Copa weathers operational challenges, posts $104 million 3Q profit

Panama City-based Copa Holdings faced severe operational challenges during the 2017 third quarter—including extreme weather, and natural disasters that Copa said affected both its 3Q financial results and hub operations in Panama City— but the company nonetheless posted a 40.2% increase in its third-quarter net profit to $103.8 million, compared to $74 million in 3Q 2016.

Copa said its third-quarter results were attributable to improved demand trends and continued cost discipline. Passenger traffic was up 14.9% to 5.3 billion RPMs during the quarter, as capacity rose 13%, leading to a load factor of 85.7%, up 1.5 points year-over-year (YOY). The airline’s average stage length increased 9.1%.

Operating revenue grew 15.6% to $657.2 million, largely on the basis of the airline’s capacity growth. Yield was up 1.3% to 12 cents and PRASM increased 3.1% to 10.3 cents. Copa’s operating margin for the quarter came in at 18.1%, up 4.7 points from 3Q 2016.

Copa’s operating expenses increased 9.4% to $538 million, but CASM fell 3.2% YOY to 8.6 cents. Fuel expenses were up 3.8%, attributable to more fuel consumed from increased capacity and higher load factors, but offset by the company’s effective jet fuel price, which decreased 8% YOY. Copa’s employee expenses were also up comparatively during the quarter to $103.8 million, a 12.8% YOY rise, driven by operational staff growth to support the airline’s fleet.

Looking ahead, Copa updated its full-year 2017 operating margin guidance to be between 17%-18% (compared to 12.4% in 2016) and its full-year capacity growth to be 8%. The company’s preliminary outlook for 2018 forecasts a 17%-19% operating margin for full-year 2018, and +/- 9% capacity growth.

Copa’s fleet plan calls for the company to operate 100 aircraft by the end of 2017, comprising 66 Boeing 737-800s, 20 Embraer E190s, and 14 737-700s.

In June, Copa converted 15 previously ordered 737 MAX aircraft to Boeing’s new MAX 10 model, and on delivery will become the first carrier to operate the MAX 10 in Latin America. The airline ordered 61 737 MAX 8 and MAX 9 aircraft in May 2013 and expects to take delivery of its first MAX 9 in August 2019. By the end of 2018, five MAX 9s are expected to be in service for a total fleet of 106 aircraft.

(Mark Nensel - ATWOnline News)