Volaris Reports Fourth Quarter 2019 Results: 20.2% Operating Margin, up 10.4 percentage points and 7.2% TRASM Increase year over year

February 25, 2020

Mexico City, Mexico, February 25, 2020 – Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announces its financial results for the fourth quarter 2019.

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

Fourth Quarter 2019 Highlights

  • Total operating revenues were Ps.9,729 million for the fourth quarter, an increase of 23.0% year over year.
  • Total ancillary revenues were Ps.3,195 million for the fourth quarter, an increase of 25.8% year over year. Total ancillary revenues per passenger for the fourth quarter reached Ps.557, an increase of 8.8% year over year. Total ancillary revenues represented 32.8% of total operating revenues for the fourth quarter 2019, increasing 0.7 percentage points with respect to the same period of last year.
  • Total operating revenues per available seat mile (TRASM) were Ps.155.0 cents for the fourth quarter, an increase of 7.2% year over year.
  • Operating expenses per available seat mile (CASM) were Ps.123.5 cents for the fourth quarter, a decrease of 5.3% year over year; with an average economic fuel cost per gallon of Ps.45.8 for the fourth quarter, a decrease of 6.8% year over year. 
  • Operating expenses per available seat mile excluding fuel, (CASM ex fuel) reached Ps.76.0 cents for the fourth quarter, a decrease of 2.1% year over year.
  • Operating income was Ps.1,967 million for the fourth quarter, a significant increase compared with the operating income of Ps.776 million for the same period of last year. Operating margin for the fourth quarter was 20.2%, an improvement in margin of 10.4 percentage points year over year.
  • Net income was Ps.1,287 million (Ps.1.27 per share / U.S.$0.68 per ADS), for a net margin of 13.2% for the fourth quarter.
  • At the close of the fourth quarter, the Mexican peso appreciated 4.0% against the U.S. dollar with respect to the exchange rate at the close of the previous quarter (Ps.19.64 per U.S. dollar). The Company booked a foreign exchange gain of Ps.456 million derived from our U.S. dollar net monetary liability position, mainly as result of the adoption of IFRS16.
  • During the fourth quarter of 2019, the net cash flow generated by operating activities were Ps.2,228 million. The net cash flow used in investing activities reached Ps.823 million. The net cash flow used in financing activities were Ps.960 million, which included Ps.1,713 million of aircraft rental payments. The negative net foreign exchange difference was Ps.275 million, thus having a net increase of cash and cash equivalents in the fourth quarter of Ps.170 million. As of December 31, 2019, cash and cash equivalents were Ps.7,980 million.

 

Stable Macroeconomics and Domestic Consumer Demand, with Peso Appreciation and Fuel Price Reduction

  • Stable macroeconomics and domestic consumer demand: The macroeconomic indicators in Mexico were stable, increasing during the months of October and November in same store sales[1]9% year over year. During the fourth quarter remittances[2] increased 1.5% year over year, and the Mexican Consumer Confidence Balance Indicator (BCC) [3] increased 2.0% year over year.
  • Air traffic volume increase: The Mexican Federal Civil Aviation Agency reported an overall passenger volume growth for Mexican carriers during the fourth quarter of 2019 of 7.6% year over year. The domestic overall passenger volume increased 8.1%, while the international overall passenger volume increased 4.2%.
  • Peso appreciation: The Mexican peso appreciated 2.8% against the U.S. dollar year over year, from an average exchange rate of Ps.19.83 per U.S. dollar in the fourth quarter of 2018 to Ps.19.28 per U.S. dollar during the fourth quarter of 2019. At the end of the fourth quarter of 2019, the Mexican peso appreciated 4.3% with respect to the exchange rate at the end of the same period of the last year. The Company booked a foreign exchange gain of Ps.456 million derived from our U.S. dollar net monetary liability position, mainly as result of the adoption of IFRS16.
  • Fuel price reduction: The average economic fuel cost per gallon decreased 6.8% in the fourth quarter of 2019, year over year, reaching Ps.45.8 per gallon (U.S.$2.4).

