CPA - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Copa Holdings First Quarter Earnings Call.

During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions].

call webcast this May recorded reminder, XXXX. XX, a is and being on As

turn call begin. the Tapia, will I Now, conference Investor Sir, Director over Relations. you may of Daniel to

Daniel Tapia

our Thank And you, earnings welcome to ma’am. call. First everyone Quarter

CEO Joining Copa Jose Holdings of us CFO. Pedro our and are today Heilbron, Montero,

Holdings going from will open In reports results. quarter Immediately Financial financial we our will highlights, analysts. discuss followed in Pedro Heilbron International measures. will over will financial First, by call today's discuss our questions for the Copa start by prepared with been first Jose, who we have financial call, after, non-IFRS accordance Standards. Reporting

the of our company's be Our non-IFRS financial IFRS found the earnings measures has in which can on website, reconciliation release, copa.com. to posted been

forward-looking forward-looking will regarding not involve that materially expectations, today historical facts cause discussed current risks contain based These the intentions in could and or are discussion the results. to and statements also reflect and report limited subject uncertainties our company's these beliefs, events on SDC. that statements, to annual future actual filed and change. of assumptions with are to Many differ results Our

to Now, turn to the Heilbron. call CEO, I'd Mr. Pedro over like our

Pedro Heilbron

morning Good Thank you, in for thanks First participating all Daniel. to Quarter and our call. earnings

well to a begin, on aviation. American for utmost efforts dedication were Latin January to Omicron and in as fuel I'd our increase the coworkers at in company February continuous and their of air forefront as our deliver such able in significant and for and them variant we as thank of jet operations respect challenges we quarter. like Before faced all a prices, where always, demand profitable the keep QX to travel, recognize as we their commitment admiration, the impact and to To the my Copa

XX% at XXXX the CASM main yields. revenues QX to highlights Omicron in from Mostly $X.XXX terms the reach compared came a QX fuel when ASMs, approximately for as lower in than of decreased of and or XXXX first-quarter and load the decrease RASM a XXXX. quarter, XXXX factors capacity In of $X.XX. our $X.XXXX X% impact of XX% on to QX Unit result

Our came the above range X.X%, QX guided in at operating margin slightly we to.

of the terms delivery during of XXX took In X. two fleet, we quarter, MAX

of an of delivering to more fuel ' to and performance delivered of that testament the was completion a With to pleased our end experience also mention than This year, and fleet true MAX our travel our world-class the deliveries XX.X% passengers. Copa of be of a the addition amongst our a in resulting for factor composed these remaining dedication efficiencies XX% also and year, best I'm for of aircraft by will valuable aircraft operation. employees on-time to the the earnings the XX.X%. in Again, industry. the commitment

XX our to hub restarted in countries during before America. quarter Colombia service we Latin in cities to position cities quarter in cities start June, most pandemic, and in cities of terms service to we the strengthening countries convenient Venezuela. and announced and In network, with new the two Marta Barcelona the in Ending Santa to four our and compared as XX as in complete XX the continue XX solidifying

from Turning Republic. the by Medellín, expansion Xth to in a Dominican to its its launching now Wingo regional Domingo Wingo, continued and Santo XXX-XXX receive Colombia route new

from can have both our So, continued see been and as you executing despite financially, we operationally headwinds. results,

strong business second with our is us we have most be I his operating to recovering reiterate will expect sheet. Hub Panama's the pace, and is quarter, a cost, on-time at to of presentation. environment which and during margins. geographic in from steady going QX which season we a prices Jose forward, strategic low the Americas, increased model, the based region position, travel have -Latin quarter that expect even leveraging fuel with share what's demand unit that will the our dramatically, want lower combined the Although a our source advantageous of historically balance guidance proven Hub and Americas an more network on And advantage. strongest intra for valuable low convenient America best best lead performance, of

results over it our turn more will finance I'll Now who in over Jose, go detail. to

