Copa Holdings Reports Net Income of $191.8 million and EPS of $4.55 for the Fourth Quarter of 2023

Rhea-AI Summary

Copa Holdings, S.A. (NYSE: CPA) reported a net profit of US$191.8 million for 4Q23 or US$4.55 per share, with a full-year net profit of US$518.2 million. The operating profit for 4Q23 was US$218.9 million, and the Company ended the quarter with approximately US$1.2 billion in cash, short-term, and long-term investments. However, the revenue per available seat mile (RASM) decreased by 7.3% compared to 4Q22 to 12.7 cents, and the yield decreased by 7.1% to 14.0 cents. The Company also had to suspend operations of twenty-one 737 MAX9 aircraft due to an Airworthiness Directive issued by the United States Federal Aviation Administration (FAA) in January.

Positive

• Copa Holdings reported a net profit of US$191.8 million for 4Q23
• The operating profit for 4Q23 was US$218.9 million
• The Company ended the quarter with approximately US$1.2 billion in cash, short-term, and long-term investments

Negative

• The revenue per available seat mile (RASM) decreased by 7.3% compared to 4Q22 to 12.7 cents
• The yield decreased by 7.1% to 14.0 cents
• The Company had to suspend operations of twenty-one 737 MAX9 aircraft due to an Airworthiness Directive issued by the United States Federal Aviation Administration (FAA) in January

Insights

Financial Analyst

The financial results reported by Copa Holdings, S.A. reflect a robust fiscal performance, with significant year-over-year increases in both net profit and operating profit. The adjusted net profit growth from US$335.4 million in 2022 to US$675.1 million in 2023 is particularly noteworthy, representing an increase of over 100%. This suggests that the company has successfully leveraged operational efficiencies or captured increased market demand, or a combination of both.

Furthermore, the improvement in the operating margin from 15.2% to 23.5% indicates a strong control over operational costs relative to revenue. The reduction in operating cost per available seat mile (CASM), especially with a 12.7% decrease in the price of jet fuel, has likely contributed to this margin enhancement. However, it is important to consider the yield decrease of 7.1% and the potential implications for pricing power in the market. If this trend continues, it could signal a competitive pricing environment that may affect future profitability.

From a liquidity standpoint, the company's cash and investments position of US$1.2 billion, representing 34% of the last twelve months' revenues, provides a cushion and indicates a solid balance sheet. The Adjusted Net Debt to EBITDA ratio of 0.5 times is also favorable, suggesting that the company is not overly leveraged and has maintained financial flexibility.

Market Research Analyst

The increase in passenger traffic and capacity, both by approximately 11%, aligns with the industry's recovery trajectory post-pandemic. The slight improvement in load factor, albeit by only 0.1 percentage points, suggests effective capacity management in relation to demand. However, the decrease in RASM by 7.3% compared to the previous year could indicate that while more seats are being filled, the revenue generated per seat is declining, which could be a concern if the trend persists.

The fleet expansion with the delivery of three Boeing 737 MAX 9 aircraft is a sign of Copa Holdings' commitment to growth and modernization. This could potentially lead to increased efficiency and cost savings in the long run, though it is essential to monitor how the additional capacity is absorbed by the market.

The on-time performance and flight completion factor are critical indicators of operational excellence and customer satisfaction. Copa Airlines' high performance in these areas, coupled with the recognition as the most on-time airline in Latin America, enhances its competitive positioning and may contribute to customer loyalty and brand strength.

Aviation Industry Expert

The suspension of operations for the 737 MAX 9 aircraft in January following the FAA directive, leading to the cancellation of 1788 flights, is a significant operational challenge. The swift return to service is a positive outcome, but the incident underscores the importance of safety and regulatory compliance in the aviation industry. The financial impact of such disruptions can be substantial and it's crucial for investors to consider the potential risks associated with fleet dependencies on specific aircraft models.

The announcement of a quarterly dividend payment of US$1.61 per share signals confidence in the company's financial health and a commitment to shareholder returns. Dividend policies can often reflect a company's stability and maturity and in this case, it may also indicate the management's optimism about future cash flows.

