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Fuel expenses hedged well

Copa has 18% of its 2Q 08 fuel volumes hedged, while it has hedged 25% of its fuel volumes for 2H 08. It has hedged approximately 25% of 1Q 09 fuel requirement, 19% of 2Q 09 fuel requirement and 10% of 3Q 09 fuel requirement. Markets were encouraged by the company’s fuel hedging strategies and therefore pushed its prices upwards for a while coupled with declining crude oil prices. This rally in Copa's prices came to an halt with the Lehman Brothers collapse and the subsequent crash in markets. However, there is reason to believe that benefits from low crude oil prices will be partially offset by increased passenger servicing expenses as AeroRepublica expands internationally and serves higher number of international passengers. This may be slightly margin erosive in the near term, but surely prove to be margin accretive in the longer term.

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