Copa Holdings Reports Net Income of US$118.2 Million and EPS of US$2.66 for the Second Quarter of 2014 Excluding special items, adjusted net income came in at $115.9 million, or EPS of $2.61 per share

PANAMA CITY, Aug. 6, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2014 (2Q14). The terms "Copa Holdings" or "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 financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the second quarter of 2013 (2Q13).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$118.2 million for 2Q14, or diluted earnings per share (EPS) of US$2.66.  Excluding special items, Copa Holdings would have reported an adjusted net income of $115.9 million, or $2.61 per share, a 36.4% increase over adjusted net income of US$85.0 million and US$1.92 per share for 2Q13.
  • Operating income for 2Q14 came in at US$131.2 million, a 34.3% increase over operating income of US$97.7 million in 2Q13.  Operating margin for the period came in at 19.5%, compared to 16.5% in 2Q13, as a result of higher unit revenues. 
  • Total revenues increased 13.8% to US$673.6 million.  Yield per passenger mile increased 1.6% to 16.6 cents and operating revenue per available seat mile (RASM) increased 3.7% to 13.3 cents.  However, adjusting for a 10.9% increase in length of haul, yields increased 6.9% and RASM increased 9.2%.
  • For 2Q14, passenger traffic (RPMs) grew 12.7% on a 9.7% capacity expansion. As a result, consolidated load factor came in at 77.3%, or 2.0 percentage points above 2Q13.
  • Operating cost per available seat mile (CASM) remained unchanged at 10.7 cents from 2Q13.  However, CASM, excluding fuel costs, decreased 0.9% to 6.6 cents.
  • Cash, short term and long term investments ended 2Q14 at US$1.15 billion, representing 42% of the last twelve months' revenues. Of this amount, 46% is in Venezuela pending repatriation due to government currency controls.
  • During the month of June, Copa Airlines received payment of US$43.3 million from CENCOEX ("Centro Nacional de Comercio Exterior") in Venezuela. The funds corresponded to repatriation requests from January and February 2013 and were honored at an exchange rate of 6.30 bolivars per dollar.    
  • During the second quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 93 aircraft. 
  • For 2Q14, Copa Holdings reported consolidated on-time performance of 89.5% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • During July 2014, Copa Airlines signed a letter of intent agreeing to lease three new Boeing 737-800 aircraft and take delivery of these aircraft in August, October, and November of 2015. 
  • Copa Holdings will pay its third quarter dividend of US$0.96 per share on September 15, 2014, on all outstanding Class A and Class B shares, to stockholders of record as of August 29, 2014. 








Consolidated Financial & Operating Highlights

2Q14

2Q13

% Change 

1Q14

% Change 

Revenue Passengers Carried ('000)

1,890

1,861

1.6%

2,032

-6.9%

RPMs (mm) 

3,916

3,475

12.7%

3,917

0.0%

ASMs (mm) 

5,067

4,618

9.7%

5,015

1.0%

Load Factor 

77.3%

75.3%

2.0 p.p.

78.1%

-0.8 p.p.

Yield

16.6

16.4

1.6%

17.7

-5.9%

PRASM (US$ Cents) 

12.8

12.3

4.3%

13.8

-6.9%

RASM (US$ Cents) 

13.3

12.8

3.7%

14.2

-6.6%

CASM (US$ Cents) 

10.7

10.7

0.0%

10.7

0.0%

CASM Excl. Fuel (US$ Cents) 

6.6

6.7

-0.9%

6.6

1.3%

Breakeven Load Factor (1)

60.8%

61.6%

-0.8 p.p.

57.6%

3.2 p.p.

Fuel Gallons Consumed (Millions) 

65.9

60.0

9.8%

65.3

0.9%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.13

3.08

1.5%

3.19

-1.9%

Average Length of Haul (Miles)

2,072

1,868

10.9%

1,928

7.5%

Average Stage Length (Miles)

1,210

1,126

7.5%

1,173

3.1%

Departures

29,726

29,357

1.3%

30,546

-2.7%

Block Hours

92,115

84,985

8.4%

91,569

0.6%

Average Aircraft Utilization (Hours)

11.0

10.9

0.7%

11.3

-3.0%

Operating Revenues (US$ mm) 

673.6

592.0

13.8%

713.6

-5.6%

Operating Income (US$ mm)

131.2

97.7

34.3%

177.0

-25.9%

Operating Margin 

19.5%

16.5%

3.0 p.p.

24.8%

-5.3 p.p.

Net Income (US$ mm)

118.2

74.4

58.7%

151.4

-21.9%

Adjusted Net Income (US$ mm) (1)

115.9

85.0

36.4%

153.6

-24.5%

EPS - Basic and Diluted (US$)

2.66

1.68

58.7%

3.41

-21.9%

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

2.61

1.92

36.3%

3.46

-24.5%

# of Shares - Basic and Diluted ('000) 

44,409

44,387

0.0%

44,403

0.0%

(1)Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q14, 2Q13, and 1Q14 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges. Additionally, 2Q14 and 1Q14 exclude charges/gains related to the Venezuelan currency.


Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 2Q14 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q14 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 7, 2014

Time:

11:00 AM US ET (10:00 AM Local Time)

Conference telephone number: 

877-293-5456 (US Domestic Callers)


707-287-9357 (International Callers)

Webcast:

http://investor.shareholder.com/copa/events.cfm

Speakers:

Pedro Heilbron, Chief Executive Officer


Jose 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 67 destinations in 30 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 95 aircraft: 69 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit: www.copaair.com.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: (507) 304-2431
www.copaair.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.