Excluding special items, adjusted net income came in at $188.4 million, or Adjusted EPS of $4.47

PANAMA CITY, Panama, Feb. 7, 2024 /PRNewswire/ --  Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2023 (4Q23) and the full year of 2023. 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 fourth quarter of 2022 (4Q22).

OPERATING AND FINANCIAL HIGHLIGHTS

• Copa Holdings reported a net profit of US$191.8 million for 4Q23 or US$4.55 per share. Excluding special items comprised of a net gain of US$3.4 million related to the value of financial investments, the Company would have reported a net profit of US$188.4 million or US$4.47 per share.
  
  
• For the full year 2023, the Company reported a net profit of US$518.2 million or US$12.89 per share. Excluding special items, comprised of a net loss related to the Company's convertible notes as well as changes in the value of financial investments totaling US$156.9 million, Copa Holdings would have reported an adjusted net profit of US$675.1 million or US$16.79 per share, compared to an adjusted net profit of US$335.4 million or earnings per share of US$8.26 in 2022.
  
  
• Copa Holdings reported an operating profit of US$218.9 million and a 23.9% operating margin for the quarter.
  
  
• For the full year 2023, the Company reported an operating profit of US$811.8 million and an operating margin of 23.5%, compared to an adjusted operating profit of US$450.4 million and an operating margin of 15.2% in 2022.
  
  
• Passenger traffic for 4Q23, measured in terms of revenue passenger miles (RPMs), increased by 11.1% compared to 4Q22 in line with capacity which, measured in available seat miles (ASMs), increased by 11.0%. As a result, the load factor for the quarter increased by 0.1 percentage points to 86.7% compared to 4Q22.
  
  
• Total revenues for 4Q23 increased 3.0% to US$916.9 million mainly driven by higher capacity, while yields decreased by 7.1% to 14.0 cents. Consequently, revenue per available seat mile (RASM) decreased by 7.3% as compared to 4Q22 to 12.7 cents.
  
  
• Operating cost per available seat mile (CASM) decreased 6.3% from 10.3 cents in 4Q22 to 9.7 cents in 4Q23, mainly driven by a decrease of 12.7% in the price of jet fuel per gallon and lower sales and distribution costs. CASM excluding fuel (Ex-fuel CASM) decreased by 1.6% in the quarter to 6.0 cents, when compared to 4Q22.
  
  
• The Company ended the quarter with approximately US$1.2 billion in cash, short-term and long-term investments, which represent 34% of the last twelve months' revenues.
  
  
• 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 took delivery of three Boeing 737 MAX 9 aircraft, ending the year 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.
  
  
• Copa Airlines had an on-time performance for the quarter of 83.8% and a flight completion factor of 99.8%.

Subsequent Events

• In January, Copa Airlines was recognized by Cirium for the ninth time as the most on-time airline in Latin America in 2023. Copa Airlines' on-time performance of 89.5% for the year was the highest of any carrier in the Americas.
  
  
• Following the Airworthiness Directive issued by the United States Federal Aviation Administration (FAA) on January 6, the Company suspended operations of twenty-one 737 MAX9 aircraft. From January 6 to January 29, a total of 1788 flights were canceled. After undergoing the technical inspections required by the regulators, all of these aircraft have returned to Copa Airlines' flight schedule.
  
  
• On February 7, 2024, the Board of Directors of Copa Holdings approved a 2024 quarterly dividend payment of US$1.61 per share. Dividends will be distributed during March, June, September, and December. The first quarterly dividend of US$1.61 per share will be paid on March 15, 2024, to shareholders on record as of February 29, 2024. 

 

