Copa Holdings Reports Financial Results for the Third Quarter of 2020
PANAMA CITY, Nov 18, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2020 (3Q20). The terms "Copa Holdings" and "the Company" refer to the consolidated entity. 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 third quarter of 2019 (3Q19).
Due to government restrictions on air travel implemented in response to the Covid-19 outbreak, the Company did not provide scheduled commercial service during the first 45 days of the quarter. On August 14, the Company restarted limited scheduled commercial operations subject to Panama's restrictions on the number of flights and entry for non-citizens and non-residents, and it has been gradually increasing capacity ever since. However, the capacity figures were still very low on a full quarter basis. Therefore, this earnings release will focus on the financial results and metrics that are relevant in these circumstances and will omit certain financial ratios, unit metrics and operational indicators that are usually provided, since they are either not measurable or immaterial on such a limited operational base.
OPERATING AND FINANCIAL HIGHLIGHTS
- Copa Holdings reported a net loss of US$118.1 million or US$2.78 per share. Excluding special items, the Company would have reported a net loss of US$121.6 million, or US$2.86 per share.
- Special items for the quarter include a US$3.6 million unrealized gain on the mark-to-market of the Company's outstanding convertible notes.
- Copa Holdings reported an operating loss of US$107.0 million.
- Cash consumption, defined as cash disbursements less proceeds, excluding extraordinary financing activities and asset sales, averaged US$36 million per month during the quarter.
- The Company ended the quarter with US$1.3 billion of available liquidity, consisting of US$1.0 billion in cash, short-term and long-term investments, and committed and undrawn credit facilities of US$305 million.
- The Company repaid US$50 million in short-term lines of credit, closing the quarter with a total debt of US$1.2 billion.
- On August 14, the Company restarted limited scheduled commercial operations, subject to Panama's health control restrictions on the number of flights and entry for non-citizens and non-residents to Panama and has been gradually increasing capacity since then. Capacity for the quarter represented approximately 1.5% of 3Q19 capacity.
- The Company completed the delivery of the first EMB-190 aircraft out of 14 that have been sold to a third party.
- Excluding the aircraft classified as assets held for sale, Copa Holdings ended the quarter with a consolidated fleet of 74 aircraft – 68 Boeing 737-800s and 6 Boeing 737MAX9s.
Subsequent Events
- During October, the Company delivered the 2nd and 3rd EMB-190 aircraft out of 14 that have been sold to a third party.
- On October 11, Panama lifted restrictions on the number of flights and entry for non-citizens and non-residents.
- During the month of November, the Company signed a Letter of Intent for the sale of 2 Boeing 737-700 aircraft, to be finalized and delivered in January 2021.
- As of November 15, the Company has restarted service to 38 destinations.
- On November 18, the FAA rescinded the order that grounded the Boeing 737-MAX aircraft type and published an Airworthiness Directive and MAX training requirements, paving the way for a return to service. The Company has a plan in place to comply with all new requirements and expects to return its six Boeing 737-MAX9 aircraft to service soon.
- The Company is in advanced discussions with Boeing to reach a settlement regarding the Boeing 737-MAX grounding. Subject to the outcome of these discussions, the Company expects to receive two Boeing 737-MAX9 aircraft during the month of December 2020.
