Volaris Reports Record First Quarter 2016 Results: 42% Adjusted EBITDAR Margin

April 25, 2016

MEXICO CITY--(BUSINESS WIRE)-- Volaris* (NYSE:VLRS and BMV:VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announced its financial results for the first quarter 2016.

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

First Quarter 2016 Highlights

    --  Total operating revenues were Ps.5,182 million for the first quarter, an
        increase of 37.5% year over year.
    --  Non-ticket revenues were Ps.1,276 million for the first quarter, an
        increase of 50.8% year over year. Non-ticket revenues per passenger for
        the first quarter was Ps.372, increasing 10.4% year over year.
    --  Total operating revenues per available seat mile (TRASM) rose to
        Ps.133.2 cents for the first quarter, an increase of 7.5% year over
        year.
    --  Operating expenses per available seat mile (CASM) were Ps.111.7 cents
        for the first quarter, a decrease of 0.7% year over year.
    --  Adjusted EBITDAR was Ps.2,175 million for the first quarter, an increase
        of 80.6% year over year. Adjusted EBITDAR margin was 42.0% for the first
        quarter, a margin expansion of 10.0 percentage points.
    --  Operating income was Ps.836 million for the first quarter, with an
        operating margin of 16.1%, equal to a year over year operating margin
        improvement of 6.9 percentage points.
    --  Net income was Ps.602 million (Ps.0.59 per share / US$0.34 per ADS) for
        the first quarter, with a net margin of 11.6%.
    --  Net increase of cash and cash equivalents was Ps.1,209 million for the
        first quarter. Unrestricted cash and cash equivalents was Ps.6,366
        million.

Volaris CEO Enrique Beltranena commented: "The strong passenger demand environment in the first quarter of 2016, supported by seasonality, continued fueling Volaris' financial results and achieving record first quarter margins. Our low base fares and bus switching campaign strategy continue to be the cornerstone of our unbundled business model to stimulate demand for both domestic and international travel in Mexico and the United States."

Macroeconomic Environment Supports Traffic Volume Growth; Still Exchange Rate Volatile

    --  Air traffic volume increase: The Mexican DGAC reported an overall
        passenger volume growth for Mexican carriers of 15.0% year over year in
        January and February. Domestic passenger volume increased 13.2%, while
        international passenger volume increased 21.9%.
    --  Exchange rate volatility: The Mexican peso depreciated 21% year over
        year against the US dollar, from an average of Ps.14.93 pesos per US
        dollar in the first quarter 2015 to Ps.18.02 pesos per US dollar during
        the first quarter 2016.
    --  Lower fuel prices: The average economic fuel cost per gallon decreased
        25.6% to Ps.22.1 per gallon (US$1.3) in the first quarter 2016, year
        over year.

Unit Revenues Improvements Driven by a Strong Demand and Seasonality, with Non-Ticket Revenue Expansion

    --  Passenger traffic stimulation: Volaris booked 3.4 million passengers in
        the first quarter of 2016, a 36.6% year over year growth. Volaris
        traffic (measured in terms of revenue passenger miles, or RPMs)
        increased 35.8% for the same period.
    --  Unit revenues improvement and demand driven capacity growth: For the
        first quarter of 2016, TRASM increased 7.5%, while yield decreased 1.6%,
        year over year. During the first quarter, in terms of ASMs, domestic
        capacity grew 28.4%, while international capacity increased 26.7%
        responding to a seasonally strong demand in both markets.
    --  Non-ticket revenues growth: Non-ticket revenues per passenger increased
        10.4% year over year for the first quarter of 2016, as the Company
        continued implementing dynamic pricing strategies and increasing car
        rental and hotel content.
    --  New routes: In the first quarter 2016, Volaris launched four new
        domestic routes.

Fuel Savings Offset Exchange Rate Pressures

In the first quarter 2016, Volaris continued to experience pressure in US-dollar denominated costs, such as aircraft rents, international airport costs, and maintenance expenses due to the depreciation of the Mexican peso. Despite these challenges, the CASM for the first quarter was Ps.111.7 cents, a 0.7% decrease compared to the first quarter 2015, mainly driven by lower fuel prices.

Young and Fuel Efficient Fleet

As of March 31, 2016, Volaris fleet was comprised of 59 aircraft (18 A319s, 39 A320s and 2 A321s), with an average age of 4.6 years.

Strong Cash Flow Generation, Solid Balance Sheet and Good Liquidity

The net increase in cash and cash equivalents was equal to Ps.1,209 million during the first quarter, mainly driven by generation of operating cash flow of Ps.1,329 million. As of March 31, 2016, Volaris' unrestricted cash and cash equivalents balance was Ps.6,366 million. Volaris registered negative net debt (or a positive net cash position) of Ps.5,265 million and total equity of Ps.7,484 million.

During the first quarter 2016, Volaris obtained positive cash flow from investing activities of Ps.435 million, which included reimbursements of aircraft pre-delivery payments of Ps.446 million and net acquisition of rotable spare parts, furniture and equipment and intangibles assets for Ps.11 million.

