Copa Holdings Reports Financial Results for the Fourth Quarter and Full-Year 2021

Excluding special items, Adjusted Net Profit for full-year 2021 came in at US$2.7 million, or Adjusted EPS of US$0.06

News provided by

Feb 09, 2022, 17:00 ET

PANAMA CITY, Panama, Feb. 9, 2022 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2021 (4Q21) and full year 2021. 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 2019 (4Q19) (which the Company believes are more relevant than year-over-year comparisons due to the significant impacts in 2020 of the COVID-19 pandemic).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported a net profit of US$114.4 million for the quarter or US$2.69 per share. Excluding special items, the Company would have reported a net profit of US$84.1 million or US$1.98 per share. Special items include an US$8.9 million unrealized mark-to-market loss related to the Company's convertible notes and a reversal of US$39.2 million in the Company's provision related to the return of leased aircraft.
Copa Holdings reported an operating profit of US$155.0 million for the quarter. Excluding the US$39.2 million reversal, the Company would have reported an operating profit of US$115.8 million and a 20.1% operating margin.
For full-year 2021, the Company reported a net profit of US$39.9 million or US$0.94 per share. Excluding special items, which included a reversal of US$39.2 million in the Company's provision related to the return of leased aircraft, a US$22.8 million unrealized mark-to-market loss related to the Company's convertible notes, and a passenger revenue adjustment of US$20.8 million corresponding to unredeemed coupons from 2019 and 2020 sales, Copa Holdings would have reported an adjusted net profit of US$2.7 million or US$0.06 per share.
For full-year 2021, the Company reported an operating profit of US$145.7 million. Excluding special items, the Company would have reported an operating profit of US$85.6 million and a 5.8% operating margin.
Capacity for 4Q21, measured in terms of available seat miles (ASMs), was 83.1% of the capacity flown in 4Q19.
Total revenues for 4Q21 came in at US$575.0 million, reaching 84.3% of 4Q19 revenues. Passenger revenues for 4Q21 reached 82.2% of 4Q19 levels, while 4Q21 cargo revenues were 61.2% higher than 4Q19. Passenger yield increased 1.0% to 12.7 cents and load factors decreased 1.8 percentage points to 83.5%, compared to 4Q19. Revenue per Available Seat Mile (RASM) came in at 11.3 cents, or 1.5% higher than 4Q19.
Operating cost per available seat mile (CASM) in 4Q21, excluding special items (adjusted CASM) decreased 3.8% vs. 4Q19 to 9.0 cents. While adjusted CASM, excluding fuel, decreased 7.5% to 6.1 cents.
Cash buildup, defined as cash proceeds minus disbursements, excluding extraordinary financing activities and asset sales but including capital expenditures and payment of financial obligations, was US$84 million for the quarter.
The Company ended the quarter with US$1.5 billion in available liquidity, consisting of approximately US$1.2 billion in cash, short-term and long-term investments, and US$295 million in committed and undrawn credit facilities.
The Company closed the quarter with total debt, including lease liabilities, of US$1.6 billion.
During the quarter, the Company took delivery of one Boeing 737 MAX 9, completed the conversion of one Boeing 737-800 into a freighter, and decided to retain three Boeing 737-700s previously classified as assets held for sale.
Including 3 Boeing 737-700 aircraft currently in temporary storage and one Boeing 737-800 freighter, Copa Holdings ended the year with a consolidated fleet of 91 aircraft – 68 Boeing 737-800s, 14 Boeing 737 MAX 9s, and 9 Boeing 737-700s, compared to a fleet of 102 aircraft prior to the COVID-19 pandemic.
Copa Airlines had an on-time performance for the quarter of 90.0% and a flight completion factor of 99.54%, once again positioning the airline among the best in the industry.

