6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Report on Form 6-K dated for the month of May 2023

Copa Holdings, S.A.

(Translation of Registrant's Name Into English)

Boulevard Costa del Este, Avenida Principal y Avenida de la Rotonda

Urbanización Costa del Este

Complejo Business Park, Torre Norte

ParqueLefevre

Panama City, Panama

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F X Form 40-F

(Indicate by check whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes No X

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b);82- )

Enclosure: 1Q23 Earnings Release

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	Copa Holdings, S.A. (Registrant)
Date: 5/11/2023
	By:	/s/ José Montero
		Name: José Montero Title: CFO

EX-99.1

 

Exhibit 99.1

Copa Holdings Reports Financial Results for the First Quarter of 2023

Panama City, Panama --- May 10, 2023. Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the first quarter of 2023 (1Q23). 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 first quarter of 2019 (1Q19) (which the Company believes are more relevant than year-over-year comparisons due to the significant impact of the COVID-19 pandemic in 2020, 2021, and 2022).

OPERATING AND FINANCIAL HIGHLIGHTS

▪Copa Holdings reported a net profit of US$121.5 million for 1Q23 or US$3.07 per share, as compared to a net profit of US$89.4 million or earnings per share of US$2.11 in 1Q19. Excluding special items comprised of the unrealized mark-to-market net loss of US$36.3 million related to the Company’s convertible notes, as well as changes in the value of financial investments, the Company would have reported a net profit of US$157.8 million or US$3.99 per share.

▪Copa Holdings reported an operating profit of US$193.2 million and a 22.3% operating margin for the quarter, as compared to an operating profit of US$112.9 million and an operating margin of 16.8% in 1Q19.

▪Passenger traffic, measured in terms of revenue passenger miles (RPMs), increased by 7.1% compared to 1Q19, while capacity (available seat miles or ASMs) increased by 2.8%. As a result, the load factor for the quarter increased by 3.5 percentage points to 86.8%, as compared to 1Q19.

▪Total revenues for 1Q23 increased 29.0% to US$867.3 million, as compared to 1Q19 revenues. Yields increased 20.0% to 14.6 cents and revenue per available seat mile (RASM) increased 25.5% to 13.1 cents.

▪Operating cost per available seat mile (CASM) increased 17.2% from 8.7 cents in 1Q19 to 10.2 cents in 1Q23, mainly driven by an increase of 61.4% in the price of jet fuel per gallon. CASM excluding fuel (Ex-fuel CASM) increased 2.1% in the quarter to 6.2 cents, as compared to 1Q19.

▪The Company ended the quarter with approximately US$1.2 billion in cash, short-term and long-term investments, which represent 36.3% of the last twelve months’ revenues.

▪The Company closed the quarter with total debt, including lease liabilities, of US$1.7 billion,while our Net Debt to EBITDA ratio ended at 0.6 times, a decrease when compared to the previous quarter.

▪During the quarter, the Company took delivery of two Boeing 737 MAX 9 aircraft, ending the quarter with a consolidated fleet of 99 aircraft – 67 Boeing 737-800s, 22 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800 freighter, compared to a fleet of 102 aircraft prior to the COVID-19 pandemic.

▪Copa Airlines had an on-time performance for the quarter of 92.2% and a flight completion factor of 99.9%, once again positioning itself among the very best in the industry.

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Subsequent Events

▪Copa Holdings will pay its second quarterly dividend of $0.82 per share on June 15, to all Class A and Class B shareholders on record as of May 31, 2023.