Active in Fuel Risk Management

Volaris has continued to remain active in its fuel risk management program. Volaris hedged 55% of its first quarter fuel consumption of 2016, at an average strike price of US $1.94 per gallon, which combined with the 45% unhedged consumption, resulted in a blended average economic fuel cost of US$1.27 per gallon.

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

Conference Call/Webcast Details:



                                           Mr. Enrique Beltranena, CEO
Presenters for the Company:
                                           Mr. Fernando Suárez, CFO
Date:
                                           Monday, April 25, 2016

Time:                                      11:00 am U.S. EDT (10:00 am Mexico City Time)

United States dial in (toll free):         1-800-311-9408

Mexico dial in (toll free):                0-1-800-847-7666

Brazil dial in (toll free):                0800-282-5781

International dial in:                     +1-334-323-7224

Participant entry number:                  83342

Webcast will be available on our website:  https://www.webcaster4.com/Webcast/Page/1174/14488



About Volaris:

Controladora Vuela Compania de Aviacion, 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 and Central America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since beginning operations in March 2006, Volaris has increased its routes from five to more than 150 and its fleet from four to 59 aircraft. Volaris offers more than 280 daily flight segments on routes that connect 40 cities in Mexico and 22 cities in the United States and Central America with the youngest aircraft fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business people and leisure travelers in Mexico and to select destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for six consecutive years. For more information, please visit: www.volaris.com

Forward-looking Statements:

Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to a number of 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 revenues; and government regulation. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings.

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

                       Financial and Operating Indicators

Unaudited                 Three months
                         ended March 31,
(In Mexican pesos,            2016        Three months   Three months   Variance
except otherwise                           ended March    ended March
indicated)                (US Dollars)*     31, 2016       31, 2015       (%)

Total operating revenues
(millions)                           298          5,182          3,768     37.5%

Total operating expenses
(millions)                           250          4,346          3,422     27.0%

EBIT (millions)                       48            836            346     >100%

EBIT margin                        16.1%          16.1%           9.2%    6.9 pp

Adjusted EBITDA
(millions)                            55            956            449     >100%

Adjusted EBITDA margin             18.4%          18.4%          11.9%    6.5 pp

Adjusted EBITDAR
(millions)                           125          2,175          1,204     80.6%

Adjusted EBITDAR margin            42.0%          42.0%          32.0%   10.0 pp

Net income (millions)                 35            602            306     96.4%

Net income margin                  11.6%          11.6%           8.1%    3.5 pp

Earnings per share:

Basic (pesos)                       0.03           0.59           0.30     96.4%

Diluted (pesos)                     0.03           0.59           0.30     96.4%

Earnings per ADS:

Basic (pesos)                       0.34           5.95           3.03     96.4%

Diluted (pesos)                     0.34           5.95           3.03     96.4%

Weighted average shares
outstanding:

Basic                                  -  1,011,876,677  1,011,876,677      0.0%

Diluted                                -  1,011,876,677  1,011,876,677      0.0%

Available seat miles
(ASMs) (millions)(1)                   -          3,892          3,043     27.9%

Domestic                               -          2,730          2,126     28.4%

International                          -          1,162            917     26.7%

Revenues passenger miles
(RPMs) (millions)(1)                   -          3,306          2,435     35.8%

Domestic                               -          2,317          1,719     34.8%

International                          -            989            716     38.2%

Load factor(2)                         -          85.0%          80.0%    5.0 pp

Domestic                               -          84.9%          80.9%    4.0 pp

International                          -          85.1%          78.0%    7.1 pp

Total operating revenues
per ASM (TRASM) (cents)
(1)                                  7.7          133.2          123.8      7.5%

Passenger revenues per
ASM (RASM) (cents)(1)                5.8          100.4           96.0      4.5%

Passenger revenues per
RPM (Yield) (cents)(1)               6.8          118.1          120.0    (1.6%)

Average fare(2)                     65.6          1,141          1,165    (2.0%)

Non-ticket revenues per
passenger (1)                       21.4            372            337     10.4%

Operating expenses per
ASM (CASM) (cents)(1)                6.4          111.7          112.5    (0.7%)

Operating expenses per
ASM (CASM) (US cents)(1)               -            6.4          7.4**   (13.5%)

CASM ex fuel (cents)(1)              4.9           85.6           77.9      9.9%

CASM ex fuel (US cents)
(1)                                    -            4.9          5.1**    (4.3%)

Booked passengers
(thousands)(1)                         -          3,430          2,511     36.6%

Departures(1)                          -         24,061         19,313     24.6%

Block hours(1)                         -         64,868         50,695     28.0%

Fuel gallons consumed
(millions)                             -           45.8           35.4     29.6%

Average economic fuel
cost per gallon                      1.3           22.1           29.7   (25.6%)

Aircraft at end of
period                                 -             59             51     15.7%

Average aircraft
utilization (block
hours)                                 -           13.1           12.1      8.4%

Average exchange rate                  -          18.02          14.93     20.7%

*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only

**Peso amounts were converted to U.S. dollars at the rate of Ps.15.1542 for
convenience purposes only

(1) Includes schedule +
charter (2) Includes
schedule



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

                      Consolidated Statement of Operations

                            Three months
Unaudited                  ended March 31,
                                2016        Three months  Three months  Variance
(In millions of Mexican                     ended March   ended March
pesos)                      (US Dollars)*     31, 2016      31, 2015      (%)

