Copa Airlines Results

Copa Holdings Reports Financial Results for the Fourth Quarter of 2019

Reported net profit came in at $2.7 million, or EPS $0.06. Excluding Special Items, adjusted net profit came in at $92.1 million, or Adjusted EPS of $2.17

Copa Airlines

Copa Holdings, S.A. (NYSE: CPA), yesterday announced financial results for the fourth quarter of 2019 (4Q19) and full year 2019. The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS). See the accompanying reconciliation of non-IFRS financial information to IFRS financial information included in the financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2018 (4Q18).

The financial information included in this press release is preliminary as the Company has not yet issued its audited financial statements and may differ from those results. During the preparation of the financial statements and related notes and our year-end audit, additional items that would require material adjustments to the preliminary financial information included in this press release may be identified.

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported a net profit of US$2.7 million for 4Q19 or earnings per share (EPS) of US$0.06, as compared to a net loss of US$155.8 million or loss per share of US$3.67 in 4Q18. Excluding Special Items, which for 4Q19 included a non-cash fleet impairment charge of US$89.3 million, and for 4Q18 included a non-cash fleet impairment charge of US$188.6 million and a non-cash US$11.4 million-dollar foreign currency translation loss (Special Items), the Company would have reported a net profit of US$92.1 million, or adjusted EPS of US$2.17 in 4Q19, compared to an adjusted net profit of US$44.1 million or adjusted EPS of US$1.04 in 4Q18.
  • For full year 2019, net profit came in at US$247 million or EPS of US$5.81, compared to a net profit of US$88.1 million or earnings per share of US$2.07 for full year 2018. Excluding Special Items, which for 2019 included a non-cash fleet impairment charge of US$89.3 million, and for 2018 included a non-cash fleet impairment charge of US$188.6 million and a non-cash US$11.4 million-dollar foreign currency translation loss, Copa Holdings would have reported an adjusted net profit of US$336.3 million or EPS of US$7.92 in 2019, compared to an adjusted net profit of US$276.7 million or adjusted EPS of US$6.52 in 2018.
  • In 4Q19, the Company had an operating profit of US$17.8 million, compared to an operating loss of US$126.4 million in 4Q18. Excluding Special Items, namely the fleet impairment charges in 4Q19 and 4Q18, The Company would have reported an Operating profit of US$107.1 million in 4Q19, compared to an operating profit of US$62.2 million in 4Q18. Excluding Special Items, operating margin for 4Q19 would have come in at 15.7%, compared to 9.5% in 4Q18.
  • For full year 2019, the Company reported operating profit of US$346.2 million. Excluding Special Items, the Company would have reported an operating profit of US$435.5 million, representing an increase of 25.1% over adjusted operating profit of US$348.1 million for full year 2018, mostly due to stronger unit revenues and lower jet fuel prices. Excluding Special Items, operating margin for full year 2019 would have come in at 16.1%.
  • Total revenues for 4Q19 increased 3.9% to US$681.9 million, despite a 4.6% capacity contraction. Yield per passenger mile increased 6.0% to 12.5 cents, and load factors improved 2.5 percentage points year over year to 85.3%. Revenue per available seat mile (RASM) came in at 11.1 cents, or 8.9% higher than 4Q18.
  • For full year 2019, consolidated load factor was 84.8%, 1.4 percentage points higher than 2018 on a 2.7% capacity reduction.
  • Operating cost per available seat mile (CASM), excluding Special Items (Adjusted CASM) increased 1.4%, from 9.2 cents in 4Q18 to 9.3 cents in 4Q19. Adjusted CASM excluding fuel costs increased 6.4% from 6.2 cents in 4Q18 to 6.6 cents in 4Q19, mainly as a result of lower capacity, as well as expenses, associated to the Boeing MAX fleet grounding.
  • Cash, short-term and long-term investments ended 2019 at US$985.5 million, representing 36% of the last twelve months' revenues.
  • Copa Holdings ended the year with a consolidated fleet of 102 aircraft – 6 Boeing 737MAX9s, 68 Boeing 737-800s, 14 Boeing 737-700s, and 14 Embraer 190s.
  • As was previously reported, during the fourth quarter the Company announced its intention to sell its remaining 14 Embraer 190s over the next two years duly classifying these assets as available for sale. As such, a US$89.3 million impairment charge was booked in 4Q19.
  • For 2019, Copa Airlines ended the year with a consolidated on-time performance of 91.9% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

Subsequent Events  

  • In January 2020, the company was recognized by FlightStats – for the seventh consecutive year – as the most on-time airline in Latin America, and by OAG as the second most on-time airline in the world.
  • On February 12, 2020, the Board of Directors of Copa Holdings approved a 2020 quarterly dividend payment of 80 cents per share. Dividends will be distributed during the months of March, June, September and December. The first quarterly dividend of 80 cents per share will be paid on March 13 to shareholders on record as of February 28, 2020.
  • As part of the world-wide grounding of the Boeing MAX fleet, the Company has removed all Boeing MAX operations from its schedule until the end of August of 2020.

