Volaris Reports Fourth Quarter 2018 Results: 8.4% TRASM Increase and 7.9% Reduction of Unit Cost Excluding Fuel

February 22, 2019

MEXICO CITY, Feb. 22, 2019 /PRNewswire/ -- 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 fourth quarter and full year 2018.

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

Fourth Quarter and Full Year 2018 Highlights

  • Total operating revenues were Ps.7,909 million and Ps.27,305 million for the fourth quarter and full year, an increase of 21.2% and 10.2% year over year, respectively.
  • Total ancillary revenues were Ps.2,538 million and Ps.8,817 million for the fourth quarter and full year, an increase of 42.4% and 26.0% year over year, respectively. Total ancillary revenues per passenger for the fourth quarter and full year were Ps.512 and Ps.479, increasing 21.3% and 12.5% year over year, respectively. Total ancillary revenues represent 32.1% and 32.3% of the total operating revenues for the fourth quarter and full year, respectively.
  • Total operating revenues per available seat mile (TRASM) were Ps.144.5 cents and Ps.130.0 cents for the fourth quarter and full year, an increase of 8.4% and decrease of 1.1% year over year, respectively.
  • Operating expenses per available seat mile (CASM) were Ps.138.0 cents and Ps.134.2 cents for the fourth quarter and full year, an increase of 3.8% and 1.9% year over year, respectively; with an average economic fuel cost per gallon were Ps.49.1 and Ps.44.6 for the fourth quarter and full year, an increase of 32.8% and 29.3% year over year, respectively.
  • Operating expenses excluding fuel, per available seat mile (CASM ex fuel) were Ps.85.3 cents and Ps.85.9 cents for the fourth quarter and full year, a decrease of 7.9% and 7.8% year over year, respectively. 
  • Operating income was Ps.355 million and an operating loss of Ps.881 million for the fourth quarter and full year, an increase of >100% year over year, respectively. Operating margin for the fourth quarter and full year was 4.5% and (3.2%), an increase in margin of 4.2 percentage points and a decrease in margin of 3.0 percentage points year over year, respectively.
  • Net income was Ps.511 million (Ps.0.51 per share / US$0.26 per ADS) and a net loss of Ps.687 million (Ps.(0.68) per share / US$(0.35) per ADS), with a net margin of 6.5% and (2.5%) for the fourth quarter and full year, respectively.
  • At the close of the fourth quarter, the Mexican peso had depreciated 4.6% against the U.S. dollar with respect to the end of period exchange rate of the previous quarter (Ps.18.81 per US dollar). The Company booked a foreign exchange gain of Ps.384 million as a consequence of our U.S. dollar net monetary asset position. 
  • The net cash flow provided by operating activities were Ps.102 million and Ps.566 million for the fourth quarter and full year, respectively. Year over year the cash and cash equivalents for the fourth quarter and full year decrease Ps.218 million and Ps.1,088 million, respectively; despite the net foreign exchange differences represent an increase of Ps.277 million and decrease of Ps.29 million for the fourth quarter and full year, respectively. As of December 31, 2018, unrestricted cash and cash equivalents were Ps.5,863 million.

Resilient Macroeconomics and Domestic Consumer Demand with Exchange Rate Depreciation and Fuel Price Pressures

  • Resilient macroeconomics and domestic consumer demand:  The macroeconomic indicators in Mexico during full year are stable, with same store sales1 increasing 5.0% year over year; remittances2 increasing in fourth quarter and full year 9.4% and 10.5% year over year, respectively; and the Mexican Consumer Confidence Balance Indicator (BCC)3 increasing in the fourth quarter and full year 18% and 12% year over year, respectively.
  • Air traffic volume increase: The Mexican DGAC reported overall passenger volume growth for Mexican carriers of 10.6% year over year for the fourth quarter; domestic overall passenger volume increased 10.6%, while international overall passenger volume increased 3.8%.
  • Exchange rate volatility: The Mexican peso depreciated 4.7% year over year against the US dollar, from an average exchange rate of Ps.18.93 pesos per US dollar in the fourth quarter 2017 to Ps.19.83 pesos per US dollar during the fourth quarter 2018. At the close of the fourth quarter, the Mexican peso had depreciated 4.6% with respect to the end of period exchange rate of the previous quarter (Ps.18.81 per US dollar). The Company booked a foreign exchange gain of Ps.384 million, mainly as a consequence of our US dollar net monetary asset position. 
  • Higher fuel prices: The average economic fuel cost per gallon increased 32.8% and 29.3% year over year to Ps.49.1 per gallon (US$2.5) and Ps.44.6 per gallon (US$2.3) in the fourth quarter and full year, respectively.

