
    
    
    $
    20,761
    
    
    $
    8,722
    
    
    $
    13,481
    
    
    $
    594,004
    
    
    $
    (4,536
    )
    
    $
    632,432
   F-6




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In US$ thousands)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    118,659
    
    
    $
    161,820
    
    
    $
    133,839Adjustments for:Deferred income taxes
    
    
    4,649
    
    
    
    2,352
    
    
    
    (328
    )Depreciation
    
    
    42,891
    
    
    
    35,328
    
    
    
    24,874Gain on sale of property, equipment and involuntary conversion
    
    
    
    
    
    
    (9,579
    )
    
    
    (612
    )Special fleet charges
    
    
    199
    
    
    
    6,300
    
    
    
    Provision for doubtful accounts
    
    
    3,230
    
    
    
    4,276
    
    
    
    3,764Provision for obsolescence of expendable parts and supplies
    
    
    21
    
    
    
    12
    
    
    
    12Derivative instruments mark to market
    
    
    53,290
    
    
    
    (6,291
    )
    
    
    4,496Stock compensation
    
    
    5,593
    
    
    
    4,809
    
    
    
    3,340Changes in:Accounts receivable
    
    
    (4,459
    )
    
    
    (14,805
    )
    
    
    (15,317
    )Accounts receivable from related parties
    
    
    (3,177
    )
    
    
    1,256
    
    
    
    (1,661
    )Other current assets
    
    
    (6,346
    )
    
    
    (14,149
    )
    
    
    (8,690
    )Restricted cash
    
    
    (39,803
    )
    
    
    (1
    )
    
    
    110Other assets
    
    
    974
    
    
    
    (7,835
    )
    
    
    (3,412
    )Accounts payable
    
    
    (2,074
    )
    
    
    7,611
    
    
    
    2,699Accounts payable to related parties
    
    
    1,681
    
    
    
    1,671
    
    
    
    975Air traffic liability
    
    
    32,090
    
    
    
    35,215
    
    
    
    30,658Other liabilities
    
    
    (9,313
    )
    
    
    13,951
    
    
    
    18,721Net cash provided by operating activities
    
    
    198,105
    
    
    
    221,941
    
    
    
    193,468Cash flows from investing activitiesAcquisition of investments
    
    
    (240,407
    )
    
    
    (500
    )
    
    
    (32,988
    )Proceeds from redemption of investments
    
    
    132,586
    
    
    
    17,495
    
    
    
    22,906Advance payments on aircraft purchase contracts
    
    
    (53,434
    )
    
    
    (62,128
    )
    
    
    (58,697
    )Acquisition of property and equipment
    
    
    (162,479
    )
    
    
    (304,013
    )
    
    
    (193,330
    )Disposal of property and equipment
    
    
    954
    
    
    
    2,354
    
    
    
    3,129Insurance proceeds on involuntary conversion
    
    
    
    
    
    
    12,034
    
    
    
    Net cash flows used in investing activities
    
    
    (322,780
    )
    
    
    (334,758
    )
    
    
    (258,980
    )Cash flows from financing activitiesProceeds from loans and borrowings
    
    
    160,197
    
    
    
    329,147
    
    
    
    254,559Payments on loans and borrowings
    
    
    (84,471
    )
    
    
    (87,291
    )
    
    
    (77,246
    )Redemption of bonds
    
    
    
    
    
    
    
    
    
    
    (27,504
    )Dividends declared and paid
    
    
    (16,207
    )
    
    
    (13,561
    )
    
    
    (8,311
    )Net cash flows provided by financing activities
    
    
    59,519
    
    
    
    228,295
    
    
    
    141,498Effect of exchange rate change on cash
    
    
    106
    
    
    
    500
    
    
    
    (212
    )Net increase (decrease) in cash and cash equivalents
    
    
    (65,050
    )
    
    
    115,978
    
    
    
    75,774Cash and cash equivalents at January 1st
    
    
    285,858
    
    
    
    169,880
    
    
    
    94,106Cash and cash equivalents at December 31
    
    $
    220,808
    
    
    $
    285,858
    
    
    $
    169,880Supplemental disclosure of cash flow informationInterest paid, net of amount capitalized
    
    $
    40,383
    
    
    $
    40,108
    
    
    $
    26,779Income taxes paid
    
    
    14,906
    
    
    
