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 November,
2007
Copa
Holdings, S.A.
(Translation
of Registrant's Name Into English)
Boulevard
Costa del Este, Avenida Principal y Avenida de la Rotonda
Urbanización
Costa del Este
Parque
Lefevre
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:
Earnings
Release - Copa
Holdings Reports Earnings of US$46.8 Million and EPS of US$1.08 for 3Q07,
including US$8.0 Million Non-Recurring Gain
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: 11/15/2007 | By: | /s/ Victor Vial |
|
Name:
Victor Vial
Title:
CFO
|
||
Copa
Holdings Reports Earnings of US$46.8 Million and EPS of US$1.08 for 3Q07,
Including US$8.0 Million Non-Recurring Gain
PANAMA
CITY, Nov. 15 /PRNewswire-FirstCall/ -- Copa Holdings, S.A. (NYSE: CPA),
parent company of Copa Airlines and Aero Republica, today announced financial
results for the third quarter of 2007 (3Q07). The terms “Copa Holdings" or "the
Company" makes reference to the consolidated entity, whose operating
subsidiaries are Copa Airlines and Aero Republica. The following financial
and
operating information, unless otherwise indicated, is presented pursuant
to US
GAAP.
OPERATING
AND FINANCIAL HIGHLIGHTS
| · |
Copa
Holdings reported net earnings of US$46.8 million for 3Q07, representing
diluted earnings per share of $1.08. Excluding an US$8.0 million
non-recurring pre-tax gain related to insurance proceeds in excess
of
aircraft book value, net earnings for the quarter would have been
US$38.8
million, which would have represented diluted earnings per share
of
US$0.89.
|
| · |
Operating
income for 3Q07 increased 3.3% to US$46.7 million from US$45.2
million in
3Q06. Operating margin came in at 17.6%, a 2 percentage point decrease
compared to 3Q06.
|
| · |
Revenue
passenger miles (RPMs) increased 16.3% from 1.35 billion in 3Q06
to 1.56
billion in 3Q07. Available seat miles (ASMs) increased 18.0% from
1.78
billion in 3Q06 to 2.10 billion in 3Q07. As a result, average load
factor
came in at 74.4%. Copa Airlines, which represented 80% of consolidated
capacity, delivered a 78.5% load factor on 22.7% capacity growth.
|
| · |
Total
revenues increased to US$264.6 million, representing growth of
14.7%.
Passenger yield decreased 1.6% to 15.9 cents and operating revenue
per
available seat mile (RASM) decreased 2.7% to 12.6
cents.
|
| · |
Operating
cost per available seat mile (CASM) decreased 0.4% to 10.4 cents.
CASM
excluding fuel remained unchanged at 7.0
cents.
|
| · |
On
July 13, Aero Republica began its second daily frequency from Bogota
to
Panama City. Additionally, on October 4, Aero Republica added service
into
Panama City from Colombia’s fifth largest city, Bucaramanga. The airline
currently provides international connections to Copa Airlines’ Hub of the
Americas from five Colombian cities: Bogota, Bucaramanga, Cali,
Cartagena
and Medellin.
|
| · |
On
July 15, Copa Airlines began service from its Hub of the Americas
in
Panama City to Washington D.C. and Punta Cana (Dominican Republic),
as
well as Guadalajara (Mexico) on July 18 and Cordoba (Argentina)
on August
15. Copa Airlines network now serves 40 cities in 21 countries
in North,
South and Central America and the Caribbean.
|
| · |
On
July 30, Copa Airlines announced a comprehensive code share agreement
with
AeroMexico, which formally began on August 1, 2007. As part of
the
agreement, Copa Airlines has placed its designator code on
AeroMexico-operated flights beyond Mexico City to 17 Mexican cities.
Additionally, AeroMexico has placed its designator code on Copa
Airlines-operated flights between the Hub of the Americas in Panama
City
to Mexico City, Cancun and
Guadalajara.
|
| · |
In
August, Copa Airlines was named by Skytrax, for the fourth consecutive
year, as “Best Airline in Central America, Mexico and the Caribbean” as
well “Best Cabin Staff in Central America, Mexico and the Caribbean”.
|
| · |
On
September 4, Copa Airlines formally entered into the global SkyTeam
Alliance as an Associate Member. SkyTeam operates more than 15,200
daily
flights to more than 790 cities in 162 countries.
|
| · |
In
3Q07, Aero Republica continued its fleet modernization plan with
the
delivery of two EMBRAER 190 Aircraft. Aero Republica currently
has a fleet
of five EMBRAER 190 and eight MD-80 aircraft. For the remainder
of the
year, Aero Republica is expected to take delivery of two additional
EMBRAER 190 aircraft, ending 2007 with a fleet of 13 aircraft –
7 EMBRAER
190s and 6 MD-80s.
|
| · |
In
3Q07, Copa Airlines continued its fleet expansion with the delivery
of
three EMBRAER-190s and one Boeing 737-800. In the fourth quarter,
Copa has
taken delivery of two additional aircraft –
one
EMBRAER-190 and one Boeing 737-800 –
and will
end 2007 with a fleet of 37 aircraft with an average age of 3.7
years.
|
| · |
For
3Q07, Copa Airlines reported an on-time performance of 84.6% and
a
flight-completion factor of 99.1%.
|
| · |
On
October 11, Copa Airlines and KLM Royal Dutch Airlines announced
a broad
code share alliance, which will enable passengers of both carriers
to
travel more easily between Copa's extensive Latin American network
and
Europe via two of the world's most convenient hubs. KLM will begin
service
from Amsterdam to Panama City in March
2008.
|
| · |
In
October, Copa Airlines was included in Fortune Magazine's top five
best
companies for leaders in Latin America for 2007. This survey was
designed
to identify the companies that best develop leaders as a result
of
corporate culture, leadership values, and business
performance.
|
| · |
In
November, Copa Airlines entered into a new collective bargaining
agreement
with its pilot union. This agreement will expire in August of
2012.