Passenger Traffic Stimulation, Further Ancillary Revenue Expansion, and Positive TRASM Trend Reaching Almost the Same Level Last Year

  • Passenger traffic stimulation: Volaris booked 5.0 million passengers in the fourth quarter 2018 and 18.4 million passengers in full year 2018, up 17.4% and 12.0% year over year. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) increased 17.1% and 11.5% for the same period, respectively. System load factor during the quarter and full year increased 3.9 percentage points and 0.1 percentage points to 86.5% and 84.5% year over year, respectively.
  • Positive TRASM trend almost at the same level of last year: For the fourth quarter and full year 2018, TRASM increased 8.4% and decreased 1.1% year over year, respectively. During the fourth quarter and full year 2018, the total capacity, in terms of ASMs, increased 11.8% and 11.4% year over year, respectively.
  • Total ancillary revenue growth: For the fourth quarter and full year 2018, total ancillary revenues increased 42.4% and 26.0% year over year, respectively. Total ancillary revenues per passenger for the fourth quarter of 2018 and full year increased 21.3% and 12.5% year over year, respectively. The total ancillary revenue generation continues to grow with new and matured products, appealing to customers' needs, representing 33.8% in our full year figures of the total operating revenues.
  • New routes: In the fourth quarter 2018, Volaris began operations in 16 new domestic routes from its focus cities Mexico City, Bajio, Guadalajara and Tijuana and four new international routes (Guadalajara, Jalisco to Charlotte, North Carolina; Bajio to Sacramento, California and Bajio to San Jose, California; and Guadalajara, Jalisco to Albuquerque, New Mexico). Additionally, Volaris launched one domestic route (Ciudad Juarez, Chihuahua to Culiacan, Sinaloa). 

Despite Fuel Price Pressure and Exchange Rate Depreciation, Offset Mainly by Cost Control Discipline

  • CASM and CASM ex fuel for the fourth quarter 2018 were Ps.138.0 (US$7.0 cents) and Ps.85.3 cents (US$4.3 cents), respectively. This represented an increase of 3.8% and a decrease of 7.9%, respectively; mainly driven by higher average economic fuel cost per gallon of 32.8% and an average exchange rate depreciation of 4.7%, which were offset mainly by a tightening cost control discipline.

Young and Fuel-efficient Fleet

  • During the fourth quarter 2018, the Company incorporated four aircraft (three A320 neo and one A321 neo) to its fleet; during this quarter no redeliveries were registered. As of December 31, 2018, Volaris' fleet was composed of 77 aircraft (8 A319s, 55 A320s and 14 A321s), with an average age of 4.6 years. At the end of the fourth quarter 2018, Volaris' fleet had an average of 185 seats, 73% of which were in sharklet-equipped aircraft.

Solid Balance Sheet and Good Liquidity

  • During the fourth quarter and full year 2018, cash flow provided by operating activities were Ps.102 million and Ps.566 million, respectively; cash flow used in investing activities were Ps.748 million and Ps.1,389 million, respectively; cash flow provided by (used in) financing activities were Ps.151 million and (Ps.235) million, respectively; despite the net foreign exchange differences represent an increase of Ps.277 million and decrease of Ps.29 million for the fourth quarter and full year, respectively. Year over year the cash and cash equivalents for the fourth quarter and full year decrease Ps.218 million and Ps.1,088 million, respectively. As of December 31, 2018, cash and cash equivalents were Ps.5,863 million, representing 21.5% of last twelve months operating revenues. Volaris registered negative net debt (or a positive net cash position) of Ps.2,340 million and total equity of Ps.9,182 million.

