##### Table of Contents



As
filed with the Securities and Exchange Commission on June 30, 2006
   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, 2005
 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
(+507 304-2677)
 
 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. o Yes þ No
 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 which financial statement item the registrant has elected to follow. o Item 17 þ 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
    
    
    44Item 5. Operating and Financial Review and Prospects
    
    
    44Item 6. Directors, senior management and employees
    
    
    61Item 7. Major Shareholders and Related Party Transactions
    
    
    67Item 8. Financial Information
    
    
    72Item 9. The Offer and Listing
    
    
    72Item 10. Additional Information
    
    
    75Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    89Item 12.
Description of Securities Other than Equity Securities
    
    
    89Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    90Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    90Item 15. Controls and Procedures
    
    
    90Item 16. Reserved
    
    
    90Item 16A. Audit Committee Financial Expert
    
    
    90Item 16B. Code of Ethics
    
    
    90Item 16C. Principal Accountant Fees and Services
    
    
    90Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    91Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    91Item 17.
Financial Statements
    
    
    91Item 18. Financial Statements
    
    
    91Item 19. Exhibits
    
    
    91Index to Financial Statements
    
    
    F-1EX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATION




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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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##### Table of Contents



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;
    
    competitive pressures on pricing;
    
    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;
 iii




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##### Table of Contents




    
    our ability to obtain financing on commercially reasonable terms; and
    
    the risk factors discussed under Risk Factors beginning on page 4.
  iv




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##### Table of Contents



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 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(20)(in thousands of dollars, except share and per share data and operating data)INCOME STATEMENT DATAOperating revenue:Passenger revenue
    
    $
    257,918
    
    
    $
    269,629
    
    
    $
    311,683
    
    
    $
    364,611
    
    
    $
    565,131Cargo, mail and other
    
    
    32,454
    
    
    
    31,008
    
    
    
    30,106
    
    
    
    35,226
    
    
    
    43,443Total operating revenues
    
    
    290,372
    
    
    
    300,637
    
    
    
    341,789
    
    
    
    399,837
    
    
    
    608,574Operating expenses:Aircraft fuel
    
    
    46,514
    
    
    
    40,024
    
    
    
    48,512
    
    
    
    62,549
    
    
    
    149,303Salaries and benefits
    
    
    38,709
    
    
    
    39,264
    
    
    
    45,254
    
    
    
    51,701
    
    
    
    69,730Passenger servicing
    
    
    32,834
    
    
    
    33,892
    
    
    
    36,879
    
    
    
    39,222
    
    
    
    50,622Commissions
    
    
    31,652
    
    
    
    28,720
    
    
    
    27,681
    
    
    
    29,073
    
    
    
    45,087Reservations and sales
    
    
    18,629
    
    
    
    16,707
    
    
    
    18,011
    
    
    
    22,118
    
    
    
    29,213Maintenance, materials and repairs
    
    
    25,369
    
    
    
    20,733
    
    
    
    20,354
    
    
    
    19,742
    
    
    
    32,505Depreciation
    
    
    13,325
    
    
    
    13,377
    
    
    
    14,040
    
    
    
    19,279
    
    
    
    19,857Flight operations
    
    
    13,887
    
    
    
    14,567
    
    
    
    15,976
    
    
    
    17,904
    
    
    
    24,943Aircraft rentals
    
    
    20,106
    
    
    
    21,182
    
    
    
    16,686
    
    
    
    14,445
    
    
    
    27,631Landing fees and other rentals
    
    
    8,451
    
    
    
    8,495
    
    
    
    10,551
    
    
    
    12,155
    
    
    
    17,909Other
    
    
    15,892
    
    
    
    19,166
    
    
    
    25,977
    
    
    
    29,306
    
    
    
    32,622Fleet impairment charge(1)
    
    
    
    
    
    
    13,669
    
    
    
    3,572
    
    
    
    
    
    
    
    Total operating expenses
    
    
    265,368
    
    
    
    269,796
    
    
    
    283,493
    
    
    
    317,494
    
    
    
    499,422Operating income
    
    
    25,004
    
    
    
    30,841
    
    
    
    58,296
    
    
    
    82,343
    
    
    
    109,152Non-operating income (expense):Interest expense
    
    
    (10,988
    )
    
    
    (7,629
    )
    
    
    (11,613
    )
    
    
    (16,488
    )
    
    
    (21,629
    )Interest capitalized
    
    
    1,592
    
    
    
    1,114
    
    
    
    2,009
    
    
    
    963
    
    
    
    1,089Interest income
    
    
    701
    
    
    
    831
    
    
    
    887
    
    
    
    1,423
    
    
    
    3,584Other, net(2)
    
    
    331
    
    
    
    (1,490
    )
    
    
    2,554
    
    
    
    6,063
    
    
    
    395Total non-operating expenses, net
    
    
    (8,364
    )
    
    
    (7,174
    )
    
    
    (6,163
    )
    
    
    (8,039
    )
    
    
    (16,561
    )Income (loss) before income taxes
    
    
    16,640
    
    
    
    23,667
    
    
    
    52,133
    
    
    
    74,304
    
    
    
    92,591




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##### Table of Contents



Year Ended December 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(20)(in thousands of dollars, except share and per share data and operating data)Provision for income taxes
    
    
    (1,822
    )
    
    
    (2,999
    )
    
    
    (3,644
    )
    
    
    (5,732
    )
    
    
    (9,592
    )Net income (loss)
    
    
    14,818
    
    
    
    20,668
    
    
    
    48,489
    
    
    
    68,572
    
    
    
    82,999BALANCE SHEET DATATotal cash, cash equivalents and short-term
investments
    
    $
    28,385
    
    
    $
    34,476
    
    
    $
    61,432
    
    
    $
    110,943
    
    
    $
    114,490Accounts receivable, net
    
    
    30,210
    
    
    
    24,006
    
    
    
    31,019
    
    
    
    27,706
    
    
    
    49,492Total current assets
    
    
    69,040
    
    
    
    68,940
    
    
    
    103,523
    
    
    
    152,087
    
    
    
    184,793Purchase deposits for flight equipment
    
    
    46,540
    
    
    
    55,867
    
    
    
    45,869
    
    
    
    7,190
    
    
    
    52,753Total property and equipment
    
    
    227,717
    
    
    
    345,411
    
    
    
    480,488
    
    
    
    541,211
    
    
    
    637,543Total assets
    
    
    300,121
    
    
    
    421,935
    
    
    
    591,915
    
    
    
    702,050
    
    
    
    916,912Long-term debt
    
    
    111,125
    
    
    
    211,698
    
    
    
    311,991
    
    
    
    380,827
    
    
    
    402,954Total shareholders equity
    
    
    46,426
    
    
    
    67,094
    
    
    
    115,583
    
    
    
    174,155
    
    
    
    245,867CASH FLOW DATANet cash provided by operating activities
    
    $
    32,997
    
    
    $
    55,543
    
    
    $
    73,479
    
    
    $
    98,051
    
    
    $
    119,089Net cash used in investing activities
    
    
    (39,473
    )
    
    
    (150,203
    )
    
    
    (151,802
    )
    
    
    (85,738
    )
    
    
    (163,570
    )Net cash provided by financing activities
    
    
    14,466
    
    
    
    100,400
    
    
    
    105,298
    
    
    
    29,755
    
    
    
    38,921OTHER FINANCIAL DATAEBITDA(3)
    
    
    38,660
    
    
    
    42,728
    
    
    
    74,890
    
    
    
    107,685
    
    
    
    129,404Aircraft rentals
    
    
    20,106
    
    
    
    21,182
    
    
    
    16,686
    
    
    
    14,445
    
    
    
    27,631Operating margin(4)
    
    
    8.6
    %
    
    
    10.3
    %
    
    
    17.1
    %
    
    
    20.6
    %
    
    
    17.9
    %Weighted average shares used in computing net
income per share(5)
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    42,812,500
    
    
    
    42,812,500Net income (loss) per share(5)
    
    $
    0.35
    
    
    $
    0.48
    
    
    $
    1.13
    
    
    $
    1.60
    
    
    $
    1.94OPERATING DATARevenue passengers carried(6)
    
    
    1,794
    
    
    
    1,819
    
    
    
    2,028
    
    
    
    2,333
    
    
    
    4,361Revenue passenger miles(7)
    
    
    1,870
    
    
    
    1,875
    
    
    
    2,193
    
    
    
    2,548
    
    
    
    3,831Available seat miles(8)
    
    
    2,920
    
    
    
    2,847
    
    
    
    3,226
    
    
    
    3,639
    
    
    
    5,368Load factor(9)
    
    
    64.0
    %
    
    
    65.9
    %
    
    
    68.0
    %
    
    
    70.0
    %
    
    
    71.4
    %Break-even load factor(10)
    
    
    58.7
    %
    
    
    54.5
    %
    
    
    52.8
    %
    
    
    52.6
    %
    
    
    57.9
    %Total block hours(11)
    
    
    59,760
    
    
    
    58,112
    
    
    
    64,909
    
    
    
    70,228
    
    
    
    103,628Average daily aircraft utilization(12)
    
    
    9.1
    
    
    
    8.8
    
    
    
    9.0
    
    
    
    9.3
    
    
    
    9.8Average passenger fare
    
    
    143.8
    
    
    
    148.2
    
    
    
    153.7
    
    
    
    156.3
    
    
    
    129.6Yield(13)
    
    
    13.79
    
    
    
    14.38
    
    
    
    14.22
    
    
    
    14.31
    
    
    
    14.75Passenger revenue per ASM(14)
    
    
    8.83
    
    
    
    9.47
    
    
    
    9.66
    
    
    
    10.02
    
    
    
    10.53Operating revenue per ASM(15)
    
    
    9.94
    
    
    
    10.56
    
    
    
    10.60
    
    
    
    10.99
    
    
    
    11.34Operating expenses per ASM (CASM)(16)
    
    
    9.09
    
    
    
    9.48
    
    
    
    8.79
    
    
    
    8.72
    
    
    
    9.30Departures
    
    
    23,742
    
    
    
    23,361
    
    
    
    25,702
    
    
    
    27,434
    
    
    
    48,934Average daily departures
    
    
    65.0
    
    
    