|
|
Consolidated
Financial & Operating
Highlights
|
|
|
3Q07
|
|
|
3Q06
|
|
|
%
Change
|
|
|
2Q07
|
%
Change
|
YTD
3Q07
|
YTD
3Q06
|
%
Change
|
|||||||||
|
RPMs
(millions)
|
1,565
|
1,345
|
16.3
|
%
|
1,346
|
16.3
|
%
|
4,337
|
3,638
|
19.2
|
%
|
||||||||||||||
|
ASMs
(mm)
|
2,104
|
1,784
|
18.0
|
%
|
1,880
|
11.9
|
%
|
5,852
|
5,028
|
16.4
|
%
|
||||||||||||||
|
Load
Factor
|
74.4
|
%
|
75.4
|
%
|
-1.1
|
p.p. |
71.6
|
%
|
2.8
|
p.p. |
74.1
|
%
|
72.3
|
%
|
1.8
|
p.p. | |||||||||
|
Yield
|
15.9
|
16.2
|
-1.6
|
%
|
16.4
|
-3.1
|
%
|
16.2
|
15.9
|
1.7
|
%
|
||||||||||||||
|
PRASM
(US$ cents)
|
11.8
|
12.2
|
-3.0
|
%
|
11.8
|
0.7
|
%
|
12.0
|
11.5
|
4.2
|
%
|
||||||||||||||
|
RASM
(US$ cents)
|
12.6
|
12.9
|
-2.7
|
%
|
12.5
|
0.5
|
%
|
12.7
|
12.2
|
4.0
|
%
|
||||||||||||||
|
CASM
(US$ cents)
|
10.4
|
10.4
|
-0.4
|
%
|
10.4
|
-0.8
|
%
|
10.2
|
9.9
|
2.8
|
%
|
||||||||||||||
|
CASM
Excluding Fuel (US$ cents)
|
7.0
|
7.0
|
-0.2
|
%
|
7.3
|
-4.1
|
%
|
7.0
|
6.7
|
4.3
|
%
|
||||||||||||||
|
Breakeven
Load Factor
|
60.6
|
%
|
59.7
|
%
|
0.9
|
p.p. |
59.3
|
%
|
1.3
|
p.p. |
58.9
|
%
|
58.0
|
%
|
0.9
|
p.p. | |||||||||
|
Operating
Revenues (US$ mm)
|
264.6
|
230.6
|
14.7
|
%
|
235.3
|
12.5
|
%
|
742.7
|
613.8
|
21.0
|
%
|
||||||||||||||
|
EBITDAR
(US$ mm) (1) (2)
|
72.5
|
66.0
|
10.0
|
%
|
61.7
|
17.6
|
%
|
213.8
|
169.6
|
26.1
|
%
|
||||||||||||||
|
EBITDAR
Margin (1)
(2)
|
27.4
|
%
|
28.6
|
%
|
-1.2
|
p.p. |
26.2
|
%
|
1.2
|
p.p. |
28.8
|
%
|
27.6
|
%
|
1.2
|
p.p.
|
|||||||||
|
Operating
Income (US$ mm)
|
46.7
|
45.2
|
3.3
|
%
|
39.0
|
19.8
|
%
|
146.5
|
115.5
|
26.9
|
%
|
||||||||||||||
|
Operating
Margin
|
17.6
|
%
|
19.6
|
%
|
-2.0
|
p.p. |
16.6
|
%
|
1.1
|
p.p. |
19.7
|
%
|
18.8
|
%
|
0.9
|
p.p. | |||||||||
|
Net
Income (US$ mm)
|
46.8
|
37.2
|
25.7
|
%
|
30.9
|
51.5
|
%
|
126.3
|
92.4
|
36.7
|
%
|
||||||||||||||
|
Adjusted
Net Income (US$ mm) (2)
|
38.8
|
37.2
|
4.2
|
%
|
30.9
|
25.5
|
%
|
118.3
|
92.4
|
28.0
|
%
|
||||||||||||||
|
Net
Margin
|
17.7
|
%
|
16.1
|
%
|
1.5
|
p.p. |
13.1
|
%
|
4.6
|
p.p. |
17.0
|
%
|
15.1
|
%
|
2.0
|
p.p. | |||||||||
|
Adjusted
Net Margin (2)
|
14.7
|
%
|
16.1
|
%
|
-1.5
|
p.p. |
13.1
|
%
|
1.5
|
p.p. |
15.9
|
%
|
15.1
|
%
|
0.9
|
p.p. | |||||||||
|
EPS
- Basic (US$)
|
1.09
|
0.87
|
25.4
|
%
|
0.72
|
51.1
|
%
|
2.94
|
2.16
|
36.3
|
%
|
||||||||||||||
|
Adjusted
EPS - Basic (US$) (2)
|
0.90
|
0.87
|
3.5
|
%
|
0.72
|
24.7
|
%
|
2.75
|
2.16
|
27.7
|
%
|
||||||||||||||
|
EPS
- Diluted (US$)
|
1.08
|
0.87
|
24.1
|
%
|
0.71
|
51.6
|
%
|
2.90
|
2.15
|
34.9
|
%
|
||||||||||||||
|
Adjusted
EPS - Diluted (US$) (2)
|
0.89
|
0.87
|
2.1
|
%
|
0.71
|
24.7
|
%
|
2.72
|
2.15
|
26.3
|
%
|
||||||||||||||
|
Weighted
Avg. # of Shares - Basic (000)
|
42,938
|
42,813
|
0.3
|
%
|
42,817
|
0.3
|
%
|
42,938
|
42,813
|
0.3
|
%
|
||||||||||||||
|
Weighted
Avg. # of Shares - Diluted (000)
|
43,479
|
42,908
|
1.3
|
%
|
43,502
|
-0.1
|
%
|
43,479
|
42,908
|
1.3
|
%
|
(1) EBITDAR
(earnings before interest, taxes, depreciation, amortization
and rent)
is presented as supplemental information 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.