Operating revenues:

Passenger                              224         3,906         2,922     33.7%

Non-ticket                              73         1,276           846     50.8%

                                       298         5,182         3,768     37.5%

Other operating income                (11)         (195)          (23)     >100%

Fuel                                    58         1,013         1,051    (3.6%)

Aircraft and engine rent
expense                                 70         1,219           755     61.5%

Landing, take-off and
navigation expenses                     45           791           574     37.8%

Salaries and benefits                   32           564           424     33.0%

Sales, marketing and
distribution expenses                   17           295           216     36.9%

Maintenance expenses                    20           340           181     87.5%

Other operating expenses                11           200           142     40.9%

Depreciation and
amortization                             7           120           103     16.2%

Operating expenses                     250         4,346         3,422     27.0%

Operating income                        48           836           346     >100%

Finance income                           2            34             9     >100%

Finance cost                             -           (7)           (4)     67.3%

Exchange gain, net                       1             9            86   (89.1%)

Comprehensive financing
result                                   2            37            91   (59.9%)

Income before income tax                50           872           437     99.4%

Income tax expense                    (16)         (270)         (131)     >100%

Net income                              35           602           306     96.4%

Attribution of net income:

Equity holders of the
parent                                  35           602           306     96.4%

Non-controlling interest                 -             -             -         -

Net income                              35           602           306     96.4%

*Peso amounts were converted to U.S. dollars at the rate
of Ps.17.4015 for convenience purposes only.



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

                 Consolidated Statement of Financial Position

                                   March 31, 2016
                                     Unaudited    March 31, 2016 December 31,
(In millions of Mexican pesos)     (US Dollars)*    Unaudited    2015 Audited

Assets

Cash and cash equivalents                     366          6,366         5,157

Accounts receivable                            34            594           464

Inventories                                    10            171           163

Prepaid expenses and other current
assets                                         29            496           585

Financial instruments                           2             39            10

Guarantee deposits                             60          1,052           861

Total current assets                          501          8,718         7,241

Rotable spare parts, furniture and
equipment, net                                126          2,187         2,550

Intangible assets, net                          6             97            95

Financial instruments                          17            294            69

Deferred income tax                            31            546           545

Guarantee deposits                            270          4,703         4,704

Other assets                                    3             59            58

Total non-current assets                      453          7,887         8,020

Total assets                                  954         16,604        15,261

Liabilities

Unearned transportation revenues              147          2,558         1,957

Accounts payable                               41            714           795

Accrued liabilities                           104          1,802         1,471

Other taxes and fees payable                   85          1,473         1,107

Income taxes payable                           16            281           338

Financial instruments                           3             45            44

Financial debt                                 49            845         1,371

Other liabilities                               1             22            19

Total short-term liabilities                  445          7,739         7,103

Financial instruments                           -              2            11

Financial debt                                 15            256           220

Accrued liabilities                             9            158           157

Other liabilities                               3             61            49

Employee benefits                               1             11            10

Deferred income taxes                          51            894           885

Total long-term liabilities                    79          1,381         1,333

Total liabilities                             524          9,120         8,436

Equity

Capital stock                                 171          2,974         2,974

Treasury shares                               (5)           (91)          (91)

Contributions for future capital
increases                                       -              -             -

Legal reserve                                   2             38            38

Additional paid-in capital                    103          1,792         1,791

Retained earnings                             173          3,010         2,408

Accumulated other comprehensive
losses                                       (14)          (238)         (295)

Total equity                                  430          7,484         6,825

Total liabilities and equity                  954         16,604        15,261

Total shares outstanding fully
diluted                                            1,011,876,677 1,011,876,677

*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only



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

         Consolidated Statement of Cash Flows – Cash Flow Data Summary

                                   Three months
                                  ended March 31,   Three months    Three months
Unaudited (In millions of              2016        ended March 31,  ended March
Mexican pesos)                     (US Dollars)*        2016          31, 2015

Net cash flow provided by
operating activities                           76            1,329           949

Net cash flow provided by (used
in) investing activities                       25              435          (51)

Net cash flow used in financing
activities                                   (32)            (549)          (37)

Increase in cash and cash
equivalents                                    70            1,216           862

Net foreign exchange differences                -              (7)            29

Cash and cash equivalents at
beginning of period                           296            5,157         2,265

Cash and cash equivalents at end
of period                                     366            6,366         3,156

*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only



View source version on businesswire.com: http://www.businesswire.com/news/home/20160425005304/en/

    CONTACT: Investor Relations:
             Andres Pliego & Diana Martinez, +52 55 5261 6444
             ir@volaris.com
             or
             Media:
             Cynthia Llanos, +52 1 55 4577 0803
             cllanos@gcya.net

    Source: Volaris
Investor Relations: Andrés Pliego & Diana Martínez, 52 55 5261 6444 ir@volaris.com or Media: Cynthia Llanos, 52 1 55 4577 0803 cllanos@gcya.net