Copa Holdings (CPA) Q3 Earnings & Revenues Beat, Stock Up

Copa Holdings CPA reported better-than-expected earnings and revenues in the third quarter of 2021, following which, shares of the company gained 3.2% in after-market trading on Nov 17.

CPA’s third-quarter earnings (excluding 51 cents from non-recurring items) of 70 cents per share compared favorably with the Zacks Consensus Estimate of a loss of 17 cents. In the year-ago period, the company had incurred a loss of $2.86 per share due to coronavirus-led significantly depressed air-travel demand.

Quarterly revenues of $445 million also outperformed the Zacks Consensus Estimate of $420.9 million and rose significantly year over year, thanks to improvement in air-travel demand in Panama from the pandemic-driven lows of last year. Copa Holdings’ flight operations in the quarter were 68.9% of the schedule operated in the third quarter of 2019.

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

Operational Statistics

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

Passenger revenues (contributed 93.8% to the top line) plunged 39.1% to $417.47 million in the third quarter due to 31.1% less capacity (measured in available seat miles/ASMs).

On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) fell 36.2%. As traffic decline was more than the amount of capacity contraction, load factor (% of seats filled with passengers) contracted 6.4 percentage points to 79.3% in the reported quarter. Passenger revenue per available seat miles declined 11.5% to 9.5 cents. Additionally, revenue per available seat mile (RASM) slipped 8.8% to 10.1 cents. Cost per available seat mile (CASM) decreased 2.6%. Excluding fuel, the metric dipped 0.2%.

Total operating expenses declined 32.9% to $385.99 million, backed by lower fuel expenses and reduction in wages, salaries, benefits and other employees' expenses. Expenses on fuel fell 36.6%, primarily due to reduced fuel consumption (down 36.5% to 52 million). Jet fuel prices decreased 1% to $2.13 per gallon. Expenses on wages, salaries and other employee benefits fell 40% due to reduced headcount. Passenger servicing costs dropped 59.6%. Flight operation cost also plunged 38.7%.

Other Details

Copa Holdings exited the third quarter with cash and cash equivalents of $290.23 million compared with $119.10 million at the end of 2020. Total debt, including lease liabilities, was $1.6 billion at the end of the third quarter.

This Zacks Rank #3 (Hold) company exited the third quarter with a consolidated fleet of 87 aircraft — 68 Boeing 737-800s, 13 Boeing 737 MAX 9s and six Boeing 737-700s. Additionally, Copa Holdings delivered the last Embraer 190 aircraft in its fleet and two Boeing 737-700s to their new owner. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook

Copa Holdings expects capacity to be approximately 5.1 billion in the fourth quarter, representing 83% of the schedule flown in the fourth quarter of 2019. Operating margin is estimated to be around 12% in the current quarter. CPA estimates total revenues to be approximately $545 million in the same period, which represents about 80% of fourth-quarter 2019 revenues. Fuel price per gallon is predicted to increase about 17% sequentially in the fourth quarter to $2.50.

For the first half of 2022, Copa Holdings expects capacity to increase to 92% of the comparable period in 2019.

Performance of Other Airline Stocks

Azul AZUL, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $2.09 from non-recurring items) of $1.08 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.35. The amount of loss also narrowed year over year.

Azul’s total revenues of $520 million outperformed the Zacks Consensus Estimate of $457.9 million and increased year over year (up 59.6% sequentially) as air-travel demand improves, courtesy of widespread vaccination programs in Brazil.

Gol Linhas Aereas Inteligentes GOL, carrying a Zacks Rank #4, incurred a loss (excluding $1.59 from non-recurring items) of 85 cents per share in the third quarter of 2021, in line with the Zacks Consensus Estimate. The amount of loss narrowed year over year.

Gol Linhas’ net operating revenues of $366.4 million surpassed the Zacks Consensus Estimate of $334.2 million. The top line surged significantly year over year, with passenger revenues (accounting for 92.3% of total revenues) rising more than 100%, thanks to continued recovery in air-travel demand in Brazil as vaccination rates increase.

Ryanair Holdings RYAAY, carrying a Zacks Rank #4, reported second-quarter fiscal 2022 (ended Sep 30, 2021) earnings of $1.16 per share, which fell short of the Zacks Consensus Estimate of $1.80. In the year-ago period, the company incurred adjusted loss of 12 cents per share due to coronavirus-led weakness in air-travel demand.

Ryanair’s quarterly revenues of $2,104 million also fell shy of the Zacks Consensus Estimate of $2,338.8 million. The top line increased significantly year over year with improvement in traffic, thanks to the rollout of the EU Digital Covid Certificates, which facilitate travel within the European Union during the pandemic. Easing of coronavirus-led travel restrictions also drove traffic.

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