 

Passenger Traffic Stimulation, Further Ancillary Revenue Expansion, and Positive TRASM Growth

  • Passenger traffic stimulation: Volaris booked 5.7 million passengers in the fourth quarter of 2019, an increase of 15.6% year over year. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) increased 16.7% year over year. System load factor during the fourth quarter increased 1.1 percentage points year over year, reaching 87.6%.
  • Total ancillary revenue growth: For the fourth quarter of 2019, total ancillary revenue increased 25.8% year over year. Total ancillary revenue per passenger in the fourth quarter of 2019 increased 8.8% year over year. The total ancillary revenue generation continues to grow with new and mature products, appealing to customers’ needs, representing 32.8% of total operating revenue of the fourth quarter, an increase of 0.7 percentage points year over year.
  • Positive TRASM growth: For the fourth quarter of 2019, TRASM increased 7.2% year over year. During the fourth quarter of 2019, the total capacity, in terms of ASMs, increased 15.1% year over year.
  • New routes: During the fourth quarter of 2019, Volaris began operations in four new domestic routes and one new international route. In the domestic market:1) Monterrey, Nuevo Leon to Oaxaca, Oaxaca; 2) Monterrey, Nuevo Leon to Los Cabos, Baja California; 3) Tijuana, Baja California to Tapachula, Chiapas; and 4) Mazatlan, Sinaloa to Monterrey, Nuevo Leon. On the international market: Leon, Guanajuato to Fresno, California. Additionally, Volaris launched for sale five international routes: 1) Leon, Guanajuato to Dallas Texas; 2) Leon, Guanajuato to Las Vegas, Nevada; 3) Leon Guanajuato to Chicago, Illinois; 4) Zacatecas, Zacatecas to Dallas, Texas; and 5) Cancun, Quintana Roo to Los Angeles California.

 

Total Unit Cost Reduction, with Peso Appreciation and Fuel Price Reduction

  • CASM and CASM ex fuel in the fourth quarter of 2019 reached Ps.123.5 (U.S.$6.40 cents) and Ps.76.0 cents (U.S.$3.94), respectively. This represented a decrease of 5.3% and 2.1%, respectively, year over year; mainly driven by cost control discipline, the average exchange rate appreciation of the Mexican peso against the U.S. dollar of 2.8%, and the average economic fuel cost per gallon decreased 6.8%.

Young and Fuel-Efficient Consumption Fleet

  • During the fourth quarter of 2019, the Company incorporated two aircraft (one A320 neo and one A321 neo) to its fleet. As of December 31, 2019, Volaris’ fleet was composed of 82 aircraft (8 A319s, 58 A320s and 16 A321s), with an average age of 5.0 years. At the end of the fourth quarter of 2019, Volaris’ fleet had an average of 186 seats per aircraft, 77% of our aircraft were sharklet-equipped, and 28% were NEO.

Solid Balance Sheet and Good Liquidity

  • During the fourth quarter of 2019, the net cash flow generated by operating activities were Ps.2,228 million. The net cash flow used in investing activities reached Ps.823 million. The net cash flow used in financing activities were Ps.960 million, which included Ps.1,713 million of aircraft rental payments. The negative net foreign exchange difference was Ps.275 million, thus having a net increase of cash and cash equivalents in the fourth quarter of Ps.170 million. As of December 31, 2019, cash and cash equivalents were Ps.7,980 million, representing 23.0% of last twelve months of the operating revenue. Volaris registered a negative net debt (or a positive net cash position) of Ps.3,004 million (excluding lease liability recognized under the IFRS16 adoption) and total equity of Ps.5,450 million.

 

Transition to IFRS 16

  • The Company adopted IFRS 16 as of January 1, 2019, using the full retrospective method. The cumulative effect of adopting IFRS 16 has been recognized as an adjustment to the opening balance as of January 1, 2017 as an increase in assets and liabilities and an adjustment in the retained earnings.

 The unaudited figures of this adoption are presented as follows:

Consolidated Statements of Financial Position

 

As of

January 1st,
 2017

As of
December 31,
2017

As of
December 31,
2018

Assets

 

 

 

  Property, plant and equipment
    (Right-of-use-assets)

Ps.    23,713,036

Ps.    25,084,329

Ps.    31,994,579

  Deferred income tax

          2,999,021

          2,603,243

          2,718,850

  Prepaid expenses

     (       266,959)

-

-

 

 

 

 

Liabilities

 

 

 

  Lease liabilities

Ps.    32,711,793

Ps.    32,523,704

Ps.    39,565,146

  Other liabilities

             929,431

          1,159,594

          1,400,371

  Deferred income tax

               20,564

               23,548

               27,568

 

 

 

 

Equity

 

 

 

  Retained Earnings

Ps.     7,216,690

Ps.     6,019,274

Ps.     6,279,656

 

 

Consolidated Statements of Operations

 

 

For the year ended December 31, 2017

For the year ended December 31, 2018

 

 

 

  Depreciation expense

Ps.         3,526,128

Ps.        4,128,328

  Operating lease expense

(4,807,379)

(5,543,655)

  Operating income

(1,281,251)

(1,415,327)

  Financial costs

1,428,924

1,755,978

  Foreign exchange (gain) loss

(1,476,890)

31,315

  Income tax expense (benefit)

392,795

(111,587)

  Net (income) loss

Ps.         (936,422)

Ps.            260,379

 

