There were a lot of headwinds that Copa Holdings, S.A. (CPA -0.29%) flew into in the first quarter of 2019, so it's no surprise that results weren't particularly impressive. Latin America's political instability and weak economic performance have hurt operations, and the 737 MAX grounding certainly didn't help. 

Here's a look at the high-level numbers and what drove results within the airline business.

Airplane flying above the clouds.

Image source: Getty Images.

Copa Holdings: The raw numbers

Metric Q1 2019 Q1 2018 Year-Over-Year Change
Sales $672.2 million $715.0 million  (6%) 
Net income $89.4 million  $136.6 million  (34.5%) 
Diluted EPS $2.11  $3.22  (34.6%) 

Data source: Copa Holdings, Q1 2019 earnings release. EPS = earnings per share.

What happened with Copa Holdings this quarter? 

Operationally, Copa Holdings performed fairly well, controlling costs and keeping planes full. But weak pricing led to the decline in earnings you see above. 

  • Copa Holdings continued its operating excellence, with a 93% on-time rate and 99.8% completion rate. 
  • Passengers carried rose 6.4%, to 2.6 million, and load factor improved 40 basis points, to 83.3%. 
  • Revenue per average seat mile dropped 7.7%, to 10.5 cents, and operating costs per average seat mile were down just 3.2%, to 8.7 cents. That resulted in the sharp decline in earnings you see above. 
  • Fuel cost per gallon fell 3.5%, to $2.09 per gallon. 
  • Loss from currency fluctuations was $6 million compared to a $7.3 million gain a year ago. 
  • Copa Holdings operated 105 aircraft in the quarter, six of which were the 737 MAX model that was grounded late in the quarter. Copa also didn't take delivery of two new 737 MAX aircraft due to the plane's recent issues. 
  • A dividend of $0.65 per share was announced and will be payable to investors of record on May 31, 2019. 

The macro environment in Latin America was weak, which is what drove lower prices in the quarter. That's largely out of Copa's hands, but it's also the reality of investing in a company that's reliant on politically unstable Latin American countries for demand

What management expects

Management expects operating margins to be 12% to 14% in 2019, in line with 2018's 13% mark. Operations should also be helped by a 1% increase in capacity as new aircraft, including the 737 MAX, hit the fleet. 

What's out of management's hands is the economic trends in Latin America, which continue to be weak. They could lead to volatile results, which investors should be prepared for. 

Looking forward

Copa Holdings is operating well considering the hand it's been dealt with the economy. Costs are under control and lower fuel costs have helped margins, as well. That operating excellence is what makes this one of the best airlines in the industry, even if it operates in turbulent economies.