Company Announcements

Copa Holdings Reports Financial Results for the Second Quarter of 2020

PANAMA CITY, Aug. 5, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2020 (2Q20). 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 second quarter of 2019 (2Q19).

Due to air travel restrictions implemented in response to the Covid-19 outbreak, the Company did not provide scheduled commercial service during the second quarter, and only operated a small number of charter and humanitarian flights, representing less than 1% of the Company´s capacity in 2Q19.  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 these are either not measurable or applicable on such a limited operational base.

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported a net loss of US$386.0 million or (US$9.08) per share.  Excluding special items, the Company would have reported a net loss of US$114.6 million, or (US$2.70) per share.
  • Special items for the quarter include a US$186.8 million non-cash impairment charge on the B737-700 fleet as a result of the Company´s announcement to sell those aircraft, a US$50.0 million loss expected on assets held for sale (Embraer aircraft, spare engines, spare parts and a simulator), a US$22.2 million unrealized loss on the mark-to-market of the convertible notes, and a US$12.3 million reversal for unredeemed tickets revenue provisions recorded in the first quarter, given the uncertainty of future passenger behavior due to the Covid-19 situation.
  • Copa Holdings reported an operating loss of US$357.9 million.  Excluding special items, the Company would have reported an operating loss of US$108.7 million.
  • Cash burn, defined as the cash disbursements less proceeds excluding extraordinary financing activities, averaged US$77 million per month during the quarter.
  • In April, the Company raised US$343 million in cash through a senior convertible note offering.  Cash, short-term and long-term investments totaled US$1.14 billion at the end of the quarter.
  • The Company entered into new committed, unsecured credit facilities of an additional US$150 million (currently undrawn) and closed the quarter with US$1.29 billion of available liquidity.
  • The Company repaid US$95 million in short-term lines of credit, closing the quarter with a total debt of US$1.3 billion.
  • Copa Holdings ended the quarter with a consolidated fleet of 102 aircraft – 6 Boeing 737MAX9s, 68 Boeing 737-800s, 14 Boeing 737-700s, and 14 Embraer-190s.

Subsequent Events

  • During the month of July, the Company closed a secured revolving credit facility for an initial aggregate amount of US$105 million.  Including this facility, the Company now has US$255 million in unutilized committed credit facilities.
  • On July 17th, due to the Covid-19 pandemic, the Panamanian government announced the extension of air travel restrictions until August 21st, 2020. The company has now scheduled the restart of its regular commercial flights for September 4th, 2020.
  • On July 31st, the Company signed a US$79.1 million contract for the sale of its remaining 14 EMB-190s, 6 spare engines and spare parts, and expects to deliver these assets over the next 12 months.

 

Consolidated Financial
& Operating Highlights

2Q20

2Q19

Variance vs. 2Q19

1Q20

Variance vs. 1Q20


Revenue Passengers Carried (000s)

9

2,550

-99.6%

2,118

-99.6%


RPMs (millions)

15

5,249

-99.7%

4,473

-99.7%


ASMs (millions)

31

6,166

-99.5%

5,491

-99.4%


Departures

225

32,676

-99.3%

28,286

-99.2%


Block Hours

820

106,425

-99.2%

93,568

-99.1%


Operating Revenues (US$ millions)

14.5

645.1

-97.7%

595.5

-97.6%


Operating Profit (Loss) (US$ millions)

-357.9

82.6

n/m

98.7

n/m


Adjusted Operating Profit (Loss) (US$ millions) (1)

-108.7

82.6

n/m

98.7

n/m


Net Profit (Loss) (US$ millions)

-386.0

50.9

n/m

74.3

n/m


Adjusted Net Profit (Loss) (US$ millions) (1)

-114.6

50.9

n/m

74.3

n/m


Basic EPS (US$)

-9.08

1.20

n/m

1.75

n/m


Adjusted Basic EPS (US$) (1)

-2.70

1.20

n/m

1.75

n/m


Shares for calculation of Basic EPS (000s)

42,512

42,478

0.1%

42,501

0.0%









(1 )  Excludes Special Items.  This earnings release includes a reconciliation of non-IFRS

financial measures to the comparable IFRS measures.