Consolidated Financial & Operating Highlights	1Q23			1Q19 (2)			Variance vs. 1Q19			4Q22			Variance vs. 4Q22
Revenue Passengers Carried (000s)		2,881			2,588			11.3	%		2,813			2.4	%
Revenue Passengers OnBoard (000s)		4,295			3,830			12.1	%		4,262			0.8	%
RPMs (millions)		5,723			5,345			7.1	%		5,639			1.5	%
ASMs (millions)		6,596			6,415			2.8	%		6,509			1.3	%
Load Factor		86.8	%		83.3	%		3.5 p.p.			86.6	%		0.1 p.p.
Yield (US$ Cents)		14.6			12.1			20.0	%		15.1			-3.6	%
PRASM (US$ Cents)		12.6			10.1			25.0	%		13.1			-3.4	%
RASM (US$ Cents)		13.1			10.5			25.5	%		13.7			-3.9	%
CASM (US$ Cents)		10.2			8.7			17.2	%		10.3			-0.9	%
CASM Excl. Fuel (US$ Cents)		6.2			6.1			2.1	%		6.1			1.5	%
Fuel Gallons Consumed (millions)		78.2			81.2			-3.7	%		77.7			0.6	%
Avg. Price Per Fuel Gallon (US$)		3.36			2.09			61.4	%		3.52			-4.5	%
Average Length of Haul (miles)		1,987			2,065			-3.8	%		2,005			-0.9	%
Average Stage Length (miles)		1,281			1,299			-1.4	%		1,266			1.2	%
Departures		31,984			33,329			-4.0	%		32,112			-0.4	%
Block Hours		104,626			110,089			-5.0	%		104,822			-0.2	%
Average Aircraft Utilization (hours)		11.9			11.6			1.9	%		11.8			0.8	%
Operating Revenues (US$ millions)		867.3			672.2			29.0	%		890.6			-2.6	%
Operating Profit (Loss) (US$ millions)		193.2			112.9			71.2	%		219.7			-12.0	%
Operating Margin		22.3	%		16.8	%		5.5 p.p.			24.7	%		-2.4 p.p.
Net Profit (Loss) (US$ millions)		121.5			89.4			35.9	%		88.3			37.7	%
Adjusted Net Profit (Loss) (US$ millions) (1)		157.8			89.4			76.4	%		177.7			-11.2	%
Basic EPS (US$)		3.07			2.11			45.9	%		2.23			37.6	%
Adjusted Basic EPS (US$) (1)		3.99			2.11			89.4	%		4.49			-11.2	%
Shares for calculation of Basic EPS (000s)		39,565			42,478			-6.9	%		39,554			0.0	%

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

(2)The Company believes that comparisons with 2019 are more relevant than year-over-year comparisons due to the significant impacts of the COVID-19 pandemic in 2020, 2021, and 2022.

2

 

MANAGEMENT’S COMMENTS ON 1Q23 RESULTS

Copa Holdings delivered solid financial results for the first quarter of 2023. The Company’s results were driven by a healthy demand environment in the region, which led to strong unit revenues in the quarter, and by its consistent cost execution strategy.

Operating revenues for the quarter increased 29.0% to US$867.3 million while operating 2.8% more capacity compared to 1Q19. The Company’s load factor came in at 86.8% or 3.5 percentage points above 1Q19 and yields came in at 14.6 cents or 20.0% higher than 1Q19. As a result, passenger revenues per ASM (PRASM) increased 25.0% to 12.6 cents and RASM increased 25.5% to 13.1 cents in the quarter.

Operating expenses for 1Q23 increased 20.5% to US$674.1 million, mainly due to a higher jet fuel cost. Aircraft fuel expenses increased 56.0% or US$95.3 million compared to 1Q19, due to a 61.4% higher jet fuel price, partially offset by 3.7% fewer gallons consumed.

Driven by the increase in fuel cost, cost per available seat mile (CASM) came in at 10.2 cents, an increase of 17.2% compared to 1Q19. Costs excluding fuel (Ex-fuel CASM) came in at 6.2 cents, a 2.1% increase when compared to the same period in 2019.

Copa Holdings closed the quarter with US$ 1.2 billion in cash, short-term and long-term investments, which represent 36.3% of the last twelve months’ revenues.

Total debt at the end of 1Q23 amounted to US$1.7 billion compared to US$1.6 billion at the end of 2022, while our Net Debt to EBITDA ratio ended at 0.6 times, a decrease when compared to the previous quarter.

