Copa Air On Track For Star Alliance Entry, Stock Up After 1Q

The head of Copa Airlines said Thursday that it still expected to join the Star global marketing pact "soon," despite a delay that comes amid jostling for position in Latin America by the three alliances that dominate the industry.

Copa has turned its Panama hub into a profitable fortress linking cities in North, South and Central America that had no connections a decade ago, and a useful addition to the Star pact led by United Continental Holdings Inc. (UAL) and Deutsche Lufthansa AG (LHA.XE).

Pedro Heilbron, chief executive of Copa Holdings SA (CPA), said on a post-earnings' call that it had been due to join Star last month, but indicated the move would take place soon after a delay for unspecified reasons. AviancaTaca Holding S.A. (PFAVTA.BO), formed by the merger of carriers in Colombia and El Salvador, is also due to join Star shortly.

Copa shares soared following a rise in first-quarter profit, and were recently up 8.8% at $84.03, just shy of an all-time high reached earlier in the session.

Star's expansion in Latin America comes as the industry awaits the final outcome of deliberations between LAN Airlines SA (LFL, LAN.SN) and merger partner TAM S/A's (TAM, TAMM4.BR) over which alliance they will join.

Chile's Lan is a member of the Oneworld alliance led by American Airlines and British Airways, and the enlarged carrier is widely expected by analysts to drop Tam's existing membership of Star.

The third global alliance, SkyTeam, includes Aerolineas Argentinas and Grupo Aeromexico S.A.B. de C.V. (AEROMEX.MX) in its ranks, while founder Delta Air Lines Inc. (DAL) this year added a minority stake in Brazil's GOL Linhas Aereas Inteligentes S.A. (GOL).

Copa was formerly a member of SkyTeam, but left after former parent Continental Airlines joined Star following its merger with United.

The airline reported a profit of $95.9 million compared with $94.4 million a year earlier, with per-share earnings rising two cents to $2.16.

Heilbron also said that Copa hadn't seen any reduction in demand from Brazil despite the strength of the real, and though it raised revenue guidance for the year, this wasn't because of any expected reduction in capacity by American, a unit of AMR Corp. (AAMRQ).

--By Doug Cameron, Dow Jones Newswires; 312-750-4135; [e-mail]