• Volaris Reports Financial Results for the First Quarter 2024: Net Income of USD $33 million

    Source: Nasdaq GlobeNewswire / 22 Apr 2024 20:22:11   America/Chicago

    MEXICO CITY, April 22, 2024 (GLOBE NEWSWIRE) -- Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS and BMV: VOLAR) (“Volaris” or “the Company”), the ultra-low-cost carrier (ULCC) serving Mexico, the United States, Central, and South America, today announces its financial results for the first quarter 20241.

    First Quarter 2024 Highlights
    (All figures are reported in U.S. dollars and compared to 1Q 2023 unless otherwise noted)

    • Net income of $33 million. Earnings per ADS of $0.29 cents.
    • Total operating revenues of $768 million, a 5.1% increase.
    • Total revenue per available seat mile (TRASM) increased 21% to $9.34 cents.
    • Available seat miles (ASMs) decreased by 13% to 8.2 billion.
    • Total operating expenses of $664 million, representing 86% of total operating revenue.
    • Total operating expenses per available seat mile (CASM) remained relatively flat at $8.08 cents.
    • Average economic fuel cost decreased 13% to $3.01 per gallon.
    • CASM ex-fuel increased 11% to $5.16 cents.
    • EBITDAR of $235 million, a 91% increase.
    • EBITDAR margin was 30.6%, an increase of 14 percentage points.
    • Total cash, cash equivalents, restricted cash, and short-term investments totaled $768 million, representing 23% of the last twelve months’ total operating revenue.
    • Net debt-to-LTM EBITDAR2 ratio decreased to 3.1x, compared to 3.8x in 2023.

    Enrique Beltranena, President & Chief Executive Officer, said: “We are pleased with our business performance as our Volaris team delivered strong first quarter 2024 results. Over the last six months, our primary focus has been directing operations to enhance our customer service and continuing our emphasis on obsessive cost control.

    Despite the ongoing industry challenges, we continue to execute well and remain focused on delivering shareholder value. The company produced strong results that exceeded expectations. We generated a remarkable increase in TRASM and ancillaries while costs remained controlled. Moreover, Volaris achieved net profitability in the first quarter, posting a net income of $33 million dollars. This marks a significant achievement, as historically, due to seasonality, our first quarters have resulted in net losses; the last time we recorded a net profit in the first quarter was in 2019.

    Looking forward, booking curves remain solid. As we execute our strategy, we prioritize profitability when allocating capacity and are cautiously optimistic about achieving results in line with our updated guidance.”

    1 The financial information, unless otherwise indicated, is presented in accordance with the International Financial Reporting Standards (IFRS).
    2 Includes short-term investments.


    First Quarter 2024 Consolidated Financial and Operating Highlights
    (All figures are reported in U.S. dollars and compared to 1Q 2023 unless otherwise noted)
     First Quarter
    Consolidated Financial Highlights2024 2023 Var.
    Total operating revenue (millions)768 731 5.1 %
    TRASM (cents)9.34 7.71 21.3%
    ASMs (millions, scheduled & charter)8,217 9,488 (13.4%)
    Load Factor (scheduled, RPMs/ASMs)87.0%85.0%1.9 pp
    Passengers (thousands, scheduled & charter)6,924 8,186 (15.4%)
    Fleet (at the end of the period)134 120 14 
    Total operating expenses (millions)664 762 (12.9%)
    CASM (cents)8.08 8.03 0.6%
    CASM ex fuel (cents)5.16 4.65 11.0%
    Adjusted CASM ex fuel (cents)35.32 4.28 24.3%
    Operating income (loss) (EBIT) (millions)104  (31)N/A
    % EBIT Margin13.5%(4.3%)17.8 pp
    Net income (loss) (millions) 33 (71)N/A
    % Net income (loss) margin4.3%(9.7%)14.0 pp
    EBITDAR (millions)235 123 91.1 %
    % EBITDAR Margin30.6%16.8%13.7 pp
    Net debt-to-LTM EBITDAR43.1x3.8x-0.7x


    Reconciliation of CASM to Adjusted CASM ex-fuel: 
     First Quarter
    Reconciliation of CASM2024 2023 Var.
    CASM (cents)8.08 8.03 0.6%
    Fuel expense(2.92)(3.38)(13.6%)
    CASM ex fuel5.16 4.65 11.0%
    Aircraft and engine variable lease expenses50.04 (0.37)N/A
    Sale and lease back gains0.12 0.00 N/A
    Adjusted CASM ex fuel 5.32 4.28 24.3%



    Note: Figures are rounded for convenience purposes. Further detail found in financial and operating indicators.
    3 Excludes fuel expense, aircraft and engine variable lease expenses and sale and lease-back gains.
    4 Includes short-term investments.
    5 Aircraft redeliveries.


