Copa Holdings Reports Financial Results for the Third Quarter of 2023

Published

PANAMA CITY, Nov. 15, 2023 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2023 (3Q23). The terms "Copa Holdings" and 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 the financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the third quarter of 2022 (3Q22).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported a net profit of US$187.4 million for 3Q23 or US$4.72 per share. Excluding special items comprised of a net gain of US$12.2 million related to the settlement of the Company's convertible notes and an unrealized mark-to-market gain of US$0.8 million related to the value of financial investments, the Company would have reported a net profit of US$174.4 million or US$4.39 per share.
  • Copa Holdings reported an operating profit of US$205.0 million and a 23.6% operating margin for the quarter, as compared to an operating profit of US$143.7 million and an operating margin of 17.8% in 3Q22.
  • Passenger traffic, measured in terms of revenue passenger miles (RPMs), increased by 13.3% year over year, while capacity measured in available seat miles (ASMs) increased by 12.1%. As a result, the load factor for the quarter increased by 0.9 percentage points to 87.8%, as compared to 3Q22.
  • Total revenues for 3Q23 increased 7.2% to US$867.7 million driven by higher capacity and load factors, while yields decreased by 5.0% to 13.4 cents. Consequently, revenue per available seat mile (RASM) decreased by 4.3% as compared to 3Q22 to 12.2 cents.
  • Operating cost per available seat mile (CASM) decreased 11.2% from 10.5 cents in 3Q22 to 9.3 cents in 3Q23, mainly driven by a decrease of 21.3% in the price of jet fuel per gallon and lower sales and distribution costs. CASM excluding fuel (Ex-fuel CASM) decreased by 2.1% in the quarter to 5.8 cents, when compared to 3Q22.
  • The Company ended the quarter with approximately US$1.2 billion in cash, short-term and long-term investments, which represent 34.0% of the last twelve months' revenues.
  • In September, Copa Holdings completed the previously announced redemption of its 4.50% Convertible Senior Notes due 2025. The redemption resulted in a net settlement of US$350.0 million in cash, plus approximately 3.7 million shares issued to noteholders.
  • The Company closed the quarter with total debt, including lease liabilities, of US$1.7 billion, while our Adjusted Net Debt to EBITDA ratio ended at 0.4 times.
  • During the quarter, the Company took delivery of two Boeing 737 MAX 9 aircraft, ending the quarter with a consolidated fleet of 103 aircraft – 67 Boeing 737-800s, 26 Boeing 737 MAX 9s, 9 Boeing 737-700s, and     1 Boeing 737-800 freighter.
  • Copa Airlines had an on-time performance for the quarter of 89.4% and a flight completion factor of 99.8%, once again positioning itself among the very best in the industry.

Subsequent Events

  • In November, the Company took delivery of two Boeing 737 MAX 9 aircraft and expects to receive one additional aircraft during the remainder of 2023. The Company expects to end the year with 106 aircraft.
  • In October, the Company started service to Barquisimeto, Venezuela, bringing the total number of destinations in its network to 81, maintaining its position as the hub with the most non-stop international destinations in Latin America.
  • In October, the Company completed its previously disclosed Share Repurchase Program and on November 15, 2023, the board of directors of Copa Holdings approved a new US$200 million Share Repurchase Program. Purchases will be made subject to market and economic conditions, applicable legal requirements, and other relevant factors.
  • Copa Holdings will make its fourth dividend payment of the year of US$0.82 per share on December 15, 2023, to all Class A and Class B shareholders on record as of November 30, 2023.

Consolidated Financial & Operating Highlights

3Q23

3Q22

Variance vs. 3Q22

2Q23

Variance vs. 2Q23

Revenue Passengers Carried (000s)

3,272

2,755

18.7 %

2,980

9.8 %

Revenue Passengers OnBoard (000s)

4,873

4,190

16.3 %

4,469

9.0 %

RPMs (millions) 

6,239

5,508

13.3 %

5,826

7.1 %

ASMs (millions) 

7,109

6,344

12.1 %

6,767

5.1 %

Load Factor 

87.8 %

86.8 %

0.9 p.p.

86.1 %

1.7 p.p.