    64.0
    
    
    
    70.4
    
    
    
    75.0
    
    
    
    156.6Average number of aircraft
    
    
    18.0
    
    
    
    18.1
    
    
    
    19.8
    
    
    
    20.6
    
    
    
    31.0Airports served at period end
    
    
    28
    
    
    
    27
    
    
    
    28
    
    
    
    29
    
    
    
    43SEGMENT FINANCIAL DATACopa:Operating revenue
    
    $
    290,372
    
    
    $
    300,637
    
    
    $
    341,789
    
    
    $
    399,837
    
    
    $
    505,655Operating expenses
    
    
    265,368
    
    
    
    269,796
    
    
    
    283,493
    
    
    
    317,494
    
    
    
    402,684Depreciation
    
    
    13,325
    
    
    
    13,377
    
    
    
    14,040
    
    
    
    19,279
    
    
    
    19,242Aircraft rentals
    
    
    20,106
    
    
    
    21,182
    
    
    
    16,686
    
    
    
    14,445
    
    
    
    22,096Interest expense
    
    
    10,988
    
    
    
    7,629
    
    
    
    11,613
    
    
    
    16,488
    
    
    
    19,424Interest capitalized
    
    
    1,592
    
    
    
    1,114
    
    
    
    2,009
    
    
    
    963
    
    
    
    1,089Interest income
    
    
    701
    
    
    
    831
    
    
    
    887
    
    
    
    1,423
    
    
    
    3,376Net income (loss) before tax
    
    
    16,640
    
    
    
    23,667
    
    
    
    52,133
    
    
    
    74,304
    
    
    
    89,745Total assets
    
    
    300,121
    
    
    
    421,935
    
    
    
    591,915
    
    
    
    702,050
    
    
    
    851,075AeroRepública:Operating revenue
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    $
    102,976Operating expenses
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    96,839Depreciation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    615Aircraft rentals
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    5,535Interest expense
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,205Interest capitalized
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Interest income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    208Net income (loss) before tax
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,846Total assets
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    98,091SEGMENT OPERATING DATACopa:Available seat miles(8)
    
    
    2,920
    
    
    
    2,847
    
    
    
    3,226
    
    
    
    3,639
    
    
    
    4,409Load factor(9)
    
    
    64.0
    %
    
    
    65.9
    %
    
    
    68.0
    %
    
    
    70.0
    %
    
    
    73.4
    %Break-even load factor
    
    
    58.7
    %
    
    
    54.5
    %
    
    
    52.8
    %
    
    
    52.6
    %
    
    
    56.8
    %Yield(13)
    
    
    13.79
    
    
    
    14.38
    
    
    
    14.22
    
    
    
    14.31
    
    
    
    14.41Operating revenue per ASM(15)
    
    
    9.94
    
    
    
    10.56
    
    
    
    10.60
    
    
    
    10.99
    
    
    
    11.47CASM(16)
    
    
    9.09
    
    
    
    9.48
    
    
    
    8.79
    
    
    
    8.72
    
    
    
    9.13Average stage length(18)
    
    
    1,023
    
    
    
    1,010
    
    
    
    1,028
    
    
    
    1,047
    
    
    
    1,123
 2




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##### Table of Contents



Year Ended December 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(20)(in thousands of dollars, except share and per share data and operating data)On time performance(17)
    
    
    87.7
    %
    
    
    90.5
    %
    
    
    91.4
    %
    
    
    91.8
    %
    
    
    91.7
    %AeroRepública:Available seat miles(8)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    950Load factor(9)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    62.0
    %Break even load factor
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    60.8
    %Yield(13)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    16.61

(21)Operating revenue per ASM(15)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    10.74CASM(16)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    10.10Average stage length(18)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    360On time performance(19)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    70.4
    %
 
 (1)
    
    Represents impairment losses on our Boeing 737-200 aircraft
and related assets. See Note 10
to our consolidated financial statements.(2)
    
    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)
    
    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 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(in thousands of dollars)Net income (loss)
    
    $
    14,818
    
    
    $
    20,668
    
    
    $
    48,489
    
    
    $
    68,572
    
    
    $
    82,999Interest expense
    
    
    10,988
    
    
    
    7,629
    
    
    
    11,613
    
    
    
    16,488
    
    
    
    21,629Income taxes
    
    
    1,822
    
    
    
    2,999
    
    
    
    3,644
    
    
    
    5,732
    
    
    
    9,592Depreciation
    
    
    13,325
    
    
    
    13,377
    
    
    
    14,040
    
    
    
    19,279
    
    
    
    19,857Subtotal
    
    
    40,953
    
    
    
    44,673
    
    
    
    77,786
    
    
    
    110,071
    
    
    
    134,077Interest capitalized
    
    
    (1,592
    )
    
    
    (1,114
    )
    
    
    (2,009
    )
    
    
    (963
    )
    
    
    (1,089
    )Interest income
    
    
    (701
    )
    
    
    (831
    )
    
    
    (887
    )
    
    
    (1,423
    )
    
    
    (3,584
    )EBITDA
    
    
    38,660
    
    
    
    42,728
    
    
    
    74,890
    
    
    
    107,685
    
    
    
    129,404
 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 $20.1 million in
2001, $21.2 million in 2002, $16.7 million in 2003, $14.4 million in 2004, and $27.6 million in
2005.(4)
    
    Operating margin represents operating income divided by operating revenues.(5)
    
    All share and per share amounts have been retroactively restated to reflect the current
capital structure described under Description of Capital Stock and in the notes to our
consolidated financial statements.(6)
    
    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.(7)
    
    Number of miles flown by scheduled revenue passengers, expressed in millions.(8)
    
    Aircraft seating capacity multiplied by the number of miles the seats are flown, expressed in
millions.(9)
    
    Percentage of aircraft seating capacity that is actually utilized. Load factors are
calculated by dividing revenue passenger miles by available seat miles.(10)
    
    Load factor that would have resulted in total revenues being equal to total expenses.(11)
    
    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.(12)
    
    Average number of block hours operated per day per aircraft for the total aircraft fleet.(13)
    
    Average amount (in cents) one passenger pays to fly one mile.(14)
    
    Passenger revenues (in cents) divided by the number of available seat miles.(15)
    
    Total operating revenues for passenger aircraft related costs (in cents) divided by the
number of available seat miles.(16)
    
    Total operating expenses for passenger aircraft related costs (in cents) divided by the
number of available seat miles.(17)
    
    Percentage of flights that arrive at the destination gate within fifteen minutes of scheduled
arrival. 3




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##### Table of Contents



(18)
    
    The average number of miles flown per flight.(19)
    
    Percentage of flights that depart within fifteen minutes of the scheduled departure time.(20)
    
    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.(21)
    
    AeroRepública has not historically distinguished between revenue passengers and non-revenue
passengers. Although we are implementing 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 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.
 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.
    4




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If we fail to successfully integrate the new Embraer 190 aircraft we have agreed to purchase into
our operations, 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.
   We are dependent on our alliance with Continental and cannot assure you that it will continue.
   5




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Continentals economic interest in our continued success can be expected to further decline over
time.
  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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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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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 and our auditors identified a material weakness in our internal controls over financial
reporting in connection with the preparation of our financial statements under U.S. GAAP, and if we
fail to remediate this material weakness and achieve and maintain an effective system of internal
controls, we may not be able to accurately report our financial results on a timely basis. As a
result, current and potential stockholders could lose confidence in our financial reporting, which
would harm our business and the trading price of our Class A shares.
   9




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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.
  The cost of refinancing our debt and obtaining additional financing for new aircraft could increase
significantly if the Export-Import Bank of the United States does not continue to guarantee our
debt.
  10




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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 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
 We rely on information technology systems, and we may become more dependent on such systems in the
future.
  11




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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.
  Our maintenance costs will increase as Copas fleet ages and as we perform maintenance on
AeroRepúblicas older fleet.
 12




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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.
   13




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##### Table of Contents



The integration of AeroRepública into our business may require a significant amount of our
managements time and distract our management from our core operations.
  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 for our aircraft and engines.
  14




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We are dependent on key personnel.
  Risks Relating to the Airline Industry
 The airline industry is highly competitive.
   15




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##### Table of Contents



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




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Airline bankruptcies could adversely affect the industry.
  The 2001 terrorist attacks on the United States have adversely affected, and any additional
terrorist attacks or hostilities would further adversely affect, the airline industry by decreasing
demand and increasing costs.
   The negative impact on the airline industry of the current global state of affairs, including the
aftermath of the Iraq war and the threat of another outbreak of a communicable disease, may
continue or possibly worsen.
  Risks Relating to Panama and our Region
 Our performance is heavily dependent on economic conditions in the countries in which we do
business.
  17




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##### Table of Contents




    
    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.
  We are highly dependent on conditions in Panama.
  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.
   18




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Political unrest and instability in Colombia may adversely affect our business and the market price
of our Class A shares.
  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)
  19




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##### Table of Contents



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.
  Substantial future sales of our Class A shares by Continental or CIASA after the proposed offering
could cause the price of the Class A shares to decrease.
  20




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##### Table of Contents



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 develop.
  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.
  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.
  21




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##### Table of Contents



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.
  
 Item 4. Information on the Company
 A. History and Development of the Company
 General
   22




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##### Table of Contents



sociedad anónima
   Capital Expenditures
  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
industry.
    
    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 was 8.72 cents in 2004 and 9.30 cents in 2005. Our operating cost per
available seat mile excluding costs for fuel and fleet impairment charges was 7.50 cents in
2001, 7.59 cents in 2002, 7.17 cents in 2003, 7.01 cents in 2004 and 6.52 cents in 2005.
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 completed the replacement of all of its Boeing
737-200 aircraft in the first quarter of 2005 with Boeing 737-Next Generation aircraft
equipped with winglets and other modern cost-saving and safety features. Copa also recently
accepted delivery of its first two Embraer 190 aircraft. Over the next four years, Copa
intends to enhance its modern fleet through the addition of at least eight additional
Boeing 737-Next Generation aircraft and 13 new Embraer 190s. 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 and 737-800s and our new
Embraer 190s to offer substantial operational cost savings over the replaced aircraft in
terms of fuel efficiency and maintenance costs. AeroRepública is currently implementing a
fleet modernization and expansion plan with firm commitments on five new Embraer 190s and
options for an additional 20 Embraer 190 aircraft.
 24




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##### Table of Contents




    
    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 three months ended March 31, 2006, Copa Airlines
statistic for on-time performance was 92.3%, completion factor was 99.7% and baggage
handling was 1.2 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.
 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.
With the addition of Embraer 190 aircraft and growth in overall capacity, we expect to have
more flexibility in scheduling our flights for our customers convenience.
    
