Volaris reports financial results for the second quarter 2024

Volaris, the ultra-low-cost carrier (ULCC) serving Mexico, the United States, Central, and South America, has released its unaudited financial results for the second quarter of 2024.

Enrique Beltranena, President & Chief Executive Officer, said: “Volaris continues to perform positively, achieving our highest absolute EBITDAR for a second quarter despite the fleet groundings due to accelerated engine inspections. Volaris’ unwavering focus on execution and efficient cost control has enabled us to deliver strong results. Our mitigation plan is on track with favorable outcomes, and we have largely achieved our goals since the inspections began. In fact, we are improving our full-year ASM guidance to -14%3. We currently have a well-balanced market mix, with an increased presence in the cross-border market that has strengthened our TRASM, and our booking curves indicate ongoing robust performance for the summer high season.

With recent updates from Pratt & Whitney, we are cautiously optimistic about this evolving situation, but we recognize that the engine's time on wing remains a challenge. Looking ahead, as grounded aircraft gradually return to our productive fleet, we expect recent unit revenue levels to remain resilient and remain committed to prudent and rational growth, prioritizing profitability.”

Second Quarter 2024 Highlights

(All figures are reported in U.S. dollars and compared to 2Q 2023 unless otherwise noted)

Net income of $10 million. Earnings per American Depositary Shares (ADS) of $9 cents.

Total operating revenue of $726 million, a 7.2% decrease.

Total revenue per available seat mile (TRASM) increased 12% to $8.89 cents.

Available seat miles (ASMs) decreased by 17% to 8.2 billion.

Total operating expenses of $660 million, representing 91% of total operating revenue.

Total operating expenses per available seat mile (CASM) increased 9.1% to $8.08 cents.

Average economic fuel cost increased 6.1% to $2.86 per gallon.

CASM ex fuel increased 11% to $5.33 cents.

EBITDAR of $261 million, a 23% increase.

EBITDAR margin was 35.9%, an increase of 8.8 percentage points.

Total cash, cash equivalents, restricted cash, and short-term investments totaled $774 million, representing 24% of the last twelve months’ total operating revenue.

Net debt-to-LTM EBITDAR2 ratio decreased to 2.9x, compared to 3.1x in the previous quarter.

1 The financial information, unless otherwise indicated, is presented in accordance with the International Financial Reporting Standards (IFRS).

2 Includes short-term investments.

Second Quarter 2024

(All figures are reported in U.S. dollars and compared to 2Q 2023 unless otherwise noted)

Total operating revenue amounted to $726 million in the quarter, driven by strong domestic demand and an improvement in total operating revenue per passenger. This represents a 7.2% decrease, notwithstanding the 17% reduction in total capacity resulting from aircraft-on-ground (AOG) due to Pratt & Whitney’s accelerated engine inspections.

Total capacity, in terms of available seat miles (ASMs), was 8.2 billion.

Booked passengers totaled 7.1 million, a 15% decrease. Mexican domestic and international booked passengers decreased 18% and 4.9%, respectively.

The load factor for the quarter reached 85.5%, representing an increase of 0.9 percentage points.

TRASM rose 12% to $8.89 cents, and total operating revenue per passenger stood at $102, representing a 9.8% increase.

The average base fare was $49, a 4.3% increase. The total ancillary revenue per passenger was $53, reflecting a 15% improvement. Ancillary revenue represented 52% of total operating revenue, up by 2.6 percentage points.

Total operating expenses were $660 million, representing 91% of total operating revenue.

CASM totaled $8.08 cents, a 9.1% increase when compared to the same period of 2023.

The average economic fuel cost rose 6.1% to $2.86 per gallon.

CASM ex fuel increased 11% to $5.33 cents, mainly due to the AOG due to Pratt and Whitney's engine preventive accelerated inspections.

Comprehensive financing result represented an expense of $52 million, compared to a $43 million expense in the same period of the previous year.

Income tax expense was $4 million, compared to a $2 million expense registered in the second quarter of 2023.

Net income in the quarter was $10 million, with an earnings per ADS of $9 cents.

EBITDAR for the quarter was $261 million, a 23% improvement, primarily attributable to strong unit revenues and efficient cost control, partially offset by an increase in fuel prices. EBITDAR margin stood at 35.9%, up by 8.8 percentage points.

Balance Sheet, Liquidity, and Capital Allocation

For the quarter, net cash flow provided by operating activities was $304 million. Net cash flow used in investing and financing activities was $141 million and $149 million, respectively.

