Copa Holdings Reports Net Income of US$86.6 Million for the Fourth Quarter of 2012 and US$326.5 Million for Full Year 2012

PANAMA CITY, Feb. 6, 2013 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2012 (4Q12) and full year 2012. The terms "Copa Holdings" or "the Company" refers 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 fourth quarter of 2011 (4Q11).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$86.6 million for 4Q12 or earnings per share (EPS) of US$1.95, as compared to net income of US$104.4 million or EPS of US$2.36 in 4Q11.  Excluding special items, Copa Holdings reported an adjusted net income of US$89.3 million or adjusted EPS of $2.01, compared to adjusted net income of US$85.3 million or adjusted EPS of $1.93 in 4Q11. 
  • Net income for full year 2012 reached US$326.5 million or EPS of US$7.35, compared to US$310.4 million or EPS of US$6.98 for full year 2011.  Excluding special items, however, Copa Holdings would have reported an adjusted net income of US$336.1 million or EPS of US$7.57, compared to adjusted net income of US$314.1 or adjusted EPS of $7.06 for full year 2011.
  • Operating income for 4Q12 came in at US$104.3 million, representing a 6.5% decline from operating income of US$111.5 million in 4Q11, mainly as a result of a 3.7% drop in unit operating revenue per available seat mile (RASM) and a 6.3% increase in the all-in price of jet fuel.  As a result, operating margin for 4Q12 came in at 17.4%, or 4.5 percentage points below 4Q11. 
  • The Company reported operating income of US$402.5 million for full year 2012, representing an increase of 4.6% over operating income of US$385.0 million in 2011.  Operating margin for full year 2012 came in at 17.9%, as compared to an operating margin of 21.0% in 2011.
  • Total revenues for 4Q12 increased 17.7% to US$599.8 million. Yield per passenger mile decreased 4.1% to 17.1 cents and RASM came in at 13.5 cents, or 3.7% below 4Q11.  However, on a quarter over quarter basis, both yields and RASM remained relatively flat over our third quarter high season, declining only 0.9% and 0.2%, respectively. 
  • For 4Q12 consolidated passenger traffic grew 23.7%, led by international traffic growth which expanded a robust 26.0%.  At the same time, consolidated capacity grew 22.3%, led by a 24.4% increase in international capacity.  As a result, consolidated load factor for the quarter increased 0.8 percentage points to 75.7%.  For full year 2012, consolidated load factor came in at 75.4%, down 0.9 percentage points from 2011, on 24.1% capacity growth. 
  • Operating cost per available seat mile (CASM) increased 1.8%, from 11.0 cents in 4Q11 to 11.1 cents in 4Q12 as a result of an increase in the all-in price of jet fuel.  However, CASM excluding fuel cost decreased 1.3% from 6.9 cents in 4Q11 to 6.8 cents in 4Q12, as a result of lower labor, maintenance and distribution unit costs, which were partly offset mainly by higher passenger servicing costs and other administrative expenses.
  • Cash, short term and long term investments ended 2012 at US$720.5 million, representing 32% of the last twelve months' revenues. 
  • During the fourth quarter, Copa Airlines took delivery of two Boeing 737-800s and returned one leased Boeing 737-800 aircraft.  As a result, Copa Holdings ended the year with a consolidated fleet of 83 aircraft, composed of 18 Boeing 737-700s, 39 Boeing 737-800s and 26 Embraer-190s.
  • During the fourth quarter, Copa Holdings and Boeing agreed to reschedule four future B737-800 aircraft deliveries (2 firm and 2 options).  As a result, the company now has eight firm deliveries of Boeing 737-800 aircraft and four lease expirations of B737-700 aircraft for 2014.
  • For 2012, Copa Holdings reported on-time performance of 85.5% and a flight-completion factor of 99.6%, maintaining its position among the best in the industry.

Subsequent Events

  • In January 2013, Copa Holdings completed the sale-leaseback of eight Boeing 737-800 aircraft, four of which involve 2013 deliveries and four involving 2014 deliveries.  The sale-leaseback transactions for the 2013 deliveries were closed with MC Aviation Partners, the aircraft leasing arm of Mitsubishi Corporation, and the sale-leaseback transactions for the 2014 deliveries were closed with SMBC Aviation Capital.
  • Effective March 15, 2013, and after 17 years of valuable service, Copa Holdings' CFO, Mr. Victor Vial, will be resigning.  Mr. Vial will continue to be involved with the company as an advisor to the Board of Directors. The company is currently undergoing a selection process to appoint a new CFO.







Consolidated Financial & Operating Highlights

4Q12

Variance vs. 4Q11

Variance vs. 3Q12

FY 2012

Variance vs. 2011


Revenue Passengers Carried ('000)

1,899

17.8%

1.6%

7,140

13.5%


RPMs (mm) 

3,366

23.7%

2.2%

12,499

22.6%


ASMs (mm) 

4,447

22.3%

1.8%

16,567

24.1%


Load Factor 

75.7%

0.8p.p.

