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Press release from PR Newswire

Copa Holdings Reports Net Income of US$118.2 Million and EPS of US$2.66 for the Second Quarter of 2014

Wednesday, August 06, 2014

Copa Holdings Reports Net Income of US$118.2 Million and EPS of US$2.66 for the Second Quarter of 2014

16:43 EDT Wednesday, August 06, 2014

Excluding special items, adjusted net income came in at $115.9 million, or EPS of $2.61 per share

PANAMA CITY, Aug. 6, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2014 (2Q14). 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 second quarter of 2013 (2Q13).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$118.2 million for 2Q14, or diluted earnings per share (EPS) of US$2.66.  Excluding special items, Copa Holdings would have reported an adjusted net income of $115.9 million, or $2.61 per share, a 36.4% increase over adjusted net income of US$85.0 million and US$1.92 per share for 2Q13.
  • Operating income for 2Q14 came in at US$131.2 million, a 34.3% increase over operating income of US$97.7 million in 2Q13.  Operating margin for the period came in at 19.5%, compared to 16.5% in 2Q13, as a result of higher unit revenues. 
  • Total revenues increased 13.8% to US$673.6 million.  Yield per passenger mile increased 1.6% to 16.6 cents and operating revenue per available seat mile (RASM) increased 3.7% to 13.3 cents.  However, adjusting for a 10.9% increase in length of haul, yields increased 6.9% and RASM increased 9.2%.
  • For 2Q14, passenger traffic (RPMs) grew 12.7% on a 9.7% capacity expansion. As a result, consolidated load factor came in at 77.3%, or 2.0 percentage points above 2Q13.
  • Operating cost per available seat mile (CASM) remained unchanged at 10.7 cents from 2Q13.  However, CASM, excluding fuel costs, decreased 0.9% to 6.6 cents.
  • Cash, short term and long term investments ended 2Q14 at US$1.15 billion, representing 42% of the last twelve months' revenues. Of this amount, 46% is in Venezuela pending repatriation due to government currency controls.
  • During the month of June, Copa Airlines received payment of US$43.3 million from CENCOEX ("Centro Nacional de Comercio Exterior") in Venezuela. The funds corresponded to repatriation requests from January and February 2013 and were honored at an exchange rate of 6.30 bolivars per dollar.    
  • During the second quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 93 aircraft. 
  • For 2Q14, Copa Holdings reported consolidated on-time performance of 89.5% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • During July 2014, Copa Airlines signed a letter of intent agreeing to lease three new Boeing 737-800 aircraft and take delivery of these aircraft in August, October, and November of 2015. 
  • Copa Holdings will pay its third quarter dividend of US$0.96 per share on September 15, 2014, on all outstanding Class A and Class B shares, to stockholders of record as of August 29, 2014. 

Consolidated Financial & Operating Highlights

2Q14

2Q13

% Change 

1Q14

% Change 

Revenue Passengers Carried ('000)

1,890

1,861

1.6%

2,032

-6.9%

RPMs (mm) 

3,916

3,475

12.7%

3,917

0.0%

ASMs (mm) 

5,067

4,618

9.7%

5,015

1.0%

Load Factor 

77.3%

75.3%

2.0 p.p.

78.1%

-0.8 p.p.

Yield

16.6

16.4

1.6%

17.7

-5.9%

PRASM (US$ Cents) 

12.8

12.3

4.3%

13.8

-6.9%

RASM (US$ Cents) 

13.3

12.8

3.7%

14.2

-6.6%

CASM (US$ Cents) 

10.7

10.7

0.0%

10.7

0.0%

CASM Excl. Fuel (US$ Cents) 

6.6

6.7

-0.9%

6.6

1.3%

Breakeven Load Factor (1)

60.8%

61.6%

-0.8 p.p.

57.6%

3.2 p.p.

Fuel Gallons Consumed (Millions) 

65.9

60.0

9.8%

65.3

0.9%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.13

3.08

1.5%

3.19

-1.9%

Average Length of Haul (Miles)

2,072

1,868

10.9%

1,928

7.5%

Average Stage Length (Miles)

1,210

1,126

7.5%

1,173

3.1%

Departures

29,726

29,357

1.3%

30,546

-2.7%

Block Hours

92,115

84,985

8.4%

91,569

0.6%

Average Aircraft Utilization (Hours)

11.0

10.9

0.7%

11.3

-3.0%

Operating Revenues (US$ mm) 

673.6

592.0

13.8%

713.6

-5.6%

Operating Income (US$ mm)

131.2

97.7

34.3%

177.0

-25.9%

Operating Margin 

19.5%

16.5%

3.0 p.p.

24.8%

-5.3 p.p.

Net Income (US$ mm)

118.2

74.4

58.7%

151.4

-21.9%

Adjusted Net Income (US$ mm) (1)

115.9

85.0

36.4%

153.6

-24.5%

EPS - Basic and Diluted (US$)

2.66

1.68

58.7%

3.41

-21.9%

Adjusted EPS - Basic and Diluted (US$) (1)

2.61

1.92

36.3%

3.46

-24.5%

# of Shares - Basic and Diluted ('000) 

44,409

44,387

0.0%

44,403

0.0%

(1)Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q14, 2Q13, and 1Q14 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges. Additionally, 2Q14 and 1Q14 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 2Q14 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q14 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 7, 2014

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:

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 67 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 95 aircraft: 69 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit: www.copaair.com.