Income Statement - IFRS

(US$ Thousands)












Unaudited


Unaudited


%


Unaudited


%


2Q14


2Q13


Change


1Q14


Change

Operating Revenues










Passenger Revenue

651,081


568,960


14.4%


691,977


-5.9%

Cargo, mail and other

22,480


23,038


-2.4%


21,629


3.9%

Total Operating Revenue

673,560


591,998


13.8%


713,605


-5.6%











Operating Expenses










Aircraft fuel

205,942


184,767


11.5%


208,014


-1.0%

Salaries and benefits

69,584


66,105


5.3%


73,976


-5.9%

Passenger servicing

65,533


60,389


8.5%


64,118


2.2%

Commissions

24,467


24,279


0.8%


26,132


-6.4%

Reservations and sales

23,978


24,763


-3.2%


23,853


0.5%

Maintenance, material and repairs

29,301


22,807


28.5%


24,746


18.4%

Depreciation

27,744


26,866


3.3%


27,821


-0.3%

Flight operations

32,547


30,028


8.4%


31,134


4.5%

Aircraft rentals

28,534


22,124


29.0%


25,315


12.7%

Landing fees and other rentals

13,250


12,789


3.6%


13,253


0.0%

Other

21,490


19,393


10.8%


18,246


17.8%

Total Operating Expense

542,369


494,309


9.7%


536,607


1.1%











Operating Income

131,192


97,689


34.3%


176,999


-25.9%











Non-operating Income (Expense):










Interest expense

(6,876)


(7,560)


-9.1%


(7,094)


-3.1%

Interest income

3,586


2,841


26.2%


3,736


-4.0%

Other, net

4,107


(10,616)


n/a


67


n/a

Total Non-Operating Income/(Expense)

817


(15,336)


n/a


(3,291)


n/a











Income before Income Taxes

132,008


82,354


60.3%


173,707


-24.0%











Provision for Income Taxes

13,836


7,912


74.9%


22,350


-38.1%











Net Income

118,172


74,441


58.7%


151,357


-21.9%





















EPS - Basic and Diluted

2.66


1.68


58.7%


3.41


-21.9%

Shares - Basic and Diluted

44,408,515


44,387,279


0.0%


44,402,832


0.0%


Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)


June 30,



December 31,



2014



2013



 (Unaudited) 



 (Audited) 

ASSETS






Current Assets:






Cash and cash equivalents


$       172,103



$        139,108

Short-term investments


723,808



992,579

Total cash, cash equivalents and short-term investments


895,911



1,131,687







Accounts receivable, net of allowance for doubtful accounts


119,197



132,867

Accounts receivable from related parties


2,195



2,189

Expendable parts and supplies, net of allowance for obsolescence


63,806



56,814

Prepaid expenses


59,682



59,175

Other current assets


23,685



22,783

Total Current Assets


1,164,476



1,405,515







Long-term investments


253,876



37,590







Property and Equipment:






Owned property and equipment:






Flight equipment


2,554,756



2,477,830

Other equipment


84,529



73,487



2,639,285



2,551,317

Less: Accumulated depreciation


(583,042)



(530,347)



2,056,243



2,020,970

Purchase deposits for flight equipment


370,200



327,544

Total Property and Equipment


2,426,443



2,348,514







Other Assets:






Net pension asset


11,936



11,114

Goodwill


25,919



25,305

Intangible asset


30,968



28,214

Other assets


98,193



96,509

Total Other Assets


167,016



161,143

Total Assets


$    4,011,811



$     3,952,762













LIABILITIES AND SHAREHOLDER'S EQUITY






Current Liabilities:






Current maturities of long-term debt


$       147,649



$        156,329

Accounts payable


113,697



95,046

Accounts payable to related parties


16,235



14,483

Air traffic liability


463,283



578,439

Taxes and interest payable


96,211



113,541

Accrued expenses payable


72,930



75,975

Other current liabilities


8,484



8,133

Total Current Liabilities


918,489



1,041,946







Non-Current Liabilities:






Long-term debt


895,396



913,507

Post employment benefits liability


6,176



6,223

Other long-term liabilities


65,837



51,223

Deferred tax liabilities


35,858



37,959

Total Non-Current Liabilities


1,003,267



1,008,912







Total Liabilities


1,921,756



2,050,858







Shareholders' Equity:






Class A - 33,433,789 shares issued and outstanding


22,676



22,626

Class B - 10,938,125 shares issued and outstanding


7,466



7,466

Additional paid in capital


49,671



47,031

Retained earnings


2,004,859



1,820,580

Accumulated other comprehensive income (loss)


5,383



4,200

Total Shareholders' Equity


2,090,054



1,901,903

Total Liabilities and Shareholders' Equity


$    4,011,811



$     3,952,762













NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: CASM Excluding Fuel, Adjusted Net Income and Adjusted EPS.   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 income and net income. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

  








Reconciliation of Net Income







Excluding Special Items


2Q14


2Q13


1Q13








Net income as Reported


$118,172


$74,441


$151,357








Special Items (adjustments):







     Unrealized (gain) loss on fuel hedging instruments 


(4,105)


10,582


3,373

     Loss due to devaluation of Venezuelan Bolivar


1,874


0


(1,178)

Adjusted Net Income


$115,941


$85,023


$153,553








Shares used for Computation (in thousands)







     Basic and Diluted


44,409


44,387


44,403








Adjusted earnings per share - Basic and Diluted


2.61


1.92


3.46








Reconciliation Operating Costs per ASM







Excluding Fuel and Special Items


2Q14


2Q13


1Q14








Operating Costs per ASM as Reported


10.7


10.7


10.7

Aircraft fuel per ASM


(4.1)


(4.0)


(4.1)

Operating Costs per ASM excluding fuel 


6.6


6.7


6.6








SOURCE Copa Holdings, S.A.



RELATED LINKS
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