Copa Holdings Reports Net Income of US$113.9 Million for the Fourth Quarter of 2013

Copa Holdings Reports Net Income of US$113.9 Million for the Fourth Quarter of
                                     2013

PR Newswire

PANAMA CITY, Feb. 12, 2014

PANAMA CITY, Feb. 12, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA),
today announced financial results for the fourth quarter of 2013 (4Q13) and
full year 2013. The terms "Copa Holdings" or "the Company" refers 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 fourth quarter of 2012 (4Q12).

OPERATING AND FINANCIAL HIGHLIGHTS

  oCopa Holdings reported net income of US$113.9 million for 4Q13 or earnings
    per share (EPS) of US$2.57, as compared to net income of US$86.6 million
    or EPS of US$1.95 in 4Q12. Excluding special items, which for 4Q13
    includes a non-cash impairment charge of US$31.2 million on Intangible
    Assets booked in 2005 related to the acquisition of AeroRepublica (now
    Copa Colombia) and a non-cash gain of US$2.6 million associated with the
    mark-to-market of fuel hedge contracts, Copa Holdings would have reported
    adjusted net income of US$142.5 million or adjusted EPS of US$3.21,
    compared to adjusted net income of US$89.3 million or adjusted EPS of
    US$2.01 in 4Q12.
  oNet income for full year 2013 reached US$428.2 million or EPS of US$9.64,
    compared to US$326.5 million or EPS of US$7.35 for full year 2012.
    Excluding special items, which for 2013 includes a non-cash impairment
    charge of US$31.2 million on Intangible Assets booked in 2005 related to
    the acquisition of AeroRepublica (now Copa Colombia), a US$13.9 million
    loss related to the Venezuelan devaluation of February 2013, and a
    non-cash gain of US$5.2 million associated with the mark-to-market of fuel
    hedge contracts, Copa Holdings would have reported an adjusted net income
    of US$468.1 million or EPS of US$10.54, compared to adjusted net income of
    US$336.1 or adjusted EPS of US$7.57 for full year 2012.
  oOperating income for 4Q13 came in at US$130.7 million, representing a 25%
    increase over operating income of US$104.3 million in 4Q12, mainly as a
    result of a 6.2% increase in unit operating revenue per available seat
    mile (RASM) and a 6.5% drop in the all-in price of jet fuel. As a result,
    operating margin for 4Q13 came in at 18.7%, or 1.3 percentage points
    higher than 4Q12. Excluding special items, operating income would have
    been US$161.8 million, which would have represented an operating margin of
    23.2%, or 5.8 percentage points higher than 4Q12. 
  oThe Company reported operating income of US$518.5 million for full year
    2013, representing an increase of 28.8% over operating income of US$402.5
    million in 2012. Operating margin for full year 2013 came in at 19.9%, as
    compared to an operating margin of 17.9% in 2012. However, excluding the
    intangible impairment charge of US$31.2 million recorded in 4Q13, the
    adjusted operating margin for 2013 would have been 21.1%.
  oTotal revenues for 4Q13 increased 16.3% to US$697.8 million. Yield per
    passenger mile increased 5.8% to 18.1 cents and RASM came in at 14.3
    cents, or 6.2% above 4Q12. On a quarter-over-quarter basis, both yields
    and RASM increased over our third quarter high season, rising 4.9% and
    3.1%, respectively.
  oFor 4Q13 consolidated passenger traffic grew 10.7%, led by international
    traffic growth which expanded a robust 12.2%. At the same time,
    consolidated capacity grew 9.5%, led by a 10.9% increase in international
    capacity. As a result, consolidated load factor for the quarter increased
    0.8 percentage points to 76.5%. For full year 2013, consolidated load
    factor came in at 76.7%, up 1.2 percentage points from 2012, on 14.4%
    capacity growth.
  oOperating cost per available seat mile (CASM) increased 4.5%, from 11.1
    cents in 4Q12 to 11.7 cents in 4Q13 as a result of the non-cash intangible
    impairment charge partly offset by a decrease in the all-in price of jet
    fuel. However, CASM excluding special items decreased 1.2% to 11.0 cents.
    CASM excluding fuel cost and special items increased 2.1% from 6.8 cents
    in 4Q12 to 6.9 cents in 4Q13, as a result of higher distribution unit
    costs related to the higher revenues, and aircraft rentals, which were
    partly offset mainly by lower maintenance costs and other rentals.
  oCash, short term and long term investments ended 2013 at US$1,169.4
    million, representing 45% of the last twelve months' revenues.
  oDuring the fourth quarter, Copa Airlines took delivery of one Boeing
    737-800 aircraft. As a result, Copa Holdings ended the year with a
    consolidated fleet of 90 aircraft, composed of 18 Boeing 737-700s, 46
    Boeing 737-800s and 26 Embraer-190s.
  oFor 2013, Copa Holdings reported international on-time performance of
    88.6%, 80.8% for domestic and 87.7% overall, as well as a
    flight-completion factor of 99.6%, maintaining its position among the best
    in the industry.

