2014

Copa Holdings Reports Net Income of US$74.4 Million and EPS of US$1.68 for the Second Quarter of 2013 Excluding special items, adjusted net income came in at $85.0 million, or EPS of $1.92 per share

PANAMA CITY, Aug. 7, 2013 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2013 (2Q13). 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 2012 (2Q12).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$74.4 million for 2Q13, or diluted earnings per share (EPS) of US$1.68.  Excluding special items, Copa Holdings would have reported an adjusted net income of $85.0 million, or $1.92 per share, a 45.3% increase over adjusted net income of US$58.5 million and US$1.32 per share for 2Q12.
  • Operating income for 2Q13 came in at US$97.7 million, a 34.5% increase over operating income of US$72.6 million in 2Q12.  Operating margin for the period came in at 16.5%, compared to 14.1% in 2Q12, as a result of lower unit costs. 
  • Total revenues increased 14.8% to US$592.0 million.  Yield per passenger mile decreased 4.6% to 16.4 cents and operating revenue per available seat mile (RASM) decreased 2.5% to 12.8 cents.  However, adjusting for a 7.3% increase in length of haul, yields decreased 1.2% and RASM increased 1.0%.
  • For 2Q13, passenger traffic (RPMs) grew 20.4% on a 17.7% capacity expansion.  Consolidated load factor came in at 75.3%, or 1.7 percentage points above 2Q12.
  • Operating cost per available seat mile (CASM) decreased 5.2%, from 11.3 cents in 2Q12 to 10.7 cents in 2Q13.  CASM, excluding fuel costs, decreased 2.6% to 6.7 cents.
  • Cash, short term and long term investments ended 2Q13 at US$848.7 million, representing 35.0% of the last twelve months' revenues. 
  • During the second quarter, Copa Airlines took delivery of one Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 86 aircraft. 
  • For 2Q13, Copa Holdings reported consolidated on-time performance of 89.3% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • On July 17, 2013, Copa Airlines announced it will begin nonstop service four times a week from Panama to Tampa, Fla., on December 16, 2013.  Tampa will be Copa Airlines' ninth U.S. destination and its 66th destination overall. 
  • On August 7, 2013, the Board of Directors of Copa Holdings resolved to change the Company's dividend policy to increase the annual distribution to an amount equal to 40% of the prior years' annual consolidated net income. In addition, dividends going forward will be distributed in equal quarterly installments during the months of March, June, September and December, subject to board approval each quarter.  On August 7, 2013, the Board of Directors also approved dividend payments payable at the end of both 3Q13 and 4Q13, in amounts equal to 10% of the consolidated net income of 2012.  

 

Consolidated Financial &
Operating Highlights

2Q13

2Q12

% Change 

1Q13

% Change 

Revenue Passengers Carried ('000)

1,861

1,658

12.2%

1,899

-2.0%

RPMs (mm) 

3,475

2,886

20.4%

3,529

-1.5%

ASMs (mm) 

4,618

3,923

17.7%

4,590

0.6%

Load Factor 

75.3%

73.5%

1.7 p.p.

76.9%

-1.6 p.p.

Yield

16.4

17.2

-4.6%

17.6

-6.9%

PRASM (US$ Cents) 

12.3

12.6

-2.3%

13.5

-8.9%

RASM (US$ Cents) 

12.8

13.1

-2.5%

14.0

-8.2%

CASM (US$ Cents) 

10.7

11.3

-5.2%

10.9

-1.5%

CASM Excl. Fuel (US$ Cents) 

6.7

6.9

-2.6%

6.5

3.3%

Breakeven Load Factor (1)

61.6%

63.0%

-1.4 p.p.

58.7%

2.9 p.p.

Fuel Gallons Consumed (Millions) 

60.0

52.1

15.0%

60.1

-0.2%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.08

3.32

-7.3%

3.34

-7.8%

Average Length of Haul (Miles)

1,868

1,740

7.3%

1,859

0.5%

Average Stage Length (Miles)

1,126

1,063

6.0%

1,123

0.2%

Departures

29,357

27,005

8.7%

29,428

-0.2%

Block Hours

84,985

74,678

13.8%

84,490

0.6%

Average Aircraft Utilization (Hours)

10.9

10.6

3.1%

11.3

-3.5%

Operating Revenues (US$ mm) 

592.0

515.8

14.8%

641.3

-7.7%

Operating Income (US$ mm)

97.7

72.6

34.5%

142.6

-31.5%

Operating Margin 

16.5%

14.1%

2.4 p.p.

22.2%

-5.7 p.p.

Net Income (US$ mm)

74.4

32.0

132.6%

113.8

-34.6%

Adjusted Net Income (US$ mm) (1)

85.0

58.5

45.3%

124.4

-31.6%

EPS - Basic and Diluted (US$)

1.68

0.72

132.4%

2.56

-34.6%

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

1.92

1.32

45.2%

2.80

-31.6%

# of Shares - Basic and Diluted ('000) 

44,387

44,354

0.1%

44,387

0.0%

(1)Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q13, 2Q12, and 1Q13 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.   Additionally, for 1Q13 excludes a US$13.9 million charge related to the devaluation of the Venezuelan currency.
Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 2Q13 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q13 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 8, 2013



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



Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 65 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 87 aircraft: 61 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit: www.copaair.com.

