Copa Holdings Reports Net Income of US$32.0 Million and EPS of US$0.72 for the Second Quarter of 2012

Excluding special items, adjusted net income came in at $58.6 million, or EPS of $1.32 per share

08 Aug, 2012, 18:37 ET from Copa Holdings, S.A.

PANAMA CITY, Aug. 8, 2012 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2012 (2Q12). 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 2011 (2Q11).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$32.0 million for 2Q12, or diluted earnings per share (EPS) of US$0.72.  Excluding special items, Copa Holdings would have reported adjusted net income of $58.6 million, or $1.32 per share, a 3.6% increase over adjusted net income of US$56.6 million and US$1.28 per share for 2Q11.
  • Operating income for 2Q12 came in at US72.6 million, a 2.7% decrease over operating income of US$74.6 million in 2Q11.  Operating margin for the period came in at 14.1%, compared to 17.4% in 2Q11, as a result of a 3.3% decline in unit revenues and a 2.7% increase in the effective price of jet fuel.  
  • Total revenues increased 20.6% to US$515.8 million.  Yield per passenger mile increased 1.2% to 17.2 cents and operating revenue per available seat mile (RASM) decreased 3.3% to 13.1 cents.   However, adjusting for a 9.6% increase in average length of haul, adjusted yields and adjusted RASM increased 5.9% and 1.2%, respectively.
  • For 2Q12, passenger traffic (RPMs) grew 20.3% on a 24.8% capacity expansion, resulting in a consolidated load factor of 73.5%, or 2.8 percentage points below 2Q11.
  • Operating cost per available seat mile (CASM) increased 0.6%, from 11.2 cents in 2Q11 to 11.3 cents in 2Q12.  However, CASM excluding fuel costs remained flat year over year at 6.9 cents.
  • Cash, short term and long term investments ended 2Q12 at US$718.2 million, representing 35% of the last twelve months' revenues. 
  • During the second quarter, Copa Airlines took delivery of five Boeing 737-800 aircraft and returned two leased 737-700 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 80 aircraft.
  • In June, Copa Airlines launched service to four new destinations: Las Vegas (USA), Recife (Brazil), Liberia (Costa Rica) and Willemstad (Curacao).  Also, on July 14, the airline launched service to Iquitos (Peru).  As a result. Copa Airlines' network now provides service to 64 destinations in 29 countries in North, Central and South America and the Caribbean.
  • On June 21, Copa Airlines officially joined the Star Alliance, the largest and most important global airline network. Entry into Star Alliance strengthens the airlines' successful alliance with United Airlines, as well as the Hub of the Americas' position as the major connection center in the Americas.
  • For 2Q12, Copa Holdings reported consolidated on-time performance of 83.7% and a flight-completion factor of 99.4%.

Consolidated Financial & Operating Highlights

2Q12

2Q11

% Change 

1Q12

% Change 

Revenue Passengers Carried ('000)

1,658

1,511

9.8%

1,714

-3.2%

RPMs (mm) 

2,886

2,400

20.3%

2,954

-2.3%

ASMs (mm) 

3,923

3,145

24.8%

3,829

2.5%

Load Factor 

73.5%

76.3%

-2.8 p.p.

77.2%

-3.6 p.p.

Yield

17.2

17.0

1.2%

17.7

-3.2%

PRASM (US$ Cents) 

12.6

12.9

-2.5%

13.7

-7.8%

RASM (US$ Cents) 

13.1

13.6

-3.3%

14.2

-7.3%

CASM (US$ Cents) 

11.3

11.2

0.6%

11.3

0.2%

CASM Excl. Fuel (US$ Cents) 

6.9

6.9

-0.1%

6.8

1.0%

Breakeven Load Factor (1)

63.0%

58.5%

4.5 p.p.

61.2%

1.8 p.p.

Fuel Gallons Consumed (Millions) 

52.1

42.2

23.6%

51.3

1.7%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.32

3.24

2.7%

3.33

-0.2%

Average Length of Haul (Miles)

1,740

1,588

9.6%

1,724

0.9%

Average Stage Length (Miles)

1,063

973

9.2%

1,066

-0.3%

Departures

27,005

24,694

9.4%

26,647

1.3%

Block Hours

74,841

61,240

22.2%

73,480

1.9%

Average Aircraft Utilization (Hours)

10.6

10.2

3.5%

11.0

-3.6%

Operating Revenues (US$ mm) 

515.8

427.7

20.6%

543.3

-5.0%

Operating Income (US$ mm)

72.6

74.6

-2.7%

111.6

-34.9%

Operating Margin 

14.1%

17.4%

-3.4 p.p.

20.5%

-6.5 p.p.

Net Income (US$ mm)

32.0

41.3

-22.4%

95.9

-66.6%

Adjusted Net Income (US$ mm) (1)

58.6

56.6

3.6%

90.6

-35.3%

EPS - Basic and Diluted (US$)

0.72

0.93

-22.5%

2.16

-66.6%

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

1.32

1.28

3.5%

2.04

-35.3%

# of Shares - Basic and Diluted ('000) 

44,354

44,316

0.1%

44,341

0.0%

(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q12, 2Q11, and 1Q12 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.

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

FULL 2Q12 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q12 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 9, 2012

Time:

11:00 a.m. US EDT (10:00 a.m. 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

Victor Vial, Chief Financial Officer

Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 64 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 80 aircraft: 54 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit www.copaair.com.