    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.
    
    Introduce service with new Embraer 190 aircraft.We believe that the addition of the
Embraer 190 aircraft allows us to provide efficient service to new destinations in
underserved markets. In addition, we believe that the Embraer 190s enhance our ability to
efficiently match our capacity to demand, allowing us to improve service frequencies to
currently served markets and to redeploy our higher capacity aircraft to serve routes with
greater demand.
    
    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
 25




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##### Table of Contents



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
market share and profitability through a variety of initiatives, including modernizing its
fleet, integrating its route network with Copas and improving overall efficiency. We also
seek to increase customer loyalty by making further operational improvements at
AeroRepública, such as on-time performance which improved from 70.4% during the six months
ended December 31, 2005 to 81.9% during the three months ended March 31, 2006, and in March
2006, we implemented the OnePass frequent flyer program at AeroRepública.
 AeroRepública
 Unidad Especial Administrative de Aeronáutica Civil
    26




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##### Table of Contents



Industry
     2005 IATA Traffic ResultsPassengers
    
    
    
    
    
    PassengerCarried
    
    
    
    
    
    Miles(Thousands)
    
    Change (%)
    
    (Millions)
    
    Change (%)
    
    ASMs (Million)
    
    Change (%)
    
    Load FactorInternational Scheduled ServiceNorth America  Central America
    
    
    18,922
    
    
    
    4.1
    %
    
    
    27,855
    
    
    
    1.2
    %
    
    
    37,718
    
    
    
    (2.1
    )%
    
    
    73.9
    %North America  South America
    
    
    19,377
    
    
    
    10.4
    %
    
    
    37,171
    
    
    
    11.4
    %
    
    
    51,486
    
    
    
    6.6
    %
    
    
    72.2
    %Central America  South America
    
    
    4,666
    
    
    
    17.2
    %
    
    
    8,951
    
    
    
    28.2
    %
    
    
    12,601
    
    
    
    26.1
    %
    
    
    71.0
    %Within Central America
    
    
    2,214
    
    
    
    (5.6
    )%
    
    
    1,090
    
    
    
    (16.9
    )%
    
    
    1,712
    
    
    
    (27.4
    )%
    
    
    63.6
    %Within South America
    
    
    8,595
    
    
    
    21.8
    %
    
    
    10,862
    
    
    
    12.3
    %
    
    
    14,771
    
    
    
    7.2
    %
    
    
    73.5
    %Domestic Scheduled ServiceCentral America
    
    
    11,487
    
    
    
    (4.4
    )%
    
    
    6,992
    
    
    
    (3.7
    )%
    
    
    16,900
    
    
    
    (7.7
    )%
    
    
    66.6
    %South America
    
    
    40,183
    
    
    
    19.7
    %
    
    
    20,657
    
    
    
    18.4
    %
    
    
    48,010
    
    
    
    13.9
    %
    
    
    69.2
    %
  GDP
    
    GDP per Capita2005 GDP
    
    
    
    
    
    2005 GDP per CapitaCurrent Prices
    
    2005 Real GDP
    
    Current Prices(US$bn)
    
    (% Growth)
    
    (US$)Brazil
    
    
    792.7
    
    
    
    2.3
    %
    
    
    4,315.7Argentina
    
    
    181.7
    
    
    
    9.2
    %
    
    
    4,802.1Chile
    
    
    114.0
    
    
    
    6.3
    %
    
    
    7,040.3Mexico
    
    
    768.4
    
    
    
    3.0
    %
    
    
    7,297.6
 27




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##### Table of Contents



GDP
    
    GDP per Capita2005 GDP
    
    
    
    
    
    2005 GDP per CapitaCurrent Prices
    
    2005 Real GDP
    
    Current Prices(US$bn)
    
    (% Growth)
    
    (US$)Colombia
    
    
    122.3
    
    
    
    5.1
    %
    
    
    2,742.5Panama
    
    
    15.2
    
    
    
    5.5
    %
    
    
    4,722.2USA
    
    
    12,485.7
    
    
    
    3.5
    %
    
    
    42,101.3
 
 Source:
    
    International Monetary Fund, World Economic Outlook Database,
April 2006; real GDP growth calculated in local currency    Route Network and Schedules
 Copa
    28




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##### Table of Contents



Number of Passengers Carried
 Year Ended December 31,Region
    
    ASMs per Week
    
    2003
    
    2004
    
    2005North America
    
    
    22,961,778
    
    
    
    335,294
    
    
    
    395,497
    
    
    
    487,852Central America
    
    
    8,900,633
    
    
    
    655,726
    
    
    
    741,295
    
    
    
    855,491South America
    
    
    49,098,742
    
    
    
    799,057
    
    
    
    884,298
    
    
    
    1,120,355Caribbean
    
    
    13,614,008
    
    
    
    265,660
    
    
    
    290,372
    
    
    
    339,975
     Revenue by Region
 Year Ended December 31,Region
    
    2003
    
    2004
    
    2005North America(1)
    
    
    15.2
    %
    
    
    16.6
    %
    
    
    17.2
    %South America
    
    
    38.1
    %
    
    
    37.2
    %
    
    
    39.6
    %Central America(2)
    
    
    34.6
    %
    
    
    34.3
    %
    
    
    31.6
    %Caribbean(3)
    
    
    12.1
    %
    
    
    11.9
    %
    
    
    11.6
    %
 
 (1)
    
    The United States, Canada and Mexico.(2)
    
    Includes Panama.(3)
    
    Cuba, Dominican Republic, Haiti, Jamaica, Puerto Rico AeroRepública
  Number of PassengersDepartures
    
    Carried During theDate Service
    
    Scheduled
    
    Year EndedDestinations Served
    
    Commenced
    
    per Week(1)
    
    December 31, 2005Barranquilla
    
    Jun 1995
    
    
    26
    
    
    
    102,252Bogotá
    
    Jun 1993
    
    
    259
    
    
    
    985,391Bucaramanga
    
    May 1995
    
    
    20
    
    
    
    84,025
 29




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##### Table of Contents



Number of PassengersDepartures
    
    Carried During theDate Service
    
    Scheduled
    
    Year EndedDestinations Served
    
    Commenced
    
    per Week(1)
    
    December 31, 2005Cali
    
    Jun 1993
    
    
    61
    
    
    
    275,731Cartagena
    
    Jun 1993
    
    
    50
    
    
    
    193,255Cúcuta
    
    Nov 2005
    
    
    14
    
    
    
    5,347Leticia
    
    Nov 1993
    
    
    7
    
    
    
    31,667Medellín
    
    Oct 1994
    
    
    69
    
    
    
    213,758Montería
    
    Jul 1994
    
    
    14
    
    
    
    64,107Panama
    
    Dec 2005
    
    
    14
    
    
    
    4,839Pereira
    
    Mar 2003
    
    
    14
    
    
    
    40,500San Andrés
    
    Jun 1993
    
    
    33
    
    
    
    179,746Santa Marta
    
    Jun 1993
    
    
    15
    
    
    
    74,696
 
 (1)
    
    As of March 31, 2006.   Comunidad Andina
 Airline Operations
 Passenger Operations
   Cargo Operations
  30




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##### Table of Contents



Pricing and Revenue Management
 Copa
    AeroRepública
  Relationship with Continental Airlines
   Product Positioning. Clase Ejecutiva
 31




---



##### Table of Contents



Code-sharing.
 Aircraft Maintenance & Flight Safety.
 Sales & Revenue Management.
 Information Technology.
 Fleet Modernization.
 Sales, Marketing and Distribution
 Copa
 Sales and Distribution.
 32




---



##### Table of Contents



Advertising and Promotional Activities.
 AeroRepública
  Competition
  33




---



##### Table of Contents



34




---



##### Table of Contents



Aircraft
 Copa
   AverageTermof LeaseNumber of Aircraft
    
    
    
    
    
    Remaining
    
    Average Age
    
    SeatingTotal
    
    Owned
    
    Leased
    
    (Years)
    
    (Years)
    
    CapacityBoeing 737-700
    
    
    18
    
    
    
    12
    
    
    
    6
    
    
    
    4.8
    
    
    
    4.4
    
    
    
    124Boeing 737-800
    
    
    4
    
    
    
    3
    
    
    
    1
    
    
    
    6.5
    
    
    
    2.0
    
    
    
    155Embraer 190
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    96Total
    
    
    24
    
    
    
    17
    
    
    
    7
    
    
    
    5.0
    
    
    
    3.6
    
    
    
    
  Aircraft Type
    
    2006
    
    2007
    
    2008
    
    2009737-700
    
    
    20
    
    
    
    20
    
    
    
    20
    
    
    
    20737-800(1)
    
    
    4
    
    
    
    6
    
    
    
    8
    
    
    
    10Embraer 190
    
    
    6
    
    
    
    11
    
    
    
    15
    
    
    
    20Total Fleet
    
    
    30
    
    
    
    37
    
    
    
    43
    
    
    
    50
 
 (1)
    
    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 scheduled after 2006.  
    
    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.
  35




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##### Table of Contents



Clase
Ejecutiva
  AeroRepública
  Maintenance
 Copa
  36




---



##### Table of Contents



AeroRepública
  Safety
    37




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##### Table of Contents



Airport Facilities
  
    
    Panamas consistently temperate climate is ideal for airport operations. For
example, Tocumen was closed and unavailable for flight operations for a total of
less than two hours in each of 2004 and 2005.
    
    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 Tocumen.
    