Jose Montero

the to world-class with us We the quarter Thank February. XXXX, given that we results. Omicron Load decrease which average net miles, service and billion profit available all $X.XX Pedro. impacted Pedro team January Thanks ASMs, our everyone. in XX% in start came came to of an factor our deliver $XX.X I quarter, morning, of they passengers. by our XXXX by were our point more QX in first you, like reported for a capacity. over the percentage to join a acknowledging share. at going will XX.X% in and today. Good million, of also being wave quarter for Capacity is seat compared at approximately X.X efforts for I'd great a or XX% make, first to X.X per operated

$X.XX per as well coming came to mark-to-market reported in share. the items, of related focus an for We and in previous operating notes of $X.X issued growth XX%. items of costs on reported improved revenues to as a consisting convertible loss Unit quarter a of in company's changes million, compared to ¢XX.X, related decrease XXXX, same XXXX. reducing net a million financial loss at an totaled quarterly the $XX.X unrealized period profit of our or an million the special margin X% of Unit driven Excluding operating expenses, continued X.X%. capacity investments. million quarter-over-quarter by the in at excluding when per would ASM, quarter, profit fuel, versus we unrealized value of $X.X Special in $XX.X $X.X and have a million, the $X.XX

for an improved liquidity. on in cargo spend to by discussing now driven going environment QX demand region. for over came I'm cargo our cargo quarter in Finally, revenues the our above sheet time XXXX balance the XX% some our revenues

first quarter, As end $X.X to we months and and our at which last ended the billion of cash of revenues. of short represents assets XX $X.X close billion XX% long-term had investments the of

financed that increasing the net limiting cost highlight fourth of to to our quarter $X.X debt, want exposure and fixed interest for quarter I liabilities, debt as we than debt is rate times. terms of was environment. came our more average of aircraft-related and levels adjusted it of debt-to-EBITDA In the in our in XX% at reported billion rates, ended those of the XXXX, similar occurrent with and end lease interest to of ratio X.X%, at at quarter X.X

X Turning fleet of s we end now with first a two total XXX to received quarter, our aircraft. to MAX the XX quarter during the

Our XXX-XXXs. total and nine fleet temporary are These which comprised XXXs, XXX s, is one storage, and include s, three XX currently XXX XXX XXX-XXX XXX MAX figures XX X in freighter.

state expectation quarter environment the guidance Our the based can of fuel. We of XXXX. for the of current the demand on store second price outlook, current provide of and the the following

range ASMs. operating QX XX% margin to about to in of X%. We the XXXX X% billion $X.X approximately or be we our to And levels, of expect expect be capacity

$X XX%, on an assumptions. price of approximately our per factor of We $X.XX, the are Load XXXX of outlook fuel approximately QX following gallon. of all-in revenues CASM approximately unit basing ex-fuel $X.XXX

the believe guidance. is full complete to Given the current it we volatility premature in give environment, year

call preliminarily, the capacity you. approximately and to that, of ASMs open CASM be with we'll some be full-year approximately XX% expect Thank our Question-and-Answer However, ex-fuel we XXXX And XXXX questions. Session to to our ¢X.X.

Operator

Thank you. Instruction]. [Operator

Savanthi of the have our We Raymond Syth now first of line comes question is your James, line from open.

Savianthi Syth

morning. good Hey,

what on a revenue the seeing little historical seen. that in bit leisure really side or that talk of coming seen the driven you've that's on Is Just in just factors than Could it levels business you about what by have. strong, you terms guide demand? we've are is still demand there leisure? Load higher you're strengthening

Pedro Heilbron

Hi It's of the morning. number in months. last been Savi, that it's Pedro. has the mainly case leisure, Good

the the range. was However, business It's XX% an we in seeing in are still quarter, still uptick first in travel.

versus business it's Our But quarters up. as and but mostly in leisure second increasing the April again, VFR it's corporate XXXX, and ticking travel.

Savanthi Syth

It the a first similar a did momentum Should you you side? might can the going here quarter. a about some share wonder forward? And buybacks talk then on little in like That's allocation ask when helpful. expect if you we introducing And if comfortable I capital bit be dividend looks I might again.

