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Copa Holdings (CPA) Q3 Loss Wider Than Expected, Revenues Down

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Zacks Equity Research
·5 min read
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Copa Holdings CPA incurred a loss (excluding 8 cents from non-recurring items) of $2.86 per share in third-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.79. In the year-ago quarter, the company reported earnings of $2.45 per share.

Thanks to coronavirus-led government travel restrictions, the company could not operate scheduled commercial flights during the first 45 days of the third-quarter. From Aug 14, the airline resumed limited scheduled commercial operations due to Panama's restrictions on the number of flights and entry for non-citizens and non-residents. Since then, it has been gradually increasing capacity. Due to this limited flying, Copa Holdings did not provide certain financial ratios, unit metrics and operational indicators this time, since they were either not measurable or applicable in such a scenario.

Quarterly revenues of $32.4 million missed the Zacks Consensus Estimate of $39 million. Moreover, the top line plunged 95.4% year over year with passenger revenues (accounted for 85.2% of the top line) declining 96%.

Operational Statistics

On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) fell 99% and capacity (measured in available seat miles/ASMs) declined 98.5%. Travel restrictions due to coronavirus concerns forced the company to reduce capacity drastically. As traffic decline was more than the amount of capacity contraction, load factor (% of seats filled with passengers) declined by 2600 basis points to 59.7% in the reported quarter.

Total operating expenses declined 75.8% year over year to $139.35 million, backed by lower capacity among other factors. Expenses on fuel fell 99.3% due to reduced fuel consumption (down 98.4% to 1.32 million) and low jet fuel prices ($1.41 per gallon, down 34.6%). Expenses on wages, salaries and other employee benefits fell 61% due to temporary work-contract suspensions, voluntary pay cuts and work-hour reductions for employees.

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

 

Other Details

Copa Holdings exited the third quarter with cash and cash equivalents of $222.26 million compared with $158.73 million at 2019 end. Total debt at the end of the third quarter was $1.2 billion. The company repaid $50 million in short-term lines of credit.

This Zacks Rank #4 (Sell) company ended the third quarter with a consolidated fleet of 74 aircrafts – 68 Boeing 737-800s and 6 Boeing 737MAX9s. During the quarter, the company also completed the delivery of its first EMB-190 aircraft out of 14 that has been sold to a third party.

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

Sectorial Snapshot

Apart from Copa Holdings, let’s take a look at some other Zacks Transportation sector’s third-quarter earnings like Kirby Corporation’s KEX, J.B. Hunt Transport Services JBHT and United Airlines Holdings, Inc. UAL.

Kirby reported mixed third-quarter 2020 results, with earnings beating the Zacks Consensus Estimate and revenue missing the same.  Earnings of 46 cents per share beat the Zacks Consensus Estimate by 9 cents. However, the bottom line plunged 42.5% year over year. Total revenues of $496.6 million lagged the Zacks Consensus Estimate of $526.5 million and declined 25.5% year over year. The top line was hurt by decline in revenues in the marine transportation and the distribution and services segments stemming from the coronavirus-induced weak economic conditions.

J.B. Hunt reported mixed third-quarter 2020 results, with earnings missing estimates and revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to disappointing performance in its intermodal (JBI) unit. Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.

United Airlines incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63. Results were hurt by coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and lagged the Zacks Consensus Estimate of $2,570.1 million. The year-over-year plunge was caused by 84.3% drop in passenger revenues to $1,649 million.

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