Active in Risk Management

  • Volaris remains active in its fuel risk management program. Volaris used call options to hedge 46% of its fourth quarter 2018 fuel consumption, at an average strike price of US $1.85 per gallon, which combined with the 54% unhedged consumption, resulted in a blended average economic fuel cost of US$2.5 per gallon.

IFRS 15: Revenue from Contracts with Customers

  • During 1Q 2018, we adopted IFRS 15 "Revenue from Contracts with Customers" which replaces existing revenue recognition guidance, including IAS 18 "Revenue". IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
  • The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed in the consolidated statement of operations including in these quarterly earnings release as "other passenger revenue"). 
  • Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance, hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.
  • This quarterly earnings release includes supplemental information for comparable basis, with recast amounts with the IFRS 15 adoption effects, and were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017.  

IFRS 16: Leases

  • IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet accounting model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of 'low-value' assets (i.e., personal computers) and short-term leases (leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee recognizes a liability to make lease payments (the lease liability) and an asset representing the right to use the underlying asset during the lease term (the right-of-use asset). Lessees are required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
  • Lessees are also required to remeasure the lease liability upon the occurrence of certain events (i.e., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. In addition, for leases denominated in a foreign currency other than lessee's functional currency the Lease liability will be remeasured with a charge directly to income or expense in the current period.
  • IFRS 16 permits two different adoption models. Full retrospective model or modified retrospective model.
  • Cash Flows impact. Under IAS 17 cash flows related to rent payments were recorded as part of the operating cash flows, but under IFRS 16 the cash flows related to rental payments must be  presented as part of the financial cash flows.
  • Income tax accounting. Under IFRS 16, based in the impacts and differences between the right of use asset and the lease liability, will be necessary: a) Recognition and measurement of deferred tax assets and liabilities; and b) Assessment of the recoverability of deferred tax assets.
  • Lessor accounting under IFRS 16 is substantially unchanged from accounting under IAS 17. Lessors continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases.
  • IFRS 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make more extensive disclosures than under IAS 17.

Transition to IFRS 16

  • The Company adopted IFRS 16 as of January 1st, 2019, using the full retrospective method. The cumulative effect of adopting IFRS 16 has been recognized as an adjustment to the opening balance as an increase in assets and liabilities and an adjustment in the retained earnings. The full disclosure of this initial adoption will be included in the Company´s 2018 annual report. 

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:

Presenters for the Company:

 

 

 

Date:

Mr. Enrique Beltranena, CEO

Mr. Holger Blankenstein, Airline EVP

Ms. Sonia Jerez Burdeus, CFO

 

Friday, February 22, 2019

Time:

10:00 am U.S. EDT (9:00 am Mexico City Time)

United States dial in (toll free):

1-877-830-2576

Mexico dial in (toll free):

001-800-514-6145

Brazil dial in (toll free):

0-800-891-6744

International dial in:

+ 1-785-424-1726

Participant passcode:

VOLARIS (8652747)

Webcast will be available at:

https://webcasts.eqs.com/volaris20190222

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 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 172 and its fleet from four to 77 aircraft. Volaris offers more than 360 daily flight segments on routes that connect 41 cities in Mexico and 26 cities in the United States and Central America with the youngest 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 eight 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, 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 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. Forward-looking statements should not be read as a guarantee or assurance of future performance or results and 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 with respect to 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 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. 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.

