As filed with the Securities and Exchange Commission on July 25, 2013







UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F/A

Amendment No. 1







| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012
|- | --------------------------------------------------------------------------------------------------------------------------------

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | 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.

(Exact name of Registrant as Specified in Its Charter)





Not Applicable

(Translation of Registrants Name Into English)

Republic of Panama

(Jurisdiction of Incorporation or Organization)

Avenida Principal y Avenida de la Rotonda, Costa del Este

Complejo Business Park, Torre Norte

Parque Lefevre, Panama City

Panama

(Address of Principal Executive Offices)

Joseph Putaturo

Complejo Business Park, Torre Norte

Parque Lefevre, Panama City, Panama

+507 304 2677 (Telephone)

+507 304 2535 (Facsimile)

(Registrants Contact Person)

Securities registered or to be
registered pursuant to Section 12(b) of the Act



|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of Each Class:                    |  | Name of Each Exchange On Which Registered
|Class 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:At December 31, 2012, there were outstanding 44,036,470 shares of common stock, without
par value, of which 33,098,345 were Class A shares and 10,938,125 were Class B shares.

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.xYes ̈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. ̈YesxNo

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.xYes ̈No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).xYes ̈No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and non-accelerated filer in Rule 12b-2 of Exchange Act. (Check one):



|                        |  |   |  |                   |  |   |  |                       |  |  
|----------------------- |  | - |  | ----------------- |  | - |  | --------------------- |  | -
|Large Accelerated Filer |  | x |  | Accelerated Filer |  |  ̈ |  | Non-accelerated Filer |  |  ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:



|          |  |   |  |                                                                                                       |  |   |  |       |  |  
|--------- |  | - |  | ----------------------------------------------------------------------------------------------------- |  | - |  | ----- |  | -
|U.S. GAAP |  |  ̈ |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board |  | x |  | Other |  |  ̈

If Other has been checked in response to the previous question, indicate by check mark
which financial statement item the registrant has elected to follow:

 ̈Item 17 ̈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). ̈YesxNo









---

EXPLANATORY NOTE

This Amendment No. 1 (Amendment No. 1) to the Annual Report on Form 20-F of Copa Holdings, S.A. (Copa) for the fiscal year ended December 31, 2012, filed on April 29, 2013 (the
Original Form 20-F) is being filed solely to correct a typographical error contained in Item 18 by including the name of Copas independent registered public accounting firm in the audit report dated April 29, 2013. The other
portions of Item 18 were filed as part of the Original Form 20-F and are being refiled as part of this Amendment No. 1 without change.

This
Amendment No. 1 consists of a cover page, this explanatory note, Item 18, Item 19 and the signature pages and required certifications of the chief executive officer and chief financial officer of Copa.

Except for the matters described above, this Amendment No. 1 does not modify or update disclosure in, or exhibits to, the Original Form 20-F.



1



---

Item 18. Financial Statements

See our consolidated financial statements beginning on page F-1.

Item 19. Exhibits



|           |  |                                                                                                                                                                                                                                                              
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1**      |  | English translation of the Articles of Incorporation (Pacto Social) of the Registrant                                                                                                                                                                        
|           | 
|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. 29047                                                                    
|           | 
|10.1(2008) |  | Supplemental Agreement dated as of May 13, 2008 by and among Copa Holdings, S.A. Corporation de Inversiones Aereas, S.A. and Continental Airlines, Inc.                                                                                                      
|           | 
|10.2**    |  | 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. 29047
|           | 
|10.3**    |  | 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. 29047           
|           | 
|10.4**    |  | 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. 29048                                                                    
|           | 
|10.5**    |  | 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             
|           | 
|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. 29048           



2



---

|         |  |                                                                                                                                                                                                                                                            
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | 
|10.7**  |  | Aircraft Lease Agreement, dated as of November 18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing
Model 737-700 Aircraft, Serial No. 28607                                                                 
|         | 
|10.8**  |  | Letter Agreement No. 1 dated as of November 18, 1998 to Aircraft Lease Agreement, dated November 18, 1998, between Aviation Financial Services Inc. and Compañía
Panameña de Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 28607               
|         | 
|10.9**  |  | 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. 28607                   
|         | 
|10.10** |  | 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. 28607
|         | 
|10.11** |  | Aircraft Lease Agreement, dated as of November 18, 1998, between Aviation Financial Services Inc. and Compañía Panameña de Aviación, S.A., Boeing Model
737-700 Aircraft, Serial No. 30049                                                                 
|         | 
|10.12** |  | Letter Agreement No. 1 dated as of November 18, 1998 to Aircraft Lease Agreement, dated November 18, 1998, between Aviation Financial Services Inc. and Compañía
Panameña de Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 30049               
|         | 
|10.13** |  | 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. 30049                   
|         | 
|10.14** |  | Lease Extension and Amendment Agreement dated as of April 30, 2003, to Aircraft Lease Agreement, dated November 18, 1998, between Aviation Financial Services Inc. and
Compañía Panameña de Aviación, S.A., Boeing Model 737-700 Aircraft, Serial No. 30049
|         | 
|10.15** |  | 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. 30676                                                                    
|         | 
|10.16** |  | 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. 32800                                                                        
|         | 
|10.17** |  | 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. 29670                                                         
|         | 
|10.18** |  | 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-006/2003                                                                                      
|         | 
|10.20** |  | Letter Agreement DCT-008/2003 between EmbraerEmpresa Brasileira de Aeronáutica S.A. and Regional Aircraft Holdings Ltd., relating to Purchase Agreement
DCT-006/2003                                                                                      
|         | 
|10.21**  |  | Aircraft General Terms Agreement, dated November 25, 1998, between The Boeing Company and Copa Holdings, S.A.                                                                                                                                              
|         | 
|10.22** |  | 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
Aircraft                                                                                      



3



---

|         |  |                                                                                                                                                                                            
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | 
|10.23** |  | Supplemental Agreement No. 1 dated as of June 29, 2001 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                                
|         | 
|10.24** |  | Supplemental Agreement No. 2 dated as of December 21, 2001 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                            
|         | 
|10.25** |  | Supplemental Agreement No. 3 dated as of June 14, 2002 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                                
|         | 
|10.26** |  | Supplemental Agreement No. 4 dated as of December 20, 2002 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                            
|         | 
|10.27** |  | Supplemental Agreement No. 5 dated as of October 31, 2003 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                             
|         | 
|10.28** |  | Supplemental Agreement No. 6 dated as of September 9, 2004 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                            
|         | 
|10.29** |  | Supplemental Agreement No. 7 dated as of December 9, 2004 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                             
|         | 
|10.30** |  | Supplemental Agreement No. 8 dated as of April 15, 2005 to Purchase Agreement Number 2191 between The Boeing Company and Copa Holdings, S.A.                                               
|         | 
|10.31** |  | Maintenance Cost per Hour Engine Service Agreement, dated March 5, 2003, between G.E. Engine Services, Inc. and Copa Holdings, S.A.                                                        
|         | 
|10.32** |  | English translation of Aviation Fuel Supply Agreement, dated July 18, 2005, between Petróleos Delta, S.A. and Compañía Panameña de Aviación,
S.A.                                          
|         | 
|10.33** |  | Form of Amended and Restated Alliance Agreement between Continental Airlines, Inc. and Compañía Panameña de Aviación, S.A.                                                                 
|         | 
|10.34**  |  | Form of Amended and Restated Services Agreement between Continental Airlines, Inc. and Compañía Panameña de Aviación, S.A.                                                                 
|         | 
|10.35*   |  | Form of Second Amended and Restated Shareholders Agreement among Copa Holdings, S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines,
Inc.                              
|         | 
|10.36**  |  | Form of Guaranteed Loan Agreement                                                                                                                                                          
|         | 
|10.37*   |  | Form of Amended and Restated Registration Rights Agreement among Copa Holdings, S.A., Corporación de Inversiones Aéreas, S.A. and Continental Airlines,
Inc.                               
|         | 
|10.38**  |  | Form of Copa Holdings, S.A. 2005 Stock Incentive Plan                                                                                                                                      
|         | 
|10.39**  |  | Form of Copa Holdings, S.A. Restricted Stock Award Agreement                                                                                                                               
|         | 
|10.40**  |  | Form of Indemnification Agreement with the Registrants directors                                                                                                                          
|         | 
|10.41**  |  | Form of Amended and Restated Trademark License Agreement between Continental Airlines, Inc. and Compañía Panameña de Aviación, S.A.                                                        
|         | 
|10.42*  |  | 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
aircraft           
|         | 
|10.43*  |  | 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 aircraft



4



---

|              |  |                                                                                                                                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|10.44(2006)  |  | 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.        
|              | 
|10.45(2006)  |  | 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.          
|              | 
|10.44(2006)  |  | Supplemental Agreement No. 11 dated as of August 30, 2006 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.      
|              | 
|10.45(2007)  |  | Supplemental Agreement No. 12 dated as of February 26, 2007 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.    
|              | 
|10.46(2007)  |  | Supplemental Agreement No. 13 dated as of April 23, 2007 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.       
|              | 
|10.47(2007)  |  | Supplemental Agreement No. 14 dated as of August 31, 2007 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.      
|              | 
|10.48(2008)  |  | Supplemental Agreement No. 15 dated as of February 21, 2008 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.    
|              | 
|10.49(2008)  |  | Supplemental Agreement No. 16 dated as of June 30, 2008 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.        
|              | 
|10.50(2008)  |  | Supplemental Agreement No. 17 dated as of December 15, 2008 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A.    
|              | 
|10.51(2009)  |  | Supplemental Agreement No. 18 dated as of July 15, 2009 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A         
|              | 
|10.52(2009)  |  | Supplemental Agreement No. 19 dated as of August 31, 2009 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A       
|              | 
|10.53(2009)  |  | Supplemental Agreement No. 20 dated as of November 19, 2009 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A     
|              | 
|10.54(2010)  |  | Supplemental Agreement No. 21 dated as of May 28, 2010 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A          
|              | 
|10.55(2010)  |  | Supplemental Agreement No. 22 dated as of September 24, 2010 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A    
|              | 
|10.56(2010)  |  | Supplemental Agreement No. 23 dated as of October, 2010 to the Boeing Purchase Agreement Number 2191 dated November 25, 1998 between the Boeing Company and Copa Holdings,
S.A         
|              | 
|10.57(2011)  |  | On PointsmSolutions Rate per Engine Flight Hour Service Agreement dated as of May 22, 2011 between GE Engine Services, LLC., Copa Holdings, S.A., and Lease Management Services, LLC.  
|              | 
|10.58(2012) |  | On PointsmSolutions Rate per Engine Flight Hour Service Agreement dated as of April 15, 2012 between GE Engine Services, LLC., Copa Holdings, S.A., and Lease Management Services, LLC.
|              | 
|12.1          |  | Certification of the Chief Executive Officer, pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.                                                           
|              | 
|12.2          |  | Certification of the Chief Financial Officer, pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of
1934.                                                           



5



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|       |  |                                                                                                         
|------ |  | --------------------------------------------------------------------------------------------------------
|       | 
|13.1   |  | Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    
|       | 
|13.2   |  | Certification of the Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|       | 
|21.1** |  | Subsidiaries of the Registrant                                                                          



|* | Previously filed with the SEC as an exhibit and incorporated by reference from our Registration Statement on Form F-1, filed June 15, 2006, File
No. 333-135031.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Previously filed with the SEC as an exhibit and incorporated by reference from our Registration Statement on Form F-1, filed November 28, 2005, as amended on
December 1, 2005 and December 13, 2005, File No. 333-129967.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2007 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed July 2, 2007, File No. 001-32696.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|2008 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed May 9, 2008, File No. 001-32696.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|*** | Previously filed with the SEC as an exhibit and incorporated by reference from our Registration Statement on Form F-3, filed May 13, 2008, File
No. 333-150882.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|2009 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed May 6, 2009, File No. 001-32696.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|2010 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed March 16, 2010, File No. 001-32696.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|2011 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed May 17, 2011, as amended on December 22,
2011, File No. 001-32696.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2012 | Previously filed with the SEC as an exhibit and incorporated by reference from our Annual Report on Form 20-F, filed April 29, 2013, File No. 001-32696.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | The Registrant was granted confidential treatment for portions of this exhibit.
|- | -------------------------------------------------------------------------------

| | The Registrant has requested confidential treatment for portions of this exhibit.
|-- | ---------------------------------------------------------------------------------



6



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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



COPA HOLDINGS, S.A.By:

/s/ Pedro HeilbronName: Pedro HeilbronTitle: Chief Executive OfficerBy:

/s/ Jose MonteroName: Jose MonteroTitle: Chief Financial Officer


Dated: July 25, 2013



7



---

Consolidated Financial Statements

Copa Holdings, S. A. and Subsidiaries

Year ended December 31, 2012

with Independent Auditors Report



F-1



---

Copa Holdings, S. A. and subsidiaries

Contents



|                                                                          |  |      
|------------------------------------------------------------------------- |  | -----
|                                                                          |  | Pages
|Independent Auditors Report                                              |  | F-3  
|Consolidated Statement of Financial Position                              |  | F-4  
|Consolidated Statement of Income                                          |  | F-5  
|Consolidated Statement of Comprehensive Income                            |  | F-6  
|Consolidated Statement of Changes in Shareholders Equity                 |  | F-7  
|Consolidated Statement of Cash Flows                                      |  | F-8  
|Notes to the Consolidated Financial Statements                            |  | F-9  
|1. Corporate Information                                                  |  | F-9  
|2.1 Basis of preparation                                                  |  | F-10 
|2.2 Basis of Consolidation                                                |  | F-10 
|2.3 Summary of Significant Accounting Policies                            |  | F-11 
|a) Goodwill                                                               |  | F-11 
|b) Foreign Currencies                                                     |  | F-11 
|c) Revenue Recognition                                                    |  | F-12 
|d) Taxes                                                                  |  | F-13 
|e) Property, Plant and Equipment                                          |  | F-15 
|f) Intangible Assets                                                      |  | F-15 
|g) Leases                                                                 |  | F-17 
|h) Borrowing Costs                                                        |  | F-18 
|i) Financial instruments  Initial Recognition and subsequent measurement |  | F-18 
|j) Derivative Financial instruments and hedging activities                |  | F-22 
|k) Expendable Parts and Supplies                                          |  | F-23 
|l) Impairment of non  Financial Assets                                   |  | F-23 
|m) Cash and Cash Equivalents                                              |  | F-24 
|n) Provisions                                                             |  | F-24 
|o) Passenger Traffic Commissions                                          |  | F-24 
|p) Share-Based Payments                                                   |  | F-25 
|q) Maintenance Deposit                                                    |  | F-25 
|r) Monetary Unit                                                          |  | F-25 
|3. Significant accounting judgments, estimates and assumptions            |  | F-26 
|4. Standards issued but not yet effective                                 |  | F-28 
|5. Cash and cash equivalents                                              |  | F-32 
|6. Investments                                                            |  | F-32 
|7. Accounts receivable                                                    |  | F-33 
|8. Expendable parts and supplies                                          |  | F-34 
|9. Prepaid expenses                                                       |  | F-34 
|10. Other currents assets                                                 |  | F-34 
|11. Property, plant and equipment, net                                    |  | F-35 
|12. Goodwill                                                              |  | F-37 



---

Copa Holdings, S. A. and subsidiaries

Contents



|                                                        |  |      
|------------------------------------------------------- |  | -----
|                                                        |  | Pages
|13. Other intangible assets,                            |  | F-37 
|14. Other asset                                         |  | F-39 
|15. Long-term debt                                      |  | F-39 
|16. Accounts and transactions with related parties      |  | F-41 
|17. Accrued expenses payable                            |  | F-44 
|18. Other current liabilities                           |  | F-44 
|19. Other long term liabilities                         |  | F-45 
|20. Exchange rate difference                            |  | F-46 
|21. Operating leases                                    |  | F-46 
|22. Income taxes                                        |  | F-46 
|23. Share-based payments                                |  | F-48 
|24. Earnings per share                                  |  | F-50 
|25. Dividends paid                                      |  | F-51 
|26. Commitments and contingencies                       |  | F-51 
|27. Objectives and policies for managing financial risk |  | F-54 
|28. Subsequent events                                   |  | F-62 
|29. Segment reporting                                   |  | F-62 



---

LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

COPA HOLDINGS, S.A.

