UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Report on Form 6-K dated for the month of May 2023
Copa Holdings, S.A.
(Translation of Registrant's Name Into English)
Boulevard Costa del Este, Avenida Principal y Avenida de la Rotonda
Urbanizacion Costa del Este
Complejo Business Park, Torre Norte
ParqueLefevre
Panama City, Panama
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F
X
Form 40-F
(Indicate by check whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes
No
X
(If Yes is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b);82-
)
Enclosure: 1Q23 Earnings Release
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Copa Holdings, S.A.
(Registrant)
Date:
5/11/2023
By: /s/ Jose Montero
Name: Jose Montero
Title: CFO
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Exhibit 99.1
Copa Holdings Reports Financial Results for the First Quarter of 202
3
Panama City, Panama
--- May 10, 2023. Copa Holdings, S.A. (NYSE: CPA), today announced financial
results for the first quarter of 2023 (1Q23). 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 first quarter of 2019 (1Q19)
(which the Company believes are more relevant than year-over-year comparisons
due to the significant impact of the COVID-19 pandemic in 2020, 2021, and
2022).
OPERATING AND FINANCIAL HIGHLIGHTS
Copa Holdings reported a net profit of US$121.5 million for 1Q23 or US$3.07
per share, as compared to a net profit of US$89.4 million or earnings per
share of US$2.11 in 1Q19. Excluding special items comprised of the unrealized
mark-to-market net loss of US$36.3 million related to the Companys convertible
notes, as well as changes in the value of financial investments, the Company
would have reported a net profit of US$157.8 million or US$3.99 per share.
Copa Holdings reported an operating profit of US$193.2 million and a 22.3%
operating margin for the quarter, as compared to an operating profit of
US$112.9 million and an operating margin of 16.8% in 1Q19.
Passenger traffic, measured in terms of revenue passenger miles (RPMs),
increased by 7.1% compared to 1Q19, while capacity (available seat miles or
ASMs) increased by 2.8%. As a result, the load factor for the quarter
increased by 3.5 percentage points to 86.8%, as compared to 1Q19.
Total revenues for 1Q23 increased 29.0% to US$867.3 million, as compared to
1Q19 revenues. Yields increased 20.0% to 14.6 cents and revenue per available
seat mile (RASM) increased 25.5% to 13.1 cents.
Operating cost per available seat mile (CASM) increased 17.2% from 8.7 cents
in 1Q19 to 10.2 cents in 1Q23, mainly driven by an increase of 61.4% in the
price of jet fuel per gallon. CASM excluding fuel (Ex-fuel CASM) increased
2.1% in the quarter to 6.2 cents, as compared to 1Q19.
The Company ended the quarter with approximately US$1.2 billion in cash,
short-term and long-term investments, which represent 36.3% of the last twelve
months revenues.
The Company closed the quarter with total debt, including lease liabilities,
of US$1.7 billion,
while our Net Debt to EBITDA ratio ended at 0.6 times, a decrease when
compared to the previous quarter.
During the quarter, the Company took delivery of two Boeing 737 MAX 9
aircraft, ending the quarter with a consolidated fleet of 99 aircraft 67
Boeing 737-800s, 22 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800
freighter, compared to a fleet of 102 aircraft prior to the COVID-19 pandemic.
Copa Airlines had an on-time performance for the quarter of 92.2% and a flight
completion factor of 99.9%, once again positioning itself among the very best
in the industry.
1
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Subsequent Events
Copa Holdings will pay its second quarterly dividend of $0.82 per share on
June 15, to all Class A and Class B shareholders on record as of May 31, 2023.
Consolidated Financial 1Q23 1Q19 Variance vs. 1Q19 4Q22 Variance vs. 4Q22
& Operating Highlights (2)
Revenue Passengers Carried (000s) 2,881 2,588 11.3 % 2,813 2.4 %
Revenue Passengers OnBoard (000s) 4,295 3,830 12.1 % 4,262 0.8 %
RPMs (millions) 5,723 5,345 7.1 % 5,639 1.5 %
ASMs (millions) 6,596 6,415 2.8 % 6,509 1.3 %
Load Factor 86.8 % 83.3 % 3.5 p.p. 86.6 % 0.1 p.p.
