Copa Holdings (CPA) Misses Q4 Earnings Estimates, Down Y/Y

Copa Holdings, S.A. (NYSE:CPA) reported disappointing fourth-quarter 2018 results, with earnings and revenues missing the Zacks Consensus Estimate.

The transportation company’s earnings (excluding $4.71 from non-recurring items) of $1.04 per share missed the Zacks Consensus Estimate of $1.06. Moreover, the bottom line plunged significantly on a year-over-year basis primarily due to high costs.

Quarterly revenues slipped nearly 3% year over year to $656.1 million and lagged the Zacks Consensus Estimate of $673.6 million. Passenger revenues declined 3.2% year over year to $631.8 million.

Operational Statistics

While passenger unit revenue per available seat mile (PRASM) declined 8.2%, yield per passenger mile dipped 7.7%. On a consolidated basis, traffic (measured in revenue passenger miles or RPMs) rose 4.9% and capacity (or available seat miles/ASMs) was up 5.5% in the reported quarter. As traffic growth was outpaced by capacity expansion, consolidated load factor contracted 40 basis points (bps) to 82.8%.

Additionally, unit revenue per available seat mile (RASM) slid 7.7%. Adjusted operating cost per available seat mile (CASM) inched up 0.5% in the reported quarter, primarily due to high costs. The metric excluding fuel costs declined 5.8%. Cost-cutting efforts among other factors led to this improvement. Despite the current downtrend in oil prices, average fuel price per gallon increased 17.5% year over year to $2.38.

Copa Holdings is making consistent efforts to modernize fleet. To this end, the company received delivery of a Boeing (NYSE:BA) 737 MAX 9 aircraft in January 2019. Apart from adding new planes, this carrier is replacing outdated ones as part of its fleet modernization efforts. To this end, the carrier sold one Embraer 190 aircraft to Azorra aviation in the same month.

Liquidity

This Zacks Rank #2 (Buy) company exited 2018 with cash and cash equivalents of $153.3 million compared with $238.8 million at the end of 2017. Long-term debt amounted to $979.9 million compared with $876.1 million in December 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lowered Dividend

Adding to the woes, the board of directors decided to trim quarterly dividend by 25.3%. The new dividend is 65 cents per share (annualized $2.60). The first instalment of the dividend will be paid on Mar 15 to shareholders of record as on Feb 28, 2019.

Upcoming Releases

Investors interested in the Zacks Transportation Sector are keenly awaiting quarterly results from key players like Expeditors International of Washington, Inc. (NASDAQ:EXPD) , Air Lease Corporation (NYSE:AL) and LATAM Airlines Group S.A. (NYSE:LTM) . While Expeditors and Air Lease are scheduled to report fourth-quarter 2018 earnings on Feb 19 and Feb 21, respectively, LATAM Airlines will release the same on Mar 12.

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