However,EBITDAR should not be considered in isolation, as a substitute
for net income prepared in accordance with US GAAP or as a measure
of a
company's profitability. In addition, our calculations may not be comparable
to
other similarly titled measures of other companies. A reconciliation
of EBITDAR
to consolidated net income is attached to this press
release.
(2)
For
3Q07, excludes a US$8.0 million pre-tax non-recurring gain related to insurance
proceeds in excess of aircraft book value. On
July 16, an Aero Republica aircraft overran the runway on arrival at the
Simon
Bolivar International Airport in the city of Santa Marta, Colombia. No major
injuries were sustained. The aircraft involved in this incident, an EMBRAER-190,
was declared a total loss.
2
MANAGEMENT’S
COMMENTS ON 3Q07 RESULTS
For
the
third quarter, Copa Holdings experienced a 14.7% or US$34.0 million
year-over-year increase in operating revenues, driven mainly by an 11.6%
or
US$21.1 million increase in Copa Airlines operating revenues and a 28.2%
or
US$13.7 million increase in Aero Republica operating revenues.
Copa
Airlines year over year capacity growth accelerated during 3Q07 to 22.7%,
significantly outpacing 3Q06 year over year capacity growth of 15.9%. Revenues
per available seat mile decreased 9.0% year-over-year, with load factors
coming
in strong at 78.5%, while yields decreased 8.2% or 5.1% on a length of haul
adjusted basis. This decline came mostly as a result of:
| · |
New
destinations and frequencies added in 2007, which represented 8%
of Copa
Airlines total capacity for the
quarter.
|
| · |
A
7% year over year average length of haul
increase;
|
Yields
were also affected by:
| · |
Revenue
management issues related to demand forecasts affected by the transition
in June from a two bank to a four bank hub
structure.
|
| · |
More
competitive activity in the Mexico, Central America and some Caribbean
markets.
|
As
a
result of adjustments made to Copa Airlines revenue management system’s demand
forecasts during the third quarter, as well increased fares and fuel surcharges,
yields began an upward trend in September and for the 4Q07 are currently
expected to come in well above 3Q07 levels.
For
3Q07,
Aero Republica year over year capacity increased by 2.6%, as the airline
continues its fleet modernization program transitioning to smaller gauge
EMBRAER
190 aircraft. Aero Republica’s traffic for the quarter saw a 6% reduction year
over year, resulting in a load factor of 58.2%, a 5.3 percentage point decrease
compared to 3Q06 mostly attributable to a weaker Colombian domestic leisure
market and increased promotional fare activity by the airline’s main competitor.
However, Aero Republica’s RASM increased 25.0% to 14.6 cents as a result of
higher yields, mostly related to a stronger Colombian currency in addition
to a
9.8% increase in local currency fares.
Aero
Republica’s yields, which increased 31.8% year-over-year, continued to benefit
from a stronger Colombian currency, higher local currency fares as well as
increased capacity into higher yielding international flights. Moreover,
for
3Q07 Aero Republica’s international load factors reached 67.8%, coming in
significantly above domestic load factors.
Consolidated
operating costs for the quarter increased slightly below capacity at 17.6%
or
US$32.5 million, driven mostly as a result of increased capacity and the
impact
of a stronger Colombian currency against the US dollar. Total unit cost,
as
measured by operating cost per available seat mile, decreased less than one
percent, coming in at 10.4 cents. Excluding fuel expense, unit costs remained
flat year over year at 7.0 cents.
3
Jet
fuel
prices, net of hedges, remained flat averaging US$2.34 in 3Q07 against US$2.33
in 3Q06. For 3Q07, fuel hedges represented 22% of consolidated volume at
an
average price of $2.16 per gallon (US Gulf Coast). The company continues
to
implement its strategic fuel hedging program and currently has hedges in
place
for 4Q07 representing 19% of consolidated volume at $2.07 per
gallon.
Excluding
an US$8.0 million pre-tax non-recurring gain, consolidated earnings before
interest, taxes, depreciation, amortization and rents ("EBITDAR"), would
have
increased 10.0% to US$72.5 million from US$66.0 million in 3Q06; EBITDAR
margins
would have decreased by 1.2 percentage points to 27.4%.
In
3Q07
operating income increased 3.3% to US$46.7 million from US$45.2 million in
3Q06,
which resulted in a 2 percentage point decrease in operating margin to 17.6%,
continuing to place amongst the highest operating margins in the industry.
The
Company maintains a strong liquidity position, ending the quarter with US$287.7
million in cash, cash equivalents, short-term and long-term investments and
US$34.5 million in committed credit lines for a total liquidity of US$322.2
million or approximately 33% of last twelve-month revenues. Total debt amounted
to US$807.5 million, which relates for the most part to aircraft and equipment
financing. We believe that the company also continues to have one of
the most competitive financing costs in the industry, with an average blended
interest rate of 5.7%.
For
3Q07,
Aero Republica recorded operating income of US$10.5 million, compared to
an
operating income of $0.1 million in 3Q06. Aero Republica’s operating margin for
3Q07 came in at 16.8%, which represents an operating margin year to date
through
September of 10.5%.
In
September, Aero Republica continued its fleet renewal program by receiving
two
EMBRAER 190s and is expected to receive an additional two in 4Q07, to end
the
year with a fleet of seven EMBRAER-190’s and six MD-80’s, reducing it’s average
fleet age by more than half to 7.4 years.
Additionally,
Aero Republica continues to increase its international connectivity with
Copa
Airlines’ Hub of the Americas. Aero Republica now feeds Copa Airlines’ Hub from
five of Colombia’s most important cities, having recently added service from the
city of Bucaramanga – Colombia’s fifth
largest city, with a metropolitan area population of more than a million
inhabitants.
In
November, Copa Airlines entered into early negotiations with its pilots union,
reaching a new collective bargaining agreement that will be in place for
more
than 4 years –
with
next negotiations coming due in August 2012. The Company believes
this new agreement significantly improves Copa Airlines’ ability to retain and
hire the pilots needed to continue with its expansion plans without compromising
its long term cost structure or competitiveness.
