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Copa Holdings' (CPA) Q1 Earnings & Revenues Beat, Improve Y/Y

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Copa Holdings CPA reported first-quarter 2022 earnings (excluding 23 cents from non-recurring items) of 70 cents per share, which surpassed the Zacks Consensus Estimate of 36 cents. In the year-ago quarter, the company had incurred a loss of $2.23 per share due to coronavirus-led depressed air-travel demand.

Quarterly revenues of $571.6 million outperformed the Zacks Consensus Estimate of $566.1 million and rose significantly year over year, thanks to an improvement in air-travel demand.

Operational Statistics

Below, we present all comparisons (in % terms) with first-quarter 2019 levels (pre-coronavirus).

Passenger revenues (contributed 94.7% to the top line) plunged 16.6% to $541.25 million in the first quarter due to 12.4% less capacity (measured in available seat miles/ASMs). Cargo and mail revenues jumped 40.6% to $21.54 million, owing to higher cargo volumes and yields. Total revenues declined 15% in the reported quarter.

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

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

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


On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) fell 14.2%. As traffic decline was more than the amount of capacity contraction, load factor (% of seats filled with passengers) contracted 1.8 percentage points to 81.5% in the reported quarter. Passenger revenue per available seat miles dropped 4.8% to 9.6 cents. Additionally, revenue per available seat mile (RASM) fell 3% to 10.2 cents. Cost per available seat mile (CASM) increased 7.5%. Excluding fuel, the metric dipped 1.6%. Average fuel price per liter soared 37.4% to $2.87.

Total operating expenses declined 5.8% to $526.81 million due to lower wages, salaries, benefits and other employees' expenses, and sales and distribution costs. Expenses on wages, salaries and other employee benefits fell 21% due to reduced headcount. Sales and distribution costs declined 13.4%. Passenger servicing costs dropped 39%. Flight operation costs decreased 14.8%.

Other Details

Copa Holdings exited the first quarter with cash and cash equivalents of $249.01 million compared with $211.08 million at the end of December 2021. Total debt, including lease liabilities, was $1.6 billion at the end of the first quarter.

Copa Holdings, carrying a Zacks Rank #3 (Hold), exited the first quarter with a consolidated fleet of 93 aircraft — 68 Boeing 737-800s, 16 Boeing 737 MAX 9s, and nine Boeing 737-700s. During the first quarter, the carrier took delivery of two Boeing 737 MAX 9 aircraft.

2022 Outlook

Due to escalating fuel prices, among other factors, Copa holdings expects second-quarter operating margin to be only 3-5%. The company expects capacity to be approximately 5.9 billion, which is equivalent to 96% of the second-quarter 2019 capacity. Load factor is estimated to be around 86% in the second quarter. Fuel price is estimated to be $4 per gallon.

For the full year, CPA expects capacity to reach approximately 98% of the 2019 level.

Performance of Other Airline Stocks

Gol Linhas Aereas Inteligentes GOL, carrying a Zacks Rank #3, incurred a loss (excluding $3.15 from non-recurring items) of 63 cents per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of 67 cents. The amount of loss narrowed year over year.

Gol Linhas’ net operating revenues of $616.2 million outperformed the Zacks Consensus Estimate of $603.2 million. The top line not only surged more than 100% year over year, but also came in above the first quarter of 2019.

Azul AZUL, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $4.89 from non-recurring items) of $1.14 per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.21. The amount of loss narrowed year over year as well.

Azul’s total revenues of $610.9 million missed the Zacks Consensus Estimate of $638.5 million but increased 82.9% year over year as air-travel demand improved, courtesy of widespread vaccination programs in Brazil.

Southwest Airlines LUV, carrying a Zacks Rank #1 (Strong Buy), incurred a loss (excluding 15 cents from non-recurring items) of 32 cents per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of 34 cents. Results were hurt by Omicron-induced woes in January and February. You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwest’s operating revenues of $4694 million outperformed the Zacks Consensus Estimate of $4,663.8 million and also jumped more than 100% year over year. Passenger revenues improved more than 100% year over year.


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