Copa Holdings, S.A. (NYSE:CPA) Q3 2022 Results Conference Call November 17, 2022 11:00 AM ET

Company Participants

Daniel Tapia - IR

Pedro Heilbron - CEO

Jose Montero - CFO

Conference Call Participants

Duane Pfennigwerth - Evercore ISI

Alejandro Zamacona - Credit Suisse

Michael Linenberg - Deutsche Bank

Savi Syth - Raymond James

Stephen Trent - Citi

Helane Becker - Cowen

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Copa Holdings Third Quarter Earnings Call. During the presentation, all participants will be on a listen-only mode. Afterwards, we will conduct a question-and-answer session [Operator Instructions]. As a reminder, this call is being webcast and recorded on November 16, 2022.

Now, I will turn the conference call over to Daniel Tapia, Director of Investor Relations. Sir, you may now begin.

Daniel Tapia

Thank you, Victor. And welcome everyone to our third quarter earnings call. Joining us today are Pedro Heilbron, CEO of Copa Holdings; and Jose Montero, our CFO. First, Pedro will start by going over our third quarter highlights, followed by Jose, who will discuss our financial results. Immediately after, we will open the call for questions from analysts. Copa Holdings financial reports have been prepared in accordance with International Financial Reporting Standards. In today's call, we will discuss non-IFRS financial measures. A reconciliation of the non-IFRS to IFRS financial measures can be found in our earning's release, which has been posted on the company's Web site copaair.com. Our discussions today will also contain forward-looking statements, not limited to historical facts that reflect the company's current beliefs, expectations and/or intentions regarding future events and results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially and are based on assumptions subject to change. Many of these are discussed in our annual report filed with the SEC.

Now, I'd like to turn the call over to our CEO, Mr. Pedro Heilbron.

Pedro Heilbron

Thank you, Daniel. Good morning to all, and thanks for participating in our third quarter earnings call. Before we begin, I'd like to thank all our co-workers for their commitment to the company and recognize their intense efforts and dedication to keep Copa at the forefront of Latin American aviation. To them, as always, my utmost respect and admiration. Despite the pressure that higher jet fuel prices continue to add to operating costs, in the third quarter, we were able to cover this increase, thanks to strong demand and unit revenue performance and lower ex fuel unit cost. During Q3, our effective fuel price per gallon increased by 77% compared to the same period in 2019, which drove a unit cost increase of 16%. However, both our load factors and yields also increased improving unit revenues by 15% compared to Q3 2019, driven by a currently stronger travel demand environment in the region. The combination of these factors plus our ability to control our non-fuel related costs enabled us to deliver a 17.8% operating margin, which compares to an operating margin of 18.8% in Q3 2019.