Subsequent Events

In January, Copa Airlines was recognized by Cirium – for the eighth consecutive year – as the most on-time airline in Latin America in 2021. Copa Airlines' on-time performance of 91.1% for the year was the highest of any carrier in the Americas.
In January, the Company took delivery of one Boeing 737 MAX 9 aircraft, originally scheduled for December 2021.
Due to the recent surge in COVID-19 cases in Panama and Latin America, mainly driven by the Omicron variant, which impacted its crew availability, the Company canceled over 1,000 flights, reducing the 1Q22 published schedule by approximately 4%.

Consolidated Financial & Operating Highlights	4Q21	4Q19 ⁽³⁾	Variance vs. 4Q19	3Q21	Variance vs. 3Q21	FY21	FY19 ⁽³⁾	Variance vs. FY19
Revenue Passengers Carried (000s)	2,214	2,633	-15.9%	1,823	21.5%	6,136	10,474	-41.4%
Revenue Passengers OnBoard (000)	3,369	3,838	-12.2%	2,852	18.1%	9,452	15,424	-38.7%
RPMs (millions)	4,265	5,244	-18.7%	3,485	22.4%	11,734	21,303	-44.9%
ASMs (millions)	5,109	6,149	-16.9%	4,396	16.2%	14,934	25,113	-40.5%
Load Factor	83.5%	85.3%	-1.8 p.p.	79.3%	4.2 p.p.	78.6%	84.8%	-6.3 p.p.
Yield (US$ Cents)	12.7	12.5	1.0%	12.0	5.8%	12.0	12.3	-1.9%
PRASM (US$ Cents)	10.6	10.7	-1.1%	9.5	11.4%	9.5	10.4	-9.1%
RASM (US$ Cents)	11.3	11.1	1.5%	10.1	11.2%	10.1	10.8	-6.2%
CASM (US$ Cents)	8.2	10.8	-23.9%	8.8	-6.4%	9.1	9.4	-2.8%
Adjusted CASM (US$ Cents) ⁽¹⁾	9.0	9.3	-3.8%	8.8	2.4%	9.4	9.0	3.9%
CASM Excl. Fuel (US$ Cents)	5.3	8.0	-33.8%	6.2	-14.7%	6.6	6.6	-0.9%
Adjusted CASM Excl. Fuel (US$ Cents) ⁽¹⁾	6.1	6.6	-7.5%	6.2	-2.4%	6.8	6.3	8.9%
Fuel Gallons Consumed (millions)	61.0	78.9	-22.8%	52.0	17.1%	177.4	321.4	-44.8%
Avg. Price Per Fuel Gallon (US$)	2.43	2.16	12.5%	2.13	13.8%	2.14	2.16	-0.6%
Average Length of Haul (miles)	1,926	1,992	-3.3%	1,912	0.7%	1,912	2,034	-6.0%
Average Stage Length (miles)	1,254	1,279	-2.0%	1,213	3.4%	1,230	1,288	-4.5%
Departures	25,458	32,441	-21.5%	22,559	12.9%	75,755	131,819	-42.5%
Block Hours	80,710	105,620	-23.6%	69,308	16.5%	235,295	431,749	-45.5%
Average Aircraft Utilization (Hours) ⁽²⁾	11.3	11.3	0.8%	10.7	6.4%	9.2	11.4	-19.7%
Operating Revenues (US$ millions)	575.0	681.9	-15.7%	445.0	29.2%	1509.9	2707.4	-44.2%
Operating Profit (Loss) (US$ millions)	155.0	17.8	770.5%	59.0	162.6%	145.7	346.2	-57.9%
Adjusted Operating Profit (Loss) (US$ millions) ⁽¹⁾	115.8	107.1	8.0%	48.6	138.1%	85.6	435.5	-80.3%
Operating Margin	27.0%	2.6%	24.3 p.p.	13.3%	13.7 p.p.	9.6%	12.8%	-3.1 p.p.
Adjusted Operating Margin ⁽¹⁾	20.1%	15.7%	4.4 p.p.	11.2%	8.9 p.p.	5.8%	16.1%	-10.3 p.p.
Net Profit (Loss) (US$ millions)	114.4	2.7	4092.8%	8.2	1287.5%	39.9	247.0	-83.8%
Adjusted Net Profit (Loss) (US$ millions) ⁽¹⁾	84.1	92.1	-8.7%	29.9	180.8%	2.7	336.3	-99.2%
Basic EPS (US$)	2.69	0.06	4088.2%	0.19	1291.3%	0.94	5.81	-83.8%
Adjusted Basic EPS (US$) ⁽¹⁾	1.98	2.17	-8.8%	0.70	181.6%	0.06	7.92	-99.2%
Shares for calculation of Basic EPS (000s)	42,533	42,487	0.1%	42,649	-0.3%	42,533	42,487	0.1%
(1) Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures. (2) Average Aircraft Utilization is calculated based on the Company's active fleet, excluding aircraft in storage as well as those classified as assets held for sale. (3) The Company believes that comparisons with 2019 are more relevant than year-over-year comparisons due to the significant impacts in 2020 of the COVID-19 pandemic.