Consolidated
Financial &         4Q13     Variance vs.   Variance vs.  FY 2013  Variance
Operating                    4Q12           3Q13                   vs. 2012
Highlights
Revenue Passengers  2,013    6.0%           0.3%          7,779    8.9%
Carried ('000)
RPMs (mm)          3,725    10.7%          -2.1%         14,533   16.3%
ASMs (mm)          4,870    9.5%           -0.1%         18,950   14.4%
Load Factor        76.5%    0.8 p.p.       -1.6 p.p.     76.7%    1.2 p.p.
Yield               18.1     5.8%           4.9%          17.3     0.2%
PRASM (US$ Cents)  13.8     6.9%           2.8%          13.3     1.8%
RASM (US$ Cents)   14.3     6.2%           3.1%          13.8     1.4%
CASM (US$ Cents)   11.6     4.5%           7.1%          11.0     -1.1%
Adjusted CASM (US$  11.0     -1.2%          1.2%          10.9     -2.5%
Cents) ^(1)
CASM Excl. Fuel     7.6      11.6%          10.9%         6.9      1.9%
(US$ Cents)
Adjusted CASM Excl.
Fuel (US$ Cents)    6.9      2.1%           1.5%          6.7      -0.5%
^(1)
Breakeven Load      57.3%    -4.3 p.p.      -4.1 p.p.     59.7%    -1.6 p.p.
Factor ^(2)
Fuel Gallons
Consumed            63.9     9.4%           0.5%          247.5    12.8%
(Millions)
Avg. Price Per Fuel
Gallon (US$         3.12     -6.5%          0.1%          3.16     -4.3%
Dollars)
Average Length of   1,850    4.4%           -2.4%         1,868    6.7%
Haul (Miles)
Average Stage       1,151    5.7%           -0.7%         1,140    6.0%
Length (Miles)
Departures          30,266   2.4%           0.5%          119,177  5.9%
Block Hours         89,783   8.0%           0.2%          348,882  11.3%
Average Aircraft    10.9     -0.9%          -2.7%         11.1     1.2%
Utilization (Hours)
Operating Revenues  697.8    16.3%          3.0%          2,608.3  16.0%
(US$ mm)
Operating Income    130.7    25.3%          -11.4%        518.5    28.8%
(US$ mm)
Adjusted Operating
Income (US$ mm)     161.8    55.2%          9.7%          549.6    36.5%
^(1)
Operating Margin   18.7%    1.3 p.p.       -3.0 p.p.     19.9%    2.0 p.p.
Adjusted Operating  23.2%    5.8 p.p.       1.4 p.p.      21.1%    3.2 p.p.
Margin ^(1)
Net Income (US$ mm) 113.9    31.5%          -9.6%         428.2    31.2%
Adjusted Net Income 142.5    59.6%          22.7%         468.1    39.3%
(US$ mm) ^(2)
EPS - Basic and     2.57     31.6%          -9.5%         9.64     31.1%
Diluted (US$)
Adjusted EPS -
Basic and Diluted   3.21     59.7%          22.7%         10.54    39.2%
(US$) ^(2)
# of Shares - Basic 44,379   -0.1%          0.0%          44,424   0.1%
and Diluted ('000)


^(1^) Adjusted CASM, Adjusted Operating Income, Adjusted Operating
Margin for 4Q13 and 2013 exclude non-cash impairment charge on
Intangible Assets booked in 2005 related to the acquisition of
AeroRepublica (now Copa Colombia).
^(2^) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS
for 4Q13, 4Q12, 3Q13, 2013 and 2012 exclude non-cash impairment
charge on Intangible Assets booked in 2005 related to the
acquisition of AeroRepublica (now Copa Colombia), non-cash
charges/gains associated with the mark-to-market of fuel hedges,
and the impact of the Venezuelan currency devaluation.



