Copa Holdings Reports Financial Results for the Third Quarter of 2020

Rhea-AI Summary

Copa Holdings reported a net loss of US$118.1 million for the third quarter of 2020, translating to US$2.78 per share, amidst the ongoing COVID-19 pandemic and related travel restrictions. The company operated at 1.5% of its 3Q19 capacity, generating US$32.4 million in operating revenues, down 95.4% year-over-year. Copa ended the quarter with US$1.3 billion in liquidity but reported significant operational losses. Subsequent events included resuming service to 38 destinations and plans to return its Boeing 737-MAX9 aircraft to service.

Positive

• Copa Holdings has US$1.3 billion in available liquidity, ensuring operational continuity.
• Resumed service to 38 destinations in November 2020.
• Plans to return 6 Boeing 737-MAX9 aircraft to service following FAA approval.

Negative

• Net loss of US$118.1 million for 3Q20, a significant decline compared to profitability in 3Q19.
• Operating revenues fell by 95.4% year-over-year to US$32.4 million.
• Capacity utilization was just 1.5% of 3Q19 levels.

PANAMA CITY, Nov 18, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2020 (3Q20). 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 2019 (3Q19).

Due to government restrictions on air travel implemented in response to the Covid-19 outbreak, the Company did not provide scheduled commercial service during the first 45 days of the quarter.  On August 14, the Company restarted limited scheduled commercial operations subject to Panama's restrictions on the number of flights and entry for non-citizens and non-residents, and it has been gradually increasing capacity ever since.  However, the capacity figures were still very low on a full quarter basis.  Therefore, this earnings release will focus on the financial results and metrics that are relevant in these circumstances and will omit certain financial ratios, unit metrics and operational indicators that are usually provided, since they are either not measurable or immaterial on such a limited operational base.

OPERATING AND FINANCIAL HIGHLIGHTS

• Copa Holdings reported a net loss of US$118.1 million or US$2.78 per share. Excluding special items, the Company would have reported a net loss of US$121.6 million, or US$2.86 per share.
• Special items for the quarter include a US$3.6 million unrealized gain on the mark-to-market of the Company's outstanding convertible notes.
• Copa Holdings reported an operating loss of US$107.0 million.
• Cash consumption, defined as cash disbursements less proceeds, excluding extraordinary financing activities and asset sales, averaged US$36 million per month during the quarter.
• The Company ended the quarter with US$1.3 billion of available liquidity, consisting of US$1.0 billion in cash, short-term and long-term investments, and committed and undrawn credit facilities of US$305 million.
• The Company repaid US$50 million in short-term lines of credit, closing the quarter with a total debt of US$1.2 billion.
• On August 14, the Company restarted limited scheduled commercial operations, subject to Panama's health control restrictions on the number of flights and entry for non-citizens and non-residents to Panama and has been gradually increasing capacity since then. Capacity for the quarter represented approximately 1.5% of 3Q19 capacity.
• The Company completed the delivery of the first EMB-190 aircraft out of 14 that have been sold to a third party.
• Excluding the aircraft classified as assets held for sale, Copa Holdings ended the quarter with a consolidated fleet of 74 aircraft – 68 Boeing 737-800s and 6 Boeing 737MAX9s.

Subsequent Events

• During October, the Company delivered the 2^nd and 3^rd EMB-190 aircraft out of 14 that have been sold to a third party.
• On October 11, Panama lifted restrictions on the number of flights and entry for non-citizens and non-residents.
• During the month of November, the Company signed a Letter of Intent for the sale of 2 Boeing 737-700 aircraft, to be finalized and delivered in January 2021.
• As of November 15, the Company has restarted service to 38 destinations.
• On November 18, the FAA rescinded the order that grounded the Boeing 737-MAX aircraft type and published an Airworthiness Directive and MAX training requirements, paving the way for a return to service.  The Company has a plan in place to comply with all new requirements and expects to return its six Boeing 737-MAX9 aircraft to service soon.
• The Company is in advanced discussions with Boeing to reach a settlement regarding the Boeing 737-MAX grounding.  Subject to the outcome of these discussions, the Company expects to receive two Boeing 737-MAX9 aircraft during the month of December 2020.