CONTACT: Copa Holdings S.A. Investor Relations: Ph: (507) 304-2677 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

%

2Q12

2Q11

Change

1Q12

Change

Operating Revenues

     Passenger Revenue

495,029

406,813

21.7%

523,812

-5.5%

     Cargo, mail and other

20,814

20,850

-0.2%

19,444

7.0%

Total Operating Revenue

515,843

427,663

20.6%

543,257

-5.0%

Operating Expenses

     Aircraft fuel

173,289

136,542

26.9%

170,875

1.4%

     Salaries and benefits

61,123

52,697

16.0%

57,536

6.2%

     Passenger servicing

50,943

38,745

31.5%

49,433

3.1%

     Commissions

21,272

15,828

34.4%

22,223

-4.3%

     Reservations and sales

20,586

17,399

18.3%

20,090

2.5%

     Maintenance, material and repairs

23,954

16,911

41.6%

20,530

16.7%

     Depreciation

21,214

18,564

14.3%

20,526

3.4%

     Flight operations

24,991

19,551

27.8%

25,039

-0.2%

     Aircraft rentals

17,191

11,186

53.7%

17,300

-0.6%

     Landing fees and other rentals

10,931

10,706

2.1%

10,846

0.8%

     Other

17,730

14,923

18.8%

17,300

2.5%

Total Operating Expense

443,224

353,052

25.5%

431,699

2.7%

Operating Income

72,619

74,611

-2.7%

111,558

-34.9%

Non-operating Income (Expense):

     Interest expense

(8,583)

(7,801)

10.0%

(7,959)

7.8%

     Interest income

2,741

1,575

74.0%

2,286

19.9%

     Other, net

(30,981)

(17,322)

78.9%

4,866

nm

Total Non-Operating Income/(Expense)

(36,823)

(23,548)

56.4%

(806)

nm

Income before Income Taxes

35,796

51,063

-29.9%

110,751

-67.7%

     Provision for Income Taxes

3,790

9,800

-61.3%

14,822

-74.4%

Net Income

32,006

41,263

-22.4%

95,930

-66.6%

EPS - Basic and Diluted

0.72

0.93

-22.5%

2.16

-66.6%

Shares - Basic and Diluted

44,353,845

44,315,841

0.1%

44,340,562

0.0%

 

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

June 30,

December 31,

2012

2011

 (Unaudited) 

 (Audited) 

ASSETS

Current Assets:

     Cash and cash equivalents

$       255,828

$       243,801

     Short-term investments

244,509

262,345

     Total cash, cash equivalents and short-term investments

500,337

506,146

     Accounts receivable, net of allowance for doubtful accounts

134,773

142,297

     Accounts receivable from related parties

513

704

     Expendable parts and supplies, net of allowance for obsolescence

43,686

42,382

     Prepaid expenses

46,210

40,058

     Other current assets

7,043

22,655

     Total Current Assets

732,562

754,242

Long-term investments

217,859

104,834

Property and Equipment:

     Owned property and equipment:

     Flight equipment

2,284,925

2,036,983

     Other equipment

61,979

67,577

2,346,904

2,104,560

     Less: Accumulated depreciation

(387,186)

(346,656)

1,959,718

1,757,904

     Purchase deposits for flight equipment

166,711

242,287

     Total Property and Equipment

2,126,429

2,000,191

Other Assets:

     Net pension asset

9,406

8,974

     Goodwill

27,322

25,099

     Intangible asset

56,518

47,047

     Other assets

122,564

125,409

     Total Other Assets

215,810

206,529

     Total Assets

$    3,292,660

$     3,065,796

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

     Current maturities of long-term debt

$       114,522

$        131,069

     Accounts payable

82,497

92,842

     Accounts payable to related parties

14,902

22,074

     Air traffic liability

359,057

297,135

     Taxes and interest payable

85,663

71,223

     Accrued expenses payable

42,190

30,472

     Other current liabilities

16,277

13,845

     Total Current Liabilities

715,108

658,660

Non-Current Liabilities:

     Long-term debt

1,063,745

936,657

     Post employment benefits liability

5,910

5,847

     Other long-term liabilities

42,667

44,657

     Deferred tax liabilities

32,052

30,444

     Total Non-Current Liabilities

1,144,374

1,017,605

     Total Liabilities

1,859,482

1,676,265

Shareholders' Equity:

     Class A - 33,341,822 shares issued and outstanding

22,496

22,495

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

7,466

7,466

     Additional paid in capital

37,237

33,567

     Retained earnings

1,359,341

1,324,394

     Accumulated other comprehensive income (loss)

6,638

1,609

     Total Shareholders' Equity

1,433,178

1,389,531

     Total Liabilities and Shareholders' Equity

$    3,292,660

$     3,065,796

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

2Q12

2Q11

1Q12

Net income as Reported

$32,006

$41,263

$95,930

Special Items (adjustments):

     Unrealized (gain) loss on fuel hedging instruments (1)

26,587

15,315

(5,328)

Adjusted Net Income

$58,593

$56,578

$90,602

Shares used for Computation (in thousands)

     Basic and Diluted

44,354

44,316

44,341

Adjusted earnings per share - Basic and Diluted

1.32

1.28

2.04

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

2Q12

2Q11

1Q12

Operating Costs per ASM as Reported

11.3

11.2

11.3

Aircraft fuel per ASM

(4.4)

(4.3)

(4.5)

Operating Costs per ASM excluding fuel 

6.9

6.9

6.8

FOOTNOTES:

(1)    Includes unrealized (gains) losses resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments.  For 2Q12 and 2Q11, the Company recorded unrealized fuel hedge losses of US$26.6 million and US$15.3 million, and a fuel hedge gain of US$5.3 million for 1Q12.

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copaair.com