    First Quarter 2024
    (All figures are reported in U.S. dollars and compared to 1Q 2023 unless otherwise noted)

    Total operating revenue in the quarter was $768 million, a 5.1% increase driven by solid demand and an improvement in total revenue per passenger.

    Booked passengers amounted to 6.9 million, a decrease of 15%. Mexican domestic booked passengers decreased 23%, while international booked passengers increased 11%.

    Total capacity, in terms of available seat miles (ASMs) decreased 13% to 8.2 billion due to the accelerated Pratt & Whitney engine inspections and the resulting aircraft groundings.

    The load factor for the quarter reached 87.0%, representing an increase of 1.9 percentage points.

    TRASM increased 21% to $9.34 cents, and total operating revenue per passenger stood at $111, representing a 24% increase.

    The average base fare was $54, a 15% increase. The total ancillary revenue per passenger was $57, a 35% increase. Ancillary revenue represented 51% of total operating revenue, an increase of 4.1 percentage points.

    Total operating expenses were $664 million, representing 86% of total operating revenue.

    CASM totaled $8.08 cents and remained relatively flat year over year.

    The average economic fuel cost decreased 13% to $3.01 per gallon.

    CASM ex-fuel increased 11% to $5.16 cents. This increase was mainly caused by the aircraft-on-ground (AOG) due to Pratt and Whitney's engine preventive accelerated inspections and the effect of a larger proportion of international capacity with higher landing and navigation fees. This pressure was partially offset by the remeasurement of previously booked redelivery accruals, which reflect the lease extensions from 2024 to 2026.

    Comprehensive financing result represented an expense of $57 million, compared to $65 million in the same period of 2023. For the period, the average exchange rate was Ps.17.00 per U.S. dollar, a 9.1% appreciation. At the end of the first quarter, the exchange rate stood at Ps.16.68 per U.S. dollar.

    Income tax expense for the quarter was $14 million, compared to an income tax benefit of $25 million registered in the same period of 2023.

    Net income in the quarter was $33 million, with an earnings per ADS of $0.29 cents.

    EBITDAR for the quarter was $235 million, an increase of 91%, primarily attributable to higher unit revenues and lower fuel prices, while EBITDAR margin stood at 30.6%, an increase of 14 percentage points.

    Balance Sheet, Liquidity and Capital Allocation

    As of March 31, 2024, cash, cash equivalents, restricted cash and short-term investments were $768 million, representing 23% of the last twelve months total operating revenue.

    Net cash flow provided by operating activities was $245 million. Net cash flow used in investing and financing activities was $97 million and $171 million, respectively.

    The financial debt amounted to $642 million, while total lease liabilities stood at $3,021 million, resulting in a net debt of $2,8956 million.

    Net debt-to-LTM EBITDAR6 ratio stood at 3.1x, compared to 3.3x in the previous quarter and 3.8x in the same period of 2023.

    2024 Guidance

    For the second quarter of 2024, the Company expects:

     2Q’242Q’23 (1)
    2Q’24 Guidance  
    ASM growth (YoY)~ -18%+18.1%
    TRASM$9.1 to $9.2 cents$7.92 cents
    CASM ex fuel$5.5 to $5.6 cents$4.82 cents
    EBITDAR margin31% to 33%27.1%
    Average USD/MXN ratePs.17.30 to 17.50Ps.17.72
    Average U.S. Gulf Coast jet fuel price$2.60 to $2.702.29
    (1) For convenience purposes, actual reported figures for 2Q'23 are included.  


    For the full year 2024, the Company expects:

     Updated GuidancePrior Guidance
    Full Year 2024 Guidance  
    ASM growth (YoY)-16% to -18%-16% to -18%
    EBITDAR margin32% to 34%31% to 33%
    CAPEX (2)$400 million~$300 million
    Average USD/MXN ratePs.17.30 to 17.50Ps.17.70 to Ps.17.90
    Average U.S. Gulf Coast jet fuel price$2.60 to $2.70$2.50 to $2.60
    (2) CAPEX net of financed fleet predelivery payments.  


    The second quarter and full year 2024 outlook presented above includes the compensation that Volaris expects to receive for the projected grounded aircraft resulting from the GTF engine removals, in accordance with the Company’s agreement with Pratt & Whitney that was previously announced on December 5, 2023.