FULL 4Q21 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

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

4Q21 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	February 10, 2021
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 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.
Income Statement - IFRS
(US$ Thousands)
	Unaudited	Unaudited	%	Unaudited	%	Unaudited	Audited	%
	4Q21	4Q19	Change	3Q21	Change	FY21	FY19	Change
Operating Revenues
Passenger revenue	540,571	657,940	-17.8%	417,466	29.5%	1,412,390	2,612,605	-45.9%
Cargo and mail revenue	25,849	16,033	61.2%	21,082	22.6%	71,577	62,460	14.6%
Other operating revenue	8,575	7,955	7.8%	6,451	32.9%	25,964	32,343	-19.7%
Total Operating Revenue	574,995	681,927	-15.7%	444,999	29.2%	1,509,930	2,707,409	-44.2%

Operating Expenses
Fuel	149,057	171,314	-13.0%	112,658	32.3%	383,179	696,249	-45.0%
Wages, salaries, benefits and other employees' expenses	80,434	115,036	-30.1%	68,049	18.2%	258,128	450,438	-42.7%
Passenger servicing	12,204	24,798	-50.8%	10,576	15.4%	35,869	102,103	-64.9%
Airport facilities and handling charges	42,863	44,877	-4.5%	39,407	8.8%	131,335	181,959	-27.8%
Sales and distribution	43,706	53,222	-17.9%	36,077	21.1%	129,877	210,623	-38.3%
Maintenance, materials and repairs	(13,317)	37,648	-135.4%	24,008	-155.5%	48,191	127,562	-62.2%
Depreciation and amortization	59,828	70,478	-15.1%	55,702	7.4%	234,505	282,080	-16.9%
Flight operations	19,173	24,908	-23.0%	16,291	17.7%	55,766	102,806	-45.8%
Other operating and administrative expenses	26,057	32,506	-19.8%	23,222	12.2%	87,426	118,090	-26.0%
Fleet Impairment	-	89,334	-100.0%	-	0.0%	-	89,344	-100.0%
Total Operating Expense	420,005	664,123	-36.8%	385,989	8.8%	1,364,276	2,361,255	-42.2%

Operating Profit (Loss)	154,989	17,804	770.5%	59,010	162.6%	145,655	346,154	-57.9%

Non-operating Income (Expense)
Finance cost	(18,994)	(17,154)	10.7%	(18,615)	2.0%	(74,051)	(57,432)	28.9%
Finance income	2,571	6,289	-59.1%	2,679	-4.0%	10,849	24,405	-55.5%
Gain (loss) on foreign currency fluctuations	(2,508)	2,406	-204.3%	(2,620)	-4.3%	(6,174)	(15,408)	-59.9%
Net change in fair value of derivatives	(8,922)	-	-100.0%	(32,092)	-72.2%	(22,778)	-
Other non-operating income (expense)	(1,158)	(989)	17.1%	(1,573)	-26.4%	(3,291)	(4,279)	-23.1%
Total Non-Operating Income/(Expense)	(29,011)	(9,448)	207.1%	(52,220)	-44.4%	(95,445)	(52,715)	81.1%