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

Financial and Operating Indicators


Unaudited

Three months
ended December
31, 2018

Three months
ended
December 31,
2018

Three months
ended December
31, 2017

(Adjusted)

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars)*

(%)

Total operating revenues (millions)

402

7,909

6,524

21.2%

Total operating expenses (millions)

384

7,554

6,508

16.1%

EBIT (millions)

18

355

17

>100%

EBIT margin

4.5%

4.5%

0.3%

4.2 pp

Depreciation and amortization

7

130

131

(0.9%)

Aircraft and engine rent expense

82

1,622

1,612

0.6%

Net income (millions)

26

511

454

12.6%

Net income margin

6.5%

6.5%

7.0%

(0.5) pp

Income per share:





Basic (pesos)

0.03

0.51

0.45

12.6%

Diluted (pesos)

0.03

0.51

0.45

12.6%

Income per ADS:





Basic (pesos)

0.26

5.05

4.49

12.6%

Diluted (pesos)

0.26

5.05

4.49

12.6%

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)

-

5,472

4,895

11.8%

     Domestic

-

3,832

3,361

14.0%

     International

-

1,640

1,534

6.9%

Revenue passenger miles (RPMs) (millions) (1)

-

4,731

4,042

17.1%

     Domestic

-

3,428

2,889

18.7%

     International

-

1,303

1,153

13.0%

Load factor (2) 

-

86.5%

82.6%

3.9 pp

     Domestic

-

89.5%

85.9%

3.6 pp

     International

-

79.4%

75.2%

4.2 pp

Total operating revenue per ASM (TRASM) (cents) (1) 

7.3

144.5

133.3

8.4%

Total ancillary revenue per passenger (4)

26.0

512

422

21.3%

Total operating revenue per passenger

81.0

1,594

1,544

3.2%

Operating expenses per ASM (CASM) (cents) (1)

7.0

138.0

133.0

3.8%

Operating expenses per ASM (CASM) (US cents) (3)

-

7.0

7.0

(0.9%)

CASM ex fuel (cents) (1)

4.3

85.3

92.7

(7.9%)

CASM ex fuel (US cents) (3)

-

4.3

4.9

(12.1%)

Booked passengers (thousands) (1)

-

4,963

4,226

17.4%

Departures (1)

-

30,844

27,878

10.6%

Block hours (1)

-

84,569

76,079

11.2%

Fuel gallons consumed (millions)

-

58.7

53.3

10.1%

Average economic fuel cost per gallon

2.5

49.1

37.0

32.8%

Aircraft at end of period

-

77

71

8.5%

Average aircraft utilization (block hours)

-

13.1

12.8

2.3%

Average exchange rate

-

19.83

18.93

4.7%

End of period exchange rate

-

19.68

19.74

(0.3%)

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

(1) Includes schedule + charter                                                                    (3) Dollar amounts were converted at average exchange rate of each period

(2) Includes schedule                                                                                   (4) Includes "other passenger revenues" and "non-passenger revenues"

 

 

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

Financial and Operating Indicators


Unaudited

Twelve months
ended December
31, 2018

Twelve months
ended
December 31,
2018

Twelve months
ended December
31, 2017

(Adjusted)

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars) *

(%)

Total operating revenues (millions)

1,387

27,305

24,788

10.2%

Total operating expenses (millions)

1,432

28,186

24,827

13.5%

EBIT (millions)

(45)

(881)

(39)

>100%

EBIT margin

(3.2%)

(3.2%)

(0.2%)

(3.0) pp

Depreciation and amortization

25

501

549

(8.8%)

Aircraft and engine rent expense

321

6,315

6,073

4.0%

Net loss (millions)

(35)

(687)

(652)

5.5%

Net loss margin

(2.5%)

(2.5%)

(2.6%)

0.1 pp

Loss per share:





Basic (pesos)

(0.03)

(0.68)

(0.64)

5.5%

Diluted (pesos)

(0.03)

(0.68)

(0.64)

5.5%

Loss per ADS:





Basic (pesos)

(0.35)

(6.79)

(6.44)

5.5%

Diluted (pesos)

(0.35)

(6.79)

(6.44)

5.5%

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)

-

21,010

18,861

11.4%

     Domestic

-

14,519

12,740

14.0%

     International

-

6,491

6,121

6.0%

Revenue passenger miles (RPMs) (millions) (1)

-

17,748

15,917

11.5%

     Domestic

-

12,655

11,054

14.5%

     International

-

5,093

4,863

4.7%

Load factor (2) 

