Copa Holdings Reports Financial Results for the First Quarter of 2024

Rhea-AI Summary

Copa Holdings (NYSE: CPA) reported its financial results for the first quarter of 2024.

The company achieved a net profit of US$176.1 million, a rise of US$18.3 million from 1Q23. Operating profit was US$216.0 million, with an operating margin of 24.2%, up 1.9 percentage points from last year. Total revenues grew by 3.0% to US$893.5 million, despite a 3.8% drop in passenger yields and a 4.6% decline in revenue per available seat mile (RASM).

Cost per available seat mile (CASM) improved by 6.9%, primarily due to lower jet fuel prices. The company ended the quarter with US$1.1 billion in cash and investments, and total debt stood at US$1.7 billion. Copa executed US$40 million of its US$200 million share repurchase program and announced a US$1.61 per share dividend payment for June 2024.

The fleet expanded to 108 aircraft with the recent acquisition of two Boeing 737 MAX 9. Despite grounding 21 Boeing 737 MAX 9 aircraft in January, the company saw passenger traffic increase by 7.1%.

Positive

• Net profit increased to US$176.1 million, up by US$18.3 million from 1Q23.
• Operating profit reached US$216.0 million, an 11.8% increase from 1Q23.
• Operating margin improved to 24.2%, up by 1.9 percentage points from last year.
• Total revenues rose by 3.0% to US$893.5 million.
• CASM decreased by 6.9%, driven by a 13.9% drop in jet fuel prices.
• The company ended the quarter with US$1.1 billion in cash and investments.
• Executed US$40 million of the US$200 million share repurchase program.
• Announced a dividend payment of US$1.61 per share for June 2024.
• Fleet expanded to 108 aircraft with the addition of two Boeing 737 MAX 9.
• Passenger traffic increased by 7.1%.

Negative

• Passenger yields decreased by 3.8% to 14.0 cents.
• Revenue per available seat mile (RASM) declined by 4.6% to 12.5 cents.
• Load factor decreased by 0.7 percentage points to 86.0%.
• The grounding of 21 Boeing 737 MAX 9 aircraft negatively impacted costs by approximately US$44.0 million.
• Total debt, including lease liabilities, stood at US$1.7 billion.
• Adjusted Net Profit decreased by 4.5% compared to 4Q23.
• Basic EPS decreased by 6.0% from 4Q23.

Insights

Financial Analyst

Copa Holdings' financial performance for 1Q24 showcases notable strengths despite challenges. The company reported a net profit of US$176.1 million, or US$4.19 per share, an increase from 1Q23. This is particularly impressive considering the negative impact of US$44.0 million from the grounding of 21 Boeing 737 MAX 9 aircraft. Excluding this, the results indicate strong underlying business health.

Total revenues increased by 3.0% to US$893.5 million, driven by higher passenger traffic, although passenger yields and revenue per available seat mile (RASM) decreased by 3.8% and 4.6%, respectively. The company managed to offset some revenue declines through operational efficiency, evidenced by a 6.9% decrease in cost per available seat mile (CASM), largely due to lower fuel prices and cost controls.

The company's liquidity position remains robust with cash and investments totaling US$1.1 billion, representing 32% of last twelve months' revenues. This provides a cushion for future uncertainties and potential strategic investments. Additionally, the execution of US$40 million in share repurchases out of a US$200 million authorized program indicates confidence in future prospects and a commitment to return value to shareholders.

However, a slight decrease in load factor to 86.0% suggests potential overcapacity or softening demand, which needs monitoring. The long-term debt, though manageable with an Adjusted Net Debt to EBITDA ratio of 0.5, also warrants attention.

Overall, the financials reflect a company that is effectively navigating operational hurdles while maintaining profitability and liquidity.

Market Research Analyst

The increase in passenger traffic by 7.1% and capacity by 8.0% suggests a strong demand environment for Copa Holdings. However, the decrease in load factor to 86.0% (-0.7 percentage points) implies that the company might have added capacity faster than demand grew, leading to lower utilization. This could potentially pressure margins if not managed carefully.