We have audited the
accompanying consolidated statements of financial position of Copa Holdings, S.A. and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for
each of the three years in the period ended December 31, 2012. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Copa Holdings, S.A. and its subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 2012, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Copa Holdings, S.A. and its
subsidiaries internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated April 29, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young

April 29, 2013

Panama City, Republic of Panama



F-3



---

Copa Holdings, S. A. and Subsidiaries

Consolidated statement of financial position

As at
31 December 2012

(In US$ thousands)



|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|--------------------------------------------------------------------------------------------------------- |  | ----- | -- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                                                                                          |  | Notes |    |  | 2012 |   |           | 2011 | 
|Assets                                                                                                    |  |       |    |  |      |   |           |      |  |   |           | 
|Current assets                                                                                            |  |       |    |  |      |   |           |      |  |   |           | 
|Cash and cash equivalents                                                                                 |  |       | 5  |  |      | $ | 76,094    |      |  | $ | 243,801   | 
|Short-term investments                                                                                    |  |       | 6  |  |      |   | 575,009   |      |  |   | 262,345   | 
|Accounts receivable                                                                                       |  |       | 7  |  |      |   | 135,207   |      |  |   | 142,297   | 
|Accounts receivable from related parties                                                                  |  |       | 16 |  |      |   | 1,129     |      |  |   | 704       | 
|Expendable parts and supplies                                                                             |  |       | 8  |  |      |   | 50,603    |      |  |   | 42,382    | 
|Prepaid expenses                                                                                          |  |       | 9  |  |      |   | 63,120    |      |  |   | 40,058    | 
|Other current assets                                                                                      |  |       | 10 |  |      |   | 16,328    |      |  |   | 22,655    | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total current assets                                                                                      |  |       |    |  |      |   | 917,490   |      |  |   | 754,242   | 
|Non-current assets                                                                                        |  |       |    |  |      |   |           |      |  |   |           | 
|Investments                                                                                               |  |       | 6  |  |      |   | 69,445    |      |  |   | 104,834   | 
|Property, plant and equipment                                                                             |  |       | 11 |  |      |   | 2,284,631 |      |  |   | 2,000,191 | 
|Prepaid pension asset                                                                                     |  |       |    |  |      |   | 10,009    |      |  |   | 8,974     | 
|Goodwill                                                                                                  |  |       | 12 |  |      |   | 27,575    |      |  |   | 25,099    | 
|Other intangible assets                                                                                   |  |       | 13 |  |      |   | 59,382    |      |  |   | 47,047    | 
|Other assets                                                                                              |  |       | 14 |  |      |   | 1 10,968  |      |  |   | 125,409   | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total non-current assets                                                                                  |  |       |    |  |      |   | 2,562,010 |      |  |   | 2,311,554 | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total assets                                                                                              |  |       |    |  |      | $ | 3,479,500 |      |  | $ | 3,065,796 | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Liabilities and equity                                                                                    |  |       |    |  |      |   |           |      |  |   |           | 
|Current Liabilities                                                                                       |  |       |    |  |      |   |           |      |  |   |           | 
|Current maturities of long-term debt                                                                      |  |       | 15 |  |      | $ | 136,268   |      |  | $ | 131,069   | 
|Accounts payable                                                                                          |  |       |    |  |      |   | 104,975   |      |  |   | 92,842    | 
|Accounts payable to related parties                                                                       |  |       | 16 |  |      |   | 20,255    |      |  |   | 22,074    | 
|Air traffic liability                                                                                     |  |       |    |  |      |   | 382,807   |      |  |   | 297,135   | 
|Taxes and interest payable                                                                                |  |       |    |  |      |   | 85,436    |      |  |   | 71,223    | 
|Accrued expenses payable                                                                                  |  |       | 17 |  |      |   | 48,047    |      |  |   | 30,472    | 
|Other current liabilities                                                                                 |  |       | 18 |  |      |   | 10,902    |      |  |   | 13,845    | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total Current Liabilities                                                                                 |  |       |    |  |      |   | 788,690   |      |  |   | 658,660   | 
|Non-Current Liabilities                                                                                   |  |       |    |  |      |   |           |      |  |   |           | 
|Long-term debt                                                                                            |  |       | 15 |  |      |   | 1,069,836 |      |  |   | 936,657   | 
|Post employment benefits liability                                                                        |  |       |    |  |      |   | 6,340     |      |  |   | 5,847     | 
|Other long-term liabilities                                                                               |  |       | 19 |  |      |   | 43,726    |      |  |   | 44,657    | 
|Deferred tax liabilities                                                                                  |  |       | 22 |  |      |   | 34,364    |      |  |   | 30,444    | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total Non-Current Liabilities                                                                             |  |       |    |  |      |   | 1,154,266 |      |  |   | 1,017,605 | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total Liabilities                                                                                         |  |       |    |  |      |   | 1,942,956 |      |  |   | 1,676,265 | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Equity                                                                                                    |  |       |    |  |      |   |           |      |  |   |           | 
|Class A common stock33,391,137 (201133,343,164) shares issued, 33,098,345 (201132,957,763)
outstanding |  |       |    |  |      |   | 22,591    |      |  |   | 22,495    | 
|Class B common stock10,938,125 (2011- 10,938,125) shares issued and outstanding, no par value            |  |       |    |  |      |   | 7,466     |      |  |   | 7,466     | 
|Additional paid in capital                                                                                |  |       |    |  |      |   | 40,660    |      |  |   | 33,567    | 
|Retained earnings                                                                                         |  |       |    |  |      |   | 1,458,258 |      |  |   | 1,324,394 | 
|Accumulated other comprehensive income                                                                    |  |       |    |  |      |   | 7,569     |      |  |   | 1,609     | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total equity                                                                                              |  |       |    |  |      |   | 1,536,544 |      |  |   | 1,389,531 | 
|Commitments and Contingencies                                                                             |  |       | 26 |  |      |   |           |      |  |   |           | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 
|Total liabilities and equity                                                                              |  |       |    |  |      | $ | 3,479,500 |      |  | $ | 3,065,796 | 
|                                                                                                          |  |       |    |  |      |   |           |      |  |   |           | 

The accompanying notes are an integral part of these consolidated financial statements.



F-4



---

Copa Holdings, S. A. and Subsidiaries

Consolidated statement of income

For the year ended
31 December 2012

(In US$ thousands)



|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|-------------------------------------- |  | ----- | -- |  | ---- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                       |  | Notes |    |  | 2012 |   |           | 2011 |  |   | 2010      |  
|Operating Revenue                      |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Passenger revenue                      |  |       |    |  |      | $ | 2,163,136 |      |  | $ | 1,747,102 |   |  | $ | 1,338,581 |  
|Cargo, mail and other                  |  |       |    |  |      |   | 86,252    |      |  |   | 83,819    |   |  |   | 76,225    |  
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|                                       |  |       |    |  |      |   | 2,249,388 |      |  |   | 1,830,921 |   |  |   | 1,414,806 |  
|Operating Expenses                     |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Aircraft fuel                          |  |       |    |  |      |   | 725,763   |      |  |   | 547,221   |   |  |   | 354,427   |  
|Salaries and benefits                  |  |       | 23 |  |      |   | 247,405   |      |  |   | 213,094   |   |  |   | 178,845   |  
|Passenger servicing                    |  |       |    |  |      |   | 217,137   |      |  |   | 160,725   |   |  |   | 133,718   |  
|Commissions                            |  |       |    |  |      |   | 89,378    |      |  |   | 72,947    |   |  |   | 57,677    |  
|Maintenance, material and repairs      |  |       |    |  |      |   | 92,166    |      |  |   | 70,969    |   |  |   | 62,229    |  
|Reservations and sales                 |  |       |    |  |      |   | 84,992    |      |  |   | 70,363    |   |  |   | 58,813    |  
|Aircraft rentals                       |  |       |    |  |      |   | 72,468    |      |  |   | 51,259    |   |  |   | 46,334    |  
|Flight operations                      |  |       |    |  |      |   | 104,993   |      |  |   | 83,782    |   |  |   | 70,648    |  
|Depreciation and amortization          |  |       | 11 |  |      |   | 89,217    |      |  |   | 75,458    |   |  |   | 62,962    |  
|Landing fees and other rentals         |  |       |    |  |      |   | 46,233    |      |  |   | 41,881    |   |  |   | 40,320    |  
|Other                                  |  |       |    |  |      |   | 77,101    |      |  |   | 58,237    |   |  |   | 59,185    |  
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|                                       |  |       |    |  |      |   | 1,846,853 |      |  |   | 1,445,936 |   |  |   | 1,125,158 |  
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Operating Income                       |  |       |    |  |      |   | 402,535   |      |  |   | 384,985   |   |  |   | 289,648   |  
|Non-operating expense:                 |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Finance costs                          |  |       |    |  |      |   | 32,795    |      |  |   | 32,680    |   |  |   | 29,981    |  
|Finance income                         |  |       |    |  |      |   | (11,689   | )    |  |   | (6,774    | ) |  |   | (4,759    | )
|Exchange rate difference               |  |       | 20 |  |      |   | 9,925     |      |  |   | 6,036     |   |  |   | 20,625    |  
|Mark to market fuel derivative         |  |       |    |  |      |   | 9,949     |      |  |   | 3,585     |   |  |   | (11,721   | )
|Other, net                             |  |       |    |  |      |   | (4,788    | )    |  |   | 3,447     |   |  |   | (4,501    | )
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|                                       |  |       |    |  |      |   | 36,192    |      |  |   | 38,974    |   |  |   | 29,625    |  
|Income before income taxes             |  |       |    |  |      |   | 366,343   |      |  |   | 346,011   |   |  |   | 260,023   |  
|Income tax expense                     |  |       | 22 |  |      |   | 39,867    |      |  |   | 35,586    |   |  |   | 18,966    |  
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Net income                             |  |       |    |  |      | $ | 326,476   |      |  | $ | 310,425   |   |  | $ | 241,057   |  
|                                       |  |       |    |  |      |   |           |      |  |   |           |   |  |   |           |  
|Earnings per share (Basic and diluted) |  |       | 24 |  |      | $ | 7.35      |      |  | $ | 6.98      |   |  | $ | 5.48      |  

The accompanying notes are an integral part of these consolidated financial statements.



F-5



---

Copa Holdings, S. A. and Subsidiaries

Consolidated statement of comprehensive income

For the year
ended 31 December 2012

(In US$ thousands)



|                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                   |  | 2012 |         |   | 2011 |   |         | 2010 | 
|Net income                                         |  | $    | 326,476 |   |      | $ | 310,425 |      |  | $ | 241,057 |  
|                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Other comprehensive income:                        |  |      |         |   |      |   |         |      |  |   |         |  
|Net change in fair value of derivative instruments |  |      | 1,292   |   |      |   | 47      |      |  |   | (1,301  | )
|Exchange effect on intercompany long term balance  |  |      | (1,516  | ) |      |   | (1,075  | )    |  |   | (1,062  | )
|Foreign currency translation                       |  |      | 6,184   |   |      |   | 227     |      |  |   | 3,965   |  
|                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Other comprehensive income (loss) for the year     |  |      | 5,960   |   |      |   | (801    | )    |  |   | 1,602   |  
|                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Total comprehensive income for the year            |  | $    | 332,436 |   |      | $ | 309,624 |      |  | $ | 242,659 |  
|                                                   |  |      |         |   |      |   |         |      |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



F-6



---

Copa Holdings, S. A. and Subsidiaries

Consolidated statement of changes in equity

For the year
ended 31 December 2012

(In US$ thousands)



|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   |               |   |  |       |           |   |  |   |       |   |  |   |           |  
|------------------------------- |  | ----- | -- |  | --------------- |  | ---------- | -------------- |  |  | ---------- | - |  | ---------- | ------ |  | ------------- | - | ------ | -------- |  | - | ------------- | - |  | ----- | --------- | - |  | - | ----- | - |  | - | --------- | -
|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   | Accumulated   |   |  |       |          
|                                |  |       |    |  | Common Stock    |  |            |                |  |  |            |   |  | Additional |        |  |               |   |        | Other    |  |   |               |  
|                                |  |       |    |  | (Non-par value) |  |            | Issued Capital |  |  | Paid in    |   |  | Retained   |        |  | Comprehensive |   |        |          | 
|                                |  | Notes |    |  | Class A         |  |            | Class B        |  |  | Class A    |   |  | Class B    |        |  | Capital       |   |        | Earnings |  |   | Income (Loss) |   |  | Total |          
|At January 31, 2010 (restated)  |  |       |    |  |                 |  | 30,566,853 |                |  |  | 12,778,125 |   |  | $          | 20,864 |  |               | $ | 8,722  |          |  | $ | 22,196        |   |  |       | 893,230   |   |  | $ | 808   |   |  |   | 945,820   |  
|Issuance of stock               |  |       |    |  |                 |  | 2,092,704  |                |  |  | (1,840,000 | ) |  |            | 1,427  |  |               |   | (1,256 | )        |  |   | (171          | ) |  |       |          |   |  |   |      |   |  |   |          |  
|Total comprehensive income      |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | 241,057   |   |  |   | 1,602 |   |  |   | 242,659   |  
|Restricted stock plan           |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   | 4,085         |   |  |       |          |   |  |   |      |   |  |   | 4,085     |  
|Dividends declared              |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | (47,908   | ) |  |   |      |   |  |   | (47,908   | )
|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   |               |   |  |       |           |   |  |   |       |   |  |   |           |  
|At December 31, 2010 (restated) |  |       |    |  |                 |  | 32,659,557 |                |  |  | 10,938,125 |   |  | $          | 22,291 |  |               | $ | 7,466  |          |  | $ | 26,110        |   |  | $     | 1,086,379 |   |  | $ | 2,410 |   |  | $ | 1,144,656 |  
|Issuance of stock               |  |       |    |  |                 |  | 298,206    |                |  |  |           |   |  |            | 204    |  |               |   |       |          |  |   | (204          | ) |  |       |          |   |  |   |      |   |  |   |          |  
|Total comprehensive income      |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | 310,425   |   |  |   | (801  | ) |  |   | 309,624   |  
|Restricted stock plan           |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   | 7,661         |   |  |       |          |   |  |   |      |   |  |   | 7,661     |  
|Dividends paid                  |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | (72,410   | ) |  |   |      |   |  |   | (72,410   | )
|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   |               |   |  |       |           |   |  |   |       |   |  |   |           |  
|At December 31, 2011            |  |       |    |  |                 |  | 32,957,763 |                |  |  | 10,938,125 |   |  | $          | 22,495 |  |               | $ | 7,466  |          |  | $ | 33,567        |   |  | $     | 1,324,394 |   |  | $ | 1,609 |   |  | $ | 1,389,531 |  
|Issuance of stock               |  |       |    |  |                 |  | 140,582    |                |  |  |           |   |  |            | 96     |  |               |   |       |          |  |   | (96           | ) |  |       |          |   |  |   |      |   |  |   |          |  
|Total comprehensive income      |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | 326,476   |   |  |   | 5,960 |   |  |   | 332,436   |  
|Restricted stock plan           |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   | 7,014         |   |  |       |          |   |  |   |      |   |  |   | 7,014     |  
|Other                           |  |       |    |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   | 175           |   |  |       |          |   |  |   |      |   |  |   | 175       |  
|Dividends paid                  |  |       | 25 |  |                 |  |           |                |  |  |           |   |  |            |       |  |               |   |       |          |  |   |              |   |  |       | (192,612  | ) |  |   |      |   |  |   | (192,612  | )
|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   |               |   |  |       |           |   |  |   |       |   |  |   |           |  
|At December 31, 2012            |  |       |    |  |                 |  | 33,098,345 |                |  |  | 10,938,125 |   |  | $          | 22,591 |  |               | $ | 7,466  |          |  | $ | 40,660        |   |  | $     | 1,458,258 |   |  | $ | 7,569 |   |  | $ | 1,536,544 |  
|                                |  |       |    |  |                 |  |            |                |  |  |            |   |  |            |        |  |               |   |        |          |  |   |               |   |  |       |           |   |  |   |       |   |  |   |           |  

The accompanying notes are an integral part of these consolidated financial statements.



F-7



---

Copa Holdings, S. A. and Subsidiaries

Consolidated statement of cash flows

For the year ended
31 December 2012

(In US$ thousands)



