Copa Holdings Reports Net Income of US$126.0 Million and EPS of US$2.84 for the Third Quarter of 2013

Excluding special items, adjusted net income came in at $116.2 million, or EPS of $2.62 per share

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Nov 12, 2013, 05:00 ET

PANAMA CITY, Nov. 12, 2013 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2013 (3Q13). 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 third quarter of 2012 (3Q12).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$126.0 million for 3Q13, or diluted earnings per share (EPS) of US$2.84. Excluding special items, Copa Holdings would have reported an adjusted net income of $116.2 million, or $2.62 per share, a 19.0% increase over adjusted net income of US$97.6 million and US$2.20 per share for 3Q12.
Operating income for 3Q13 came in at US$147.5 million, a 29.3% increase over operating income of US$114.1 million in 3Q12. Operating margin for the period came in at 21.8% or 2.5 percentage points over 3Q12, mostly as a result of higher unit revenues.
Total revenues increased 14.7% to US$677.3 million. Yield per passenger mile decreased 0.1% to 17.2 cents and operating revenue per available seat mile (RASM) increased 2.8% to 13.9 cents. However, adjusting for a 7.5% increase in average length of haul, yields increased 3.6% and RASM increased 6.6%.
For 3Q13, passenger traffic (RPMs) grew 15.5% on an 11.6% capacity expansion. Consolidated load factor came in at 78.1%, or 2.6 percentage points above 3Q12.
Operating cost per available seat mile (CASM) improved 0.3% to 10.9 cents. CASM, excluding fuel, increased 2.7% to 6.8 cents.
Cash, short term and long term investments ended 3Q13 at US$1.0 billion, representing 40.7% of the last twelve months' revenues.
During the third quarter, Copa Airlines took delivery of three Boeing 737-800 aircraft. As a result, Copa Holdings ended the quarter with a consolidated fleet of 89 aircraft. Additionally, during the months of September and October, Copa Airlines completed the extension of four 737-700 aircraft leases that were expiring in 2014.
For 3Q13, Copa Holdings reported consolidated on-time performance of 87.3% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

Consolidated Financial & Operating Highlights	3Q13	3Q12	% Change	2Q13	% Change
Revenue Passengers Carried ('000)	2,007	1,869	7.4%	1,861	7.8%
RPMs (mm)	3,803	3,294	15.5%	3,475	9.4%
ASMs (mm)	4,872	4,367	11.6%	4,618	5.5%
Load Factor	78.1%	75.4%	2.6 p.p.	75.3%	2.8 p.p.
Yield	17.2	17.3	-0.1%	16.4	5.4%
PRASM (US$ Cents)	13.5	13.0	3.4%	12.3	9.3%
RASM (US$ Cents)	13.9	13.5	2.8%	12.8	8.4%
CASM (US$ Cents)	10.9	10.9	-0.3%	10.7	1.6%
CASM Excl. Fuel (US$ Cents)	6.8	6.6	2.7%	6.7	1.5%
Breakeven Load Factor ⁽¹⁾	61.4%	59.8%	1.6 p.p.	61.6%	-0.2 p.p.
Fuel Gallons Consumed (Millions)	63.6	57.7	10.3%	60.0	6.0%
Avg. Price Per Fuel Gallon (US$ Dollars)	3.12	3.24	-3.8%	3.08	1.2%
Average Length of Haul (Miles)	1,895	1,763	7.5%	1,868	1.5%
Average Stage Length (Miles)	1,160	1,082	7.2%	1,126	3.0%
Departures	30,126	29,365	2.6%	29,357	2.6%
Block Hours	89,623	82,103	9.2%	84,985	5.5%
Average Aircraft Utilization (Hours)	11.2	11.2	0.1%	10.9	2.7%
Operating Revenues (US$ mm)	677.3	590.4	14.7%	592.0	14.4%
Operating Income (US$ mm)	147.5	114.1	29.3%	97.7	51.0%
Operating Margin	21.8%	19.3%	2.5 p.p.	16.5%	5.3 p.p.
Net Income (US$ mm)	126.0	111.9	12.6%	74.4	69.3%
Adjusted Net Income (US$ mm) ⁽¹⁾	116.2	97.6	19.0%	85.0	36.7%
EPS - Basic and Diluted (US$)	2.84	2.52	12.6%	1.68	69.2%
Adjusted EPS - Basic and Diluted (US$) ⁽¹⁾	2.62	2.20	19.0%	1.92	36.6%
# of Shares - Basic and Diluted ('000)	44,380	44,407	-0.1%	44,387	0.0%

⁽¹ ⁾ Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q13, 3Q12, and 2Q13 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.

Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q13 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q13 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	November 13, 2013
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:	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 66 destinations in 29 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 90 aircraft: 64 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit: www.copaair.com.

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.