-

84.5%

84.4%

0.1 pp

     Domestic

-

87.2%

86.8%

0.4 pp

     International

-

78.5%

79.4%

(0.9) pp

Total operating revenue per ASM (TRASM) (cents) (1) 

6.6

130.0

131.4

(1.1%)

Total ancillary revenue per passenger (4)

24.4

479

426

12.5%

Total operating revenue per passenger

75.4

1,484

1,509

(1.6%)

Operating expenses per ASM (CASM) (cents) (1)

6.8

134.2

131.6

1.9%

Operating expenses per ASM (CASM) (US cents) (3)

-

7.0

7.0

0.3%

CASM ex fuel (cents) (1)

4.4

85.9

93.2

(7.8%)

CASM ex fuel (US cents) (3)

-

4.5

4.9

(9.3%)

Booked passengers (thousands) (1)

-

18,396

16,427

12.0%

Departures (1)

-

117,920

108,060

9.1%

Block hours (1)

-

322,054

293,642

9.7%

Fuel gallons consumed (millions)

-

227.4

210.5

8.0%

Average economic fuel cost per gallon

2.3

44.6

34.5

29.3%

Aircraft at end of period

-

77

71

8.5%

Average aircraft utilization (block hours)

-

13.2

12.6

4.8%

Average exchange rate

-

19.24

18.93

1.6%

End of period exchange rate

-

19.68

19.74

(0.3%)

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

(1) Includes schedule + charter                                                                    (3) Dollar amounts were converted at average exchange rate of each period

(2) Includes schedule                                                                                   (4) Includes "other passenger revenues" and "non-passenger revenues"







 

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

Consolidated Statement of Operations


Unaudited

Three months
ended December
31, 2018

Three months

ended December 31,
2018

Three months
ended December 31,
2017

(Adjusted)

Variance

(In millions of Mexican pesos)

(US Dollars) *

(%)

Operating revenues:





Passenger revenues

386

7,589

6,258

21.3%

   Fare revenues

273

5,370

4,742

13.3%

   Other passenger revenues

113

2,219

1,516

46.4%






Non-passenger revenues

16

319

267

19.6%

   Cargo

4

71

53

33.6%

   Other non-passenger revenues

13

248

214

16.1%






Total operating revenues

402

7,909

6,524

21.2%






Other operating income

(7)

(147)

(78)

88.8%

Fuel

147

2,885

1,972

46.3%

Aircraft and engine rent expense

82

1,622

1,612

0.6%

Landing, take-off and navigation expenses

59

1,158

981

18.1%

Salaries and benefits

40

795

715

11.2%

Sales, marketing and distribution expenses

21

422

479

(11.8%)

Maintenance expenses

20

392

396

(1.0%)

Other operating expenses

15

296

300

(1.2%)

Depreciation and amortization

7

130

131

(0.9%)

Operating expenses

384

7,554

6,508

16.1%






Operating income

18

355

17

>100%






Finance income

4

83

33

>100%

Finance cost

(2)

(30)

(24)

24%

Exchange gain, net

20

384

784

(51.0%)

Comprehensive financing result

22

437

793

(44.9%)






Income before income tax

40

792

810

(2.2%)

Income tax expense

(14)

(281)

(356)

(21.1%)

Net income

26

511

454

12.6%






*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

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

Consolidated Statement of Operations


Unaudited

 

Twelve months
ended December
31, 2018

Twelve months

 ended December 31,
2018

Twelve months
ended December 31,
2017

(Adjusted)

Variance

(In millions of Mexican pesos)

(US Dollars)*

(%)

Operating revenues:





Passenger revenues

1,326

26,109

23,649

10.4%

   Fare revenues

939

18,488

17,791

3.9%

   Other passenger revenues

387

7,621

5,858

30.1%






Non-passenger revenues

61

1,196

1,139

5.0%

   Cargo

12

227

171

33.0%

   Other non-passenger revenues

49

969

968

0.1%






Total operating revenues

1,387

27,305

24,788

10.2%






Other operating income

(32)

