Copa Holdings Reports Net Income of US$66.0 Million and EPS of US$1.49 for the Third Quarter of 2014

Nov 19, 2014

Copa Holdings Reports Net Income of US$66.0 Million and EPS of US$1.49 for the Third Quarter of 2014 42.4 KB

PANAMA CITY, Nov. 19, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2014 (3Q14). 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 third quarter of 2013 (3Q13).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$66.0 million for 3Q14, or diluted earnings per share (EPS) of US$1.49. Excluding special items, Copa Holdings would have reported an adjusted net income of $99.8 million, or $2.25 per share, a 14.1% decrease from adjusted net income of US$116.2 million and US$2.62 per share for 3Q13.
Operating income for 3Q14 came in at US$111.1 million, a 24.7% decrease from operating income of US$147.5 million in 3Q13. Operating margin for the period came in at 16.7% or 5.0 percentage points below 3Q13, as a result of lower unit revenues.
Total revenues decreased 2.0% to US$663.7 million. Yield per passenger mile decreased 7.7% to 15.9 cents and operating revenue per available seat mile (RASM) decreased 9.9% to 12.5 cents. Adjusting for a 10.2% increase in average length of haul, yields decreased 3.2% and RASM decreased 5.4%.
For 3Q14, passenger traffic (RPMs) grew 6.3% on an 8.7% capacity expansion. As a result, consolidated load factor came in at 76.3%, or 1.7 percentage points below 3Q13.
Operating cost per available seat mile (CASM) improved 4.1% to 10.4 cents. CASM, excluding fuel, decreased 5.7% to 6.4 cents.
Cash, short term and long term investments ended 3Q14 at US$1.13 billion, representing 41% of the last twelve months' revenues. Of this amount, 46% is in Venezuela pending repatriation due to government currency controls.
During the third quarter, Copa Airlines took delivery of three Boeing 737-800 aircraft. As a result, Copa Holdings ended the quarter with a consolidated fleet of 96 aircraft.
For 3Q14, Copa Holdings reported consolidated on-time performance of 90.9% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

Share Repurchase program - On November 19, 2014, the board of directors of Copa Holdings approved a US$250 million share repurchase program. Purchases will be made from time to time, subject to market and economic conditions, applicable legal requirements, and other relevant factors.
Loyalty Program - On November 19, 2014, Copa Airlines and United announced to their MileagePlus members Copa's decision to launch its own loyalty program starting in July 2015. MileagePlus will remain the Company's frequent flyer program until end of June 2015.
4Q14 Dividend Payment - Copa Holdings expects to pay its fourth quarter dividend of US$0.96 per share on December 15, 2014, on all outstanding Class A and Class B shares, to stockholders of record as of December 4, 2014.


Consolidated Financial & Operating Highlights	3Q14	3Q13	% Change	2Q14	% Change
Revenue Passengers Carried ('000)	1,937	2,007	-3.5%	1,890	2.4%
RPMs (mm)	4,044	3,803	6.3%	3,916	3.3%
ASMs (mm)	5,298	4,872	8.7%	5,067	4.6%
Load Factor	76.3%	78.1%	-1.7 p.p.	77.3%	-1.0 p.p.
Yield	15.9	17.2	-7.7%	16.6	-4.3%
PRASM (US$ Cents)	12.2	13.5	-9.8%	12.8	-5.4%
RASM (US$ Cents)	12.5	13.9	-9.9%	13.3	-5.8%
CASM (US$ Cents)	10.4	10.9	-4.1%	10.7	-2.6%
CASM Excl. Fuel (US$ Cents)	6.4	6.8	-5.7%	6.6	-3.3%
Breakeven Load Factor ⁽¹⁾	62.2%	61.4%	-0.8 p.p.	60.8%	1.4 p.p.
Fuel Gallons Consumed (Millions)	68.2	63.6	7.2%	65.9	3.5%
Avg. Price Per Fuel Gallon (US$ Dollars)	3.12	3.12	0.0%	3.13	-0.3%
Average Length of Haul (Miles)	2,088	1,895	10.2%	2,072	0.8%
Average Stage Length (Miles)	1,234	1,160	6.4%	1,210	2.0%
Departures	30,362	30,126	0.8%	29,726	2.1%
Block Hours	95,819	89,623	6.9%	92,115	4.0%
Average Aircraft Utilization (Hours)	11.0	11.2	-2.0%	11.0	0.0%
Operating Revenues (US$ mm)	663.7	677.3	-2.0%	673.6	-1.5%
Operating Income (US$ mm)	111.1	147.5	-24.7%	131.2	-15.3%
Operating Margin	16.7%	21.8%	-5.0 p.p.	19.5%	-2.7 p.p.
Net Income (US$ mm)	66.0	126.0	-47.6%	118.2	-44.2%
Adjusted Net Income (US$ mm) ⁽¹⁾	99.8	116.2	-14.1%	115.9	-13.9%
EPS - Basic and Diluted (US$)	1.49	2.84	-47.7%	2.66	-44.2%
Adjusted EPS - Basic and Diluted (US$) ⁽¹⁾	2.25	2.62	-14.2%	2.61	-13.9%
# of Shares - Basic and Diluted ('000)	44,404	44,380	0.1%	44,409	0.0%

⁽¹⁾Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q14, 3Q13, and 2Q14 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges. Additionally, 3Q14 and 2Q14 exclude charges/gains related to the Venezuelan currency. Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q14 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q14 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	November 20, 2014
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
	Jose 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 69 destinations in 30 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 98 aircraft: 72 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit: www.copa.com.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: (507) 304-2431
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	%
	3Q14	3Q13	Change	2Q14	Change
Operating Revenues
Passenger Revenue	643,719	655,991	-1.9%	651,081	-1.1%
Cargo, mail and other	19,974	21,288	-6.2%	22,480	-11.1%
Total Operating Revenue	663,693	677,279	-2.0%	673,560	-1.5%