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



FULL 4Q13 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
http://investor.shareholder.com/copa/results.cfm

4Q13 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:                        February 13, 2014
Time:                        10:00 AM US ET (10:00 AM Local Time)
Conference telephone         877-293-5456 (US Domestic Callers)
number:
                             707-287-9357(International Callers)
Webcast:                     http://investor.shareholder.com/copa/events.cfm
Speakers:                    Pedro Heilbron, Chief Executive Officer
                             Jose Montero, Chief Financial Officer

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 66 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 90 aircraft: 64 Boeing 737NG aircraft and 26 EMBRAER-190s.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: (507) 304-2431
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.

Copa Holdings,
S.A.
Income Statement
- IFRS
(US$ Thousands)
                 Unaudited   Unaudited   %       Unaudited   %        Unaudited   Audited     %
                 4Q13        4Q12        Change  3Q13        Change   2013        2012        Change
Operating
Revenues
Passenger        674,209     575,731     17.1%   655,991     2.8%     2,519,649   2,163,136   16.5%
Revenue
Cargo, mail and  23,562      24,109      -2.3%   21,288      10.7%    88,682      86,252      2.8%
other
Total Operating  697,771     599,839     16.3%   677,279     3.0%     2,608,331   2,249,388   16.0%
Revenue
Operating
Expenses
Aircraft fuel    199,388     194,754     2.4%    198,163     0.6%     783,092     725,763     7.9%
Salaries and     73,382      65,782      11.6%   69,941      4.9%     276,156     247,405     11.6%
benefits
Passenger        64,986      59,788      8.7%    64,913      0.1%     250,604     217,137     15.4%
servicing
Commissions      27,428      22,382      22.5%   27,717      -1.0%    103,685     89,378      16.0%
Reservations and 26,013      22,112      17.6%   27,588      -5.7%    99,812      84,992      17.4%
sales
Maintenance,
material and     22,866      24,311      -5.9%   25,035      -8.7%    92,993      92,166      0.9%
repairs
Depreciation     27,082      24,446      10.8%   26,576      1.9%     105,331     89,217      18.1%
Flight           31,451      27,747      13.3%   30,829      2.0%     121,786     104,993     16.0%
operations
Aircraft rentals 24,617      19,472      26.4%   23,540      4.6%     90,233      72,468      24.5%
Landing fees and 12,813      12,266      4.5%    12,607      1.6%     50,405      46,233      9.0%
other rentals
Other            25,907      22,510      15.1%   22,878      13.2%    84,589      77,101      9.7%
Intangible       31,162      0           n/m     0           n/m      31,162      0           n/m
Impairment
Total Operating  567,097     495,570     14.4%   529,787     7.0%     2,089,848   1,846,852   13.2%
Expense
Operating Income 130,675     104,269     25.3%   147,492     -11.4%   518,483     402,535     28.8%
Non-operating
Income
(Expense):
Interest expense (7,447)     (8,130)     -8.4%   (7,513)     -0.9%    (30,180)    (32,795)    -8.0%
Interest income  3,963       3,427       15.6%   3,127       26.7%    12,636      11,689      8.1%
Other, net       (4,081)     (2,721)     50.0%   10,700      -138.1%  (13,192)    (15,086)    -12.6%
Total
Non-Operating    (7,565)     (7,424)     n/a     6,314       -219.8%  (30,736)    (36,192)    n/a
Income/(Expense)
Income before    123,110     96,845      27.1%   153,807     -20.0%   487,747     366,343     33.1%
Income Taxes
Provision for
Income           9,189       10,222      -10.1%  27,798      -66.9%   59,546      39,867      49.4%
Taxes
Net Income       113,921     86,623      31.5%   126,008     -9.6%    428,200     326,476     31.2%
EPS - Basic and  2.57        1.95        31.6%   2.84        -9.6%    9.64        7.35        31.1%
Diluted
Shares - Basic   44,379,289  44,409,211  -0.1%   44,379,507  0.0%     44,423,845  44,400,224  0.1%
and Diluted