Jose Montero

actually we have -- flow you know, and liquidity year. -- very Savi, been cash we've cash generating the strong as we last position a indeed

our So, value an to have we also was opportunity $XXX And shareholders. our program approve there to bringing thereby we believe reactivate ongoing. that million

Pedro Heilbron

started That done much We're and final program way. terms In many stretch. the pretty -- yeah, like that years of by in the ago. is

came the for terms It we had net XX% out dividend the profit of dividend, policy we In of same year. have still before.

this XXXX will decide accordingly. year, board So, consider at our the end our results of and

Savanthi Syth

I on That's follow If Pedro. might super up helpful, that.

the your cash are what at or think you you what if looking maybe you So, dividends, in program anything considering to that of the might environment? pause buyback terms board reinstating about cause and flow increasing is or

Pedro Heilbron

still if for the now profit our of this the cannot and position I in but a terms dividend. year, I right we In deliver cash and look mean, reinstating -- board solid we're would speak it's And expected stay our policy, to would just say, I again be assume is that dividend board place. in Yeah. track, I the which on is to going going favorably,

Savanthi Syth

All right. Thank you.

Pedro Heilbron

Thank you. Savi.

Operator

you. Thank

We Duane line of Pfennigwerth Evercore from have ISI. of question, next the the comes

is line Your now open.

your You question. may ask

Duane Pfennigwerth

Hey, morning. guys. Thank Good you.

comments recently where policy notable travel you to easing? And your on pick restrictions, changes on on seeing business regionally comment can respect that with Just up? travel, you're any

Pedro Heilbron

a the before. Again, it's significant picking change is again, quarter, a I trend, it's what is still, in over place. versus which second right we've encouraging the development, for positive And all. seen not would it's up all but say the just But which

out intra very I will balanced really a market. a have specific We not and point -America diversified networks.

Jose Montero

kind regions I what the think with network. of average performing are for in is the line all reasonably

Duane Pfennigwerth

questions some And that? settling lines live you shares look on want then that about in Savi's ultimately some allocation. at or something paying down do Is the you long of think with capital convert do how you How along the to of point? -- at

Jose Montero

so Yeah. liquidity we have I as is have ongoing fact the that And before, quite always -- of are again, this now look that that at our That's we're light right levels and been program and buyback strong our -- bit. look also positive. we factor the and at been in that something mentioned cash-flow a we we

at are have. we or keep options the looking liabilities always So, that mitigating of open managing our in terms alternatives, that as we

Duane Pfennigwerth

environment guidance your a was about again, talk just ahead my as and fuel Then about, where assumption. higher higher for fuel, were the competitive think one, last of -- despite Great. you can you we just

working. the So, clearly fuel is recovery

just questions. you you? are the can us, curve, for booking seasonally are softer you the incrementally typically fuel over seeing remind out what look dynamics. is Thanks surcharge -- beyond taking for the outlook XQ what their And you As surge a in yields

Jose Montero

That's through and see guide seasonality important load out. Duane. very stronger when for a into that QX seeing demand see sort we're environment sequentially we And questions, the as of that and the quarter isolate When such. specifically put you QX, factor you that the

almost I capturing of moves we've we're coming think months That almost in we're our that yield through fuel a quarters. made. position and the increases say the that to half

for active and we're of now, space, in RN We how the And positive very fuel but the is. that increases in environment have expected given visibility QX as it through fair a we're course, the of functions actions. and kind are trend, that yields right seeing continue

Duane Pfennigwerth

increasing that out it sort further is the and recapture Is look you building future? as of into

Jose Montero

Correct.

Duane Pfennigwerth

for taking questions. the Thanks

Jose Montero

Duane. Thank you,

Operator

comes of Suisse. Thank the question line you Credit from Alejandro Zamacona for next the of

open. now is line Your

your may question. ask You

Alejandro Zamacona

Thank table more, for nothing contribution with something I'm Hi, deal JBA the on Jose. the this after agreement and the time [Indiscernible]. and [Indiscernible], still wondering you It's if potential Pedro long that's potential plan how a and without Avianca may this change since you. been recent call. potential the is or Thank

Pedro Heilbron

Yes.

a bankruptcy, very during We And down a airlines. So, hold. pandemic Avianca everything did XX the went the since itself the up and times pandemic. hold. sign know, JBA, on on as a it's Chapter then you put proceedings pandemic, put which everything the been into three

the rethink right so, And the out of that all airlines and was airlines. to when was the expectation desire to it. down, figure was Is three and the sit the three time implement JBA

whole JBA came Now to really would it. going new just and to knew we'll anybody with yesterday, which is I see. announcing this is development, another twist, about the assume up conversation have

that three So, us partners the them that make what's it's hard JBA. the say the now, of for be going part that to decision right or partners, to other of of

So, we still still to it's talk it's I would the up in air need right that It's about. say, now. but something there.