CONTACT: Copa Holdings S.A.Investor Relations:Ph: (507) 304-2431www.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

%

2Q14

2Q13

Change

1Q14

Change

Operating Revenues

Passenger Revenue

651,081

568,960

14.4%

691,977

-5.9%

Cargo, mail and other

22,480

23,038

-2.4%

21,629

3.9%

Total Operating Revenue

673,560

591,998

13.8%

713,605

-5.6%

Operating Expenses

Aircraft fuel

205,942

184,767

11.5%

208,014

-1.0%

Salaries and benefits

69,584

66,105

5.3%

73,976

-5.9%

Passenger servicing

65,533

60,389

8.5%

64,118

2.2%

Commissions

24,467

24,279

0.8%

26,132

-6.4%

Reservations and sales

23,978

24,763

-3.2%

23,853

0.5%

Maintenance, material and repairs

29,301

22,807

28.5%

24,746

18.4%

Depreciation

27,744

26,866

3.3%

27,821

-0.3%

Flight operations

32,547

30,028

8.4%

31,134

4.5%

Aircraft rentals

28,534

22,124

29.0%

25,315

12.7%

Landing fees and other rentals

13,250

12,789

3.6%

13,253

0.0%

Other

21,490

19,393

10.8%

18,246

17.8%

Total Operating Expense

542,369

494,309

9.7%

536,607

1.1%

Operating Income

131,192

97,689

34.3%

176,999

-25.9%

Non-operating Income (Expense):

Interest expense

(6,876)

(7,560)

-9.1%

(7,094)

-3.1%

Interest income

3,586

2,841

26.2%

3,736

-4.0%

Other, net

4,107

(10,616)

n/a

67

n/a

Total Non-Operating Income/(Expense)

817

(15,336)

n/a

(3,291)

n/a

Income before Income Taxes

132,008

82,354

60.3%

173,707

-24.0%

Provision for Income Taxes

13,836

7,912

74.9%

22,350

-38.1%

Net Income

118,172

74,441

58.7%

151,357

-21.9%

EPS - Basic and Diluted

2.66

1.68

58.7%

3.41

-21.9%

Shares - Basic and Diluted

44,408,515

44,387,279

0.0%

44,402,832

0.0%

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

June 30,

December 31,

2014

2013

 (Unaudited) 

 (Audited) 

ASSETS

Current Assets:

Cash and cash equivalents

$       172,103

$        139,108

Short-term investments

723,808

992,579

Total cash, cash equivalents and short-term investments

895,911

1,131,687

Accounts receivable, net of allowance for doubtful accounts

119,197

132,867

Accounts receivable from related parties

2,195

2,189

Expendable parts and supplies, net of allowance for obsolescence

63,806

56,814

Prepaid expenses

59,682

59,175

Other current assets

23,685

22,783

Total Current Assets

1,164,476

1,405,515

Long-term investments

253,876

37,590

Property and Equipment:

Owned property and equipment:

Flight equipment

2,554,756

2,477,830

Other equipment

84,529

73,487

2,639,285

2,551,317

Less: Accumulated depreciation

(583,042)

(530,347)

2,056,243

2,020,970

Purchase deposits for flight equipment

370,200

327,544

Total Property and Equipment

2,426,443

2,348,514

Other Assets:

Net pension asset

11,936

11,114

Goodwill

25,919

25,305

Intangible asset

30,968

28,214

Other assets

98,193

96,509

Total Other Assets

167,016

161,143

Total Assets

$    4,011,811

$     3,952,762

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$       147,649

$        156,329

Accounts payable

113,697

95,046

Accounts payable to related parties

16,235

14,483

Air traffic liability

463,283

578,439

Taxes and interest payable

96,211

113,541

Accrued expenses payable

72,930

75,975

Other current liabilities

8,484

8,133

Total Current Liabilities

918,489

1,041,946

Non-Current Liabilities:

Long-term debt

895,396

913,507

Post employment benefits liability

6,176

6,223

Other long-term liabilities

65,837

51,223

Deferred tax liabilities

35,858

37,959

Total Non-Current Liabilities

1,003,267

1,008,912

Total Liabilities

1,921,756

2,050,858

Shareholders' Equity:

Class A - 33,433,789 shares issued and outstanding

22,676

22,626

Class B - 10,938,125 shares issued and outstanding

7,466

7,466

Additional paid in capital

49,671

47,031

Retained earnings

2,004,859

1,820,580

Accumulated other comprehensive income (loss)

5,383

4,200

Total Shareholders' Equity

2,090,054

1,901,903

Total Liabilities and Shareholders' Equity

$    4,011,811

$     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

2Q14

2Q13

1Q13

Net income as Reported

$118,172

$74,441

$151,357

Special Items (adjustments):

     Unrealized (gain) loss on fuel hedging instruments 

(4,105)

10,582

3,373

     Loss due to devaluation of Venezuelan Bolivar

1,874

0

(1,178)

Adjusted Net Income

$115,941

$85,023

$153,553

Shares used for Computation (in thousands)

     Basic and Diluted

44,409

44,387

44,403

Adjusted earnings per share - Basic and Diluted

2.61

1.92

3.46

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

2Q14

2Q13

1Q14

Operating Costs per ASM as Reported

10.7

10.7

10.7

Aircraft fuel per ASM

(4.1)

(4.0)

(4.1)

Operating Costs per ASM excluding fuel 

6.6

6.7

6.6

SOURCE Copa Holdings, S.A.

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