A solid fourth-quarter performance in passenger revenue and cost containment pushed Panama City-based Copa Holdings toward a $370 million net profit for 2017, up 10.6% over the company’s $335 million net income in 2016.

Copa Holdings is the parent company of Copa Airlines and Copa Airlines Colombia.

Following a third quarter with natural disaster-related operational challenges, Copa’s fourth-quarter results continued to reflect ongoing improvement in passenger demand, Copa management said. Fourth-quarter operating revenue grew 12.4% year-over-year (YOY) to $676 million as passenger and cargo revenue grew 12.6% and 5.5%, respectively. 

Copa’s fourth-quarter operating expenses were up 4.6% to $555.2 million as fuel and labor costs rose 12.3% and 13.9%, respectively. Maintenance expenses fell 7.3% and aircraft depreciation and amortization dropped 22.7% “primarily [as] the result of an adjustment of the fleet’s useful life assumption from 30 to 27 years” during the fourth quarter, Copa said.

The company’s fourth-quarter operating income jumped 70.4% to $120.4 million and net income for the quarter came to $101 million, up 11.4% YOY.

Passenger traffic was up 11.9% to 5.1 billion RPMs during the quarter, as capacity grew 9.2% to 6.1 billion ASMs, resulting in an 83.2% load factor. Fourth-quarter yield was up 1.2% YOY to 12.9 cents and the company’s operating margin increased 6.1 points to 17.8%.

Copa’s full-year revenue totaled $2.5 billion, up 13.8% from $2.2 billion in 2016, reflecting a 14.3% rise in passenger revenue. Operating expenses for the year were up 7.3% to $2.1 billion and included marked rises in flight operations and passenger servicing expenses, up 15.3% and 15.2% respectively. For the full year, Copa’s passenger traffic rose 12.6% to 20 billion RPMs on 8.8% capacity growth to 24 billion ASMs, producing an 83.2% load factor, up 2.8 points from 2016. The company reported $440.1 million in operating profit for the year, up 59.4% over $276.1 million in operating income in 2016. Copa’s operating margin for the year was 17.4%, up 5 points from 2016.

Looking ahead, Copa updated its guidance for consolidated capacity growth of approximately 9% in 2018, and projected its operating margin to come in between 17% and 19%.

As of Dec. 31, 2017, Copa’s fleet comprised 100 aircraft, including 66 Boeing 737-800s, 14 737-700s and 20 Embraer E190s. The company took delivery of an additional 737-800 in January. During the year, Copa converted 15 previously ordered 737 MAX aircraft to 737 MAX 10 variants; on delivery Copa will be the first Latin American carrier to operate the MAX 10. Copa is expecting delivery of its first MAX 9 in August 2018, part of a larger order for 61 MAX 8 and -9 aircraft originally placed in May 2013.

Mark Nensel mark.nensel@informa.com