OUTLOOK
FOR 2007
Based
on
year to date results and preliminary data for 4Q07 the Company expects an
improvement in consolidated yields over 3Q07, coming mainly from a recovery
of
Copa Airlines’ yields and continued strength in Aero Republica yields.
Consolidated load factors for the fourth quarter are expected to come in
approximately one percentage point below 4Q06, leading to a slight reduction
in
full year load factor guidance form +/-75% to +/-74%, which represents
approximately a one percentage point increase over 2006. The Company also
expects full year RASM to come in more than 2% above 2006, therefore has
increased RASM guidance to +/-12.7 cents.
4
On
the
cost front, the Company expects consolidated ex-fuel CASM to come in at +/-6.9
cents, unchanged form previous guidance. However, higher than expected fuel
prices are resulting in a lower operating margin forecast. Therefore, Copa
Holdings’ is revising its full year 2007 guidance as follows:
|
Financial
Outlook (US GAAP)
|
2007
- Full Year
Revised
|
|
ASMs
(billion)
|
+/-
8.0
|
|
Average
Load Factor
|
+/-
74%
|
|
RASM
(cents)
|
+/-
12.7
|
|
CASM
Ex-fuel (cents)
|
+/-
6.9
|
|
Operating
Margin
|
+/-
18.5%
|
OUTLOOK
FOR 2008 - PRELIMINARY
In
2008,
Copa Holdings will continue focused on profitable growth and the execution
of
its proven business model of efficiently connecting the Americas through
Copa
Airlines´ centrally located Hub of the Americas in Panama City. Copa Holdings
expects demand to be driven by strong regional economic growth and the growing
preference for its network and services. Consolidated capacity is expected
to
grow approximately 17% in 2008, driven mostly by Copa Airlines’ growth.
Additionally, strong demand should lead to healthy load factors and yields,
while ex-fuel CASM is expected to remain steady. However, a continued high
fuel
costs environment is expected to continue to impact operating margins.
Preliminary outlook for 2008 reflects a fuel assumption of an average cost
per
barrel of +/-$85 and a crack spread of +/$15.
|
Financial
Outlook (US GAAP)
|
2008
- Full Year
|
|
ASMs
(billion)
|
+/-9.3
|
|
Average
Load Factor
|
+/-75%
|
|
RASM
(cents)
|
+/-12.9
|
|
CASM
Ex-fuel (cents)
|
+/-7.0
|
|
Operating
Margin
|
17%-19%
|
CONSOLIDATED
THIRD QUARTER RESULTS
Operating
revenue
Consolidated
revenue for 3Q07 totaled US$264.6 million, a 14.7% or US$34.0 million
increase over operating revenue of US$230.6 million in 3Q06, due to an
11.6% or US$21.1 million increase in Copa Airlines’ operating revenue and a
28.2% or US$13.7 million increase in Aero Republica’s operating
revenue.
| Copa Airlines operating revenue | ||
Copa
Airlines operating revenue for 3Q07 totaled US$203.3 million, an 11.6%
increase over operating revenue of US$182.2 million in 3Q06. This increase
was primarily due to an 11.9% increase in passenger revenue.
5
Passenger
revenue. For
3Q07
passenger revenue totaled US$191.1 million, an 11.9% increase over passenger
revenue of US$170.8 million in 3Q06. This increase resulted from growth in
capacity (ASMs increased by 22.7% in 3Q07 as compared to 3Q06) partly offset
by
a lower load factor (load factor decreased from 79.0% in 3Q06 to 78.5% in
3Q07)
and an 8.2% decline in passenger yield, which stood at 14.5 cents.
Cargo,
mail and other. Cargo,
mail and other totaled US$12.2 million in 3Q07, a 7.2% increase over cargo,
mail
and other of US$11.4 million in 3Q06.
| Aero Republica operating revenue | ||
During
3Q07, Aero Republica generated operating revenue of US$62.4 million,
representing a 28.2% or US$13.7 million increase over 3Q06. This increase
resulted mainly from a US$11.2 million or 23.9% increase in passenger revenue
and a US$2.5 million or 152.8% increase in cargo, mail and other. During
the
quarter Aero Republica’s capacity (ASMs) increased by 2.6%, while traffic (RPMs)
decreased by 6.0%, representing a load factor of 58.2% or 5.3 percentage
points
below 3Q06. Yields increased by 31.8% primarily due to the strengthening
of the
Colombian currency as well as higher fares in both domestic and international
routes.
Operating
expenses
For
3Q07,
consolidated operating expenses totaled US$217.9 million, a 17.6% increase
over
operating expenses of US$185.4 million for 3Q06. Operating cost per
available seat mile (CASM) decreased 0.4% to 10.4 cents. An overview of the
major variances on a consolidated basis follows:
Aircraft
fuel. For
3Q07,
aircraft fuel totaled US$71.4 million, a US$10.4 million or 17.1% increase
over aircraft fuel of US$60.9 million in 3Q06. This increase was primarily
a result of a 16.1% increase in gallons consumed resulting from increased
capacity. Jet fuel prices, net of hedges, remained flat as compared to 3Q06,
averaging US$2.34 in 3Q07 vs. US$2.33 in 3Q06.
Salaries
and benefits. For
3Q07,
salaries and benefits totaled US$29.0 million, a 23.6% increase over
salaries and benefits of US$23.5 million in 3Q06. This was mainly a result
of an
overall increase in operating headcount to support additional capacity and
the
effect of the Colombian currency appreciation.
Passenger
servicing. For
3Q07,
passenger servicing totaled US$22.9 million, a 33.0% increase over
passenger servicing of US$17.3 million in 3Q06. This increase was primarily
a
result of an increase in passengers carried and additional costs related
to
irregular operations at Copa Airlines.
Commissions.
For
3Q07,
commissions totaled US$15.8 million, a 1.9% increase over commissions of
US$15.5 million in 3Q06. This increase was primarily a result of a 14.5%
increase in passenger revenue, offset by a lower average commission rate.
