Copa Holdings S.A. (CPA -0.62%) was working against a lot of headwinds in 2015, with Latin American economies faltering and currencies in the region being extremely volatile. But the parent of Panamanian carrier Copa Airlines and its subsidiary, Copa Airlines Colombia, managed to squeeze out a profit in the fourth quarter, which was reported after the market closed on Wednesday -- and even a slim profit was enough to get investors excited about the stock again.

Copa Holdings results: The raw numbers


Q4 2015 Actuals 

Q4 2014 Actuals

Growth (YOY)


$532.6 million

$654.2 million


Net Income

$1.9 million

$26.2 million






Data source: Company earnings release. Note: Apparent discrepancies in percentages are due to rounding of figures.

What happened with Copa Holdings this quarter?
Operating results were hit and miss for Copa Holdings. In general, costs were down, driven by falling fuel costs, but those gains were more than offset by reductions in prices for airline tickets. Here are a few highlights from the quarter:

  • Revenue per average seat mile fell 20.2% to 9.7 cents as economic weakness and pricing pressure hit operations.
  • Operating cost per available seat mile fell 12.4% to 9.0 cents in the quarter. The biggest driver was a 30.8% drop in fuel costs per mile as the price of a gallon of fuel fell to $1.95.
  • Special items, including losses on hedge contracts and writedowns of assets, took $25.3 million away from net income in the quarter. Adjusted net income was $31.7 million, or $0.73 per share, which was down from adjusted net income of $115.6 million a year ago.
  • Fourth-quarter passenger traffic grew 1.7%, but capacity was up 2%, resulting in a 0.3% decline in load factor.
  • A dividend of $0.51 per share per quarter was approved by the board of directors.

What management had to say
There's no question that economic weakness in Latin America had a negative impact on results in the fourth quarter. But management is still bullish on the future of the region, given long-term growth and Copa's low cost structure.

Given the uncertainty in the region and the ways Latin American currencies can fluctuate, it may be a rocky ride, but as a low-cost leader in the region's airline industry, the company still has a bright future.

Looking forward
Expect that 2016 will present some of the same challenges as late 2015. According to Copa Holdings' guidance, revenue per seat mile is expected to be around 9.8 cents, and costs will rise slightly to around 6.5 cents per seat mile, excluding fuel costs.

The good news is that fuel costs are still in decline, and management expects to increase its load factor slightly to 76%. If the company can do that, it could hit the high end of expected operating margins of 11% to 13% in 2016. However, that's likely to depend more on whether or not there is stabilization and growth in the Latin American economy. Those factors are what will really drive results going forward.