Yield (US$ Cents) 14.6 12.1 20.0 % 15.1 -3.6 %
PRASM (US$ Cents) 12.6 10.1 25.0 % 13.1 -3.4 %
RASM (US$ Cents) 13.1 10.5 25.5 % 13.7 -3.9 %
CASM (US$ Cents) 10.2 8.7 17.2 % 10.3 -0.9 %
CASM Excl. Fuel (US$ Cents) 6.2 6.1 2.1 % 6.1 1.5 %
Fuel Gallons Consumed (millions) 78.2 81.2 -3.7 % 77.7 0.6 %
Avg. Price Per Fuel Gallon (US$) 3.36 2.09 61.4 % 3.52 -4.5 %
Average Length of Haul (miles) 1,987 2,065 -3.8 % 2,005 -0.9 %
Average Stage Length (miles) 1,281 1,299 -1.4 % 1,266 1.2 %
Departures 31,984 33,329 -4.0 % 32,112 -0.4 %
Block Hours 104,626 110,089 -5.0 % 104,822 -0.2 %
Average Aircraft Utilization (hours) 11.9 11.6 1.9 % 11.8 0.8 %
Operating Revenues (US$ millions) 867.3 672.2 29.0 % 890.6 -2.6 %
Operating Profit (Loss) (US$ millions) 193.2 112.9 71.2 % 219.7 -12.0 %
Operating Margin 22.3 % 16.8 % 5.5 p.p. 24.7 % -2.4 p.p.
Net Profit (Loss) (US$ millions) 121.5 89.4 35.9 % 88.3 37.7 %
Adjusted Net Profit (Loss) (US$ millions) 157.8 89.4 76.4 % 177.7 -11.2 %
(1)
Basic EPS (US$) 3.07 2.11 45.9 % 2.23 37.6 %
Adjusted Basic EPS (US$) 3.99 2.11 89.4 % 4.49 -11.2 %
(1)
Shares for calculation of Basic EPS (000s) 39,565 42,478 -6.9 % 39,554 0.0 %
(1)
Excludes Special Items. This earnings release includes a reconciliation of
non-IFRS financial measures to the comparable IFRS measures.
(2)
The Company believes that comparisons with 2019 are more relevant than
year-over-year comparisons due to the significant impacts of the COVID-19
pandemic in 2020, 2021, and 2022.
2
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MANAGEMENTS COMMENTS ON 1Q23 RESULTS
Copa Holdings delivered solid financial results for the first quarter of 2023.
The Companys results were driven by a healthy demand environment in the
region, which led to strong unit revenues in the quarter, and by its
consistent cost execution strategy.
Operating revenues for the quarter increased 29.0% to US$867.3 million while
operating 2.8% more capacity compared to 1Q19. The Companys load factor came
in at 86.8% or 3.5 percentage points above 1Q19 and yields came in at 14.6
cents or 20.0% higher than 1Q19. As a result, passenger revenues per ASM
(PRASM) increased 25.0% to 12.6 cents and RASM increased 25.5% to 13.1 cents
in the quarter.
Operating expenses for 1Q23 increased 20.5% to US$674.1 million, mainly due to
a higher jet fuel cost. Aircraft fuel expenses increased 56.0% or US$95.3
million compared to 1Q19, due to a 61.4% higher jet fuel price, partially
offset by 3.7% fewer gallons consumed.
Driven by the increase in fuel cost, cost per available seat mile (CASM) came
in at 10.2 cents, an increase of 17.2% compared to 1Q19. Costs excluding fuel
(Ex-fuel CASM) came in at 6.2 cents, a 2.1% increase when compared to the same
period in 2019.
Copa Holdings closed the quarter with US$ 1.2 billion in cash, short-term and
long-term investments, which represent 36.3% of the last twelve months
revenues.
Total debt at the end of 1Q23 amounted to US$1.7 billion compared to US$1.6
billion at the end of 2022, while our Net Debt to EBITDA ratio ended at 0.6
times, a decrease when compared to the previous quarter.
The Company has a proven business model, which is built on operating the best
and most convenient network for intra-Latin America travel from its Hub of the
Americas
(R)
based on Panamas advantageous geographic position, low unit costs, best
on-time performance, and a strong balance sheet. Going forward, the Company
expects to leverage its strong balance sheet, leading liquidity position, and
lower cost base to continue strengthening its long-term competitive position
by implementing initiatives that will further reinforce its network, product,
and cost competitiveness.
