Copa Holdings announces financial results for the fourth quarter of 2016

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Copa Holdings, S.A. today announced financial results for the fourth quarter of 2016 (4Q16) and full year 2016.

OPERATING AND FINANCIAL HIGHLIGHTS

• Copa Holdings reported net income of US$95.8 million for 4Q16 or earnings per share (EPS) of US$2.26, as compared to net loss of US$408.5 million or loss per share of US$9.44 in 4Q15. Excluding special items, which for 4Q16 include a non-cash gain of US$24.3 million associated with the mark-to-market of fuel hedge contracts, and a US$11.5 million gain related to a non-cash currency translation of Venezuelan Bolivars, the Company would have reported a net income of US$60.0 million, or adjusted EPS of US$1.42, compared to an adjusted net income of US$41.5 million or adjusted EPS of US$0.96 in 4Q15.


• For full year 2016, net income reached US$339.8 million or EPS of US$8.02, compared to a loss of US$225.0 million or loss per share of US$5.13 for full year 2015. Excluding special items, which for 2016 include a non-cash gain of US$111.6 million associated with the mark-to-market of fuel hedge contracts and a US$21.5 million non-cash gain related to currency translation of Venezuelan Bolivars, Copa Holdings would have reported an adjusted net income of US$206.7 million or EPS of US$4.88, compared to adjusted net income of US$226.0 million or adjusted EPS of US$5.15 for full year 2015.

• Operating income for 4Q16 came in at US$71.1 million, representing an 82.1% increase over operating income of US$39.1 million in 4Q15, as a result of a 10.7% increase in unit revenue per available seat mile (RASM), partly offset by a 5.3% increase in unit costs. Operating margin for 4Q16 came in at 11.8%, compared to an operating margin of 7.3% in 4Q15.

• Operating results for the quarter were significantly affected by a US$21.3 million realized fuel hedge loss, compared to US$24.1 million in 4Q15. Excluding these fuel hedge losses, operating margin for the quarter would have been 15.4% for 4Q16 compared to 11.9% for 4Q15.

• For full year 2016, the Company reported operating income of US$276.6 million, representing an increase of 4.0% over operating income of US$266.1 million for full year 2015. Operating margin for full year 2016 came in at 12.4%, compared to an operating margin of 11.8% in 2015.

• Operating results for the year 2016 were significantly affected by a US$93.7 million realized fuel hedge loss, compared to US$95.2 million in 2015. Excluding these fuel hedge losses, operating margin for 2016 would have been 16.7%, compared to 16.1% for 2015.

• Total revenues for 4Q16 increased 12.9% to US$601.3 million. Yield per passenger mile increased 1.3% to 12.6 cents and RASM came in at 10.7 cents, or 10.7% above 4Q15.

• For 4Q16, consolidated passenger traffic grew 11.3% while consolidated capacity grew 2.0%. As a result, consolidated load factor for the quarter increased 6.8 percentage points to 81.6%. For full year 2016, consolidated load factor came in at 80.4%, 5.1 percentage points higher than 2015 on 1.5% capacity growth.

• Operating cost per available seat mile (CASM) increased 5.3%, from 9.0 cents in 4Q15 to 9.5 cents in 4Q16, mostly as a result of a non-cash increase in depreciation expense related to an adjustment in our aircraft useful life assumption from 30 to 27 years, for which the full year 2016 impact was recorded in 4Q16. CASM excluding fuel costs increased 6.7% from 6.5 cents in 4Q15 to 6.9 cents in 4Q16, mainly as a result of this non-cash adjustment in our aircraft useful life assumptions.

• Cash, short-term and long-term investments ended 2016 at US$815.6 million, representing 37% of the last twelve months’ revenues.

• Copa Holdings ended the year with a consolidated fleet of 99 aircraft – 64 Boeing 737-800s, 14 Boeing 737-700s, and 21 Embraer-190s.

• For 2016, Copa Holdings reported consolidated on-time performance of 88.4% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

Subsequent Events

• In January 2017, the company took delivery of one Boeing 737-800, increasing the consolidated fleet to 100 aircraft.

• Also in January 2017, the company was recognized by FlightStats – for the fourth consecutive year – as the most on-time airline in Latin America, and by OAG – for the second consecutive year– as the second most on-time airline in the world.

• On February 15th, 2017, the Board of Directors of Copa Holdings approved a 2017 dividend payment of 51 cents per share per quarter. Dividends will be distributed quarterly during the months of March, June, September and December. The first quarterly dividend of 51 cents per share will be paid on March 15 to shareholders on record as of February 28th, 2017.