Yield (US$ Cents) 

13.4

14.1

-5.0 %

13.3

0.6 %

PRASM (US$ Cents) 

11.7

12.2

-4.0 %

11.4

2.5 %

RASM (US$ Cents) 

12.2

12.8

-4.3 %

12.0

2.1 %

CASM (US$ Cents) 

9.3

10.5

-11.2 %

9.1

2.6 %

CASM Excl. Fuel (US$ Cents) 

5.8

5.9

-2.1 %

5.9

-2.4 %

Fuel Gallons Consumed (millions) 

83.9

75.7

10.9 %

79.9

5.1 %

Avg. Price Per Fuel Gallon (US$)

3.00

3.81

-21.3 %

2.65

12.9 %

Average Length of Haul (miles)

1,907

1,999

-4.6 %

1,955

-2.5 %

Average Stage Length (miles)

1,238

1,265

-2.1 %

1,260

-1.7 %

Departures

35,468

31,484

12.7 %

33,385

6.2 %

Block Hours

112,114

102,027

9.9 %

107,055

4.7 %

Average Aircraft Utilization (hours)

11.9

11.7

2.0 %

11.8

1.0 %

Operating Revenues (US$ millions) 

867.7

809.4

7.2 %

809.2

7.2 %

Operating Profit (Loss) (US$ millions)

205.0

143.7

42.7 %

194.7

5.3 %

Operating Margin 

23.6 %

17.8 %

5.9 p.p.

24.1 %

-0.4 p.p.

Net Profit (Loss) (US$ millions)

187.4

115.9

61.6 %

17.5

970.2 %

Adjusted Net Profit (Loss) (US$ millions) (1)

174.4

115.1

51.6 %

154.5

12.9 %

Basic EPS (US$)

4.72

2.93

61.0 %

0.44

962.4 %

Adjusted Basic EPS (US$) (1)

4.39

2.91

51.0 %

3.92

12.1 %

Shares for calculation of Basic EPS (000s) 

39,730

39,589

0.4 %

39,442

0.7 %

(1)  Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q23 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

https://copa.gcs-web.com/financial-information/quarterly-results

3Q23 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

November 16, 2023

Time:

11:00 AM US ET (11:00 AM Local Time)

Join by phone: 

https://register.vevent.com/register/BI71cb8585c38244d6ad583f080f785ae0

Webcast (listen-only):

https://copa.gcs-web.com/events-and-presentations

Speakers:

Pedro Heilbron, Chief Executive Officer

José 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 countries in North, Central, and South America and the Caribbean. For more information visit: www.copaair.com

CONTACT: Copa Holdings S.A.Investor Relations:Ph: 011 507 304-2774www.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 several 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

%

3Q23

3Q22

Change

2Q23

Change

Operating Revenues

Passenger revenue

833,306

774,230

7.6 %

773,781

7.7 %

Cargo and mail revenue

23,431

26,400

-11.2 %

23,888

-1.9 %

Other operating revenue

10,973

8,815

24.5 %

11,521

-4.8 %

Total Operating Revenue

867,711

809,445

7.2 %

809,190

7.2 %

Operating Expenses

Fuel

252,077

291,528

-13.5 %

214,121

17.7 %

Wages, salaries, benefits and other employees' expenses

108,416

96,612

12.2 %

105,788

2.5 %

Passenger servicing

23,147

18,881

22.6 %

21,460

7.9 %

Airport facilities and handling charges

58,243

49,783

17.0 %

54,146

7.6 %

Sales and distribution

54,058

60,712

-11.0 %

56,596

-4.5 %

Maintenance, materials and repairs

29,528

23,577

25.2 %

31,430

-6.1 %

Depreciation and amortization

78,359

68,813

13.9 %

74,818

4.7 %

Flight operations

29,476

25,483

15.7 %

25,005

17.9 %

Other operating and administrative expenses

29,394

30,363

-3.2 %

31,158

-5.7 %

Total Operating Expense

662,697

665,752

-0.5 %

614,523

7.8 %

Operating Profit/(Loss)

205,014

143,692

42.7 %

194,667

5.3 %

Non-operating Income (Expense):

Finance cost

(82,926)

(22,528)

268.1 %

(30,517)

171.7 %

Finance income

15,108

4,546

232.3 %

11,970

26.2 %

Gain (loss) on foreign currency fluctuations

(1,566)

(3,335)

-53.1 %

3,712

-142.2 %

Net change in fair value of derivatives

77,058

1,575

4792.6 %

(137,473)

-156.1 %

Other non-operating income (expense)

1,867

4,230

-55.9 %

925

101.8 %

Total Non-Operating Income/(Expense)

9,540

(15,513)

-161.5 %

(151,382)

-106.3 %

Profit before taxes

214,555

128,179

67.4 %

43,284

395.7 %

Income tax expense

(27,179)

(12,241)

122.0 %

(25,775)

5.4 %

Net Profit/(Loss)

187,375

115,939

61.6 %

17,509

970.2 %

EPS

Basic

4.72

2.93

61.0 %

0.44

962.4 %

Shares used for calculation:

Basic

39,730,180

39,588,984

0.4 %

39,442,367

0.7 %

 

Copa Holdings, S. A. and subsidiaries 

Consolidated statement of financial position 

(US$ Thousands)

September 2023

December 2022

 ASSETS 

 (Unaudited)  

 (Audited)  

