UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

Report on Form 6-K dated for the month of May, 2022

 

 

Copa Holdings, S.A.

(Translation of Registrant's Name Into English)

 

 

Boulevard Costa del Este, Avenida Principal y Avenida de la Rotonda

Urbanización Costa del Este

Complejo Business Park, Torre Norte

ParqueLefevre

Panama City, Panama

                                             (Address of principal executive offices)

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

Form 20-F    X        Form 40-F             

 

(Indicate by check whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes                  No     X    

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b);82-             )

 

 

 

Enclosure: Press Release - 1Q22 Earnings Release

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

 

 

 

Exhibit 99.1

 

Copa Holdings Reports Financial Results for the First Quarter of 2022

 

Panama City, Panama --- May 11, 2022.  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

 

 

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Exhibit 99.1

 

 

 

 

 

2

 

 

 

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Exhibit 99.1

 

 

MANAGEMENT’S COMMENTS ON 1Q22 RESULTS

 

Thanks to the recovery in demand following the impact of the COVID-19 Omicron variant, and despite higher fuel prices, Copa Holdings reported a profitable quarter. These results also reflect the Company’s ability to increase capacity while operating with low unit costs.

 

During the first quarter, the Company reported a net profit of US$19.8 million, an operating profit of US$44.8 million, and an operating margin of 7.8%. Excluding special items, comprised of US$9.7 million in unrealized mark-to-market losses related to the Company’s convertible notes as well as changes in the value of financial investments, the Company would have reported a net profit of US$29.5 million.

 

Despite the cancellation of approximately 4% of the Company’s planned departures for the quarter due to the impact of the Omicron variant on the number of available crews, the Company operated 87.6% of its 1Q19 ASMs, compared to 83.1% of its 4Q19 capacity in 4Q21.

 

Total revenues for 1Q22 came in at US$571.6 million, reaching 85.0% of 1Q19 revenues. Passenger revenue for 1Q22 reached 83.4% of 1Q19 levels, while 1Q22 cargo revenue was 40.6% higher than 1Q19. Driven mainly by the impact of the Omicron variant to passenger demand, yields decreased 2.7% to 11.8 cents and load factors decreased 1.8 percentage points to 81.5%, compared to 1Q19, resulting in Revenues per Available Seat Mile (RASM) of 10.2 cents, or 3.0% lower than 1Q19.

 

Unit cost (CASM) came in at 9.4 cents, an increase of 7.5% versus 1Q19, driven by a higher fuel cost. Excluding fuel, CASM came in at 6.0 cents, a decrease of 1.6% when compared to 1Q19, while operating at 87.6% of 1Q19 capacity.

 

The Company ended the quarter with a cash balance of US$1.2 billion, which represents 65% of the last twelve months’ revenues.

 

Despite the positive financial results during 1Q22 and the recovering demand environment, the Company expects lower second-quarter margins due to the significant increase in jet fuel prices in what is historically a low season quarter.

 

The Company has a proven and very strong business model, which is built on operating the best and most convenient network for intra-Latin America travel from its Hub of the Americas^® based on Panama’s advantageous geographic position, low unit costs, best on-time performance, and strongest balance sheet. Going forward, the Company expects to leverage its strong balance sheet, leading liquidity position, and lower cost base to continue strengthening its long-term competitive position by implementing initiatives that will further reinforce its network, product and cost competitiveness.

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Exhibit 99.1

 

 

OUTLOOK FOR 2022

 

As a result of the continued uncertainty related to outbreaks of COVID-19 and its variants, the Company will provide financial guidance only for the second quarter of 2022 and preliminary capacity and CASM ex-fuel guidance for the full-year 2022.

 

Given the impact of higher fuel prices, among other factors, the Company expects its operating margin to be within a range of approximately 3% to 5% for 2Q22. The Company expects capacity in 2Q22 to reach approximately 5.9 billion ASMs or 96% of 2Q19 ASMs.

