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Copa Holdings Reports Net Income of US$32.0 Million and EPS of US$0.72 for the Second Quarter of 2012

August 8, 2012

PANAMA CITY, Aug. 8, 2012 /PRNewswire/ — Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2012 (2Q12). The terms “Copa Holdings” or “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 second quarter of 2011 (2Q11).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$32.0 million for 2Q12, or diluted earnings per share (EPS) of US$0.72. Excluding special items, Copa Holdings would have reported adjusted net income of $58.6 million, or $1.32 per share, a 3.6% increase over adjusted net income of US$56.6 million and US$1.28 per share for 2Q11.
  • Operating income for 2Q12 came in at US72.6 million, a 2.7% decrease over operating income of US$74.6 million in 2Q11. Operating margin for the period came in at 14.1%, compared to 17.4% in 2Q11, as a result of a 3.3% decline in unit revenues and a 2.7% increase in the effective price of jet fuel.
  • Total revenues increased 20.6% to US$515.8 million. Yield per passenger mile increased 1.2% to 17.2 cents and operating revenue per available seat mile (RASM) decreased 3.3% to 13.1 cents. However, adjusting for a 9.6% increase in average length of haul, adjusted yields and adjusted RASM increased 5.9% and 1.2%, respectively.
  • For 2Q12, passenger traffic (RPMs) grew 20.3% on a 24.8% capacity expansion, resulting in a consolidated load factor of 73.5%, or 2.8 percentage points below 2Q11.
  • Operating cost per available seat mile (CASM) increased 0.6%, from 11.2 cents in 2Q11 to 11.3 cents in 2Q12. However, CASM excluding fuel costs remained flat year over year at 6.9 cents.
  • Cash, short term and long term investments ended 2Q12 at US$718.2 million, representing 35% of the last twelve months’ revenues.
  • During the second quarter, Copa Airlines took delivery of five Boeing 737-800 aircraft and returned two leased 737-700 aircraft. As a result, Copa Holdings ended the quarter with a consolidated fleet of 80 aircraft.
  • In June, Copa Airlines launched service to four new destinations: Las Vegas (USA), Recife (Brazil), Liberia (Costa Rica) and Willemstad (Curacao). Also, on July 14, the airline launched service to Iquitos (Peru). As a result. Copa Airlines’ network now provides service to 64 destinations in 29 countries in North, Central and South America and the Caribbean.
  • On June 21, Copa Airlines officially joined the Star Alliance, the largest and most important global airline network. Entry into Star Alliance strengthens the airlines’ successful alliance with United Airlines, as well as the Hub of the Americas’ position as the major connection center in the Americas.
  • For 2Q12, Copa Holdings reported consolidated on-time performance of 83.7% and a flight-completion factor of 99.4%.

(

    Consolidated Financial
     & Operating
     Highlights            2Q12         2Q11         % Change            1Q12         % Change
    ---------------------- ----         ----         --------            ----         --------
    Revenue Passengers
     Carried ('000)              1,658        1,511                 9.8%       1,714                -3.2%
    RPMs (mm)                    2,886        2,400                20.3%       2,954                -2.3%
    ASMs (mm)                    3,923        3,145                24.8%       3,829                 2.5%
    Load Factor                   73.5%        76.3%          -2.8 p.p.         77.2%          -3.6 p.p.
    Yield                         17.2         17.0                 1.2%        17.7                -3.2%
    PRASM (US$ Cents)             12.6         12.9                -2.5%        13.7                -7.8%
    RASM (US$ Cents)              13.1         13.6                -3.3%        14.2                -7.3%
    CASM (US$ Cents)              11.3         11.2                 0.6%        11.3                 0.2%
    CASM Excl. Fuel (US$
     Cents)                        6.9          6.9                -0.1%         6.8                 1.0%
    Breakeven Load Factor
     (1)                          63.0%        58.5%           4.5 p.p.         61.2%           1.8 p.p.
    Fuel Gallons Consumed
     (Millions)                   52.1         42.2                23.6%        51.3                 1.7%
    Avg. Price Per Fuel
     Gallon (US$ Dollars)         3.32         3.24                 2.7%        3.33                -0.2%
    Average Length of Haul
     (Miles)                     1,740        1,588                 9.6%       1,724                 0.9%
    Average Stage Length
     (Miles)                     1,063          973                 9.2%       1,066                -0.3%
    Departures                  27,005       24,694                 9.4%      26,647                 1.3%
    Block Hours                 74,841       61,240                22.2%      73,480                 1.9%
    Average Aircraft
     Utilization (Hours)          10.6         10.2                 3.5%        11.0                -3.6%
    Operating Revenues
     (US$ mm)                    515.8        427.7                20.6%       543.3                -5.0%
    Operating Income (US$
     mm)                          72.6         74.6                -2.7%       111.6               -34.9%
    Operating Margin              14.1%        17.4%          -3.4 p.p.         20.5%          -6.5 p.p.
    Net Income (US$ mm)           32.0         41.3               -22.4%        95.9               -66.6%
    Adjusted Net Income
     (US$ mm) (1)                 58.6         56.6                 3.6%        90.6               -35.3%
    EPS -Basic and
     Diluted (US$)                0.72         0.93               -22.5%        2.16               -66.6%
    Adjusted EPS -Basic
     and Diluted (US$) (1)        1.32         1.28                 3.5%        2.04               -35.3%
    # of Shares -Basic
     and Diluted ('000)         44,354       44,316                 0.1%      44,341                 0.0%
    -------------------         ------       ------                 ---       ------                 ---

