Copa Airlines net profit down 66.3%; TAM reports net loss but yields improve

North American airline stocks rebounded on Thursday (12-Aug-2010), as oil prices dived 2.9%, to USD75.74. The gains were despite a decline in the wider market, with the Dow (-0.6%) falling on an unexpected rise in jobless claims last week.

It was the opposite in Latin America, with the majority of carriers down on disappointing financial results, while wider markets gained. Brazil’s Bovespa (+0.3%) rose for the first time in five sessions, following a string of recent reports expecting strong corporate earnings. Chile’s IPSA (-0.1%) dropped sharply in early trading but made some ground in the afternoon.

Copa Airlines net profit down 66.3%

Copa Airlines (-3.3%) fell after the carrier reported a 66.3% decline in net profit for the three months ended 30-Jun-2010, to USD18.6 million. Operating profit was also down for the quarter, falling 11.6% to USD32.5 million, as a 12.5% rise in operating expenses to USD270.9 million, outweighed the 9.3% rise in operating revenue to USD303.4 million.

Yield was also down for the period, declining 2.5%, to USD 15.2 cents, mainly as a result of lower fares in Venezuela and the Colombian domestic market. However, passenger revenue per ASM rose 3.7% to USD 11.1 cents.

The carrier stated that going forward, it is “well positioned to seize future growth opportunities and will continue to strengthen what is arguably the most complete and convenient network for intra-Latin American travel and take advantage of its superior airport infrastructure”. The carrier expects RASM for 2010 to total USD 12.7 cents, a downward revision from USD 13.1 cents, but an increase from 2009 levels of USD 12.6 cents. It also expects average load factor of 77%, which is unchanged from its previous guidance, but an increase from 74.6% in 2009.

Despite missing its estimates, Citi announced it maintains a "buy" rating on Copa’s stock, with a price target of USD73. Citi had expected the carrier to report 2Q2010 earnings of USD0.67 per share, higher than the USD0.60 the carrier actually reported. The analysts stated the majority of Copa’s competitors find it difficult to match its service “in an economical manner”.

See related CAPA Profile: Financial Results

TAM reports net loss, but yields improve

TAM, meanwhile, was flat after reporting a net loss of USD87.1 million (BRL154.1 million) for the three months ended 30-Jun-2010, compared with a profit of USD313.8 million (BRL555.1 million) in the previous corresponding period.

However, operating losses for the period narrowed with the carrier reporting a loss of USD13.9 million (BRL24.5 million), compared with a loss of USD76.8 million (BRL135.8 million) in the previous corresponding period. 

Furthermore, yield for the period rose 3.1% to USD 13.5 cents (BRL 23.9 cents). Revenue per ASK (RASK) also improved, rising 7.0% to USD 8.71 cents (BRL 15.4 cents).

See related CAPA Profile: Yields

Elsewhere, GOL (-2.3%) was also down for the day, while LAN Airlines (+0.2%) rose marginally.

In North America, Hawaiian Airlines (+9.0%) rebounded, with Republic Airways (+8.5%) also surging for the day. WestJet (-3.8%) declined.

North & South America selected airlines daily share price movements (% change): 12-Aug-2010