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Copa Holdings Reports Net Income of US$111.9 Million and EPS of US$2.52 for the Third Quarter of 2012

Excluding special items, adjusted net income came in at $97.6 million, or EPS of $2.20 per share

PANAMA CITY, Nov. 7, 2012 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2012 (3Q12). 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 2011 (3Q11).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$111.9 million for 3Q12, or diluted earnings per share (EPS) of US$2.52.  Excluding special items, Copa Holdings would have reported adjusted net income of US$97.6 million, or US$2.20 per share, an 8.3% increase over adjusted net income of US$90.2 million and US$2.03 per share for 3Q11.
  • Operating income for 3Q12 came in at US$114.1 million, a 14.9% increase over operating income of US$99.3 million in 3Q11.  Operating margin for the period came in at 19.3%, compared to 20.9% in 3Q11, as a result of a 1.7% decline in unit revenues and a 0.4% increase in unit cost as a result of increased fuel costs.
  • Total revenues increased 24.5% to US$590.4 million.  Yield per passenger mile increased 1.1% to 17.3 cents, while operating revenue per available seat mile (RASM) decreased 1.7% to 13.5 cents.   However, adjusting for a 2.7% increase in average length of haul, adjusted yields increased 2.5% and adjusted RASM remained flat year over year.
  • For 3Q12, passenger traffic (RPMs) grew 23.8% on a 26.6% capacity expansion, resulting in a consolidated load factor of 75.4% compared to 77.1% in 3Q11.
  • Operating cost per available seat mile (CASM) came in at 10.9 cents, an increase of 0.4% over 3Q11, but 3.4% lower than 2Q12. CASM excluding fuel costs came in at 6.6 cents for a decrease of 0.2% over 3Q11 and 3.6% over 2Q12.  
  • Cash, short term and long term investments ended 3Q12 at US$795.5 million, representing 37% of the last twelve months' revenues.  
  • During the third quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 82 aircraft.
  • For 3Q12, Copa Holdings reported consolidated on-time performance of 87.2% and a flight-completion factor of 99.6%.

Consolidated Financial & Operating Highlights

3Q12

3Q11

% Change

2Q12

% Change

Revenue Passengers Carried ('000)

1,869

1,551

20.5%

1,658

12.7%

RPMs (mm)

3,294

2,660

23.8%

2,886

14.1%

ASMs (mm)

4,367

3,450

26.6%

3,923

11.3%

Load Factor

75.4%

77.1%

-1.7 p.p.

73.5%

1.9 p.p.

Yield

17.3

17.1

1.1%

17.2

0.6%

PRASM (US$ Cents)

13.0

13.2

-1.1%

12.6

3.2%

RASM (US$ Cents)

13.5

13.7

-1.7%

13.1

2.8%

CASM (US$ Cents)

10.9

10.9

0.4%

11.3

-3.4%

CASM Excl. Fuel (US$ Cents)

6.6

6.6

-0.2%

6.9

-3.6%

Breakeven Load Factor (1)

59.8%

58.6%

1.2 p.p.

63.0%

-3.2 p.p.

Fuel Gallons Consumed (Millions)

57.7

45.3

27.2%

52.1

10.6%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.24

3.22

0.7%

3.32

-2.5%

Average Length of Haul (Miles)

1,763

1,716

2.7%

1,740

1.3%

Average Stage Length (Miles)

1,083

1,058

2.3%

1,063

1.9%

Departures

29,344

24,728

18.7%

27,005

8.7%

Block Hours

82,103

65,159

26.0%

74,841

9.7%

Average Aircraft Utilization (Hours)

11.2

10.6

5.5%

10.6

5.5%

Operating Revenues (US$ mm)

590.4

474.3

24.5%

515.8

14.5%

Operating Income (US$ mm)

114.1

99.3

14.9%

72.6

57.1%

Operating Margin

19.3%

20.9%

-1.6 p.p.

14.1%

5.2 p.p.

Net Income (US$ mm)

111.9

70.3

59.1%

32.0

249.7%

Adjusted Net Income (US$ mm) (1)

97.6

90.2

8.3%

58.6

66.6%

EPS - Basic and Diluted (US$)

2.52

1.59

58.8%

0.72

249.3%

Adjusted EPS - Basic and Diluted (US$) (1)

2.20

2.03

8.1%

1.32

66.4%

# of Shares - Basic and Diluted ('000)

44,407

44,319

0.2%

44,354

0.1%


(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q12, 3Q11, and 2Q12 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 3Q12 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q12 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST


Date:

November 8, 2012

Time:

4:00 PM US ET (4:00 PM 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


Victor Vial, Chief Financial Officer




Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 64 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 83 aircraft: 57 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.

CPA-G

Copa Holdings, S.A.










