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 August 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-             )

 

 

 

 

 

 

 

 

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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 Second Quarter of 2022

Adjusted Net Profit for the second quarter came in at US$13.2 million, or Adjusted EPS of US$0.32

 

Panama City, Panama --- August 3, 2022.  Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2022 (2Q22). 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 second quarter of 2019 (2Q19) (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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MANAGEMENT’S COMMENTS ON 2Q22 RESULTS

Copa Holdings’ second quarter results reflect the impact from the significant increase in jet fuel prices on our operating costs, which was partially offset by higher passenger yields and lower unit costs excluding fuel.

 

Copa Holdings’ adjusted net profit excluding special items came in at US$13.2 million or US$0.32 per share. These results compare to an adjusted net profit of US$50.9 million or earnings per share of US$1.20 in 2Q19. Special items for the quarter totaled US$110.9 million comprised of an unrealized mark-to-market gain related to the Company’s convertible notes and an unrealized mark-to-market loss related to changes in the value of financial investments. Including special items, the Company reported a net profit of US$124.1 million or US$3.01 per share.

Copa Holdings reported an operating profit of US$42.3 million, and an operating margin of 6.1% for the quarter, compared to an operating profit of US$82.6 million and an operating margin of 12.8% in 2Q19.

The Company operated 96.6% of its 2Q19 ASMs during the quarter, compared to 87.6% of its 1Q19 capacity in 1Q22.

Total revenues for 2Q22 came in at US$693.4 million, or 7.5% higher than 2Q19 revenues. Passenger revenue for 2Q22 came in 5.9% higher than 2Q19, while cargo revenue was 62.4% higher than 2Q19. Yields increased 10.1% to 13.0 cents while load factors decreased 0.4 percentage points to 84.8%, resulting in Revenues per Available Seat Mile (RASM) of 11.6 cents, or 11.3% higher than 2Q19.

Unit cost (CASM) came in at 10.9 cents, an increase of 19.9% compared to 2Q19, driven by a higher fuel cost. Excluding fuel, CASM came in at 6.0 cents, a decrease of 4.6% when compared to 2Q19, while operating at 96.6% of 2Q19 capacity.

The Company ended the quarter with a cash balance of US$1.1 billion, which represents 47% of the last twelve months’ revenues.

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 a strong 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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OUTLOOK FOR 2022

 

As a result of the current volatility in the economic environment, the Company will provide financial guidance only for the third quarter of 2022 and update its preliminary capacity and CASM ex-fuel guidance for the full-year 2022.

 

Mainly driven by a quarter-over-quarter increase in unit revenues, the Company expects its operating margin to be within a range of approximately 16% to 18% for 3Q22, or 10 to 12 percentage points higher than 2Q22. The Company expects capacity in 3Q22 to reach approximately 6.4 billion ASMs or 100% of 3Q19 ASMs.

 

 

Factored in this outlook is a load factor of approximately 86%, Unit Revenues (RASM) of approximately 12.7 cents, unit costs excluding fuel (Ex-Fuel CASM) of approximately 6.0 cents, and an all-in fuel price of US$3.80 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 SECOND-QUARTER RESULTS

Operating revenue

Consolidated revenue for 2Q22 totaled US$693.4 million, mainly driven by passenger revenue.

 

Passenger revenue totaled US$656.9 million, a 5.9% increase compared to the same period in 2019, driven by 10.1% higher yields. The second-quarter results are mostly comprised of flown passenger ticket revenue, passenger-related ancillary revenue, and unredeemed tickets revenue.

 

Cargo and mail revenue totaled US$26.7 million, a 62.4% increase compared to the same period in 2019, related to higher cargo volumes and yields.

  

Other operating revenue totaled US$9.7 million, mainly revenues from non-air ConnectMiles partners.

 

Operating expenses

 

Fuel totaled US$296.0 million, an increase of 67.0% compared to the same period in 2019, on 9.9% fewer gallons consumed and an 86.1% higher effective fuel price.

 

Wages, salaries, benefits, and other employee expenses totaled US$89.0 million, representing a 17.9% decrease compared to the same period in 2019, mainly driven by a reduced headcount.

 

Passenger servicing totaled US$16.1 million, a decrease of 37.0% compared to the same period in 2019, as a result of a simplified onboard product offering due to temporary COVID-19 biosafety protocols.

 

Airport facilities and handling charges totaled US$47.3 million, an increase of 5.8% compared to the same period in 2019, mostly related to higher airport fees, mainly in the US.

 

Sales and distribution totaled US$56.2 million, an increase of 9.6% compared to the same period in 2019, due to higher sales compared to 2Q19.

 

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Maintenance, materials, and repairs totaled US$28.3 million, a decrease of 9.4% compared to the same period in 2019, driven by 10.6% fewer flight hours.

 

Depreciation and amortization totaled US$65.3 million, mostly comprised of owned and leased flight equipment, maintenance events and IT systems amortizations, a decrease of 7.4% compared to 2Q19, mainly due to a reduction in fleet size.

 

Flight operations mostly related to overflight fees, totaled US$24.1 million, a decrease of 5.4% compared to the same period in 2019, driven by 10.1% fewer departures, partially offset by an increase in overflight fees due to a different fleet and route mix.

 

Other operating and administrative expenses totaled US$28.9 million, an increase of 2.3% versus 2Q19, 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 income of US$86.4 million.

 

Finance cost totaled (US$21.3) million, mostly comprised of convertible notes interest expenses of US$10.5 million, US$7.4 million related to loan interest and commission expenses, and US$1.4 million in interest charges related to operating leases.

 

Finance income totaled US$3.5 million in proceeds from investments.

 

Gain (loss) on foreign currency fluctuations totaled (US$6.8) million, mainly driven by the devaluation of the Brazilian real, Colombian peso, and Chilean peso.

 

Net change in fair value of derivatives totaled a US$113.7 million unrealized mark-to-market gain related to the Company’s convertible notes.

 

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

 

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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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Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

 

 

 

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Copa Holdings, S. A. and subsidiaries

Consolidated statement of financial position

(US$ Thousands)

 

 

 

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Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the six months ended June 30,

(In US$ thousands)

 

 

 

 

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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, 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:

 

 

 

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