As of June 30, 2024, cash, cash equivalents, restricted cash, and short-term investments were $774 million, representing 24% of the last twelve months' total operating revenue.

The financial debt amounted to $638 million, while total lease liabilities stood at $3,003 million, resulting in a net debt of $2,8677 million.

Net debt-to-LTM EBITDAR7 ratio stood at 2.9x, compared to 3.1x in the previous quarter and 3.5x in the same period of 2023.

The average exchange rate for the period was Ps.17.21 per U.S. dollar, a 2.9% appreciation. At the end of the second quarter, the exchange rate stood at Ps.18.38 per U.S. dollar.

7 Includes short-term investments.

Fleet

During the second quarter, Volaris added two A321neo aircraft to its fleet, bringing the total number of aircraft to 136. At the end of the quarter, Volaris’ fleet had an average age of 6.1 years and an average seating capacity of 197 passengers per aircraft. Of the total fleet, 60% of the aircraft are New Engine Option (NEO) models.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Financial and Operating Indicators
Unaudited (U.S. dollars, except otherwise indicated)	Three months ended June 30, 2024	Three months ended June 30, 2023	Variance
Total operating revenues (millions)	726	782	(7.2%)
Total operating expenses (millions)	660	731	(9.7%)
EBIT (millions)	66	51	29.4%
EBIT margin	9.1%	6.5%	2.6 pp
Depreciation and amortization (millions)	150	121	24.0%
Aircraft and engine variable lease expenses (millions)	45	40	12.5%
Net income (millions)	10	6	66.7%
Net income margin	1.4%	0.7%	0.7 pp
Earnings per share (1):
Basic	0.01	0.00	89.6%
Diluted	0.01	0.00	89.1%
Earnings per ADS*:
Basic	0.09	0.05	89.6%
Diluted	0.09	0.05	89.1%
Weighted average shares outstanding:
Basic	1,150,766,440	1,152,974,446	(0.2%)
Diluted	1,165,976,677	1,165,244,334	0.1%
Financial Indicators
Total operating revenue per ASM (TRASM) (cents) (2)	8.89	7.92	12.2%
Average base fare per passenger	49	47	4.3%
Total ancillary revenue per passenger (3)	53	46	15.3%
Total operating revenue per passenger	102	93	9.8%
Operating expenses per ASM (CASM) (cents) (2)	8.08	7.40	9.1%
CASM ex fuel (cents) (2)	5.33	4.82	10.7%
Adjusted CASM ex fuel (cents) (2) (4)	4.86	4.43	9.6%
Operating Indicators
Available seat miles (ASMs) (millions) (2)	8,173	9,873	(17.2%)
Domestic	4,868	6,614	(26.4%)
International	3,305	3,260	1.4%
Revenue passenger miles (RPMs) (millions) (2)	6,988	8,348	(16.3%)
Domestic	4,388	5,643	(22.2%)
International	2,600	2,705	(3.9%)
Load factor (5)	85.5%	84.6%	0.9 pp
Domestic	90.1%	85.3%	4.9 pp
International	78.7%	83.0%	(4.3 pp)
Booked passengers (thousands) (2)	7,087	8,373	(15.4%)
Domestic	5,324	6,518	(18.3%)
International	1,763	1,855	(4.9%)
Departures (2)	42,495	51,127	(16.9%)
Block hours (2)	109,638	132,965	(17.5%)
Aircraft at end of period	136	123	13
Average aircraft utilization (block hours)	13.05	13.27	(1.7%)
Fuel gallons accrued (millions)	77.93	94.04	(17.1%)
Average economic fuel cost per gallon (6)	2.86	2.70	6.1%
Average exchange rate	17.21	17.72	(2.9%)
Exchange rate at the end of the period	18.38	17.07	7.6%
*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 Financial and Operating Indicators
