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Copa Holdings (CPA) Incurs Narrower-Than-Expected Loss in Q1

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Copa Holdings (CPA - Free Report) incurred a loss (excluding 37 cents from non-recurring items) of $2.23 per share in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.25. In the year-ago period, the company reported earnings of $1.75. Results were hurt by coronavirus-induced limited flight operations.  The company’s flight operations were only 39% of the 2019 (pre-pandemic) level in the quarter.

Quarterly revenues of $185.7 million missed the Zacks Consensus Estimate of $188.9 million and also plunged 68.8% year over year, with passenger revenues (contributed 93.2% to the top line) declining 69.9%.

Operational Statistics

On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) fell 61.6% and capacity (measured in available seat miles/ASMs) declined 54.8%. As traffic decline was more than the amount of capacity contraction, load factor (% of seats filled with passengers) contracted 12.3 percentage points to 69.2% in the reported quarter. Passenger revenue per available seat miles decreased 33.3% year over year to 7 cents. Additionally, total revenue per available seat mile slipped 31% to 7.5 cents. Cost per available seat mile jumped 17.1% year over year. Excluding fuel, the metric surged 30.1%.

Total operating expenses declined 47.1% year over year to $262.76 million, backed by lower passenger servicing and fuel cost. Expenses on fuel fell 62.5% due to reduced fuel consumption (down 58.5% year over year to 29.08 million) and low jet fuel prices ($1.75, down 9.9%). Expenses on passenger servicing declined 74.5% on a year-over-year basis. Moreover, expenses on wages, salaries and other employee benefits dropped 50.5% due to reduced payroll expenses, voluntary temporary leaves and less variable compensation provisions.

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 first quarter with cash and cash equivalents of $193.8 million compared with $119.10 million at the end of 2020. Total debt, including lease liabilities, was $1.7 billion at the end of the first quarter.

This Zacks Rank #4 (Sell) company ended the first quarter with a consolidated fleet of 81 aircraft — 68 Boeing 737-800s and 13 Boeing 737 MAX 9s. During the quarter, the company took delivery of 6 Boeing 737 MAX 9.  Additionally, the company sold 4 Embraer 190 aircraft to a third party as was previously agreed upon.

Q2 Outlook

Copa Holdings expects its capacity to reach approximately 2.9 billion in the second quarter. This represents around 45% of second-quarter 2019 levels. The company anticipates total revenues of $260 million in the quarter, which is 40% of second-quarter 2019 revenues. Cash consumption, excluding proceeds from asset sales and extraordinary financing activities, is estimated between $10 million and $15 million per month in the period.

Performance of Other Airline Stocks

United Airlines (UAL - Free Report) , carrying a Zacks Rank #4, incurred a loss (excluding $3.21 from non-recurring items) of $7.5 per share in the first quarter of 2021, wider than the Zacks Consensus Estimate of a loss of $6.97. Operating revenues of $3,221 million also fell short of the Zacks Consensus Estimate of $3,253.1 million.

Southwest Airlines (LUV - Free Report) , carrying a Zacks Rank #3 (Hold), incurred a loss of $1.72 per share (excluding $1.91 from non-recurring items) in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.82. Meanwhile, operating revenues of $2,052 million surpassed the Zacks Consensus Estimate of $2,031.7 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alaska Air Group (ALK - Free Report) , carrying a Zacks Rank #3, incurred a loss (excluding $2.46 from non-recurring items) of $3.51 per share in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $3.71. Moreover, revenues of $797 million surpassed the Zacks Consensus Estimate of $787.1 million.

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