Copa Airlines has reported a 11.4% decline in total revenue to $595.5 million for the first quarter of 2020, with an expected operating profit of $98.7 million and operating margin of approximately 16.6%.
The Brazilian airline has confirmed that it has approximately $1.13bn in cash, cash equivalents, and short-term and long-term investments. In March 2020, Copa borrowed $145 million from unsecured loan facilities, each of which must be repaid in a single instalment no later than March 2021. The company is now negotiating adding a new $150 million unsecured, revolving credit facility.
Copa is also privately offering $350 million convertible senior notes due 2025 to qualified institutional buyers, with an additional purchase option of $52.5million of notes. The notes will be senior, unsecured obligations of Copa, which will mature on April 15, 2025, unless earlier repurchased, redeemed or converted. The notes will be redeemable, in whole or in part, for cash at Copa's option at any time.
Although the company has paid a quarter dividend for of 80 cents per share on March 13, the Board has decided to postpone payment of dividends for the remaining quarters of 2020.
Copa states that although it has unencumbered assets, consisting of aircraft, engines, aircraft spare parts and simulators, with a net book value of approximately $600 million, it cannot provide any “assurances that any or all of these assets will be acceptable collateral for any new financing”.
The shutdown began to impact Copa’s traffic numbers in March, when capacity measured in available seat miles decreased 35.7% compared to March 2019 and revenue passenger miles decreased by 43.4% with a load factor of 73.4%, 9.9 points lower than March 2019.
The airline has not operated any commercial flights since March 22, and does not expect to resume commercial operations until June 1 at the earliest, and thereafter ramp up in demand will be “gradual”. The impact on the second and third quarter results is expected to be much more severe. Without any revenue, Copa is burning through $85 million every month.