Copa Holdings SA Q1 2024 Financial Results

Executive Summary

On May 16, 2024, Copa Holdings SA (NYSE: CPA) reported its financial results for the first quarter of 2024. Despite facing operational challenges, the company showcased strong financial performance, driven by robust demand and efficient cost management. The results reaffirm Copa Holdings' leadership in the Latin American aviation market.

Operational Highlights

Copa Holdings demonstrated strong operational metrics for Q1 2024:

• Passenger traffic grew by 7.1% compared to Q1 2023.
• The load factor for the quarter was 86%.
• Passenger yield was noted at $0.14, a 3.8% decrease year-over-year.
• Unit revenue (RASM) was recorded at $0.0125, representing a 4.6% decrease from Q1 2023.
• Unit costs declined by 6.9%, primarily due to lower fuel, aircraft maintenance, and distribution costs.
• Ex-fuel unit costs (CASM ex) decreased by 2% year-over-year, at $0.061.

Financial Performance

Copa Holdings reported the following key financial metrics:

• Total Revenue: $893.47M
• Cost of Revenue: $589.72M
• Gross Profit: $303.75M
• Operating Income: $215.99M
• Net Income: $176.07M
• Earnings Per Share (EPS): $4.19
• EBITDA: $299.35M

Operating expenses stood at $87.76M, leading to a net profit margin of 19.71%. Despite the grounding of 21 Boeing 737 MAX 9 aircraft in January, the operating margin was 24.2%, showcasing a 1.9 percentage point improvement over Q1 2023.

Balance Sheet and Liquidity

By the end of Q1 2024, Copa Holdings displayed a solid balance sheet, with total assets amounting to $5.19B. Key highlights include:

• Total Current Assets: $1.20B
• Property, Plant, and Equipment: $3.55B
• Total Current Liabilities: $1.32B
• Total Non-Current Liabilities: $1.68B
• Total Stockholders’ Equity: $2.19B

Cash and short-term investments reached over $801.17M, representing 32% of the last 12 months' revenues. The company ended the quarter with an adjusted net debt to EBITDA ratio of 0.5x and a total debt of $1.69B. The average cost of debt stood at 3.5%, with 70% being fixed-rate debt.

Fleet and Network Expansion

During Q1 2024, Copa Holdings operated a fleet of 106 aircraft. This included:

• 68 Boeing 737-800s
• 29 Boeing 737 MAX 9s
• 9 Boeing 737-700s

Additionally, the company acquired two leased Boeing 737-800s, increasing the percentage of owned aircraft to 73%. By the end of 2024, the company expects to operate 115 aircraft, subject to delivery timelines. The network is expanding with new destinations, including Raleigh-Durham, Florida, Florianópolis, and Tulum, bringing the total to 85 destinations across 32 countries.

Future Outlook

Copa Holdings remains optimistic about market demand in the region and is reaffirming its full-year operating margin guidance of 21% to 23%. The company anticipates a capacity growth of approximately 10% for the year, supported by higher load factors and efficient cost management. The anticipated all-in fuel price is projected to be $2.85 per gallon, with unit costs excluding fuel (CASM ex) expected to be around $0.059.

Date: May 19, 2024

Report Link: SEC Filing