Consolidated Financial & Operating Highlights	4Q23	4Q22	Variance vs. 4Q22	3Q23	Variance vs. 3Q23	FY23	FY22	Variance vs. FY22
Revenue Passengers Carried (000s)	3,310	2,813	17.7 %	3,272	1.2 %	12,442	10,334	20.4 %
Revenue Passengers OnBoard (000s)	4,930	4,262	15.7 %	4,873	1.2 %	18,566	15,724	18.1 %
RPMs (millions)	6,263	5,639	11.1 %	6,239	0.4 %	24,052	20,779	15.7 %
ASMs (millions)	7,228	6,509	11.0 %	7,109	1.7 %	27,700	24,430	13.4 %
Load Factor	86.7 %	86.6 %	0.1 p.p.	87.8 %	-1.1 p.p.	86.8 %	85.1 %	1.8 p.p.
Yield (US$ Cents)	14.0	15.1	-7.1 %	13.4	5.1 %	13.8	13.6	1.6 %
PRASM (US$ Cents)	12.2	13.1	-7.1 %	11.7	3.8 %	12.0	11.6	3.7 %
RASM (US$ Cents)	12.7	13.7	-7.3 %	12.2	3.9 %	12.5	12.1	3.0 %
CASM (US$ Cents)	9.7	10.3	-6.3 %	9.3	3.6 %	9.6	10.3	-7.1 %
CASM Excl. Fuel (US$ Cents)	6.0	6.1	-1.6 %	5.8	3.9 %	6.0	6.0	-0.3 %
Fuel Gallons Consumed (millions)	85.6	77.7	10.2 %	83.9	2.1 %	327.6	291.4	12.4 %
Avg. Price Per Fuel Gallon (US$)	3.07	3.52	-12.7 %	3.00	2.6 %	3.02	3.60	-16.0 %
Average Length of Haul (miles)	1,892	2,005	-5.6 %	1,907	-0.8 %	1,933	2,011	-3.9 %
Average Stage Length (miles)	1,229	1,266	-2.9 %	1,238	-0.8 %	1,251	1,275	-1.9 %
Departures	36,207	32,112	12.8 %	35,468	2.1 %	137,044	120,155	14.1 %
Block Hours	115,118	104,822	9.8 %	112,114	2.7 %	438,913	390,639	12.4 %
Average Aircraft Utilization (hours)	11.9	11.8	1.3 %	11.9	0.0 %	11.9	11.3	5.0 %
Operating Revenues (US$ millions)	916.9	890.6	3.0 %	867.7	5.7 %	3,461.1	2,965.0	16.7 %
Operating Profit (Loss) (US$ millions)	218.9	219.7	-0.4 %	205.0	6.8 %	811.8	450.4	80.2 %
Operating Margin	23.9 %	24.7 %	-0.8 p.p.	23.6 %	0.2 p.p.	23.5 %	15.2 %	8.3 p.p.
Net Profit (Loss) (US$ millions)	191.8	88.3	117.2 %	187.4	2.4 %	518.2	348.1	48.9 %
Adjusted Net Profit (Loss) (US$ millions) (1)	188.4	177.7	6.0 %	174.4	8.0 %	675.1	335.4	101.3 %
Basic EPS (US$)	4.55	2.23	103.9 %	4.72	-3.5 %	12.89	8.58	50.3 %
Adjusted Basic EPS (US$) (1)	4.47	4.49	-0.5 %	4.39	1.8 %	16.79	8.26	103.2 %
Shares for calculation of Basic EPS (000s)	42,150	39,554	6.6 %	39,730	6.1 %	40,201	40,582	-0.9 %