)

((1)() )Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q12, 2Q11, and 1Q12 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.

Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 2Q12 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q12 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

    Date:                        August 9, 2012
    Time:                        11:00 a.m. US EDT (10:00 a.m. Local Time)
    Conference telephone number: 877-293-5456 (US Domestic Callers)
                                 707-287-9357 (International Callers)
    Webcast:                      http://investor.shareholder.com/copa/
                                  events.cfm
    Speakers:                    Pedro Heilbron, Chief Executive Officer
                                 Victor Vial, Chief Financial Officer

Copa Holdings is a leading Latin American provider of passenger and cargo services. The Company, through its operating subsidiaries, provides service to 64 destinations in 29 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 80 aircraft: 54 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit www.copaair.com.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: (507) 304-2677
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 management’s expectations that involve a number of 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.

CPA-G

    Copa Holdings, S.A.
    Income Statement - IFRS
    (US$ Thousands)

                                           Unaudited             Unaudited                %          Unaudited                %
                                             2Q12                  2Q11                Change          1Q12                Change
                                             ----                  ----                ------          ----                ------
    Operating Revenues
         Passenger Revenue                              495,029               406,813          21.7%              523,812          -5.5%
         Cargo, mail and other                           20,814                20,850          -0.2%               19,444           7.0%
    Total Operating Revenue                             515,843               427,663          20.6%              543,257          -5.0%

    Operating Expenses
         Aircraft fuel                                  173,289               136,542          26.9%              170,875           1.4%
         Salaries and benefits                           61,123                52,697          16.0%               57,536           6.2%
         Passenger servicing                             50,943                38,745          31.5%               49,433           3.1%
         Commissions                                     21,272                15,828          34.4%               22,223          -4.3%
         Reservations and sales                          20,586                17,399          18.3%               20,090           2.5%
         Maintenance, material and repairs               23,954                16,911          41.6%               20,530          16.7%
         Depreciation                                    21,214                18,564          14.3%               20,526           3.4%
         Flight operations                               24,991                19,551          27.8%               25,039          -0.2%
         Aircraft rentals                                17,191                11,186          53.7%               17,300          -0.6%
         Landing fees and other rentals                  10,931                10,706           2.1%               10,846           0.8%
         Other                                           17,730                14,923          18.8%               17,300           2.5%
    Total Operating Expense                             443,224               353,052          25.5%              431,699           2.7%

    Operating Income                                     72,619                74,611          -2.7%              111,558         -34.9%

    Non-operating Income (Expense):
         Interest expense                                (8,583)               (7,801)         10.0%               (7,959)          7.8%
         Interest income                                  2,741                 1,575          74.0%                2,286          19.9%
         Other, net                                     (30,981)              (17,322)         78.9%                4,866            nm
    Total Non-Operating Income/(Expense)                (36,823)              (23,548)         56.4%                 (806)           nm

    Income before Income Taxes                           35,796                51,063         -29.9%              110,751         -67.7%

         Provision for Income Taxes                       3,790                 9,800         -61.3%               14,822         -74.4%

    Net Income                                           32,006                41,263         -22.4%               95,930         -66.6%
    ----------                                           ------                ------         -----                ------         -----

    EPS - Basic and Diluted                                0.72                  0.93         -22.5%                 2.16         -66.6%
    Shares - Basic and Diluted                       44,353,845            44,315,841           0.1%           44,340,562           0.0%

    Copa Holdings, S.A.
    Balance Sheet - IFRS
    (US$ Thousands)                                                                               June 30,               December 31,
                                                                                                                   2012          2011
                                                                                                                   ----          ----
                                                                                                 (Unaudited)              (Audited)
                                                                           ASSETS
    Current Assets:
         Cash and cash equivalents                                                                             $255,828      $243,801
         Short-term investments                                                                                 244,509       262,345
                                                                                                                -------       -------
         Total cash, cash equivalents and short-term investments                                                500,337       506,146