FULL 2Q20 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

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

2Q20 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

 

Date:

Aug 6, 2020



Time:

11:00 AM US ET (10:00 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 80 destinations in 33 countries in North, Central and South America and the Caribbean. For more information visit: www.copa.com .  

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: 011 507 304-2774
www.copa.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 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


Audited


%


Unaudited


%



2Q20


2Q19


Change


1Q20


Change

Operating Revenues











Passenger revenue


10,790


620,538


-98.3%


574,650


-98.1%

Cargo and mail revenue


145


16,464


-99.1%


13,017


-98.9%

Other operating revenue


3,597


8,100


-55.6%


7,785


-53.8%

Total Operating Revenue


14,532


645,102


-97.7%


595,453


-97.6%












Operating Expenses











Fuel


137


177,169


-99.9%


136,954


-99.9%

Wages, salaries, benefits and other employees' expenses


38,198


108,342


-64.7%


110,289


-65.4%

Passenger servicing


402


25,530


-98.4%


21,890


-98.2%

Airport facilities and handling charges


505


44,698


-98.9%


40,365


-98.7%

Sales and distribution


3,754


51,289


-92.7%


42,011


-91.1%

Maintenance, materials and repairs


7,505


31,235


-76.0%


27,144


-72.4%

Depreciation and amortization


305,185


70,549


332.6%


66,375


359.8%

Flight operations


(82)


25,450


n/m


23,731


n/m

Other operating and administrative expenses


16,803


28,240


-40.5%


28,008


-40.0%

Total Operating Expense


372,408


562,502


-33.8%


496,766


-25.0%












Operating Profit (Loss)


(357,875)


82,601


n/m


98,687


n/m












Non-operating Income (Expense):











Finance cost


(27,056)


(13,573)


99.3%


(11,085)


144.1%

Finance income


5,677


6,041


-6.0%


6,320


-10.2%

Net change in fair value of derivatives


(22,198)


-


n/m


-


n/m

Gain (loss) on foreign currency fluctuations


500


(2,213)


n/m


(10,950)


n/m

Other non-operating income (expense)


447


(2,115)


n/m


(11)


n/m

Total Non-Operating Income/(Expense)


(42,628)


(11,859)


259.5%


(15,726)


171.1%












Profit (Loss) before taxes


(400,504)


70,742


n/m


82,961


n/m












Income tax expense


(14,486)


19,876


n/m


8,687


n/m












Net Profit (Loss)


(386,018)


50,866


n/m


74,273


n/m












EPS











Basic


-9.08


1.20


n/m


1.75


n/m












Shares used for calculation:











Basic


42,511,806


42,478,415




42,501,338



 

Copa Holdings, S. A. and subsidiaries



Consolidated statement of financial position



(US$ Thousands)

June

December


2020

2019


 (Unaudited)