    16,553
    
    
    
    11,284Investing and financing activities not affecting cash:Settlement of debt through insurance proceed on involuntary conversion
    
    
    
    
    
    
    22,820
    
    
    
    
   F-7




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Corporate Information
         F-8




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation
  Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  Investments
   F-9




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Expendable Parts and Supplies
  Property and Equipment
  YearsJet aircraft
    
    
    30Jet engines
    
    
    30Ground property and equipment
    
    5 to 10Furniture, fixture, equipment and others
    
    5 to 10Software rights and licenses
    
    3 to 8Aircraft rotables
    
    10 to 30Leasehold improvements
    
    Lesser of remaining lease term or useful life
 Measurement of Impairment of Long-Lived Assets
  Revenue Recognition
 Passenger Revenue
   F-10




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Cargo and Mail Services Revenue
  Other Revenue
  Frequent Flyer Program
  Passenger Traffic Commissions
  Foreign Currency Transactions and Translation
   F-11




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Derivative Instruments and Hedging Activities
      F-12




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Maintenance and Repair Costs
   Employee Profit Sharing
   F-13




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Advertising Costs
  Income Taxes
  Goodwill and Intangibles
 Goodwill and
Other Intangible Assets
  Gain from Involuntary Conversion
  Concentration Risk
   F-14




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Reclassifications
  2. Recently Issued Accounting Pronouncement
     F-15




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   3. Special Fleet Charges
   F-16




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. Long-Term Debt
  2008
    
    
    2007Long-term fixed rate debt
    
    $
    363.8
    
    
    $
    376.4(Secured fixed rate indebtedness due through 2019
Effective rates ranged from 3.98% to 6.75%)Long-term variable rate debt
    
    
    504.4
    
    
    
    431.6(Secured variable rate indebtedness due through 2019
Effective rates ranged from 1.90% to 3.90%)Medium-term variable rate debt
    
    
    47.8
    
    
    
    34.9(Unsecured variable rate indebtedness due in 2009
Effective rates ranged of 2.52% to 4.89%)Sub-total
    
    
    916.0
    
    
    
    842.9Less current maturities
    
    
    115.8
    
    
    
    110.7Long-term debt less current maturities
    
    $
    800.2
    
    
    $
    732.2
  Year ending December 31,2009
    
    $
    115.82010
    
    
    73.72011
    
    
    73.92012
    
    
    96.62013
    
    
    61.2Thereafter
    
    $
    494.8
     F-17




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     5. Investments
    F-18




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6. Leases
 Accounting for Leases,
  Operating LeasesYear ending December 31,
    
    Aircraft
    
    
    Non-Aircraft2009
    
    $
    41.2
    
    
    $
    10.12010
    
    
    40.6
    
    
    
    8.02011
    
    
    37.3
    
    
    
    6.52012
    
    
    32.6
    
    
    
    5.92013
    
    
    27.6
    
    
    
    5.1Later years
    
    
    75.0
    
    
    
    7.9Total minimum lease payments
    
    $
    254.3
    
    
    $
    43.5
   F-19




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Financial Instruments and Risk Management
 Fuel Price Risk Management
 Accounting for Derivative Instruments and Hedging
Activities
    Foreign Currency Exchange Risk Management
    F-20




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Interest Rates Risk Management
  Debt
  Other Financial Instruments
  8. Fair Value Measurement
    F-21




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     
 Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsCurrency
hedges
    
    $
    1.3
    
    
    
    
    
    
    $
    1.3LiabilitiesFuel derivatives
    
    
    47.9
    
    
    
    
    
    
    
    47.9Interest
rate hedges
    
    
    6.6
    
    
    
    
    
    
    
    6.6Currency
hedges
    
    
    0.3
    
    
    
    
    
    
    
    0.3Total liabilities
    
    $
    54.8
    
    
    
    
    
    
    $
    54.8
  F-22




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9. Cash and Stock Based Compensation Plans
  Share-Based
Payment
  Non-vested Stock
       F-23




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2008
    
    
    2007Weighted-Average
    
    
    
    
    
    
    Weighted-AverageGrant-Date
    
    
    
    
    
    

    Grant-DateShares
    
    
    Fair Value
    
    
    Shares
    
    
    Fair ValueNon-vested at beginning
of year
    
    
    806,711
    
    
    $
    21.77
    
    
    
