Copa Holdings Reports Net Income of US$151.4 Million and EPS of US$3.41 for the First Quarter of 2014 Excluding special items, adjusted net income came in at $153.6 million, or EPS of $3.46 per share

PANAMA CITY, May 7, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the first quarter of 2014 (1Q14). 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 first quarter of 2013 (1Q13).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$151.4 million for 1Q14, or diluted earnings per share (EPS) of US$3.41.  Excluding special items, Copa Holdings would have reported an adjusted net income of $153.6 million, or $3.46 per share, a 23.5% increase over adjusted net income of US$124.4 million and US$2.80 per share for 1Q13.
  • Operating income for 1Q14 came in at US$177.0 million, a 24.1% increase over operating income of US$142.6 million in 1Q13.  Operating margin for the period came in at 24.8%, compared to 22.2% in 1Q13, as a result of higher unit revenues and lower unit costs. 
  • Total revenues increased 11.3% to US$713.6 million.  Yield per passenger mile increased 0.5% to 17.7 cents and operating revenue per available seat mile (RASM) increased 1.9% to 14.2 cents.  Furthermore, adjusting for a 3.7% increase in length of haul, yields and RASM increased 2.3% and 3.7%, respectively.
  • For 1Q14, healthy demand trends resulted in passenger traffic (RPMs) growth of 11.0% on a 9.3% capacity expansion.  Consolidated load factor came in at 78.1%, or 1.2 percentage points higher than 1Q13.
  • Operating cost per available seat mile (CASM) decreased 1.5%, from 10.9 cents in 1Q13 to 10.7 cents in 1Q14 due to lower jet fuel costs. CASM, excluding fuel, increased 1.0% to 6.6 cents mainly due to full year effect of 2013 newly leased aircraft.
  • Cash, short term and long term investments ended 1Q14 at US$1.1 billion, representing 41% of the last twelve months' revenues. Of this amount, 44% is in Venezuela pending repatriation due to government currency controls.
  • During the first quarter, Copa Airlines took delivery of one Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 91 aircraft. 
  • For 1Q14, Copa Holdings reported consolidated on-time performance of 92.3% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

Subsequent Events

  • During the month of April, Copa Airlines mandated the arrangement of a Japanese Operating Lease with Call Option (JOLCO) financing for four Boeing 737-800 aircraft delivering in 2014.
  • On June 16, 2014, Copa Holdings will pay its second quarter dividend of US$0.96 per share, on all outstanding Class A and Class B shares, to stockholders of record as of May 30, 2014.

Consolidated Financial & Operating Highlights

1Q14

1Q13

% Change 

4Q13

% Change 

Revenue Passengers Carried ('000)

2,032

1,899

7.0%

2,013

0.9%

RPMs (mm) 

3,917

3,529

11.0%

3,725

5.1%

ASMs (mm) 

5,015

4,590

9.3%

4,870

3.0%

Load Factor 

78.1%

76.9%

1.2 p.p.

76.5%

1.6 p.p.

Yield

17.7

17.6

0.5%

18.1

-2.4%

PRASM (US$ Cents) 

13.8

13.5

2.1%

13.8

-0.3%

RASM (US$ Cents) 

14.2

14.0

1.9%

14.3

-0.7%

CASM (US$ Cents) 

10.7

10.9

-1.5%

11.6

-8.1%

Adjusted CASM (US$ Cents) (1)

10.7

10.9

-1.5%

11.0

-2.8%

CASM Excl. Fuel (US$ Cents) 

6.6

6.5

1.0%

7.6

-13.2%

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

6.6

6.5

1.0%

6.9

-5.2%

Breakeven Load Factor (2)

57.6%

58.7%

-1.1 p.p.

57.3%

0.3 p.p.

Fuel Gallons Consumed (Millions) 

65.3

60.1

8.7%

63.9

2.2%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.19

3.34

-4.7%

3.12

2.1%

Average Length of Haul (Miles)

1,928

1,859

3.7%

1,850

4.2%

Average Stage Length (Miles)

1,173

1,123

4.4%

1,151

1.9%

Departures

30,546

29,428

3.8%

30,266

0.9%

Block Hours

91,569

84,490

8.4%

89,783

2.0%

Average Aircraft Utilization (Hours)

11.3

11.3

0.2%

10.9

3.9%

Operating Revenues (US$ mm) 

713.6

641.3

11.3%

697.8

2.3%

Operating Income (US$ mm)

177.0

142.6

24.1%

130.7

35.4%

Adjusted Operating Income (US$ mm) (1)

177.0

142.6

24.1%

161.8

9.4%

Operating Margin 

24.8%

22.2%

2.6 p.p.

18.7%

6.1 p.p.

Adjusted Operating Margin (1)

24.8%

22.2%

2.6 p.p.

23.2%

1.6 p.p.

Net Income (US$ mm)

151.4

113.8

33.0%

113.9

32.9%

Adjusted Net Income (US$ mm) (2)

153.6

124.4

23.5%

142.5

7.7%

EPS - Basic and Diluted (US$)

3.41

2.56

33.0%

2.57

32.8%

Adjusted EPS - Basic and Diluted (US$) (2)

3.46

2.80

23.5%

3.21

7.7%

# of Shares - Basic and Diluted ('000) 

44,403

44,387

0.0%

44,379

0.1%

(1) Adjusted CASM, Adjusted Operating Income, Adjusted Operating Margin for 4Q13 excludes non-cash impairment charge on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia).
(2) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 1Q14, 1Q13, and 4Q13 exclude non-cash impairment charge on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia), non-cash charges/gains associated with the mark-to-market of fuel hedges, and the impact of the Venezuelan currency devaluation.
Note:  Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 1Q14 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
http://investor.shareholder.com/copa/results.cfm

