Copa Holdings Reports Net Income of US$35.9 Million for the Fourth Quarter of 2014

PANAMA CITY, Feb. 11, 2015 /PRNewswire/ — Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2014 (4Q14) and full year 2014. The terms “Copa Holdings” and “the Company” refer to the consolidated entity. The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS). See the accompanying reconciliation of non-IFRS financial information to IFRS financial information included in financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2013 (4Q13).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$35.9 million for 4Q14 or earnings per share (EPS) of US$0.81, as compared to net income of US$113.2 million or EPS of US$2.55 in 4Q13. Excluding special items, which for 4Q14 includes a non-cash loss of US$89.1 million associated with the mark-to-market of fuel hedge contracts, and a US$0.4 million loss related to devaluation of the Venezuelan Bolivar, Copa Holdings would have reported adjusted net income of US$125.3 million or adjusted EPS of US$2.83, compared to adjusted net income of US$141.8 million or adjusted EPS of US$3.20 in 4Q13.
Net income for full year 2014 reached US$371.4 million or EPS of US$8.37, compared to US$427.5 million or EPS of US$9.62 for full year 2013. Excluding special items, which for 2014 includes a non-cash loss of US$116.6 million associated with the mark-to-market of fuel hedge contracts, and a US$6.6 million loss related to the devaluation of the Venezuelan Bolivar, Copa Holdings would have reported an adjusted net income of US$494.6 million or EPS of US$11.14, compared to adjusted net income of US$467.4 or adjusted EPS of US$10.52 for full year 2013.
Operating income for 4Q14 came in at US$118.8 million, representing a 26.1% decrease over adjusted operating income of US$160.9 million in 4Q13, mainly as a result of a 12.9% decrease in unit operating revenue per available seat mile (RASM) partly offset by a 9.9% drop in the all-in price of jet fuel. As a result, operating margin for 4Q14 came in at 17.7%, 5.3 percentage points lower than adjusted 4Q13.
The Company reported operating income of US$538.1 million for full year 2014, representing a decrease of 1.9% over adjusted operating income of US$548.7 million in 2013. Operating margin for full year 2014 came in at 19.8%, 1.3 percentage points lower than adjusted operating margin in 2013.
Total revenues for 4Q14 decreased 3.8% to US$670.9 million. Yield per passenger mile decreased 11.1% to 16.1 cents and RASM came in at 12.5 cents, or 12.9% below 4Q13.
For 4Q14, consolidated passenger traffic grew 8.3%, led by international traffic growth which expanded by 11.1%. At the same time, consolidated capacity grew 10.4%, led by a 13.1% increase in international capacity. As a result, consolidated load factor for the quarter decreased 1.4 percentage points to 75.1%. For full year 2014, consolidated load factor came in at 76.7%, the same as 2013, on 9.5% capacity growth.
Operating cost per available seat mile (CASM) decreased 6.9%, from an adjusted CASM of 11.0 cents in 4Q13 to 10.3 cents in 4Q14, mostly as a result of a 9.9% decrease in the all-in price of jet fuel. CASM excluding fuel cost and special items decreased 4.0% from 6.9 cents in 4Q13 to 6.7 cents in 4Q14.
Cash, short-term and long-term investments ended 2014 at US$1.16 billion, representing 43% of the last twelve months’ revenues. Of this amount, 42% or US$484.7 million is in Venezuela pending repatriation due to government currency controls.
During the fourth quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft. As a result, Copa Holdings ended the year with a consolidated fleet of 98 aircraft.
For 2014, Copa Holdings reported consolidated on-time performance of 90.3% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.
Subsequent Events

On February 5, 2015, Copa Airlines announced it would begin nonstop service in June, four times a week from Panama to New Orleans, its eleventh U.S. destination.
On February 11, 2015, the Board of Directors of Copa Holdings appointed Mr. John Gebo, Senior Vice President of Alliances for United Airlines, to the Copa Holdings Board of Directors. He fills the Board position vacated by the resignation of Mr. Doug Leo, who is also from United Airlines.
On February 11, 2015, the Board of Directors of Copa Holdings approved a 2015 dividend of US$0.84 cents per share per quarter, corresponding to 40% of Copa Holdings’ annual consolidated net income for 2014. Dividends will be distributed quarterly during the months of March, June, September and December. The first quarterly dividend of US$0.84 cents per share will be paid on March 16 to shareholders on record as of February 27, 2015.