Copa Holdings (CPA) Q4 Loss Wider Than Expected, Revenues Down

Table of Contents

Copa Holdings CPA incurred a loss (excluding $1.97 from non-recurring items) of $2.00 per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.90. In the year-ago quarter, the company reported earnings of $2.17 per share.

Owing to COVID-19 effect on the aviation industry, the company on average operated at approximately 27% of the capacity for the same period in2019 (since 2020 was coronavirus-scarred, airlines are comparing with pre-coronavirus levels). Due to this limited flying, Copa Holdings did not provide certain financial ratios, unit metrics and operational indicators this time, since they were either not measurable or applicable in such a scenario.

Quarterly revenues of $158.6 million beat the Zacks Consensus Estimate of $153.4 million. However, the top line plunged 76.7% year over year with passenger revenues (contributed 93% to the top line) declining 77.6%.

Operational Statistics

On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) fell 75.8% and capacity (measured in available seat miles/ASMs) declined 72.6%. As traffic decline was more than the amount of capacity contraction, load factor (% of seats filled with passengers) declined 10 percentage points to 75.3% in the reported quarter.

Total operating expenses declined 61.8% year over year to $253.7 million, backed by lower passenger servicing and fuel cost. Expenses on fuel fell 83.5% due to reduced fuel consumption (down 73.7% to 20.75 million) and low jet fuel prices ($1.41 per gallon, down 34.7%). Expenses on passenger servicing declined 83.1% on a year-over-year basis. Moreover, expenses on wages, salaries and other employee benefits fell 44.7% due to temporary work-contract suspensions, voluntary pay cuts and work-hour reductions for employees.

Other Details

Copa Holdings exited the fourth quarter with cash and cash equivalents of $119.1 million compared with $158.73 million at 2019 end. Total debt at the end of the fourth quarter was $1.4 billion.

Copa Holdings, S.A. Price, Consensus and EPS Surprise

Copa Holdings, S.A. price-consensus-eps-surprise-chart | Copa Holdings, S.A. Quote

This Zacks Rank #3 (Hold) company ended the fourth quarter with a consolidated fleet of 75 aircrafts — 68 Boeing 737-800s and 7 Boeing 737MAX9s. During the quarter, the company completed the delivery of 5 EMB-190 aircraft. In December, the company also took delivery of a Boeing 737 MAX 9.

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Outlook for Q1

Copa Holdings currently expects its capacity to reach approximately 2.6 billion or around 40% of the capacity during first-quarter 2019.

Total revenues are expected in the range of $170-$200 million or 25-30% of total revenues for the first quarter of 2019. The midpoint ($185 million) is greater than the Zacks Consensus Estimate of $153.4 million.

Cash consumption (excluding any proceeds from asset sales and extraordinary financing activities) is expected to increase in the range of $40-$45 million per month.

However, owing to uncertainty related to the COVID-19 pandemic, the company is not providing its full-year 2021 financial guidance.

Performance of Other Airline Stocks

United Airlines UAL, carrying a Zacks Rank #3, incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Meanwhile, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

Delta Air Lines DAL, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.

Southwest Airlines LUV, carrying a Zacks Rank #4, incurred a loss of $1.29 per share (excluding 25 cents from non-recurring items) in the fourth quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.69. Operating revenues of $2,013 million lagged the Zacks Consensus Estimate of $2,117.5 million.

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