Accounting Methods

Description of the Firm

Business Overview

The Service

Copa is a leading Latin American provider of airline passenger and cargo service through the two principal operating subsidiaries, Copa and AeroRepública.

It operates from its strategically located position in the Republic of Panama, and AeroRepública provides service primarily within Colombia complemented by international flights from various cities in Colombia to Panama City and Caracas. Currently operate a fleet of 55 aircraft, 27 Boeing 737-Next Generation aircraft, 24 Embraer 190 aircraft and 4 MD-80 aircraft.

Copa offers approximately 152 daily scheduled flights among 45 destinations in 24 countries in North, Central and South America and the Caribbean from its Panama City hub. Copa provides passengers with access to flights to more than 120 other destinations through code share arrangements with Continental pursuant to which each airline places its name and flight designation code on the other's flights. Through its Panama City hub, Copa is able to consolidate passenger traffic from multiple points to serve each destination effectively.

Since January 2001, Copa has grown significantly and has established a track record of consistent profitability. The total operating revenues have increased from $290.4 million in 2001 to $1.3 billion in 2008, while operating margins have

also increased from 8.6% to 17.4% over the same period.

Market and Competition

Market

In Latin America, the scheduled passenger service market consists of three principal groups of travelers: strictly leisure, business and travelers visiting friends and family. Leisure passengers and passengers visiting friends and family typically place a higher emphasis on lower fares, whereas business passengers typically place a higher emphasis on flight frequency, on time performance, breadth of network and service enhancements, including loyalty programs and airport lounges.

According to data from the International Air Transport Association, or IATA , Latin America comprised approximately 7.5% of worldwide passengers flown in 2007, or 105 million passengers.

The Central American aviation market is dominated by international traffic. According to data from IATA, international traffic represented more than 78% of passengers carried and 89% of passenger miles flown in Central America in 2007. International passenger traffic is concentrated between North America and Central America. This segment represented 89% of international passengers flown in Central America in 2007, compared to 4% for passengers flown between Central America and South America and 7% for passengers flown between Central American countries. Total passengers flown on international flights