(622)

(97)

>100%

Fuel

515

10,135

7,256

39.7%

Aircraft and engine rent expense

321

6,315

6,073

4.0%

Landing, take-off and navigation expenses

233

4,583

4,010

14.3%

Salaries and benefits

159

3,125

2,824

10.7%

Maintenance expenses

77

1,518

1,433

5.9%

Sales, marketing and distribution expenses

76

1,501

1,692

(11.3%)

Other operating expenses

57

1,130

1,088

3.8%

Depreciation and amortization

25

501

549

(8.8%)

Operating expenses

1,432

28,186

24,827

13.5%






Operating loss

(45)

(881)

(39)

>100%






Finance income

8

153

106

44.2%

Finance cost

(6)

(120)

(86)

39.3%

Exchange loss, net

(4)

(72)

(794)

(90.9%)

Comprehensive financing result

(2)

(40)

(774)

(94.8%)






Loss before income tax

(47)

(921)

(813)

13.3%

Income tax benefit

12

233

161

44.7%

Net loss

(35)

(687)

(652)

5.5%






*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger

The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed below as "other passenger revenue"). 

Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance, hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.  

The following table shows quarterly additional detail about the components of total ancillary revenue:

Unaudited

Three months
ended
December 31,
2018

(US Dollars)*

Three months
ended
December 31,
2018

Three months
ended
December 31,
2017

(Adjusted)

Variance

(%)

(In millions of Mexican pesos)






Other passenger revenues

113

2,219

1,516

46.4%

Non-passenger revenues

16

319

267

19.6%

Total ancillary revenues

129

2,538

1,783

42.4%






Booked passengers (thousands)

-

4,963

4,226

17.4%






Total ancillary revenue per passenger

26

512

422

21.3%






*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

Unaudited

Twelve months
ended
December 31,
2018

(US Dollars)*

Twelve months
ended
December 31,
2018

Twelve months
ended
December 31,
2017

(Adjusted)

Variance

(%)

(In millions of Mexican pesos)






Other passenger revenues

387

7,621

5,858

30.1%

Non-passenger revenues

61

1,196

1,139

5.0%

Total ancillary revenues

448

8,817

6,997

26.0%






Booked passengers (thousands)

-

18,396

16,427

12.0%






Total ancillary revenue per passenger

24.4

479

426

12.5%






*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

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

Consolidated Statement of Financial Position


(In millions of Mexican pesos)

December 31, 2018
Unaudited

December 31, 2018
Unaudited

December 31, 2017
(Adjusted)

(US Dollars)*

Assets




Cash and cash equivalents

298

5,863

6,951

Accounts receivable

78

1,535

1,449

Inventories

15

297

295

Prepaid expenses and other current assets

37

725

768

Financial instruments

3

62

497

Guarantee deposits

40

791

1,353

Total current assets

471

9,274

11,313

Rotable spare parts, furniture and equipment, net

294

5,782

4,376

Intangible assets, net

9

179

190

Deferred income taxes

30

593

562

Guarantee deposits

322

6,337

6,098

Other assets

8

155

126

Total non-current assets

663

13,047

11,353

Total assets

1,134

22,321

22,666

Liabilities




Unearned transportation revenue

124

2,439

2,293

Accounts payable

56

1,101

1,118

Accrued liabilities

118

2,318

2,051

Other taxes and fees payable

98

1,927

1,357

Income taxes payable

-

6

-

Financial instruments

6

123

-

Financial debt

62

1,212

2,404

Other liabilities

6

118

281

Total short-term liabilities

470

9,243

9,503

Financial debt

117

2,311

1,079

Accrued liabilities

7

137

200

Other liabilities

17

328

217

Employee benefits

1

18

19

Deferred income taxes

56

1,101

1,616

Total long-term liabilities

198

3,895

3,131

Total liabilities

668

13,138

12,635

Equity




Capital stock

151

2,974

2,974

Treasury shares

(6)

(123)