Reservations
and sales.
Reservations
and sales totaled US$13.1 million, a 28.7% increase over reservation and
sales
of US$10.1 million in 3Q06. This increase was primarily a result of more
passengers carried and additional costs related to global distribution systems
at Aero Republica.
Maintenance,
material and repairs. For
3Q07,
maintenance, material and repairs totaled US$13.4 million, a 2.6% decrease
over
maintenance, material and repairs of US$13.7 million in 3Q06. This decrease
resulted from less major maintenance events at Aero Republica, partly offset
by
higher capacity and more major airframe overhaul events for Copa Airlines.
Depreciation.
Depreciation
totaled US$9.1 million in 3Q07, a 39.4% increase over depreciation of
US$6.5 million in 3Q06. This increase was primarily related to the
depreciation of new aircraft and spares.
Aircraft
rentals. For
3Q07,
aircraft rentals totaled US$10.5 million, a 3.9% decrease over aircraft rentals
of US$10.9 million in 3Q06. This decrease was primarily driven by a
reclassification adjustment from the maintenance to the aircraft rental line
in
3Q06 related to supplemental rents in Aero Republica segment, as well as
less
aircraft and engine rentals in Aero Republica segment.
6
Flight
operations,
landing
fees and other rentals.
Combined
flight operations, landing fees and other rentals increased 26.5% from US$15.1
million in 3Q06 to US$19.1 million in 3Q07, primarily as a result of
higher capacity and more international flights at Aero Republica.
Other.
Other
expenses totaled US$13.8 million in 3Q07, an increase of 16.3% over US$11.8
million in 3Q06, primarily related to the lease exiting cost of two MD-80
aircraft in Aero Republica segment.
| Copa Airlines operating expenses | ||
Copa
Airlines’ operating expenses increased 21.9% to US$167.1 million from US$137.1
million in 3Q06. Operating expenses per available seat mile decreased 0.6%
to
10.0 cents in 3Q07. Excluding fuel costs, operating expenses per available
seat
mile decreased 1.3% from 6.9 cents in 3Q06 to 6.8 cents in 3Q07.
Aircraft
fuel.
For
3Q07,
aircraft fuel totaled US$53.6 million, a 23.7% increase over aircraft fuel
expense of US$43.3 million in the same period in 2006. This increase was
primarily a result of a 22.7% increase in gallons consumed resulting from
increased capacity and a 0.4% increase in the average price per gallon of
jet
fuel (all-in), which net of hedges averaged US$2.30 in 3Q07 vs. US$2.29 in
3Q06.
Salaries
and benefits.
For
3Q07,
salaries and benefits totaled US$22.6 million, a 16.7% increase over
salaries and benefits of US$19.4 million in the same period in 2006. This
increase was mainly a result of an overall increase in operating headcount
to
support additional capacity.
Passenger
servicing.
Passenger
servicing totaled US$18.9 million for 3Q07, a 28.1% increase over passenger
servicing of US$14.7 million in 3Q06. This increase was primarily a result
of an increase in carried passengers as well as additional costs related
to
irregular operations.
Commissions.
Commissions
totaled US$10.9 million for 3Q07, a 4.7% increase over commissions of
US$10.4 million in 3Q06. This increase was primarily a result of an 11.9%
increase in passenger revenue, partially offset by a lower average commission
rate.
Reservations
and sales.
Reservations
and sales totaled US$9.7 million, a 22.6% increase over reservation and sales
of
US$7.9 million in 3Q06. This increase was primarily a result of more passengers
carried and consultant services.
Maintenance,
materials and repairs.
Maintenance,
materials and repairs totaled US$10.7 million in 3Q07, a 40.3% increase
over maintenance, materials and repairs of US$7.6 million in 3Q06. This
increase resulted from higher capacity and more major airframe overhaul events
during the period.
Depreciation.
Depreciation
totaled US$7.9 million in 3Q07, a 24.9% increase over depreciation of
US$6.3 million in 3Q06. This increase was primarily related to depreciation
of new aircraft and spares.
Aircraft
rentals. Aircraft
rentals totaled US$8.3 million in 3Q07, a 38.6% increase over aircraft
rentals in 3Q06. This increase resulted from inter-company wet-leases between
Aero Republica and Copa Airlines to cover 3Q07 capacity needs, in addition
a
third party wet lease.
Flight
operations,
landing
fees and other rentals.
Combined,
flight operations, landing fees and other rentals increased 23.2% from US$12.3
million in 3Q06 to US$15.1 million in 3Q07, primarily as a result of
higher capacity.
Other.
Other
expenses totaled US$9.6 million in 3Q07, a 3.4% increase over other
expenses in 3Q06.
| Aero Republica operating expenses | ||
Aero
Republica’s operating expenses increased 6.9% to US$51.9 million in 3Q07 from
US$48.5 million in 3Q06. Operating expenses per available seat mile increased
4.2% to 12.1 cents in 3Q07 from 11.6 cents in 3Q06. Excluding fuel costs,
operating expenses per available seat mile increased 7.5% from 7.4 cents
in 3Q06
to 8.0 cents in 3Q07, mainly driven by a stronger Colombian currency against
the
US$ dollar.
7
Non-operating
income (expense)
Consolidated
non-operating income for 3Q07 totaled US$4.0 million. However, excluding
the
effect of an US$8.0 million one time gain related to insurance proceeds in
excess of aircraft book value, it would have totaled a US$4.1 million
expense compared to US$5.0 million expense in 3Q06.
Interest
expense.
Interest expense totaled US$11.5 million in 3Q07, a 44.3% increase over interest
expense of US$8.0 million in 3Q06, mostly as a result of increased aircraft
related debt.
Interest
capitalized.
Interest capitalized totaled US$0.7 million in 3Q07, a 145.4% increase over
interest capitalized of US$0.3 million in 3Q06.
Interest
income. Interest
income totaled US$3.3 million, a 66.4% increase over interest income of US$2.0
million in 3Q06, mostly a result of increased cash, cash equivalents and
investments.