The Company has a proven business model, which is built on operating the best and most convenient network for intra-Latin America travel from its Hub of the Americas® based on Panama’s advantageous geographic position, low unit costs, best on-time performance, and a strong balance sheet. Going forward, the Company expects to leverage its strong balance sheet, leading liquidity position, and lower cost base to continue strengthening its long-term competitive position by implementing initiatives that will further reinforce its network, product, and cost competitiveness.

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OUTLOOK FOR 2023

For 2023, the Company updates its outlook as follows: consolidated capacity is expected to grow within a range of 12% to 13% over 2022, and operating margin is now expected to come within the range of 22% to 24%.

Financial Outlook	2023 Guidance	2022
Capacity – YOY ASM growth	12-13%	63.6%
Operating Margin	22-24%	15.2%

Factored into this outlook is a load factor of approximately 85%, unit revenues (RASM) of 12.5 cents, unit costs excluding fuel (Ex-Fuel CASM) in the range of 6.1 cents, and an all-in fuel price of US$2.85 per gallon.

CONSOLIDATED FIRST-QUARTER RESULTS

Operating revenue

Consolidated revenue for 1Q23 totaled US$867.3 million, mainly driven by passenger revenue.

Passenger revenue totaled US$834.0 million, a 28.5% increase compared to the same period in 2019, mostly driven by 20.0% higher yields. The first-quarter results are mostly comprised of flown passenger ticket revenue, passenger-related ancillary revenue, and unredeemed ticket revenue.

Cargo and mail revenuewhich in 2023 includes the operation of one Boeing 737-800 freighter, totaled US$23.3 million, a 51.8% increase compared to the same period in 2019, related to higher cargo volumes and yields.

Other operating revenue totaled US$10.0 million, a 24.0% increase compared to the same period in 2019, mainly revenues from non-air ConnectMiles partners.

Operating expenses

Fuel totaled US$265.5 million, an increase of 56.0% compared to the same period in 2019, due to a 61.4% higher effective fuel price, partially offset by 3.7% fewer fuel gallons consumed.

Wages, salaries, benefits, and other employee expenses totaled US$102.7 million, representing a 9.7% decrease compared to the same period in 2019, mainly driven by a reduced administrative headcount as well as more subcontracted services in stations outside of Panama.

Passenger servicing totaled US$20.4 million, a decrease of 20.3% compared to the same period in 2019, driven by a simplified onboard product offering.

Airport facilities and handling charges totaled US$50.5 million, an increase of 11.3% compared to the same period in 2019, mostly related to higher airport costs mainly in the US, as well as outsourced airport services in stations outside of Panama.

Sales and distribution totaled US$61.4 million, an increase of 15.6% compared to the same period in 2019, due to an increase in ticket sales compared to 1Q19.

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Maintenance, materials, and repairstotaled US$40.3 million, an increase of 43.7% compared to 1Q19, mainly due to an increase in engine maintenance costs, changes in supplemental rent provisions related to aircraft utilization and new leased aircraft, as well as one-time maintenance costs.

Depreciation and amortization totaled US$72.7 million, mostly comprised of owned and leased flight equipment, maintenance events, and IT systems amortizations, an increase of 6.6% compared to 1Q19, mainly due to an increase in the amortization of aircraft maintenance events compared to the same period of 2019.

Flight operationsmostly related to overflight fees, totaledUS$27.4 million, an increase of 6.0% compared to the same period in 2019, mostly due to an increase in overflight rates in certain countries.

Other operating and administrative expenses totaled US$33.2 million, an increase of 13.4% compared to the same period in 2019, mainly related to engine rentals required to compensate for longer induction and turnaround times at third-party maintenance facilities.

Non-operating Income (Expense)

Consolidated non-operating income (expense) totaled (US$51.0) million.

Finance cost totaled (US$24.4) million, mostly comprised of US$11.3 million of convertible notes interest expenses, which included $7.4 million related to a non-cash interest expense due to the amortization of the debt principal and debt issuance costs associated with the convertible notes; US$8.6 million related to aircraft loan interest and commission expenses; and US$4.5 million related to our aircraft leases.

Finance income totaled US$8.8 million in proceeds from investments.

