PR Newswire | Nov 18, 2020 04:31PM EST

11/18 15:30 CST

Copa Holdings Reports Financial Results for the Third Quarter of 2020 PANAMA CITY, Nov 18, 2020

PANAMA CITY, Nov 18, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2020 (3Q20). 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 the financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the third quarter of 2019 (3Q19).

Due to government restrictions on air travel implemented in response to the Covid-19 outbreak, the Company did not provide scheduled commercial service during the first 45 days of the quarter. On August 14, the Company restarted limited scheduled commercial operations subject to Panama's restrictions on the number of flights and entry for non-citizens and non-residents, and it has been gradually increasing capacity ever since. However, the capacity figures were still very low on a full quarter basis. Therefore, this earnings release will focus on the financial results and metrics that are relevant in these circumstances and will omit certain financial ratios, unit metrics and operational indicators that are usually provided, since they are either not measurable or immaterial on such a limited operational base.

OPERATING AND FINANCIAL HIGHLIGHTS

* Copa Holdings reported a net loss of US$118.1 million or US$2.78 per share. Excluding special items, the Company would have reported a net loss of US$121.6 million, or US$2.86 per share. * Special items for the quarter include a US$3.6 million unrealized gain on the mark-to-market of the Company's outstanding convertible notes. * Copa Holdings reported an operating loss of US$107.0 million. * Cash consumption, defined as cash disbursements less proceeds, excluding extraordinary financing activities and asset sales, averaged US$36 million per month during the quarter. * The Company ended the quarter with US$1.3 billion of available liquidity, consisting of US$1.0 billion in cash, short-term and long-term investments, and committed and undrawn credit facilities of US$305 million. * The Company repaid US$50 million in short-term lines of credit, closing the quarter with a total debt of US$1.2 billion. * On August 14, the Company restarted limited scheduled commercial operations, subject to Panama's health control restrictions on the number of flights and entry for non-citizens and non-residents to Panama and has been gradually increasing capacity since then. Capacity for the quarter represented approximately 1.5% of 3Q19 capacity. * The Company completed the delivery of the first EMB-190 aircraft out of 14 that have been sold to a third party. * Excluding the aircraft classified as assets held for sale, Copa Holdings ended the quarter with a consolidated fleet of 74 aircraft - 68 Boeing 737-800s and 6 Boeing 737MAX9s.

Subsequent Events

* During October, the Company delivered the 2nd and 3rd EMB-190 aircraft out of 14 that have been sold to a third party. * On October 11, Panama lifted restrictions on the number of flights and entry for non-citizens and non-residents. * During the month of November, the Company signed a Letter of Intent for the sale of 2 Boeing 737-700 aircraft, to be finalized and delivered in January 2021. * As of November 15, the Company has restarted service to 38 destinations. * On November 18, the FAA rescinded the order that grounded the Boeing 737-MAX aircraft type and published an Airworthiness Directive and MAX training requirements, paving the way for a return to service. The Company has a plan in place to comply with all new requirements and expects to return its six Boeing 737-MAX9 aircraft to service soon. * The Company is in advanced discussions with Boeing to reach a settlement regarding the Boeing 737-MAX grounding. Subject to the outcome of these discussions, the Company expects to receive two Boeing 737-MAX9 aircraft during the month of December 2020.

Consolidated Financial 3Q20 3Q19 Variance vs. 3Q19 2Q20 Variance vs. 2Q20& Operating Highlights

Revenue Passengers Carried (000s) 30 2,703 -98.9% 9 225.9%

RPMs (millions) 57 5,466 -99.0% 15 275.7%

ASMs (millions) 95 6,383 -98.5% 31 205.9%

Load Factor 59.7% 85.6% -26.0 p.p. 48.6% 11.1 p.p.

Fuel Gallons Consumed (millions) 1.32 81.97 -98.4% 0.66 99.4%

Avg. Price Per Fuel Gallon (US$) 1.41 2.16 -34.6% 0.81 74.1%

Average Length of Haul (miles) 1,925 2,022 -4.8% 1,670 15.3%

Average Stage Length (miles) 1,081 1,295 -16.5% 727 48.7%

Departures 559 33,373 -98.3% 225 148.4%

Block Hours 1,710 109,614 -98.4% 820 108.5%

Operating Revenues (US$ millions) 32.4 708.2 -95.4% 14.5 122.8%

Operating Profit (Loss) (US$ millions) -107.0 132.9 n/m -357.9 n/m

Adjusted Operating Profit (Loss) (US$ millions) ^(1) -107.0 132.9 n/m -108.7 n/m

Net Profit (Loss) (US$ millions) -118.1 104.0 n/m -386.0 n/m

Adjusted Net Profit (Loss) (US$ millions) ^(1) -121.6 104.0 n/m -114.6 n/m

Basic EPS (US$) -2.78 2.45 n/m -9.08 n/m

Adjusted Basic EPS (US$) ^(1) -2.86 2.45 n/m -2.70 n/m

Shares for calculation of Basic EPS (000s) 42,510 42,487 0.1% 42,512 0.0%

^(1^) Excludes Special Items. This earnings release includes a reconciliationof non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q20 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: https://copa.gcs-web.com/financial-information/quarterly-results