Consolidated Financial |
3Q20 |
3Q19 |
Variance vs. 3Q19 |
2Q20 |
Variance vs. 2Q20 |
Revenue Passengers Carried (000s) |
30 |
2,703 |
-98.9% |
9 |
225.9% |
RPMs (millions) |
57 |
5,466 |
-99.0% |
15 |
275.7% |
ASMs (millions) |
95 |
6,383 |
-98.5% |
31 |
205.9% |
Load Factor |
59.7% |
85.6% |
-26.0 p.p. |
48.6% |
11.1 p.p. |
Fuel Gallons Consumed (millions) |
1.32 |
81.97 |
-98.4% |
0.66 |
99.4% |
Avg. Price Per Fuel Gallon (US$) |
1.41 |
2.16 |
-34.6% |
0.81 |
74.1% |
Average Length of Haul (miles) |
1,925 |
2,022 |
-4.8% |
1,670 |
15.3% |
Average Stage Length (miles) |
1,081 |
1,295 |
-16.5% |
727 |
48.7% |
Departures |
559 |
33,373 |
-98.3% |
225 |
148.4% |
Block Hours |
1,710 |
109,614 |
-98.4% |
820 |
108.5% |
Operating Revenues (US$ millions) |
32.4 |
708.2 |
-95.4% |
14.5 |
122.8% |
Operating Profit (Loss) (US$ millions) |
-107.0 |
132.9 |
n/m |
-357.9 |
n/m |
Adjusted Operating Profit (Loss) (US$ millions) (1) |
-107.0 |
132.9 |
n/m |
-108.7 |
n/m |
Net Profit (Loss) (US$ millions) |
-118.1 |
104.0 |
n/m |
-386.0 |
n/m |
Adjusted Net Profit (Loss) (US$ millions) (1) |
-121.6 |
104.0 |
n/m |
-114.6 |
n/m |
Basic EPS (US$) |
-2.78 |
2.45 |
n/m |
-9.08 |
n/m |
Adjusted Basic EPS (US$) (1) |
-2.86 |
2.45 |
n/m |
-2.70 |
n/m |
Shares for calculation of Basic EPS (000s) |
42,510 |
42,487 |
0.1% |
42,512 |
0.0% |
(1) Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures. |
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FULL 3Q20 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
https://copa.gcs-web.com/financial-information/quarterly-results
3Q20 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST
Date: |
Nov 19, 2020 |
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Time: |
11:00 AM US ET (11:00 AM Local Time) |
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Conference telephone number: |
877-293-5456 (US Domestic Callers) |
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707-287-9357 (International Callers)
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Webcast: |
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Speakers: |
Pedro Heilbron, Chief Executive Officer |
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José Montero, Chief Financial Officer |
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. For more information visit: www.copa.com.
CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: 011 507 304-2774
www.copa.com (IR section)
This release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. The risks and uncertainties relating to the forward-looking statements in this release are among those disclosed in Copa Holdings' filed disclosure documents and are, therefore, subject to change without prior notice.
CPA-G
Copa Holdings, S.A. |
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Income Statement - IFRS |
||||||||||
(US$ Thousands) |
||||||||||
Unaudited |
Unaudited |
% |
Unaudited |
% |
||||||
3Q20 |
3Q19 |
Change |
2Q20 |
Change |
||||||
Operating Revenues |
||||||||||
Passenger revenue |
27,619 |
685,337 |
-96.0% |
10,790 |
156.0% |
|||||
Cargo and mail revenue |
596 |
14,647 |
-95.9% |
145 |
309.9% |
|||||
Other operating revenue |
4,167 |
8,226 |
-49.3% |
3,597 |
15.8% |
|||||
Total Operating Revenue |
32,382 |
708,210 |
-95.4% |
14,532 |
122.8% |
|||||
Operating Expenses |
||||||||||
Fuel |
1,287 |
177,603 |
-99.3% |
137 |
839.0% |
|||||
Wages, salaries, benefits and other employees' expenses |
44,241 |
113,398 |
-61.0% |
38,198 |
15.8% |
|||||
Passenger servicing |
1,095 |
26,204 |
-95.8% |
402 |
172.4% |
|||||
Airport facilities and handling charges |
1,752 |
47,022 |
-96.3% |
505 |
246.9% |
|||||
Sales and distribution |
5,985 |
52,980 |
-88.7% |
3,754 |
59.4% |
|||||
Maintenance, materials and repairs |
9,079 |
30,632 |
-70.4% |
7,505 |
21.0% |
|||||
Depreciation and amortization |
63,022 |
72,876 |
-13.5% |
305,185 |
-79.3% |