Unaudited (U.S. dollars, except otherwise indicated)	Six months ended June 30, 2024	Six months ended June 30, 2023	Variance
Total operating revenues (millions)	1,494	1,513	(1.3%)
Total operating expenses (millions)	1,324	1,493	(11.3%)
EBIT (millions)	170	20	>100%
EBIT margin	11.4%	1.3%	10.1 pp
Depreciation and amortization (millions)	283	240	17.9%
Aircraft and engine variable lease expenses (millions)	42	76	(44.7%)
Net income (loss) (millions)	44	(65)	N/A
Net income (loss) margin	2.9%	(4.3%)	7.2 pp
Earnings (loss) per share (1):
Basic	0.04	(0.06)	N/A
Diluted	0.04	(0.06)	N/A
Earnings (loss) per ADS*:
Basic	0.38	(0.57)	N/A
Diluted	0.37	(0.56)	N/A
Weighted average shares outstanding:
Basic	1,151,108,712	1,152,750,608	(0.1%)
Diluted	1,165,976,677	1,165,147,164	0.1%
Financial Indicators
Total operating revenue per ASM (TRASM) (cents) (2)	9.12	7.81	16.7%
Average base fare per passenger	52	47	9.4%
Total ancillary revenue per passenger (3)	55	44	24.5%
Total operating revenue per passenger	107	91	16.7%
Operating expenses per ASM (CASM) (cents) (2)	8.08	7.71	4.8%
CASM ex fuel (cents) (2)	5.25	4.74	10.8%
Adjusted CASM ex fuel (cents) (2) (4)	5.09	4.36	16.8%
Operating Indicators
Available seat miles (ASMs) (millions) (2)	16,390	19,362	(15.3%)
Domestic	9,636	13,151	(26.7%)
International	6,754	6,211	8.7%
Revenue passenger miles (RPMs) (millions) (2)	14,134	16,415	(13.9%)
Domestic	8,717	11,189	(22.1%)
International	5,417	5,226	3.7%
Load factor (5)	86.2%	84.8%	1.4 pp
Domestic	90.5%	85.1%	5.4 pp
International	80.2%	84.2%	(4.0 pp)
Booked passengers (thousands) (2)	14,010	16,559	(15.4%)
Domestic	10,309	12,958	(20.4%)
International	3,702	3,601	2.8%
Departures (2)	82,923	101,318	(18.2%)
Block hours (2)	219,001	263,514	(16.9%)
Aircraft at end of period	136	123	13
Average aircraft utilization (block hours)	12.89	13.39	(3.8%)
Fuel gallons accrued (millions)	157.15	186.27	(15.6%)
Average economic fuel cost per gallon (6)	2.93	3.07	(4.5%)
Average exchange rate	17.10	18.21	(6.1%)
Exchange rate at the end of the period	18.38	17.07	7.6%
*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 June 30, 2024	Three months ended June 30, 2023	Variance
Operating revenues:
Passenger revenues	693	746	(7.1%)
Fare revenues	349	396	(11.9%)
Other passenger revenues	344	350	(1.7%)
Non-passenger revenues	33	36	(8.3%)
Cargo	5	5	0.0%
Other non-passenger revenues	28	31	(9.7%)
Total operating revenues	726	782	(7.2%)
Other operating income	(48)	(3)	>100%
Fuel expense	224	255	(12.2%)
Aircraft and engine variable lease expenses	45	40	12.5%
Salaries and benefits	99	96	3.1%
Landing, take-off and navigation expenses	117	127	(7.9%)
Sales, marketing and distribution expenses	32	38	(15.8%)
Maintenance expenses	11	25	(56.0%)
Depreciation and amortization	50	31	61.3%
Depreciation of right of use assets	100	90	11.1%
Other operating expenses	30	32	(6.3%)
Operating expenses	660	731	(9.7%)
Operating income	66	51	29.4%
Finance income	12	9	33.3%
Finance cost	(72)	(57)	26.3%
Exchange gain, net	8	5	60.0%
Comprehensive financing result	(52)	(43)	20.9%
Income before income tax	14	8	75.0%
Income tax expense	(4)	(2)	100.0%
Net income	10	6	66.7%