         Accounts receivable, net of allowance for doubtful accounts                                            134,773       142,297
         Accounts receivable from related parties                                                                   513           704
         Expendable parts and supplies, net of allowance for obsolescence                                        43,686        42,382
         Prepaid expenses                                                                                        46,210        40,058
         Other current assets                                                                                     7,043        22,655
                                                                                                                  -----        ------
         Total Current Assets                                                                                   732,562       754,242

    Long-term investments                                                                                       217,859       104,834

    Property and Equipment:
         Owned property and equipment:
         Flight equipment                                                                                     2,284,925     2,036,983
         Other equipment                                                                                         61,979        67,577
                                                                                                                 ------        ------
                                                                                                              2,346,904     2,104,560
         Less: Accumulated depreciation                                                                        (387,186)     (346,656)
                                                                                                               --------
                                                                                                              1,959,718     1,757,904
         Purchase deposits for flight equipment                                                                 166,711       242,287
                                                                                                                -------       -------
         Total Property and Equipment                                                                         2,126,429     2,000,191

    Other Assets:
         Net pension asset                                                                                        9,406         8,974
         Goodwill                                                                                                27,322        25,099
         Intangible asset                                                                                        56,518        47,047
         Other assets                                                                                           122,564       125,409
                                                                                                                -------       -------
         Total Other Assets                                                                                     215,810       206,529
         Total Assets                                                                                        $3,292,660    $3,065,796
                                                                                                             ==========    ==========

                                                            LIABILITIES AND SHAREHOLDER'S EQUITY
    Current Liabilities:
         Current maturities of long-term debt                                                                  $114,522      $131,069
         Accounts payable                                                                                        82,497        92,842
         Accounts payable to related parties                                                                     14,902        22,074
         Air traffic liability                                                                                  359,057       297,135
         Taxes and interest payable                                                                              85,663        71,223
         Accrued expenses payable                                                                                42,190        30,472
         Other current liabilities                                                                               16,277        13,845
                                                                                                                 ------        ------
         Total Current Liabilities                                                                              715,108       658,660

    Non-Current Liabilities:
         Long-term debt                                                                                       1,063,745       936,657
         Post employment benefits liability                                                                       5,910         5,847
         Other long-term liabilities                                                                             42,667        44,657
         Deferred tax liabilities                                                                                32,052        30,444
                                                                                                                 ------        ------
         Total Non-Current Liabilities                                                                        1,144,374     1,017,605

         Total Liabilities                                                                                    1,859,482     1,676,265
                                                                                                              ---------     ---------

    Shareholders' Equity:
         Class A - 33,341,822 shares issued and outstanding                                                      22,496        22,495
         Class B - 10,938,125 shares issued and outstanding                                                       7,466         7,466
         Additional paid in capital                                                                              37,237        33,567
         Retained earnings                                                                                    1,359,341     1,324,394
         Accumulated other comprehensive income (loss)                                                            6,638         1,609
                                                                                                                  -----         -----
         Total Shareholders' Equity                                                                           1,433,178     1,389,531
         Total Liabilities and Shareholders' Equity                                                          $3,292,660    $3,065,796
                                                                                                             ==========    ==========

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: CASM Excluding Fuel, Adjusted Net Income and Adjusted EPS. 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 income and net income. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:


    Reconciliation of Net
     Income
    Excluding Special
     Items                      2Q12          2Q11          1Q12
                                ----          ----          ----

    Net income as Reported           $32,006       $41,263       $95,930

    Special Items
     (adjustments):
         Unrealized (gain) loss
          on fuel hedging
          instruments (1)             26,587        15,315        (5,328)
    Adjusted Net Income              $58,593       $56,578       $90,602
                                     =======       =======       =======

    Shares used for
     Computation (in
     thousands)
         Basic and Diluted            44,354        44,316        44,341
                                      ======        ======        ======

    Adjusted earnings per
     share -Basic and
     Diluted                            1.32          1.28          2.04
                                        ====          ====          ====

    Reconciliation
     Operating Costs per
     ASM
    Excluding Fuel and
     Special Items              2Q12          2Q11          1Q12
                                ----          ----          ----

    Operating Costs per
     ASM as Reported                    11.3          11.2          11.3
    Aircraft fuel per ASM               (4.4)         (4.3)         (4.5)
                                        ----          ----          ----
    Operating Costs per
     ASM excluding fuel                  6.9           6.9           6.8
                                         ===           ===           ===

FOOTNOTES:

(1) Includes unrealized (gains) losses resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments. For 2Q12 and 2Q11, the Company recorded unrealized fuel hedge losses of US$26.6 million and US$15.3 million, and a fuel hedge gain of US$5.3 million for 1Q12.

SOURCE Copa Holdings, S.A.


Source: PR Newswire