3Q20 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Nov 19, 2020Date:

Time: 11:00 AM US ET (11:00 AM Local Time)

Conference telephone number: 877-293-5456 (US Domestic Callers)

707-287-9357 (International Callers)



Webcast: https://copa.gcs-web.com/ events-and-presentations

Speakers: Pedro Heilbron, Chief Executive Officer

Jos? Montero, Chief Financial Officer

About Copa HoldingsCopa Holdings is a leading Latin American provider of passenger and cargo services. The Company, through its operating subsidiaries, provides service to 80 destinations in 33 countries in North, Central and South America and the Caribbean. For more information visit:www.copa.com.

CONTACT:Copa Holdings S.A. Investor Relations:Ph: 011 507 304-2774 www.copa.com (IR section)

This release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. The risks and uncertainties relating to the forward-looking statements in this release are among those disclosed in Copa Holdings' filed disclosure documents and are, therefore, subject to change without prior notice.

CPA-G

Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

Unaudited Unaudited % Unaudited %

3Q20 3Q19 Change 2Q20 Change

Operating Revenues

Passenger revenue 27,619 685,337 -96.0% 10,790 156.0%

Cargo and mail revenue 596 14,647 -95.9% 145 309.9%

Other operating revenue 4,167 8,226 -49.3% 3,597 15.8%

Total Operating Revenue 32,382 708,210 -95.4% 14,532 122.8%

Operating Expenses

Fuel 1,287 177,603 -99.3% 137 839.0%

Wages, salaries, benefits and other employees' expenses 44,241 113,398 -61.0% 38,198 15.8%

Passenger servicing 1,095 26,204 -95.8% 402 172.4%

Airport facilities and handling charges 1,752 47,022 -96.3% 505 246.9%

Sales and distribution 5,985 52,980 -88.7% 3,754 59.4%

Maintenance, materials and repairs 9,079 30,632 -70.4% 7,505 21.0%

Depreciation and amortization 63,022 72,876 -13.5% 305,185 -79.3%

Flight operations 454 26,572 n/m (82) n/m

Other operating and administrative expenses 12,435 28,047 -55.7% 16,803 -26.0%

Total Operating Expense 139,349 575,334 -75.8% 372,408 -62.6%

Operating Profit (Loss) (106,966) 132,876 n/m (357,875) n/m

Non-operating Income (Expense):

Finance cost (16,264) (12,696) 28.1% (27,056) -39.9%

Finance income 4,394 6,121 -28.2% 5,677 -22.6%

Net change in fair value of derivatives 3,591 - n/m (22,198) n/m

Gain (loss) on foreign currency fluctuations (370) (9,641) n/m 500 n/m

Other non-operating income (expense) (2,631) (350) n/m 447 n/m

Total Non-Operating Income/(Expense) (11,278) (16,567) -31.9% (42,628) -73.5%

Profit (Loss) before taxes (118,245) 116,309 n/m (400,504) n/m

Income tax expense (188) 12,332 n/m (14,486) n/m

Net Profit (Loss) (118,057) 103,978 n/m (386,018) n/m

EPS

Basic -2.78 2.45 n/m -9.08 n/m

Shares used for calculation:

Basic 42,509,959 42,487,355 42,511,806

Copa Holdings, S. A. and subsidiaries

Consolidated statement of financial position

(US$ Thousands) September December

2020 2019

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents 222,263 158,733

Short-term investments 644,137 692,403

Total cash, cash equivalents and short-term investments 866,400 851,136

Accounts receivable, net 35,669 129,634

Accounts receivable from related parties 1,625 147

Expendable parts and supplies, net 77,481 69,100

Prepaid expenses 29,755 49,034

Prepaid income tax 9,020 1,181

Other current assets 8,546 14,206

162,096 263,301

Assets held for sale 143,466 120,006

TOTAL CURRENT ASSETS 1,171,962 1,234,442

Long-term investments 139,503 134,347

Long-term accounts receivable 1,038 2,139

Long-term prepaid expenses 6,416 17,743

Property and equipment, net 2,203,750 2,532,402

Right of use assets 229,595 290,843

Intangible, net 97,771 108,116

Net pension asset 2,868 249

Deferred tax assets 21,714 19,216

Other Non-Current Assets 13,663 17,881

TOTAL NON-CURRENT ASSETS 2,716,318 3,122,935

TOTAL ASSETS 3,888,280 4,357,377

LIABILITIES

Loans and borrowings 129,667 122,581

Current portion of lease liability 89,708 97,732

Accounts payable 39,560 119,332

Accounts payable to related parties 5,101 14,086

Air traffic liability 433,145 497,374

Frequent flyer deferred revenue 88,219 80,325

Taxes Payable 6,756 46,267

Employee benefits obligations 7,350 55,373

Income tax payable 883 9,683

Other Current Liabilities 136 83

TOTAL CURRENT LIABILITIES 800,525 1,042,836

Loans and borrowings long-term 1,118,846 938,182

Lease Liability 152,234 206,832

Derivative financial instruments 94,836 -

Other long - term liabilities 219,400 191,221

Deferred tax Liabilities 27,283 43,397

TOTAL NON-CURRENT LIABILITIES 1,612,599 1,379,633

TOTAL LIABILITIES 2,413,124 2,422,469

EQUITY

Issued Capital

Class A -33,858,511 issued and 31,417,714 outstanding 21,196 21,142

Class B common stock - 10,938,125 7,466 7,466

Additional Paid-In Capital 90,125 86,135

Treasury Stock (136,388) (136,388)

Retained Earnings 1,931,191 1,718,179

Net profit (429,801) 247,002

Other comprehensive loss (8,632) (8,628)

TOTAL EQUITY 1,475,156 1,934,908

TOTAL EQUITY & LIABILITIES 3,888,280 4,357,377

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the nine months ended September 30,

(In US$ thousands)

2020 2019 2018

(Unaudited) (Unaudited) (Unaudited)

Cash flow (used in) from operating activities (75,298) 548,947 377,941

Cash flow used in operating activities (2,333) (32,863) (129,541)

Cash flow from (used in) financing activities 141,162 (446,953) (316,461)

Net increase (decrease) in cash and cash equivalents 63,531 69,131 (68,061)

Cash and cash equivalents at January 1 158,732 156,158 238,792

Cash and cash equivalents at September 30 $ 222,263 $ 225,289 $ 170,731

Short-term investments 644,137 536,084 579,246

Long-term investments 139,503 124,169 165,865

Total cash and cash equivalents and investments at September 30 $ 1,005,903 $ 885,542 $ 915,842

Copa Holdings, S.A.NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non-IFRS financial measures: Adjusted Operating Profit, Adjusted Net Profit, Adjusted Basic EPS and Monthly Cash Consumption. This supplemental information is presented because we believe it is a useful indicator of our operating performance and is useful in comparing our performance with other companies in the airline industry. These measures should not be considered in isolation, and should be considered together with comparable IFRS measures, in particular operating profit and net profit. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

Reconciliation of Adjusted Operating Profit

and Adjusted Net Profit 3Q20 3Q19 2Q20

Operating Profit as Reported $ (106,966) $ 132,876 $ (357,875)

Add: Unredeemed Ticket Revenue provision reversal $ 12,341

Add: Fleet Impairment loss $ 186,807

Add: Expected Loss on Embraer assets held for sale $ 50,048

Adjusted Operating Profit $ (106,966) $ 132,876 $ (108,679)

Net profit as Reported $ (118,057) $ 103,978 $ (386,018)

Add: Unredeemed Ticket Revenue provision reversal $ 12,341

Add: Fleet Impairment loss $ 186,807

Add: Expected Loss on Embraer assets held for sale $ 50,048

Add: Net change in fair value of derivatives $ $ 22,198 (3,591)

Adjusted Net Profit $ (121,648) $ 103,978 $ (114,624)

Reconciliation of Adjusted Basic EPS

Adjusted Net Profit $ (121,648) $ 103,978 $ (114,624)

Shares used for calculation of Basic EPS 42,510 42,487 42,512

Adjusted Basic Earnings per share (Adjusted Basic EPS) $ $ $ (2.86) 2.45 (2.70)

Reconciliation of Monthly Cash Consumption for 2Q and 3Q 2020

Beginning Cash balance 1,143 1,127

Ending Cash balance 1,006 1,143

Net cashflows in the quarter (137) 16

Substract: Proceeds from Convertible Notes Offering - 343

Substract: Others proceeds (assets sold and other non-op proceeds) 22

Add: Repayment of short term credit lines 50 95

Cash Consumption excluding extraordinary activities (109) (232)

Monthly Cash Consumption excluding extraordinary activities (36) (77)

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SOURCE Copa Holdings, S.A.