The decrease in passenger yields by 3.8% and RASM by 4.6% points to pricing pressure, which could be due to competitive dynamics or market conditions. While the company has managed to reduce CASM significantly, maintaining profitability in the face of declining yields will be crucial.

The share repurchase program is a positive indicator, suggesting that management believes the stock is undervalued and is confident in future earnings. Moreover, the recognition for on-time performance enhances the brand’s reputation in a competitive market, potentially boosting customer loyalty and market share over time.

While current results are promising, investors should keep an eye on capacity management and competitive pressures which can impact yields and load factors.

PANAMA CITY, Panama, May 15, 2024 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the first quarter of 2024 (1Q24). 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 2023 (1Q23).

OPERATING AND FINANCIAL HIGHLIGHTS

• Copa Holdings reported a net profit of US$176.1 million for 1Q24 or US$4.19 per share, a US$18.3 million increase compared to 1Q23 on an adjusted basis. These results include a negative impact of approximately US$44.0 million related to the grounding of 21 of the Company's Boeing 737 MAX 9 aircraft in January and exclude any compensation received from Boeing.
• Copa Holdings reported an operating profit of US$216.0 million and an operating margin of 24.2%, an increase of 11.8% and 1.9 percentage points, respectively, compared to 1Q23.
• Passenger traffic for 1Q24, measured in terms of revenue passenger miles (RPMs), increased by 7.1% compared to 1Q23 while capacity, measured in available seat miles (ASMs), increased by 8.0%. As a result, the load factor for the quarter decreased by 0.7 percentage points to 86.0% compared to 1Q23.
• Total revenues for 1Q24 increased 3.0% to US$893.5 million driven by an increase in passenger traffic. During the quarter, compared to 1Q23, passenger yields decreased by 3.8% to 14.0 cents, and revenue per available seat mile (RASM) decreased by 4.6% to 12.5 cents.
• Operating cost per available seat mile (CASM) decreased by 6.9% from 10.2 cents in 1Q23 to 9.5 cents in 1Q24, mainly driven by a decrease of 13.9% in the price of jet fuel, a decrease in maintenance, materials and repairs costs, and lower sales and distribution costs.
• CASM excluding fuel (Ex-fuel CASM) decreased by 2.0% in the quarter to 6.1 cents, when compared to 1Q23. Excluding the negative impact on costs and capacity of the partial grounding of the Company's 737 MAX 9 fleet in January, Copa Holdings would have reported an Ex-fuel CASM of approximately 5.8 cents for the quarter.
• The Company ended the quarter with approximately US$1.1 billion in cash, short-term and long-term investments, which represent 32% of the last twelve months' revenues.
• By the end of 1Q24, the Company had executed approximately US$40 million of the US$200 million share repurchase program approved by the Board of Directors.
• 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 0.5 times.
• During the quarter, the Company purchased from lessors two Boeing 737-800 NG aircraft, which were part of its current fleet as operating leases.
• The Company ended the quarter with a consolidated fleet of 106 aircraft – 67 Boeing 737-800s, 29 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800 freighter.
• During the first quarter, Cirium recognized Copa Airlines as the carrier with the highest on-time performance in Latin America. In fact, Copa Airlines' on-time performance averaging above 90% for the quarter was the highest amongst all airlines in the Americas and one of the highest in the world.

Subsequent Events

• In April, the Company signed a confidential resolution with Boeing to cover the impact of the partial grounding of its Boeing 737 MAX 9 fleet in January. The value will be amortized through the depreciation and amortization line of our Income Statement.
• In May, the Company took delivery of two Boeing 737 MAX 9 aircraft, increasing its total fleet to 108 aircraft.
• Copa Holdings will make its second dividend payment of the year of US$1.61 per share on June 14, 2024, to all Class A and Class B shareholders on record as of May 31, 2024.