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


%


2Q13


2Q12


Change


1Q13


Change

Operating Revenues










Passenger Revenue

568,960


495,029


14.9%


620,488


-8.3%

Cargo, mail and other

23,038


20,814


10.7%


20,793


10.8%

Total Operating Revenue

591,998


515,843


14.8%


641,282


-7.7%











Operating Expenses










Aircraft fuel

184,767


173,289


6.6%


200,773


-8.0%

Salaries and benefits

66,105


61,123


8.2%


66,728


-0.9%

Passenger servicing

60,389


50,943


18.5%


60,316


0.1%

Commissions

24,279


21,272


14.1%


24,260


0.1%

Reservations and sales

24,763


20,586


20.3%


21,449


15.5%

Maintenance, material and repairs

22,807


23,954


-4.8%


22,284


2.3%

Depreciation

26,866


21,214


26.6%


24,806


8.3%

Flight operations

30,028


24,991


20.2%


29,479


1.9%

Aircraft rentals

22,124


17,191


28.7%


19,952


10.9%

Landing fees and other rentals

12,789


10,931


17.0%


12,195


4.9%

Other

19,393


17,730


9.4%


16,412


18.2%

Total Operating Expense

494,309


443,224


11.5%


498,655


-0.9%











Operating Income

97,689


72,619


34.5%


142,626


-31.5%











Non-operating Income (Expense):










Interest expense

(7,560)


(8,583)


-11.9%


(7,660)


-1.3%

Interest capitalized

0


0


nm


0


nm

Interest income

2,841


2,741


3.6%


2,706


5.0%

Other, net

(10,616)


(30,982)


-65.7%


(9,195)


15.5%

Total Non-Operating Income/(Expense)

(15,336)


(36,824)


n/a


(14,150)


8.4%











Income before Income Taxes

82,354


35,796


130.1%


128,476


-35.9%











Provision for Income Taxes

7,912


3,790


108.8%


14,646


-46.0%











Net Income

74,441


32,006


132.6%


113,830


-34.6%





















EPS - Basic and Diluted

1.68


0.72


132.4%


2.56


-34.6%

Shares - Basic and Diluted

44,387,279


44,353,845


0.1%


44,387,148


0.0%

 

Copa Holdings, S.A.






Balance Sheet - IFRS






(US$ Thousands)


June 30,



December 31,



2013



2012



 (Unaudited) 



 (Audited) 

ASSETS






Current Assets:






Cash and cash equivalents


$       327,385



$          76,094

Short-term investments


479,676



575,009

Total cash, cash equivalents and short-term investments


807,061



651,103







Accounts receivable, net of allowance for doubtful accounts


169,115



135,207

Accounts receivable from related parties


2,054



1,129

Expendable parts and supplies, net of allowance for obsolescence


49,111



50,603

Prepaid expenses


63,502



63,120

Other current assets


12,472



16,328

Total Current Assets


1,103,315



917,490







Long-term investments


41,591



69,445







Property and Equipment:






Owned property and equipment:






Flight equipment


2,448,950



2,405,346

Other equipment


70,953



66,330



2,519,903



2,471,676

Less: Accumulated depreciation


(480,853)



(432,589)



2,039,050



2,039,087

Purchase deposits for flight equipment


284,238



245,544

Total Property and Equipment


2,323,288



2,284,631







Other Assets:






Net pension asset


10,974



10,009

Goodwill


25,277



27,575

Intangible asset


57,748



59,382

Other assets


111,643



110,968

Total Other Assets


205,642



207,934

Total Assets


$    3,673,836



$     3,479,500













LIABILITIES AND SHAREHOLDER'S EQUITY






Current Liabilities:






Current maturities of long-term debt


$       131,474



$        136,268

Accounts payable


102,209



104,975

Accounts payable to related parties


14,232



20,255

Air traffic liability


442,172



382,807

Taxes and interest payable


98,519



85,436

Accrued expenses payable


59,279



48,047

Other current liabilities


11,883



10,902

Total Current Liabilities


859,768



788,690







Non-Current Liabilities:






Long-term debt


999,549



1,069,836

Post employment benefits liability


6,293



6,340

Other long-term liabilities


46,910



43,726

Deferred tax liabilities


36,803



34,364

Total Non-Current Liabilities


1,089,555



1,154,266







Total Liabilities


1,949,323



1,942,956







Shareholders' Equity:






Class A - 33,408,928 shares issued and outstanding


22,626



22,591

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


7,466



7,466

Additional paid in capital


44,442



40,660

Retained earnings


1,646,529



1,458,258

Accumulated other comprehensive income (loss)


3,450



7,569

Total Shareholders' Equity


1,724,513



1,536,544

Total Liabilities and Shareholders' Equity


$    3,673,836



$     3,479,500







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


2Q13


2Q12


1Q13








Net income as Reported


$74,441


$32,006


$113,830








Special Items (adjustments):







     Unrealized (gain) loss on fuel hedging instruments 

10,582


26,510


(3,376)

     Loss due to devaluation of Venezuelan Bolivar





13,927

Adjusted Net Income


$85,023


$58,515


$124,381








Shares used for Computation (in thousands)







     Basic and Diluted


44,387


44,354


44,387








Adjusted earnings per share - Basic and Diluted


1.92


1.32


2.80








Reconciliation Operating Costs per ASM






Excluding Fuel and Special Items


2Q13


2Q12


1Q13








Operating Costs per ASM as Reported


10.7


11.3


10.9

Aircraft fuel per ASM


(4.0)


(4.4)


(4.4)

Operating Costs per ASM excluding fuel 


6.7


6.9


6.5

SOURCE Copa Holdings, S.A.



RELATED LINKS
http://www.copaair.com

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