On 6 June 1992, the Boeing 737-204 Advanced operating the route rolled, entered a steep dive, disintegrated in mid-air, and crashed into the jungle of the Darién Gap 29 minutes after takeoff, killing all 47 people on board.

[3] At 20:47, about 10 minutes after takeoff, Captain Chial contacted Panama City Air Traffic Control, requesting weather information.

At 20:48, Captain Chial made another radio contact requesting permission from Panama City ATC to fly a different route due to the severe weather ahead.

One minute later, at 20:49, Panama City Control Center received a third message from Captain Chial, who reported reaching cruising flight level of 250 (about 25,000 feet or 7,600 metres).

Finally, at 20:56, Flight 201 banked to the right and entered a steep dive at an angle of 80 degrees to the right and began to roll uncontrollably while accelerating towards the ground.

Despite the attempts by Captain Chial and First Officer Tejada to level off, the airplane continued its steep dive, until it exceeded the speed of sound and started to break apart at 10,000 feet (3,000 m).

[3][9] Because the bodies of the victims and various parts of the aircraft's fuselage were scattered in a radius of 10 kilometres (6 mi), the recovery process was extremely difficult.

The cockpit voice recorder was recovered and flown to Panama City, then to the United States, for analysis by the National Transportation Safety Board.

[3] The investigation team also found that the backup ADI (stand-by) was probably available to the pilots during the intermittent failure of the main instruments systems (the post-impact damage of the stand-by indicator showed that it was operating properly up to impact with the ground), but due to an ineffective cross-checking procedure done by the pilots, the backup ADI was not used correctly to identify the problem and select a reliable source of altitude information.

Another factor contributing to the crash was that the Copa Airlines' ground training simulator program was ineffective, as it did not present enough information relating to the differences between aircraft and crew resource management in order to give to the flight crew knowledge to overcome intermittent attitude indicator errors and to maintain control of an aircraft with the ADI/VG auxiliary instruments.

In the morning of the next day, Colombian and Panamanian radio stations were reporting that some residents of Tucutí and other villages nearby to the crash site said that on the night of the accident they felt a very strong explosion; meanwhile, others said that they saw a burning object that was falling from the sky towards the jungle.

[12] However, these reports were eventually dismissed by the head of Panama's civil aviation authority, Zosimo Guardia, who argued that the plane could not have exploded before crashing.

[4] As a result of the accident, the relatives of those who perished in the crash filed 49 wrongful death lawsuits against Lucas Aerospace, one of the part suppliers of the Boeing 737.