1Q14 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

May 8, 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 66 destinations in 29 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 92 aircraft: 66 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


%


1Q14


1Q13


Change


4Q13


Change

Operating Revenues










Passenger Revenue

691,977


620,488


11.5%


674,209


2.6%

Cargo, mail and other

21,629


20,793


4.0%


23,562


-8.2%

Total Operating Revenue

713,605


641,282


11.3%


697,771


2.3%











Operating Expenses










Aircraft fuel

208,014


200,773


3.6%


199,388


4.3%

Salaries and benefits

73,976


66,728


10.9%


73,382


0.8%

Passenger servicing

64,118


60,316


6.3%


64,986


-1.3%

Commissions

26,132


24,260


7.7%


27,428


-4.7%

Reservations and sales

23,853


21,449


11.2%


26,013


-8.3%

Maintenance, material and repairs

24,746


22,284


11.0%


22,866


8.2%

Depreciation

27,821


24,806


12.2%


27,082


2.7%

Flight operations

31,134


29,479


5.6%


31,451


-1.0%

Aircraft rentals

25,315


19,952


26.9%


24,617


2.8%

Landing fees and other rentals

13,253


12,195


8.7%


12,813


3.4%

Other

18,246


16,412


11.2%


25,907


-29.6%

Intangible Impairment

-


-


n/m


31,162


n/m

Total Operating Expense

536,607


498,655


7.6%


567,097


-5.4%











Operating Income

176,999


142,626


24.1%


130,675


35.4%











Non-operating Income (Expense):










Interest expense

(7,094)


(7,660)


-7.4%


(7,447)


-4.7%

Interest income

3,736


2,706


38.1%


3,963


-5.7%

Other, net

67


(9,195)


n/m


(4,081)


n/m

Total Non-Operating Income/(Expense)

(3,291)


(14,150)


-76.7%


(7,565)


-56.5%











Income before Income Taxes

173,707


128,476


35.2%


123,110


41.1%











Provision for Income Taxes

22,350


14,646


52.6%


9,189


143.2%











Net Income

151,357


113,830


33.0%


113,921


32.9%





















EPS - Basic and Diluted

3.41


2.56


33.0%


2.57


32.8%

Shares - Basic and Diluted

44,402,832


44,387,148


0.0%


44,379,289


0.1%

 

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)


March 31,



December 31,



2014



2013



 (Unaudited) 



 (Audited) 

ASSETS






Current Assets:






Cash and cash equivalents


$       237,320



$        139,108

Short-term investments


878,674



992,579

Total cash, cash equivalents and short-term investments


1,115,994



1,131,687







Accounts receivable, net of allowance for doubtful accounts


148,542



132,867

Accounts receivable from related parties


5,759



2,189

Expendable parts and supplies, net of allowance for obsolescence


59,655



56,814

Prepaid expenses


58,417



59,175

Other current assets


20,770



22,783

Total Current Assets


1,409,138



1,405,515







Long-term investments


6,589



37,590







Property and Equipment:






Owned property and equipment:






Flight equipment


2,487,257



2,477,830

Other equipment


75,423



73,487



2,562,680



2,551,317

Less: Accumulated depreciation


(556,204)



(530,347)



2,006,476



2,020,970

Purchase deposits for flight equipment


364,770



327,544

Total Property and Equipment


2,371,246



2,348,514







Other Assets:






Net pension asset


11,801



11,114

Goodwill


24,810



25,305

Intangible asset


28,436



28,214

Other assets


93,181



96,509

Total Other Assets


158,229



161,143

Total Assets


$    3,945,202



$     3,952,762













LIABILITIES AND SHAREHOLDER'S EQUITY






Current Liabilities:






Current maturities of long-term debt


$       155,674



$        156,329

Accounts payable


112,386



95,046

Accounts payable to related parties


18,641



14,483

Air traffic liability


496,210



578,439

Taxes and interest payable


97,119



113,541

Accrued expenses payable


63,957



75,975

Other current liabilities


9,135



8,133

Total Current Liabilities


953,122



1,041,946







Non-Current Liabilities:






Long-term debt


883,119



913,507

Post employment benefits liability


6,219



6,223

Other long-term liabilities


59,019



51,223

Deferred tax liabilities


32,693



37,959

Total Non-Current Liabilities


981,050



1,008,912







Total Liabilities


1,934,172



2,050,858







Shareholders' Equity:






Class A - 33,434,185 shares issued and outstanding


22,626



22,626

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


7,466



7,466

Additional paid in capital


48,154



47,031

Retained earnings


1,929,306



1,820,580

Accumulated other comprehensive income (loss)


3,478



4,200

Total Shareholders' Equity


2,011,031



1,901,903

Total Liabilities and Shareholders' Equity


$    3,945,202



$     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


1Q14


1Q13


4Q13








Net income as Reported


$151,357


$113,830


$113,921








Special Items (adjustments):







     Intangible Impairment


-


-


31,162

     Unrealized (gain) loss on fuel hedging instruments 


3,373


(3,376)


(2,553)

     Loss due to devaluation of Venezuelan Bolivar


(1,178)


13,927


-

Adjusted Net Income


$153,553


$124,381


$142,530








Shares used for Computation (in thousands)







     Basic and Diluted


44,403


44,387


44,379








Adjusted earnings per share - Basic and Diluted


3.46


2.80


3.21








Reconciliation Operating Costs per ASM







Excluding Fuel and Special Items


1Q14


1Q13


4Q13








Operating Costs per ASM as Reported


10.7


10.9


11.6

Intangible Impairment


-


-


(0.6)

Aircraft fuel per ASM


(4.1)


(4.4)


(4.1)

Operating Costs per ASM excluding fuel 


6.6


6.5


6.9








SOURCE Copa Holdings, S.A.



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