Operating Expenses
Aircraft fuel	212,591	198,163	7.3%	205,942	3.2%
Salaries and benefits	74,016	69,941	5.8%	69,584	6.4%
Passenger servicing	68,791	64,913	6.0%	65,533	5.0%
Commissions	22,934	27,717	-17.3%	24,467	-6.3%
Reservations and sales	22,122	27,588	-19.8%	23,978	-7.7%
Maintenance, material and repairs	24,186	25,035	-3.4%	29,301	-17.5%
Depreciation	28,070	26,576	5.6%	27,744	1.2%
Flight operations	34,014	30,829	10.3%	32,547	4.5%
Aircraft rentals	28,082	23,540	19.3%	28,534	-1.6%
Landing fees and other rentals	13,498	12,607	7.1%	13,250	1.9%
Other	24,327	22,878	6.3%	21,490	13.2%
Total Operating Expense	552,632	529,787	4.3%	542,369	1.9%

Operating Income	111,060	147,492	-24.7%	131,192	-15.3%

Non-operating Income (Expense):
Interest expense	(7,603)	(7,513)	1.2%	(6,876)	10.6%
Interest income	4,348	3,127	39.1%	3,586	21.3%
Other, net	(36,157)	10,700	n/a	4,107	n/a
Total Non-Operating Income/(Expense)	(39,412)	6,314	n/a	817	n/a

Income before Income Taxes	71,648	153,807	-53.4%	132,008	-45.7%

Provision for Income Taxes	5,667	27,798	-79.6%	13,836	-59.0%

Net Income	65,980	126,008	-47.6%	118,172	-44.2%


EPS - Basic and Diluted	1.49	2.84	-47.7%	2.66	-44.2%
Shares - Basic and Diluted	44,403,578	44,379,507	0.1%	44,408,515	0.0%

Copa Holdings, S.A.
Balance Sheet - IFRS
(US$ Thousands)	September 30,	December 31,
	2014	2013
	(Unaudited)	(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$ 186,739	$ 139,108
Short-term investments	698,945	992,579
Total cash, cash equivalents and short-term investments	885,684	1,131,687

Accounts receivable, net of allowance for doubtful accounts	151,725	132,867
Accounts receivable from related parties	1,910	2,189
Expendable parts and supplies, net of allowance for obsolescence	62,093	56,814
Prepaid expenses	62,182	59,175
Other current assets	8,915	22,783
Total Current Assets	1,172,509	1,405,515

Long-term investments	240,097	37,590

Property and Equipment:
Owned property and equipment:
Flight equipment	2,701,440	2,477,830
Other equipment	85,400	73,487
	2,786,840	2,551,317
Less: Accumulated depreciation	(604,455)	(530,347)
	2,182,384	2,020,970
Purchase deposits for flight equipment	330,603	327,544
Total Property and Equipment	2,512,987	2,348,514

Other Assets:
Net pension asset	12,173	11,114
Goodwill	24,037	25,305
Intangible asset	34,103	28,214
Other assets	96,641	96,509
Total Other Assets	166,954	161,143
Total Assets	$ 4,092,547	$ 3,952,762


LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt	$ 152,298	$ 156,329
Accounts payable	117,319	95,046
Accounts payable to related parties	17,526	14,483
Air traffic liability	434,740	578,439
Taxes and interest payable	64,000	113,541
Accrued expenses payable	83,632	75,975
Other current liabilities	19,569	8,133
Total Current Liabilities	889,085	1,041,946

Non-Current Liabilities:
Long-term debt	982,160	913,507
Post employment benefits liability	6,139	6,223
Other long-term liabilities	64,354	51,223
Deferred tax liabilities	33,848	37,959
Total Non-Current Liabilities	1,086,500	1,008,912

Total Liabilities	1,975,585	2,050,858

Shareholders' Equity:
Class A common stock -33,420,977 shares authorized, issued and outstanding	20,858	22,626
Class B common stock - 10,938,125 shares authorized, issued, and outstanding	7,466	7,466
Additional paid in capital	52,211	47,031
Retained earnings	2,027,914	1,820,580
Accumulated other comprehensive (loss)	8,513	4,200
Total Shareholders' Equity	2,116,962	1,901,903
Total Liabilities and Shareholders' Equity	$ 4,092,547	$ 3,952,762

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	3Q14	3Q13	2Q14

Net income as Reported	$65,980	$126,008	$118,172

Special Items (adjustments):
Unrealized gain (loss) on fuel hedging instruments	28,293	(9,820)	(4,105)
(Loss) gain due to devaluation of Venezuelan Bolivar	5,516	0	1,874
Adjusted Net Income	$99,789	$116,188	$115,941

Shares used for Computation (in thousands)
Basic and Diluted	44,404	44,380	44,409

Adjusted earnings per share - Basic and Diluted	2.25	2.62	2.61

Reconciliation Operating Costs per ASM
Excluding Fuel and Special Items	3Q14	3Q13	2Q14

Operating Costs per ASM as Reported	10.4	10.9	10.7
Aircraft fuel per ASM	(4.0)	(4.1)	(4.1)
Operating Costs per ASM excluding fuel	6.4	6.8	6.6

SOURCE Copa Holdings, S.A.

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News Release Details

Copa Holdings Reports Net Income of US$66.0 Million and EPS of US$1.49 for the Third Quarter of 2014