(85)

Contributions for future capital increases

-

-

-

Legal reserve

15

291

291

Additional paid-in capital

94

1,853

1,805

Retained earnings

216

4,261

4,948

Accumulated other comprehensive losses

(4)

(73)

99

Total equity

467

9,182

10,031

Total liabilities and equity

1,134

22,321

22,666





Total shares outstanding fully diluted


1,011,876,677

1,011,876,677

*Peso amounts were converted to U.S. dollars at end of period exchange rate 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


Unaudited

 

Three months

ended December 31,
2018

Three months
ended December 31,
2018

Three months
ended December
31, 2017

(Adjusted)

(In millions of Mexican pesos)

(US Dollars)*





Net cash flow provided by operating activities

5

102

1,116

Net cash flow used in investing activities

(38)

(748)

(852)

Net cash flow provided by financing activities

8

151

865

(Decrease) increase in cash and cash equivalents

(25)

(495)

1,130

Net foreign exchange differences

14

277

448

Cash and cash equivalents at beginning of period

309

6,082

5,373

Cash and cash equivalents at end of period

298

5,863

6,951

*Peso amounts were converted to U.S. dollars at end of period exchange rate 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


Unaudited

 

Twelve months

ended December 31,
2018

Twelve months
ended December
31, 2018

Twelve months
ended December
31, 2017

(Adjusted)

(In millions of Mexican pesos)

(US Dollars)*





Net cash flow provided by operating activities

29

566

986

Net cash flow used in investing activities

(71)

(1,389)

(2,260)

Net cash flow (used in) provided by financing activities

(12)

(235)

1,398

(Decrease) increase in cash and cash equivalents

(54)

(1,059)

124

Net foreign exchange differences

(1)

(29)

(244)

Cash and cash equivalents at beginning of period

353

6,951

7,071

Cash and cash equivalents at end of period

298

5,863

6,951

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

 

 

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


The following table shows adjusted balances after the adoption of IFRS 15, "Revenue from Contracts with Customers" on the quarterly statements of operations for each quarter of 2017. These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017.


Unaudited

Three
months
ended March
31, 2017

Three
months
ended June
30, 2017

Three
months
ended
September
30, 2017

Three
months
ended
December
31, 2017

Full Year
2017
Adjusted

(In millions of Mexican pesos)






Operating revenues:






 Passenger revenues

5,407

5,700

6,286

6,257

23,650

   Fare revenues

4,025

4,252

4,773

4,741

17,791

   Other passenger revenues

1,382

1,448

1,513

1,516

5,859







 Non-passenger revenues

292

294

285

267

1,138

   Cargo

41

39

38

53

171

   Other non-passenger revenues

251

255

247

214

967







Total operating revenues

5,699

5,994

6,571

6,524

24,788







Other operating income

(1)

(10)

(8)

(78)

(97)

Fuel

1,892

1,694

1,698

1,972

7,256

Aircraft and engine rent expense

1,699

1,378

1,384

1,612

6,073

Landing, take-off and navigation expenses

1,035

1,006

989

981

4,011

Salaries and benefits

696

717

695

715

2,823

Sales, marketing and distribution expenses

358

387

468

479

1,692

Maintenance expenses

351

362

324

396

1,433

Other operating expenses

270

270

248

300

1,088

Depreciation and amortization

128

139

150

131

548

Operating expenses

6,428

5,943

5,948

6,508

24,827







Operating (loss) income

(729)

51

623

16

(39)







Finance income

21

21

30

34

106

Finance cost

(21)

(22)

(20)

(23)

(86)

Exchange (loss) gain, net

(1,145)

(558)

125

784

(794)

Comprehensive financing result

(1,145)

(559)

135

795

(774)







(Loss) income before income tax

(1,874)

(508)

758

811

(813)

Income tax benefit (expense)

556

-

(38)

(357)

161

Net (loss) income

(1,318)

(508)

720

454

(652)







(Loss) earnings per share:






Basic (pesos)

(1.30)

(0.50)

0.71

0.45

(0.64)

Diluted (pesos)

(1.30)

(0.50)

0.71

0.45

(0.64)

(Loss) earnings per ADS:






Basic (pesos)

(13.02)

(5.02)

7.11

4.49

(6.44)

Diluted (pesos)

(13.02)

(5.02)

7.11

4.49

(6.44)








 

 

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

The following table shows quarterly adjustments made due to the adoption of IFRS 15, "Revenue from Contracts with Customers" on the statements of operations for 2017.