|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------- |  | ------------------------ | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                          |  | Years Ended December 31, |         
|                                                          |  | 2012                     |          |   | 2011 |   |          | 2010 | 
|Operating activities                                      |  |                          |          |   |      |   |          |      |  |   |          |  
|Net income                                                |  | $                        | 326,476  |   |      | $ | 310,425  |      |  | $ | 241,057  |  
|Adjustments for:                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Income tax expense                                        |  |                          | 39,867   |   |      |   | 35,586   |      |  |   | 18,966   |  
|Finance cost                                              |  |                          | 32,795   |   |      |   | 32,680   |      |  |   | 29,981   |  
|Finance income                                            |  |                          | (11,689  | ) |      |   | (6,774   | )    |  |   | (4,759   | )
|Depreciation and amortization                             |  |                          | 89,217   |   |      |   | 75,458   |      |  |   | 62,962   |  
|Gain on sale of property and equipment                    |  |                          | (68      | ) |      |   | (801     | )    |  |   | (20      | )
|Loss on disposal of property and equipment                |  |                          | 348      |   |      |   |         |      |  |   |         |  
|Provision for impairment                                  |  |                          | 6,829    |   |      |   | 347      |      |  |   | (540     | )
|Allowance for obsolescence                                |  |                          | 43       |   |      |   | 45       |      |  |   | 36       |  
|Derivative instruments mark to market                     |  |                          | 10,614   |   |      |   | 4,989    |      |  |   | (13,555  | )
|Stock compensation                                        |  |                          | 7,014    |   |      |   | 7,661    |      |  |   | 4,032    |  
|Amortization and impairment of brand name                 |  |                          | 970      |   |      |   | 883      |      |  |   | 1,500    |  
|Currency translation adjustment                           |  |                          | (4,185   | ) |      |   | (1,145   | )    |  |   | 62       |  
|Changes in:                                               |  |                          |          |   |      |   |          |      |  |   |          |  
|Accounts receivable                                       |  |                          | 261      |   |      |   | (53,870  | )    |  |   | (10,208  | )
|Accounts receivable from related parties                  |  |                          | (425     | ) |      |   | (91      | )    |  |   | 4,064    |  
|Other current assets                                      |  |                          | (25,474  | ) |      |   | (5,037   | )    |  |   | (32,448  | )
|Restricted cash                                           |  |                          | 4,889    |   |      |   | (110     | )    |  |   | 182      |  
|Other assets                                              |  |                          | 5,717    |   |      |   | (24,550  | )    |  |   | (9,197   | )
|Accounts payable                                          |  |                          | 12,133   |   |      |   | 23,882   |      |  |   | 13,207   |  
|Accounts payable to related parties                       |  |                          | (1,819   | ) |      |   | 11,134   |      |  |   | (1,832   | )
|Air traffic liability                                     |  |                          | 85,672   |   |      |   | 125,719  |      |  |   | 27,106   |  
|Other liabilities                                         |  |                          | 22,490   |   |      |   | 12,542   |      |  |   | (1,824   | )
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Cash flows from operating activities                      |  |                          | 601,675  |   |      |   | 548,973  |      |  |   | 328,772  |  
|Income tax paid                                           |  |                          | (39,653  | ) |      |   | (25,568  | )    |  |   | (13,041  | )
|Interest paid                                             |  |                          | (28,946  | ) |      |   | (28,911  | )    |  |   | (26,249  | )
|Interest received                                         |  |                          | 4,950    |   |      |   | 3,795    |      |  |   | 3,319    |  
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Net cash flows from operating activities                  |  |                          | 538,026  |   |      |   | 498,289  |      |  |   | 292,801  |  
|Investing activities                                      |  |                          |          |   |      |   |          |      |  |   |          |  
|Acquisition of investments                                |  |                          | (399,733 | ) |      |   | (319,652 | )    |  |   | (340,268 | )
|Proceeds from redemption of investments                   |  |                          | 117,568  |   |      |   | 153,722  |      |  |   | 234,768  |  
|Advance payments on aircraft purchase contracts           |  |                          | (194,886 | ) |      |   | (175,354 | )    |  |   | (157,292 | )
|Acquisition of property and equipment                     |  |                          | (177,554 | ) |      |   | (130,973 | )    |  |   | (191,437 | )
|Proceed on sale of property and equipment                 |  |                          |         |   |      |   | 4,007    |      |  |   | 8,797    |  
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Net cash flows used in investing activities               |  |                          | (654,605 | ) |      |   | (468,250 | )    |  |   | (445,432 | )
|Financing activities                                      |  |                          |          |   |      |   |          |      |  |   |          |  
|Proceeds from loans and borrowings                        |  |                          | 287,490  |   |      |   | 171,747  |      |  |   | 282,072  |  
|Payments on loans and borrowings                          |  |                          | (149,353 | ) |      |   | (93,562  | )    |  |   | (138,697 | )
|Paid-in capital                                           |  |                          | 176      |   |      |   |         |      |  |   | 53       |  
|Dividends paid                                            |  |                          | (192,612 | ) |      |   | (72,410  | )    |  |   | (47,908  | )
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Net cash flows (used in) provided by financing activities |  |                          | (54,299  | ) |      |   | 5,775    |      |  |   | 95,520   |  
|Effect of exchange rate change on cash                    |  |                          | 3,171    |   |      |   | 297      |      |  |   | 2,145    |  
|Net increase (decrease) in cash and cash equivalents      |  |                          | (167,707 | ) |      |   | 36,111   |      |  |   | (54,966  | )
|Cash and cash equivalents at January 1st                  |  |                          | 243,801  |   |      |   | 207,690  |      |  |   | 262,656  |  
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents at December 31                  |  | $                        | 76,094   |   |      | $ | 243,801  |      |  | $ | 207,690  |  
|                                                          |  |                          |          |   |      |   |          |      |  |   |          |  

The accompanying notes are an integral part of these consolidated financial statements.



F-8



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$
thousands)

1. Corporate information

Copa Holdings, S. A. (the Company) was incorporated according to the laws of the Republic of Panama and owns 99.9% of the shares of Compañía Panameña de Aviación,
S. A. (Copa Airlines), 100% of the shares of Oval Financial Leasing, Ltd. (OVAL), and 99.9% of the shares of AeroRepública, S.A. (Copa Colombia).

Copa Airlines, the Companys core operation, is incorporated according to the laws of the Republic of Panama and provides international air transportation for passengers, cargo and mail. Copa
Airlines operates from its Panama City hub in the Republic of Panama. Copa Colombia is a Colombian air carrier, which is incorporated according to the laws of the Republic of Colombia and provides domestic and international air transportation for
passengers, cargo and mail with a point-to-point route network. OVAL is incorporated according to the laws of the British Virgin Islands, and controls the special purpose entities that have a beneficial interest in the majority of our fleet, which
are all leased to either Copa Airlines or Copa Colombia.

The Company currently offers approximately 334 daily scheduled flights among 64
destinations in 29 countries in North, Central and South America and the Caribbean, mainly from its Panama City Hub. Additionally, the Company provides passengers with access to flights to more than 165 other international destinations through
codeshare agreements with United and other airline partners. The Company has a broad commercial alliance with United, which includes joint marketing, code-sharing arrangements, participation in Uniteds Mileage Plus frequent flyer loyalty
program and access to Uniteds VIP lounge program, Presidents Club, along with other benefits such as improved purchasing power in negotiations with service providers, aircraft vendors and insurers. Since June 2012, Copa Airlines is a
Star Alliance member. Copa Airlines passengers who are members of the frequent flyer program can earn Mileage Plus miles on all flights operated by Star Alliance partners, and are eligible to redeem their Mileage Plus miles for free reward
tickets to any of Star Alliances 1,292 global destinations.

As of December 31, 2012, the Company operates a fleet of 83 aircraft
with an average age of 5.13 years; consisting of 57 modern Boeing 737-Next Generation aircraft and 26 Embraer 190 aircraft.



F-9



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



1. Corporate information (continued)



The Companys principal executive offices are located at Boulevard Costa del Este, Avenida
Principal y Avenida de la Rotonda, Urbanización Costa del Este, Complejo Business Park, Torre Norte, Parque Lefevre, Panama City, Republic of Panama.

As used in these Notes to Consolidated Financial Statements, the terms the Company, we, us, our and similar terms refer to Copa Holdings, S.A. and, unless
the context indicates otherwise, its consolidated subsidiaries.

The consolidated financial statements have been authorized by Management for
issue on April 26, 2013.

2.1 Basis of preparation

The Companys consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).

The consolidated financial statements have been prepared on a historical cost basis, except for certain
assets and liabilities, which are measured at fair value, as set out in the specific accounting policy for such assets and liabilities. The consolidated financial statements are presented in United States dollars and all values are rounded to the
nearest thousand U.S. $000, except when otherwise indicated.

2.2 Basis of consolidation

These consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2012.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until
the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intercompany balances, transactions and dividends are
eliminated in full.



F-10



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies

a) Goodwill

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and
liabilities assumed of the acquired subsidiary at the date of acquisition.

After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Companys cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units.

b)
Foreign currencies

The Companys consolidated financial statements are presented in U.S. Dollars, which is also the companys
functional currency. For each entity the Company determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

i) Transactions and balances

Transactions in foreign currencies are initially recorded by
the Company at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets
and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange at the reporting date.

Non-monetary items are translated at equivalent U.S. Dollar costs at dates of the initial transaction and maintained at historical rate. Foreign
exchange gains and losses are included in the exchange rate difference line in the consolidated statement of income for the year.

ii)
Group companies

The financial statements of Copa Colombia, S. A. are measured in Colombian Pesos, the functional currency of the
subsidiary, and are translated to U.S. Dollars as follows: for assets and liabilities at the exchange rate prevailing at the reporting date and for income statement at the average exchange rate for each month. The exchange differences arising on
translation for consolidation are recognized in the consolidated statement of comprehensive income.

Any goodwill arising on the acquisition
of a foreign operation is treated as asset of the foreign operation and translated at the closing exchange rate.



F-11



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)

c) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue
is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition criteria must also be met before revenue is
recognized:

Passenger revenue

Passenger revenue is recognized when transportation is provided rather than when a ticket is sold. The amount of passenger ticket sales, not yet
recognized as revenue, is reflected as Air traffic liability in the consolidated statement of financial position. Fares for tickets that are expected to expire unused are recognized as revenue based on historical data and experience. The
Company performs periodic evaluations of this liability, and any adjustments resulting there from, which can be significant, are included in operations for the periods in which the evaluations are completed.

A significant portion of the Companys ticket sales are processed through major credit card companies, resulting in accounts receivable which are
generally short-term in duration and typically collected prior to when revenue is recognized. The Company believes that the credit risk associated with these receivables is minimal.

The Company is required to charge certain taxes and fees on its passenger tickets. These taxes and fees include transportation taxes, airport passenger facility charges and arrival and departure taxes.
These taxes and fees are legal assessments on the customer. As the Company has a legal obligation to act as a collection agent with respect to these taxes and fees, we do not include such amounts in passenger revenue. The Company records a liability
when the amounts are collected and derecognize the liability when payments are made to the applicable government agency or operating carrier.

Cargo and courier services

Cargo and
courier services are recognized when the Company provides the shipping services and thereby completes the earning process.

Other revenue

Other revenue is primarily comprised of excess baggage charges, commissions earned on tickets sold for flights on other airlines and
charter flights, and is recognized when transportation or service is provided.



F-12



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Frequent flyer program

The Company participates in United Continentals One Pass frequent flyer program (Renamed Mileage Plus in March 2012), for which the Companys passengers receive all the benefits and privileges
offered by the Mileage Plus program. United Continental is responsible for the administration of and retains the liability to redeem miles under the Mileage Plus program. Under the terms of the Companys frequent flyer agreement with United
Continental, Mileage Plus members receive Mileage Plus frequent flyer mileage credits for traveling on the Companys flight and the Company pays United Continental a per mile rate for each mileage credit granted to United Continental at the
time of the flight. The amounts paid to United Continental are recognized by the Company through a deduction under passenger revenue in the consolidated statement of income and the Company has no further payment or service obligation
with respect to the mileage credits. United Continental is then obligated to pay the Company a per mile rate for every mile flown by a Mileage Plus Member redeeming miles on a Copa Airlines or Copa Colombia flight. The rates paid by United
Continental depend on the class of service, the flight length and the availability of the reward. This revenue received from United Continental is recorded in passenger revenue in the accompanying consolidated income statement as flight
services are provided to the passenger.

d) Taxes

Current income tax

Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and
generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes provisions when appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences,
except:



| |  |  | When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-13



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



| |  |  | In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses. Deferred tax assets are recognized to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized, except:



| |  |  | When deferred tax asset relating to the deductible temporary difference arises from initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax
assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation
to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities
are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.



F-14



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



e) Property, plant and equipment

Property, plant and equipment comprise mainly airframe, engines and other related flight equipments. All property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated impairment losses, if any. Under IAS 16 Property, Plant and Equipment, major maintenance events, including major engine overhauls, are treated as a separate asset component with the cost
capitalized and depreciated over the period to the next major event. All other replacement spares and costs relating to maintenance of fleet assets are charged to the consolidated statement of income on consumption or as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:



|                                          |  |                                              
|----------------------------------------- |  | ---------------------------------------------
| Airframe and engines                    |  | 30 years                                     
| Aircraft components                     |  | 30 years                                     
| Ground equipment                        |  | 10 years                                     
| Furniture, fixture, equipment and other |  | 5 to 10 years                                
| Major maintenance events                |  | 1 to 8 years                                 
| Leasehold improvements                  |  | lesser of remaining lease term or useful life

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

f) Intangible
assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and the expenditure is reflected in the consolidated statement of income in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.



F-15



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Intangible assets with finite lives are amortized over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period, as appropriate, and are treated as changes in accounting estimates.
The amortization expense on intangible assets with finite lives is recognized in the consolidated statement of income.

Intangible assets with
indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to
be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains and losses arising from the
derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of income when the asset is derecognized.

A summary of the Companys intangible assets and the policies applied is:

Computer software

Acquired computer software licenses are capitalized on the basis of the
costs incurred to acquire and bring to use the specific software. These costs are amortized using the straight-line method over their estimated useful lives (three to eight years).

Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the production of identifiable and unique
software products controlled by the Company, and that are estimated to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include the software development employee costs and an appropriate
portion of relevant overheads.

Computer software development costs recognized as assets are amortized using the straight-line method over
their estimated useful lives.

Licenses and software rights acquired by the Company have finite useful lives and are amortized on a
straight-line basis over the term of the contract and the amortization is recognized in the consolidated statement of income.



F-16



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Brand name and routes

Routes rights have an indefinite useful life and are carried at cost, less any accumulated impairment. Annually they are tested for impairment.

During the third quarter of 2010, AeroRepública began to operate under Copa Colombia brand, causing a change in managements assumption from indefinite life to 5 years for the
AeroRepúblicas brand name. Based on the change of the commercial name, an impairment loss was recognized for $1.5 million during 2010. The remaining balance of this intangible asset is amortized over the 5 years defined life term.

g) Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date. The arrangement is assessed for whether the fulfillment of the agreement
is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of the
following applies:



| |  | There is a change in contractual terms, other than a renewal or extension of the arrangement;
|- |  | ---------------------------------------------------------------------------------------------



| |  | A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | There is a change in the determination of whether fulfillment is dependent on a specified asset; or
|- |  | ---------------------------------------------------------------------------------------------------



| |  | There is a substantial change to the asset.
|- |  | -------------------------------------------

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment. When a renewal option is exercised or extension
granted, lease accounting shall commence or cease at the date of renewal or extension period.

Company as a lessee

Leases where lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases.

Operating lease payments are recognized as an expense in the consolidated statement of income on a straight-line basis over the lease term.



F-17



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



h) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of any qualifying asset, that necessarily takes a substantial period
of time to get ready for its intended use or sale, are capitalized as part of the cost of the asset during that period of time. Other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.

i) Financial instruments  initial recognition and
subsequent measurement

i) Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are
classified as financial assets at fair value through profit or loss, receivables, held to maturity investments or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of
its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus directly attributable
transaction costs, except in the case of financial asset at fair value through profit and loss.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as describe below:

Held to maturity investments

The
Company invests in short-term time deposits with original maturities of more than three months but less than one year. Additionally, the Company invests in long-term time deposits with maturities greater than one year. These investments are
classified as short and long-term investments, respectively, in the accompanying consolidated statement of financial position. All of these investments are classified as held-to-maturity securities and are subsequently measured at amortized cost
using the Effective Interest Rate (EIR) method, less impairment, since the Company has determined that it has the intent and ability to hold the securities to maturity. Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the consolidated statement of income. Restricted cash is classified within short-term and long-term investments and is held as
collateral for letters of credit.



F-18



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Receivables

Accounts receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These financial instruments, which generally have 30 days terms, are
initially recognized and carried at original invoice amount, less a provision for impairment. The losses arising from impairment are recognized in the consolidated statement of income in Other operating expenses.

The Company records its best estimate of provision for impairment of receivables, on the basis of various factors, including: varying customer
classifications, agreed upon credit terms, and the age of the individual debt.

Derecognition

A financial asset is derecognized when:



| |  | The rights to receive cash flows from the asset have expired
|- |  | ------------------------------------------------------------



| |  | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without
material delay to a third party under a pass-through arrangement, and either (a) the Company has transferred substantially all the risk and rewards of the asset, or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

When the Company has
transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Companys continuing involvement in the asset. In that case, the Company also recognizes an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the
Company could be required to repay.



F-19



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



ii) Impairment of financial assets

The Company assesses at the end of each reporting date, whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets
is deemed to be impaired if there is objective evidence as a result of one or more events that has occurred since the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indicators that the debtors or the group of debtors is experiencing financial difficulty, default or delinquency in interest or
principal payments; the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows.

Impairment of financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a
group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not
included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of
the loss is measured as the difference between the assetss carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated
future cash flows is discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced and the loss is recorded in the consolidated statement of income.

iii) Financial liabilities

Initial
recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through
profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction
costs.

The Companys financial liabilities include trade and other payables, loans and borrowings, and derivative financial instruments.



F-20



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Subsequent measurement

The measurement of financial liabilities depends on their classification as described below:

Long-term debt

All borrowings and loans
are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest rate (EIR) method. Gain and losses are
recognized in the consolidated statement of income when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortization is included in finance costs in the consolidated statement of income.

Other financial liabilities

Other financial liabilities are initially recognized at fair value, including directly attributable transaction costs. Subsequent to initial recognition,
they are measured at amortized cost using the effective interest rate method.

Gain and losses are recognized in the consolidated statement of
income when the liabilities are derecognized as well as through the amortization process.

Derecognition

Financial liabilities are derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of income.

iv) Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or
dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For
financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:



| |  | Using recent arms length market transactions
|- |  | ---------------------------------------------



| |  | Reference to the current fair value of another instrument that is substantially the same
|- |  | ----------------------------------------------------------------------------------------



| |  | A discounted cash flow analysis or other valuation models.
|- |  | ----------------------------------------------------------

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 27.9.



F-21



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



j) Derivative financial instruments and hedging activities

Initial recognition and subsequent measurement

Derivatives instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The method for recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so,
the classification of the hedging.

For the purpose of hedge accounting, hedges are classified as:



| |  | Fair value hedges
|- |  | -----------------



| |  | Cash flow hedges
|- |  | ----------------



| |  | Hedges of a net investment in a foreign operation.
|- |  | --------------------------------------------------

The Company designates certain derivatives as cash flow hedges.

At the inception of a hedge
relationship, the Company formally designates and documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions.

The Company also documents its assessment both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions, as expected, are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of
various derivative instruments used for hedging purposes are shown in Note 18.

Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognized in the consolidated statement of comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of income.

Amounts recognized as other comprehensive income are transferred to the income statement when the hedged transaction affects profit or loss, such as when
the hedged financial income or financial expense is recognized. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognized as other comprehensive income are transferred to the initial carrying amount
of the nonfinancial asset or liability.