Copa Holdings, S.A.
Balance Sheet - IFRS
(US$ Thousands)            December 31,       September 30,  December 31,
                           2013               2013           2012
                           (Unaudited)      (Unaudited)  (Audited)
Current Assets:
Cash and cash equivalents  $     139,240  $         $      
                                              475,181        76,094
Short-term investments     930,399            499,047        575,009
Total cash, cash
equivalents and            1,069,640          974,228        651,103
short-term investments
Accounts receivable, net
of allowance for doubtful  132,001            173,175        135,207
accounts
Accounts receivable from   2,189              2,109          1,129
related parties
Expendable parts and
supplies, net of           56,814             56,314         50,603
allowance for
obsolescence
Prepaid expenses           59,160             62,163         63,120
Other current assets       22,783             19,073         16,328
Total Current Assets       1,342,586          1,287,062      917,490
Long-term investments      99,770             46,590         69,445
Property and Equipment:
Owned property and
equipment:
Flight equipment           2,477,830          2,462,278      2,405,346
Other equipment            73,487             71,570         66,330
                           2,551,317          2,533,848      2,471,676
Less: Accumulated          (530,347)          (505,147)      (432,589)
depreciation
                           2,020,970          2,028,701      2,039,087
Purchase deposits for      327,544            302,371        245,544
flight equipment
Total Property and         2,348,514          2,331,072      2,284,631
Equipment
Other Assets:
Net pension asset          11,114             10,826         10,009
Goodwill                   25,305             25,466         27,575
Intangible asset           28,214             57,767         59,382
Other assets               96,949             110,889        110,968
Total Other Assets         161,583            204,948        207,934
Total Assets               $   3,952,454   $           $    
                                              3,869,672     3,479,500
LIABILITIES AND
SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of      $     156,460  $         $     
long-term debt                                140,114        136,268
Accounts payable           95,046             101,128        104,975
Accounts payable to        14,460             15,380         20,255
related parties
Air traffic liability      578,439            549,721        382,807
Taxes and interest         113,517            121,647        85,436
payable
Accrued expenses payable   74,963             65,993         48,047
Other current liabilities  8,133              7,835          10,902
Total Current Liabilities  1,041,019          1,001,818      788,690
Non-Current Liabilities:
Long-term debt             913,507            960,462        1,069,836
Post employment benefits   6,223              6,309          6,340
liability
Other long-term            51,223             49,912         43,726
liabilities
Deferred tax liabilities   38,743             32,274         34,364
Total Non-Current          1,009,696          1,048,957      1,154,266
Liabilities
Total Liabilities          2,050,715          2,050,775      1,942,956
Shareholders' Equity:
Class A - 33,407,876
shares issued and          22,626             22,626         22,591
outstanding
Class B - 10,938,125
shares issued and          7,466              7,466          7,466
outstanding
Additional paid in         47,031             45,594         40,660
capital
Retained earnings          1,821,243          1,739,740      1,458,258
Accumulated other
comprehensive income       3,372              3,470          7,569
(loss)
Total Shareholders'        1,901,738          1,818,896      1,536,544
Equity
Total Liabilities and      $   3,952,454   $           $    
Shareholders' Equity                          3,869,672     3,479,500

Copa Holdings, S.A.
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        4Q13      4Q12     3Q13      2013      2012
Net income as Reported         $113,921  $86,623  $126,008  $428,200  $326,476
Special Items (adjustments):
 Intangible Impairment     $31,162   $0       $0        $31,162   $0
 Unrealized (gain) loss    -$2,553   $2,673   -$9,820   -$5,167   $9,577
on fuel hedging instruments
 Venezuela Devaluation     $0        $0       $0        $13,927   $0
Adjusted Net Income            $142,530  $89,296  $116,188  $468,123  $336,053
Shares used for Computation
(in thousands)
 Basic and Diluted         44,379    44,409   44,380    44,424    44,400
Adjusted earnings per share -  3.21      2.01     2.62      10.54     7.57
Basic and Diluted
Reconciliation Operating
Costs per ASM
Excluding Fuel and Special     4Q13      4Q12     3Q13      2013      2012
Items
Operating Costs per ASM as     11.6      11.1     10.9      11.0      11.1
Reported
Intangible Impairment          (0.6)     -        -         (0.2)     -
Aircraft fuel per ASM          (4.1)     (4.4)    (4.1)     (4.1)     (4.4)
Adjusted Operating Costs per   6.9       6.8      6.8       6.7       6.8
ASM excluding fuel

CPA-G

SOURCE Copa Holdings, S.A.

Website: http://www.copaair.com
 
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