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Copa Holdings (CPA) Q3 Earnings & Revenues Miss on Cost Woes

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Copa Holdings, S.A. (CPA - Free Report) put up a disappointing performance in the third quarter of 2018 with lower-than-expected earnings and revenues. The company’s earnings per share of $1.36 missed the Zacks Consensus Estimate of $1.42. Moreover, the bottom line plunged significantly year over year. Results were hurt by high fuel prices and weakening Brazilian and Argentinian currencies.

Quarterly revenues increased more than 2% year over year to $672.4 million but lagged the Zacks Consensus Estimate of $684.2 million. Passenger revenues inched up 1.4% year over year to $649.11 million.

The earnings and revenue miss displeased investors. Consequently, the stock declined 4.3% in after-hours trading on Nov 14.

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

 

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

Operational Statistics

While passenger unit revenue per available seat mile (PRASM) slipped 4.8%, yield per passenger mile dipped 3.3%. Passenger traffic (on a consolidated basis) rose 4.8% and capacity was up 6.6% in third-quarter 2018. Load factor contracted 140 basis points to 84.3% as traffic rise was outweighed by capacity growth.

Additionally, unit revenue per available seat mile (RASM) slid 4.2%. Operating cost per available seat mile (CASM) rose 4.3% in the reported quarter, primarily due to higher fuel costs. However, the metric excluding fuel declined 5.5%. Cost-cutting efforts among other factors led to this upside. Average fuel price per gallon surged 31.6% year over year to $2.40.

Copa Holdings has been making consistent fleet modernization efforts. In October and earlier this November, the company took delivery of two Boeing 737 MAX 9 aircraft, bringing its total fleet to 104.

Dividend

The company’s board has approved a quarterly cash dividend of 87 cents per share, payable Dec 14 to shareholders of record as of Nov 30.

Financials

Copa Holdings exited the third quarter with cash and cash equivalents of $170.73 million compared with $238.79 million at the end of 2017. Additionally, long-term debt totaled $918.69 million at the end of the third quarter compared with $876.12 million at the end of December 2017.

Zacks Rank & Key Picks

Copa Holdings carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the airline space are Air France-KLM SA (AFLYY - Free Report) , International Consolidated Airlines Group SA (ICAGY - Free Report) and Spirit Airlines, Inc. (SAVE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Air France-KLM have rallied more than 30% in the past six months while the same of International Consolidated Airlines and Spirit Airlines has gained more than 7% and 41%, respectively, in a year.

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