0.4%

75.4%

-0.9p.p.


Yield

17.1

-4.1%

-0.9%

17.3

1.0%


PRASM (US$ Cents) 

12.9

-3.0%

-0.5%

13.1

-0.2%


RASM (US$ Cents) 

13.5

-3.7%

-0.2%

13.6

-1.0%


CASM (US$ Cents) 

11.1

1.8%

2.2%

11.1

2.9%


CASM Excl. Fuel (US$ Cents) 

6.8

-1.3%

2.1%

6.8

0.5%


Breakeven Load Factor (1)

61.6%

2.6p.p.

1.8p.p.

61.3%

1.4p.p.


Fuel Gallons Consumed (Millions) 

58.4

23.3%

1.3%

219.5

24.4%


Avg. Price Per Fuel Gallon (US$ Dollars)

3.34

6.3%

3.0%

3.31

6.6%


Average Length of Haul (Miles)

1,772

5.0%

0.6%

1,751

8.0%


Average Stage Length (Miles)

1,090

2.2%

0.6%

1,076

5.8%


Departures

29,555

15.9%

0.7%

112,551

12.7%


Block Hours

83,146

21.4%

1.3%

313,321

22.6%


Average Aircraft Utilization (Hours)

11.0

5.4%

-1.7%

10.9

4.4%


Operating Revenues (US$ mm) 

599.8

17.7%

1.6%

2,249.4

22.9%


Operating Income (US$ mm)

104.3

-6.5%

-8.6%

402.5

4.6%


Operating Margin 

17.4%

-4.5p.p.

-1.9p.p.

17.9%

-3.1p.p.


Net Income (US$ mm)

86.6

-17.0%

-22.6%

326.5

5.2%


Adjusted Net Income (US$ mm) (1)

89.3

4.7%

-8.5%

336.1

7.0%


EPS - Basic and Diluted (US$)

1.95

-17.2%

-22.6%

7.35

5.4%


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

2.01

4.4%

-8.6%

7.57

7.2%


# of Shares - Basic and Diluted ('000) 

44,409

0.2%

0.0%

44,400

-0.2%


 (1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 4Q12, 4Q11, and 3Q12 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 4Q12 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

4Q12 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

February 7, 2013



Time:

11:00 AM US ET (11:00 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




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 83 aircraft: 57 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


%


Unaudited


Audited


%



4Q12


4Q11


Change


3Q12


Change


2012


2011


Change

Operating Revenues

















Passenger Revenue


575,731


485,324


18.6%


568,564


1.3%


2,163,136


1,747,102


23.8%

Cargo, mail and other


24,109


24,125


-0.1%


21,884


10.2%


86,252


83,819


2.9%

Total Operating Revenue


599,839


509,449


17.7%


590,448


1.6%


2,249,388


1,830,921


22.9%


















Operating Expenses

















Aircraft fuel


194,754


148,678


31.0%


186,844


4.2%


725,763


547,221


32.6%

Salaries and benefits


65,782


57,854


13.7%


62,964


4.5%


247,405


213,094


16.1%

Passenger servicing


59,788


45,903


30.2%


56,973


4.9%


217,137


160,725


35.1%

Commissions


22,382


19,750


13.3%


23,501


-4.8%


89,378


72,947


22.5%

Reservations and sales


22,112


18,813


17.5%


22,203


-0.4%


84,992


70,363


20.8%

Maintenance, material and repairs


24,311


22,323


8.9%


23,370


4.0%


92,166


70,969


29.9%

Depreciation


24,446


19,727


23.9%


23,031


6.1%


89,217


75,458


18.2%

Flight operations


27,747


22,251


24.7%


27,217


1.9%


104,993


83,782


25.3%

Aircraft rentals


19,472


15,573


25.0%


18,504


5.2%


72,468


51,259


41.4%

Landing fees and other rentals


12,266


10,388


18.1%


12,190


0.6%


46,233


41,881


10.4%

Other


22,510


16,684


34.9%


19,561


15.1%


77,101


58,237


32.4%

Total Operating Expense


495,570


397,943


24.5%


476,359


4.0%


1,846,852


1,445,936


27.7%


















Operating Income


104,269


111,506


-6.5%


114,089


-8.6%


402,535


384,985


4.6%


















Non-operating Income (Expense):

















Interest expense


(8,130)


(8,808)


-7.7%


(8,124)


0.1%


(32,795)


(32,680)


0.4%

Interest income


3,427


2,152


59.2%


3,235


5.9%


11,689


6,774


72.6%

Other, net


(2,721)


11,605


nm


13,750


nm


(15,086)


(13,068)


15.4%

Total Non-Operating Income/(Expense)


(7,424)


4,950


nm


8,861


nm


(36,192)


(38,974)


-7.1%


















Income before Income Taxes


96,845


116,456


-16.8%


122,951


-21.2%


366,343


346,011


5.9%


















Provision for Income Taxes


10,222


12,073


-15.3%


11,033


-7.4%


39,867


35,586


12.0%


















Net Income


86,623


104,383


-17.0%


111,917


-22.6%


326,476


310,425


5.2%


















EPS - Basic and Diluted


1.95


2.36


-17.2%


2.52


-22.6%


7.35


6.98


5.4%

Shares - Basic and Diluted


44,409,211


44,314,505


0.2%


44,406,679


0.0%


44,400,224


44,493,779


-0.2%


















  










Copa Holdings, S.A.








