Copa Holdings, parent company of Copa Airlines and Aero Republica, today announced financial results for the fourth quarter of 2009 (4Q09) and full year 2009. The terms “Copa Holdings” or “the Company” refers to the consolidated entity, whose operating subsidiaries are Copa Airlines and Aero Republica. The following financial and operating information, unless otherwise indicated, is presented in accordance with US GAAP. See the accompanying reconciliation of non-GAAP financial information to GAAP financial information included in financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2008 (4Q08).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$70.4 million for 4Q09 or diluted earnings per share (EPS) of US$1.61, as compared to net income of US$25.8 million or diluted EPS of US$0.59 in 4Q08. Excluding special items, which for 4Q09 include a special charge of US$4.8 million related to the accrual of costs associated with the retirement of four MD-80 aircraft as a result of Aero Republica’s transition to an all Embraer-190 fleet and a US$9.6 million non-cash gain associated with the mark-to-market of fuel hedge contracts, Copa Holdings would have reported an adjusted net income of US$65.7 million, compared to an adjusted net income of US$65.2 million in 4Q08.

Net income for full year 2009 reached US$240.4 million or diluted EPS of US$5.50, compared to US$118.7 million or diluted EPS of US$2.73 for full year 2008. Excluding special items, which for 2009 include a special charge of US$19.4 million related to the accrual of costs associated with the retirement of four MD-80 aircraft as a result of Aero Republica’s transition to an all Embraer-190 fleet and a US$58.0 million non-cash gain associated with the mark-to-market of fuel hedge contracts, Copa Holdings would have reported an adjusted net income of US$201.7 million compared to an adjusted net income of US$173.5 for full year 2008, representing an increase of 16.3%.

Operating income for 4Q09 came in at US$71.8 million, representing an operating margin of 20.9%, as compared to operating income for 4Q08 of US$84.0 million. Excluding special fleet charges of US$4.8 million, operating income would have been US$76.6 million, which would have represented an operating margin of 22.3% for the quarter, down from 24.3% in 4Q08.

The Company reported operating income of US$223.3 million for full year 2009, representing an operating margin of 17.8%, as compared to 17.4% in 2008. However, excluding special fleet charges of US$19.4 million recorded in 2009, the adjusted operating margin for 2009 stood at 19.4%.

Total revenues for 4Q09 decreased 0.9% to US$343.0 million. Yield per passenger mile decreased 11.7% to 16.4 cents and operating revenue per available seat mile (RASM) decreased 5.8% to 13.7 cents.

For 4Q09 consolidated passenger traffic grew 12.7% while capacity increased 5.2%. As a result, consolidated load factor for the quarter increased 5.3 percentage points to 79.4%. For full year 2009 consolidated capacity increased 12%.

Operating cost per available seat mile (CASM) decreased 1.6%, from 11.0 cents in 4Q08 to 10.9 cents in 4Q09. CASM, excluding fuel costs and special items, increased 5.2% from 7.2 cents in 4Q08 to 7.6 cents in 4Q09, mainly due to higher salaries and benefits and passenger related costs.

Cash, short term and long term investments ended 2009 at US$358.5 million, representing 29% of the last twelve months’ revenues. During 2009 the Company funded from cash US$120 million in pre-delivery payments related to aircraft to be delivered between 2010 and 2011.

During the fourth quarter, Copa Airlines took delivery of one Boeing 737-800, ending the year with a consolidated fleet of 56 aircraft.

For 2009, Copa Airlines reported on-time performance of 87.6% and a flight-completion factor of 99.4%, maintaining its position among the best in the industry. Additionally, Aero Republica’s on-time performance came in at 90.1%, leading the Colombian market both in domestic and international on-time performance.

Subsequent Events

On January 8, 2010, the Venezuelan government announced its decision to implement new fixed exchange rates effective January 11, 2010, which resulted in a significant devaluation of the Bolivar against the U.S. dollar. The new regime applies two distinct official rates depending on the applicable sector of the economy. The first exchange rate, applicable to imported goods characterized as essential, will be VEB 2.60 per U.S. dollar, and the rate applicable to all other imported goods and services, including the aviation sector, will be VEB 4.30 per U.S. dollar. The Venezuelan government, however, has announced that it will apply the exchange rate of VEB 2.60 per U.S. dollar to all authorization requests pending approval by the Venezuela Central Bank through January 8, 2010. We estimate that the Company will incur losses related to the devaluation of these funds of approximately US$21 million, which will be recorded in the first quarter of 2010 in accordance with US GAAP.

On February 10, our Board of Directors approved the modification of the Company’s dividend policy, which had provided for an annual payment of approximately 10% of our annual consolidated net income to our shareholders. Effective immediately, the new dividend policy provides for annual dividend payments in amounts up to 20% of our annual consolidated net income to be paid pro rata among all our shareholders. The determination of the annual dividend payment each year will remain subject to approval by our Board of Directors and compliance with applicable legal requirements.