|||||
Flight operations |
454 |
26,572 |
n/m |
(82) |
n/m |
|||||
Other operating and administrative expenses |
12,435 |
28,047 |
-55.7% |
16,803 |
-26.0% |
|||||
Total Operating Expense |
139,349 |
575,334 |
-75.8% |
372,408 |
-62.6% |
|||||
Operating Profit (Loss) |
(106,966) |
132,876 |
n/m |
(357,875) |
n/m |
|||||
Non-operating Income (Expense): |
||||||||||
Finance cost |
(16,264) |
(12,696) |
28.1% |
(27,056) |
-39.9% |
|||||
Finance income |
4,394 |
6,121 |
-28.2% |
5,677 |
-22.6% |
|||||
Net change in fair value of derivatives |
3,591 |
- |
n/m |
(22,198) |
n/m |
|||||
Gain (loss) on foreign currency fluctuations |
(370) |
(9,641) |
n/m |
500 |
n/m |
|||||
Other non-operating income (expense) |
(2,631) |
(350) |
n/m |
447 |
n/m |
|||||
Total Non-Operating Income/(Expense) |
(11,278) |
(16,567) |
-31.9% |
(42,628) |
-73.5% |
|||||
Profit (Loss) before taxes |
(118,245) |
116,309 |
n/m |
(400,504) |
n/m |
|||||
Income tax expense |
(188) |
12,332 |
n/m |
(14,486) |
n/m |
|||||
Net Profit (Loss) |
(118,057) |
103,978 |
n/m |
(386,018) |
n/m |
|||||
EPS |
||||||||||
Basic |
-2.78 |
2.45 |
n/m |
-9.08 |
n/m |
|||||
Shares used for calculation: |
||||||||||
Basic |
42,509,959 |
42,487,355 |
42,511,806 |
Copa Holdings, S. A. and subsidiaries |
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Consolidated statement of financial position |
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(US$ Thousands) |
September |
December |
2020 |
2019 |
|
(Unaudited) |
||
ASSETS |
||
Current Assets |
||
Cash and cash equivalents |
222,263 |
158,733 |
Short-term investments |
644,137 |
692,403 |
Total cash, cash equivalents and short-term investments |
866,400 |
851,136 |
Accounts receivable, net |
35,669 |
129,634 |
Accounts receivable from related parties |
1,625 |
147 |
Expendable parts and supplies, net |
77,481 |
69,100 |
Prepaid expenses |
29,755 |
49,034 |
Prepaid income tax |
9,020 |
1,181 |
Other current assets |
8,546 |
14,206 |
162,096 |
263,301 |
|
Assets held for sale |
143,466 |
120,006 |
TOTAL CURRENT ASSETS |
1,171,962 |
1,234,442 |
Long-term investments |
139,503 |
134,347 |
Long-term accounts receivable |
1,038 |
2,139 |
Long-term prepaid expenses |
6,416 |
17,743 |
Property and equipment, net |
2,203,750 |
2,532,402 |
Right of use assets |
229,595 |
290,843 |
Intangible, net |
97,771 |
108,116 |
Net pension asset |
2,868 |
249 |
Deferred tax assets |
21,714 |
19,216 |
Other Non-Current Assets |
13,663 |
17,881 |
TOTAL NON-CURRENT ASSETS |
2,716,318 |
3,122,935 |
TOTAL ASSETS |
3,888,280 |
4,357,377 |
LIABILITIES |
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Loans and borrowings |
129,667 |
122,581 |
Current portion of lease liability |
89,708 |
97,732 |
Accounts payable |
39,560 |
119,332 |
Accounts payable to related parties |
5,101 |
14,086 |
Air traffic liability |
433,145 |
497,374 |
Frequent flyer deferred revenue |
88,219 |
80,325 |
Taxes Payable |
6,756 |
46,267 |
Employee benefits obligations |
7,350 |
55,373 |
Income tax payable |
883 |
9,683 |
Other Current Liabilities |
136 |
83 |
TOTAL CURRENT LIABILITIES |
800,525 |
1,042,836 |
Loans and borrowings long-term |
1,118,846 |
938,182 |
Lease Liability |
152,234 |
206,832 |
Derivative financial instruments |
94,836 |
- |
Other long - term liabilities |
219,400 |
191,221 |
Deferred tax Liabilities |
27,283 |
43,397 |
TOTAL NON-CURRENT LIABILITIES |
1,612,599 |
1,379,633 |
TOTAL LIABILITIES |
2,413,124 |
2,422,469 |
EQUITY |
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Issued Capital |
||
Class A -33,858,511 issued and 31,417,714 outstanding |
21,196 |
21,142 |
Class B common stock - 10,938,125 |
7,466 |
7,466 |
Additional Paid-In Capital |
90,125 |
86,135 |
Treasury Stock |
(136,388) |
(136,388) |
Retained Earnings |
1,931,191 |
1,718,179 |
Net profit |
(429,801) |
247,002 |
Other comprehensive loss |
(8,632) |
(8,628) |