Cash and cash equivalents

236,878

122,424

Short-term investments

754,799

812,323

Total cash, cash equivalents and short-term investments

991,677

934,747

Accounts receivable, net

169,386

135,415

Accounts receivable from related parties

2,416

2,168

Expendable parts and supplies, net

108,546

93,332

Prepaid expenses

44,189

52,322

Prepaid income tax

139

798

Other current assets

25,671

17,043

350,347

301,078

TOTAL CURRENT ASSETS

1,342,024

1,235,825

Long-term investments

177,835

202,056

Long-term prepaid expenses

9,475

7,770

Property and equipment, net

3,069,652

2,883,524

Right of use assets

291,446

234,380

Intangible, net

85,711

78,555

Net defined benefit assets

2,303

504

Deferred tax assets

27,473

30,743

Other Non-Current Assets

17,435

17,005

TOTAL NON-CURRENT ASSETS

3,681,330

3,454,537

TOTAL ASSETS

5,023,354

4,690,362

 LIABILITIES 

Loans and borrowings

260,164

142,484

Current portion of lease liability

69,001

80,084

Accounts payable

179,052

166,660

Accounts payable to related parties

1,574

1,004

Air traffic liability

658,246

651,805

Frequent flyer deferred revenue

121,732

111,526

Taxes Payable

39,939

43,878

Employee benefits obligations

48,809

44,913

Income tax payable

19,046

6,276

Other Current Liabilities

1,236

1,175

TOTAL CURRENT LIABILITIES

1,398,799

1,249,805

Loans and borrowings long-term

1,110,284

1,301,819

Lease Liability

224,140

158,289

Derivative financial instruments

-

251,150

Deferred tax Liabilities

44,343

16,571

Other long - term liabilities

238,623

220,618

TOTAL NON-CURRENT LIABILITIES

1,617,390

1,948,447

TOTAL LIABILITIES

3,016,189

3,198,252

EQUITY

Class A - 34,075,308  issued and 31,146,012 outstanding

21,367

21,327

Class B - 10,938,125

7,466

7,466

Additional Paid-In Capital

209,836

103,465

Treasury Stock

(199,379)

(344,541)

Retained Earnings

1,652,915

1,367,784

Net profit 

326,405

348,054

Other comprehensive loss

(11,445)

(11,445)

TOTAL EQUITY

2,007,165

1,492,110

TOTAL EQUITY LIABILITIES

5,023,354

4,690,362

 

Copa Holdings, S. A. and subsidiaries 

Consolidated Statement of Cash Flows

For the nine months ended September 30

(In US$ thousands)

2023

2022

2021

(Unaudited)

(Unaudited)

(Unaudited)

Cash flow from operating activities 

764,586

543,471

263,252

Cash flow used in investing activities 

(274,166)

(387,334)

(140,844)

Cash flow from (used in) from financing activities 

(375,966)

(168,474)

48,758

Net increase (decrease) in cash and cash equivalents 

114,454

(12,337)

171,166

Cash and cash equivalents at January 1

122,424

211,081

119,065

Cash and cash equivalents at September 30

$               236,878

$               198,744

$               290,231

Short-term investments 

754,799

752,812

901,645

Long-term investments 

177,835

168,114

96,956

Total cash and cash equivalents and investments at September 30

$            1,169,512

$            1,119,670

$            1,288,832

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non-IFRS financial measures: Adjusted Net Profit, Adjusted Basic EPS, and Operating CASM Excluding Fuel. 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 profit, and net profit. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

Reconciliation of Adjusted Net Profit

3Q23

3Q22

2Q23

Net Profit as Reported

$   187,375

$   115,939

$     17,509

   Add: Interest expense related to the settlement of the convertible notes

$     64,894

$             -

$             -

   Add: Net change in fair value of derivatives

$   (77,058)

$     (1,575)

$   137,473

   Add: Net change in fair value of financial investments

$        (810)

$          699

$        (512)

Adjusted Net Profit

$   174,400

$   115,062

$   154,469

Reconciliation of Adjusted Basic EPS

3Q23

3Q22

2Q23

Adjusted Net Profit

$   174,400

$   115,062

$   154,469

Shares used for calculation of Basic EPS

39,730

39,589

39,442

Adjusted Basic Earnings per share (Adjusted Basic EPS)

$         4.39

$         2.91

$         3.92

Reconciliation of Operating Costs per ASM

Excluding Fuel (CASM Excl. Fuel)

3Q23

3Q22

2Q23

Operating Costs per ASM as Reported (in US$ Cents)

9.3

10.5

9.1

Aircraft Fuel Cost per ASM  (in US$ Cents)

3.5

4.6

3.2

Operating Costs per ASM excluding fuel (in US$ Cents)

5.8

5.9

5.9

 

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SOURCE Copa Holdings, S.A.

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