F-22



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classified as current or non-current or separated into a current and non-current portion based on an assessment of the
facts and circumstances:



| |  | When the Company will hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond 12 months after the reporting
date, the derivative is classified as non-current (or separated into current and non-current portions) consistent with the classification of the underlying item.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Embedded derivates that are not closely related to the host contract are classified consistent with the cash flows of the host contract.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | Derivative instruments that are designated as, and are effective hedging instruments, are classified consistently with the classification of the
underlying hedged item. The derivative instrument is separated into a current portion and a non-current portion only if a reliable allocation can be made.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

k) Expendable parts and supplies

Expendable parts and supplies
for flight equipment are carried at the lower of the average acquisition cost or replacement cost, and are expensed when used in operations. The replacement cost is the estimated purchase price in the normal course of business.

l) Impairment of non  financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the
Company estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets of group of assets. When the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the consolidated statement of income in those expense categories consistent with the function of the
impaired asset.



F-23



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



For assets, excluding goodwill, an assessment is made at each reporting date to determine whether there
is any indication that previously recognized impairment losses no longer exists or may have decreased. If such indication exists, the Company estimates the assets or CGUs recoverable amount. A previously recognized impairment loss is
reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement.

m) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position, comprise cash at banks and on hands, money market accounts and time deposits with original maturities of three months or less when
purchased.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash net of outstanding bank
overdraft.

n) Provisions

Provisions for costs, including restitution, restructuring and legal claims and assessments are recognized when:



| |  | The Company has a present legal or constructive obligation as a result of past events;
|- |  | --------------------------------------------------------------------------------------



| |  | It is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  | The amount of obligation can be reliably estimated.
|- |  | ---------------------------------------------------

For certain operating leases, the Company is contractually obliged to return aircraft in a defined condition. The Company accrues for restitution costs related to aircraft held under operating leases
throughout the duration of the lease. Restitution costs are based on the net present value of the estimated costs of returning the aircrafts and are recognized in the consolidated statement of income in Maintenance, material and repairs.
These costs are reviewed annually and adjusted as appropriate.

o) Passenger traffic commissions

Passenger traffic commissions are recognized as expense when transportation is provided and the related revenue is recognized. Passenger traffic
commissions paid but not yet recognized as expense are included in Prepaid expenses in the accompanying consolidated statement of financial position.



F-24



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



2.3 Summary of significant accounting policies (continued)



p) Share-based payments

Employees (including senior executives) of the Company receive remuneration in the form of share-based payment transactions, whereby employees render
services as consideration for equity instruments (equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in
which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Companys best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and
is recognized in Salaries and benefits expense (Note 23).

q) Maintenance deposit

The Company makes payments for engine overhauls under power by the hour agreements (PBH). Payments related to engine overhauls under PBH
agreements are recognized as prepaid assets until the maintenance event occurs, at which time the actual costs of the maintenance is capitalized and are amortized over the expected period until the next event. Additonally, the PBH covers minor
maintenance events which are recognized as an expense when occurs. Management performs regular reviews of the recovery of maintenance deposits and believes that the values reflected in the consolidated statement of financial position are
recoverable.

r) Monetary unit

The consolidated financial statements are presented in U.S. Dollar, the legal tender of the Republic of Panama. The Republic of Panama does not issue its own paper currency, instead, the
U.S. Dollar (US$) is used as legal currency.



F-25



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



3. Significant accounting judgments, estimates and assumptions

The preparation of the Companys consolidated financial statements requires management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount assets or liabilities affected in future periods.

Judgments

In the process of applying the Companys accounting policies, management has made judgment, which has the most significant effect on the amounts
recognized in the consolidated financial statements:

Leases

The Company has entered into lease contracts on some of the aircraft it operates. The Company has determined, based on the terms and conditions of the arrangements, that all the significant risks and
rewards of ownership of the aircraft it leases are not transferred, so it accounts for the contracts as operating leases.

Estimates and
assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions
when they occur.

Impairment of non financial asset

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value
less costs to sell calculation is based on available data from binding sales transactions, conducted at arms length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation
is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the
assets performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

Property, plant and equipment

The Companys management has determined that the residual value of the aircraft components owned is 15% of the cost of the asset, so the depreciation
of flight equipment is made accordingly. Annually, management reviews the useful life and salvage value of each of these assets.



F-26



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



3. Significant accounting judgments, estimates and assumptions (continued)



Maintenance provision

The recording of maintenance provisions related to return conditions on aircraft leases requires management to make estimates of the future costs associated with the maintenance events required under the
lease return condition and estimates of the expected future maintenance condition of the aircraft at the time of lease expiry. These estimates take into account current costs of these maintenance events, estimates of inflation surrounding these
costs as well as assumptions surrounding utilization of the related aircraft. Any difference in the actual maintenance cost incurred and the amount of the provision is recorded in maintenance expense in the period. The effect of any changes in
estimates, including changes in discount rates, inflation assumptions, cost estimates or lease expiries, is also recognized in maintenance expense in the period.

Share-based payments

The Company measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent
on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about
them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 23.

Revenue
recognition  expired tickets

The Company recognizes revenue from fares for tickets that are expected to expire unused based on
historical data and experience. Estimating expected breakage requires management to make informed judgment about, among other things, the extent to which historical experience is an indication of the future customer behavior. Quarterly as the
experience data suggests, management reassesses the historical data and makes required improvements.



F-27



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



3. Significant accounting judgments, estimates and assumptions (continued)



Taxes

The Company believes that the tax positions taken are reasonable. However, various taxing authorities may challenge the positions taken resulting in additional liabilities for taxes and interest that may
become payable in future years as a result of audits by the tax authorities. The tax positions involve considerable judgment on the part of management and tax positions are reviewed and adjusted to account for changes in circumstances, such as
lapsing of applicable statutes of limitations, conclusions of tax audits, additional exposures based on identification of new issues or court decisions affecting a particular tax issue. Actual results could differ from estimates.

4. Standards issued but not yet effective

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Companys financial statements are disclosed below. The Company intends to adopt these
standards, if applicable, when they become effective.

IAS 1 Presentation of Items of Other Comprehensive Income  Amendments
to IAS 1

The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be
reclassified (or recycled) to profit or loss at a future point in time (for example, net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on
available-for-sale financial assets) would be presented separately from items that will never be reclassified (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affects
presentation only and has no impact on the Groups financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012, and will therefore be applied in the Companys first annual
report after becoming effective.

IAS 19 Employee Benefits (Revised)

The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications
and re-wording. However, the amended standard will impact the net benefit expense as the expected return on plan assets will be calculated using the same interest rate as applied for the purpose of discounting the benefit obligation. The amendment
becomes effective for annual periods beginning on or after 1 January 2013.



F-28



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



4. Standards issued but not yet effective (continued)



IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been
renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The revised standard becomes effective for annual periods beginning on or
after 1 January 2013.

IAS 32 Offsetting Financial Assets and Financial Liabilities  Amendments to IAS 32

These amendments clarify the meaning of currently has a legally enforceable right to set-off. The amendments also clarify the application of
the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are not expected to impact the Groups financial position or
performance and become effective for annual periods beginning on or after 1 January 2014.

IFRS 1 Government Loans 
Amendments to IFRS 1

These amendments require first-time adopters to apply the requirements of IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to IFRS. Entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if
the information needed to do so had been obtained at the time of initially accounting for that loan. The exception would give first-time adopters relief from retrospective measurement of government loans with a below-market rate of interest. The
amendment is effective for annual periods on or after 1 January 2013. The amendment has no impact on the Company.

IFRS 7 Disclosures
 Offsetting Financial Assets and Financial Liabilities  Amendments to IFRS 7

These amendments require an entity to disclose
information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entitys financial position.
The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation.

The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance
with IAS 32. These amendments will not impact the Companys financial position or performance and become effective for annual periods beginning on or after 1 January 2013.



F-29



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



4. Standards issued but not yet effective (continued)



IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of
financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition
Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an
effect on the classification and measurement of the Companys financial assets, but will not have an impact on classification and measurements of financial liabilities. The Company will quantify the effect in conjunction with the other phases,
when the final standard including all phases is issued.

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial
Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for
consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation  Special Purpose Entities.

IFRS 10
establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore
are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Based on the preliminary analyses performed, IFRS 10 is not expected to have any impact on the currently held investments of the Company. This standard
becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities  Non-monetary Contributions by Venturers. IFRS 11 removes
the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. These amendments are not expected to impact the
Groups financial position or performance.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures
that were previously included in IAS 31 and IAS 28. These disclosures relate to an entitys interests in subsidiaries, joint arrangements, associates and structured entities.



F-30



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



4. Standards issued but not yet effective (continued)



A number of new disclosures are also required, but has no impact on the Groups financial position
or performance. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 13 Fair Value
Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an
entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Company is currently assessing the impact that this standard will have on the financial position
and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective for annual periods beginning on or after 1 January 2013.

Annual Improvements May 2012

These improvements will not have an impact on the Company,
but include:

IFRS 1 First-time Adoption of International Financial Reporting Standards

This improvement clarifies that an entity that stopped applying IFRS in the past and chooses, or is required, to apply IFRS, has the option to re-apply
IFRS 1. If IFRS 1 is not re-applied, an entity must retrospectively restate its financial statements as if it had never stopped applying IFRS.

IAS 1 Presentation of Financial Statements

This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is
provided for the previous period.

IAS 16 Property Plant and Equipment

This improvement clarifies that major spare parts and servicing equipment that meet the definition of property; plant and equipment are not inventory.

IAS 32 Financial Instruments, Presentation

This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes.

IAS 34 Interim Financial Reporting

The
amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.

These improvements are effective for annual periods beginning on or after 1 January 2013.



F-31



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



5. Cash and cash equivalents



|                                          |  |      |        |  |      |   |         | 
|----------------------------------------- |  | ---- | ------ |  | ---- | - | ------- | 
|                                          |  | 2012 |        |  | 2011 |  
|Checking and saving accounts              |  | $    | 44,504 |  |      | $ | 93,132  | 
|Time deposits of no more than ninety days |  |      | 476    |  |      |   | 110,212 | 
|Overnight deposits                        |  |      | 30,616 |  |      |   | 27,914  | 
|Cash on hand                              |  |      | 498    |  |      |   | 12,543  | 
|                                          |  |      |        |  |      |   |         | 
|                                          |  | $    | 76,094 |  |      | $ | 243,801 | 
|                                          |  |      |        |  |      |   |         | 

Time deposits earn interest based on rates determined by the banks in which the instruments are held. The use of the time
deposits depends on the cash requirements of the Company and bear interest rates ranging between 0.05% and 3.96% as of December 31, 2012 and 0.25% and 3.40% as of December 31, 2011.

6. Investments



|                                      |  |      |         |  |      |   |         | 
|------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                                      |  | 2012 |         |  | 2011 |  
|Short-term investments:               |  |      |         |  |      |   |         | 
|Time deposits between 90 and 365 days |  | $    | 484,838 |  |      | $ | 262,345 | 
|Other short term investments          |  |      | 90,171  |  |      |   | 0       | 
|                                      |  |      |         |  |      |   |         | 
|                                      |  | $    | 575,009 |  |      | $ | 262,345 | 
|                                      |  |      |         |  |      |   |         | 
|Long term investments:                |  |      |         |  |      |   |         | 
|Time deposits of more than 365 days   |  | $    | 68,000  |  |      | $ | 98,500  | 
|Restricted cash                       |  |      | 1,445   |  |      |   | 6,334   | 
|                                      |  |      |         |  |      |   |         | 
|                                      |  | $    | 69,445  |  |      | $ | 104,834 | 
|                                      |  |      |         |  |      |   |         | 

As of December 31, 2012 the Company had $90,171 million, not available for use by the Company due to exchange
controls in Venezuela.



F-32



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



7. Accounts receivable



|                                            |  |      |         |   |      |   |         |  
|------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                            |  | 2012 |         |   | 2011 |  
|Travel agencies and airlines clearing house |  | $    | 81,460  |   |      | $ | 74,955  |  
|Credit cards                                |  |      | 31,555  |   |      |   | 40,423  |  
|Cargo and other travel agencies             |  |      | 9,491   |   |      |   | 12,396  |  
|Mail                                        |  |      | 2,385   |   |      |   | 2,558   |  
|Other                                       |  |      | 13,499  |   |      |   | 16,502  |  
|                                            |  |      |         |   |      |   |         |  
|                                            |  |      | 138,390 |   |      |   | 146,834 |  
|Provision for impairment                    |  |      | (3,183  | ) |      |   | (4,537  | )
|                                            |  |      |         |   |      |   |         |  
|                                            |  | $    | 135,207 |   |      | $ | 142,297 |  
|                                            |  |      |         |   |      |   |         |  
|                                            |  |     
|                                            |  | 2012 |         |   | 2011 |  
|Current                                     |  | $    | 111,288 |   |      | $ | 83,859  |  
|Past due 0 to 30 days                       |  |      | 11,076  |   |      |   | 26,382  |  
|Past due 31 to 60 days                      |  |      | 3,611   |   |      |   | 7,493   |  
|More than 60 days                           |  |      | 12,415  |   |      |   | 29,100  |  
|                                            |  |      |         |   |      |   |         |  
|                                            |  | $    | 138,390 |   |      | $ | 146,834 |  
|                                            |  |      |         |   |      |   |         |  

Current accounts receivable are those that do not show delays in their payments, according to the date agreed with the
customer. The provision for impairment is made collectively when the Company estimates that it will not be able to collect all of the amounts past due. Movements in the provision for impairment of receivables were as follows:



|                             |  |      |        |   |      |   |        |  
|---------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                             |  | 2012 |        |   | 2011 |  
|Balance at beginning of year |  | $    | 4,537  |   |      | $ | 4,190  |  
|Additions                    |  |      | 6,829  |   |      |   | 5,019  |  
|Write-offs                   |  |      | (8,183 | ) |      |   | (4,672 | )
|                             |  |      |        |   |      |   |        |  
|Balance at end of year       |  | $    | 3,183  |   |      | $ | 4,537  |  
|                             |  |      |        |   |      |   |        |  



F-33



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



8. Expendable parts and supplies



|                                    |  |      |        |  |      |   |        | 
|----------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                    |  | 2012 |        |  | 2011 |  
|Material for repair and maintenance |  | $    | 43,476 |  |      | $ | 36,527 | 
|Purchases in transit                |  |      | 5,297  |  |      |   | 4,049  | 
|Other inventories                   |  |      | 1,830  |  |      |   | 1,806  | 
|                                    |  |      |        |  |      |   |        | 
|                                    |  | $    | 50,603 |  |      | $ | 42,382 | 
|                                    |  |      |        |  |      |   |        | 

The amount of expendable parts and supplies recognized as an expense in the consolidated statement of income in
Maintenance, material and repairs was $22.7 million, $18.1 million and $17.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

9. Prepaid expenses



|                    |  |      |        |  |      |   |        | 
|------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                    |  | 2012 |        |  | 2011 |  
|Prepaid taxes       |  | $    | 19,928 |  |      | $ | 12,550 | 
|Prepaid commissions |  |      | 6,942  |  |      |   | 4,195  | 
|Prepaid insurance   |  |      | 7,631  |  |      |   | 7,624  | 
|Prepaid rent        |  |      | 2,818  |  |      |   | 3,342  | 
|Prepaidother       |  |      | 25,801 |  |      |   | 12,347 | 
|                    |  |      |        |  |      |   |        | 
|                    |  | $    | 63,120 |  |      | $ | 40,058 | 
|                    |  |      |        |  |      |   |        | 

10. Other current assets



|                                  |  |      |        |  |      |   |        | 
|--------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                  |  | 2012 |        |  | 2011 |  
|Derivatives financial instruments |  | $    | 8,991  |  |      | $ | 18,605 | 
|Others                            |  |      | 7,337  |  |      |   | 4,050  | 
|                                  |  |      |        |  |      |   |        | 
|                                  |  | $    | 16,328 |  |      | $ | 22,655 | 
|                                  |  |      |        |  |      |   |        | 