Unaudited

Full Year 2017
as Reported

Three months
ended March 31,
2017

Three months
ended June 30,
2017

Three months
ended September 30,
2017

Three months
ended December 31,
2017

Full Year 2017
Adjusted

(In millions of Mexican pesos)

Operating revenues:







 Passenger revenues

17,791

1,382

1,448

1,513

1,516

23,650

   Fare revenues

17,791

-

-

-

-

17,791

   Other passenger revenues

-

1,382

1,448

1,513

1,516

5,859








 Non-passenger revenues

7,054

(1,339)

(1,435)

(1,524)

(1,618)

1,138

   Cargo

171

-

-

-

-

171

   Other non-passenger revenues

6,883

(1,339)

(1,435)

(1,524)

(1,618)

967








Total operating revenues

24,845

43

13

(11)

(102)

24,788








Other operating income

(97)

-

-

-

-

(97)

Fuel

7,256

-

-

-

-

7,256

Aircraft and engine rent expense

6,073

-

-

-

-

6,073

Landing, take-off and navigation expenses

4,011

-

-

-

-

4,011

Salaries and benefits

2,823

-

-

-

-

2,823

Sales, marketing and distribution expenses

1,692

-

-

-

-

1,692

Maintenance expenses

1,433

-

-

-

-

1,433

Other operating expenses

1,088

-

-

-

-

1,088

Depreciation and amortization

548

-

-

-

-

548

Operating expenses

24,827

-

-

-

-

24,827








Operating income (loss)

18

43

13

(11)

(102)

(39)








Finance income

106

-

-

-

-

106

Finance cost

(86)

-

-

-

-

(86)

Exchange (loss), net

(794)

-

-

-

-

(794)

Comprehensive financing result

(774)

-

-

-

-

(774)








(Loss)income before income tax

(756)

43

13

(11)

(102)

(813)

Income tax benefit

161

-

-

-

-

161

Net (loss) income

(595)

43

13

(11)

(102)

(652)








Basic (loss) earnings per share

(0.59)

0.04

0.01

(0.01)

(0.10)

(0.64)

Diluted (loss) earnings per share

(0.59)

0.04

0.01

(0.01)

(0.10)

(0.64)









 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger

The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed below as "other passenger revenue"). 

Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.  

The following table shows quarterly additional detail about the components of total ancillary revenue:

Unaudited

Three months
ended March
31, 2017

Three months
ended June 30,
2017

Three months
ended
September 30,
2017

Three months
ended 
December 31,
2017

Full Year 2017
Adjusted

(In millions of Mexican pesos)







Other passenger revenues

1,382

1,448

1,513

1,516

5,859

Non-passenger revenues

292

294

285

267

1,138

Total ancillary revenues

1,674

1,742

1,798

1,783

6,997







Booked passengers (thousands)

3,964

4,063

4,173

4,226

16,426







Total ancillary revenue per passenger

422

429

431

422

426







 Total ancillary revenue per

passenger (as reported) (*)

411

426

434

446

429

(*) These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017, under the called name "Non-ticket revenue per passenger".

 

1 Source: Asociación Nacional de Tiendas de Autoservicio y Departamentales, A. C. (ANTAD)
2
 Source: Banco de México (BANXICO)
3 Source: Instituto Nacional de Estadística y Geografía (INEGI)

 

Cision View original content:http://www.prnewswire.com/news-releases/volaris-reports-fourth-quarter-2018-results-8-4-trasm-increase-and-7-9-reduction-of-unit-cost-excluding-fuel-300800294.html

SOURCE Volaris