 

Consolidated Financial & Operating Highlights	1Q24	1Q23	Variance vs. 1Q23	4Q23	Variance vs. 4Q23
Revenue Passengers Carried (000s)	3,272	2,881	13.6 %	3,310	(1.1) %
Revenue Passengers OnBoard (000s)	4,790	4,295	11.5 %	4,930	(2.8) %
RPMs (millions)	6,127	5,723	7.1 %	6,263	(2.2) %
ASMs (millions)	7,121	6,596	8.0 %	7,228	(1.5) %
Load Factor	86.0 %	86.8 %	-0.7 p.p	86.7 %	-0.6 p.p
Yield (US$ Cents)	14.0	14.6	(3.8) %	14.0	0.3 %
PRASM (US$ Cents)	12.1	12.6	(4.6) %	12.1	(0.4) %
RASM (US$ Cents)	12.5	13.1	(4.6) %	12.6	(0.7) %
CASM (US$ Cents)	9.5	10.2	(6.9) %	9.7	(1.6) %
CASM Excl. Fuel (US$ Cents)	6.1	6.2	(2.0) %	6.0	1.0 %
Fuel Gallons Consumed (millions)	84.4	78.2	7.9 %	85.6	(1.5) %
Avg. Price Per Fuel Gallon (US$)	2.90	3.36	(13.9) %	3.08	(5.8) %
Average Length of Haul (miles)	1,873	1,987	(5.8) %	1,892	(1.0) %
Average Stage Length (miles)	1,246	1,281	(2.8) %	1,229	1.4 %
Departures	35,220	31,984	10.1 %	36,207	(2.7) %
Block Hours	112,164	104,626	7.2 %	115,118	(2.6) %
Average Aircraft Utilization (hours)	11.6	11.9	(2.1) %	11.9	(2.6) %
Operating Revenues (US$ millions)	893.5	867.3	3.0 %	912.8	(2.1) %
Operating Profit (Loss) (US$ millions)	216.0	193.2	11.8 %	214.3	0.8 %
Operating Margin	24.2 %	22.3 %	1.9 p.p	23.5 %	0.7 p.p
Net Profit (Loss) (US$ millions)	176.1	121.5	44.9 %	187.7	(6.2) %
Adjusted Net Profit (Loss) (US$ millions)(1)	176.1	157.8	11.6 %	184.3	(4.5) %
Basic EPS (US$)	4.19	3.07	36.3 %	4.45	(6.0) %
Adjusted Basic EPS (US$) (1)	4.19	3.99	5.0 %	4.37	(4.3) %
Shares for calculation of Basic EPS (000s)	42,052	39,565	6.3 %	42,150	(0.2) %

(1)  Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 1Q24 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
https://copa.gcs-web.com/financial-information/quarterly-results

1Q24 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	May 16, 2024
Time:	11:00 AM US ET (11:00 AM Local Time)
Join by phone:	https://register.vevent.com/register/BIeac58d3f3e4f4841995aa07d6c718112
Webcast (listen-only):	https://copa.gcs-web.com/events-and-presentations
Speakers:	Pedro Heilbron, Chief Executive Officer
	José 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 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. and Subsidiaries
Consolidated statement of profit or loss
(In US$ thousands)

