Copa Holdings Reports Financial Results for the Third Quarter of 2023

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

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


%



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

SOURCE Copa Holdings, S.A.


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