Copa Holdings, S.A. (CPA 0.08%) reported another strong quarter on Wednesday when it released third-quarter 2017 results. Demand at the airline was strong, and a growing aircraft fleet is driving both top-line performance and cost reductions.
Here's a look at the overall performance of Copa Holdings and the detailed metrics of its operations.
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Copa Holdings: The raw numbers
| Metric | Q3 2017 | Q3 2016 | Year-Over-Year Change |
|---|---|---|---|
| Sales | $657.2 million | $568.3 million | 15.6% |
| Net income | $103.8 million | $74.0 million | 40.2% |
| Diluted EPS | $2.45 | $1.75 | 40% |
Data Source: Copa Holdings' Q3 2017 earnings release. EPS = earnings per share.
What happened with Copa Holdings this quarter?
The headline numbers look great for Copa Holdings, but looking under the hood of the business gives a better insight into what's driving results. And almost every metric is moving in the right direction for investors.
- Available seat miles (ASMs) were up 13% to 6.22 billion as the addition of new 737-800 aircraft increased capacity. Revenue passenger miles (RPMs) were up 12.9% to 2.52 billion.
- Passenger revenue per average seat mile was up 3.1% to 10.3 cents.
- Costs were down with cost per average seat mile (CASM) falling 3.2% to 8.6 cents and CASM excluding fuel falling 1.2% to 6.3 cents.
- Despite the strong results, management said that operational challenges from severe weather and natural disasters affected on-time performance and completion factors, which were 82.9% and 98.5% respectively, below usual performance.
- Management announced it will pay a dividend of $0.75 per share on Dec. 15, 2017, to holders of record on Nov. 30, 2017.
What management had to say
What's incredible is that results could have been even better without some unforeseen headwinds. Hurricanes that have decimated parts of the Caribbean and Latin America impacted operations negatively, although 98.5% of flights were still completed. In the earnings release, management said:
Copa Airlines faced several operational challenges during the quarter, including severe weather, natural disasters, and other external factors that affected the company's financial results for the quarter and the operation of its hub in Panama City. These events caused many flight cancellations and delays.
These are likely short-term headwinds, and once they subside we could see margins expand further for Copa Holdings.
Looking forward
Airline demand continues to be strong with ticket prices moving up as operating and fuel costs are falling. Those are great trends for the long-term health of the company and its dividend. Right now, this Latin American airline is soaring to new heights and carrying long-term investors along with it.