    The Company's outlook is subject to unforeseen disruptions, macroeconomic factors, or other negative impacts that may affect its business, and is based on several assumptions, including the foregoing, which are subject to change and may be outside the control of the Company and its management. The Company's expectations may change if actual results vary from these assumptions. There can be no assurances that Volaris will achieve these results.

    Fleet

    During the first quarter, Volaris added two A320ceo and three A321neo aircraft to its fleet, bringing the total number of aircraft to 134. At the end of the quarter, Volaris’ fleet had an average age of 5.9 years and an average seating capacity of 197 passengers per aircraft. Of the total fleet, 59% of the aircraft are New Engine Option (NEO) models.

     First QuarterFourth Quarter
    Total Fleet20242023Var.2023Var.
    CEO     
    A31933-3-
    A32042402402
    A3211010-10-
    NEO     
    A3205150151-
    A321281711253
    Total aircraft at the end of the period134120141295

    Investors are urged to carefully read the Company’s periodic reports filed with or provided to the Securities and Exchange Commission, for additional information regarding the Company.

    Investor Relations Contact
    Ricardo Martínez / ir@volaris.com

    Media Contact
    Israel Álvarez / ialvarez@gcya.net

    Conference Call Details

    Date:Tuesday, April 23, 2024
    Time:9:00 am Mexico City / 11:00 am New York (USA) (ET)
    Webcast link:Volaris Webcast (View the live webcast)
    Dial-in & Live Q&A link: Volaris Dial-in and Live Q&A

    1. Click on the call link and complete the online registration form.
    2. Upon registering you will receive the dial-in info and a unique PIN to join the call, as well as an email confirmation with the details.
    3. Select a method for joining the call:
      1. Dial-In: A dial-in number and unique PIN are displayed to connect directly from your phone.
      2. Call Me: Enter your phone number and click “Call Me” for an immediate callback from the system.

    About Volaris

    *Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (“Volaris” or “the Company”) (NYSE: VLRS and BMV: VOLAR) is an ultra-low-cost carrier, with point-to-point operations, serving Mexico, the United States, Central, and South America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since the beginning of operations in March 2006, Volaris has increased its routes from 5 to more than 198 and its fleet from 4 to 134 aircraft. Volaris offers more than 450 daily flight segments on routes that connect 44 cities in Mexico and 29 cities in the United States, Central, and South America, with one of the youngest fleets in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico, the United States, Central, and South America. Volaris has received the ESR Award for Social Corporate Responsibility for fourteen consecutive years. For more information, please visit ir.volaris.com. Volaris routinely posts information that may be important to investors on its investor relations website. The Company encourages investors and potential investors to consult the Volaris website regularly for important information about Volaris.

    Forward-Looking Statements

    Statements in this release contain various forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended, which represent the Company's expectations, beliefs, or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words "expects," “intends,” "estimates," “predicts,” "plans," "anticipates," "indicates," "believes," "forecast," "guidance," “potential,” "outlook," "may," “continue,” "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements describing the Company's objectives, plans or goals, or actions the Company may take in the future are forward-looking. Forward-looking statements include, without limitation, statements regarding the Company's outlook, the expectation of receiving certain compensation in connection with the GTF engine removals, and the anticipated execution of its business plan and focus on its priorities. Forward-looking statements should not be read as a guarantee or assurance of future performance or results. They will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time concerning future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements are subject to several factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry, the Company's ability to keep costs low; changes in fuel costs, the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenue; and government regulation. The Company's US Securities and Exchange Commission filings contain additional information concerning these and other factors. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date of this release. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

    Supplemental Information on Non-IFRS Measures

    We evaluate our financial performance by using various financial measures that are not performance measures under International Financial Reporting Standards (“non-IFRS measures”). These non-IFRS measures include CASM, CASM ex-fuel, Adjusted CASM ex-fuel, EBITDAR, Net debt-to-LTM EBITDAR, Total cash, cash equivalents, restricted cash, and short-term investments. We define CASM as total operating expenses by available seat mile. We define CASM ex-fuel as total operating expenses by available seat mile, excluding fuel expense. We define Adjusted CASM ex fuel as total operating expenses by available seat mile, excluding fuel expense, aircraft and engine variable lease expenses and sale and lease back gains. We define EBITDAR as earnings before interest, income tax, depreciation and amortization, depreciation of right of use assets and aircraft and engine variable lease expenses. We define Net debt-to-LTM EBITDAR as Net debt divided by LTM EBITDAR. We define Total cash, cash equivalents, restricted cash, and short-term investments as the sum of cash, cash equivalents, restricted cash, and short-term investments.