    From Panamas central location, our 124-seat Boeing 737-700s can efficiently
serve long-haul destinations in South American cities such as Santiago, Chile;
Buenos Aires, Argentina; 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.
     38




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##### Table of Contents



Fuel
  Aircraft Fuel Data2001
    
    2002
    
    2003
    
    2004
    
    2005CopaAverage price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    $
    0.95
    
    
    $
    0.86
    
    
    $
    1.01
    
    
    $
    1.32
    
    
    $
    1.87Gallons consumed (in thousands)
    
    
    46,669
    
    
    
    44,788
    
    
    
    48,444
    
    
    
    50,833
    
    
    
    58,924Available seat miles (in millions)
    
    
    2,920
    
    
    
    2,847
    
    
    
    3,226
    
    
    
    3,639
    
    
    
    4,409Gallons per ASM (in hundredths)
    
    
    1.60
    
    
    
    1.57
    
    
    
    1.50
    
    
    
    1.40
    
    
    
    1.34AeroRepública(1)Average price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2.12Gallons consumed (in thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,887Available seat miles (in millions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    950Gallons per ASM (in hundredths)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.88
 
 (1)
    
    Since April 22, 2005.    Insurance
  39




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##### Table of Contents



Environmental
  Regulation
 Panama
     40




---



##### Table of Contents



Antitrust regulation, enforcement
 per se
 Noise regulations effects
  Colombia
 Unidad Especial Administrativa de Aeronáutica Civil, Aeronautica Civil.
 41




---



##### Table of Contents



Comunidad Andina
 U.S. Airline Regulation
  Authorizations and Licenses.
  Security.
 42




---



##### Table of Contents



Noise Restrictions.
  Proposed Laws and Regulations.
 Other Jurisdictions
  C. Organizational Structure
  
 
 *
    
    Includes ownership by us held through wholly-owned holding companies organized in the British
Virgin Islands as of March 31, 2006.  43




---



##### 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.
   44




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##### Table of Contents



Unidad Especial Administrativa de
Aeronáutica Civil
  Our 2005 acquisition of AeroRepública has affected the comparability of our recent results of
operations.
 Unidad Especial Administrativa de Aeronáutica Civil
  45




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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 31,2003
    
    2004
    
    2005Copa SegmentCapacity (in available seat miles, in millions)
    
    
    3,225.9
    
    
    
    3,639.4
    
    
    
    4,409.1Load factor
    
    
    68.0
    %
    
    
    70.0
    %
    
    
    73.4
    %
 46




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##### Table of Contents



Year Ended December 31,2003
    
    2004
    
    2005Yield (in cents)
    
    
    14.22
    
    
    
    14.31
    
    
    
    14.41AeroRepública Segment(1)Capacity (in available seat miles, in millions)
    
    
    
    
    
    
    
    
    
    
    950.0Load factor
    
    
    
    
    
    
    
    
    
    
    62.0
    %Yield (in cents)(2)
    
    
    
    
    
    
    
    
    
    
    16.61
 
 (1)
    
    Since April 22, 2005.(2)
    
    AeroRepública has not historically distinguished between revenue
passengers and non-revenue passengers. While we are implementing
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 has been derived from estimates
that we believe to be materially accurate. Seasonality
  Operating Expenses
  Aircraft fuel. Accounting for Derivative Instruments and Hedging Activities
 Aircraft Fuel Data2001
    
    2002
    
    2003
    
    2004
    
    2005Copa SegmentAverage price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    $
    0.95
    
    
    $
    0.86
    
    
    $
    1.01
    
    
    $
    1.32
    
    
    $
    1.87Gallons consumed (in thousands)
    
    
    46,669
    
    
    
    44,788
    
    
    
    48,444
    
    
    
    50,833
    
    
    
    58,924Available seat miles (in millions)
    
    
    2,920
    
    
    
    2,847
    
    
    
    3,226
    
    
    
    3,639
    
    
    
    4,409Gallons per ASM (in hundredths)
    
    
    1.60
    
    
    
    1.57
    
    
    
    1.50
    
    
    
    1.40
    
    
    
    1.34AeroRepública Segment(1)Average price per gallon of jet
fuel into plane (excluding hedge)
(in U.S. dollars)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2.12Gallons consumed (in thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,887Available seat miles (in millions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    950Gallons per ASM (in hundredths)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.88
 
 (1)
    
    Since April 22, 2005. 47




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##### Table of Contents



Salaries and benefits.
 Passenger servicing expenses.
 Commissions.
 Maintenance, material and repair expenses.
  Aircraft rent.
 Reservations and sales expenses.
 48




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##### Table of Contents



Flight operations landing fees and other rentals
 Other
 Taxes
     Internal Controls
   49




---



##### Table of Contents



Critical Accounting Policies and Estimates
   Revenue recognition.
  Frequent flyer program.
 Impairment of long-lived assets.
 Goodwill and indefinite-lived purchased intangible assets.
 50




---



##### Table of Contents



Goodwill and Other
Intangible Assets
 Derivative instruments used for aircraft fuel. Accounting for Derivative
Instruments and Hedging Activities.
 Maintenance and repair costs.
  51




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##### Table of Contents



Results of Operation
  Year Ended December 31,2003
    
    
    2004
    
    
    2005(1)Operating revenues:Passenger revenue
    
    
    91.2
    %
    
    
    91.2
    %
    
    
    92.9
    %Cargo, mail and other
    
    
    8.8
    %
    
    
    8.8
    %
    
    
    7.1
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Aircraft fuel
    
    
    (14.2
    )%
    
    
    (15.6
    )%
    
    
    (24.5
    )%Salaries and benefits
    
    
    (13.2
    )%
    
    
    (12.9
    )%
    
    
    (11.5
    )%Passenger servicing
    
    
    (10.8
    )%
    
    
    (9.8
    )%
    
    
    (8.3
    )%Commissions
    
    
    (8.1
    )%
    
    
    (7.3
    )%
    
    
    (7.4
    )%Reservation and sales
    
    
    (5.3
    )%
    
    
    (5.5
    )%
    
    
    (4.8
    )%Maintenance, materials and repairs
    
    
    (6.0
    )%
    
    
    (4.9
    )%
    
    
    (5.3
    )%Depreciation
    
    
    (4.1
    )%
    
    
    (4.8
    )%
    
    
    (3.3
    )%Flight operations
    
    
    (4.7
    )%
    
    
    (4.5
    )%
    
    
    (4.1
    )%Aircraft rentals
    
    
    (4.9
    )%
    
    
    (3.6
    )%
    
    
    (4.5
    )%Landing fees and other rentals
    
    
    (3.1
    )%
    
    
    (3.0
    )%
    
    
    (2.9
    )%Other
    
    
    (7.6
    )%
    
    
    (7.3
    )%
    
    
    (5.4
    )%Fleet impairment charges
    
    
    (1.0
    )%
    
    
    0.0
    %
    
    
    0.0
    %Total
    
    
    (82.9
    )%
    
    
    (79.4
    )%
    
    
    (82.1
    )%Operating income
    
    
    17.1
    %
    
    
    20.6
    %
    
    
    17.9
    %Non-operating income (expenses):Interest expense
    
    
    (3.4
    )%
    
    
    (4.1
    )%
    
    
    (3.6
    )%Interest capitalized
    
    
    0.6
    %
    
    
    0.2
    %
    
    
    0.2
    %Interest income
    
    
    0.3
    %
    
    
    0.4
    %
    
    
    0.6
    %Other, net
    
    
    0.7
    %
    
    
    1.5
    %
    
    
    0.1
    %Total
    
    
    (1.8
    )%
    
    
    (2.0
    )%
    
    
    (2.7
    )%Income/(loss) before income taxes
    
    
    15.3
    %
    
    
    18.6
    %
    
    
    15.2
    %Income taxes
    
    
    (1.1
    )%
    
    
    (1.4
    )%
    
    
    (1.6
    )%Net income
    
    
    14.2
    %
    
    
    17.1
    %
    
    
    13.6
    %
 
 (1)
    
    Includes results from our AeroRepública segment for the period from April 22, 2005 to December 31, 2005. Year 2005 Compared to Year 2004
  Operating revenue
  Copa segment operating revenue
  Passenger revenue.
 52




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##### Table of Contents



Cargo, mail and other.
 AeroRepública segment operating revenue
  Operating expenses
    Aircraft fuel.
 Salaries and benefits.
 Passenger servicing.
 Commissions.
  Copa segment operating expenses
  53




---



##### Table of Contents



Year EndedDecember 31,
    
    Percent2004
    
    2005
    
    Change(in cents)Operating Expenses per ASM:Salaries and benefits
    
    
    1.42
    
    
    
    1.33
    
    
    
    (6.2
    )%Passenger servicing
    
    
    1.08
    
    
    
    1.02
    
    
    
    (4.9
    )%Commissions
    
    
    0.80
    
    
    
    0.81
    
    
    
    1.0
    %Reservation and sales
    
    
    0.61
    
    
    
    0.57
    
    
    
    (5.6
    )%Maintenance, materials and repairs
    
    
    0.54
    
    
    
    0.48
    
    
    
    (10.8
    )%Depreciation
    
    
    0.53
    
    
    
    0.44
    
    
    
    (17.6
    )%Flight operations
    
    
    0.49
    
    
    
    0.50
    
    
    
    1.0
    %Aircraft rentals
    
    
    0.40
    
    
    
    0.50
    
    
    
    26.2
    %Landing fees and other rentals
    
    
    0.33
    
    
    
    0.34
    
    
    
    0.9
    %Other
    
    
    0.81
    
    
    
    0.62
    
    
    
    (22.4
    )%Total operating expenses per ASM before
aircraft fuel
    
    
    7.01
    
    
    
    6.62
    
    
    
    (5.5
    )%Aircraft fuel
    
    
    1.72
    
    
    
    2.51
    
    
    
    46.3
    %Total operating expenses per ASM
    
    
    8.72
    
    
    
    9.13
    
    
    
    4.7
    %
 Aircraft fuel.
 Salaries and benefits.
 Passenger servicing.
 Commissions.
 Reservations and sales.
 Maintenance, materials and repairs.
 Depreciation.
 Aircraft rentals.
 54




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##### Table of Contents



Flight operations landing fees and other rentals.
 Other.
 AeroRepública segment operating expenses
  Non-operating income (expense)
  Copa segment non-operating income (expense)
  Interest expense.
 Interest capitalized.
 Interest income.
 Other, net.
 Year 2004 Compared to Year 2003
  55