		Unaudited		Unaudited		%	Audited		%
		1Q24		1Q23		Change	4Q23		Change
Operating Revenues
Passenger revenue		858,725		834,018		3.0 %	875,257		(1.9 %)
Cargo and mail revenue		21,910		23,252		(5.8 %)	26,534		(17.4 %)
Other operating revenue		12,831		9,995		28.4 %	11,049		16.1 %
Total Operating Revenue		893,467		867,264		3.0 %	912,840		(2.1 %)
Operating Expenses
Fuel		245,352		265,498		(7.6 %)	264,166		(7.1 %)
Wages, salaries, benefits and other employees' expenses		114,314		102,652		11.4 %	119,669		(4.5 %)
Passenger servicing		29,684		20,391		45.6 %	24,148		22.9 %
Airport facilities and handling charges		60,347		50,479		19.5 %	59,010		2.3 %
Sales and distribution		55,494		61,406		(9.6 %)	55,111		0.7 %
Maintenance, materials and repairs		25,627		40,296		(36.4 %)	31,276		(18.1 %)
Depreciation and amortization		83,365		72,677		14.7 %	80,261		3.9 %
Flight operations		31,029		27,424		13.1 %	27,987		10.9 %
Other operating and administrative expenses		32,270		33,228		(2.9 %)	36,875		(12.5 %)
Total Operating Expense		677,482		674,053		0.5 %	698,504		(3.0 %)
Operating Profit/(Loss)		215,985		193,212		11.8 %	214,335		0.8 %
Non-operating Income (Expense):
Finance cost		(18,840)		(24,365)		(22.7 %)	(20,408)		(7.7 %)
Finance income		13,746		8,842		55.5 %	14,289		(3.8 %)
Gain (loss) on foreign currency fluctuations		(3,914)		1,201		(425.8 %)	(272)		1339.3 %
Net change in fair value of derivatives		(8)		(37,933)		(100.0 %)	—		— %
Other non-operating income (expense)		(112)		1,235		(109.1 %)	3,126		(103.6 %)
Total Non-Operating Income/(Expense)		(9,127)		(51,020)		(82.1 %)	(3,264)		179.6 %
Profit before taxes		206,858		142,192		45.5 %	211,071		(2.0 %)
Income tax expense		(30,792)		(20,671)		49.0 %	(23,378)		31.7 %
Net Profit/(Loss)		176,066		121,521		44.9 %	187,693		(6.2 %)

Copa Holdings, S. A. and Subsidiaries
Consolidated statement of financial position
(In US$ thousands)

		March 2024		December 2023
ASSETS		(Unaudited)		(Audited)
Cash and cash equivalents		170,525		206,375
Short-term investments		630,640		708,809
Total cash, cash equivalents and short-term investments		801,165		915,184
Accounts receivable, net		192,486		156,720
Accounts receivable from related parties		2,433		2,527
Expendable parts and supplies, net		116,919		116,604
Prepaid expenses		55,495		44,635
Prepaid income tax		88		66
Other current assets		32,548		32,227
		399,968		352,780
TOTAL CURRENT ASSETS		1,201,133		1,267,963
Long-term investments		301,192		258,934
Long-term prepaid expenses		9,471		9,633
Property and equipment, net		3,286,848		3,238,632
Right of use assets		259,283		281,146
Intangible, net		88,312		87,986
Net defined benefit assets		5,373		5,346
Deferred tax assets		20,999		30,148
Other Non-Current Assets		16,722		17,048
TOTAL NON-CURRENT ASSETS		3,988,199		3,928,872
TOTAL ASSETS		5,189,332		5,196,836
LIABILITIES
Loans and borrowings		233,110		222,430
Current portion of lease liability		64,465		68,304
Accounts payable		204,237		182,303
Accounts payable to related parties		1,658		1,228
Air traffic liability		579,476		611,856
Frequent flyer deferred revenue		132,132		124,815
Taxes Payable		53,565		44,210
Accrued expenses payable		34,214		64,940
Income tax payable		16,365		26,741
Other Current Liabilities		1,468		1,403
TOTAL CURRENT LIABILITIES		1,320,689		1,348,229
Loans and borrowings long-term		1,198,017		1,240,261
Lease Liability		198,387		215,353
Deferred tax Liabilities		45,742		36,369
Other long - term liabilities		235,014		234,474
TOTAL NON-CURRENT LIABILITIES		1,677,161		1,726,457
TOTAL LIABILITIES		2,997,850		3,074,685
EQUITY
Class A - 34,143,485 issued and 30,748,862 outstanding		23,238		23,201
Class B - 10,938,125		7,466		7,466
Additional Paid-In Capital		210,157		209,102
Treasury Stock		(244,311)		(204,130)
Retained Earnings		2,028,194		1,581,739
Net profit		176,066		514,098
Other comprehensive loss		(9,326)		(9,326)
TOTAL EQUITY		2,191,483		2,122,150
TOTAL EQUITY LIABILITIES		5,189,332		5,196,836