Alejandro Zamacona

the I rather say In And you. actually temporary cost do are rather the terms second cost cost Thank than then cost Okay. a a on question, reduction to of reductions, may? reductions you my the comfortable feel if efficiency basis?

Pedro Heilbron

-- efficiencies cost worked -- we reductions. was sustained went for pandemic just not us. our we And on pandemic leasing we back reduction, less on offered of cost the would over. were temporary we at example cost -- beginning totally how not sustainable back to even efficiencies. when later Yes, were offered source, -- an we then We I example, during work to the We attractive the and on think which is kick

reductions cost for costs, So, plan it's lower we way. keep when because we to that it show

Jose Montero

[Indiscernible]. you Thank

Operator

Sorry. [Indiscernible]

line of Linenberg have of Bank. Deutsche we question, Next Mike the

open. now is line Your

your question. ask You may

Michael Linenberg

question actually we a in fuel the dealing June quarter and higher price the in your answered in recapture is increasing we're yet what than You much March also building, about Duane's fewer with quarter. were

what just I said? that like wanted based that fair accelerating. clarify it Is does to on assessment you a the So, that it's trend strong, not very seem only but is revenue

Jose Montero

the related to stronger was by. don't know, and but time by the I was Mike, the the getting way way, as was My the the recapture of it first comments -- missed got I whether part that recapture, went I fuel question,

specifically the that quarter. yield So, fuel making quarter our the we're ultimately half increase increasing continuing time our the revenue the that where month is in we by. than in of going next moves fuel. comment pricing almost the seeing such immediate just the my to are second That's in is you're to faster fact M us seeing be a -- and put to way were or half the fuel in curve where percentage that second the are covering a specifically the is as recapture terms forward, to and and for related given specifically quarter spot But or second the a increases to revenue of and of course, moves able goes we're

Michael Linenberg

Okay.

labor you look last actually at helpful XX% shortages higher XX%. you that's also put back you prices. across looking whole you follow-up When a by for feel to of where capacity to it five industry the and and opportunistic? we is and So is to back just the and but capacity, then year-end, and were like your that it it that a of you more of of to What maybe year quarter, you're looked of the confident XXXX. some in seeing tied of look and some host at competitors, the want sort points reasons, scale going now that growth are XXXX We're like, get being higher. it fuel we is We've much that more are in carriers aspirations on seen part their other

Jose Montero

or demand in environment environment a yes, positive seeing we're our traffic demand particular. trends or we're And in environment in the revenue region. And Yeah. certainly space the seeing robust Mike, recovering in

Pedro Heilbron

year. And every second market. to and in the are same Mike, not capacity. be of carrier at the XXX%, still They get We're there not we're let's above -- some There trying XXXX. remember carriers that has recuperated not in especially are in the half we'll a XXX% a domestic so still to also

think mind that kept I in so, And also. needs be to

Michael Linenberg

Okay, very good.

that when the I needed feels Avianca. lastly, understatement yet that response has bit have still equity Abra code it the patients with market to will I out in want I that Thank come the share thinking make think we though, you I on compelled respond that list or getting of that questions. that to And negative What on. you they're form. to about an bilateral sort some has is all from on that? sense goal goes twist, a question some do on is that, believe Just with the Abra, a guys. in like the of The an other the shape, investors, concerned and can chip. just be also That's are you you for guess anti-trust start my your with And you a of as you. knowing a for ask and way, we does questions where Copa connections, and thoughts Copa, is starters, immunized is were that agreement announcement or

Pedro Heilbron

Okay.