---



##### Table of Contents



Operating revenue
  Passenger revenue.
 Cargo, mail and other.
 Operating expenses
  Year EndedDecember 31,
    
    Percent2003
    
    2004
    
    Change(in cents)Operating expenses per ASM:Salaries and benefits
    
    
    1.40
    
    
    
    1.42
    
    
    
    1.3
    %Passenger servicing
    
    
    1.14
    
    
    
    1.08
    
    
    
    (5.7
    )%Commissions
    
    
    0.86
    
    
    
    0.80
    
    
    
    (6.9
    )%Reservation and sales
    
    
    0.56
    
    
    
    0.61
    
    
    
    8.8
    %Depreciation
    
    
    0.44
    
    
    
    0.53
    
    
    
    21.7
    %Maintenance, materials and repairs
    
    
    0.63
    
    
    
    0.54
    
    
    
    (14.0
    )%Flight operations
    
    
    0.50
    
    
    
    0.49
    
    
    
    (0.7
    )%Aircraft rentals
    
    
    0.52
    
    
    
    0.40
    
    
    
    (23.3
    )%Landing fees and other rentals
    
    
    0.33
    
    
    
    0.33
    
    
    
    2.1
    %Other
    
    
    0.81
    
    
    
    0.81
    
    
    
    0.0
    %Total operating expenses per ASM before aircraft fuel and fleet impairment charges
    
    
    7.17
    
    
    
    7.01
    
    
    
    (2.3
    )%Aircraft fuel
    
    
    1.50
    
    
    
    1.72
    
    
    
    14.3
    %Total operating expenses per ASM before fleet impairment charges
    
    
    8.68
    
    
    
    8.72
    
    
    
    0.5
    %Fleet impairment charges
    
    
    0.11
    
    
    
    0.00
    
    
    
    N/ATotal operating expenses per ASM
    
    
    8.79
    
    
    
    8.72
    
    
    
    (0.7
    )%
 Aircraft fuel.
 Salaries and benefits.
 56




---



##### Table of Contents



Passenger servicing.
 Commissions.
 Reservations and sales.
 Depreciation.
 Maintenance, materials and repairs.
 Aircraft rentals.
 Flight operations and landing fees and other rentals.
 Other.
 Non-operating income (expense)
  Interest expense.
 57




---



##### Table of Contents



Interest capitalized.
 Interest income.
 Other, net.
 B. Liquidity and Capital Resources
   Operating Activities
  Investing Activities
  Financing Activities
   58




---



##### Table of Contents



59




---



##### Table of Contents



Capital resources.
  C. Research and Development, Patents and Licenses, etc.
   D. Trend Information
   60




---



##### Table of Contents



E. Off-balance sheet arrangements
  F. Tabular Disclosure of Contractual Obligations
  At December 31, 2005Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years(in thousands of dollars)Aircraft and engine purchase commitments
    
    $
    480,339
    
    
    $
    181,515
    
    
    $
    280,649
    
    
    $
    18,175
    
    
    $
    3⁄4Aircraft operating leases
    
    
    143,513
    
    
    
    33,358
    
    
    
    60,732
    
    
    
    35,083
    
    
    
    14,340Other operating leases
    
    
    21,213
    
    
    
    3,561
    
    
    
    5,122
    
    
    
    4,721
    
    
    
    7,809Short-term debt and long-term debt(1)
    
    
    576,243
    
    
    
    90,645
    
    
    
    109,013
    
    
    
    96,524
    
    
    
    280,061Total
    
    $
    1,221,308
    
    
    $
    309,079
    
    
    $
    455,516
    
    
    $
    154,503
    
    
    $
    302,210
 
 (1)
    
    Includes actual interest and estimated interest for floating-rate debt based on December 31, 2005 rates.  
 Item 6. Directors, senior management and employees
 A. Directors and Senior Management
   Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer and Director
    
    
    48Stanley Motta
    
    Chairman and Director
    
    
    60Osvaldo Heilbron
    
    Director
    
    
    79Jaime Arias
    
    Director
    
    
    70
 61




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##### Table of Contents



Name
    
    Position
    
    AgeRicardo Alberto Arias
    
    Director
    
    
    66Alberto C. Motta, Jr.
    
    Director
    
    
    59Mark Erwin
    
    Director
    
    
    50George Mason
    
    Director
    
    
    59Roberto Artavia Loria
    
    Director
    
    
    46Jose Castañeda Velez
    
    Director
    
    
    61
 Mr. Pedro Heilbron 3⁄4
 Mr. Stanley Motta
 Mr. Osvaldo Heilbron
 Mr. Jaime Arias
 Mr. Ricardo Arias
 Mr. Alberto Motta, Jr.
 Mr. Mark Erwin
 Mr. George Mason
 62




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##### Table of Contents



Mr. Roberto Artavia Loria
 Mr. José Castañeda Velez
  Name
    
    Position
    
    AgePedro Heilbron
    
    Chief Executive Officer
    
    
    48Victor Vial
    
    Chief Financial Officer
    
    
    40Lawrence Ganse
    
    Senior Vice-President of Operations
    
    
    62Jorge Isaac García
    
    Vice-President, Commercial
    
    
    46Daniel Gunn
    
    Vice-President of Planning
    
    
    38Jaime Aguirre
    
    Vice President of Maintenance
    
    
    43Vidalia de Casado
    
    Vice President of Passenger Services
    
    
    49Alexander Gianareas
    
    Senior Director of Human Resources
    
    
    53Roberto Junguito Pombo
    
    Chief Executive Officer of AeroRepública
    
    
    36
 Mr. Pedro Heilbron
 Mr. Victor Vial
 Captain Lawrence Ganse
 Mr. Jorge Isaac Garciá
 Mr. Daniel Gunn
 63




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##### Table of Contents



Mr. Jaime Aguirre
 Ms. Vidalia de Casado
 Mr. Alexander Gianareas
 Mr. Roberto Junguito Pombo
  B. Compensation
   Long Term Incentive Compensation Plan
  64




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##### Table of Contents



C. Board Practices
    Committees of the Board of Directors
 Audit Committee.
 Compensation Committee.
 Nominating and Corporate Governance Committee.
 Independent Directors Committee.
 65




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##### Table of Contents




    
    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
    December 31,
    
    March 31,2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006Pilots
    
    
    178
    
    
    
    192
    
    
    
    220
    
    
    
    224
    
    
    
    235
    
    
    
    242Flight attendants
    
    
    334
    
    
    
    330
    
    
    
    349
    
    
    
    372
    
    
    
    448
    
    
    
    442Mechanics
    
    
    154
    
    
    
    203
    
    
    
    209
    
    
    
    189
    
    
    
    200
    
    
    
    213Customer service agents, reservation agents, ramp and other
    
    
    1,248
    
    
    
    1,299
    
    
    
    1,382
    
    
    
    1,470
    
    
    
    1,626
    
    
    
    1,589Management and clerical
    
    
    367
    
    
    
    429
    
    
    
    480
    
    
    
    499
    
    
    
    587
    
    
    
    650Total employees
    
    
    2,281
    
    
    
    2,453
    
    
    
    2,640
    
    
    
    2,754
    
    
    
    3,096
    
    
    
    3,136
  66




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Asociación Colombiana de Aviadores Civiles Asociación Colombiana de Auxiliares de
Vuelo
 E. Share Ownership
  
 Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  Class A SharesBeneficially OwnedShares
    
    (%)(1)CIASA(2)
    
    
    
    
    
    
    Continental(3)(4)
    
    
    11,921,875
    
    
    
    38.4
    %Executive officers and directors as a group (18 persons)
    
    
    829,625
    
    
    
    2.8
    %Others
    
    
    18,220,375
    
    
    
    58.8
    %Total
    
    
    30,971,875
    
    
    
    100
    %
 
 (1)
    
    Based on a total of 30,971,875 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 Securities and Exchange Commission, dated February 2, 2006, in
which Continental reported that it had sole voting and dispositive power over 11,921,875 of Class A
shares.
f
(4) After giving effect to the proposed offering which we are currently making, Continental will own
5,359,375 Class A shares, representing 17.3% of our Class A shares.  67




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B. Related Party Transactions
 Shareholders Agreement
  
    
    a right of each of CIASA and Continental to designate a certain number of
directors to our board of directors for so long as they hold a certain amount of
our common stock. Of the 11 members of our board, CIASA initially had the right to
designate six directors and Continental initially had the right to designate two
directors, with the remaining three directors being independent under the rules
of the New York Stock Exchange. After consummation of the proposed offering which
we are currently making, Continental will have the right to designate one of our
directors and CIASA will have the right to designate seven of our directors;
    
    certain limitations on transfers of our common stock by CIASA or Continental;
    
    subject to certain exceptions, a right of first offer in favor of CIASA
to purchase any shares of our common stock Continental proposes to sell to any
third party; and
    
    the ability of Continental to tag-along their shares of our common
stock to certain sales of common stock by CIASA to non-Panamanians or, in the case
of certain sales of Class B stock by CIASA to Panamanians, to receive additional
registration rights with respect to the shares they would otherwise have been able
to sell.
  68




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Registration Rights Agreement
    Commercial Agreements with Continental
  Alliance Agreement.
 69




---



##### Table of Contents



Services Agreement.
 Frequent Flyer Participation Agreement.
 Trademark License Agreement.
 Agreements with our controlling shareholders and their affiliates
  Banco Continental de Panama, S.A.
  70




---



##### Table of Contents



ASSA Compañía de Seguros, S.A.
  Petróleos Delta, S.A.
  Desarollo Inmobiliario del Este, S.A.
  Galindo, Arias & Lopez
  Other Transactions
    C. Interests of Experts and Counsel
  71




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##### Table of Contents



Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information
 3⁄4
 Legal Proceedings
  Dividends and Dividend Policy
    B. Significant Changes
  
 Item 9. The Offer and Listing
 A. Offer and Listing Details
 72




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##### Table of Contents



Low
    
    High2005Fourth quarter(1)
    