    917,050
    
    
    $
    21.10Granted
    
    
    76,689
    
    
    
    37.97
    
    
    
    16,955
    
    
    
    53.14Vested
    
    
    (256,722
    )
    
    
    22.11
    
    
    
    (125,344
    )
    
    
    21.10Forfeited
    
    
    (11,990
    )
    
    
    24.49
    
    
    
    (1,950
    )
    
    
    21.10Non-vested at end of year
    
    
    614,688
    
    
    $
    23.60
    
    
    
    806,711
    
    
    $
    21.77
    F-24




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Stock Options
    SharesOutstanding at January 1, 2008
    
    
    35,657Granted
    
    
    0Exercised
    
    
    0Forfeited or expired
    
    
    (2,028
    )Outstanding at December 31, 2008
    
    
    33,629
   F-25




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Earnings Per Share
  December 31,2008
    
    
    2007
    
    
    2006Income available to common
stockholders for both basic
and diluted EPS
    
    $
    118.7
    
    
    $
    161.8
    
    
    $
    133.8Weighted average
common shares outstanding
applicable to basic EPS
    
    
    43,142,515
    
    
    
    42,907,967
    
    
    
    42,812,500Basic earnings per share
    
    $
    2.75
    
    
    $
    3.77
    
    
    $
    3.13Weighted average common
shares outstanding
applicable to diluted EPS
    
    
    43,142,515
    
    
    
    42,907,967
    
    
    
    42,812,500Effect of dilutive shares:Non-vested Stock Plan
    
    
    297,363
    
    
    
    555,792
    
    
    
    422,053Adjusted weighted average
common shares outstanding
applicable to diluted EPS
    
    
    43,439,878
    
    
    
    43,463,759
    
    
    
    43,234,553Diluted earnings per share
    
    $
    2.73
    
    
    $
    3.72
    
    
    $
    3.10
   F-26




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##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11. Accumulated Other Comprehensive Income (Loss)
  Foreign
    
    
    
    
    
    
    DerivativesCurrency
    
    
    
    
    
    
    FinancialTranslation
    
    
    Pensions
    
    
    Instruments
    
    
    TotalBalance as of December 31,
2006
    
    $
    0.6
    
    
    $
    (0.9
    )
    
    $
    (4.0
    )
    
    $
    (4.3
    )Foreign currency translation
    
    
    3.0
    
    
    
    
    
    
    
    
    
    
    
    3.0Unrealized gain (loss) on
derivatives instruments
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    4.0SFAS 158 Unrecognized
actuarial loss of the period
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Amortization of actuarial loss
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Balance as of December 31,
2007
    
    $
    3.6
    
    
    $
    (0.9
    )
    
    $
    0.0
    
    
    $
    2.7Foreign currency translation
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Unrealized gain (loss) on
derivatives instruments
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    (6.8
    )SFAS 158 Unrecognized
actuarial loss of the period
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.2
    )Amortization of actuarial loss
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Balance as of December 31,
2008
    
    $
    3.3
    
    
    $
    (1.0
    )
    
    $
    (6.8
    )
    
    $
    (4.5
    )
 12. Issued Capital and Corporate Reorganization
   F-27




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    13. Income Taxes
    F-28




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    2008
    
    
    2007
    
    
    2006PanamaCurrent
    
    $
    1.7
    
    
    $
    1.3
    
    
    $
    1.1Deferred
    
    
    
    
    
    
    
    
    
    
    ForeignCurrent
    
    
    11.2
    
    
    
    13.4
    
    
    
    11.5Deferred
    
    
    4.6
    
    
    
    2.4
    
    
    
    (0.3
    )Total
    
    
    17.5
    
    
    
    17.1
    
    
    
    12.3
     F-29




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Amount
    
    
    Percentage2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006Provision for income taxes
at Panamanian
statutory rates
    
    $
    40.8
    
    
    $
    53.7
    
    
    $
    43.8
    
    
    
    30.0
    %
    
    
    30.0
    %
    
    
    30.0
    %Panamanian gross tax election
    
    
    (13.5
    )
    
    
    (13.6
    )
    
    
    (12.4
    )
    
    
    (9.9
    %)
    
    
    (7.6
    %)
    
    
    (8.5
    %)Exemption in non-taxable
countries
    
    
    (2.2
    )
    
