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Anyone watching the results of U.S. based airlines over the last 6 months know they have struggled mightily with higher fuel prices. In contrast, my favorite airline stock, Panama based Copa Holdings (NYSE:CPA) has had two nicely profitable quarters in a row. For the just released 3rd quarter Copa had net earnings of $30.3 million or 70¢ per share, the same level as the 2nd quarter. The earnings are well below the $1.08 for the 3rd quarter of 2007, but very nice results considering the fuel cost environment.

Copa Holdings is the holding company for Copa Airlines and Aero Republica. They have an extremely modern, fuel efficient fleet of Boeing 737-800 and Embraer-190 aircraft. By year end they will be serving 45 cities in 24 countries, giving them the most extensive Latin America network. Copa flies to New York, Washington, D.C., Miami and Los Angeles in the U.S.

I believe economic growth in Latin America will continue to be strong and Copa is a good way to play that growth. The company is very well managed and I expect earnings to start growing rapidly with falling fuel prices. Estimated earnings of $4 per share for 2009 could be way short and $4 bucks already looks pretty good against a $25 share price.

CPA is a component of my hypothetical Opportunities Portfolio.

View the full CPA chart at Wikinvest

Source: Copa Airlines: Still Nice and Profitable