Income Statement - IFRS










(US$ Thousands)





















Unaudited


Unaudited


%


Unaudited


%


3Q12


3Q11


Change


2Q12


Change

Operating Revenues










Passenger Revenue

568,564


454,078


25.2%


495,029


14.9%

Cargo, mail and other

21,884


20,184


8.4%


20,814


5.1%

Total Operating Revenue

590,448


474,261


24.5%


515,843


14.5%











Operating Expenses










Aircraft fuel

186,844


145,860


28.1%


173,289


7.8%

Salaries and benefits

62,964


54,199


16.2%


61,123


3.0%

Passenger servicing

56,973


41,095


38.6%


50,943


11.8%

Commissions

23,501


19,297


21.8%


21,272


10.5%

Reservations and sales

22,203


18,680


18.9%


20,586


7.9%

Maintenance, material and repairs

23,370


16,391


42.6%


23,954


-2.4%

Depreciation

23,031


19,350


19.0%


21,214


8.6%

Flight operations

27,217


22,111


23.1%


24,991


8.9%

Aircraft rentals

18,504


13,273


39.4%


17,191


7.6%

Landing fees and other rentals

12,190


11,069


10.1%


10,931


11.5%

Other

19,561


13,656


43.2%


17,730


10.3%

Total Operating Expense

476,359


374,979


27.0%


443,224


7.5%











Operating Income

114,089


99,282


14.9%


72,619


57.1%











Non-operating Income (Expense):










Interest expense

(8,124)


(8,144)


-0.3%


(8,583)


-5.3%

Interest capitalized

0


0


nm


0


nm

Interest income

3,235


1,795


80.3%


2,741


18.0%

Other, net

13,750


(18,228)


nm


(30,981)


nm

Total Non-Operating Income/(Expense)

8,861


(24,578)


nm


(36,823)


nm











Income before Income Taxes

122,951


74,705


64.6%


35,796


243.5%











Provision for Income Taxes

11,033


4,374


152.3%


3,790


191.1%











Net Income

111,917


70,331


59.1%


32,006


249.7%





















EPS - Basic and Diluted

2.52


1.59


58.8%


0.72


249.3%

Shares - Basic and Diluted

44,406,679


44,318,760


0.2%


44,353,845


0.1%



Copa Holdings, S.A.






Balance Sheet - IFRS






(US$ Thousands)


September 30,



December 31,



2012



2011



(Unaudited)



(Audited)

ASSETS






Current Assets:






Cash and cash equivalents


$          282,642



$        243,801

Short-term investments


441,349



262,345

Total cash, cash equivalents and short-term investments


723,991



506,146







Accounts receivable, net of allowance for doubtful accounts


143,057



142,297

Accounts receivable from related parties


505



704

Expendable parts and supplies, net of allowance for obsolescence


51,292



42,382

Prepaid expenses


49,745



40,058

Other current assets


17,964



22,655

Total Current Assets


986,554



754,242







Long-term investments


71,500



104,834







Property and Equipment:






Owned property and equipment:






Flight equipment


2,346,637



2,036,983

Other equipment


63,757



67,577



2,410,394



2,104,560

Less: Accumulated depreciation


(408,965)



(346,656)



2,001,429



1,757,904

Purchase deposits for flight equipment


163,696



242,287

Total Property and Equipment


2,165,125



2,000,191







Other Assets:






Net pension asset


9,685



8,974

Goodwill


27,081



25,099

Intangible asset


57,537



47,047

Other assets


120,776



125,409

Total Other Assets


215,079



206,529

Total Assets


$       3,438,258



$     3,065,796













LIABILITIES AND SHAREHOLDER'S EQUITY






Current Liabilities:






Current maturities of long-term debt


$          118,387



$        131,069

Accounts payable


105,609



92,842

Accounts payable to related parties


14,765



22,074

Air traffic liability


360,223



297,135

Taxes and interest payable


86,174



71,223

Accrued expenses payable


45,753



30,472

Other current liabilities


9,897



13,845

Total Current Liabilities


740,808



658,660







Non-Current Liabilities:






Long-term debt


1,067,549



936,657

Post employment benefits liability


6,286



5,847

Other long-term liabilities


44,635



44,657

Deferred tax liabilities


31,888



30,444

Total Non-Current Liabilities


1,150,358



1,017,605







Total Liabilities


1,891,166



1,676,265







Shareholders' Equity:






Class A - 33,391,400 shares issued and outstanding


22,496



22,495

Class B - 10,938,125 shares issued and outstanding


7,466



7,466

Additional paid in capital


38,977



33,567

Retained earnings


1,471,258



1,324,394

Accumulated other comprehensive income (loss)


6,895



1,609

Total Shareholders' Equity


1,547,092



1,389,531

Total Liabilities and Shareholders' Equity


$       3,438,258



$     3,065,796



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


3Q12


3Q11


2Q12








Net income as Reported


$111,917


$70,331


$32,006








Special Items (adjustments):







    Unrealized (gain) loss on fuel hedging instruments (1)


(14,277)


19,845


26,587

Adjusted Net Income


$97,640


$90,177


$58,593








Shares used for Computation (in thousands)







    Basic and Diluted


44,407


44,319


44,354








Adjusted earnings per share - Basic and Diluted


2.20


2.03


1.32








Reconciliation Operating Costs per ASM







Excluding Fuel and Special Items


3Q12


3Q11


2Q12








Operating Costs per ASM as Reported


10.9


10.9


11.3

Aircraft fuel per ASM


(4.3)


(4.2)


(4.4)

Operating Costs per ASM excluding fuel


6.6


6.6


6.9















FOOTNOTES:
(1) Includes unrealized (gains) losses resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments.  For 3Q12, the Company recorded an unrealized fuel hedge gain of US$14.3 million, and for 3Q11 and 2Q12 it recorded fuel hedge losses of US$19.8 million and 26.6 million, respectively..




SOURCE Copa Holdings, S.A.

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