Other,
net. Other
net
totaled US$11.5 million in 3Q07. This balance is primarily composed of an
US$8.0
million one time gain related to insurance proceeds in excess of aircraft
book
value.
About
Copa Holdings
Copa
Holdings, through its Copa Airlines and Aero Republica operating subsidiaries,
is a leading Latin American provider of international airline passenger and
cargo service. Copa Airlines currently offers approximately 116 daily scheduled
flights to 40 destinations in 21 countries in North, Central and South America
and the Caribbean. In addition, Copa Airlines provides passengers with
access to flights to more than 120 other international destinations through
code
share agreements with Continental Airlines and other airlines. Aero Republica,
the second-largest domestic carrier in Colombia, provides service to 12 cities
in Colombia as well as international connectivity with Copa Airlines’ Hub of the
Americas through flights from Bogota, Bucaramanga, Cali, Cartagena and
Medellin.
CONTACT:
Copa
Holdings S.A.
Investor
Relations:
Ph:
(507)
304-2677
e-mail:
investorrelations@copaair.com
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.
8
|
Operating
data
US
GAAP - Unaudited
|
|
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
%
|
|
|
Unaudited
|
|
|
%
|
|
|
3Q07
|
3Q06
|
Change
|
2Q07
|
Change
|
||||||||||||
|
Copa
Holdings (Consolidated)
|
||||||||||||||||
|
Revenue
passengers carried (thousands)
|
1,253
|
1,244
|
0.7
|
%
|
1,107
|
13.2
|
%
|
|||||||||
|
Revenue
passengers miles (RPMs) (mm)
|
1,565
|
1,345
|
16.3
|
%
|
1,346
|
16.3
|
%
|
|||||||||
|
Available
seat miles (ASMs) (mm)
|
2,104
|
1,784
|
18.0
|
%
|
1,880
|
11.9
|
%
|
|||||||||
|
Load
factor
|
74.4
|
%
|
75.4
|
%
|
-1.1
|
p.p. |
71.6
|
%
|
2.8
|
p.p. | ||||||
|
Break-even
load factor
|
60.6
|
%
|
59.7
|
%
|
0.9
|
p.p. |
59.3
|
%
|
1.3
|
p.p. | ||||||
|
Yield
(US$ cents)
|
15.9
|
16.2
|
-1.6
|
%
|
16.4
|
-3.1
|
%
|
|||||||||
|
Operating
revenue per ASM (US$ cents) (RASM)
|
12.6
|
12.9
|
-2.7
|
%
|
12.5
|
0.5
|
%
|
|||||||||
|
Operating
expenses per ASM (US$ cents) (CASM)
|
10.4
|
10.4
|
-0.4
|
%
|
10.4
|
-0.8
|
%
|
|||||||||
|
Operating
Cost (excluding fuel) per ASM (US$ cents)
|
7.0
|
7.0
|
-0.2
|
%
|
7.3
|
-4.1
|
%
|
|||||||||
|
Fuel
gallons consumed (mm)
|
29.9
|
25.8
|
16.1
|
%
|
26.6
|
12.7
|
%
|
|||||||||
|
Average
price of Fuel - Net of Hedges (US$)
|
2.34
|
2.33
|
0.5
|
%
|
2.22
|
5.5
|
%
|
|||||||||
|
Copa
Segment
|
||||||||||||||||
|
Revenue
passengers miles (RPMs) (mm)
|
1,315
|
1,080
|
21.8
|
%
|
1,134
|
16.0
|
%
|
|||||||||
|
Available
seat miles (ASMs) (mm)
|
1,676
|
1,366
|
22.7
|
%
|
1,478
|
13.4
|
%
|
|||||||||
|
Load
factor
|
78.5
|
%
|
79.0
|
%
|
-0.6
|
p.p. |
76.7
|
%
|
1.7
|
p.p. | ||||||
|
Break-even
load factor
|
63.6
|
%
|
57.4
|
%
|
6.2
|
p.p. |
58.6
|
%
|
5.0
|
p.p. | ||||||
|
Yield
(US$ cents)
|
14.5
|
15.8
|
-8.2
|
%
|
15.2
|
-4.5
|
%
|
|||||||||
|
Operating
revenue per ASM (US$ cents) (RASM)
|
12.1
|
13.3
|
-9.0
|
%
|
12.5
|
-2.6
|
%
|
|||||||||
|
Operating
expenses per ASM (US$ cents) (CASM)
|
10.0
|
10.0
|
-0.6
|
%
|
10.0
|
-0.5
|
%
|
|||||||||
|
Operating
Cost (excluding fuel) per ASM (US$ cents)
|
6.8
|
6.9
|
-1.3
|
%
|
7.1
|
-4.0
|
%
|
|||||||||
|
Fuel
gallons consumed (mm)
|
22.8
|
18.5
|
22.7
|
%
|
19.9
|
14.5
|
%
|
|||||||||
|
Average
price of Fuel - Net of Hedges (US$)
|
2.30
|
2.29
|
0.4
|
%
|
2.17
|
6.0
|
%
|
|||||||||
|
AeroRepublica
Segment
|
||||||||||||||||
|
Revenue
passengers miles (RPMs) (mm)
|
249
|
265
|
-6.0
|
%
|
211
|
18.0
|
%
|
|||||||||
|
Available
seat miles (ASMs) (mm)
|
428
|
417
|
2.6
|
%
|
401
|
6.6
|
%
|
|||||||||
|
Load
factor
|
58.2
|
%
|
63.6
|
%
|
-5.3
|
p.p. |
52.6
|
%
|
5.6
|
p.p. | ||||||
|
Break-even
load factor
|
48.1
|
%
|
65.8
|
%
|
-17.7
|
p.p. |
54.7
|
%
|
-6.6
|
