Copa Holdings reported a net loss of US$598.6 million during 2020 due to the COVID-19 pandemic. Excluding special items, the Panamanian carrier would have reported an operating loss of US$220.6 million for 2020, it said in a statement.
A look at Copa’s capacity
Due to the pandemic’s effects, Copa Airlines operated, on average, at approximately 27% of the capacity for the same period in 2019. The airline was grounded for at least five months due to travel restrictions both in Panama and the rest of Latin America.
In October, Copa Airlines restarted operations at 15% capacity, measured in available seat miles (ASMs). By November, it was at 28%, and by December at 39%. In January 2021, it operated at 45% capacity, overextending itself because of a decrease in passenger numbers after an increase in COVID cases in Latin America and new travel restrictions across the region.
In January, Copa saw passenger traffic (measured in Revenue passenger miles, RPMs) decreasing by 66%. This resulted in a 63.4% load factor, 20.8 percentage points lower year over year.
Now, the airline expects a capacity adjustment for February and March, but it is not providing financial guidance for full-year 2021.
Pedro Heilbron, Copa Airlines’ CEO, said, “Despite the encouraging results in the fourth quarter, increasing COVID-19 cases and new international travel requirements and restrictions have stalled demand starting in the second half of December, which, along with working capital changes, will lead to a larger cash consumption in the first quarter of 2021”.
According to the airline, it will burn between US$40 and 45 million monthly during the first quarter. Cash consumption during the fourth quarter was US$6 million per month.
A look at Copa’s finances
Copa Airlines revenue fell 72.8% between 2019 and 2020, going from US$10,474 billion to US$2,852 billion. The operating loss of the company was US$460.9 million.
Nevertheless, Copa ended the quarter with US$1.3 billion of available liquidity. It consists of approximately US$1.0 billion in cash, short-term and long-term investments. And it also has US$305 million of committed and undrawn credit facilities. Meanwhile, Copa Airlines’ total debt, including lease liabilities, is US$1.4 billion.
During the fourth quarter, Copa had a consolidated revenue of US$158.6 million, driven mostly by passenger revenue. Passenger revenue totaled US$147.5 million. This total was mostly comprised of flown passenger revenue and unredeemed ticket revenues. Meanwhile, cargo and mail revenue totaled US$7.2 million, and other operating income was US$3.9 million, resulting mostly from non-air ConnectMiles partners.
The MAX plan going into the future
Copa Airlines started using its Boeing 737 MAX-9 fleet by the end of December 2020. It became the first carrier to operate the MAX on international flights.
Before the grounding of the MAX, Copa had a fleet of six MAX-9. Since the FAA lifted the single-aisle Boeing bestseller restrictions, Copa Airlines has received four new units. Between December 2020 and December 2022, Copa Airlines expects to receive 14 new Boeing 737 MAX 9 (one in 2020, nine in 2021, and five in 2022). The airline reached an agreement with Boeing regarding compensation to the Boeing 737 MAX grounding, but the terms remain confidential.
Finally, Copa Airline’s fleet went from 102 aircraft by year-end 2019 to 75 by year-end 2020. It was comprised of 68 Boeing 737-800 and seven Boeing 737 MAX 9.