Gain (loss) on foreign currency fluctuationsresulted in a gain of US$1.2 million, mainly driven by the appreciation of the Colombian peso and the Mexican peso during the quarter.

Net change in fair value of derivatives totaled a net (US$37.9) million unrealized mark-to-market loss related to the value of the Company’s convertible notes.

Other non-operating income (expense) totaled a net of US$1.2 million, which includes an unrealized mark-to-market gain of US$1.7 million related to changes in the value of financial investments.

5

 

About Copa Holdings

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

CONTACT: Copa Holdings S.A.

Investor Relations:

Ph: 011 507 304-2774

www.copaair.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 several 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.

6

 

Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

	Unaudited			Unaudited			%			Unaudited			%
	1Q23			1Q19			Change			4Q22			Change
Operating Revenues
Passenger revenue		834,018			648,790			28.5	%		852,291			-2.1	%
Cargo and mail revenue		23,252			15,316			51.8	%		27,095			-14.2	%
Other operating revenue		9,995			8,063			24.0	%		11,226			-11.0	%
Total Operating Revenue		867,264			672,169			29.0	%		890,612			-2.6	%
Operating Expenses
Fuel		265,498			170,163			56.0	%		273,901			-3.1	%
Wages, salaries, benefits and other employees' expenses		102,652			113,662			-9.7	%		105,019			-2.3	%
Passenger servicing		20,391			25,571			-20.3	%		19,518			4.5	%
Airport facilities and handling charges		50,479			45,362			11.3	%		49,734			1.5	%
Sales and distribution		61,406			53,133			15.6	%		61,498			-0.1	%
Maintenance, materials and repairs		40,296			28,047			43.7	%		28,875			39.6	%
Depreciation and amortization		72,677			68,187			6.6	%		70,251			3.5	%
Flight operations		27,424			25,875			6.0	%		25,667			6.8	%
Other operating and administrative expenses		33,228			29,297			13.4	%		36,492			-8.9	%
Total Operating Expense		674,053			559,296			20.5	%		670,954			0.5	%
Operating Profit/(Loss)		193,212			112,873			71.2	%		219,657			-12.0	%
Non-operating Income (Expense):
Finance cost		(24,365	)		(14,010	)		73.9	%		(23,388	)		4.2	%
Finance income		8,842			5,954			48.5	%		7,413			19.3	%
Gain (loss) on foreign currency fluctuations		1,201			(5,960	)		-120.2	%		(2,560	)		-146.9	%
Net change in fair value of derivatives		(37,933	)		-			-100.0	%		(91,305	)		-58.5	%
Other non-operating income (expense)		1,235			(825	)		-249.7	%		1,221			1.1	%
Total Non-Operating Income/(Expense)		(51,020	)		(14,841	)		243.8	%		(108,619	)		-53.0	%
Profit before taxes		142,192			98,032			45.0	%		111,039			28.1	%
Income tax expense		(20,671	)		(8,600	)		140.4	%		(22,758	)		-9.2	%
Net Profit/(Loss)		121,521			89,431			35.9	%		88,280			37.7	%
EPS
Basic		3.07			2.11			45.9	%		2.23			37.6	%
Shares used for calculation:
Basic		39,565,223			42,477,761			-6.9	%		39,554,071			0.0	%

7

 

Copa Holdings, S. A. and subsidiaries

Consolidated statement of financial position

(US$ Thousands)