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Consolidated Statement of Operations
Unaudited (In millions of U.S. dollars)	Six months ended June 30, 2024	Six months ended June 30, 2023	Variance
Operating revenues:
Passenger revenues	1,425	1,447	(1.5%)
Fare revenues	724	782	(7.4%)
Other passenger revenues	701	665	5.4%
Non-passenger revenues	69	66	4.5%
Cargo	11	10	10.0%
Other non-passenger revenues	58	56	3.6%
Total operating revenues	1,494	1,513	(1.3%)
Other operating income	(93)	(4)	>100%
Fuel expense	464	576	(19.4%)
Aircraft and engine variable lease expenses	42	76	(44.7%)
Salaries and benefits	201	187	7.5%
Landing, take-off and navigation expenses	244	237	3.0%
Sales, marketing and distribution expenses	78	74	5.4%
Maintenance expenses	48	51	(5.9%)
Depreciation and amortization	85	63	34.9%
Depreciation of right of use assets	198	177	11.9%
Other operating expenses	57	56	1.8%
Operating expenses	1,324	1,493	(11.3%)
Operating income	170	20	>100%
Finance income	24	16	50.0%
Finance cost	(134)	(115)	16.5%
Exchange gain (loss), net	2	(8)	N/A
Comprehensive financing result	(108)	(107)	0.9%
Income (loss) before income tax	62	(87)	N/A
Income tax (expense) benefit	(18)	22	N/A
Net income (loss)	44	(65)	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 provides additional details about the components of total ancillary revenue for the quarter:
Unaudited (In millions of U.S. dollars)	Three months ended June 30, 2024	Three months ended June 30, 2023	Variance
Other passenger revenues	344	350	(1.7%)
Non-passenger revenues	33	36	(8.3%)
Total ancillary revenues	377	386	(2.3%)
Booked passengers (thousands) (1)	7,087	8,373	(15.4%)
Total ancillary revenue per passenger	53	46	15.3%
(1) Includes schedule and charter.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of Total Ancillary Revenue per Passenger
The following table provides additional details about the components of total ancillary revenue for the first half of the year:
Unaudited (In millions of U.S. dollars)	Six months ended June 30, 2024	Six months ended June 30, 2023	Variance
Other passenger revenues	701	665	5.4%
Non-passenger revenues	69	66	4.5%
Total ancillary revenues	770	731	5.3%
Booked passengers (thousands) (1)	14,010	16,559	(15.4%)
Total ancillary revenue per passenger	55	44	24.5%
(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 June 30, 2024 Unaudited	As of December 31, 2023 Audited
Assets
Cash, cash equivalents and restricted cash	758	774
Short-term investments	16	15
Total cash, cash equivalents, restricted cash, and short-term investments (1)	774	-
Accounts receivable, net	226	251
Inventories	16	16
Guarantee deposits	200	148
Prepaid expenses and other current assets	57	44
Total current assets	1,273	1,248
Right of use assets	2,436	2,338
Rotable spare parts, furniture and equipment, net	954	805
Intangible assets, net	21	16
Derivatives financial instruments	1	2
Deferred income taxes	249	236
Guarantee deposits	441	462
Other long-term assets	43	39
Total non-current assets	4,145	3,898
Total assets	5,418	5,146
Liabilities and equity
Unearned transportation revenue	459	343
Accounts payable	209	250
Accrued liabilities	184	163
Other taxes and fees payable	271	262
Income taxes payable	14	8
Financial debt	325	220
Lease liabilities	357	373
Other liabilities	6	2
Total short-term liabilities	1,825	1,621
Financial debt	313	433
Accrued liabilities	10	14
Employee benefits	15	15
Deferred income taxes	16	16
Lease liabilities	2,646	2,518
Other liabilities	307	286
Total long-term liabilities	3,307	3,282
Total liabilities	5,132	4,903
Equity
Capital stock	248	248
Treasury shares	(12)	(12)
Contributions for future capital increases	-	-
Legal reserve	17	17
Additional paid-in capital	284	282
Accumulated deficit	(104)	(148)
Accumulated other comprehensive loss	(147)	(144)
Total equity	286	243
Total liabilities and equity	5,418	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 June 30, 2024	Three months ended June 30, 2023
Net cash flow provided by operating activities	304	159
Net cash flow used in investing activities	(141)	(102)
Net cash flow used in financing activities*	(149)	(109)
Increase (decrease) in cash, cash equivalents and restricted cash	14	(52)
Net foreign exchange differences	(8)	3
Cash, cash equivalents and restricted cash at beginning of period	752	704
Cash, cash equivalents and restricted cash at end of period	758	655
*Includes aircraft rental payments of $143 million and $131 million for the three months ended June 30, 2024, and 2023, respectively.

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)	Six months ended June 30, 2024	Six months ended June 30, 2023
Net cash flow provided by operating activities	549	367
Net cash flow used in investing activities	(238)	(211)
Net cash flow used in financing activities*	(320)	(219)
Decrease in cash, cash equivalents and restricted cash	(9)	(63)
Net foreign exchange differences	(7)	6
Cash, cash equivalents and restricted cash at beginning of period	774	712
Cash, cash equivalents and restricted cash at end of period	758	655
*Includes aircraft rental payments of $284 million and $258 million for the six months ended June 30, 2024, and 2023, respectively.

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