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

FULL 4Q23 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

https://copa.gcs-web.com/financial-information/quarterly-results

4Q23 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	February 8, 2024
Time:	11:00 AM US ET (11:00 AM Local Time)
Join by phone:	https://register.vevent.com/register/BI4cf2c550166242c38d9f247f0fa590a7
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.
Consolidated statement of profit or loss
(US$ Thousands)
		Unaudited		Unaudited		%	Unaudited		%	Unaudited		Audited		%
		4Q23		4Q22		Change	3Q23		Change	FY23		FY22		Change
Operating Revenues
Passenger revenue		879,351		852,291		3.2 %	833,306		5.5 %	3,320,455		2,824,719		17.5 %
Cargo and mail revenue		26,534		27,095		-2.1 %	23,431		13.2 %	97,105		1,01,765		-4.6 %
Other operating revenue		11,049		11,226		-1.6 %	10,973		0.7 %	43,538		38,549		12.9 %
Total Operating Revenue		916,933		890,612		3.0 %	867,711		5.7 %	3,461,098		2,965,033		16.7 %
Operating Expenses
Fuel		264,166		273,901		-3.6 %	252,077		4.8 %	995,862		1,052,637		-5.4 %
Wages, salaries, benefits and other employees' expenses		119,669		105,019		14.0 %	108,416		10.4 %	436,526		380,385		14.8 %
Passenger servicing		24,148		19,518		23.7 %	23,147		4.3 %	89,146		70,080		27.2 %
Airport facilities and handling charges		59,010		49,734		18.7 %	58,243		1.3 %	2,21,878		1,92,584		15.2 %
Sales and distribution		55,111		61,498		-10.4 %	54,058		1.9 %	2,27,171		2,24,465		1.2 %
Maintenance, materials and repairs		31,276		28,875		8.3 %	29,528		5.9 %	1,32,531		1,04,114		27.3 %
Depreciation and amortization		79,815		70,251		13.6 %	78,359		1.9 %	3,05,668		2,67,704		14.2 %
Flight operations		27,987		25,667		9.0 %	29,476		-5.1 %	1,09,892		97,256		13.0 %
Other operating and administrative expenses		36,875		36,492		1.0 %	29,394		25.5 %	1,30,656		1,25,424		4.2 %
Total Operating Expense		698,058		670,954		4.0 %	662,697		5.3 %	2,649,331		2,514,648		5.4 %
Operating Profit/(Loss)		218,875		219,657		-0.4 %	205,014		6.8 %	811,767		450,384		80.2 %
Non-operating Income (Expense):
Finance cost		(20,408)		(23,388)		-12.7 %	(82,926)		-75.4 %	(1,58,216)		(87,631)		80.5 %
Finance income		14,289		7,413		92.8 %	15,108		-5.4 %	50,209		18,030		178.5 %
Gain (loss) on foreign currency fluctuations		(272)		(2,560)		-89.4 %	(1,566)		-82.6 %	3,076		(9,812)		-131.3 %
Net change in fair value of derivatives		-		(91,305)		-100.0 %	77,058		-100.0 %	(98,347)		17,189		-672.2 %
Other non-operating income (expense)		3,126		1,221		156.0 %	1,867		67.5 %	7,153		70		10065.6 %
Total Non-Operating Income/(Expense)		(3,264)		(1,08,619)		-97.0 %	9,540		-134.2 %	(196,126)		(62,155)		215.5 %
Profit before taxes		215,611		111,039		94.2 %	214,555		0.5 %	615,641		388,229		58.6 %
Income tax expense		(23,830)		(22,758)		4.7 %	(27,179)		-12.3 %	(97,456)		(40,176)		142.6 %
Net Profit/(Loss)		191,780		88,280		117.2 %	187,375		2.4 %	518,185		348,054		48.9 %
EPS
Basic		4.55		2.23		103.9 %	4.72		-3.5 %	12.89		8.58		50.3 %
Shares used for calculation:
Basic		42,149,854		39,554,071		6.6 %	39,730,180		6.1 %	40,200,947		40,581,616		-0.9 %

 

 

Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)
	December 2023	December 2022
ASSETS	(Unaudited)	(Audited)
Cash and cash equivalents	206,375	122,424
Short-term investments	708,809	812,323
Total cash, cash equivalents and short-term investments	915,184	934,747
Accounts receivable, net	156,720	135,415
Accounts receivable from related parties	2,527	2,168
Expendable parts and supplies, net	116,604	93,332
Prepaid expenses	44,635	52,322
Prepaid income tax	66	798
Other current assets	32,227	17,043
	352,779	301,078
TOTAL CURRENT ASSETS	1,267,963	1,235,825
Long-term investments	258,934	202,056
Long-term prepaid expenses	9,633	7,770
Property and equipment, net	3,239,078	2,883,524
Right of use assets	281,146	234,380
Intangible, net	87,986	78,555
Net defined benefit assets	5,346	504
Deferred tax assets	30,136	30,743
Other Non-Current Assets	17,048	17,005
TOTAL NON-CURRENT ASSETS	3,929,307	3,454,537
TOTAL ASSETS	5,197,270	4,690,362
LIABILITIES
Loans and borrowings	2,22,430	1,42,484
Current portion of lease liability	68,304	80,084
Accounts payable	182,303	166,660
Accounts payable to related parties	1,228	1,004
Air traffic liability	605,900	651,805
Frequent flyer deferred revenue	126,677	111,526
Taxes Payable	44,210	43,878
Accrued expenses payable	64,940	44,913
Income tax payable	26,956	6,276
Other Current Liabilities	1,403	1,175
TOTAL CURRENT LIABILITIES	1,344,351	1,249,805
Loans and borrowings long-term	1,240,261	1,301,819
Lease Liability	215,353	158,289
Derivative financial instruments	-	251,150
Deferred tax Liabilities	36,594	16,571
Other long - term liabilities	234,474	220,618
TOTAL NON-CURRENT LIABILITIES	1,726,682	1,948,447
TOTAL LIABILITIES	3,071,033	3,198,252
EQUITY
Class A - 34,075,142  issued and 31,090,299 outstanding	21,367	21,327
Class B - 10,938,125	7,466	7,466
Additional Paid-In Capital	210,936	103,465
Treasury Stock	(204,130)	(344,541)
Retained Earnings	1,581,739	1,367,784
Net profit	518,185	348,054
Other comprehensive loss	(9,326)	(11,445)
TOTAL EQUITY	2,126,237	1,492,110
TOTAL EQUITY LIABILITIES	5,197,270	4,690,362