Copa Holdings, S. A. and Subsidiaries
Consolidated statement of cash flows
For the three months ended
(In US$ thousands) 

	2024		2023		2022
	(Unaudited)		(Audited)		(Audited)
Cash flow from operating activities	200,998		203,419		169,336
Cash flow used in investing activities	(78,334)		(62,868)		(120,515)
Cash flow used in financing activities	(158,514)		(20,661)		(10,888)
Net (decrease)  increase in cash and cash equivalents	(35,850)		119,890		37,933
Cash and cash equivalents at January 1	206,375		122,424		211,081
Cash and cash equivalents at March 31	$            170,525		$            242,314		$            249,014
Short-term investments	630,640		773,493		771,074
Long-term investments	301,192		166,481		204,810
Total cash and cash equivalents and investments at March 31	$         1,102,357		$         1,182,288		$         1,224,898

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	1Q24		1Q23		4Q23
Net Profit as Reported	$      176,066		$      121,521		$       187,693
Net change in fair value of derivatives	$               —		$        37,933		$                —
Net change in fair value of financial investments	$               —		$         (1,655)		$         (3,372)
Adjusted Net Profit	$      176,066		$      157,799		$       184,321
Reconciliation of Adjusted Basic EPS	1Q24		1Q23		4Q23
Adjusted Net Profit	$      176,066		$      157,799		$       184,321
Shares used for calculation of Basic EPS	42,052		39,565		42,150
Adjusted Basic Earnings per share (Adjusted Basic EPS)	$            4.19		$            3.99		$            4.37
Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel)	1Q24		1Q23		4Q23
Operating Costs per ASM as Reported (in US$ Cents)	9.5		10.2		9.7
Aircraft Fuel Cost per ASM (in US$ Cents)	3.4		4.0		3.7
Operating Costs per ASM excluding fuel (in US$ Cents)	6.1		6.2		6.0

 

 

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SOURCE Copa Holdings, S.A.

FAQ

What is Copa Holdings' net profit for 1Q24?

Copa Holdings reported a net profit of US$176.1 million for the first quarter of 2024.

How did Copa Holdings perform financially in 1Q24 compared to 1Q23?

Copa Holdings saw a net profit increase of US$18.3 million, operating profit rise by 11.8%, and total revenues grow by 3.0% compared to 1Q23.

What is Copa Holdings' operating margin for 1Q24?

Copa Holdings reported an operating margin of 24.2% for 1Q24.

How did Copa Holdings' passenger traffic change in 1Q24?

Passenger traffic increased by 7.1% in 1Q24 compared to 1Q23.

What is the impact of jet fuel prices on Copa Holdings' CASM in 1Q24?

CASM decreased by 6.9% in 1Q24, primarily due to a 13.9% reduction in jet fuel prices.

How much cash and investments did Copa Holdings have at the end of 1Q24?

Copa Holdings ended 1Q24 with approximately US$1.1 billion in cash, short-term, and long-term investments.

What is the status of Copa Holdings' share repurchase program?

Copa Holdings has executed US$40 million of the US$200 million share repurchase program approved by the Board of Directors.

What is Copa Holdings' dividend payment for June 2024?

Copa Holdings announced a dividend payment of US$1.61 per share to be made on June 14, 2024.

What was the impact of the grounding of Boeing 737 MAX 9 on Copa Holdings?

The grounding of 21 Boeing 737 MAX 9 aircraft negatively impacted Copa Holdings' costs by approximately US$44.0 million in 1Q24.

How did Copa Holdings' fleet change by the end of 1Q24?

Copa Holdings' fleet expanded to 108 aircraft with the addition of two Boeing 737 MAX 9 during the quarter.