 

 

Factored in this outlook is a load factor of approximately 86%, Unit Revenues (RASM) of approximately 11.3 cents, unit costs excluding fuel (Ex-Fuel CASM) of approximately 6.0 cents, and an all-in fuel price of US$4.00 per gallon.

 

For full-year 2022, the Company expects to operate approximately 98% of 2019 ASMs and deliver a CASM ex-fuel of approximately 5.9 cents.

 

CONSOLIDATED FIRST-QUARTER RESULTS

 

Operating revenue

 

Consolidated revenue for 1Q22 totaled US$571.6 million, mainly driven by passenger revenue.

 

Passenger revenue totaled US$541.3 million, a 16.6% decrease compared to the same period in 2019, on 12.4% less capacity. The first-quarter results are mostly comprised of flown passenger ticket revenue and passenger-related ancillary revenue.

 

Cargo and mail revenue totaled US$21.5 million, a 40.6% increase compared to the same period in 2019, related to higher cargo volume and yields.

  

Other operating revenue totaled US$8.8 million, mainly revenues from non-air ConnectMiles partners.

 

Operating expenses

 

Fuel totaled US$191.3 million, an increase of 12.4% compared to the same period in 2019, on 18.1% fewer gallons consumed and a 37.4% higher effective fuel price.

 

Wages, salaries, benefits, and other employee expenses totaled US$89.8 million, representing a 21.0% decrease compared to the same period in 2019, mainly driven by a reduced headcount.

 

Passenger servicing totaled US$15.6 million, a decrease of 39.0% compared to the same period in 2019, as a result of 9.2% fewer passengers and a simplified onboard product offering due to temporary COVID-19 biosafety protocols.

 

Airport facilities and handling charges totaled US$45.8 million, an increase of 0.9% compared to the same period in 2019, mostly related to higher airport fees, mainly in the US.

 

Sales and distribution totaled US$46.0 million, a decrease of 13.4% compared to the same period in 2019, due to lower sales in the quarter compared to 1Q19.

 

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Exhibit 99.1

 

 

Maintenance, materials, and repairs totaled US$23.4 million, a decrease of 16.7% compared to the same period in 2019, driven by 19.4% fewer flight hours and lower materials and component repairs related to a simplified fleet.

 

Depreciation and amortization totaled US$63.3 million, mostly comprised of owned and leased flight equipment, maintenance events, and IT systems amortizations, a decrease of 7.2% compared to 1Q19, mainly due to a reduction in fleet size.

 

Flight operations mostly related to overflight fees, totaled US$22.0 million, a decrease of 14.8% compared to the same period in 2019, driven by 18.4% fewer departures.

 

Other operating and administrative expenses totaled US$30.0 million, an increase of 1.3% versus 1Q19 mainly comprised of IT systems expenses, aircraft engine rentals, aircraft insurance and cargo expenses, as well as other overhead expenses.

 

Non-operating Income (Expense)

 

Consolidated non-operating income (expense) resulted in a net expense of (US$24.4) million.

 

Finance cost totaled (US$20.4) million, mostly comprised of convertible notes interest expenses of US$10.2 million, US$6.2 million related to loan interest and commission expenses, and US$1.1 million in interest charges related to operating leases.

 

Finance income totaled US$2.5 million in proceeds from investments.

 

Gain (loss) on foreign currency fluctuations resulted in a US$2.9 million gain, mainly driven by the revaluation of the Brazilian real and the Colombian peso.

 

Net change in fair value of derivatives totaled a net (US$6.8) million unrealized mark-to-market loss related to the Company’s convertible notes.

 

Other non-operating income (expense) totaled a (US$2.7) million unrealized mark-to-market loss related to changes in the value of financial investments.

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Exhibit 99.1

 

 

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.

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Exhibit 99.1

 

 

 

 

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Exhibit 99.1

 

 

Copa Holdings, S. A. and subsidiaries

Consolidated statement of financial position

(US$ Thousands)

 

8

 

 

 

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Exhibit 99.1

 

 

 

 

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Exhibit 99.1

 

 

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:

 

 

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