    $
    20.00
    
    
    $
    27.30Last Six MonthsJanuary 2006
    
    $
    22.20
    
    
    $
    27.10February 2006
    
    $
    20.90
    
    
    $
    23.75March 2006
    
    $
    21.10
    
    
    $
    23.20April 2006
    
    $
    21.20
    
    
    $
    23.13May 2006
    
    $
    21.15
    
    
    $
    23.80June 2006(2)
    
    $
    22.03
    
    
    $
    24.25
 
 Source: FactSet Research Systems(1)
    
    Period beginning December 14, 2005 through December 31, 2005.(2)
    
    Period through June 28, 2006. B. Plan of Distribution
  C. Markets
  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.
 73




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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.
 D. Selling Shareholders
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E. Dilution
  F. Expenses of the Issue
  
 Item 10. Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
 (sociedad anónima)
 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 the registration
statement of which this prospectus forms a part.
 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
  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
 75




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##### Table of Contents




    
    any amendment to the foregoing special voting provisions adversely affecting the
rights and privileges of the Class A shares.
    Class B Shares
  Class C Shares
  Objects and Purposes
  Restrictions on Transfer of Common Stock; Conversion of Class B Shares
  76




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Tag-along Rights
  Aviation Rights Protections
   
    
    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.
 77




---



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Dividends
  Shareholder Meetings
 Ordinary Meetings
  Extraordinary Meetings
  Vote required
  Notice and Location
   Quorum
  78




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Proxy Representation
  Other Shareholder Rights
    Listing
  Transfer Agent and Registrar
  Summary of Significant Differences between Shareholders Rights and Other Corporate Governance
Matters Under Panamanian Corporation Law and Delaware Corporation Law
 sociedad anónima
 79




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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.
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.
    
    Conflict of Interest Transactions. Transactions
involving a Delaware corporation and an
interested director of that corporation are
generally permitted if: (1) the material facts as to the interested
directors relationship or interest are disclosed
and a majority of disinterested directors approve
the transaction;(2) the material facts are disclosed as to the
interested directors relationship or interest
and the stockholders approve the transaction; or(3) the transaction is fair to the corporation
at the time it is authorized by the board of
directors, a committee of the board of directors
or the stockholders.Terms. Panamanian
law does not set
limits on the
length of the terms
that a director may
serve. Staggered
terms are allowed
but not required.
    
    Terms. The Delaware General Corporation Law
generally provides for a one-year term for
directors. However, the directorships may be
divided into up to three classes with up to
three-year terms, with the years for each class
expiring in different years, if permitted by the
articles of incorporation, an initial by-law or a
by-law adopted by the shareholders.Number. The board
of directors must
consist of a
minimum of three
members, which
could be natural
persons or legal
entities.
    
    Number. The board of directors must consist of a
minimum of one member.Authority to take
Actions. In
general, a simple
majority of the
board of directors
is necessary and
sufficient to take
any action on
behalf of the board
of directors.
    
    Authority to take Actions. The articles of
incorporation or by-laws can establish certain
actions that require the approval of more than a
majority of directors.Shareholder Meetings and Voting RightsQuorum. The quorum
for shareholder
meetings must be
set by the articles
of incorporation or
the by-laws. If the
articles of
incorporation and
the notice for a
given meeting so
provide, if quorum
is not met a new
meeting can be
immediately called
and quorum shall
consist of those
present at such new
meeting.
    
    Quorum. For stock corporations, the articles of
incorporation or bylaws may specify the number to
constitute a quorum but in no event shall a
quorum consist of less than one-third of shares
entitled to vote at a meeting. In the absence of
such specifications, a majority of shares
entitled to vote shall constitute a quorum.
 80




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Panama
    
    DelawareAction by Written
Consent. Panamanian
law does not permit
shareholder action
without formally
calling a meeting.
    
    Action by Written Consent. Unless otherwise
provided in the articles of incorporation, any
action required or permitted to be taken at any
annual meeting or special meeting of stockholders
of a corporation may be taken without a meeting,
without prior notice and without a vote, if a
consent or consents in writing, setting forth the
action to be so taken, is signed by the holders
of outstanding shares having not less than the
minimum number of votes that would be necessary
to authorize or take such action at a meeting at
which all shares entitled to vote thereon were
present and noted.Other Shareholder RightsShareholder
Proposals.
Shareholders
representing 5% of
the issued and
outstanding capital
of the corporation
have the right to
require a judge to
call a general
shareholders
meeting and to
propose the matters
for vote.
    
    Shareholder Proposals. Delaware law does not
specifically grant shareholders the right to
bring business before an annual or special
meeting. If a Delaware corporation is subject to
the SECs proxy rules, a shareholder who owns at
least $2,000 in market value, or 1% of the
corporations securities entitled to vote, may
propose a matter for a vote at an annual or
special meeting in accordance with those rules.Appraisal Rights.
Shareholders of
Panamanian
corporation do not
have the right to
demand payment in
cash of the
judicially
determined fair
value of their
shares in
connection with a
merger or
consolidation
involving the
corporation.
Nevertheless, in a
merger, the
majority of
shareholders could
approve the total
or partial
distribution of
cash, instead of
shares, of the
surviving entity.
    
    Appraisal Rights. Delaware law affords
shareholders in certain cases the right to demand
payment in cash of the judicially-determined fair
value of their shares in connection with a merger
or consolidation involving their corporation.
However, no appraisal rights are available if,
among other things and subject to certain
exceptions, such shares were listed on a national
securities exchange or designated national market
system or such shares were held of record by more
than 2,000 holders.Shareholder
Derivative Actions.
Any shareholder,
with the consent of
the majority of the
shareholders, can
sue on behalf of
the corporation,
the directors of
the corporation for
a breach of their
duties of care and
loyalty to the
corporation or a
violation of the
law, the articles
of incorporation or
the by-laws.
    
    Shareholder Derivative Actions. Subject to
certain requirements that a shareholder make
prior demand on the board of directors or have an
excuse not to make such demand, a shareholder may
bring a derivative action on behalf of the
corporation to enforce the rights of the
corporation against officers, directors and third
parties. An individual may also commence a class
action suit on behalf of himself and other
similarly-situated stockholders if the
requirements for maintaining a class action under
the Delaware General Corporation Law have been
met. Subject to equitable principles, a
three-year period of limitations generally
applies to such shareholder suits against
officers and directors.
 81




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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.
 82




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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.
 83




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Panama
    
    DelawareOnce 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.
 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
  84




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Purchase Agreement between Empresa Brasileira de Aeronautica, S.A. and Copa Holdings, S.A.
  D. Exchange Controls
  E. Taxation
 United States
  
    
    a bank;
    
    a dealer in securities or currencies;
    
    a financial institution;
    
    a regulated investment company;
    
    a real estate investment trust;
    
    an insurance company;
    
    a tax-exempt organization;
    
    a person holding our Class A shares as part of a hedging, integrated or conversion
transaction, a constructive sale or a straddle;
    
    a trader in securities that has elected the mark-to-market method of accounting for your securities;
    
    a person liable for alternative minimum tax;
    
    a person who owns 10% or more of our voting stock;
    
    a partnership or other pass-through entity for United States federal income tax purposes; or
    
    a person whose functional currency is not the United States dollar.
  85




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##### Table of Contents



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.
 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,
 86




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Passive Foreign Investment Company
  Taxation of Capital Gains
  Information reporting and backup withholding
   Panamanian Taxation
 87
    Table of Contents    General principles
  Taxation of dividends
  Taxation of capital gains
  Other Panamanian taxes
  F. Dividends and Paying Agents
  G. Statement by Experts
  H. Documents on Display
   88




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##### Table of Contents



I. Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures about Market Risk
  Aircraft Fuel.
 Interest.
 Foreign Currencies.
 2005 Revenues and Expenses Breakdown by Currency
 Revenue
    
    ExpenseArgentinian Peso
    
    
    4.3
    %
    
    
    2.5
    %Brazilian Real
    
    
    5.9
    %
    
    
    3.0
    %Colombian Peso
    
    
    24.3
    %
    
    
    12.6
    %Costa Rican Colon
    
    
    3.7
    %
    
    
    1.8
    %Mexican Peso
    
    
    4.2
    %
    
    
    2.0
    %U.S. Dollar
    
    
    42.2
    %
    
    
    71.9
    %Venezuelan Bolivar
    
    
    3.9
    %
    
    
    1.7
    %Other(1)
    
    
    11.6
    %
    
    
    4.5
    %
 
 (1)
    
    Chilean Peso, Dominican Peso, Guatemalan Quetzal, Jamaican Dollar, Honduran Lempira, Haitian Gourde.  
 Item 12. Description of Securities Other than Equity Securities
  89




---



##### Table of Contents



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
    Changes
in internal control    
 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
  2004
    
    2005Audit Fees
    
    $95,000
    
    $
    1,717,003Audit-Related Fees
    
    3⁄4
    
    
    3⁄4Tax Fees
    
    3⁄4
    
    
    3⁄4All Other Fees
    
    3⁄4
    
    
    3⁄4Total
    
    $95,000
    
    $
    1,717,003
 Audit Fees
  Audit-Related Fees
 90




---



##### Table of Contents



Tax Fees
  All Other Fees
  Pre-Approval Policies and Procedures
 de minimis de minimis
 
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 1.1**
    
    English translation of the Articles of Incorporation (Pacto Social) of the Registrant2.1*
    
    Form of Second Amended and Restated Shareholders Agreement among Copa Holdings,
S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines, Inc.2.2*
    
    Form of Amended and Restated Registration Rights Agreement among Copa Holdings,
S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines, Inc.10.1**
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank
and Compañía Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q
Aircraft, Serial No. 2904710.2**
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement,
dated October 1, 1998, between First Security Bank and Compañía Panameña de
Aviación, S.A., in respect of One Boeing Model 737-71Q Aircraft, Manufacturers
Serial No. 2904710.3**
    
    Aircraft Lease Amendment Agreement dated as of May 21, 2004 to Aircraft Lease
Agreement, dated October 1, 1998, between First Security Bank and Compañía Panameña
de Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904710.4**
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank
and Compañía Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q
Aircraft, Serial No. 2904810.5**
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement,
dated as of October 1, 1998, between First Security Bank and Compañía Panameña de
Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 29048
 91




---



##### Table of Contents



10.6**
    
    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.
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
 92




---



##### Table of Contents



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.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 directors12.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer12.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer13.1
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    Section 1350 Certification of Chief Financial Officer21.1**
    
    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- 93




---



##### Table of Contents



129967.
    