Consolidated Financial

& Operating Highlights

4Q19

4Q18*

Variance

vs. 4Q18*

3Q19

Variance

vs. 3Q19

FY19

FY18*

Variance

vs. FY18*

Revenue Passengers Carried ('000)

2,633

2,554

3.1%

2,703

-2.6%

10,474

10,069

4.0%

RPMs (mm) 

5,244

5,335

-1.7%

5,466

-4.1%

21,303

21,529

-1.0%

ASMs (mm) 

6,149

6,445

-4.6%

6,383

-3.7%

25,113

25,817

-2.7%

Load Factor 

85.3%

82.8%

2.5 p.p.

85.6%

-0.4 p.p.

84.8%

83.4%

1.4 p.p.

Yield

12.5

11.8

6.0%

12.5

0.1%

12.3

12.0

2.0%

PRASM (US$ Cents) 

10.7

9.8

9.2%

10.7

-0.3%

10.4

10.0

3.8%

RASM (US$ Cents) 

11.1

10.2

8.9%

11.1

0.0%

10.8

10.4

3.9%

CASM (US$ Cents) 

10.8

12.1

-11.0%

9.0

19.8%

9.4

9.8

3.6%

Adjusted CASM (US$ Cents) (1)

9.3

9.2

1.4%

9.0

3.7%

9.0

9.0

-0.3%

CASM Excl. Fuel (US$ Cents) 

8.0

9.1

-11.9%

6.2

28.6%

6.6

6.8

2.3%

Adjusted CASM Excl. Fuel (US$ Cents) (1)

6.6

6.2

6.4%

6.2

5.3%

6.3

6.1

-3.6%

Fuel Gallons Consumed (Millions) 

78.9

82.1

-3.9%

82.0

-3.7%

321.4

328.1

2.0%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.16

2.38

-9.2%

2.16

0.1%

2.16

2.32

7.2%

Average Length of Haul (Miles)

1,992

2,089

-4.6%

2,022

-1.5%

2,034

2,138

-4.9%

Average Stage Length (Miles)

1,279

1,299

-1.5%

1,295

-1.2%

1,288

1,321

-2.5%

Departures

32,441

33,541

-3.3%

33,373

-2.8%

131,819

132,498

-0.5%

Block Hours

105,620

111,315

-5.1%

109,614

-3.6%

431,749

444,851

-2.9%

Average Aircraft Utilization (Hours)

11.3

11.7

-3.6%

11.5

-2.1%

45.8

12.0

281.8%

Operating Revenues (US$ mm) 

681.9

656.1

3.9%

708.2

-3.7%

2,707.4

2,677.6

1.1%

Operating Profit (US$ mm)

17.8

-126.4

n/m  

132.9

-86.6%

346.2

159.5

117.1%

Adjusted Operating Profit (US$ mm) (1)

107.1

62.2

72.1%

132.9

-19.4%

435.5

348.1

25.1%

Operating Margin 

2.6%

-19.3%

21.9 p.p.

18.8%

-16.2 p.p.

12.8%

6.0%

6.8 p.p.

Adjusted Operating Margin (1)

15.7%

9.5%

6.2 p.p.

18.8%

-3.0 p.p.

16.1%

13.0%

3.1 p.p.

Net Profit (US$ mm)

2.7

-155.8

n/m

104.0

-97.4%

247.0

88.1

180.4%

Adjusted Net Profit (US$ mm) (1)

92.1

44.1

108.6%

104.0

-11.5%

336.3

276.7

21.6%

EPS - Basic and Diluted (US$)

0.06

-3.67

n/m

2.45

-97.4%

5.81

2.07

180.3%

Adjusted EPS - Basic and Diluted (US$) (1)

2.17

1.04

108.5%

2.45

-11.5%

7.92

6.52

21.6%

# of Shares - Basic and Diluted ('000) 

42,487

42,468

0.0%

42,487

0.0%

42,483

42,456

0.1%

(1)Adjusted CASM Excl. Fuel, Adjusted Operating Profit, Adjusted Net Profit, Adjusted Operating Margin and Adjusted EPS for 4Q19, 4Q18, 3Q19, 2019 and 2018 exclude non-cash charges/gains associated with the Embraer 190 Fleet impairment and a currency translation effects.

*  Restated for the retrospective adoption of IFRS 16

About Copa Holdings

Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 80 destinations in 33 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 102 aircraft: 6 Boeing 737MAX9s, 82 Boeing 737NGs and 14 EMBRAER 190s.



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