Copa Holdings reports Q4 2015 financial results

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PANAMA CITY, Panama – Copa Holdings, SA today announced financial results for the fourth quarter of 2015 (4Q15) and full year 2015. 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 financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2014 (4Q14).

The financial information included in this press release is preliminary as the Company has not yet issued its audited financial statements and may differ from those results. During the course of the preparation of the financial statements and related notes and our year-end audit, additional items that would require material adjustments to the preliminary financial information included in this press release may be identified.

OPERATING AND FINANCIAL HIGHLIGHTS

• Copa Holdings reported net income of US$1.9 million for 4Q15 or earnings per share (EPS) of US$0.04, as compared to net income of US$26.2 million or EPS of US$0.59 in 4Q14. Excluding special items, which for 4Q15 includes a non-cash loss of US$25.3 million associated with the mark-to-market of fuel hedge contracts, a US$2.3 million gain associated with the mark-to-market of shares repurchased, and a US$6.9 million loss related to the devaluation of the Argentinean Peso, Copa Holdings would have reported adjusted net income of US$31.7 million or adjusted EPS of US$0.73, compared to adjusted net income of US$115.6 million or adjusted EPS of US$2.61 in 4Q14.

• Net income for full year 2015 reached US$185.4 million or EPS of US$4.23, compared to US$361.7 million or EPS of US$8.15 for full year 2014. Excluding special items, which for 2015 includes a non-cash loss of US$21.6 million associated with the mark-to-market of fuel hedge contracts, a US$6.9 million loss related to the devaluation of the Argentinean Peso, and a US$2.3 million loss related to the devaluation of the Venezuelan Bolivar, Copa Holdings would have reported an adjusted net income of US$216.2 million or EPS of US$4.93, compared to adjusted net income of US$484.8 million or adjusted EPS of US$10.92 for full year 2014.

• Operating income for 4Q15 came in at US$39.1 million, representing a 61.6% decrease over operating income of US$101.8 million in 4Q14, mainly as a result of a 20.2% decrease in unit operating revenue per available seat mile (RASM) and partly offset by a 30.8% drop in the all-in price of jet fuel. As a result, operating margin for 4Q15 came in at 7.3%, compared to an operating margin of 15.6% in 4Q14.

• The Company reported operating income of US$266.1 million for full year 2015, representing a decrease of 48.9% over operating income of US$521.1 million in 2014. Operating margin for full year 2015 came in at 11.8%, compared to an operating margin of 19.3% in 2014.

• Total revenues for 4Q15 decreased 18.6% to US$532.6 million. Yield per passenger mile decreased 20.4% to 12.5 cents and RASM came in at 9.7 cents, or 20.2% below 4Q14.

• For 4Q15, consolidated passenger traffic grew 1.7% while consolidated capacity grew 2.0%. As a result, consolidated load factor for the quarter decreased 0.3 percentage points to 74.8%. For full year 2015, consolidated load factor came in at 75.2%, 1.4 percentage points lower than 2014 on 4.4% capacity growth.

• Operating cost per available seat mile (CASM) decreased 12.4%, from 10.3 cents in 4Q14 to 9.0 cents in 4Q15, mostly as a result of a 30.8% decrease in the all-in price of jet fuel. CASM excluding fuel costs decreased 2.4% from 6.7 cents in 4Q14 to 6.5 cents in 4Q15.

• Cash, short-term and long-term investments ended 2015 at US$1.1 billion, representing 49% of the last twelve months’ revenues. Of this amount, 38% or US$422.6 million is in Venezuela the repatriation of which is subject to government currency controls.

• During the fourth quarter, Copa Airlines took delivery of four Boeing 737-800 aircraft, and returned 3 leased Embraer 190s. As a result, Copa Holdings ended the year with a consolidated fleet of 100 aircraft – 63 Boeing 737-800s, 14 Boeing 737-700s, and 23 Embraer-190s.

• For 2015, Copa Holdings reported consolidated on-time performance of 90.6% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

Subsequent Events

• On February 17, 2016, the Board of Directors of Copa Holdings approved a change to the Company’s dividend policy from a current payout of 40% of previous years’ reported net income to 40% of previous years’ adjusted net income. The Board of Directors also approved a 2016 dividend payment of US$0.51 cents per share per quarter, corresponding to 40% of Copa Holdings’ adjusted consolidated net income for 2015. Dividends will be distributed quarterly during the months of March, June, September and December. The first quarterly dividend of US$0.51 cents per share will be paid on March 16 to shareholders on record as of March 3rd, 2016.

Consolidated Financial & Operating Highlights 4Q15 Variance
vs. 4Q14 Variance
vs. 3Q15 FY 2015 Variance
vs. 2014
Revenue Passengers Carried (‘000) 2,055 5.3% 3.4% 7,875 1.0%
RPMs (mm) 4,103 1.7% -0.3% 16,310 2.5%
ASMs (mm) 5,486 2.0% 1.6% 21,675 4.4%
Load Factor 74.8% -0.3 p.p. -1.5 p.p. 75.2% -1.4 p.p.
Yield 12.5 -20.4% -1.9% 13.3 -19.3%
PRASM (US$ Cents) 9.3 -20.7% -3.8% 10.0 -20.8%
RASM (US$ Cents) 9.7 -20.2% -4.3% 10.4 -20.3%
CASM (US$ Cents) 9.0 -12.4% -2.2% 9.2 -13.0%
CASM Excl. Fuel (US$ Cents) 6.5 -2.4% 1.0% 6.4 -3.0%
Breakeven Load Factor (1) 68.8% -10.3 p.p. -1.0 p.p. 65.8% -6.2 p.p.
Fuel Gallons Consumed (Millions) 70.4 1.9% 1.8% 277.1 3.2%
Avg. Price Per Fuel Gallon (US$ Dollars) 1.95 -30.8% -9.8% 2.18 -28.8%
Average Length of Haul (Miles) 1,997 -3.4% -3.6% 2,071 1.4%
Average Stage Length (Miles) 1,222 -0.8% -0.9% 1,236 1.9%
Departures 31,184 1.5% 1.8% 122,588 1.1%
Block Hours 97,788 0.4% 0.8% 388,355 3.0%
Average Aircraft Utilization (Hours) 10.7 -1.6% -0.9% 10.8 -1.7%
Operating Revenues (US$ mm) 532.6 -18.6% -2.7% 2,250.1 -16.8%
Operating Income (US$ mm) 39.1 -61.6% -22.7% 266.1 -48.9%
Operating Margin 7.3% -8.2 p.p. -1.9 p.p. 11.8% -7.4 p.p.
Net Income (US$ mm) 1.9 -92.6% -69.0% 185.4 -48.7%
Adjusted Net Income (US$ mm) (1) 31.7 -72.6% -15.3% 216.2 -55.4%
EPS – Basic and Diluted (US$) 0.04 -92.5% -68.5% 4.23 -48.1%
Adjusted EPS – Basic and Diluted (US$) (1) 0.73 -71.9% -13.8% 4.93 -54.9%
# of Shares – Basic and Diluted (‘000) 43,286 -2.4% -1.7% 43,861 -1.2%

(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 4Q15, 4Q14, 3Q15, 2015 and 2014 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and shares repurchased, and the impact of the Argentinean and Venezuelan currency devaluations.