 ASSETS






 Current Assets



     Cash and cash equivalents

307,297

158,733

     Short-term investments

740,887

692,403

Total cash, cash equivalents and short-term investments

1,048,184

851,136




     Accounts receivable, net

28,843

129,634

     Accounts receivable from related parties

1,302

147

     Expendable parts and supplies, net

76,577

69,100

     Prepaid expenses

32,326

49,034

     Prepaid income tax

2,387

1,181

     Other current assets

10,927

14,206


152,364

263,301

     Assets held for sale

144,836

120,006




TOTAL CURRENT ASSETS

1,345,384

1,234,442




     Long-term investments

94,540

134,347

     Long-term accounts receivable

1,038

2,139

     Long-term prepaid expenses

16,277

17,743

     Property and equipment, net

2,227,313

2,532,402

     Right of use assets

257,512

290,843

     Intangible, net

104,485

108,116

     Net pension asset

3,188

249

     Deferred tax assets

21,461

19,216

     Other Non-Current Assets

15,002

17,881

TOTAL NON-CURRENT ASSETS

2,740,816

3,122,935




TOTAL ASSETS

4,086,199

4,357,377




     Loans and borrowings

177,004

122,581

     Current portion of lease liability

95,087

97,732

     Accounts payable

45,335

119,332

     Accounts payable to related parties

1,070

14,086

     Air traffic liability

409,843

497,374

     Frequent flyer deferred revenue

85,923

80,325

     Taxes Payable

1,476

46,267

     Employee benefits obligations

11,015

55,373

     Income tax payable

3,159

9,683

     Other Current Liabilities

174

83

TOTAL CURRENT LIABILITIES

830,087

1,042,836




     Loans and borrowings

1,148,253

938,182

     Lease Liability

175,403

206,832

     Derivative financial instruments

98,427

-

     Other long - term liabilities

214,746

191,221

     Deferred tax Liabilities

27,520

43,397

TOTAL NON-CURRENT LIABILITIES

1,664,350

1,379,633




TOTAL LIABILITIES

2,494,436

2,422,469




 EQUITY



 Issued Capital



     Class A -33,859,791 issued and 31,405,999  outstanding

21,188

21,142

     Class B common stock - 10,938,125

7,466

7,466

     Additional Paid-In Capital

88,683

86,135

     Treasury Stock

(136,388)

(136,388)

     Retained Earnings

1,931,191

1,718,179

     Net (loss) profit

(311,744)

247,002

     Other comprehensive loss

(8,632)

(8,628)




TOTAL EQUITY

1,591,763

1,934,908

             

TOTAL EQUITY LIABILITIES

4,086,199

4,357,377

 

Copa Holdings, S. A. and subsidiaries







Consolidated Statement of Cash Flows







For the six months ended June 30,







(In US$ thousands)



















2020


2019


2018











(Unaudited)


(Unaudited)


(Unaudited)

Cash flow (used in) from operating activities


(56,632)


331,143


267,114

Cash flow used in investing activities


(48,009)


(8,691)


(105,907)

Cash flow from (used in) financing activities


253,205


(252,469)


(228,840)

Net increase (decrease) in cash and cash equivalents


148,564


69,982


(67,633)

Cash and cash equivalents at January 1


158,733


156,158


238,792

Cash and cash equivalents at June 30


$               307,297


$               226,140


$               171,159
















Short-term investments



740,887


523,134


604,869

Long-term investments



94,540


144,072


171,356

Total cash and cash equivalents and investments at June 30


$            1,142,724


$               893,346


$               947,384
















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 and Monthly Cash Burn. 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


2Q20


2Q19


1Q20








Operating Profit as Reported


$      (357,875)


$          82,601


$          98,687

   Add: Unredeemed Ticket Revenue provision reversal


$          12,341





   Add: Fleet Impairment loss


$        186,807





   Add: Expected Loss on Embraer assets held for sale


$          50,048





Adjusted Operating Profit


$      (108,679)


$          82,601


$          98,687








Net profit as Reported


$      (386,018)


$          50,866


$          74,273

   Add: Unredeemed Ticket Revenue provision reversal


$          12,341





   Add: Fleet Impairment loss


$        186,807





   Add: Expected Loss on Embraer assets held for sale


$          50,048





Add: Net change in fair value of derivatives


$          22,198





Adjusted Net Profit


$      (114,624)


$          50,866


$          74,273








Reconciliation of Adjusted Basic EPS














Adjusted Net Profit


$      (114,624)


$          50,866


$          74,273

Shares used for calculation of Basic EPS


42,512


42,478


42,501

Adjusted Basic Earnings per share (Adjusted Basic EPS)


$            (2.70)


$              1.20


$              1.75








Reconciliation of Monthly Cash Burn for 2Q20







Cash balance as reported on 1Q20


1,127





Cash balance as reported on 2Q20


1,143





Net cashflows in 2Q


16





   Substract: Proceeds from Convertible Notes Offering


343





   Add: Repayment of short term credit lines


95





Cash Burn for 2Q20 excluding extraordinary financing activities


(232)





Monthly Cash Burn for 2Q20 excluding extraordinary financing activities


(77)





 

CONTACT:

Raúl Pascual – Panamá


Director – Investor Relations


011 (507) 304-2774

 

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SOURCE Copa Holdings, S.A.