 

Copa Holdings, S. A. and subsidiaries
Consolidated Statement of Cash Flows
For the twelve months ended December 31,
(In US$ thousands)
									2023		2022		2021
									(Unaudited)		(Audited)		(Audited)
Cash flow from operating activities									1,020,974		740,948		462,612
Cash flow (used in) investing activities									(542,995)		(555,911)		(459,135)
Cash flow (used in) from financing activities									(394,028)		(273,694)		88,539
Net  increase (decrease) in cash and cash equivalents									83,951		(88,657)		92,016
Cash and cash equivalents at January 1									122,424		211,081		119,065
Cash and cash equivalents at December 31									$                   206,375		$                   122,424		$                   211,081
Short-term investments									708,809		812,323		806,340
Long-term investments									258,934		202,056		199,670
Total cash and cash equivalents and investments at December 31									$                1,174,118		$                1,136,803		$                1,217,091

 

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		4Q23		4Q22		3Q23		FY23		FY22
Net Profit as Reported		$    191,780		$       88,280		$    187,375		$    518,185		$    348,054
Interest expense related to the settlement of the convertible notes		$                -		$                -		$       64,894		$       64,894		$                -
Net change in fair value of derivatives		$                -		$       91,305		$      (77,058)		$       98,347		$      (17,189)
Net change in fair value of financial investments		$        (3,372)		$        (1,924)		$           (810)		$        (6,349)		$          4,516
Adjusted Net Profit		$    188,409		$    177,661		$    174,400		$    675,077		$    335,381
Reconciliation of Adjusted Basic EPS		4Q23		4Q22		3Q23		FY23		FY22
Adjusted Net Profit		$    188,409		$    177,661		$    174,400		$    675,077		$    335,381
Shares used for calculation of Basic EPS		42,150		39,554		39,730		40,201		40,582
Adjusted Basic Earnings per share (Adjusted Basic EPS)		$            4.47		$            4.49		$            4.39		$          16.79		$            8.26
Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel)		4Q23		4Q22		3Q23		FY23		FY22
Operating Costs per ASM as Reported (in US$ Cents)		9.7		10.3		9.3		9.6		10.3
Aircraft Fuel Cost per ASM  (in US$ Cents)		3.7		4.2		3.5		3.6		2.8
Operating Costs per ASM excluding fuel (in US$ Cents)		6.0		6.1		5.8		6.0		7.2

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SOURCE Copa Holdings, S.A.

FAQ

What was the net profit reported for the fourth quarter of 2023?

Copa Holdings reported a net profit of US$191.8 million for 4Q23.

What was the operating profit for the fourth quarter of 2023?

The operating profit for 4Q23 was US$218.9 million.

How much cash, short-term, and long-term investments did the company have at the end of the quarter?

The company ended the quarter with approximately US$1.2 billion in cash, short-term, and long-term investments.

What happened to the 737 MAX9 aircraft in January?

The company had to suspend operations of twenty-one 737 MAX9 aircraft due to an Airworthiness Directive issued by the United States Federal Aviation Administration (FAA) in January.