good anybody I end of thing yesterday. efficient So a news And at bunch that's spent But which read And stuff don't very and this say, spider before same is unusually, Do in better, have the of few I XX really really call question and would its news just effective way. and haven't the more and most One, time. day more have very a let's yesterday all. the many came to the have day, presents we answer. we're say years consolidations solid we the the in is the faced or yesterday. think web a and time we first abrupt not new more that losing say out strength Well things. of last, answer. of preparing that for thinking challenges doing is Because usually a a we business a but have from of we of lot so I'll what to our answer its model, uniqueness. good resilient a I

the not, strong we maybe plus. but it's some and before we've ability our that low have carrier business lower if traveler be case. not of right them competitors, of only be fact, world, a of like with pandemic, we the put with and the only the the is very [Indiscernible] lower way for might matter cost the keep our in a As that's shown the part model. might but Not when -- unique, needed. product was even cost, to hub including going, that low the But a It

pains. We have efficient

strong We or product, react we that good to position. so And a I have talk won't confident not. we're network, strong actually if have a about a in we're

choose we if business think to way. I think I it doing that model, our can successful stay on focused to we very continue be

Michael Linenberg

Pedro. Thanks, good. Very

Operator

Thank you.

next Pablo line from open. Barclays is line Monsivais the have of question of now We the comes your

You question. may your ask

Pablo Monsivais

and the know I I taking sense should mean, first do X see jet guess in If take That's That of is second revenues. out thanks Omicron, what fuel the have your just price what I the you basis quarter. Hi, if I'm my Number X, have trend we also effect out Number you. unit the one a of have question. to I the environment if don't if a of revenue. trying the revenue be but one for on terms impact of Omicron, you for taking unit of What question. normalized is would your of the higher -- calculation, revenues? Thank get level look like? unit a

Jose Montero

Because say did Yeah. fuel are it this going environment. there. all be [Indiscernible] to don't half that is you external we're back facing But what we what for factors of these Pablo, our high in is, overall, I would I basis, for recovery think And initially margin, regular we argue to normalized year a on year was a us. that reality to a us. talk year a was that if been That's the I say, almost Omicron, would've and face would ifs. I facing want about would the reality

reality of You in good see, can adaptive again, to the for it in us. otherwise. But we've a close to But you terms margin normal would've had a year as way. very very is operating

the that and increases we low on have. cost our are to are going of we pass to yields We some

Pablo Monsivais

you Thank Perfect.

Jose Montero

Pablo. you, Thank

Operator

you. Thank

open. next your from now of We question have Becker Helane line the Cowen, comes is

may question. You your ask

Helane Becker

very much, And Hi, time. for you thank Thanks the Operator. everybody.

the So, from what's the exists cargo one freighter that revenue that you you guys? have, opportunity for

Pedro Heilbron

region, are well-served wide-body our the by And We not the international in we serve serve a of markets long carriers. in the and cargo not market. big we're lot haul

second year, feel we niche freighter. but single But like be Not a it's a can it's Maybe now, that. this developed. a maybe year later next just on. after and right further So,

very and bellied successful business, operation. cargo we're our niche in although mostly it's So, freight cargo this

right in So, but different going I to don't to what think it's bottom -- change a to roof not line, going that's it's valuable now. our to results and the go through it way much something it's that's be is

Jose Montero

more to one thing aircraft. Helane, related cargo the And

that that third-party. will us for the full airplane belly have a for mentioned back we complementary February have, call markets, XXX freight we're service mostly just we our complemented for us. [Indiscernible] have the think from older we leasing that this servicing revenues also to I source replacement and that we service they is an we that cargo And in converted, for which we that main of a provide that

Helane Becker

sorry? I'm Okay. got I you --

Jose Montero

Thank you.

Helane Becker

I the question of business other was customers the The and that as is well? relatives is friends an taking on visiting loyalty loyalty and leisure, part program mostly traffic going of have leisure Since a programs. advantage or important forward

Pedro Heilbron

advantage part Leisure step-by-step of We a we are also is back travels travel the it. of program also loyalty revenues, mile business. It successful loyalty which that. not should forget none take also also. important. coming important air And the generates is And have Business program.