    These non-IFRS measures are provided as supplemental information to the financial information presented in this release that is calculated and presented in accordance with International Financial Reporting Standards (“IFRS”) because we believe that they, in conjunction with the IFRS financial information, provide useful information to management’s, analysts and investors overall understanding of our operating performance.

    Because non-IFRS measures are not calculated in accordance with IFRS, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related IFRS measures presented in this release and may not be the same as or comparable to
    similarly titled measures presented by other companies due to possible differences in the method of calculation and the items being adjusted.

    We encourage investors to review our financial statements and other filings with the Securities and Exchange Commission in their entirety for additional information regarding the Company and not to rely on any single financial measure.


    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

    Financial and Operating Indicators
    Unaudited
    (In millions U.S. dollars, except otherwise indicated)    		Three months ended
    March 31, 2024    		Three months ended
    March 31, 2023    		Variance
    Total operating revenues (millions)768 731 5.1%
    Total operating expenses (millions)664 762 (12.9%)
    EBIT (millions)104 (31)N/A
    EBIT margin13.5%(4.3%)17.8 pp
    Depreciation and amortization (millions)134 119 12.6%
    Aircraft and engine variable lease expenses (millions)(3)35 N/A
    Net income (loss) (millions)33 (71)N/A
    Net income (loss) margin4.3%(9.7%)14.0 pp
    Earnings (loss) per share (1):   
    Basic0.03 (0.06)N/A
    Diluted0.03 (0.06)N/A
    Earnings (loss) per ADS*:   
    Basic0.29 (0.62)N/A
    Diluted0.29 (0.61)N/A
    Weighted average shares outstanding:   
    Basic1,151,450,983 1,152,524,284 (0.1%)
    Diluted1,165,976,677 1,165,048,915 0.1%
    Financial Indicators   
    Total operating revenue per ASM (TRASM) (cents) (2)9.34 7.71 21.3%
    Average base fare per passenger54 47 14.7%
    Total ancillary revenue per passenger (3)57 42 34.9%
    Total operating revenue per passenger111 89 24.2%
    Operating expenses per ASM (CASM) (cents) (2)8.08 8.03 0.6%
    CASM ex fuel (cents) (2)5.16 4.65 11.0%
    Adjusted CASM ex fuel (cents) (2) (4)5.32 4.28 24.3%
    Operating Indicators   
    Available seat miles (ASMs) (millions) (2)8,217 9,488 (13.4%)
    Domestic4,768 6,537 (27.1%)
    International3,449 2,951 16.9%
    Revenue passenger miles (RPMs) (millions) (2)7,146 8,067 (11.4%)
    Domestic4,329 5,546 (21.9%)
    International2,817 2,521 11.8%
    Load factor (5)87.0%85.0%1.9 pp
    Domestic90.8%84.8%5.9 pp
    International81.7%85.4%(3.7 pp)
    Booked passengers (thousands) (2)6,924 8,186 (15.4%)
    Domestic4,985 6,440 (22.6%)
    International1,939 1,746 11.0%
    Departures (2)40,428 50,191 (19.5%)
    Block hours (2)109,363 130,549 (16.2%)
    Aircraft at end of period134 120 14 
    Average aircraft utilization (block hours)12.73 13.52 (5.8%)
    Fuel gallons accrued (millions)79.2 92.2 (14.1%)
    Average economic fuel cost per gallon (6)3.01 3.46 (12.9%)
    Average exchange rate17.00 18.70 (9.1%)
    Exchange rate at the end of the period16.68 18.11 (7.9%)
    *Each ADS represents ten CPOs and each CPO represents a financial interest in one Series A share

    (1) The basic and diluted loss or earnings per share are calculated in accordance with IAS 33. Basic loss or earnings per share is calculated by dividing net loss or earnings by the average number of shares outstanding (excluding treasury shares). Diluted loss or earnings per share is calculated by dividing net loss or earnings by the average number of shares outstanding adjusted for dilutive effects.(2) Includes schedule and charter.
    (3) Includes “Other passenger revenues” and “Non-passenger revenues”.
    (4) Excludes fuel expense, aircraft and engine variable lease expenses and sale
    and lease-back gains.
    (5) Includes schedule.
    (6) Excludes Non-creditable VAT.



