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Copa Holdings (CPA) Beats on Q1 Earnings, Load Factor Falls

Zacks Equity Research
·4 min read

Copa Holdings, S.A. CPA first-quarter 2020 earnings of $1.75 per share beat the Zacks Consensus Estimate by 19 cents. However, the bottom line fell 17.1% year over year primarily due to lower revenues. Quarterly revenues also declined 11.4% to $595.5 million, which beat the Zacks Consensus Estimate of $592.8 million. The downside was caused by 11.4% decrease in passenger revenues. Notably, passenger revenues contributed 96.5% to the top line in the reported quarter.

Operational Statistics

While passenger unit revenue per available seat mile (PRASM) ascended 3.5%, yield per passenger mile rose 5.8%. On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) dropped 16.3% and capacity (or available seat miles/ASMs) slid 14.4% due to significant decline in travel demand due to COVID-19 pandemic. As capacity contraction was less than traffic plunge, consolidated load factor (% of seats filled with passengers) contracted 190 basis points to 81.5%. Meanwhile, unit revenue per available seat mile (RASM) increased 3.5%.

Total operating costs declined 11.2% to $496.5 million backed by lower capacity. Expenses on fuel declined 19.5% due to reduction in volume consumed and lower jet fuel prices.  Average fuel price per gallon declined 6.7% in the reported quarter to $1.95.  Expenses on wages, salaries and other employee benefits fell 3%. Adjusted operating cost per available seat mile (Adjusted CASM) increased 3.8% to 9 cents in first-quarter 2020. The metric excluding fuel costs increased 8% to 6.6 cents, mainly due to flight cancellations in March stemming from the COVID-19 outbreak. Moreover, the temporary grounding of the fleet from Mar 22 resulted in a significant year-over-year capacity reduction. The company expects to resume operations (on a scaled-down basis) from Jun 1. However, the date is tentative and could be pushed back in the event of further travel restrictions.

Copa Holdings SA Price, Consensus and EPS Surprise

 

Copa Holdings SA Price, Consensus and EPS Surprise
Copa Holdings SA Price, Consensus and EPS Surprise

Copa Holdings SA price-consensus-eps-surprise-chart | Copa Holdings SA Quote

 

Other Details

The company exited the first quarter with cash and cash equivalents of $339.92 million compared with $158.73 million at 2019 end. Long-term debt declined to $907.9 million from $938.1 million at the end of 2019.

Due to COVID-19 pandemic uncertainties, on Apr 26, the company’s board of directors postponed dividend payments for the remaining quarters of 2020.

This Zacks Rank #3 (Hold) company ended the first quarter with a consolidated fleet of 102 aircraft — 6 Boeing 737MAX9s, 68 Boeing 737- 800s, 14 Boeing 737-700s and 14 Embraer 190s. Due to coronavirus-related uncertainties, the company did not provide financial guidance for 2020.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshot

Unlike Copa Holding, there are some companies in the Zacks Transportation sector like Werner Enterprises, Inc. WERN, Union Pacific Corporation UNP and Canadian Pacific Railway Limited CP that have beaten earnings estimates in first-quarter 2020.

Werner Enterprises reported first-quarter 2020 earnings per share (excluding 7 cents from non-recurring items) of 40 cents, which surpassed the Zacks Consensus Estimate of 35 cents. However, the bottom line declined 23.1% year over year.

Union Pacific’s first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line increased 11.4% on a year-over-year basis.

Canadian Pacific’s first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings surged more than 55% year over year.

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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Copa Holdings SA (CPA) : Free Stock Analysis Report
 
Werner Enterprises Inc (WERN) : Free Stock Analysis Report
 
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