Profit (Loss) before taxes	125,978	8,356	1407.6%	6,790	1755.4%	50,209	293,439	-82.9%

Income tax expense	(11,616)	(5,629)	106.4%	1,453	-899.7%	10,265	46,437	-77.9%

Net Profit (Loss)	114,363	2,728	4092.8%	8,242	1287.5%	39,945	247,002	-83.8%

EPS
Basic	2.69	0.06	4088.2%	0.19	1291.3%	0.94	5.81	-83.8%

Shares used for calculation:
Basic	42,533,036	42,486,717		42,649,175		42,533,036	42,486,717

Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)
	December 2021	December 2020
ASSETS	(Unaudited)	(Audited)
Current Assets
Cash and cash equivalents	211,081	119,065
Short-term investments	806,340	770,816
Total cash, cash equivalents and short-term investments	1,017,421	889,881

Accounts receivable, net	90,618	63,206
Accounts receivable from related parties	1,832	1,429
Expendable parts and supplies, net	74,778	74,319
Prepaid expenses	31,148	30,473
Prepaid income tax	882	16,716
Other current assets	6,054	7,805
	205,312	193,948
Asset held for sale	-	135,542
TOTAL CURRENT ASSETS	1,222,733	1,219,371

Long-term investments	199,670	119,617
Long-term accounts receivable	(0)	1,054
Long-term prepaid expenses	22,783	6,066
Property and equipment, net	2,512,704	2,147,486
Right of use assets	166,328	214,279
Intangible, net	81,749	95,568
Deferred tax assets	28,417	35,595
Other Non-Current Assets	14,098	14,348
TOTAL NON-CURRENT ASSETS	3,025,749	2,634,013

TOTAL ASSETS	4,248,482	3,853,385

LIABILITIES
Loans and borrowings	196,602	127,946
Current portion of lease liability	73,917	83,605
Accounts payable	112,596	63,461
Accounts payable to related parties	7,948	2,970
Air traffic liability	557,331	470,695
Frequent flyer deferred revenue	95,114	91,213
Taxes Payable	32,599	13,400
Employee benefits obligations	32,767	33,995
Income tax payable	3,835	1,023
Other Current Liabilities	785	252
TOTAL CURRENT LIABILITIES	1,113,493	888,560

Loans and borrowings long-term	1,229,031	1,035,954
Lease Liability	104,734	146,905
Net Defined Benefit Liability	7,670	14,332
Derivative financial instruments	268,338	245,560
Deferred tax Liabilities	18,782	22,190
Other long - term liabilities	210,933	216,325

TOTAL NON-CURRENT LIABILITIES	1,839,487	1,681,265
TOTAL LIABILITIES	2,952,981	2,569,824

EQUITY
Issued Capital
Class A - 33,998,654 issued and 30,995,120 outstanding	21,290	21,199
Class B - 10,938,125	7,466	7,466
Additional Paid-In Capital	98,348	91,341
Treasury Stock	(176,902)	(136,388)
Retained Earnings	1,324,025	1,931,086
Net profit (loss)	39,945	(607,062)
Other comprehensive income (loss)	(18,670)	(24,082)

TOTAL EQUITY	1,295,501	1,283,561
TOTAL EQUITY LIABILITIES	4,248,482	3,853,385

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the twelve months ended December 31,

(In US$ thousands)

2021

2020

2019

(Unaudited)

(Audited)

Cash flow from (used in) operating activities

462,612

(39,515)

740,776

Cash flow used in investing activities

(373,040)

(93,761)

(192,868)

Cash flow from (used in) financing activities

2,444

93,609

(545,334)

Net increase (decrease) in cash and cash equivalents

92,016

(39,667)

