Copa Holdings Reports Financial Results for the First Quarter of 2022

May 11, 2022

Q1 2022 Earnings Release - Long Version 370.7 KB

PANAMA CITY, May 11, 2022 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the first quarter of 2022 (1Q22). 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 first quarter of 2019 (1Q19) (which the Company believes are more relevant than year-over-year comparisons due to the significant impacts in 2020 and 2021 of the COVID-19 pandemic).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported a net profit of US$19.8 million for the quarter or US$0.47 per share, as compared to a net profit of US$89.4 million or earnings per share of US$2.11 in 1Q19. Excluding special items, the Company would have reported a net profit of US$29.5 million or US$0.70 per share. Special items for the quarter amount to US$9.7 million, comprised of unrealized mark-to-market losses related to the Company's convertible notes as well as changes in the value of financial investments.
Copa Holdings reported an operating profit of US$44.8 million for the quarter and a 7.8% operating margin, compared to an operating profit of US$112.9 million in 1Q19.
Total revenues for 1Q22 came in at US$571.6 million, reaching 85.0% of 1Q19 revenues. Passenger revenue for 1Q22 was 83.4% of 1Q19 levels, while cargo revenue was 40.6% higher than 1Q19. Revenue per Available Seat Mile (RASM) came in at 10.2 cents, or 3.0% lower than 1Q19.
Operating cost per available seat mile excluding fuel (Ex-fuel CASM) decreased 1.6% in the quarter vs. 1Q19 to 6.0 cents.
Capacity for 1Q22, measured in terms of available seat miles (ASMs), was 87.6% of the capacity flown in 1Q19.
The Company ended the quarter with approximately US$1.2 billion in cash, short-term and long-term investments, which represents 65% of the last twelve months' revenues.
The Company closed the quarter with total debt, including lease liabilities, of US$1.6 billion.
During the quarter, the Company took delivery of 2 Boeing 737 MAX 9 aircraft.
Including 3 Boeing 737-700 aircraft currently in temporary storage and one Boeing 737-800 freighter, Copa Holdings ended the quarter with a consolidated fleet of 93 aircraft – 68 Boeing 737-800s, 16 Boeing 737 MAX 9s, and 9 Boeing 737-700s, compared to a fleet of 102 aircraft prior to the COVID-19 pandemic.
Copa Airlines had an on-time performance for the quarter of 91.3% and a flight completion factor of 99.3%, once again positioning the airline among the best in the industry.
During the quarter, the Company announced two new destinations starting in June 2022 — Santa Marta in Colombia and Barcelona in Venezuela.

Consolidated Financial & Operating Highlights	1Q22	1Q19 ⁽³⁾	Variance vs. 1Q19	4Q21	Variance vs. 3Q21
Revenue Passengers Carried (000s)	2,285	2,588	-11.7%	2,214	3.2%
Revenue Passengers OnBoard (000s)	3,476	3,830	-9.2%	3,369	3.2%
RPMs (millions)	4,585	5,345	-14.2%	4,265	7.5%
ASMs (millions)	5,623	6,415	-12.4%	5,109	10.1%
Load Factor	81.5%	83.3%	-1.8 p.p.	83.5%	-1.9 p.p.
Yield (US$ Cents)	11.8	12.1	-2.7%	12.7	-6.9%
PRASM (US$ Cents)	9.6	10.1	-4.8%	10.6	-9.0%
RASM (US$ Cents)	10.2	10.5	-3.0%	11.3	-9.7%
CASM (US$ Cents)	9.4	8.7	7.5%	8.1	15.7%
Adjusted CASM (US$ Cents) ⁽¹⁾	9.4	8.7	7.5%	9.0	4.2%
CASM Excl. Fuel (US$ Cents)	6.0	6.1	-1.6%	5.2	15.2%
Adjusted CASM Excl. Fuel (US$ Cents) ⁽¹⁾	6.0	6.1	-1.6%	6.1	-1.7%
Fuel Gallons Consumed (millions)	66.5	81.2	-18.1%	61.0	9.1%
Avg. Price Per Fuel Gallon (US$)	2.87	2.09	37.4%	2.43	18.0%
Average Length of Haul (miles)	2,007	2,065	-2.8%	1,926	4.2%
Average Stage Length (miles)	1,298	1,299	0.0%	1,254	3.5%
Departures	27,190	33,329	-18.4%	25,458	6.8%
Block Hours	88,474	110,089	-19.6%	80,710	9.6%
Average Aircraft Utilization (hours) ⁽²⁾	11.1	11.6	-4.5%	11.3	-1.9%
Operating Revenues (US$ millions)	571.6	672.2	-15.0%	575.0	-0.6%
Operating Profit (Loss) (US$ millions)	44.8	112.9	-60.3%	161.3	-72.2%
Adjusted Operating Profit (Loss) (US$ millions) ⁽¹⁾	44.8	112.9	-60.3%	115.8	-61.3%
Operating Margin	7.8%	16.8%	-9.0 p.p.	28.1%	-20.2 p.p.
Adjusted Operating Margin ⁽¹⁾	7.8%	16.8%	-9.0 p.p.	20.1%	-12.3 p.p.
Net Profit (Loss) (US$ millions)	19.8	89.4	-77.9%	118.3	-83.3%
Adjusted Net Profit (Loss) (US$ millions) ⁽¹⁾	29.5	89.4	-67.0%	81.7	-63.9%
Basic EPS (US$)	0.47	2.11	-77.7%	2.78	-83.1%
Adjusted Basic EPS (US$) ⁽¹⁾	0.70	2.11	-66.7%	1.92	-63.4%
Shares for calculation of Basic EPS (000s)	42,006	42,478	-1.1%	42,533	-1.2%