    
    (2.4
    )
    
    
    (1.0
    )
    
    
    (1.7
    %)
    
    
    (1.3
    %)
    
    
    (0.7
    %)Difference in Panamanian
statutory rates and
non-Panamanian statutory
rates
    
    
    (7.6
    )
    
    
    (20.6
    )
    
    
    (18.1
    )
    
    
    (5.6
    %)
    
    
    (11.5
    %)
    
    
    (12.4
    %)Provision for income taxes
    
    $
    17.5
    
    
    $
    17.1
    
    
    $
    12.3
    
    
    
    12.8
    %
    
    
    9.6
    %
    
    
    8.4
    %
   F-30




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2008
    
    
    2007Deferred tax liabilities:Intangible Assets
    
    $
    (10.5
    )
    
    $
    (11.7
    )Maintenance reserves
    
    
    (2.2
    )
    
    
    (1.8
    )Others
    
    
    (0.5
    )
    
    
    (0.0
    )(13.2
    )
    
    
    (13.5
    )Deferred tax assets:Property and Equipment
    
    
    3.5
    
    
    
    6.3Allowance for doubtful accounts
    
    
    0.1
    
    
    
    0.9Expendable parts and supplies
    
    
    0.4
    
    
    
    0.4Prepaid expenses
    
    
    0.0
    
    
    
    0.1Others
    
    
    2.0
    
    
    
    2.96.0
    
    
    
    10.6Net deferred tax liabilities
    
    
    (7.2
    )
    
    
    (2.9
    )Less: Current deferred tax assets
    
    
    1.5
    
    
    
    3.8Non current deferred tax liabilities
    
    $
    (8.7
    )
    
    $
    (6.7
    )
  14. Related Party Transactions
  Continental Airlines.
  F-31




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Banco General, S. A. (Banco General
   ASSA Compañía de Seguros, S. A. (ASSA
 Petróleos Delta, S. A. (Delta Petroleum
 Desarrollo Inmobiliario del Este, S. A. (Desarrollo Inmobiliario
  F-32




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Galindo, Arias & Lopez.
 Other Transactions.
    15. Commitments and Contingencies
   Covenants
    F-33




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Labor Unions
    Lines of Credit for Working Capital and Letters of Credit
    F-34




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16. Subsequent Events
 Stock Grants
  17. Segment Reporting
   F-35




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2008
    
    
    2007
    
    
    2006Operating Revenues:Copa Segment
    
    $
    1,035.9
    
    
    $
    806.2
    
    
    $
    676.2AeroRepública segment
    
    
    264.9
    
    
    
    226.0
    
    
    
    175.9Eliminations
    
    
    (12.1
    )
    
    
    (4.9
    )
    
    
    (0.9
    )Consolidated
    
    $
    1,288.8
    
    
    $
    1,027.3
    
    
    $
    851.2Depreciation:Copa Segment
    
    $
    38.1
    
    
    $
    30.7
    
    
    $
    23.7AeroRepública segment
    
    
    4.8
    
    
    
    4.6
    
    
    
    1.2Consolidated
    
    $
    42.9
    
    
    $
    35.3
    
    
    $
    24.9Aircraft Rentals:Copa Segment
    
    $
    31.3
    
    
    $
    27.8
    
    
    $
    23.9AeroRepública segment
    
    
    22.7
    
    
    
    14.8
    
    
    
    14.6Eliminations
    
    
    (11.0
    )
    
    
    (4.0
    )
    
    
    (0.3
    )Consolidated
    
    $
    43.0
    
    
    $
    38.6
    
    
    $
    38.2Operating income:Copa Segment
    
    $
    208.2
    
    
    $
    171.7
    
    
    $
    166.6AeroRepública segment
    
    
    15.8
    
    
    
    25.8
    
    
    
    (0.5
    )Consolidated
    
    $
    224.0
    
    
    $
    197.5
    
    
    $
    166.1Interest expense:Copa Segment
    
    $
    (34.3
    )
    
    $
    (33.8
    )
    
    $
    (25.2
    )AeroRepública segment
    
    
    (5.9
    )
    
    
    (8.0
    )
    
    
    (2.2
    )Consolidated
    
    $
    (40.2
    )
    
    $
    (41.8
    )
    