3
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OUTLOOK FOR 2023
For 2023, the Company updates its outlook as follows: consolidated capacity is
expected to grow within a range of 12% to 13% over 2022, and operating margin
is now expected to come within the range of 22% to 24%.
Financial Outlook 2023 2022
Guidance
Capacity YOY ASM growth 12-13% 63.6%
Operating Margin 22-24% 15.2%
Factored into this outlook is a load factor of approximately 85%, unit
revenues (RASM) of 12.5 cents, unit costs excluding fuel (Ex-Fuel CASM) in the
range of 6.1 cents, and an all-in fuel price of US$2.85 per gallon.
CONSOLIDATED FIRST-QUARTER RESULTS
Operating revenue
Consolidated revenue
for 1Q23 totaled US$867.3 million, mainly driven by passenger revenue.
Passenger revenue
totaled US$834.0 million, a 28.5% increase compared to the same period in
2019, mostly driven by 20.0% higher yields. The first-quarter results are
mostly comprised of flown passenger ticket revenue, passenger-related
ancillary revenue, and unredeemed ticket revenue.
Cargo and mail revenue
which in 2023 includes the operation of one Boeing 737-800 freighter, totaled
US$23.3 million, a 51.8% increase compared to the same period in 2019, related
to higher cargo volumes and yields.
Other operating revenue
totaled US$10.0 million, a 24.0% increase compared to the same period in 2019,
mainly revenues from non-air ConnectMiles partners.
Operating expenses
Fuel
totaled US$265.5 million, an increase of 56.0% compared to the same period in
2019, due to a 61.4% higher effective fuel price, partially offset by 3.7%
fewer fuel gallons consumed.
Wages, salaries, benefits, and other employee expenses
totaled US$102.7 million, representing a 9.7% decrease compared to the same
period in 2019, mainly driven by a reduced administrative headcount as well as
more subcontracted services in stations outside of Panama.
Passenger servicing
totaled US$20.4 million, a decrease of 20.3% compared to the same period in
2019, driven by a simplified onboard product offering.
Airport facilities and handling charges
totaled US$50.5 million, an increase of 11.3% compared to the same period in
2019, mostly related to higher airport costs mainly in the US, as well as
outsourced airport services in stations outside of Panama.
Sales and distribution
totaled US$61.4 million, an increase of 15.6% compared to the same period in
2019, due to an increase in ticket sales compared to 1Q19.
4
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Maintenance, materials, and repairs
totaled US$40.3 million, an increase of 43.7% compared to 1Q19, mainly due to
an increase in engine maintenance costs, changes in supplemental rent
provisions related to aircraft utilization and new leased aircraft, as well as
one-time maintenance costs.
Depreciation and amortization
totaled US$72.7 million, mostly comprised of owned and leased flight
equipment, maintenance events, and IT systems amortizations, an increase of
6.6% compared to 1Q19, mainly due to an increase in the amortization of
aircraft maintenance events compared to the same period of 2019.
Flight operations
mostly related to overflight fees, totaled
US$27.4 million, an increase of 6.0% compared to the same period in 2019,
mostly due to an increase in overflight rates in certain countries.
Other operating and administrative expenses
totaled US$33.2 million, an increase of 13.4% compared to the same period in
2019, mainly related to engine rentals required to compensate for longer
induction and turnaround times at third-party maintenance facilities.
Non-operating Income (Expense)
Consolidated non-operating income (expense)
totaled (US$51.0) million.
Finance cost
totaled (US$24.4) million, mostly comprised of US$11.3 million of convertible
notes interest expenses, which included $7.4 million related to a non-cash
interest expense due to the amortization of the debt principal and debt
issuance costs associated with the convertible notes; US$8.6 million related
to aircraft loan interest and commission expenses; and US$4.5 million related
to our aircraft leases.
Finance income
totaled US$8.8 million in proceeds from investments.
Gain (loss) on foreign currency fluctuations
resulted in a gain of US$1.2 million, mainly driven by the appreciation of the
Colombian peso and the Mexican peso during the quarter.
Net change in fair value of derivatives
totaled a net (US$37.9) million unrealized mark-to-market loss related to the
value of the Companys convertible notes.