F-34



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



11. Property, plant and equipment, net

A summary of equipment and leasehold improvements as of December, 31 2012, are as follows:



|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|------------------------------------- |  | -------- | --------- | - | ------- | - | -------- | ------------------- |  | - | ---------- | - |  | ---------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | --------------- | - |  | ----- | ------- | - |  | - | ------- | - |  | - | --------- | -
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   | Furniture,    |   |         |              |  |   |                 |   |  |       |        
|                                      |  |          |           |   |         |   |          | Purchase            |  |   |            |   |  | Ramp and         |         |   | Fixtures,     |   |         |              |  |   |                 |   |  |       |        
|                                      |  |          |           |   |         |   |          | deposits for flight |  |   | Aircraft   |   |  | Miscellaneous    |         |   | Equipment and |   |         | Leasehold    |  |   | Construction in |   |  |       |        
|                                      |  | Airframe |           |   | Engines |   |          | equipment           |  |   | Components |   |  | Flight Equipment |         |   | Other         |   |         | Improvements |  |   | Progress        |   |  | Total |        
|Cost                                  |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Balance at 1 January 2012             |  | $        | 1,184,757 |   |         | $ | 737,373  |                     |  | $ | 242,287    |   |  | $                | 103,000 |   |               | $ | 29,706  |              |  |   | 19,932          |   |  | $     | 17,499  |   |  | $ | 12,291  |   |  | $ | 2,346,845 |  
|Transfer of Pre-Delivery Payments     |  |          | 117,411   |   |         |   | 86,411   |                     |  |   | (203,822   | ) |  |                  |        |   |               |   |        |              |  |   |                |   |  |       |        |   |  |   |        |   |  |   |          |  
|Additions                             |  |          | 98,807    |   |         |   | 43,312   |                     |  |   | 187,970    |   |  |                  | 12,117  |   |               |   | 3,357   |              |  |   | 2,265           |   |  |       | 1       |   |  |   | 4,191   |   |  |   | 352,020   |  
|Capitalized interest /other           |  |          |          |   |         |   |         |                     |  |   | 19,109     |   |  |                  |        |   |               |   |        |              |  |   |                |   |  |       |        |   |  |   |        |   |  |   | 19,109    |  
|Disposals                             |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  | (481    | ) |               |   | (418    | )            |  |   | (530            | ) |  |       | (187    | ) |  |   |        |   |  |   | (1,616    | )
|Effect of movements in exchange rates |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  |        |   |               |   |        |              |  |   |                |   |  |       |        |   |  |   |        |   |  |   |          |  
|Reclassifications                     |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  | 9,509   |   |               |   | (27     | )            |  |   | 58              |   |  |       | 1,799   |   |  |   | (10,478 | ) |  |   | 861       |  
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Balance at 31 December 2012           |  | $        | 1,400,975 |   |         | $ | 867,096  |                     |  | $ | 245,544    |   |  | $                | 124,145 |   |               | $ | 32,618  |              |  | $ | 21,725          |   |  | $     | 19,112  |   |  | $ | 6,004   |   |  | $ | 2,717,219 |  
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Depreciation                          |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Balance at 1 January 2012             |  | $        | (185,678  | ) |         | $ | (94,804  | )                   |  | $ |           |   |  | $                | (22,122 | ) |               | $ | (19,960 | )            |  | $ | (14,657         | ) |  | $     | (9,433  | ) |  | $ |        |   |  | $ | (346,654  | )
|Depreciation for the year             |  |          | (51,806   | ) |         |   | (23,136  | )                   |  |   |           |   |  |                  | (3,960  | ) |               |   | (2,704  | )            |  |   | (2,428          | ) |  |       | (2,330  | ) |  |   |        |   |  |   | (86,364   | )
|Disposals                             |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  | 110     |   |               |   | 385     |              |  |   | 436             |   |  |       | 103     |   |  |   |        |   |  |   | 1,034     |  
|Effect of movements in exchange rates |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  | (6      | ) |               |   | (95     | )            |  |   | 208             |   |  |       | (22     | ) |  |   |        |   |  |   | 85        |  
|Reclassifications                     |  |          |          |   |         |   |         |                     |  |   |           |   |  |                  |        |   |               |   | (35     | )            |  |   | 35              |   |  |       | (689    | ) |  |   |        |   |  |   | (689      | )
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Balance at 31 December 2012           |  | $        | (237,484  | ) |         | $ | (117,940 | )                   |  | $ |           |   |  | $                | (25,978 | ) |               | $ | (22,409 | )            |  | $ | (16,406         | ) |  | $     | (12,371 | ) |  | $ |        |   |  | $ | (432,588  | )
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|Carrying Amounts                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|At 1 January 2012                     |  | $        | 999,079   |   |         | $ | 642,569  |                     |  | $ | 242,287    |   |  |                  | 80,878  |   |               |   | 9,746   |              |  |   | 5,275           |   |  |       | 8,066   |   |  |   | 12,291  |   |  |   | 2,000,191 |  
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  
|At 31 December 2012                   |  | $        | 1,163,491 |   |         | $ | 749,156  |                     |  | $ | 245,544    |   |  | $                | 98,167  |   |               |   | 10,209  |              |  |   | 5,319           |   |  |       | 6,741   |   |  |   | 6,004   |   |  |   | 2,284,631 |  
|                                      |  |          |           |   |         |   |          |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |         |   |  |   |         |   |  |   |           |  

59 aircraft with a carrying value of $1.8 billion are pledged as collateral for the obligation of the special
purpose entities.



F-35



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



|11. | Property, plant and equipment, Net (continued)
|--- | ----------------------------------------------





|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|------------------------------------- |  | -------- | --------- | - | ------- | - | ------- | ------------------- |  | - | ---------- | - |  | ---------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | --------------- | - |  | ----- | ------ | - |  | - | ------ | - |  | - | --------- | -
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   | Furniture,    |   |         |              |  |   |                 |   |  |       |       
|                                      |  |          |           |   |         |   |         | Purchase            |  |   |            |   |  | Ramp and         |         |   | Fixtures,     |   |         |              |  |   |                 |   |  |       |       
|                                      |  |          |           |   |         |   |         | deposits for flight |  |   | Aircraft   |   |  | Miscellaneous    |         |   | Equipment and |   |         | Leasehold    |  |   | Construction in |   |  |       |       
|                                      |  | Airframe |           |   | Engines |   |         | equipment           |  |   | Components |   |  | Flight Equipment |         |   | Other         |   |         | Improvements |  |   | Progress        |   |  | Total |       
|Cost                                  |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Balance at 1 January 2011             |  | $        | 1,034,054 |   |         | $ | 650,194 |                     |  | $ | 205,972    |   |  | $                | 85,908  |   |               | $ | 27,256  |              |  |   | 19,099          |   |  | $     | 15,882 |   |  | $ | 9,103  |   |  | $ | 2,047,468 |  
|Transfer of Pre-Delivery Payments     |  |          |          |   |         |   |        |                     |  |   | (139,039   | ) |  |                  |        |   |               |   |        |              |  |   |                |   |  |       |       |   |  |   |       |   |  |   | (139,039  | )
|Additions                             |  |          | 156,457   |   |         |   | 87,179  |                     |  |   | 166,407    |   |  |                  | 12,616  |   |               |   | 3,008   |              |  |   | 2,499           |   |  |       | 6      |   |  |   | 5,004  |   |  |   | 433,176   |  
|Capitalized interest /other           |  |          |          |   |         |   |        |                     |  |   | 8,947      |   |  |                  |        |   |               |   |        |              |  |   |                |   |  |       |       |   |  |   |       |   |  |   | 8,947     |  
|Disposals                             |  |          | (306      | ) |         |   |        |                     |  |   |           |   |  |                  | (1,876  | ) |               |   | (551    | )            |  |   | (1,404          | ) |  |       |       |   |  |   | (100   | ) |  |   | (4,237    | )
|Effect of movements in exchange rates |  |          | 69        |   |         |   |        |                     |  |   |           |   |  |                  |        |   |               |   | (31     | )            |  |   | (12             | ) |  |       |       |   |  |   |       |   |  |   | 26        |  
|Reclassifications                     |  |          | (5,517    | ) |         |   |        |                     |  |   |           |   |  |                  | 6,352   |   |               |   | 24      |              |  |   | (250            | ) |  |       | 1,611  |   |  |   | (1,716 | ) |  |   | 504       |  
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Balance at 31 December 2011           |  | $        | 1,184,757 |   |         | $ | 737,373 |                     |  | $ | 242,287    |   |  | $                | 103,000 |   |               | $ | 29,706  |              |  | $ | 19,932          |   |  | $     | 17,499 |   |  | $ | 12,291 |   |  | $ | 2,346,845 |  
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Depreciation                          |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Balance at 1 January 2011             |  | $        | (146,882  | ) |         | $ | (75,105 | )                   |  | $ |           |   |  | $                | (13,881 | ) |               | $ | (17,675 | )            |  | $ | (14,068         | ) |  | $     | (7,330 | ) |  | $ |       |   |  | $ | (274,941  | )
|Depreciation for the year             |  |          | (41,911   | ) |         |   | (19,699 | )                   |  |   |           |   |  |                  | (4,480  | ) |               |   | (2,846  | )            |  |   | (2,551          | ) |  |       | (2,077 | ) |  |   |       |   |  |   | (73,564   | )
|Disposals                             |  |          | 3,015     |   |         |   |        |                     |  |   |           |   |  |                  | 256     |   |               |   | 561     |              |  |   | 1,770           |   |  |       | 2      |   |  |   |       |   |  |   | 5,604     |  
|Effect of movements in exchange rates |  |          | 100       |   |         |   |        |                     |  |   |           |   |  |                  | (1      | ) |               |   |        |              |  |   | 192             |   |  |       | (28    | ) |  |   |       |   |  |   | 263       |  
|Reclassifications                     |  |          |          |   |         |   |        |                     |  |   |           |   |  |                  | (4,016  | ) |               |   |        |              |  |   |                |   |  |       |       |   |  |   |       |   |  |   | (4,016    | )
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Balance at 31 December 2011           |  | $        | (185,678  | ) |         | $ | (94,804 | )                   |  | $ |           |   |  | $                | (22,122 | ) |               | $ | (19,960 | )            |  | $ | (14,657         | ) |  | $     | (9,433 | ) |  | $ |       |   |  | $ | (346,654  | )
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|Carrying Amounts                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|At 1 January 2011                     |  | $        | 887,172   |   |         | $ | 575,089 |                     |  | $ | 205,972    |   |  |                  | 72,027  |   |               |   | 9,581   |              |  |   | 5,031           |   |  |       | 8,552  |   |  |   | 9,103  |   |  |   | 1,772,527 |  
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  
|At 31 December 2011                   |  | $        | 999,079   |   |         | $ | 642,569 |                     |  | $ | 242,287    |   |  | $                | 80,878  |   |               |   | 9,746   |              |  |   | 5,275           |   |  |       | 8,066  |   |  |   | 12,291 |   |  |   | 2,000,191 |  
|                                      |  |          |           |   |         |   |         |                     |  |   |            |   |  |                  |         |   |               |   |         |              |  |   |                 |   |  |       |        |   |  |   |        |   |  |   |           |  

52 aircraft with a carrying value of $1.6 billion are pledged as collateral for the obligation of the special
purpose entities.



F-36



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



12. Goodwill

Movements in goodwill were as follows:



|                                             |  |      |        |  |      |   |        |  
|-------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | -
|                                             |  | 2012 |        |  | 2011 |  
|Balance at beginning of year                 |  | $    | 25,099 |  |      | $ | 25,475 |  
|Effect of movements in exchange rates        |  |      | 2,476  |  |      |   | (376   | )
|                                             |  |      |        |  |      |   |        |  
|Balance at end of year net of exchange rates |  | $    | 27,575 |  |      | $ | 25,099 |  
|                                             |  |      |        |  |      |   |        |  

13. Other intangible assets

At the acquisition date both (routes and brand name) were valued and recognized as intangible assets with an indefinite useful life, and recorded in Colombian pesos, which is the functional currency of
the subsidiary. Variations year over year, in the value of the routes correspond to the changes in the USD / Colombian Peso exchange rates.

During the third quarter of 2010, AeroRepública began to operate under Copa Colombia brand, causing a change in managements assumption from
indefinite life to 5 years for the AeroRepúblicas brand name. Based on the change of the commercial name, an impairment loss was recognized for $1.5 million during 2010. The remaining balance of this intangible asset is being amortized
over 5 years



F-37



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



|13. | Other intangible assets (continued)
|--- | -----------------------------------





|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|------------------------------------- |  | ---------------- | ------ | - | --------------- | - | ------- | ---------- |  | - | ------ | - |  | - | ------- | -
|                                      |  | Routes and Brand |        |   | License and     |   |         | Working in |  |   |        |  
|                                      |  | Name Rights      |        |   | Software Rights |   |         | Process    |  |   | Total  |  
|Cost                                  |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 1 January 2012             |  | $                | 35,300 |   |                 | $ | 18,131  |            |  | $ | 6,821  |   |  | $ | 60,252  |  
|Additions                             |  |                  |       |   |                 |   | 8,976   |            |  |   | 3,746  |   |  |   | 12,722  |  
|Reclassifications                     |  |                  |       |   |                 |   |        |            |  |   | (126   | ) |  |   | (126    | )
|Effect of movements in exchange rates |  |                  | 3,632  |   |                 |   |        |            |  |   |       |   |  |   | 3,632   |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 31 December 2012           |  | $                | 38,932 |   |                 | $ | 27,107  |            |  | $ | 10,441 |   |  | $ | 76,480  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Amortization                          |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 1 January 2012             |  | $                | (926   | ) |                 | $ | (12,279 | )          |  | $ |       |   |  | $ | (13,205 | )
|Amortization for the year             |  |                  | (970   | ) |                 |   | (2,939  | )          |  |   |       |   |  |   | (3,909  | )
|Effect of movements in exchange rates |  |                  | 16     |   |                 |   |        |            |  |   |       |   |  |   | 16      |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 31 December 2012           |  | $                | (1,880 | ) |                 | $ | (15,218 | )          |  | $ |       |   |  | $ | (17,098 | )
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Carrying Amounts                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|At 1 January 2012                     |  | $                | 34,374 |   |                 | $ | 5,852   |            |  | $ | 6,821  |   |  | $ | 47,047  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|At 31 December 2012                   |  | $                | 37,052 |   |                 | $ | 11,889  |            |  | $ | 10,441 |   |  | $ | 59,382  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|                                      |  |                  |        |  
|                                      |  | Routes and Brand |        |   | License and     |   |         | Working in |  |   |        |  
|                                      |  | Name Rights      |        |   | Software Rights |   |         | Process    |  |   | Total  |  
|Cost                                  |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 1 January 2011             |  | $                | 35,853 |   |                 | $ | 15,830  |            |  | $ | 1,905  |   |  | $ | 53,588  |  
|Additions                             |  |                  |       |   |                 |   | 2,301   |            |  |   | 7,064  |   |  |   | 9,365   |  
|Reclassifications                     |  |                  |       |   |                 |   |        |            |  |   | (2,148 | ) |  |   | (2,148  | )
|Effect of movements in exchange rates |  |                  | (553   | ) |                 |   |        |            |  |   |       |   |  |   | (553    | )
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 31 December 2011           |  | $                | 35,300 |   |                 | $ | 18,131  |            |  | $ | 6,821  |   |  | $ | 60,252  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Amortization                          |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 1 January 2011             |  | $                |       |   |                 | $ | (10,123 | )          |  | $ |       |   |  | $ | (10,123 | )
|Amortization for the year             |  |                  | (883   | ) |                 |   | (2,156  | )          |  |   |       |   |  |   | (3,039  | )
|Effect of movements in exchange rates |  |                  | (43    | ) |                 |   |        |            |  |   |       |   |  |   | (43     | )
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Balance at 31 December 2011           |  | $                | (926   | ) |                 | $ | (12,279 | )          |  | $ |       |   |  | $ | (13,205 | )
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|Carrying Amounts                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|At 1 January 2011                     |  | $                | 35,853 |   |                 | $ | 5,707   |            |  | $ | 1,905  |   |  | $ | 43,465  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  
|At 31 December 2011                   |  | $                | 34,374 |   |                 | $ | 5,852   |            |  | $ | 6,821  |   |  | $ | 47,047  |  
|                                      |  |                  |        |   |                 |   |         |            |  |   |        |   |  |   |         |  



F-38



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



14. Other assets



|                        |  |      |         |  |      |   |         | 
|----------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                        |  | 2012 |         |  | 2011 |  
|Guaranty deposits       |  | $    | 18,410  |  |      | $ | 17,066  | 
|Deposits for litigation |  |      | 18,204  |  |      |   | 18,404  | 
|Maintenance deposits    |  |      | 59,375  |  |      |   | 73,780  | 
|Deferred tax assets     |  |      | 3,655   |  |      |   | 7,577   | 
|Other assets            |  |      | 11,322  |  |      |   | 8,582   | 
|                        |  |      |         |  |      |   |         | 
|                        |  | $    | 110,968 |  |      | $ | 125,409 | 
|                        |  |      |         |  |      |   |         | 

Guaranty deposits are amounts paid to fuel suppliers and lessors of monthly lease payments, as require at the inception
of the agreements.

Deposit for litigation is paid into escrow account until the related dispute is settled. (see note 26)

Maintenance deposits mainly refer to payments made by the Company for overhaul covered by power by the hour arrangements to be used for future engines
maintenance events. Maintenance deposits paid do not transfer either obligation to maintain aircraft or cost risk associated with maintenance activities to lessors or providers.

15. Long-term debt



|                                                                                                                              |  |      |           |  |      |   |           | 
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                                                                                                              |  | 2012 |           |  | 2011 |  
|Long-term fixed rate debt (secured fixed rate indebtedness due through 2023 effective rates ranged from 1.81% to
5.58%)       |  | $    | 619,391   |  |      | $ | 661,972   | 
|Long-term variable rate debt (secured variable rate indebtedness due through 2023 effective rates ranged from 0.33% to
1.90%) |  |      | 571,713   |  |      |   | 400,754   | 
|Loans payable                                                                                                                 |  |      | 15,000    |  |      |   | 5,000     | 
|                                                                                                                              |  |      |           |  |      |   |           | 
|Sub-total                                                                                                                     |  |      | 1,206,104 |  |      |   | 1,067,726 | 
|Less current maturities                                                                                                       |  |      | 136,268   |  |      |   | 131,069   | 
|                                                                                                                              |  |      |           |  |      |   |           | 
|Long-term debt less current maturities                                                                                        |  | $    | 1,069,836 |  |      | $ | 936,657   | 
|                                                                                                                              |  |      |           |  |      |   |           | 



F-39



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



|15. | Long-term debt (continued)
|--- | --------------------------



Maturities of long-term debt for the next five years are as follows:



|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year ending December 31, |  |   |         | 
|2013                     |  | $ | 136,268 | 
|2014                     |  | $ | 156,329 | 
|2015                     |  | $ | 150,397 | 
|2016                     |  | $ | 124,271 | 
|2017                     |  | $ | 114,741 | 
|Thereafter               |  | $ | 524,098 | 

As of December 31, 2012 and 2011, the Company had $811.8 and $651.3 million of outstanding indebtedness,
respectively, that is owed to financial institutions under financing arrangements guaranteed by the Export-Import Bank of the United States. The Export-Import Bank guarantees support 85% of the net purchase price of the aircraft and are secured with
a first priority mortgage on the aircraft in favor of a security trustee on behalf of Export-Import Bank.