Balance Sheet - IFRS








(US$ Thousands)


December 31,


September 30,


December 31,




2012


2012


2011




 (Unaudited) 


 (Unaudited) 


 (Audited) 










Current Assets:








Cash and cash equivalents


166,265


$       282,642


$   243,801


Short-term investments


484,838


441,349


262,345


Total cash, cash equivalents and short-term investments


651,103


723,991


506,146










Accounts receivable, net of allowance for doubtful accounts


135,207


143,057


142,297


Accounts receivable from related parties


1,129


505


704


Expendable parts and supplies, net of allowance for obsolescence


50,603


51,292


42,382


Prepaid expenses


63,120


49,745


40,058


Other current assets


16,328


17,964


22,655


Total Current Assets


917,490


986,554


754,242










Long-term investments


69,445


71,500


104,834










Property and Equipment:








Owned property and equipment:








Flight equipment


2,405,346


2,346,637


2,036,983


Other equipment


66,330


63,757


67,577




2,471,676


2,410,394


2,104,560


Less: Accumulated depreciation


(432,589)


(408,965)


(346,656)




2,039,087


2,001,429


1,757,904


Purchase deposits for flight equipment


245,544


163,696


242,287


Total Property and Equipment


2,284,631


2,165,125


2,000,191










Other Assets:








Net pension asset


10,009


9,685


8,974


Goodwill


27,575


27,081


25,099


Intangible asset


59,382


57,537


47,047


Other assets


114,933


120,776


125,409


Total Other Assets


211,899


215,079


206,529


Total Assets


$    3,483,465


$     3,438,258


$   3,065,796


















LIABILITIES AND SHAREHOLDER'S EQUITY








Current Liabilities:








Current maturities of long-term debt


$       136,268


$        118,387


$      131,069


Accounts payable


104,975


105,609


92,842


Accounts payable to related parties


20,255


14,765


22,074


Air traffic liability


382,807


360,223


297,135


Taxes and interest payable


85,436


86,174


71,223


Accrued expenses payable


48,047


45,753


30,472


Other current liabilities


10,902


9,897


13,845


Total Current Liabilities


788,690


740,808


658,660










Non-Current Liabilities:








Long-term debt


1,069,836


1,067,549


936,657


Post employment benefits liability


6,340


6,286


5,847


Other long-term liabilities


43,726


44,635


44,657


Deferred tax liabilities


38,329


31,888


30,444


Total Non-Current Liabilities


1,158,231


1,150,358


1,017,605










Total Liabilities


1,946,921


1,891,166


1,676,265










Shareholders' Equity:








Class A - 33,391,400 shares issued and outstanding


22,591


22,496


22,495


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


7,466


7,466


7,466


Additional paid in capital


40,660


38,977


33,567


Retained earnings


1,458,258


1,471,258


1,324,394


Accumulated other comprehensive income (loss)


7,569


6,895


1,609


Total Shareholders' Equity


1,536,544


1,547,092


1,389,531


Total Liabilities and Shareholders' Equity


$    3,483,465


$     3,438,258


$   3,065,796


















Copa Holdings, S.A.

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


4Q12


4Q11


3Q12


2012


2011












Net income as Reported


$86,623


$104,383


$111,917


$326,476


$310,425












Special Items (adjustments):











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


2,673


(19,069)


(14,277)


9,577


3,634

    Other Special Items, net (2)


-


-


-




-

Adjusted Net Income


$89,296


$85,314


$97,640


$336,053


$314,059












Shares used for Computation (in thousands)











    Basic and Diluted


44,409


44,315


44,407


44,400


44,494












Adjusted earnings per share











     Basic and Diluted


2.01


1.93


2.20


7.57


7.06























Reconciliation Operating Costs per ASM











Excluding Fuel and Special Items


4Q12


4Q11


3Q12


2012


2011












Operating Costs per ASM as Reported


11.1


10.9


10.9


11.1


10.8

Aircraft fuel per ASM


(4.4)


(4.1)


(4.3)


(4.4)


(4.1)

Operating Costs per ASM excluding fuel 


6.8


6.9


6.6


6.8


6.7














































































FOOTNOTES:

(1)    Include unrealized gains resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments. 

SOURCE Copa Holdings, S.A.



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