	March 2023			December 2022
ASSETS	(Unaudited)			(Audited)
Cash and cash equivalents		242,314			122,424
Short-term investments		773,493			812,323
Total cash, cash equivalents and short-term investments		1,015,807			934,747
Accounts receivable, net		165,111			135,415
Accounts receivable from related parties		1,833			2,168
Expendable parts and supplies, net		101,680			93,332
Prepaid expenses		49,917			52,322
Prepaid income tax		370			798
Other current assets		23,665			17,043
		342,576			301,078
TOTAL CURRENT ASSETS		1,358,383			1,235,825
Long-term investments		166,481			202,056
Long-term prepaid expenses		6,494			7,770
Property and equipment, net		2,967,611			2,883,524
Right of use assets		238,269			234,380
Intangible, net		80,765			78,555
Net defined benefit assets		1,048			504
Deferred tax assets		31,636			30,743
Other Non-Current Assets		16,277			17,005
TOTAL NON-CURRENT ASSETS		3,508,581			3,454,537
TOTAL ASSETS		4,866,964			4,690,362
LIABILITIES
Loans and borrowings		144,203			142,484
Current portion of lease liability		77,412			80,084
Accounts payable		163,236			166,660
Accounts payable to related parties		1,944			1,004
Air traffic liability		611,437			651,805
Frequent flyer deferred revenue		114,976			111,526
Taxes Payable		67,122			43,878
Employee benefits obligations		31,534			44,913
Income tax payable		12,414			6,276
Other Current Liabilities		1,366			1,175
TOTAL CURRENT LIABILITIES		1,225,644			1,249,805
Loans and borrowings long-term		1,327,441			1,301,819
Lease Liability		162,029			158,289
Derivative financial instruments		289,083			251,150
Deferred tax Liabilities		25,783			16,571
Other long - term liabilities		232,941			220,618
TOTAL NON-CURRENT LIABILITIES		2,037,277			1,948,447
TOTAL LIABILITIES		3,262,921			3,198,252
EQUITY
Class A - 34,064,142 issued and 28,388,261 outstanding		21,362			21,327
Class B - 10,938,125		7,466			7,466
Additional Paid-In Capital		104,606			103,465
Treasury Stock		(357,087	)		(344,541	)
Retained Earnings		1,717,620			1,367,784
Net profit		121,521			348,054
Other comprehensive loss		(11,445	)		(11,445	)
TOTAL EQUITY		1,604,043			1,492,110
TOTAL EQUITY LIABILITIES		4,866,964			4,690,362

8

 

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the three months ended March 31,

(In US$ thousands)

	2023			2022			2021
	(Unaudited)			(Unaudited)			(Unaudited)
Cash flow from (used in) operating activities		203,419			169,336			(892	)
Cash flow used in investing activities		(62,868	)		(120,515	)		(86,697	)
Cash flow (used in) from financing activities		(20,661	)		(10,888	)		162,325
Net increase in cash and cash equivalents		119,890			37,933			74,736
Cash and cash equivalents at January 1		122,424			211,081			119,065
Cash and cash equivalents at March 31	$	242,314		$	249,014		$	193,801
Short-term investments		773,493			771,074			898,453
Long-term investments		166,481			204,810			111,001
Total cash and cash equivalents and investments at March 31	$	1,182,288		$	1,224,898		$	1,203,255

9

 

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non-IFRS financial measures: Adjusted Net Profit, Adjusted Basic EPS, and Operating CASM Excluding Fuel. 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 Net Profit	1Q23			1Q22		4Q22			1Q19
Net Profit as Reported	$	121,521		$	19,759	$	88,280		$	89,431
Add: Net change in fair value of derivatives	$	37,933		$	6,752	$	91,305
Add: Net change in fair value of financial investments	$	(1,655	)	$	2,979	$	(1,924	)
Adjusted Net Profit	$	157,798		$	29,490	$	177,661		$	89,431
Reconciliation of Adjusted Basic EPS	1Q23			1Q22		4Q22			1Q19
Adjusted Net Profit	$	157,798		$	29,490	$	177,661		$	89,431
Shares used for calculation of Basic EPS		39,565			42,006		39,554			42,478
Adjusted Basic Earnings per share (Adjusted Basic EPS)	$	3.99		$	0.70	$	4.49		$	2.11
Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel)	1Q23			1Q22		4Q22			1Q19
Operating Costs per ASM as Reported (in US$ Cents)		10.2			9.4		10.3			8.7
Aircraft Fuel Cost per ASM (in US$ Cents)		4.0			3.4		4.2			2.7
Operating Costs per ASM excluding fuel (in US$ Cents)		6.2			6.0		6.1			6.1

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