The Companys Export-Import
Bank supported financings are amortized on a quarterly basis, are denominated in U.S. Dollars and originally bear interest at a floating rate linked to LIBOR.

The Export-Import Bank guaranteed facilities typically offer an option to fix the applicable interest rate. The Company has exercised this option with respect to $563.5 million as of December 31,
2012.

The Company effectively extends the maturity of its aircraft financing to 15 years through the use of a Stretched Overall
Amortization and Repayment, or SOAR, structure which provides serial draw-downs calculated to result in a 100% loan accreting to a recourse balloon at the maturity of the Export-Import Bank guaranteed loan which totaled $71.0 million as of
December 31, 2012.

The Company also typically finances a portion of the purchase price of the Boeing aircraft through commercial loans
which totaled $15.5 million as of December 31, 2012.

As of December 31, 2012 the Company has one unused preliminary commitment for
long-term financing agreements for approximately $146.5 million to acquire five (4) Boeing 737-800 aircraft to be delivered between March and October 2013.

See note 26 for information regards financial covenants relating with the Companys financial agreement.



F-40



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



16. Accounts and transactions with related parties



|                                          |  |      |        |  |      |   |        | 
|----------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                          |  | 2012 |        |  | 2011 |  
|Accounts receivable from related parties: |  |      |        |  |      |   |        | 
|ASSA Compañía de Seguros, S.A.            |  | $    | 1,113  |  |      | $ | 673    | 
|Others                                    |  |      | 16     |  |      |   | 31     | 
|                                          |  |      |        |  |      |   |        | 
|                                          |  | $    | 1,129  |  |      | $ | 704    | 
|                                          |  |      |        |  |      |   |        | 
|                                          |  |     
|                                          |  | 2012 |        |  | 2011 |  
|Accounts payable to related parties:      |  |      |        |  |      |   |        | 
|ASSA Compañía de Seguros, S.A.            |  | $    | 7,437  |  |      | $ | 7,883  | 
|Petróleos Delta                           |  |      | 11,861 |  |      |   | 13,996 | 
|Others                                    |  |      | 957    |  |      |   | 195    | 
|                                          |  |      |        |  |      |   |        | 
|                                          |  | $    | 20,255 |  |      | $ | 22,074 | 
|                                          |  |      |        |  |      |   |        | 



F-41



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



|16. | Accounts and transactions with related parties (continued)
|--- | ----------------------------------------------------------



Transaction with related parties detail for the year ended December 31, are as follows:



|                                     |  |                   |  |                       |         |  |                       |  |         |                       |  |  |         | 
|------------------------------------ |  | ----------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | --------------------- |  |  | ------- | 
|Related Party                        |  | Transaction       |  | Amount of transaction |         |  | Amount of transaction |  |         | Amount of transaction | 
|                                     |  |                   |  | 2012                  |         |  | 2011                  |  |         | 2010                  | 
|Banco General                        |  | Debt              |  |                       |        |  |                       |  | 705     |                       |  |  | 1,515   | 
|                                     |  | Interest received |  |                       | 1,874   |  |                       |  | 1,249   |                       |  |  | 100     | 
|                                     |  | Interest paid     |  |                       | 13      |  |                       |  | 51      |                       |  |  | 988     | 
|ASSA Compañía de Seguros, S.A.       |  | Insurance         |  |                       | 10,381  |  |                       |  | 12,785  |                       |  |  | 7,631   | 
|Petróleos Delta                      |  | Purchase jet fuel |  |                       | 354,934 |  |                       |  | 283,174 |                       |  |  | 170,127 | 
|Desarrollo Inmobiliario del Este, SA |  | Property          |  |                       | 2,295   |  |                       |  | 2,055   |                       |  |  | 2,018   | 
|Galindo, Arias & López               |  | Legal services    |  |                       | 587     |  |                       |  | 511     |                       |  |  | 608     | 
|Motta Internacional& Global Brands   |  | Payments          |  |                       | 1,189   |  |                       |  | 857     |                       |  |  | 821     | 
|RD Nexos                             |  | Advertising       |  |                       | 3,805   |  |                       |  | 339     |                       |  |  | 616     | 
|Call Center Corporation              |  | Call center       |  |                       | 425     |  |                       |  | 2,593   |                       |  |  | 3,869   | 
|Telecarrier, S.A.                    |  | Payments          |  |                       |        |  |                       |  |        |                       |  |  | 863     | 

Banco General: The Companys shareholders own approximately 40% of BG Financial Group, which is the
controlling company of Banco General.

ASSA Campania de Seguros, S.A.: An insurance company controlled by the Companys
controlling shareholders, is used to provide substantially all of the Companys insurance.

Petróleos Delta: The fuel
company, during 2005 entered into a contract with the Company to supply its jet fuel needs. The contract has a one year term that automatically renews for one year period unless terminated by one of the parties. While the Companys controlling
shareholders do not hold a controlling equity interest in Petróleos Delta, S.A., various members of the Companys Board of Directors also are board members of Petróleos Delta, S.A.



F-42



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



16. Accounts and transactions with related parties (continued)



Desarrollo Inmobiliario del Este, S. A.: The Company leases five floors consisting of
approximately 104,000 square feet of the building from Desarrollo Inmobiliario, an entity controlled by the same group of investors that controls CIASA.

Galindo, Arias & López: Certain partners of Galindo, Arias & Lopez (a law firm) are indirect shareholders of CIASA and serve on the Companys Board of Directors.

Motta Internacional & Global Brands: The Company purchases most of the alcohol and other beverages served on its aircraft
from Motta Internacional, S.A. and Global Brands, S.A., both of which are controlled by the Companys controlling shareholders.

RD
Nexos: The advertising agency that the Company uses in Panama is RD Nexos, S.A., formerly owned by the brother-in-law of the Chief Executive Officer and where his brother has minority stake.

Call Center Corporation: A call center that operates Copa Airlines reservations and sales services and handles calls from Panama as well as
most other countries to which Copa Airlines flies. One of the Companys directors is one of the owners of this call center.

Telecarrier, S.A.: The Companys telecommunications and other data services have been provided by Telecarrier, Inc. Some of the controlling
shareholders of CIASA have a controlling interest in Telecarrier.

Compensation of Key Management Personnel

Compensation to the Companys key management personnel is as follows:



|                              |  |      |       |  |      |   |       |      |  |  |  |   |       | 
|----------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  |  |  | - | ----- | 
|                              |  | 2012 |       |  | 2011 |   |       | 2010 | 
|Short-term employees benefits |  | $    | 3,505 |  |      | $ | 3,281 |      |  |  |  | $ | 3,500 | 
|Post-employment pension       |  |      | 67    |  |      |   | 64    |      |  |  |  |   | 68    | 
|Stock based compensation      |  |      | 4,866 |  |      |   | 4,100 |      |  |  |  |   | 4,000 | 
|                              |  |      |       |  |      |   |       |      |  |  |  |   |       | 
|                              |  | $    | 8,438 |  |      | $ | 7,445 |      |  |  |  | $ | 7,568 | 
|                              |  |      |       |  |      |   |       |      |  |  |  |   |       | 

The Company has not set aside any additional funds for future payments to executive officers, other than pursuant to a
non-compete agreement for $3.0 million established in 2006.



F-43



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



17. Accrued expenses payable

Labor related provisions

The Company
sponsors a profit-sharing program for both management and non-management personnel. For members of management, profit-sharing is based on a combination of the Companys performance as a whole and the achievement of individual goals.
Profit-sharing for non-management employees is based solely on the Companys performance.

GDS expenses and miscellaneous provisions

The Company records estimation for charges received through clearinghouse for general distribution systems (GDS) charges related to ticket
transactions and for centralized Bank Settlement Plan (BSP) charges related to processing costs and administrative fees. These provisions are established every month and reversed the next month.

The provisions detail as of December 31 is as follows:



|                           |  |      |        |  |      |   |        | 
|-------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                           |  | 2012 |        |  | 2011 |  
|Provisions and estimations |  | $    | 18,027 |  |      | $ | 5,641  | 
|Labor related provisions   |  |      | 30,020 |  |      |   | 24,831 | 
|                           |  |      |        |  |      |   |        | 
|                           |  | $    | 48,047 |  |      | $ | 30,472 | 
|                           |  |      |        |  |      |   |        | 

18. Other current liabilities



|                                 |  |      |        |  |      |   |        | 
|-------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                 |  | 2012 |        |  | 2011 |  
|Derivative financial instruments |  | $    | 5,589  |  |      | $ | 6,831  | 
|Vacation payable                 |  |      | 1,224  |  |      |   | 1,453  | 
|Others                           |  |      | 4,089  |  |      |   | 5,561  | 
|                                 |  |      |        |  |      |   |        | 
|                                 |  | $    | 10,902 |  |      | $ | 13,845 | 
|                                 |  |      |        |  |      |   |        | 



F-44



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



19. Other long-term liabilities



|                                      |  |                     |      |   |                         |   |        |                              |  |   |                           |   |  |       |       |   |  |   |         |  
|------------------------------------- |  | ------------------- | ---- | - | ----------------------- | - | ------ | ---------------------------- |  | - | ------------------------- | - |  | ----- | ----- | - |  | - | ------- | -
|                                      |  | Provisionfor claims |      |   | Provisionforlitigations |   |        | Provisionfor returncondition |  |   | Other longtermliabilities |   |  | Total |      
|At 1 January 2012                     |  | $                   | 84   |   |                         | $ | 18,856 |                              |  | $ | 23,731                    |   |  | $     | 1,986 |   |  | $ | 44,657  |  
|Increases                             |  |                     | 117  |   |                         |   | 951    |                              |  |   | 10,114                    |   |  |       | 228   |   |  |   | 11,410  |  
|Used                                  |  |                     | (64  | ) |                         |   | (34    | )                            |  |   | (10,671                   | ) |  |       | (69   | ) |  |   | (10,838 | )
|Effect of movements in exchange rates |  |                     | 8    |   |                         |   | (1,539 | )                            |  |   | 185                       |   |  |       |      |   |  |   | (1,346  | )
|Others                                |  |                     |     |   |                         |   |       |                              |  |   |                          |   |  |       | (157  | ) |  |   | (157    | )
|                                      |  |                     |      |   |                         |   |        |                              |  |   |                           |   |  |       |       |   |  |   |         |  
|At 31 December 2012                   |  | $                   | 145  |   |                         | $ | 18,234 |                              |  | $ | 23,359                    |   |  | $     | 1,988 |   |  | $ | 43,726  |  
|                                      |  |                     |      |   |                         |   |        |                              |  |   |                           |   |  |       |       |   |  |   |         |  
|                                      |  |                     |      |   |                        
|                                      |  | Provisionfor claims |      |   | Provisionforlitigations |   |        | Provisionfor returncondition |  |   | Other longtermliabilities |   |  | Total |      
|At 1 January 2011                     |  | $                   | 378  |   |                         | $ | 16,684 |                              |  | $ | 14,680                    |   |  | $     | 1,961 |   |  | $ | 33,703  |  
|Increases                             |  |                     | 77   |   |                         |   | 2,186  |                              |  |   | 9,051                     |   |  |       | 228   |   |  |   | 11,542  |  
|Used                                  |  |                     | (357 | ) |                         |   | (14    | )                            |  |   |                          |   |  |       | (137  | ) |  |   | (508    | )
|Effect of movements in exchange rates |  |                     |     |   |                         |   |       |                              |  |   |                          |   |  |       |      |   |  |   |        |  
|Others                                |  |                     | (14  | ) |                         |   |       |                              |  |   |                          |   |  |       | (66   | ) |  |   | (80     | )
|                                      |  |                     |      |   |                         |   |        |                              |  |   |                           |   |  |       |       |   |  |   |         |  
|At 31 December 2011                   |  | $                   | 84   |   |                         | $ | 18,856 |                              |  | $ | 23,731                    |   |  | $     | 1,986 |   |  | $ | 44,657  |  
|                                      |  |                     |      |   |                         |   |        |                              |  |   |                           |   |  |       |       |   |  |   |         |  

Provision for claims

A provision is recognized for expected warranty claims based in labor legal cases. This provision will be used in the next 12 months.

Provision for litigations

Provisions for litigation in process (Note 26- commitments and
contingencies).

Provision for return condition

For certain foreign operating leases, the Company is contractually obliged to return aircraft in a defined condition. The Company accrues for restitution costs related to aircraft held under operating
leases throughout the duration of the lease.

Other long term liabilities

Provision for non-compete agreement is created for payment to senior management related to covenants not to compete with us in the future (Relative to the $3 million trust fund).



F-45



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



20. Exchange rate difference

Results of operations are translated at average exchange rates in effect during the period. Foreign exchange gains and losses are included in the
exchange rate difference line in the consolidated statement of income for the year.

21. Operating leases

The Company leases some of the aircraft it operates and other assets under long-term lease arrangements. Other leased assets include real
property, airport and terminal facilities, sales offices, maintenance facilities, training centers and general offices. Most contract leases include renewal options; a few have escalation clauses, but no purchase options. Non-aircraft related
leases, primarily held with local governments, generally have renewable terms of one year. In certain cases, the rental payments during the renewal periods would be greater than the current payments. Because the lease renewals are not considered to
be reasonably assured, the rental payments that would be due during the renewal periods are not included in the determination of rent expense until the leases are renewed. Leasehold improvements are amortized over the contractually committed lease
term, which does not include the renewal periods.

At December 31, 2012, the scheduled future minimum lease rental payments required
under aircraft and non-aircraft operating leases that have initial non-cancelable lease terms in excess of one year are as follows:



|                                    |  |          |         |  |             |   |        | 
|----------------------------------- |  | -------- | ------- |  | ----------- | - | ------ | 
|                                    |  |          |         |  | Engines and |  
|                                    |  | Aircraft |         |  | Other       |  
|Up to one year                      |  | $        | 73,081  |  |             | $ | 9,807  | 
|One to five years                   |  |          | 246,582 |  |             |   | 15,820 | 
|Over five years                     |  |          | 81,257  |  |             |   | 4,904  | 
|                                    |  |          |         |  |             |   |        | 
|Total minimum lease rental payments |  | $        | 400,920 |  |             | $ | 30,531 | 
|                                    |  |          |         |  |             |   |        | 

Total rent expense was $118.7 million, $87.4 million and $72.8 million for the years ended December 31, 2012, 2011
and 2010, respectively.

22. Income taxes



|                                                  |  |      |        |  |      |   |        |      |  |   |        |  
|------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | -
|                                                  |  | 2012 |        |  | 2011 |   |        | 2010 | 
|Current tax expense                               |  |      |        |  |      |   |        |      |  |   |        |  
|Current period                                    |  | $    | 33,285 |  |      | $ | 27,071 |      |  | $ | 26,460 |  
|Adjustment for prior period                       |  |      | 124    |  |      |   | (105   | )    |  |   | 1,151  |  
|                                                  |  |      |        |  |      |   |        |      |  |   |        |  
|                                                  |  |      | 33,409 |  |      |   | 26,966 |      |  |   | 27,611 |  
|                                                  |  |      |        |  |      |   |        |      |  |   |        |  
|Deferred tax expense                              |  |      |        |  |      |   |        |      |  |   |        |  
|Origination and reversal of temporary differences |  |      | 6,458  |  |      |   | 8,620  |      |  |   | (8,645 | )
|                                                  |  |      |        |  |      |   |        |      |  |   |        |  
|Total income tax expense                          |  | $    | 39,867 |  |      | $ | 35,586 |      |  | $ | 18,966 |  
|                                                  |  |      |        |  |      |   |        |      |  |   |        |  



F-46



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



22. Income taxes (continued)



The balances of deferred taxes are as follows:



|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|---------------------------- |  | --------------------------------- | ------- | - | -------------- |  | ------- | ---- |  |  | ------ | - |  | ---- | ----- | - |  |  | ------ | -
|                             |  | Statements of Financial Positions |         |   | Profits & Loss | 
|                             |  | 2012                              |         |   | 2011           |  |         | 2012 |  |  | 2011   |   |  | 2010 |      
|Deferred tax liabilities     |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|Intangible                   |  |                                   | (12,598 | ) |                |  | (11,344 | )    |  |  | (133   | ) |  |      | (314  | ) |  |  | (493   | )
|Reserve for maintenance      |  |                                   | (11,707 | ) |                |  | (8,909  | )    |  |  | 2,750  |   |  |      | 4,255 |   |  |  | 116    |  
|Prepaid dividend tax         |  |                                   | (5,978  | ) |                |  | (3,228  | )    |  |  | 2,749  |   |  |      | 1,904 |   |  |  | (5,737 | )
|PP&E                         |  |                                   | (4,955  | ) |                |  | (3,486  | )    |  |  | 1,300  |   |  |      | 1,200 |   |  |  | 1,728  |  
|Others                       |  |                                   | (3,091  | ) |                |  | (3,477  | )    |  |  | (64    | ) |  |      | 661   |   |  |  | (147   | )
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|                             |  |                                   | (38,329 | ) |                |  | (30,444 | )    |  |  | 6,603  |   |  |      | 7,706 |   |  |  | (4,533 | )
|Set off of tax               |  |                                   | 3,965   |   |                |  |        |      |  |  |       |   |  |      |      |   |  |  |       |  
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|                             |  |                                   | (34,364 | ) |                |  | (30,444 | )    |  |  | 6,603  |   |  |      | 7,706 |   |  |  | (4,533 | )
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|Deferred tax assets          |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|Return conditions            |  |                                   | 1,024   |   |                |  | 2,453   |      |  |  | 1,538  |   |  |      | 494   |   |  |  | (1,210 | )
|Others                       |  |                                   | 6,596   |   |                |  | 5,124   |      |  |  | (1,683 | ) |  |      | 410   |   |  |  | (2,902 | )
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|                             |  |                                   | 7,620   |   |                |  | 7,577   |      |  |  | (145   | ) |  |      | 903   |   |  |  | (4,113 | )
|Set off of tax               |  |                                   | (3,965  | ) |                |  |        |      |  |  |       |   |  |      |      |   |  |  |       |  
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|                             |  |                                   | 3,655   |   |                |  | 7,577   |      |  |  | (145   | ) |  |      | 903   |   |  |  | (4,113 | )
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  
|Net deferred tax liabilities |  |                                   | (30,709 | ) |                |  | (22,867 | )    |  |  | 6,458  |   |  |      | 8,610 |   |  |  | (8,645 | )
|                             |  |                                   |         |   |                |  |         |      |  |  |        |   |  |      |       |   |  |  |        |  

The aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and
interests in joint ventures, for which deferred tax liabilities have not been recognized is $24,014.

