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Pedro O. Heilbron

PANAMA - Transport

The Main Reasons

CEO, Copa Airlines

Bio

Pedro O. Heilbron studied economics at the College of the Holy Cross in Worcester, Massachusetts, and received his MA in business administration from George Washington University in Washington DC. He joined Copa Airlines in 1988, and under his leadership the company established the “Hub of the Americas“ and negotiated the alliance of Copa and Continental Airlines—(now United Airlines) in 1998. He oversaw the acquisition of Aero República (Copa Colombia) in 2005, and Copa Holding’s IPO on the New York Stock Exchange in December of the same year. He is a recipient of various awards that have recognized his contribution to business in Panama and the wider region, including Latin Trade’s CEO of the Year in 2006, Executive of the Year by APEDE in 2008, and the Airline Business Lifetime Achievement Award in 2009. He also currently serves as President of the Smithsonian Foundation in Panama.

"We operate an efficient airline with very competitive costs, approaching those of low-cost carriers."

What has been Copa Airlines’ strategy over the last decade?

We have followed the same strategy for over 20 years, which involves building a hub in Panama for intra-American connectivity. Our business model is very straightforward in a simple and effective manner. Over the last five years we have accelerated the airline’s capacity growth, transitioning from four to six connecting banks at Tocumen Airport, the “Hub of the Americas,” in Panama. We have also added close to 20 destinations in that same five-year period.

Copa offers service to 67 destinations in 30 countries. Which routes are the most important for your business activity?

By July 2014, we will be flying to 67 destinations in 30 countries, certainly the most complete and convenient connecting hub in Latin America. We have a very well-balanced network; therefore, I could not say that one market is more important than another. South America is, of course, the largest region that we serve through our hub in Panama. We connect most major cities in South America with Central and North America as well as the Caribbean.

“We operate an efficient airline with very competitive costs, approaching those of low-cost carriers.”

How does Copa contribute to the economic development of Panama?

We have over 6,800 employees in Panama and around 8,700 worldwide. We really believe that we contribute in a significant way to every country we serve, since today’s world is driven by connectivity and, especially, air connectivity. In regards to Panama, we are a major contributor to the country’s GDP, second only to the Panama Canal. Our direct and indirect contribution to Panama’s GDP is around 4%. Besides that, due to our hub, Panama is the most connected country in Latin America relative to its GDP. This unique connectivity is one of the main reasons why Panama has become a major business hub, tourism destination, and home for many multinational companies that have established their regional offices here.

How would you describe Copa’s financial performance over 2013, and what are your expectations for 2014?

We had a very strong year in 2013; we grew our capacity by 14%. Our revenues also grew by 16%. We met or exceeded the market and analysts’ expectations. For 2014, we expect to have another strong year, with capacity growth of 10%.

How important is the concept of social responsibility for Copa, and what are the most successful achievements in this field?

Social responsibility is an integral part of Copa’s yearly corporate objectives. It starts with our own employees; therefore, we dedicate a significant amount of time and effort to make Copa Airlines the best place to work. We have a number of programs to help in the training and advancement of our employees, including training for skills such as language and computers, even if not needed in their current jobs. We also offer scholarships for their children. Maybe the most successful program to align our workforce with the strategy and growth of the company is our profit sharing program, which we have consistently paid for over a decade. Our social responsibility programs also work with the communities we serve and look to protect the environment. One example is our 3Rs program: recycle, reduce, and reuse. As well, we are founding members of United Way in Panama. Copa Airlines included, in its CSR strategy, actions to mitigate climate change with the aim of reducing the carbon footprint. Therefore, during 2012 and 2013, Copa accomplished a reduction of over 12,200 tons of CO2. By 2014, the goal is to achieve a further reduction of over 4,800 tons of CO2.

What is the potential for low-cost carries for Panama?

There are some low-cost services flying into Panama, although it remains a small market in terms of origin and destination traffic. Nevertheless, we operate an efficient airline with very competitive costs, approaching those of low-cost carriers, and feel confident in our ability to compete and succeed.

Tocumen Airport is undergoing an expansion at the moment to increase its capacity from 5 million to 30 million passengers per year. What will be the impact of this expansion for Copa?

It is very important that the airport is being expanded. Once this expansion phase is completed, we will have an additional 20 gates, which will allow Copa to continue growing. As can be expected, we are looking forward to the new airport terminal.

What is the potential for Panama to become a world hub for aviation?

Sitting in the middle of the Americas, Panama has one of the most unique geographical positions anywhere in the world. The country has been attracting a number of European airlines that have either started new services or increased their frequencies to Panama. Those airlines benefit from Panama’s unique position as the best located and most connected hub in Latin America. As Latin America continues to grow and more airlines look to our region as an interesting market to serve, we expect Panama to continue growing as the premier gateway to our region. This should eventually mean more service from Europe and other parts of the world and, together with Copa’s own growth in the Americas, contribute to positioning Panama as a truly world hub for aviation, as it is already for shipping and commerce.

© The Business Year – June 2014

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