Helane Becker

my all you. are questions. Thank Those

Jose Montero

Helane. Thank you,

Operator

McKenzie the The of Seaport next line of question we of Dan Global. have

open. is now line Your

question. your ask may You

Daniel McKenzie

you, morning, is for Hey, question Thanks. good My first Pedro. guys.

have it a a now dollar. new era rates we here, seems strengthening of and interest You just and been cycles through count inflation are like many in rising to

cycle to be And inelastic. So, has higher really at I more Latin effect more guess American can next And case? Or been historically ultimately that I'm from the from demand cautiously? to you trying wondering I I'm economic just guess what get my to the said if view stimulus continue where question is you cause this this prices, is, bigger America. backdrop commodity does are Latin

Pedro Heilbron

in saying. Dan. you're Thank you, what And you're right

I the same think mean many able the pandemic, through going consistently been way. market very and or a that of revenues course, so not learn And time. live also and not So, increase up And be network, quite during root with resilient. used crisis kind get to XXXX it right we're situations, for capacity demand our and lining to And but in so as -- others as we that sales doing diversified I could suffer actually, we region in strong in on over a well. some always of what [Indiscernible] time, business And there's and is we've in crises mentioned, change, that prices higher now, Jose we've on somewhere. commodity through and lived be many making stronger XXXX, silver yet countries, from although could different, demand. confident is seeing may again, every And we're our model. that general we're

resiliency the advantage every current and take hope our this think of hopefully the model crisis seriously. try Copa unique Americas strong. business [Indiscernible] take in and are a of of we can out position come we to On the And We the and same. very we the will we and weather to be crisis time

Daniel McKenzie

quarter conference different going And here copa.com, question, from fair same I the last not for try just that's to I'm guess Yes. call and searches bookings. then on

So, versus how XXXX. that I they how demand to searches durability the some trying of affecting the I'm Just searches your given And volatility? pent-up How of view guess is the -- future searches? demand? macro just How of get trending? are have these here. been are

Pedro Heilbron

to And Yeah. in levels XXXX demand demand in with seeing from with The all with searches searches looking line XXXX. XXXX that, We're in very are now It's and right general. in now. similar so. that line on and are positive save

we're with of the I current environment. Just what seeing terms in think encouraging

Daniel McKenzie

remains And substantially, guess are caveat, down those right? business searches is despite I the that demand pretty

Pedro Heilbron

is That correct.

Daniel McKenzie

you Okay. guys. Thanks the much so for time

Pedro Heilbron

Good.

Jose Montero

you, Thank Dan.

Operator

you. Thank

For your now is question your line Filipe the Citi, of line last had we open. Nielsen of

ask question. may your You

Filipe Nielsen

major a question. the my could like you between agreement. and why this U.S? Latin the understand through -- quick see are you that demand for like if risks you is Thank guys. help wondering What risks of was brings goal and America main them in do what the you to are risks Avianca to what and connectivity greater terms in America on the Latin the I just Hello, exposure routes, do the American Copa in agreement routes do I'd that Central main follow-up taking risk? Trent and just connection which are see -- me

Pedro Heilbron

So, much news mentioned thing have should say all. I before. for spend as This I is time, we first not really that

We have not spent it. much time analyzing

If answers the there's the maybe will conceptually, everyone so that the that in -- and away And that we're be for from come we about this see coming time and room I'll to it very airlines feel stronger, thing. it, more might for simple, And competitors. to away cases we'll make base trying still effective, for Panama always anything, for our also complex We've But specific -- but the Hub Like bid positive there's one and help us tends whole ones model. cases again, reason. nothing many region, days, different wants for room all is I not for -- a on takes for not for we consolidating, only us market that. other in straightforward, the spent stay We from haven't the that positive, consolidating it in in room a consolidation very to the are combine much our all. for styles have tends there's future. most think but and but for in, cultures

Filipe Nielsen

guys. and Great. clear helpful. Super Thank you,

Pedro Heilbron

Thank Filipe. you,

Operator

Mr. over turn to like Heilbron. Sir? you. Pedro would call Thank I the now to

Pedro Heilbron

in next all. This support. we'll you you call. Thank being you Thank us great thank and with and see day earnings the for Have for call. concludes you. a your continued you Thank our

Operator

and the your gentlemen. you. you Thank participation. for concludes presentation. Ladies That Thank

You may disconnect and have a wonderful day.

Copa (CPA) 12 May 222022 Q1 Earnings call transcript