Reconciliation of effective tax rate is
as follows:



|                                                    |  |      |       |    |      |  |         |      |  |  |       |    |  |      |         |   |      |  |       |    |  |  |         |  
|--------------------------------------------------- |  | ---- | ----- | -- | ---- |  | ------- | ---- |  |  | ----- | -- |  | ---- | ------- | - | ---- |  | ----- | -- |  |  | ------- | -
|                                                    |  | 2012 |       |    | 2012 |  |         | 2011 |  |  | 2011  |    |  | 2010 |         |   | 2010 | 
|Profit of the period                                |  |      |       |    |      |  | 326,476 |      |  |  |       |    |  |      | 310,425 |   |      |  |       |    |  |  | 241,057 |  
|Total income tax expense                            |  |      |       |    |      |  | 39,867  |      |  |  |       |    |  |      | 35,586  |   |      |  | 7.3   | %  |  |  | 18,966  |  
|                                                    |  |      |       |    |      |  |         |      |  |  |       |    |  |      |         |   |      |  |       |    |  |  |         |  
|Profit excluding income tax                         |  |      |       |    |      |  | 366,343 |      |  |  |       |    |  |      | 346,011 |   |      |  |       |    |  |  | 260,023 |  
|                                                    |  |      |       |    |      |  |         |      |  |  |       |    |  |      |         |   |      |  |       |    |  |  |         |  
|Income taxes at Panamanian statutory rates          |  |      | 25.0  | %  |      |  | 91,586  |      |  |  | 25.0  | %  |  |      | 86,503  |   |      |  | 27.5  | %  |  |  | 71,506  |  
|Effect of tax rates in non-Panamanian jurisdictions |  |      | (2.5  | %) |      |  | (9,312  | )    |  |  | (3.9  | %) |  |      | (13,374 | ) |      |  | (9.2  | %) |  |  | (23,992 | )
|Exemption in non-taxable countries                  |  |      | (11.6 | %) |      |  | (42,408 | )    |  |  | (10.9 | %) |  |      | (37,543 | ) |      |  | (11.4 | %) |  |  | (29,699 | )
|Under (over) provided in prior periods              |  |      | 0.0   | %  |      |  | 0       |      |  |  | 0.0   | %  |  |      | 0       |   |      |  | 0.4   | %  |  |  | 1,152   |  
|                                                    |  |      |       |    |      |  |         |      |  |  |       |    |  |      |         |   |      |  |       |    |  |  |         |  
|Provision for income taxes                          |  |      | 10.9  | %  |      |  | 39,867  |      |  |  | 10.3  | %  |  |      | 35,586  |   |      |  | 7.3   | %  |  |  | 18,966  |  
|                                                    |  |      |       |    |      |  |         |      |  |  |       |    |  |      |         |   |      |  |       |    |  |  |         |  



F-47



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



23. Share-based payments

Copa Holdings has established equity compensation plans under which it administers restricted stock, stock options and certain other equity-based awards
to attract, retain and motivate executive officers, certain key employees and non-employee directors to compensate them for their contributions to the growth and profitability of the Company. Shares delivered under this award program may be sourced
from treasury stock, or authorized un-issued shares.

The Companys equity compensation plans are accounted for under IFRS No. 2,
Share-Based Payment (IFRS 2). IFRS 2 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award or at fair value
of the award at each reporting date, depending on the type of award granted. The fair value is estimated using option-pricing models. The resulting cost is recognized over the period during which an employee is required to provide service in
exchange for the award, which is usually the vesting period.

The total compensation cost recognized for non-vested stock and options awards
was $7.0 million, $7.7 million and $4.0 million in 2012, 2011 and 2010 respectively, and was recorded as a component of Salaries and benefits within Administrative expenses.

Non-vested Stock

Copa Holdings approved a one-time non-vested stock bonus award for
certain executive officers of the Company.

A summary of the terms and conditions, properly approved by the Compensation Committee of our
Board of Directors, relating to the grants of the non-vested stock award under the equity compensation plan is as follows:



|               |  |                      |         |  |                     |                                                                                                      |                  |  |         | 
|-------------- |  | -------------------- | ------- |  | ------------------- | ---------------------------------------------------------------------------------------------------- | ---------------- |  | ------- | 
|Grant Date     |  | Number ofInstruments |         |  | Vesting, Conditions |                                                                                                      | Contractual life | 
|March, 2010    |  |                      | 52,567  |  |                     | One-third every anniversary                                                                          |                  |  | 3 years | 
|March, 2011    |  |                      | 43,464  |  |                     | One-third every anniversary                                                                          |                  |  | 3 years | 
|March, 2011    |  |                      | 220,000 |  |                     | 15% first two anniversaries, 20% third anniversary, 30% fourth anniversary and 20% fifth anniversary |                  |  | 5 years | 
|March, 2011    |  |                      | 55,000  |  |                     | Fifth anniversary                                                                                    |                  |  | 5 years | 
|February, 2012 |  |                      | 42,358  |  |                     | One-third every anniversary                                                                          |                  |  | 3 years | 
|June, 2012     |  |                      | 4,547   |  |                     | 15% first two anniversaries, 20% third anniversary, 30% fourth anniversary and 20% fifth anniversary |                  |  | 5 years | 
|June, 2012     |  |                      | 1,515   |  |                     | Fifth anniversary                                                                                    |                  |  | 5 years | 



F-48



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



Non-vested stock awards were measured at their fair value, which is the same amount for which a
similarly restricted share would be issued to third party, on the grant date. For the 2012 grants, the fair value of these non-vested stocks award was $75.39 ($56.572011).

23. Share-based payments (continued)

A summary of non-vested stock award activity under
the plan as of December 31, 2012 and 2011 with changes during these years are as follows:



|                            |  |      |          |   |      |  |          |  
|--------------------------- |  | ---- | -------- | - | ---- |  | -------- | -
|Shares                      |  | 2012 |          |   | 2011 | 
|Non-vested at January 1st   |  |      | 385,401  |   |      |  | 365,727  |  
|Granted                     |  |      | 48,420   |   |      |  | 318,464  |  
|Vested                      |  |      | (137,291 | ) |      |  | (298,206 | )
|Forfeited                   |  |      | (447     | ) |      |  | (584     | )
|                            |  |      |          |   |      |  |          |  
|Non-vested at December 31st |  |      | 296,083  |   |      |  | 385,401  |  
|                            |  |      |          |   |      |  |          |  

The Company uses the accelerated attribution method to recognize the compensation cost for awards with graded vesting
periods. The Company estimates that the remaining compensation cost, not yet recognized for the non-vested stock awards, is $8.7 million with a weighted average remaining contractual life of 2.4 years. Additionally, the Company estimates that the
2013 compensation cost related to this plan will be $6.8 million.

Stock Options

In March 2007, Copa Holdings granted 35,657 equity stock options to certain named executive officers, which vested over three (3) years in yearly
installments equal to one-third of the awarded stock on each of the three anniversaries of the grant date. The exercise price of the options is $53.14, which was the market price of the Companys stock at the grant date. The stock options have
a contractual term of 10 years.

The weighted-average fair value of the stock options at the grant date was $22.33, and was estimated using
the Black-Scholes option-pricing model assuming an expected dividend yield of 0.58%, expected volatility of approximately 37.8% based on historical volatility, weighted average risk-free interest rate of 4.59%, and an expected term of 6 years
calculated under the simplified method.

A summary of options award activity under the plan as of December 31, 2012 and 2011 and changes
during the year is as follows:



|                             |  |      |        |   |      |  |        | 
|---------------------------- |  | ---- | ------ | - | ---- |  | ------ | 
|Shares                       |  | 2012 |        |   | 2011 | 
|Outstanding at January 1st   |  |      | 32,639 |   |      |  | 32,639 | 
|Granted                      |  |      |       |   |      |  |       | 
|Exercised                    |  |      | (3,291 | ) |      |  |       | 
|Forfeited or expired         |  |      |       |   |      |  |       | 
|                             |  |      |        |   |      |  |        | 
|Outstanding at December 31st |  |      | 29,348 |   |      |  | 32,639 | 
|                             |  |      |        |   |      |  |        | 



F-49



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



23. Share-based payments (continued)



Stock Options (continued)

The Company uses the accelerated method to recognize the compensation cost for stock options. There is no additional compensation cost to be recognized for stock options and the weighted average
contractual life is 4.2 years.

Copa Holdings plans to make additional equity based awards under the plan from time to time, including
additional non-vested stock and stock option awards. The Company anticipates that future employee non-vested stock and stock option awards granted pursuant to the plan will generally vest over a three year period and the stock options will carry a
ten year term.

24. Earnings per share

Basic earnings per share amounts are calculated by dividing the net income for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding
during the year.

Diluted earnings per share amounts are calculated by dividing the net income attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings per share computations:



|                                                      |  |      |         |  |      |   |         |      |  |   |         | 
|----------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                                      |  | 2012 |         |  | 2011 |   |         | 2010 | 
|Net income                                            |  | $    | 326,476 |  |      | $ | 310,425 |      |  | $ | 241,057 | 
|Denominator for basic and diluted earnings per share  |  |      |         |  |      |   |         |      |  |   |         | 
|Weighted average common shares outstanding            |  |      | 44,002  |  |      |   | 43,823  |      |  |   | 43,534  | 
|Non-vested dividend participating non vest awards     |  |      | 398     |  |      |   | 670     |      |  |   | 462     | 
|                                                      |  |      |         |  |      |   |         |      |  |   |         | 
|Total shares for basic and diluted earnings per share |  |      | 44,400  |  |      |   | 44,493  |      |  |   | 43,996  | 
|Earnings per share                                    |  |      |         |  |      |   |         |      |  |   |         | 
|Basic and diluted                                     |  | $    | 7.35    |  |      | $ | 6.98    |      |  | $ | 5.48    | 
|                                                      |  |      |         |  |      |   |         |      |  |   |         | 



F-50



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



25. Dividends paid

In June 2012 the Company declared and paid dividends based on its policy of 30% of the Companys prior period net income. The amount was $2.10 per
share.

During the fourth quarter of 2012 the Company announced an early payment of its dividends of $2.25 per share which represent
approximately 30% of the Companys estimated annual consolidated net income for 2012.

26. Commitments and
contingencies

The Company has 2 purchase contracts with Boeing, one for 16 Boeing 737-Next Generation aircraft, under which the Company
has ten (10) firm orders and six (6) purchase options, and another order for thirty (30) Boeing 737-Next Generation aircraft, under which the company has twenty (20) firm orders and ten (10) purchase orders. The firm orders
have an approximate value of $2.7 billion based on aircraft list prices, including estimated amounts for contractual price escalation and pre-delivery deposits. The Company is scheduled to take delivery of the aircraft underlying the 10 firm orders
between 2013 and 2015, and the aircraft underlying the 20 firm orders between 2015 and 2018.

Covenants

As a result of the various aircraft financing contracts entered into by the Company, the Company is required to comply with certain financial covenants.
These covenants, among other things, require the Company to maintain an EBITDAR to fixed charge ratio of at least 2.5 times, a minimum tangible net worth of $160 million, an EBITDAR to finance charge expense ratio of at least 2.0 times, a net
borrowings to Companys capitalization ratio of less than 85%, a total liability plus operating leases minus operating cash to tangible net worth ratio of less than 5.5, a long-term obligations to EBITDAR ratio of less than 6.0, a minimum
unrestricted cash balance of $50 million and a minimum of $75 million in available cash, cash equivalents and short-term investments.

As of December 31, 2012, the Company was in compliance with all required covenants.

Labor Unions

Approximately 55% of the Companys 8,277 employees are unionized. There
are currently nine (9) union organizations; five (5) covering employees in Panama and four (4) covering employees in Colombia Copa Airlines traditionally had good relations with its employees and all the unions, and expects to
continue to enjoy good relations with its employees and the unions in the future.



F-51



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



26. Commitments and contingencies (continued)



Labor Unions (continued)

The five (5) unions covering employees in Panama include: the pilots union (UNPAC); the flight attendants union (SIPANAB); the mechanics union (SITECMAP); the passenger service
agents union (UGETRACO); and an industry union (SIELAS), which represents ground personnel, messengers, drivers, passenger service agents, counter agents and other non-executive administrative staff.

Copa Airlines entered into collective bargaining agreements with its mechanics union (SITECMAP) in April 2009; its general union (SIELAS) in July
2008; its pilot union (UNPAC) in August 2012 and its flight attendants union (SIPANAB) in March 2010.

Collective bargaining agreements
in Panama cover typically between three and four year terms.

The four (4) unions covering employees in Colombia are: Pilots union
(ACDAC) whose bill of petitions is going to be resolved by arbitration since it was not possible direct agreement. It is expected to know arbitration results during 2013. Flight attendants union (ACAV), whose bill of petitions is going to be
resolved by arbitration since it was not possible a direct agreement. It is expected to know arbitration results during 2013.

The industry
union in Colombia (SINTRATAC) was created in August, 2010. During the flight attendants union negotiations, SINTRATAC received more affiliates and presented a bill of petitions on November 23, 2011. Negotiations were held without agreement, so
arbitration is in process. Mechanics Union in Colombia (ACMA) which presented a bill of petitions along with Industry Union negotiations without agreement, so arbitration is in process.

Typically, collective bargaining agreements in Colombia have terms of two to four years. Although Copa Colombia usually settles many of its collective bargaining agreement negotiations through arbitration
proceedings, it has traditionally experienced good relations with its unions.

Additional to Unions in Panama and Colombia, the Companys
employees in Brazil are covered by industry union agreements that cover all airline industry employees in the country; employees in Uruguay are covered by an industry union; airport employees in Buenos Aires, Argentina are affiliated to an industry
union (UPADEP); and airport employees in Puerto Rico are affiliated to an industry union (IAM).



F-52



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



26. Commitments and contingencies (continued)



Lines of Credit for Working Capital and Letters of Credit

The Company maintained available facilities for letters of credit with several banks with a value of $29.1 million and $33.7 million at
December 31, 2012 and 2011, respectively. These letters of credit are pledged mainly for operating lessors, maintenance providers and airport operators. Of this total, $3.4 million are letters of credit opened on behalf of Copa Colombia
for the same purposes listed above.

Copa Airlines has lines of credit at total amount of $150.5 million, in which it has committed lines of
credit totaling $60.0 million, including one line of credit for $15 million and one overdraft line of credit of $5 million with Banco General, an overdraft line of credit of $10 million with Towerbank and a line of credit of $30 million with Banco
Nacional de Panamá. Copa Airlines also has uncommitted lines of credit totaling $90.5 million, including one line of credit of $60.0 million with Bladex, a line of credit of $20 million with Citibank and one line of credit of $10.5 million
with Banco Panama. These lines of credit have been put in place to bridge liquidity gaps and for other potential contingencies. Aerorepublica has an uncommitted line of credit of $10 million with Citibank.

As of December 31, 2012 Copa Airlines has an outstanding balance of $15 million dollars with Bladex.

Litigation

The Company is the
plaintiffs in an action filed against INFRAERO, Brazils airport operator, in October of 2003 challenging the legality of the Additional Airport Tariffs (Adicional das Tarifas Aeroportuárias, or ATAERO), which is a 50% surcharge
imposed on all airlines which fly to Brazil. Similar suits have been filed against INFRAERO by other major airline carriers. In its case, the court of first instance ruled in favor of INFRAERO and has appealed the judgment. During the pendency of
the litigation, the Company continues to pay the amounts of ATAERO due into an escrow account and as of December 31, 2012, the aggregate amount in such account totaled US$18 million. In the event the Company receives a final unfavorable
judgment, it will be required to release the escrowed fund to INFRAERO and will not be able to recover such amounts. The Company does not, however, expect the release of such amounts to have a material impact on its financial results.



F-53



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27. Objectives and policies for managing financial risk

27.1 Fuel price risk

In the normal
course of its operations, the Company is exposed to a variety of financial risks: market risk (especially cash flow, currency, commodity price and interest rate risk), credit risk and liquidity risk. The Company has established risk management
policies to minimize potential adverse effects on the Companys financial performance.

Also the Company has risks that are common in its
industry and these are mitigated through derivatives contracts. The main risk associated with the industry is the variation in fuel prices, which the Company mitigates through derivatives instruments contracts.

