Copa Holdings posted a third-quarter (3Q) net profit of $57.7 million, down 55% from the same period last year—the result of rising fuel costs and weakened currencies in Brazil and Argentina.
Panama-based Copa is the parent of Copa Airlines and Copa Airlines Colombia. The company also operates Wingo-branded ultra-LCC flights out of Colombia.
The company reported $672.4 million in total revenue for the quarter, up 2.1% year-over-year (YOY) on capacity growth of 6.6%. Expenses were up 11.2% to $598.1 million, driven by a 39.2% jump in fuel costs from the same period last year. CASM increased 4.3%, leading to a 4.8% slide in PRASM compared to 3Q 2017. Passenger yield declined 3.3%.
Copa’s operating income for the quarter was $74.3 million, a 38.4% decrease from the year-earlier period. The company’s operating margin was 11%, compared to 18.3% a year ago.
“We were not able to compensate for the additional fuel expense in the third quarter. We firmly believe this is a temporary situation and are confident in the long-term value and potential of this market, the strength of our business model and our ability to return to higher margins,” CEO and director Pedro Heilbron said during the company’s Nov. 15 earnings call.
The Argentine peso lost half its value against the US dollar in the third quarter, and the Brazilian real tumbled against the dollar by 22%.
“We know from experience that Argentina always comes back. So we are optimistic, medium and long-term, but right now the yield environment is extremely difficult in Argentina,” Heilbron said. “More recently, we’re seeing demand in terms of load factor coming back and actually looking quite OK, even year-over-year, but yields are still extremely weak.”
The company adjusted its full-year 2018 guidance, lowering the expected operating margin by three points to 12%, while maintaining capacity growth at approximately 8%.
Copa’s first Boeing 737 MAX 9 was delivered in August, followed by two more in October and November. The company expects to receive two more in the fourth quarter to finish the year with a consolidated fleet of 106 aircraft…