    $
    (27.4
    )Interest income:Copa Segment
    
    $
    10.5
    
    
    $
    11.7
    
    
    $
    6.9AeroRepública segment
    
    
    0.6
    
    
    
    0.5
    
    
    
    0.4Consolidated
    
    $
    11.1
    
    
    $
    12.2
    
    
    $
    7.3Income (loss) before income taxes:Copa Segment
    
    $
    130.9
    
    
    $
    165.6
    
    
    $
    155.5AeroRepública segment
    
    
    5.3
    
    
    
    13.3
    
    
    
    (9.4
    )Consolidated
    
    $
    136.1
    
    
    $
    178.9
    
    
    $
    146.1Total Assets at End of Period:Copa Segment
    
    $
    1,823.5
    
    
    $
    1,546.6
    
    
    $
    1,168.1AeroRepública segment
    
    
    258.6
    
    
    
    256.3
    
    
    
    132.9Eliminations
    
    
    (127.8
    )
    
    
    (95.6
    )
    
    
    (46.0
    )Consolidated
    
    $
    1,954.2
    
    
    $
    1,707.3
    
    
    $
    1,255.0Capital Expenditures:Copa Segment
    
    $
    212.7
    
    
    $
    250.5
    
    
    $
    222.0AeroRepública segment
    
    
    3.2
    
    
    
    115.6
    
    
    
    30.0Consolidated
    
    $
    215.9
    
    
    $
    366.1
    
    
    $
    252.0
  F-36




---



##### Table of Contents



COPA HOLDINGS, S. A. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2008
    
    
    2007
    
    
    2006North America
    
    $
    186.1
    
    
    $
    152.1
    
    
    $
    131.2Central America and Caribbean
    
    
    192.4
    
    
    
    162.3
    
    
    
    157.0South America
    
    
    710.3
    
    
    
    573.6
    
    
    
    450.3Panama
    
    
    200.0
    
    
    
    139.3
    
    
    
    112.7Total operating revenue
    
    $
    1,288.8
    
    
    $
    1,027.3
    
    
    $
    851.2
   F-37




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##### Table of Contents



Schedule II  Valuation and Qualifying Accounts
 Balance at
    
    
    Additions
    
    
    DeductionsBeginning of
    
    
    Charged To
    
    
    from
    
    
    Balance atDescription
    
    Year
    
    
    Expense
    
    
    Reserves
    
    
    End of Year(in thousands)2008Allowance for Doubtful Accounts
    
    $
    8,157
    
    
    $
    3,401
    
    
    $
    (6,556
    )
    
    $
    5,002Allowance for Obsolescence of
Expendable Parts and Supplies
    
    
    35
    
    
    
    18
    
    
    
    0
    
    
    
    532007Allowance for Doubtful Accounts
    
    $
    7,305
    
    
    $
    4,276
    
    
    $
    (3,424
    )
    
    $
    8,157Allowance for Obsolescence of
Expendable Parts and Supplies
    
    
    21
    
    
    
    14
    
    
    
    0
    
    
    
    352006Allowance for Doubtful Accounts
    
    $
    4,911
    
    
    $
    3,764
    
    
    $
    (1,370
    )
    
    $
    7,305Allowance for Obsolescence of
Expendable Parts and Supplies
    
    
    9
    
    
    
    12
    
    
    
    0
    
    
    
    21
  S-2




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    

Description1.1
    **
    
    English translation of the Articles of Incorporation (Pacto Social) of the Registrant2.1
    
    
    Supplemental Agreement, dated May 13, 2008, among Copa Holdings, S.A., Corporación
de Inversiones Aéreas, S.A. and Continental Airlines, Inc. (Incorporated by reference to our Registration Statement on Form F-3ASR filed on May 13, 2008)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. 2860710.8
    **
    
    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.
30049




---



##### Table of Contents



ExhibitNumber
    

Description10.15
    **
    
    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.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.




---



##### Table of Contents



ExhibitNumber
    

Description10.37
    **
    
    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. (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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. (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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. (Incorporated by reference to our Annual Report on Form 20-F filed on July 2, 2007)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.  (Incorporated by reference to our Annual Report on Form 20-F filed on May 9, 2008)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.  (Incorporated by reference to our Annual Report on Form 20-F filed on May 9, 2008)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.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.12.1
    
    
    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.