p.p. | ||||||
|
Yield
(US$ cents)
|
23.4
|
17.7
|
31.8
|
%
|
23.1
|
1.4
|
%
|
|||||||||
|
Operating
revenue per ASM (US$ cents) (RASM)
|
14.6
|
11.7
|
25.0
|
%
|
13.0
|
12.2
|
%
|
|||||||||
|
Operating
expenses per ASM (US$ cents) (CASM)
|
12.1
|
11.6
|
4.2
|
%
|
12.3
|
-1.2
|
%
|
|||||||||
|
Operating
Cost (excluding fuel) per ASM (US$ cents)
|
8.0
|
7.4
|
7.5
|
%
|
8.3
|
-4.3
|
%
|
|||||||||
|
Fuel
gallons consumed (mm)
|
7.2
|
7.2
|
-1.0
|
%
|
6.7
|
7.4
|
%
|
|||||||||
|
Average
price of Fuel - Net of Hedges (US$)
|
2.48
|
2.43
|
2.0
|
%
|
2.37
|
4.6
|
%
|
9
Income
Statement - USGAAP
(US$
Thousands)
|
Unaudited
|
Unaudited
|
%
|
Unaudited
|
%
|
||||||||||||
|
3Q07
|
3Q06
|
Change
|
2Q07
|
Change
|
||||||||||||
|
Operating
Revenues
|
||||||||||||||||
|
Passenger
Revenue
|
249,346
|
217,835
|
14.5
|
%
|
221,221
|
12.7
|
%
|
|||||||||
|
Cargo,
mail and other
|
15,288
|
12,783
|
19.6
|
%
|
14,073
|
8.6
|
%
|
|||||||||
|
Total
Operating Revenue
|
264,634
|
230,618
|
14.7
|
%
|
235,294
|
12.5
|
%
|
|||||||||
|
Operating
Expenses
|
||||||||||||||||
|
Aircraft
fuel
|
71,364
|
60,940
|
17.1
|
%
|
59,711
|
19.5
|
%
|
|||||||||
|
Salaries
and benefits
|
29,001
|
23,465
|
23.6
|
%
|
28,789
|
0.7
|
%
|
|||||||||
|
Passenger
servicing
|
22,944
|
17,256
|
33.0
|
%
|
19,020
|
20.6
|
%
|
|||||||||
|
Commissions
|
15,820
|
15,529
|
1.9
|
%
|
16,809
|
-5.9
|
%
|
|||||||||
|
Reservations
and sales
|
13,050
|
10,142
|
28.7
|
%
|
12,143
|
7.5
|
%
|
|||||||||
|
Maintenance,
material and repairs
|
13,384
|
13,741
|
-2.6
|
%
|
13,355
|
0.2
|
%
|
|||||||||
|
Depreciation
|
9,056
|
6,497
|
39.4
|
%
|
8,455
|
7.1
|
%
|
|||||||||
|
Flight
operations
|
12,242
|
9,011
|
35.9
|
%
|
9,912
|
23.5
|
%
|
|||||||||
|
Aircraft
rentals
|
10,478
|
10,904
|
-3.9
|
%
|
9,303
|
12.6
|
%
|
|||||||||
|
Landing
fees and other rentals
|
6,818
|
6,058
|
12.5
|
%
|
6,314
|
8.0
|
%
|
|||||||||
|
Other
|
13,775
|
11,849
|
16.3
|
%
|
12,483
|
10.4
|
%
|
|||||||||
|
Total
Operating Expense
|
217,932
|
185,392
|
17.6
|
%
|
196,295
|
11.0
|
%
|
|||||||||
|
Operating
Income
|
46,702
|
45,226
|
3.3
|
%
|
38,999
|
19.8
|
%
|
|||||||||
|
Non-operating
Income (Expense):
|
||||||||||||||||
|
Interest
expense
|
(11,524
|
)
|
(7,984
|
)
|
44.3
|
%
|
(10,393
|
)
|
10.9
|
%
|
||||||
|
Interest
capitalized
|
719
|
293
|
145.4
|
%
|
736
|
-2.3
|
%
|
|||||||||
|
Interest
income
|
3,259
|
1,958
|
66.4
|
%
|
3,031
|
7.5
|
%
|
|||||||||
|
Other,
net
|
11,514
|
719
|
1501.4
|
%
|
2,373
|
385.2
|
%
|
|||||||||
|
Total
Non-Operating Income/(Expense)
|
3,968
|
(5,014
|
)
|
-179.1
|
%
|
(4,253
|
)
|
-193.3
|
%
|
|||||||
|
Income
before Income Taxes
|
50,670
|
40,212
|
26.0
|
%
|
34,746
|
45.8
|
%
|
|||||||||
|
Provision
for Income Taxes
|
3,848
|
2,972
|
29.5
|
%
|
3,839
|
0.2
|
%
|
|||||||||
|
Net
Income
|
46,822
|
37,240
|
25.7
|
%
|
30,907
|
51.5
|
%
|
|
Basic
EPS
|
1.09
|
0.87
|
25.4
|
%
|
0.72
|
51.1
|
%
|
|||||||||
|
Basic
Shares
|
42,937,844
|
42,812,500
|
0.3
|
%
|
42,816,678
|
0.3
|
%
|
|||||||||
|
Diluted
EPS
|
1.08
|
0.87
|
24.1
|
%
|
0.71
|
51.6
|
%
|
|||||||||
|
Diluted
Shares
|
43,479,214
|
42,907,893
|
1.3
|
%
|
43,501,720
|
-0.1
|
%
|
10
|
Copa
Holdings
Balance
Sheet - USGAAP
(US$
Thousands)
|
|
September
30,
|
June
30,
|
September
30,
|
||||||||
|
2007
|
2007
|
2006
|
||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||||
|
Current
Assets:
|
||||||||||
|
Cash
and cash equivalents
|
$
|
244,127
|
$
|
223,418
|
$
|
130,919
|
||||
|
Restricted
cash and cash equivalents
|
0
|
0
|
0
|
|||||||
|
Short-term
investments
|
22,500
|
27,500
|
7,297
|
|||||||
|
Total
cash, cash equivalents and short-term investments
|
266,627
|
250,918
|
138,216
|
|||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
106,581
|
92,394
|
69,804
|
|||||||
|
Accounts
receivable from related parties