    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

    Consolidated Statement of Operations
    Unaudited
    (In millions of U.S. dollars)    		Three months ended
    March 31, 2024    		Three months ended
    March 31, 2023    		Variance
    Operating revenues:   
    Passenger revenues732 701 4.4%
    Fare revenues375 387 (3.1%)
    Other passenger revenues357 314 13.7%
        
    Non-passenger revenues36 30 20.0%
    Cargo5 4 25.0%
    Other non-passenger revenues31 26 19.2%
        
    Total operating revenues768 731 5.1%
        
    Other operating income(45)- N/A
    Fuel expense240 321 (25.2%)
    Aircraft and engine variable lease expenses(3)35 N/A
    Salaries and benefits102 91 12.1%
    Landing, take-off and navigation expenses127 110 15.5%
    Sales, marketing and distribution expenses45 35 28.6%
    Maintenance expenses37 26 42.3%
    Depreciation and amortization35 31 12.9%
    Depreciation of right of use assets99 88 12.5%
    Other operating expenses27 25 8.0%
    Operating expenses664 762 (12.9%)
        
    Operating income (loss)104 (31)N/A
        
    Finance income12 7 71.4%
    Finance cost(62)(58)6.9%
    Exchange loss, net(7)(14)(50.0%)
    Comprehensive financing result(57)(65)(12.3%)
        
    Income (loss) before income tax47 (96)N/A
    Income tax (expense) benefit(14)25 N/A
    Net income (loss)33 (71)N/A
        


    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

    Reconciliation of Total Ancillary Revenue per Passenger

    The following table shows quarterly additional detail about the components of total ancillary revenue:
    Unaudited
    (In millions of U.S. dollars)    		Three months ended
    March 31, 2024    		Three months ended
    March 31, 2023    		Variance
        
    Other passenger revenues35731413.7%
    Non-passenger revenues363020.0%
    Total ancillary revenues39334414.2%
        
    Booked passengers (thousands) (1)6,9248,186(15.4%)
        
    Total ancillary revenue per passenger574234.9%
        
    (1) Includes schedule and charter.


    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

    Consolidated Statement of Financial Position

    (In millions of U.S. dollars)    		As of March 31, 2024
    Unaudited    		As of December 31, 2023
    Audited
    Assets  
    Cash, cash equivalents and restricted cash752 774 
    Short-term investments16 15 
    Total cash, cash equivalents, restricted cash, and
    short-term investments (1)    		768  -  
    Accounts receivable, net295 251 
    Inventories16 16 
    Guarantee deposits150 148 
    Prepaid expenses and other current assets48 44 
    Total current assets1,277 1,248 
    Right of use assets2,463 2,338 
    Rotable spare parts, furniture and equipment, net865 805 
    Intangible assets, net18 16 
    Derivatives financial instruments1 2 
    Deferred income taxes231 236 
    Guarantee deposits483 462 
    Other long-term assets43 39 
    Total non-current assets4,104 3,898 
    Total assets5,381 5,146 
    Liabilities and equity  
    Unearned transportation revenue394 343 
    Accounts payable179 250 
    Accrued liabilities205 163 
    Other taxes and fees payable304 262 
    Income taxes payable14 8 
    Financial debt260 220 
    Lease liabilities375 373 
    Other liabilities13 2 
    Total short-term liabilities1,744 1,621 
    Financial debt382 433 
    Accrued liabilities12 14 
    Employee benefits15 15 
    Deferred income taxes16 16 
    Lease liabilities2,646 2,518 
    Other liabilities289 286 
    Total long-term liabilities3,360 3,282 
    Total liabilities5,104 4,903 
    Equity  
    Capital stock248 248 
    Treasury shares(12)(12)
    Contributions for future capital increases- - 
    Legal reserve17 17 
    Additional paid-in capital283 282 
    Accumulated deficit(115)(148)
    Accumulated other comprehensive loss(144)(144)
    Total equity277 243 
    Total liabilities and equity5,381 5,146 
    (1) Non-GAAP measure.


    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

    Consolidated Statement of Cash Flows – Cash Flow Data Summary
    Unaudited
    (In millions of U.S. dollars)    		Three months ended
    March 31, 2024    		Three months ended
    March 31, 2023
       
    Net cash flow provided by operating activities245 208 
    Net cash flow used in investing activities(97)(109)
    Net cash flow used in financing activities*(171)(110)
    Decrease in cash, cash equivalents and restricted cash(23)(11)
    Net foreign exchange differences1 3 
    Cash, cash equivalents and restricted cash at beginning of period774 712 
    Cash, cash equivalents and restricted cash at end of period752 704 
    *Includes aircraft rental payments of $141 million and $127 million for the three months ended March 31, 2024, and 2023, respectively.

     


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