Copa Holdings reports a $118.1 million loss in the third quarter

Copa Holdings, S.A. has 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 2nd and 3rd 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.

 

Copa Airlines aircraft photo gallery:

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