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

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.



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