(1) Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures.
(2) Average Aircraft Utilization is calculated based on the Company's active fleet, excluding aircraft in storage.
(3) The Company believes that comparisons with 2019 are more relevant than year-over-year comparisons due to the significant impacts in 2020 of the COVID-19 pandemic.

FULL 1Q22 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
https://copa.gcs-web.com/financial-information/quarterly-results

1Q22 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	May 12, 2022
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:	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: 011 507 304-2774
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 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	%
	1Q22	1Q19	Change	4Q21	Change
Operating Revenues
Passenger revenue	541,255	648,790	-16.6%	540,571	0.1%
Cargo and mail revenue	21,537	15,316	40.6%	25,849	-16.7%
Other operating revenue	8,790	8,063	9.0%	8,575	2.5%
Total Operating Revenue	571,582	672,169	-15.0%	574,995	-0.6%

Operating Expenses
Fuel	191,256	170,163	12.4%	149,057	28.3%
Wages, salaries, benefits and other employees' expenses	89,759	113,662	-21.0%	80,434	11.6%
Passenger servicing	15,607	25,571	-39.0%	12,204	27.9%
Airport facilities and handling charges	45,787	45,362	0.9%	42,863	6.8%
Sales and distribution	46,033	53,133	-13.4%	43,706	5.3%
Maintenance, materials and repairs	23,350	28,047	-16.7%	(19,620)	-219.0%
Depreciation and amortization	63,303	68,187	-7.2%	59,828	5.8%
Flight operations	22,039	25,875	-14.8%	19,173	14.9%
Other operating and administrative expenses	29,674	29,285	1.3%	26,057	13.9%
Total Operating Expense	526,809	559,284	-5.8%	413,703	27.3%

Operating Profit/(Loss)	44,774	112,885	-60.3%	161,292	-72.2%

Non-operating Income (Expense):
Finance cost	(20,445)	(14,022)	45.8%	(21,177)	-3.5%
Finance income	2,545	5,954	-57.3%	2,571	-1.0%
Gain (loss) on foreign currency fluctuations	2,917	(5,960)	-149.0%	(2,508)	-216.3%
Net change in fair value of derivatives	(6,752)	-	-100.0%	(8,922)	-24.3%
Other non-operating income (expense)	(2,664)	(825)	223.0%	(1,158)	130.0%
Total Non-Operating Income/(Expense)	(24,398)	(14,853)	64.3%	(31,194)	-21.8%

Profit before taxes	20,376	98,032	-79.2%	130,098	-84.3%

Income tax expense	(617)	(8,600)	-92.8%	(11,837)	-94.8%

Net Profit/(Loss)	19,759	89,431	-77.9%	118,261	-83.3%

EPS
Basic	0.47	2.11	-77.7%	2.78	-83.1%

Shares used for calculation:
Basic	42,006,022	42,477,761		42,533,036

Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)
	March 2022	December 2021
ASSETS	(Unaudited)
Current Assets
Cash and cash equivalents	249,014	211,081
Short-term investments	771,074	806,340
Total cash, cash equivalents and short-term investments	1,020,088	1,017,421
	-	-
Accounts receivable, net	125,989	90,618
Accounts receivable from related parties	1,598	1,832
Expendable parts and supplies, net	80,690	74,778
Prepaid expenses	34,268	31,148
Prepaid income tax	16,095	16,938
Other current assets	6,497	6,054
	265,137	221,368
TOTAL CURRENT ASSETS	1,285,225	1,238,789

Long-term investments	204,810	199,670
Long-term accounts receivable	-	-
Long-term prepaid expenses	6,195	6,727
Property and equipment, net	2,625,393	2,512,704
Right of use assets	149,230	166,328
Intangible, net	78,381	81,749
Deferred tax assets	30,911	28,196
Other Non-Current Assets	15,497	14,098
TOTAL NON-CURRENT ASSETS	3,110,417	3,009,472