Other non-operating income (expense)
totaled a net of US$1.2 million, which includes an unrealized mark-to-market
gain of US$1.7 million related to changes in the value of financial
investments.
5
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About Copa Holdings
Copa Holdings is a leading Latin American provider of passenger and cargo
services. The Company, through its operating subsidiaries, provides service to
countries in North, Central, and South America and the Caribbean. For more
information visit:
www.copaair.com
.
CONTACT:
Copa Holdings S.A.
Investor Relations:
Ph: 011 507 304-2774
www.copaair.com
(IR section)
This release includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on current plans, estimates, and expectations, and are
not guarantees of future performance. They are based on managements
expectations that involve several business risks and uncertainties, any of
which could cause actual results to differ materially from those expressed in
or implied by the forward-looking statements. The Company undertakes no
obligation to update or revise any forward-looking statement. The risks and
uncertainties relating to the forward-looking statements in this release are
among those disclosed in Copa Holdings filed disclosure documents and are,
therefore, subject to change without prior notice.
6
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Copa Holdings, S.A.
Income Statement - IFRS
(US$ Thousands)
Unaudited Unaudited % Unaudited %
1Q23 1Q19 Change 4Q22 Change
Operating Revenues
Passenger revenue 834,018 648,790 28.5 % 852,291 -2.1 %
Cargo and mail revenue 23,252 15,316 51.8 % 27,095 -14.2 %
Other operating revenue 9,995 8,063 24.0 % 11,226 -11.0 %
Total Operating Revenue 867,264 672,169 29.0 % 890,612 -2.6 %
Operating Expenses
Fuel 265,498 170,163 56.0 % 273,901 -3.1 %
Wages, salaries, benefits and other employees' expenses 102,652 113,662 -9.7 % 105,019 -2.3 %
Passenger servicing 20,391 25,571 -20.3 % 19,518 4.5 %
Airport facilities and handling charges 50,479 45,362 11.3 % 49,734 1.5 %
Sales and distribution 61,406 53,133 15.6 % 61,498 -0.1 %
Maintenance, materials and repairs 40,296 28,047 43.7 % 28,875 39.6 %
Depreciation and amortization 72,677 68,187 6.6 % 70,251 3.5 %
Flight operations 27,424 25,875 6.0 % 25,667 6.8 %
Other operating and administrative expenses 33,228 29,297 13.4 % 36,492 -8.9 %
Total Operating Expense 674,053 559,296 20.5 % 670,954 0.5 %
Operating Profit/(Loss) 193,212 112,873 71.2 % 219,657 -12.0 %
Non-operating Income (Expense):
Finance cost (24,365 ) (14,010 ) 73.9 % (23,388 ) 4.2 %
Finance income 8,842 5,954 48.5 % 7,413 19.3 %
Gain (loss) on foreign currency fluctuations 1,201 (5,960 ) -120.2 % (2,560 ) -146.9 %
Net change in fair value of derivatives (37,933 ) - -100.0 % (91,305 ) -58.5 %
Other non-operating income (expense) 1,235 (825 ) -249.7 % 1,221 1.1 %
Total Non-Operating Income/(Expense) (51,020 ) (14,841 ) 243.8 % (108,619 ) -53.0 %
Profit before taxes 142,192 98,032 45.0 % 111,039 28.1 %
Income tax expense (20,671 ) (8,600 ) 140.4 % (22,758 ) -9.2 %
Net Profit/(Loss) 121,521 89,431 35.9 % 88,280 37.7 %
EPS
Basic 3.07 2.11 45.9 % 2.23 37.6 %
Shares used for calculation:
Basic 39,565,223 42,477,761 -6.9 % 39,554,071 0.0 %
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Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)
March 2023 December 2022
ASSETS (Unaudited) (Audited)
Cash and cash equivalents 242,314 122,424
Short-term investments 773,493 812,323
Total cash, cash equivalents and short-term investments 1,015,807 934,747
Accounts receivable, net 165,111 135,415
Accounts receivable from related parties 1,833 2,168
Expendable parts and supplies, net 101,680 93,332