TOTAL EQUITY |
1,475,156 |
1,934,908 |
TOTAL EQUITY & LIABILITIES |
3,888,280 |
4,357,377 |
Copa Holdings, S. A. and subsidiaries |
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Consolidated Statement of Cash Flows |
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For the nine months ended September 30, |
||||||||||||||
(In US$ thousands) |
||||||||||||||
2020 |
2019 |
2018 |
||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||||||||
Cash flow (used in) from operating activities |
(75,298) |
548,947 |
377,941 |
|||||||||||
Cash flow used in operating activities |
(2,333) |
(32,863) |
(129,541) |
|||||||||||
Cash flow from (used in) financing activities |
141,162 |
(446,953) |
(316,461) |
|||||||||||
Net increase (decrease) in cash and cash equivalents |
63,531 |
69,131 |
(68,061) |
|||||||||||
Cash and cash equivalents at January 1 |
158,732 |
156,158 |
238,792 |
|||||||||||
Cash and cash equivalents at September 30 |
$ 222,263 |
$ 225,289 |
$ 170,731 |
|||||||||||
Short-term investments |
644,137 |
536,084 |
579,246 |
|||||||||||
Long-term investments |
139,503 |
124,169 |
165,865 |
|||||||||||
Total cash and cash equivalents and investments at September 30 |
$ 1,005,903 |
$ 885,542 |
$ 915,842 |
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Copa Holdings, S.A.
NON-IFRS FINANCIAL MEASURE RECONCILIATION
This press release includes the following non-IFRS financial measures: Adjusted Operating Profit, Adjusted Net Profit, Adjusted Basic EPS and Monthly Cash Consumption. This supplemental information is presented because we believe it is a useful indicator of our operating performance and is useful in comparing our performance with other companies in the airline industry. These measures should not be considered in isolation, and should be considered together with comparable IFRS measures, in particular operating profit and net profit. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:
Reconciliation of Adjusted Operating Profit |
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and Adjusted Net Profit |
3Q20 |
3Q19 |
2Q20 |
|||
Operating Profit as Reported |
$ (106,966) |
$ 132,876 |
$ (357,875) |
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Add: Unredeemed Ticket Revenue provision reversal |
$ 12,341 |
|||||
Add: Fleet Impairment loss |
$ 186,807 |
|||||
Add: Expected Loss on Embraer assets held for sale |
$ 50,048 |
|||||
Adjusted Operating Profit |
$ (106,966) |
$ 132,876 |
$ (108,679) |
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Net profit as Reported |
$ (118,057) |
$ 103,978 |
$ (386,018) |
|||
Add: Unredeemed Ticket Revenue provision reversal |
$ 12,341 |
|||||
Add: Fleet Impairment loss |
$ 186,807 |
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Add: Expected Loss on Embraer assets held for sale |
$ 50,048 |
|||||
Add: Net change in fair value of derivatives |
$ (3,591) |
$ 22,198 |
||||
Adjusted Net Profit |
$ (121,648) |
$ 103,978 |
$ (114,624) |
|||
Reconciliation of Adjusted Basic EPS |
||||||
Adjusted Net Profit |
$ (121,648) |
$ 103,978 |
$ (114,624) |
|||
Shares used for calculation of Basic EPS |
42,510 |
42,487 |
42,512 |
|||
Adjusted Basic Earnings per share (Adjusted Basic EPS) |
$ (2.86) |
$ 2.45 |
$ (2.70) |
|||
Reconciliation of Monthly Cash Consumption for 2Q and 3Q 2020 |
||||||
Beginning Cash balance |
1,143 |
1,127 |
||||
Ending Cash balance |
1,006 |
1,143 |
||||
Net cashflows in the quarter |
(137) |
16 |
||||
Substract: Proceeds from Convertible Notes Offering |
- |
343 |
||||
Substract: Others proceeds (assets sold and other non-op proceeds) |
22 |
|||||
Add: Repayment of short term credit lines |
50 |
95 |
||||
Cash Consumption excluding extraordinary activities |
(109) |
(232) |
||||
Monthly Cash Consumption excluding extraordinary activities |
(36) |
(77) |
SOURCE Copa Holdings, S.A.
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