|
1,440
|
860
|
2,002
|
|||||||
|
Expendable
parts and supplies, net of allowance for obsolescence
|
11,686
|
11,501
|
7,622
|
|||||||
|
Prepaid
expenses
|
18,211
|
18,677
|
15,403
|
|||||||
|
Other
current assets
|
9,430
|
8,759
|
4,029
|
|||||||
|
Total
Current Assets
|
413,976
|
383,109
|
237,076
|
|||||||
|
Long-term
investments
|
21,038
|
21,038
|
52,129
|
|||||||
|
Property
and Equipment:
|
||||||||||
|
Owned
property and equipment:
|
||||||||||
|
Flight
equipment
|
1,107,952
|
980,287
|
773,858
|
|||||||
|
Other
equipment
|
48,628
|
47,445
|
42,422
|
|||||||
|
1,156,580
|
1,027,732
|
816,280
|
||||||||
|
Less:
Accumulated depreciation
|
(127,760
|
)
|
(119,660
|
)
|
(97,202
|
)
|
||||
|
1,028,820
|
908,072
|
719,078
|
||||||||
|
Purchase
deposits for flight equipment
|
73,004
|
93,206
|
53,352
|
|||||||
|
Total
Property and Equipment
|
1,101,824
|
1,001,278
|
772,430
|
|||||||
|
Other
Assets:
|
||||||||||
|
Net
pension asset
|
868
|
815
|
1,533
|
|||||||
|
Goodwill
|
24,100
|
24,869
|
19,569
|
|||||||
|
Intangible
asset
|
35,336
|
36,464
|
29,859
|
|||||||
|
Other
assets
|
27,455
|
24,290
|
14,595
|
|||||||
|
Total
Other Assets
|
87,759
|
86,438
|
65,556
|
|||||||
|
Total
Assets
|
$
|
1,624,596
|
$
|
1,491,863
|
$
|
1,127,191
|
||||
|
LIABILITIES
AND SHAREHOLDER'S EQUITY
|
||||||||||
|
Current
Liabilities:
|
||||||||||
|
Current
maturities of long-term debt
|
$
|
110,777
|
$
|
118,197
|
$
|
73,991
|
||||
|
Accounts
payable
|
52,828
|
50,935
|
35,923
|
|||||||
|
Accounts
payable to related parties
|
6,040
|
10,709
|
5,634
|
|||||||
|
Air
traffic liability
|
152,352
|
153,951
|
113,207
|
|||||||
|
Taxes
and interest payable
|
43,622
|
37,228
|
35,506
|
|||||||
|
Accrued
expenses payable
|
40,858
|
38,826
|
30,373
|
|||||||
|
Other
current liabilities
|
9,544
|
11,205
|
9,421
|
|||||||
|
Total
Current Liabilities
|
416,020
|
421,051
|
304,055
|
|||||||
|
Non-Current
Liabilities:
|
||||||||||
|
Long-term
debt
|
696,692
|
605,977
|
482,490
|
|||||||
|
Post
employment benefits liability
|
1,996
|
1,927
|
1,519
|
|||||||
|
Other
long-term liabilities
|
9,209
|
8,766
|
7,805
|
|||||||
|
Deferred
tax liabilities
|
5,291
|
5,440
|
3,939
|
|||||||
|
Total
Non-Current Liabilities
|
713,188
|
622,110
|
495,753
|
|||||||
|
Total
Liabilities
|
1,129,209
|
1,043,161
|
799,808
|
|||||||
|
Shareholders'
Equity:
|
||||||||||
|
Class
A - 30,159,719 shares issued and outstanding
|
20,586
|
20,586
|
20,501
|
|||||||
|
Class
B - 12,778,125 shares issued and outstanding
|
8,722
|
8,722
|
8,722
|
|||||||
|
Additional
paid in capital
|
6,827
|
5,593
|
1,840
|
|||||||
|
Retained
earnings
|
456,123
|
409,302
|
301,935
|
|||||||
|
Accumulated
other comprehensive loss
|
3,129
|
4,499
|
(5,615
|
)
|
||||||
|
Total
Shareholders' Equity
|
495,387
|
448,702
|
327,383
|
|||||||
|
Total
Liabilities and Shareholders' Equity
|
$
|
1,624,596
|
$
|
1,491,863
|
$
|
1,127,191
|
11
[
|
COPA
HOLDINGS, S.A. - EBITDAR RECONCILIATION
|
||||||||||
|
(Figures
in US$ thousands)
|
||||||||||
|
3Q07
|
3Q06
|
2Q07
|
||||||||
|
Net
Income
|
$
|
46,822
|
$
|
37,240
|
$
|
30,907
|
||||
|
Interest
Expense
|
(11,524
|
)
|
(7,984
|
)
|
(10,393
|
)
|
||||
|
Capitalized
Interest
|
719
|
293
|
736
|
|||||||
|
Interest
Income
|
3,259
|
1,958
|
3,031
|
|||||||
|
Income
Taxes
|
(3,848
|
)
|
(2,972
|
)
|
(3,839
|
)
|
||||
|
EBIT
|
58,216
|
45,945
|
41,372
|
|||||||
|
Depreciation
and Amortization
|
9,056
|
6,497
|
8,455
|
|||||||
|
EBITDA
|
67,272
|
52,442
|
49,827
|
|||||||
|
Aircraft
Rent
|
10,478
|
10,904
|
9,303
|
|||||||
|
Other
Rentals
|
2,814
|
2,609
|
2,575
|
|||||||
|
EBITDAR
|
$
|
80,564
|
$
|
65,955
|
$
|
61,706
|
||||
|
Non-recurring
gain
|
(8,019
|
)
|
-
|
-
|
||||||
|
EBITDAR,
excluding Non-recurring gain
|
$
|
72,546
|
$
|
65,955
|
$
|
61,706
|
||||
12
[