The Company periodically enters into transactions for derivative financial instruments, namely, fuel derivative instruments, with the purpose of
providing for short to mid-term hedge protection (generally three to eighteen months) against sudden and significant increases in jet fuel prices, while simultaneously ensuring that the Company is not competitively disadvantaged in the event of a
substantial decrease in the price of jet fuel. The Company does not hold or issue derivative financial instruments for trading purposes.

The
Companys derivative contracts did not qualify as hedges for financial reporting purposes. Accordingly, changes in fair value of such derivative contracts, which amounted to $9.9 million, $3.5 million and $11.7 millions in years 2012, 2011 and
2010, respectively, were recorded as a component of Other, net in the consolidated statement of income.

The fair value of
derivative contracts amounted to $9 and $(0.4) million at December 31, 2012 and $18.6; $(0.4) million at December 31, 2011 and was recorded in Other current assets and Other current liabilities in the consolidated
statement of financial position. The Companys purchases of jet fuel are made substantially from one supplier.

At December 31,
2012, the Company held derivative instruments for 28% of its projected fuel consumption for 2013, in comparison with 20% of its 2012 fuel expense.

Financial derivative instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company does not expect any failure of the
counterparties to meet their obligations, as the Companys policy to manage credit risk is to engage in business with counterparties who are financially stable and well-versed in the matters of energy risk management. The amount of such credit
exposure is generally the unrealized gain, if any, in such contracts.

The sensitivity of a possible change in the price of jet fuel, with all
other variables held constant, of the Companys income before income taxes if the price of jet fuel were to increase or decrease by 5% would be $36.3 million in 2012.



F-54



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.2 Market risk

Foreign currency risk

Foreign exchange risk is originated when the Company performs
transactions and maintains monetary assets and liabilities in currencies that are different from the functional currency of the Company. Assets and liabilities in foreign currency are converted with the exchange rates at the end of the period,
except for non-monetary assets and liabilities that are converted at the equivalent cost of the (US$) United States dollar at the acquisition date and maintain at the historical rate. The results of foreign operations are converted with the average
exchange rates that were in place during the period. Earnings and losses deriving from exchange rates are included within Exchange rate difference in the consolidated statement of income.

In 2012, approximately 64% of the Companys expenses and 39% of its revenues are denominated in dollars. The rest of revenue and expenses are
denominated in currencies of countries the Company flies to, on which the most significant is the Colombian Peso. Generally, the Companys exposure to foreign currency risk is limited to a period of up to two weeks, from the moment that the
sale is completed until the funds are repatriated to Panama in dollars.

If the devaluation percentage of the most representatives currencies
would have been 5% during 2012 and the remaining market variables were constant, the pretax income would have fallen by $0.34 million in 2012. The decrease origin would be principally for exchange losses, due to the repatriation of the currency, due
to the Company generally maintains more assets than liabilities in foreign currency, basically cash and cash equivalents.

Due to exchange
controls in Venezuela, however, the Company often experiences additional delays converting cash generated from its local operations in Venezuela.



F-55



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.2 Market risk (continued)



Foreign currency risk (continued)

The following chart summarized the Companys exchange risk exposure (assets and liabilities denominated in foreign currency) at December 31:



|                                         |  |                       |         |  |                       |   |         | 
|---------------------------------------- |  | --------------------- | ------- |  | --------------------- | - | ------- | 
|                                         |  | As ofDecember 31,2012 |         |  | As ofDecember 31,2011 |  
|Assets                                   |  |                       |         |  |                       |   |         | 
|Cash and cash equivalents                |  | $                     | 210,695 |  |                       | $ | 155,303 | 
|Accounts receivables, net                |  |                       | 69,774  |  |                       |   | 76,384  | 
|Prepaid expenses                         |  |                       | 15,478  |  |                       |   | 11,043  | 
|Other assets                             |  |                       | 108,369 |  |                       |   | 78,695  | 
|                                         |  |                       |         |  |                       |   |         | 
|Total assets                             |  | $                     | 404,316 |  |                       | $ | 321,425 | 
|                                         |  |                       |         |  |                       |   |         | 
|Liabilities                              |  |                       |         |  |                       |   |         | 
|Loans                                    |  | $                     |        |  |                       | $ | 400     | 
|Accounts payables suppliers and agencies |  |                       | 50,809  |  |                       |   | 63,366  | 
|Accumulated taxes and expenses payables  |  |                       | 65,161  |  |                       |   | 42,938  | 
|Air traffic liability                    |  |                       | 9,507   |  |                       |   | 6,797   | 
|Other liabilities                        |  |                       | 21,282  |  |                       |   | 20,779  | 
|                                         |  |                       |         |  |                       |   |         | 
|Total liabilities                        |  |                       | 146,759 |  |                       |   | 134,280 | 
|                                         |  |                       |         |  |                       |   |         | 
|Net position                             |  | $                     | 257,557 |  |                       | $ | 187,145 | 
|                                         |  |                       |         |  |                       |   |         | 

From time to time the Company enters into factoring agreements on receivables outstanding or credit card sales in certain
countries.



F-56



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.3 Credit risk

The credit risk is originated from cash and cash equivalents, deposits in banks, investments in financial instruments and accounts receivables and consist in the risk that the counterparty could not be
capable to fulfill its contracted obligations, causing financial losses to the Company. The Company, to mitigate the credit risk arising from deposit in banks and investments in financial instruments, only conducts business with financial
institution that have investment grade of Fitch and Standard & Poor above BBB- with strength and liquidity indicators aligning with or above the market average. Also, for the credit risk originated for commercial accounts receivables, the
Company does not consider it is a significant one, since most of the accounts receivables can be easily converted into cash, usually in periods no longer than one month. Accounts receivables from cargo agencies are more likely to be exposed to
credit risk, but this is mitigated with the established policies to make sure that the credit sales are to clients with good credit history. Specific credit limits and payment terms have been established according to periodic analysis of the payment
capacity of the clients.

A considerable amount of the sales of tickets by the Company are processed through major credit cards, resulting in
accounts receivable that are generally short-term, and usually collected before revenue is recognized. The Company considers that the credit risk associated with these accounts receivable is controllable based on the industrys trends and
strong policies and procedures established and followed up by the Company.

27.4 Interest rates and cash flow risk

The income and operating cash flow of the Company are substantially independent of changes in interest rates, because the Company does not have
significant assets that generate interest except for surplus cash and cash equivalents and short and long-term investments.

The interest rate
risk is originated mainly for long term aircraft lease payments. These long term lease payments at variable interest rates expose the Company to cash flow risk. To mitigate the effect of variable cash flows associated to contracted rates and
transform them into fixed rates, the Company has entered into one Interest Rates Swap contract to hedge against market rates fluctuations. This interest rates hedge contract has been designated and qualified as cash flow hedge contracts with changes
in fair value recorded in Other current assets or in Other current liabilities in the consolidated statement of financial position and offset in Accumulated other comprehensive income (loss).

At December 31, 2012, the fixed interest rates vary from 0.05% to 3.96% and the main floating rate is LIBOR. Gains and losses recognized in the
other comprehensive income in equity on interest rate swap contracts as of December 31, 2012 will be continuously released to the consolidated statement of income until the repayment of the debt.

The fair value of the interest rate swap hedge derivative contract amounted to $5,172 and $6,464 at December 31, 2012 and 2011 respectively and is
recorded as a component of Other current liabilities against the Accumulated other comprehensive income (loss).



F-57



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Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.4 Interest rates and cash flow risk (continued)



The ineffective portion of this contract, if any, is recognized in the consolidated statement of income
as a component of Other operating expenses. During these periods there was no ineffectiveness of the hedging contracts.

27.6
Liquidity risk

The Companys policy requires having sufficient cash to fulfill its obligations. The Company maintains sufficient cash
on hand and in banks or equivalents of easy realization into cash. The Company also has credit lines in financial institutions that allow it to withstand potential cash deficit to fulfill its short term commitments.

The table below summarizes the Companys financial liabilities according to their maturity date. The amounts in the table are the contractual
undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant.



|                                    |  |                        |         |  |              |  |         |                     |  |  |         | 
|----------------------------------- |  | ---------------------- | ------- |  | ------------ |  | ------- | ------------------- |  |  | ------- | 
|                                    |  | Less thantwelve months |         |  | 1 to 4 years |  |         | More thanfour years | 
|December 31, 2012                   |  |                        |         |  |              |  |         |                     |  |  |         | 
|Long term debt                      |  |                        | 136,268 |  |              |  | 545,738 |                     |  |  | 524,098 | 
|Accounts payable                    |  |                        | 104,975 |  |              |  |        |                     |  |  |        | 
|Accounts payable to related parties |  |                        | 20,255  |  |              |  |        |                     |  |  |        | 
|Air traffic liability               |  |                        | 382,807 |  |              |  |        |                     |  |  |        | 
|Other liabilities                   |  |                        | 144,385 |  |              |  | 84,395  |                     |  |  |        | 
|December 31, 2011                   |  |                        |         |  |              |  |         |                     |  |  |         | 
|Long term debt                      |  |                        | 131,069 |  |              |  | 354,916 |                     |  |  | 581,741 | 
|Accounts payable                    |  |                        | 92,842  |  |              |  |        |                     |  |  |        | 
|Accounts payable to related parties |  |                        | 22,074  |  |              |  |        |                     |  |  |        | 
|Air traffic liability               |  |                        | 297,135 |  |              |  |        |                     |  |  |        | 
|Other liabilities                   |  |                        | 115,540 |  |              |  | 80,948  |                     |  |  |        | 



F-58



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Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.8 Capital risk management

The Companys objectives when managing capital are to safeguard the Companys ability to continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, the Company
monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated statement of
financial position) less cash and cash equivalents and short-term investments. Total capital is calculated as equity as shown in the consolidated statement of financial position plus net debt.

Following is summarized the gearing ratio of the Company:



|                                                           |  |              |           |  
|---------------------------------------------------------- |  | ------------ | --------- | -
|                                                           |  | As of        |          
|                                                           |  | December 31, |          
|                                                           |  | 2012         |          
|Total loans payable (Note 14)                              |  | $            | 1,206,104 |  
|Less: cash and cash equivalents and short-term investments |  |              | (651,103  | )
|                                                           |  |              |           |  
|Net debt                                                   |  |              | 555,001   |  
|Total equity                                               |  |              | 1,536,544 |  
|                                                           |  |              |           |  
|Total capital                                              |  | $            | 2,091,545 |  
|                                                           |  |              |           |  
|Gearing ratio                                              |  |              | 27        | %
|                                                           |  |              |           |  



F-59



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.9 Fair value measurement



|                                      |  |                 |           |  |              |   |           |              |  |   |              |  |  |   |           | 
|------------------------------------- |  | --------------- | --------- |  | ------------ | - | --------- | ------------ |  | - | ------------ |  |  | - | --------- | 
|                                      |  | Carrying amount |           |  | Fair value   |  
|                                      |  | December 31,    |           |  | December 31, |   |           | December 31, |  |   | December 31, | 
|                                      |  | 2012            |           |  | 2011         |   |           | 2012         |  |   | 2011         | 
|Financial assets                      |  |                 |           |  |              |   |           |              |  |   |              |  |  |   |           | 
|Cash and cash equivalents             |  | $               | 76,094    |  |              | $ | 243,801   |              |  | $ | 76,094       |  |  | $ | 243,801   | 
|Short term investments                |  | $               | 575,009   |  |              | $ | 262,345   |              |  | $ | 575,009      |  |  | $ | 262,345   | 
|Investments                           |  | $               | 69,445    |  |              | $ | 104,834   |              |  | $ | 69,445       |  |  | $ | 104,834   | 
|Accounts receivable                   |  | $               | 135,207   |  |              | $ | 142,297   |              |  | $ | 135,207      |  |  | $ | 142,297   | 
|Fuel derivatives                      |  | $               | 8,991     |  |              | $ | 18,605    |              |  | $ | 8,991        |  |  | $ | 18,605    | 
|Financial liabilities                 |  |                 |           |  |              |   |           |              |  |   |              |  |  |   |           | 
|Accounts payable                      |  | $               | 104,975   |  |              | $ | 92,842    |              |  | $ | 104,975      |  |  | $ | 93,457    | 
|Current maturities and long-term debt |  | $               | 1,206,104 |  |              | $ | 1,067,726 |              |  | $ | 1,275,982    |  |  | $ | 1,143,047 | 
|Fuel derivatives                      |  | $               | 417       |  |              | $ | 366       |              |  | $ | 417          |  |  | $ | 366       | 
|Interest rate hedges                  |  | $               | 5,172     |  |              | $ | 6,464     |              |  | $ | 5,172        |  |  | $ | 6,464     | 

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions
were used to estimate the fair values:



| |  |  | Cash and cash equivalents, short term investments approximate their carrying amounts largely due to the short-term maturities of these instruments.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Accounts receivable are evaluated by the Company based on parameters such an interest rates, risk characteristics. Based on this evaluation, allowances
are taken to account for the expected losses of these receivables.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Debts obligation, financial assets and financial liabilities are estimated by discounting future cash flows using the Companys current
incremental rate of borrowing for a similar liability.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-60



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Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



27.10 Fair value measurement (continued)



Fair value measurement is classified entirely following the hierarchy level of fair value that was
included in IFRS 7 Financial Instruments: Disclosures;as following:

Level 1: Quoted prices (unadjusted) in active markets for
identical assets and liabilities.

Level 2: Inputs other than quoted prices including within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is derived from prices).

Level 3: Inputs for the asset or liability that
is not based on observable market data (that is unobservable inputs).

The following chart summarizes the Companys financial instruments
measured at fair value, classified according to the valuation method:



|                      |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|--------------------- |  | ---------------------------------------- | ----- |  | ------- |  | - | ------- |  |  | ------- |  |  |  | - | 
|                      |  | Fair Value Measurement at Reporting Date |      
|Description           |  | 2012                                     |       |  | Level 1 |  |   | Level 2 |  |  | Level 3 | 
|Assets                |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|Fuel derivatives      |  |                                          | 8,991 |  |         |  |  |         |  |  | 8,991   |  |  |  |  | 
|                      |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|Total assets          |  |                                          | 8,991 |  |         |  |  |         |  |  | 8,991   |  |  |  |  | 
|                      |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|Liabilities           |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|Interest rates hedges |  |                                          | 5,172 |  |         |  |  |         |  |  | 5,172   |  |  |  |  | 
|Fuel derivatives      |  |                                          | 417   |  |         |  |  |         |  |  | 417     |  |  |  |  | 
|                      |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 
|Total liabilities     |  |                                          | 5,589 |  |         |  |  |         |  |  | 5,589   |  |  |  |  | 
|                      |  |                                          |       |  |         |  |   |         |  |  |         |  |  |  |   | 



F-61



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



28. Subsequent events

Stock Grants

During first quarter of
2013, the Compensation Committee of the Companys Board of Directors approved three (3) new awards. Awards were granted under these new plans for approximately 43,685 shares of non-vested stock, which will vest over a period of three (3)
to five (5) years. The Company estimates the fair value of these awards to be approximately $4.5 million and the 2013 compensation cost for these plans is $1.5 million.

Currency devaluation

On February 8, 2013, the Venezuelan government announced its
decision to devalue its currency. Since the previous devaluation in January of 2010, the official exchange rate for all non-essential imported goods and services, including the aviation sector, had been fixed at VEB 4.30 per U.S.
dollar. Under the new regime, the official exchange rate will be VEB 6.30 per U.S. dollar.

On Wednesday, February 13, 2013,
the Venezuelan government announced that it would continue to apply the exchange rate of VEB 4.30 per U.S. dollar to all authorization requests pending approval by the Venezuela Central Bank through February 8, 2013. As a result,
approximately 93% of our cash balance in Venezuela as of December 31, 2012 will be honored at the previous exchange rate, which was in effect when these authorization requests were submitted.

The Company incurred losses related to the devaluation of our cash balance of US$13.9 million, which were recorded in the first quarter of 2013.

29. Segment reporting

Information concerning operating revenue by principal geographic area for the period ended December 31 is as follows (in millions):



|                              |  |      |         |  |      |   |         |      |  |   |         | 
|----------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                              |  | 2012 |         |  | 2011 |   |         | 2010 | 
|North America                 |  | $    | 375.4   |  |      | $ | 308.9   |      |  | $ | 215.3   | 
|Central America and Caribbean |  |      | 240.6   |  |      |   | 241.0   |      |  |   | 208.2   | 
|Colombia                      |  |      | 299.4   |  |      |   | 270.7   |      |  |   | 245.0   | 
|Brazil                        |  |      | 327.4   |  |      |   | 230.7   |      |  |   | 135.4   | 
|Venezuela                     |  |      | 257.3   |  |      |   | 178.5   |      |  |   | 123.0   | 
|Others South America          |  |      | 483.3   |  |      |   | 380.3   |      |  |   | 281.0   | 
|Panama                        |  |      | 265.9   |  |      |   | 220.8   |      |  |   | 206.9   | 
|                              |  |      |         |  |      |   |         |      |  |   |         | 
|                              |  | $    | 2,249.3 |  |      | $ | 1,830.9 |      |  | $ | 1,414.8 | 
|                              |  |      |         |  |      |   |         |      |  |   |         | 



F-62



---

Copa Holdings, S. A. and Subsidiaries

Notes to the consolidated financial statements

December 31, 2012

(In US$ thousands)



We attribute revenue among the geographical areas based upon point of sales. Our tangible assets and
capital expenditures consist primarily of flight and related ground support equipment, which is mobile across geographic markets and, therefore, has not been allocated.



F-63