Prepaid expenses 49,917 52,322
Prepaid income tax 370 798
Other current assets 23,665 17,043
342,576 301,078
TOTAL CURRENT ASSETS 1,358,383 1,235,825
Long-term investments 166,481 202,056
Long-term prepaid expenses 6,494 7,770
Property and equipment, net 2,967,611 2,883,524
Right of use assets 238,269 234,380
Intangible, net 80,765 78,555
Net defined benefit assets 1,048 504
Deferred tax assets 31,636 30,743
Other Non-Current Assets 16,277 17,005
TOTAL NON-CURRENT ASSETS 3,508,581 3,454,537
TOTAL ASSETS 4,866,964 4,690,362
LIABILITIES
Loans and borrowings 144,203 142,484
Current portion of lease liability 77,412 80,084
Accounts payable 163,236 166,660
Accounts payable to related parties 1,944 1,004
Air traffic liability 611,437 651,805
Frequent flyer deferred revenue 114,976 111,526
Taxes Payable 67,122 43,878
Employee benefits obligations 31,534 44,913
Income tax payable 12,414 6,276
Other Current Liabilities 1,366 1,175
TOTAL CURRENT LIABILITIES 1,225,644 1,249,805
Loans and borrowings long-term 1,327,441 1,301,819
Lease Liability 162,029 158,289
Derivative financial instruments 289,083 251,150
Deferred tax Liabilities 25,783 16,571
Other long - term liabilities 232,941 220,618
TOTAL NON-CURRENT LIABILITIES 2,037,277 1,948,447
TOTAL LIABILITIES 3,262,921 3,198,252
EQUITY
Class A - 34,064,142 issued and 28,388,261 outstanding 21,362 21,327
Class B - 10,938,125 7,466 7,466
Additional Paid-In Capital 104,606 103,465
Treasury Stock (357,087 ) (344,541 )
Retained Earnings 1,717,620 1,367,784
Net profit 121,521 348,054
Other comprehensive loss (11,445 ) (11,445 )
TOTAL EQUITY 1,604,043 1,492,110
TOTAL EQUITY LIABILITIES 4,866,964 4,690,362
8
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Copa Holdings, S. A. and subsidiaries
Consolidated Statement of Cash Flows
For the three months ended March 31,
(In US$ thousands)
2023 2022 2021
(Unaudited) (Unaudited) (Unaudited)
Cash flow from (used in) operating activities 203,419 169,336 (892 )
Cash flow used in investing activities (62,868 ) (120,515 ) (86,697 )
Cash flow (used in) from financing activities (20,661 ) (10,888 ) 162,325
Net increase in cash and cash equivalents 119,890 37,933 74,736
Cash and cash equivalents at January 1 122,424 211,081 119,065
Cash and cash equivalents at March 31 $ 242,314 $ 249,014 $ 193,801
Short-term investments 773,493 771,074 898,453
Long-term investments 166,481 204,810 111,001
Total cash and cash equivalents and investments at March 31 $ 1,182,288 $ 1,224,898 $ 1,203,255
9
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Copa Holdings, S.A.
NON-IFRS FINANCIAL MEASURE RECONCILIATION
This press release includes the following non-IFRS financial measures:
Adjusted Net Profit, Adjusted Basic EPS, and Operating CASM Excluding Fuel.
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 Net Profit 1Q23 1Q22 4Q22 1Q19
Net Profit as Reported $ 121,521 $ 19,759 $ 88,280 $ 89,431
Add: Net change in fair value of derivatives $ 37,933 $ 6,752 $ 91,305
Add: Net change in fair value of financial investments $ (1,655 ) $ 2,979 $ (1,924 )
Adjusted Net Profit $ 157,798 $ 29,490 $ 177,661 $ 89,431
Reconciliation of Adjusted Basic EPS 1Q23 1Q22 4Q22 1Q19
Adjusted Net Profit $ 157,798 $ 29,490 $ 177,661 $ 89,431
Shares used for calculation of Basic EPS 39,565 42,006 39,554 42,478
Adjusted Basic Earnings per share (Adjusted Basic EPS) $ 3.99 $ 0.70 $ 4.49 $ 2.11
Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel) 1Q23 1Q22 4Q22 1Q19
Operating Costs per ASM as Reported (in US$ Cents) 10.2 9.4 10.3 8.7
Aircraft Fuel Cost per ASM (in US$ Cents) 4.0 3.4 4.2 2.7
Operating Costs per ASM excluding fuel (in US$ Cents) 6.2 6.0 6.1 6.1
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{graphic omitted}