    The Registrant was granted confidential treatment for portions of this exhibit. 94




---



##### Table of Contents



SIGNATURES
  COPA HOLDINGS, S.A.By:

/s/ PEDRO
HEILBRONName:
    Pedro HeilbronTitle:
    Chief Executive Officer




---



##### 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, 2005 and 2004


F-3Consolidated
    Statements of Income for each of the three years in the period
    ended
    December 31, 2005


F-5Consolidated
    Statements of Shareholders Equity for each of the three
    years in the period ended December 31, 2005


F-6Consolidated
    Statements of Cash Flows for each of the three years in the
    period ended
    December 31, 2005


F-7Notes to
    Consolidated Financial Statements


F-9   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  THE BOARD OF
    DIRECTORS AND SHAREHOLDERS
    COPA HOLDINGS, S. A.
             F-2




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS  As of
    December 31,2005


2004(In US$ thousands, except share
    and per share data)ASSETSCurrent Assets:Cash and cash equivalents

$
94,106


$
99,666Short-term investments


20,384



11,277Total cash, cash equivalents and
    short-term investments


114,490



110,943Accounts receivable, net of
    allowance for doubtful accounts of $4,911 and $2,622 as of
    December 31, 2005 and 2004, respectively


49,044



27,706Accounts receivable from related
    parties


448



Expendable parts and supplies, net
    of allowance for obsolescence of $9 and $1,739 as of
    December 31, 2005 and 2004, respectively


4,070



2,333Prepaid expenses


13,502



8,403Other current assets


3,239



2,702Total Current Assets


184,793



152,087Long-term Investments


26,175



3,948Property and
    Equipment:Owned property and equipment:Flight equipment


628,876



593,825Other


35,899



27,233664,775



621,058Less: Accumulated depreciation


(79,985
)


(87,037
)584,790



534,021Purchase deposits for flight
    equipment


52,753



7,190Total Property and Equipment


637,543



541,211Other Assets:Prepaid pension asset


1,261



1,153Goodwill


20,512



Other intangible asset


31,298



Other assets, net


15,330



3,651Total Other Assets


68,401



4,804Total Assets

$
916,912


$
702,050  F-3




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##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS(Continued)
  As of
    December 31,2005


2004(In US$ thousands, except share
    and per share data)LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term
    debt

$
67,905


$
30,573Accounts payable


44,848



25,335Accounts payable to related parties


7,750



3,733Air traffic liability


85,673



53,423Taxes and interest payable


27,450



16,269Accrued expenses payable


14,780



12,848Other current liabilities


5,573



830Total Current Liabilities


253,979



143,011Non-Current
    Liabilities:Long-term debt


402,954



380,827Post employment benefits liability


1,283



1,158Other long-term liabilities


8,790



1,310Deferred tax liabilities


4,039



1,589Total Non-Current Liabilities


417,066



384,884Total Liabilities


671,045



527,895Shareholders
    Equity:Class A common
    stock30,034,375 shares authorized, issued, and
    outstanding


19,813



19,813Class B common
    stock12,778,125 shares authorized, issued, and
    outstanding


9,410



9,410Retained earnings


217,862



144,932Accumulated other comprehensive
    loss


(1,218
)


Total Shareholders Equity


245,867



174,155Total Liabilities and
    Shareholders Equity

$
916,912


$
702,050    F-4




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##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF INCOME  Year Ended
    December 31,2005


2004


2003(In US$ thousands, except share
    and per share data)Operating Revenue:Passenger revenue

$
565,131


$
364,611


$
311,683Cargo, mail and other


43,443



35,226



30,106608,574



399,837



341,789Operating Expenses:Aircraft fuel


149,303



62,549



48,512Salaries and benefits


69,730



51,701



45,254Passenger servicing


50,622



39,222



36,879Commissions


45,087



29,073



27,681Maintenance, material and repairs


32,505



19,742



20,354Reservations and sales


29,213



22,118



18,011Aircraft rentals


27,631



14,445



16,686Flight operations


24,943



17,904



15,976Depreciation


19,857



19,279



14,040Landing fees and other rentals


17,909



12,155



10,551Other


32,622



29,306



25,977Fleet impairment charges










3,572499,422



317,494



283,493Operating Income


109,152



82,343



58,296Non-operating Income
    (Expense):Interest expense


(21,629
)


(16,488
)


(11,613
)Interest capitalized


1,089



963



2,009Interest income


3,584



1,423



887Other, net


395



6,063



2,554(16,561
)


(8,039
)


(6,163
)Income before Income
    Taxes


92,591



74,304



52,133Provision for Income Taxes


9,592



5,732



3,644Net Income

$
82,999


$
68,572


$
48,489Earnings per Share:Basic and diluted

$
1.94


$
1.60


$
1.13Shares used for computation


42,812,500



42,812,500



42,812,500    F-5




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY  AccumulatedCommon Stock











Other(No-par value)


Issued Capital


Retained


ComprehensiveClass A


Class B


Class A


Class B


Earnings


Loss


Total(In US$ thousands, except share
    and per share data)At December 31,
    2002


30,034,375



12,778,125


$
19,813


$
9,410


$
37,871






$
67,094Net Income


















48,489







48,489At December 31,
    2003


30,034,375



12,778,125



19,813



9,410



86,360







115,583Net Income


















68,572







68,572Dividends declared


















(10,000
)






(10,000
)At December 31,
    2004


30,034,375



12,778,125



19,813



9,410



144,932







174,155Net Income


















82,999







82,999Other comprehensive loss:Foreign currency translation






















(1,218
)


(1,218
)Total comprehensive income


























81,781Dividends Declared


















(10,069
)






(10,069
)At December 31,
    2005


30,034,375



12,778,125


$
19,813


$
9,410


$
217,862


$
(1,218
)

$
245,867    F-6




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended
    December 31,2005


2004


2003(In US$ thousands)Cash flows from operating
    activitiesNet income

$
82,999


$
68,572


$
48,489Adjustments for:Deferred income taxes


(885
)


(519
)


447Depreciation


19,857



19,279



14,040(Gain) / Loss on sale of property
    and equipment


(1,340
)


(1,125
)


Fleet impairment charge










3,572Provision for doubtful accounts


812



1,026



2,154Provision for obsolescence of
    expendable parts and supplies


3



6



938Derivative instruments mark to
    market


(165
)


945



(207
)Changes in:Accounts receivable


(11,252
)


2,287



(9,167
)Accounts receivable from related
    parties


(448
)






Other current assets


278



(3,317
)


(2,130
)Other assets


(9,321
)


(1,430
)


(402
)Accounts payable


(4,330
)


25



295Accounts payable to related parties


4,017



1,089



1,063Air traffic liability


27,759



6,200



8,809Other liabilities


11,105



5,013



5,578Net cash provided by operating
    activities


119,089



98,051



73,479Cash flows from investing
    activitiesAcquisition of investments


(48,294
)


(38,082
)


Proceed from redemption of
    investments


20,658



30,639



19Restricted cash


(3,698
)


582



82Advance payments on aircraft
    purchase contracts


(49,461
)


(16,314
)


(41,232
)Acquisition of property and
    equipment


(63,296
)


(65,764
)


(112,181
)Disposal of property and equipment


2,803



3,201



1,510Purchase of AeroRepublica, net of
    acquired cash


(22,282
)






Net cash flows used in
    investing activities


(163,570
)


(85,738
)


(151,802
)Cash flows from financing
    activitiesProceeds from loans and borrowings


68,416



101,198



140,732Payments on loans and borrowings


(46,929
)


(32,125
)


(21,969
)Issuance of bonds


27,503



6,357



21,736Redemption of bonds






(35,675
)


(35,201
)Dividends declared and paid


(10,069
)


(10,000
)


Net cash flows provided by
    financing activities


38,921



29,755



105,298 F-7




---



##### Table of Contents



Year Ended
    December 31,2005


2004


2003(In US$ thousands)Net (decrease) increase in cash
    and cash equivalents


(5,560
)


42,068



26,975Cash and cash equivalents at
    January 1st


99,666



57,598



30,623Cash and cash equivalents at
    December 31

$
94,106


$
99,666


$
57,598Supplemental disclosure of cash
    flow informationInterest paid, net of amount
    capitalized

$
21,126


$
16,021


$
10,449Income taxes paid


7,411



4,286



2,400    F-8




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  Corporate
    Information
              1.Summary
    of Significant Accounting Policies
  Basis
    of Presentation
    Principles
    of Consolidation
   F-9




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Investments
  held-to-maturity
  Expendable
    Parts and Supplies
   F-10




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Property
    and Equipment
    YearsBuilding

40Jet aircraft

25 to 30Jet engines

10 to 30Ground property and equipment

10Furniture, fixture, equipment and
    others

5 to 10Software rights and licenses

3 to 8Aircraft rotables

7 to 30Leasehold improvements

Lesser ofremaining lease termor useful life   Measurement
    of Impairment of Long-Lived Assets
    Revenue
    Recognition
  Passenger
    Revenue
  and/or
  Cargo and
    Mail Services Revenue
    Other
    Revenue
   F-11




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Frequent
    Flyer Program
    Passenger
    Traffic Commissions
    Foreign
    Currency Transactions and Translation
  end-of-period
      Maintenance
    and Repair Costs
  power-by-the-hour
  Employee
    Profit Sharing
    Advertising
    Costs
   F-12




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Income
    Taxes
    Goodwill
    and Intangibles
  Goodwill and Other Intangible
    Assets
  Reclassifications
    2.
    Acquisition
    of AeroRepública  point-to-point
     F-13




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
      Assets:Cash and cash equivalents

