Venezuela: The Misfortune of Having a Bad Neighbor

The convulsions in Venezuela should not be seen as merely a political issue, but also from the point of view of the economic insecurity it creates in the region.

Friday, March 7, 2014

The effects of the crisis in Venezuela are not only reflected in the economy but spread quickly to the rest of the continent, particularly in countries with the most trade and economic ties.

This is how what happens in neighboring Venezuela can directly affect a company such as COPA Airlines, whose shares on the New York Stock Exchange fell 7% in response to the possibility of the carrier failing to collect what it is owed to it by the Venezuelan government.

It is the same case in the Colon Free Zone, which has accounts receivable of $2 billion with companies and the government in the Andean country.

"Citigroup cut its target price for COPA shares from $170 to $148 and lowered its rating from "buy" to "neutral" explains a Bloomberg.com article.

"The more negative the stance in political terms, the lower the probability that COPA has of regaining the liquidity tied up in Venezuela and the greater the uncertainty for the operation," said Stephen Trent, an analyst at Citigroup. "



More on this topic

Panama and Venezuela Reestablish Business Relationships

April 2018

The agreement between both governments also implies the resumption, in the coming days, of Copa flights between Caracas and Panama City.

Almost a month after President Maduro decided to suspend economic relations with Panama, both governments have reached an agreement to resume dialogue.

Panama - Venezuela Conflict Worsens

April 2018

In response to actions taken by the Maduro government, Panama will suspend cargo and passenger transport activities of Venezuelan airlines operating in the country for three months.

Immediately after the retaliation measures that the Varela administration intends to implement were made public, the Venezuelan government announced it will suspend economic relations with more companies in Panama and freeze their accounts, although they did not specify who those companies will be.

Venezuela cuts Ties with Panama

April 2018

The Maduro government has announced a ban on carrying out commercial or financial activities with 22 Panamanian government officials and 46 Panamanian private sector companies.

Prensa.com reports that "...Among the Panamanian companies affected are Copa Airlines, Vida Panama, Supercentro Casanova, Casablanca, and Yamaha Music Latin America, among others."

COPA's Winning Strategy

April 2009

In 70% of its routes, COPA has no competition. The Panamanian airline flies to destinations not covered by the major regional airlines such as TAM and LAN.

The company prefers to fly to destinations that are not too popular, where the passengers waiting to board are not many more than 50.

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