 

Consolidated Financial & Operating Highlights	3Q20	3Q19	Variance vs. 3Q19	2Q20	Variance vs. 2Q20
Revenue Passengers Carried (000s)	30	2,703	-98.9%	9	225.9%
RPMs (millions)	57	5,466	-99.0%	15	275.7%
ASMs (millions)	95	6,383	-98.5%	31	205.9%
Load Factor	59.7%	85.6%	-26.0 p.p.	48.6%	11.1 p.p.
Fuel Gallons Consumed (millions)	1.32	81.97	-98.4%	0.66	99.4%
Avg. Price Per Fuel Gallon (US$)	1.41	2.16	-34.6%	0.81	74.1%
Average Length of Haul (miles)	1,925	2,022	-4.8%	1,670	15.3%
Average Stage Length (miles)	1,081	1,295	-16.5%	727	48.7%
Departures	559	33,373	-98.3%	225	148.4%
Block Hours	1,710	109,614	-98.4%	820	108.5%
Operating Revenues (US$ millions)	32.4	708.2	-95.4%	14.5	122.8%
Operating Profit (Loss) (US$ millions)	-107.0	132.9	n/m	-357.9	n/m
Adjusted Operating Profit (Loss) (US$ millions) (1)	-107.0	132.9	n/m	-108.7	n/m
Net Profit (Loss) (US$ millions)	-118.1	104.0	n/m	-386.0	n/m
Adjusted Net Profit (Loss) (US$ millions) (1)	-121.6	104.0	n/m	-114.6	n/m
Basic EPS (US$)	-2.78	2.45	n/m	-9.08	n/m
Adjusted Basic EPS (US$) (1)	-2.86	2.45	n/m	-2.70	n/m
Shares for calculation of Basic EPS (000s)	42,510	42,487	0.1%	42,512	0.0%
(1) Excludes Special Items.  This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q20 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: 
https://copa.gcs-web.com/financial-information/quarterly-results

3Q20 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	Nov 19, 2020
Time:	11:00 AM US ET (11:00 AM Local Time)
Conference telephone number:	877-293-5456 (US Domestic Callers)
	707-287-9357 (International Callers)
Webcast:	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 80 destinations in 33 countries in North, Central and South America and the Caribbean. For more information visit: www.copa.com. 

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: 011 507 304-2774
www.copa.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		%
		3Q20		3Q19		Change		2Q20		Change
Operating Revenues
Passenger revenue		27,619		685,337		-96.0%		10,790		156.0%
Cargo and mail revenue		596		14,647		-95.9%		145		309.9%
Other operating revenue		4,167		8,226		-49.3%		3,597		15.8%
Total Operating Revenue		32,382		708,210		-95.4%		14,532		122.8%
Operating Expenses
Fuel		1,287		177,603		-99.3%		137		839.0%
Wages, salaries, benefits and other employees' expenses		44,241		113,398		-61.0%		38,198		15.8%
Passenger servicing		1,095		26,204		-95.8%		402		172.4%
Airport facilities and handling charges		1,752		47,022		-96.3%		505		246.9%
Sales and distribution		5,985		52,980		-88.7%		3,754		59.4%
Maintenance, materials and repairs		9,079		30,632		-70.4%		7,505		21.0%
Depreciation and amortization		63,022		72,876		-13.5%		305,185		-79.3%
Flight operations		454		26,572		n/m		(82)		n/m
Other operating and administrative expenses		12,435		28,047		-55.7%		16,803		-26.0%
Total Operating Expense		139,349		575,334		-75.8%		372,408		-62.6%
Operating Profit (Loss)		(106,966)		132,876		n/m		(357,875)		n/m
Non-operating Income (Expense):
Finance cost		(16,264)		(12,696)		28.1%		(27,056)		-39.9%
Finance income		4,394		6,121		-28.2%		5,677		-22.6%
Net change in fair value of derivatives		3,591		-		n/m		(22,198)		n/m
Gain (loss) on foreign currency fluctuations		(370)		(9,641)		n/m		500		n/m
Other non-operating income (expense)		(2,631)		(350)		n/m		447		n/m
Total Non-Operating Income/(Expense)		(11,278)		(16,567)		-31.9%		(42,628)		-73.5%
Profit (Loss) before taxes		(118,245)		116,309		n/m		(400,504)		n/m
Income tax expense		(188)		12,332		n/m		(14,486)		n/m
Net Profit (Loss)		(118,057)		103,978		n/m		(386,018)		n/m
EPS
Basic		-2.78		2.45		n/m		-9.08		n/m
Shares used for calculation:
Basic		42,509,959		42,487,355				42,511,806

 

Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)	September	December
	2020	2019
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	222,263	158,733
Short-term investments	644,137	692,403
Total cash, cash equivalents and short-term investments	866,400	851,136
Accounts receivable, net	35,669	129,634
Accounts receivable from related parties	1,625	147
Expendable parts and supplies, net	77,481	69,100
Prepaid expenses	29,755	49,034
Prepaid income tax	9,020	1,181
Other current assets	8,546	14,206
	162,096	263,301
Assets held for sale	143,466	120,006
TOTAL CURRENT ASSETS	1,171,962	1,234,442
Long-term investments	139,503	134,347
Long-term accounts receivable	1,038	2,139
Long-term prepaid expenses	6,416	17,743
Property and equipment, net	2,203,750	2,532,402
Right of use assets	229,595	290,843
Intangible, net	97,771	108,116
Net pension asset	2,868	249
Deferred tax assets	21,714	19,216
Other Non-Current Assets	13,663	17,881
TOTAL NON-CURRENT ASSETS	2,716,318	3,122,935
TOTAL ASSETS	3,888,280	4,357,377
LIABILITIES
Loans and borrowings	129,667	122,581
Current portion of lease liability	89,708	97,732
Accounts payable	39,560	119,332
Accounts payable to related parties	5,101	14,086
Air traffic liability	433,145	497,374
Frequent flyer deferred revenue	88,219	80,325
Taxes Payable	6,756	46,267
Employee benefits obligations	7,350	55,373
Income tax payable	883	9,683
Other Current Liabilities	136	83
TOTAL CURRENT LIABILITIES	800,525	1,042,836
Loans and borrowings long-term	1,118,846	938,182
Lease Liability	152,234	206,832
Derivative financial instruments	94,836	-
Other long - term liabilities	219,400	191,221
Deferred tax Liabilities	27,283	43,397
TOTAL NON-CURRENT LIABILITIES	1,612,599	1,379,633
TOTAL LIABILITIES	2,413,124	2,422,469
EQUITY
Issued Capital
Class A -33,858,511 issued and 31,417,714  outstanding	21,196	21,142
Class B common stock - 10,938,125	7,466	7,466
Additional Paid-In Capital	90,125	86,135
Treasury Stock	(136,388)	(136,388)
Retained Earnings	1,931,191	1,718,179
Net profit	(429,801)	247,002
Other comprehensive loss	(8,632)	(8,628)
TOTAL EQUITY	1,475,156	1,934,908
TOTAL EQUITY & LIABILITIES	3,888,280	4,357,377

 

Copa Holdings, S. A. and subsidiaries
Consolidated Statement of Cash Flows
For the nine months ended September 30,
(In US$ thousands)
										2020		2019		2018
										(Unaudited)		(Unaudited)		(Unaudited)
Cash flow (used in) from operating activities										(75,298)		548,947		377,941
Cash flow used in operating activities										(2,333)		(32,863)		(129,541)
Cash flow from (used in) financing activities										141,162		(446,953)		(316,461)
Net increase (decrease) in cash and cash equivalents										63,531		69,131		(68,061)
Cash and cash equivalents at January 1										158,732		156,158		238,792
Cash and cash equivalents at September 30										$               222,263		$               225,289		$               170,731
Short-term investments										644,137		536,084		579,246
Long-term investments										139,503		124,169		165,865
Total cash and cash equivalents and investments at September 30										$            1,005,903		$               885,542		$               915,842

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 Monthly Cash Consumption. 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 Operating Profit
and Adjusted Net Profit		3Q20		3Q19		2Q20
Operating Profit as Reported		$      (106,966)		$        132,876		$      (357,875)
Add: Unredeemed Ticket Revenue provision reversal						$          12,341
Add: Fleet Impairment loss						$        186,807
Add: Expected Loss on Embraer assets held for sale						$          50,048
Adjusted Operating Profit		$      (106,966)		$        132,876		$      (108,679)
Net profit as Reported		$      (118,057)		$        103,978		$      (386,018)
Add: Unredeemed Ticket Revenue provision reversal						$          12,341
Add: Fleet Impairment loss						$        186,807
Add: Expected Loss on Embraer assets held for sale						$          50,048
Add: Net change in fair value of derivatives		$          (3,591)				$          22,198
Adjusted Net Profit		$      (121,648)		$        103,978		$      (114,624)
Reconciliation of Adjusted Basic EPS
Adjusted Net Profit		$      (121,648)		$        103,978		$      (114,624)
Shares used for calculation of Basic EPS		42,510		42,487		42,512
Adjusted Basic Earnings per share (Adjusted Basic EPS)		$            (2.86)		$              2.45		$            (2.70)
Reconciliation of Monthly Cash Consumption for 2Q and 3Q 2020
Beginning Cash balance		1,143				1,127
Ending Cash balance		1,006				1,143
Net cashflows in the quarter		(137)				16
Substract: Proceeds from Convertible Notes Offering		-				343
Substract: Others proceeds (assets sold and other non-op proceeds)		22
Add: Repayment of short term credit lines		50				95
Cash Consumption excluding extraordinary activities		(109)				(232)
Monthly Cash Consumption excluding extraordinary  activities		(36)				(77)

 

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SOURCE Copa Holdings, S.A.