TOTAL ASSETS	4,395,642	4,248,261

LIABILITIES
Loans and borrowings	151,234	196,602
Current portion of lease liability	74,571	73,917
Accounts payable	126,899	112,596
Accounts payable to related parties	19,113	7,948
Air traffic liability	625,309	557,331
Frequent flyer deferred revenue	97,040	95,114
Taxes Payable	40,557	32,600
Employee benefits obligations	28,487	32,767
Income tax payable	4,293	3,835
Other Current Liabilities	1,206	786
TOTAL CURRENT LIABILITIES	1,168,709	1,113,496

Loans and borrowings long-term	1,329,125	1,229,031
Lease Liability	86,787	104,734
Net Defined Benefit Liability	7,547	7,670
Derivative financial instruments	275,090	268,338
Deferred tax Liabilities	18,885	18,782
Other long - term liabilities	216,979	206,813

TOTAL NON-CURRENT LIABILITIES	1,934,413	1,835,368
TOTAL LIABILITIES	3,103,122	2,948,864

EQUITY	-	-

Class A - 34,012,597 issued and 30,643,923 outstanding	21,324	21,289
Class B - 10,938,125	7,466	7,466
Additional Paid-In Capital	99,849	98,348
Treasury Stock	(205,074)	(176,902)
Retained Earnings	1,367,866	1,324,022
Net profit	19,759	43,844
Other comprehensive loss	(18,670)	(18,670)

TOTAL EQUITY	1,292,520	1,299,397
TOTAL EQUITY LIABILITIES	4,395,642	4,248,261

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the three months ended March 31,

(In US$ thousands)

2022

2021

2020

(Unaudited)

Cash flow from (used in) operating activities

169,336

(892)

106,340

Cash flow (used in) from investing activities

(120,515)

(86,697)

19,795

Cash flow (used in) from financing activities

(10,888)

162,325

55,058

Net increase in cash and cash equivalents

37,933

74,736

181,193

Cash and cash equivalents at January 1

211,081

119,065

158,732

Cash and cash equivalents at March 31

$ 249,014

$ 193,801

$ 339,925

Short-term investments

771,074

898,453

672,721

Long-term investments

204,810

111,001

114,277

Total cash and cash equivalents and investments at March 31

$ 1,224,898

$ 1,203,255

$ 1,126,923

Copa Holdings, S.A.
NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non-IFRS financial measures: Adjusted Operating Profit, Adjusted Net Profit, Adjusted Basic EPS, Operating CASM Excluding Fuel, and Cash Buildup. 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 Operating Profit
and Adjusted Net Profit	1Q22	1Q21	4Q21	1Q19

Operating Profit as Reported	$ 44,774	$ (77,081)	$ 161,292	$ 112,873
Subtract: Leased Aircraft Return provision			$ 45,519
Adjusted Operating Profit	$ 44,774	$ (77,081)	$ 115,773	$ 112,873

Net Profit as Reported	$ 19,759	$(110,733)	$ 118,261	$ 89,431
Subtract: Leased Aircraft Return provision			$ 45,519
Add: Net change in fair value of derivatives	$ 6,752	$ 15,663	$ 8,922
Add: Net change in fair value of financial investments	$ 2,979
Adjusted Net Profit	$ 29,490	$ (95,070)	$ 81,664	$ 89,431

Reconciliation of Adjusted Basic EPS	1Q22	1Q21	4Q21	1Q19

Adjusted Net Profit	$ 29,490	$ (95,070)	$ 81,664	$ 89,431
Shares used for calculation of Basic EPS	42,006	42,571	42,533	42,478
Adjusted Basic Earnings per share (Adjusted Basic EPS)	$ 0.70	$ (2.23)	$ 1.92	$ 2.11

Reconciliation of Adjusted Operating Costs per ASM
Excluding Fuel (Adjusted CASM Excl. Fuel)	1Q22	1Q21	4Q21	1Q19

Operating Costs per ASM as Reported (in US$ Cents)	9.4	9.0	8.2	8.7
Return of leased aircraft provision per ASM (in US$ Cents)	-	-	(0.8)	-
Adjusted Operating Costs per ASM (in US$ Cents)	9.4	9.0	9.0	8.7

Aircraft Fuel Cost per ASM (in US$ Cents)	3.4	2.5	2.9	2.7
Adjusted Operating Costs per ASM excluding fuel (in US$ Cents)	6.0	6.6	6.1	6.1

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SOURCE Copa Holdings, S.A.

News Release Details

Copa Holdings Reports Financial Results for the First Quarter of 2022