Shares of Copa Holdings SA (CPA) have declined approximately 5.7% since the company reported mixed third-quarter 2014 results last week. Copa Holdings – a leading provider of passenger and cargo services in Latin America – reported adjusted earnings of $2.25 per share, well above the Zacks Consensus Estimate of $1.94. However, the quarter’s earnings declined 14.1% from the year-ago quarter equivalent.

Revenues fell 2% to $663.7 million and also lagged the Zacks Consensus Estimate of $694 million. The top line was hurt by lower passenger revenue yields. Capacity reductions in Venezuela also weighed on the results (pls read : Copa Airlines Slides as Venezuela, Panama Clash). Copa Holdings stated in its third quarter conference call that it is working toward reducing its Venezuelan currency exposure.

Yield per passenger mile declined 7.7% in the third quarter of 2014 to 15.9 cents Operating revenue per available seat mile (:RASM) was down 9.9% to 12.5 cents, while operating cost per available seat mile (CASM) declined 4.1% to 10.4 cents. Excluding fuel, CASM declined 5.7% to 6.4 cents.

Passenger traffic at Copa Holdings climbed 6.3% on the back of 8.7% capacity expansion. Load factor came in at 76.3% in the reported quarter, down 170 basis points. The operating margin declined to 16.7% in the reported quarter from 21.8% a year ago.

The company exited the third quarter with a consolidated fleet of 96 planes following the addition of three 737-800 aircraft of The Boeing Company (BA) to Copa’s fleet.

We remind investors that another Latin American carrier GOL Linhas Aereas Inteligentes S.A. (GOL) also reported third-quarter results earlier this month. GOL performed disappointingly in the quarter reporting a wider-than-expected loss.

Zacks Rank

Copa Holdings presently carries a Zacks Rank #4 (Sell). A better-ranked stock in the airline space is SkyWest Inc. (SKYW) with a Zacks Rank #1 (Strong Buy).

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