Copa Holdings, S.A.
Income Statement - IFRS
(US$ Thousands)

	Unaudited	Unaudited	%	Unaudited	%
	3Q13	3Q12	Change	2Q13	Change
Operating Revenues
Passenger Revenue	655,991	568,564	15.4%	568,960	15.3%
Cargo, mail and other	21,288	21,884	-2.7%	23,038	-7.6%
Total Operating Revenue	677,279	590,448	14.7%	591,998	14.4%

Operating Expenses
Aircraft fuel	198,163	186,844	6.1%	184,767	7.3%
Salaries and benefits	69,941	62,964	11.1%	66,105	5.8%
Passenger servicing	64,913	56,973	13.9%	60,389	7.5%
Commissions	27,717	23,501	17.9%	24,279	14.2%
Reservations and sales	27,588	22,203	24.2%	24,763	11.4%
Maintenance, material and repairs	25,035	23,370	7.1%	22,807	9.8%
Depreciation	26,576	23,031	15.4%	26,866	-1.1%
Flight operations	30,829	27,217	13.3%	30,028	2.7%
Aircraft rentals	23,540	18,504	27.2%	22,124	6.4%
Landing fees and other rentals	12,607	12,190	3.4%	12,789	-1.4%
Other	22,878	19,561	17.0%	19,393	18.0%
Total Operating Expense	529,787	476,359	11.2%	494,309	7.2%

Operating Income	147,492	114,089	29.3%	97,689	51.0%

Non-operating Income (Expense):
Interest expense	(7,513)	(8,124)	-7.5%	(7,560)	-0.6%
Interest income	3,127	3,235	-3.3%	2,841	10.1%
Other, net	10,700	13,750	-22.2%	(10,616)	-200.8%
Total Non-Operating Income/(Expense)	6,314	8,861	n/a	(15,336)	-141.2%

Income before Income Taxes	153,807	122,951	25.1%	82,354	86.8%

Provision for Income Taxes	27,798	11,033	152.0%	7,912	251.3%

Net Income	126,008	111,917	12.6%	74,441	69.3%


EPS - Basic and Diluted	2.84	2.52	12.7%	1.68	69.3%
Shares - Basic and Diluted	44,379,507	44,406,679	-0.1%	44,387,279	0.0%

Copa Holdings, S.A. Balance Sheet - IFRS (US$ Thousands)

	September 30,	December 31,
	2013	2012
	(Unaudited)	(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$ 475,181	$ 76,094
Short-term investments	499,047	575,009
Total cash, cash equivalents and short-term investments	974,228	651,103

Accounts receivable, net of allowance for doubtful accounts	173,175	135,207
Accounts receivable from related parties	2,109	1,129
Expendable parts and supplies, net of allowance for obsolescence	56,314	50,603
Prepaid expenses	62,163	63,120
Other current assets	19,073	16,328
Total Current Assets	1,287,062	917,490

Long-term investments	46,590	69,445

Property and Equipment:
Owned property and equipment:
Flight equipment	2,462,278	2,405,346
Other equipment	71,570	66,330
	2,533,848	2,471,676
Less: Accumulated depreciation	(505,147)	(432,589)
	2,028,701	2,039,087
Purchase deposits for flight equipment	302,371	245,544
Total Property and Equipment	2,331,072	2,284,631

Other Assets:
Net pension asset	10,826	10,009
Goodwill	25,466	27,575
Intangible asset	57,767	59,382
Other assets	110,889	110,968
Total Other Assets	204,948	207,934
Total Assets	$ 3,869,672	$ 3,479,500


LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt	$ 140,114	$ 136,268
Accounts payable	101,128	104,975
Accounts payable to related parties	15,380	20,255
Air traffic liability	549,721	382,807
Taxes and interest payable	121,647	85,436
Accrued expenses payable	65,993	48,047
Other current liabilities	7,835	10,902
Total Current Liabilities	1,001,818	788,690

Non-Current Liabilities:
Long-term debt	960,462	1,069,836
Post employment benefits liability	6,309	6,340
Other long-term liabilities	49,912	43,726
Deferred tax liabilities	32,274	34,364
Total Non-Current Liabilities	1,048,957	1,154,266

Total Liabilities	2,050,775	1,942,956

Shareholders' Equity:
Class A - 33,408,055 shares issued and outstanding	22,626	22,591
Class B - 10,938,125 shares issued and outstanding	7,466	7,466
Additional paid in capital	45,594	40,660
Retained earnings	1,739,740	1,458,258
Accumulated other comprehensive income (loss)	3,470	7,569
Total Shareholders' Equity	1,818,896	1,536,544
Total Liabilities and Shareholders' Equity	$ 3,869,672	$ 3,479,500

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	3Q13	3Q12	2Q13

Net income as Reported	$126,008	$111,917	$74,441

Special Items (adjustments):
Unrealized (gain) loss on fuel hedging instruments	(9,820)	(14,277)	10,582
Adjusted Net Income	$116,188	$97,640	$85,023

Shares used for Computation (in thousands)
Basic and Diluted	44,380	44,407	44,387

Adjusted earnings per share - Basic and Diluted	2.62	2.20	1.92

Reconciliation Operating Costs per ASM
Excluding Fuel and Special Items	3Q13	3Q12	2Q13

Operating Costs per ASM as Reported	10.9	10.9	10.7
Aircraft fuel per ASM	(4.1)	(4.3)	(4.0)
Operating Costs per ASM excluding fuel	6.8	6.6	6.7