Copa Holdings, S.A. Earnings: Latin America's Slump Continues to Be a Drag

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The weakness in Latin America's economy continues to be a drag on Copa Holdings, S.A. (NYSE: CPA) in 2016. But the company's low cost structure has shown its advantage, buffering investors from too big a loss in net income. Here's a look at what you should know about second-quarter earnings, released Wednesday after the market closed.

Copa Holdings results: The raw numbers


Q2 2016 Actuals

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Q2 2015 Actuals

Growth (YOY)


$472.9 million

$517.5 million


Net income

$60.3 million

$71.2 million


Earnings per share (EPS)




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    Data source: Copa Holdings earnings release. YOY = year over year.

    What happened with Copa Holdings this quarter?

    Revenue declined in large part because of lower ticket prices, and net income was hurt as a result. But withairlines,the headline numbers rarely tell the true story. So, a few key metrics are worth exploring to show what's really going on in the business.

    What management had to say

    The weak economy in countries like Brazil, Venezuela, and Colombia is certainly hurting pricing for airline tickets, but demand to fly is still fairly strong, and Copa Holdings' low cost structure still allowed for a profit during the quarter. This low cost structure is the company's competitive advantage, and will allow it to adjust flights to markets where there's more profitable demand.

    To that end, management recently opened service to two new destinations -- Chiclayo, Peru, and Holguin, Cuba -- in an effort to diversify.

    Looking forward

    Managing costs in the face of economic weakness will be key throughout 2016, and Copa Holdings has done a good job on that front, helped by lower fuel costs. Investors should watch for signs that the economies in Latin America may be starting to turn a corner, which is really what the company needs to return to growth.

    One positive to fall back on is the continuation of the $0.51 quarterly dividend. For now, Copa Holdings is still generating enough income to cover the dividend without weighing down the balance sheet, giving investors a nice 3.2% dividend yield until the macro environment improves.

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