2,574

Cash and cash equivalents at January 1

119,065

158,732

156,158

Cash and cash equivalents at December 31

$ 211,081

$ 119,065

$ 158,732

Short-term investments

806,340

770,816

692,403

Long-term investments

199,670

119,617

134,347

Total cash and cash equivalents and investments at December 31

$ 1,217,091

$ 1,009,498

$ 985,482

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, Operating CASM Excluding Fuel, and Cash Buildup. 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	4Q21	4Q20	3Q21	4Q19	FY21	FY19

Operating Profit as Reported	$ 154,989	$ (95,057)	$ 59,010	$ 17,804	$ 145,655	$ 346,171
Subtract: Unredeemed Ticket Revenue provision reversal			$ 10,395		$ 20,790
Subtract: Leased Aircraft Return provision	$ 39,217				$ 39,217
Add: Fleet Impairment loss		$ 4,400		$ 89,344		$ 89,344
Add: Expected loss (gain) on Embraer assets held for sale		$ (877)
Adjusted Operating Profit	$ 115,773	$ (91,533)	$ 48,615	$ 107,148	$ 85,648	$ 435,515

Net Profit as Reported	$ 114,363	$ (168,805)	$ 8,242	$ 2,728	$ 39,945	$ 247,002
Subtract: Unredeemed Ticket Revenue provision reversal			$ 10,395		$ 20,790
Subtract: Leased Aircraft Return provision	$ 39,217				$ 39,217
Add: Fleet Impairment loss		$ 4,400		$ 89,344		$ 89,344
Add: Expected loss (gain) on Embraer assets held for sale		$ (877)
Add: Net change in fair value of derivatives	$ 8,922	$ 80,076	$ 32,092		$ 22,779
Adjusted Net Profit	$ 84,068	$ (85,205)	$ 29,939	$ 92,072	$ 2,717	$ 336,346

Reconciliation of Adjusted Basic EPS	4Q21	4Q20	3Q21	4Q19	FY21	FY19

Adjusted Net Profit	$ 84,068	$ (85,205)	$ 29,939	$ 92,072	$ 2,717	$ 336,346
Shares used for calculation of Basic EPS	42,533	42,511	42,649	42,487	42,508	42,478
Adjusted Basic Earnings per share (Adjusted Basic EPS)	$ 1.98	$ (2.00)	$ 0.70	$ 2.17	$ 0.06	$ 7.92

Reconciliation of Adjusted Operating Costs per ASM
Excluding Fuel (Adjusted CASM Excl. Fuel)	4Q21		3Q21	4Q19	FY21	FY19

Operating Costs per ASM as Reported (in US$ Cents)	8.2		8.8	10.8	9.1	9.4
Return of leased aircraft provision per ASM (in US$ Cents)	(0.8)		-	-	(0.3)	-
Fleet Impairment per ASM (in US$ Cents)	-		-	1.5	-	0.4
Adjusted Operating Costs per ASM (in US$ Cents)	9.0		8.8	9.3	9.4	9.0

Aircraft Fuel Cost per ASM (in US$ Cents)	2.9		2.6	2.8	2.6	2.8
Adjusted Operating Costs per ASM excluding fuel (in US$ Cents)	6.1		6.2	6.6	6.8	6.3

Reconciliation of Monthly Cash Buildup (Burn) for 2021	4Q21	3Q21	2Q21	1Q21
Beginning Cash balance	$ 1,289	$ 1,282	$ 1,203	$ 1,009
Ending Cash balance	$ 1,217	$ 1,289	$ 1,282	$ 1,203
Net cashflows in the quarter	$ (72)	$ 7	$ 79	$ 194
Subtract: Proceeds from Lines of Credit	$ 50	$ -	$ -	$ -
Subtract: Net Proceeds from new Aircraft Financing minus Pre Delivery Payments	$ (181)	$ (57)	$ (21)	$ 241
Subtract: Others proceeds (assets sold and other non-op proceeds)	$ 14	$ 11	$ 36	$ 20
Add: Share repurchase	$ 39	$ -	$ -	$ -
Cash Buildup (Burn) excluding extraordinary activities	$ 84	$ 54	$ 64	$ (68)