$
1.1Accounts receivable


10.7Prepaid expenses


2.6Other current assets


4.7Property, plant &
    equipment


4.8Goodwill


20.1Intangibles


30.6Other non-current assets


4.1Total assets acquired

$
78.7Liabilities:Accounts payable

$
23.3Air traffic liability


4.4Accrued liabilities


7.6Debt


10.2Deferred tax liability


3.3Other liabilities


6.5Total liabilities
    assumed

$
55.3Net assets acquired

$
23.4        F-14




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
     Year EndedDecember 31,2005


2004(Unaudited)Pro formaTotal Revenue

$
646.3


$
513.0Operating Income


106.3



90.8Income before income taxes


92.4



78.5Net income

$
83.0


$
70.3Net income per share:Basic and diluted

$
1.94


$
1.64   3.Long-Term
    Debt
    2005


2004Long-term fixed rate debt

$
292.5


$
318.7(Secured fixed rate indebtedness
    due through 2017Effective rates ranged from 3.98%
    to 8.96%)Long-term variable rate debt


150.9



92.7(Secured variable rate
    indebtedness due through 2017Effective rates ranged from 4.15%
    to 19.35%)Private bond issuances


27.5



(Unsecured variable rate
    indebtedness due in 2006Weighted average rate of 7.22%, as
    of December 31, 2005)Sub-total


470.9



411.4Less current maturities


67.9



30.6Long-term debt less current
    maturities

$
403.0


$
380.8     Year ending December 31,2006

$
67.92007

$
35.92008

$
35.42009

$
33.62010

$
31.9Thereafter

$
266.2  F-15




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
                   4.Investments
  held-to-maturity
  5.Leases
  Accounting for Leases,
 F-16




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
      Operating LeasesAircraft

Non-AircraftYear ending December 31,2006

$
33.4

$
3.62007


31.9


2.72008


28.8


2.42009


22.5


2.42010


12.6


2.3Later years


14.3


7.8Total minimum lease payments

$
143.5

$
21.2     6.Financial
    Instruments and Risk Management
  Fuel
    Price Risk Management
    Accounting for Derivative
    Instruments and Hedging Activities
    Debt
   F-17




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Other
    Financial Instruments
    7.Issued
    Capital and Corporate Reorganization
           F-18




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  and/or
    8.Income
    Taxes
       F-19




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
        2005

2004


2003PanamaCurrent

$
0.8

$
0.7



Deferred









ForeignCurrent


7.9


5.5



3.2Deferred


0.9


(0.5
)


0.4Total

$
9.6

$
5.7


$
3.6            F-20




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
     Amount


Percentage2005


2004


2003


2005


2004


2003Provision for income taxes at
    Panamanian statutory rates

$
27.8


$
22.3


$
15.6



30.0
%


30.0
%


30.0
%Panamanian gross tax election


(8.9
)


(6.9
)






(9.6
)%


(9.3
)%


Impact of excess of Panamanian
    source expenses over Panamanian source revenues










(7.0
)










(13.5
)%Difference in Panamanian statutory
    rates and non-Panamanian statutory rates


(9.3
)


(9.7
)


(5.0
)


(10.0
)%


(13.0
)%


(9.5
)%Provision for income taxes

$
9.6


$
5.7


$
3.6



10.4
%


7.7
%


7.0
%       2005


2004Deferred tax liabilitiesMaintenance reserves

$
(1.5
)

$
(1.5
)Pension obligation


(0.1
)


(0.2
)Other assets


(1.1
)


Others


(1.3
)


Total deferred tax liabilities


(4.0
)


(1.7
)Deferred tax assetsPost-employment benefit obligation


0.1



0.1Allowance for doubtful receivables


0.8



Expendable parts and supplies


1.1



Prepaid expenses


0.5



Others


0.3



Total deferred tax assets


2.8



0.1Net deferred tax liabilities

$
(1.2
)

$
(1.6
)     9.Employee
    Benefit Plans
     F-21




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##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  Employers
    Accounting for Pensions
  Employers
    Accounting for Postemployment Benefits
    Panama
    Pension and Post Employment Plans
  Pension
    Plan
    2005


2004Accumulated benefit obligation

$
2.6


$
2.2Projected benefit obligation at
    beginning of year

$
2.5


$
2.1Service cost


0.3



0.3Interest cost


0.1



0.1Actuarial losses


0.2



0.2Benefits paid


(0.2
)


(0.2
)Projected benefit obligation at
    end of year

$
2.9


$
2.5   
  2005


2004Fair value of plan assets at
    beginning of year

$
2.9


$
2.4Actual return on plan assets


0.0



0.1Employer contributions


0.7



0.6Benefits paid


(0.2
)


(0.2
)Fair value of plan assets at end
    of year

$
3.4


$
2.9     2005


2004Funded status of the plannet
    over funded

$
0.5


$
0.4Unrecognized net actuarial loss


0.8



0.8Net asset recognized

$
1.3


$
1.2  F-22




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
     2005


2004Weighted average assumed discount
    rate


5.50
%


5.75
%Weighted average rate of
    compensation increase


3.25
%


3.50
%   
  2005


2004


2003Service cost

$
0.3


$
0.3


$
0.2Interest cost


0.1



0.1



0.1Expected return on plan assets


(0.1
)


(0.1
)


(0.1
)Net periodic benefit expense

$
0.3


$
0.3


$
0.2     2005


2004


2003Weighted average assumed discount
    rate


5.75
%


6.25
%


6.75
%Expected long-term rate of return
    on plan assets


4.00
%


4.00
%


4.00
%Weighted average rate of
    compensation increase


3.50
%


4.00
%


4.50
%         Future contribution payments:2006

$
0.6Future benefit payments:2006

$
0.52007

$
0.52008

$
0.52009

$
0.52010

$
0.4Remaining five years

$
2.1  F-23




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Post-employment
    Benefit Plan
    Colombia
    Pension Plan
  Pension
    Plan
      10.
    Fleet
    Impairment Charges  737-200 Accounting for the Impairment
    or Disposal of Long-Lived Assets
      11.
    Related
    Party Transactions    Continental Airlines.
   F-24




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    Banco Continental de Panamá, S.A. (Banco
    Continental).
    ASSA Compañía de Seguros, S.A.
    (ASSA).
  Petróleos Delta, S.A. (Delta
    Petroleum).
  Desarrollo Inmobiliario del Este, S.A. (Desarrollo
    Inmobiliario).
  Galindo, Arias & Lopez.
  Other Transactions.
   F-25




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   12.
    Commitments
    and Contingencies  Aircraft
    Commitments
        Expected FirmOrder Deliveries


Total2006


8


$
308.82007


10



400.92008


6



245.62009


2



121.526


$
1,076.8   Covenants
         F-26




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   Labor
    Unions
        Lines
    of Credit for Working Capital and Letters of
    Credit
            Termination
    of General Sales Agent
  Accounting for Costs Associated with Exit or Disposal
    Activities
     F-27




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   13.
    Subsequent
    Events  Restricted
    Stock Awards
      Dividend
    distribution (Unaudited)
    Debt
    (Unaudited)
    14.
    Segment
    Reporting  point-to-point
    December 31,
    2005Operating Revenues:Copa Segment

$
505.7AeroRepública segment


103.0Eliminations


(0.1
)Consolidated

$
608.6 F-28




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  December 31,
    2005Depreciation:Copa Segment

$
19.3AeroRepública segment


0.6Consolidated

$
19.9Aircraft Rentals:Copa Segment

$
22.1AeroRepública segment


5.5Consolidated

$
27.6Operating income:Copa Segment

$
103.0AeroRepública segment


6.1Consolidated

$
109.1Interest expense:Copa Segment

$
(18.3
)AeroRepública segment


(2.2
)Consolidated

$
(20.5
)Interest income:Copa Segment

$
3.4AeroRepública segment


0.2Consolidated

$
3.6Income before income
    taxes:Copa Segment

$
89.8AeroRepública segment


2.8Consolidated

$
92.6Total Assets at End of
    Period:Copa Segment

$
851.1AeroRepública segment


98.1Eliminations


(32.3
)Consolidated

$
916.9  F-29




---



##### Table of Contents



COPA
    HOLDINGS, S. A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
     2005


2004


2003North America

$
86.9


$
66.3


$
51.9Central America and Caribbean


125.3



104.2



90.7South America


303.2



148.8



130.4Panama


93.2



80.5



68.8Total operating revenue

$
608.6


$
399.8


$
341.8    F-30




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description1.1**
    
    English translation of the Articles of Incorporation (Pacto Social) of the Registrant2.1*
    
    Form of Second Amended and Restated Shareholders Agreement among Copa Holdings,
S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines, Inc.2.2*
    
    Form of Amended and Restated Registration Rights Agreement among Copa Holdings,
S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines, Inc.10.1**
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank
and Compañía Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q
Aircraft, Serial No. 2904710.2**
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement,
dated October 1, 1998, between First Security Bank and Compañía Panameña de
Aviación, S.A., in respect of One Boeing Model 737-71Q Aircraft, Manufacturers
Serial No. 2904710.3**
    
    Aircraft Lease Amendment Agreement dated as of May 21, 2004 to Aircraft Lease
Agreement, dated October 1, 1998, between First Security Bank and Compañía Panameña
de Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904710.4**
    
    Aircraft Lease Agreement, dated as of October 1, 1998, between First Security Bank
and Compañía Panameña de Aviación, S.A., in respect of Boeing Model 737-71Q
Aircraft, Serial No. 2904810.5**
    
    Letter Agreement dated as of November 6, 1998 amending Aircraft Lease Agreement,
dated as of October 1, 1998, between First Security Bank and Compañía Panameña de
Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904810.6**
    
    Aircraft Lease Amendment Agreement dated as of May 21, 2003 to Aircraft Lease
Agreement, dated October 1, 1998, between First Security Bank and Compañía Panameña
de Aviación, S.A., in respect of Boeing Model 737-71Q Aircraft, Serial No. 2904810.7**
    
    Aircraft Lease Agreement, dated as of November 18, 1998, between Aviation Financial
Services Inc. and Compañía Panameña de Aviación, S.A., Boeing Model 737-700
Aircraft, Serial No. 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.
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




---



##### Table of Contents



Exhibit No.
    
    DescriptionAviación, 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



Exhibit No.
    
    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 directors12.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer12.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer13.1
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    Section 1350 Certification of Chief Financial Officer21.1**
    
    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.