  • This quarterly earnings release includes supplemental information for comparable purposes, with the recast and unaudited adjusted 2018 figures, including the IFRS 16 adoption effects describe above. These figures were derived from unaudited financial statements included in the quarterly reports on Form 6-K reported during the year ended as of December 31, 2018.
  • Starting on March 25th and during 2019, the Company established hedges on its USD denominated revenues, through a non-derivative financial instrument, using the lease liabilities denominated in USD as a hedge instrument. These hedging’s relationships were designated as a cash flow hedge of forecasted revenues to mitigate the volatility of the foreign exchange variation arising from the revaluation of its lease liabilities. During 2019, the impacts of these hedges for the fourth quarter and year to date were Ps.33 million and Ps.73 million, respectively, which has been presented as part of the total operating revenue.
  • Additionally, also starting on March 25th and during 2019, the Company established hedges on a portion of its forecasted fuel expense, through a non-derivative financial instrument, using as a hedge instrument a portion of its USD denominated monetary assets. These hedging’s relationships were designated as a cash flow hedge of forecasted fuel expense to mitigate the volatility of the foreign exchange variation arising from the revaluation of this portion of USD denominated monetary asset. During 2019, the impacts of these hedges for the fourth quarter and year to date were Ps.17 million and Ps.57 million, respectively, which has been presented as part of the total fuel expense.

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, President & CEO

Mr. Holger Blankenstein, Airline EVP

Ms. Sonia Jerez Burdeus, VP & CFO

Wednesday, February 26, 2020

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

Webcast will be available at:

https://services.choruscall.com/links/vlrs2002248AUE8lsj.html

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 the beginning of operations in March 2006, Volaris has increased its routes from five to more than 187 and its fleet from four to 82 aircraft. Volaris offers more than 400 daily flight segments on routes that connect 40 cities in Mexico and 25 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 and leisure travelers in Mexico, the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for ten 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.

Investor Relations Contact:

Maria Elena Rodríguez & Andrea González / Investor Relations / ir@volaris.com / +52 55 5261 6444

Media Contact:

Gabriela Fernández / volaris@gcya.net / +52 55 5246 0100

 

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

Financial and Operating Indicators

Unaudited

 

Three months ended December 31, 2019

Three months ended December 31, 2019

 

Three months ended

December 31, 2018

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars)*

(%)

Total operating revenues (millions)

516

9,729

7,909

23.0%

Total operating expenses (millions)

412

7,762

7,133

8.8%

EBIT (millions)

104

1,967

776

>100%

EBIT margin

20.2%

20.2%

9.8%

10.4 pp

Depreciation and amortization

76

1,439

1,257

14.5%

Aircraft and engine rent expense

8

142

100

42.4%

Net income (loss) (millions)

68

1,287

(610)

NA

Net income (loss) margin

13.2%

13.2%

(7.7%)

20.9 pp

Income (loss) per share:

       

Basic (pesos)

                   0.07

              1.27

             (0.60)

NA

Diluted (pesos)

                   0.07

              1.27

             (0.60)

NA

Income (loss) per ADS:

       

Basic (pesos)

                   0.68

            12.72

             (6.02)

NA

Diluted (pesos)

                   0.68

            12.72

             (6.02)

NA

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)

                        -

6,300

5,472

15.1%

     Domestic

 -

4,343

3,832

13.3%

     International

 -

1,957

1,640

19.4%

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

                        -

5,521

4,731

16.7%

     Domestic

 -

3,888

3,429

13.4%

     International

 -

1,633

1,303

25.4%

Load factor (2)

                        -

87.6%

86.5%

1.1 pp

     Domestic

 -

89.5%

89.5%

0.0 pp

     International

 -

83.5%

79.4%

4.1 pp

Total operating revenue per ASM (TRASM) (cents) (1) (5)  

8.2

155.0

144.5

7.2%

Total ancillary revenue per passenger (4) (5)

29.5

557

512

8.8%

Total operating revenue per passenger (5)

90.3

            1,701

             1,594

6.8%

Operating expenses per ASM (CASM) (cents) (1) (5)

6.55

123.5

130.3

(5.3%)

Operating expenses per ASM (CASM) (US cents) (3) (5)

                      -  

6.40

6.57

(2.6%)

CASM ex fuel (cents) (1) (5)

4.03

76.0

77.6

(2.1%)

CASM ex fuel (US cents) (3) (5)

                      -  

3.94

3.92

0.7%

Booked passengers (thousands) (1)

                      -  

5,738

4,963

15.6%

Departures (1)

                      -  

35,261

30,844

14.3%

Block hours (1)

                      -  

89,714

84,569

6.1%

Fuel gallons consumed (millions)

                      -  

65.2

58.7

11.1%

Average economic fuel cost per gallon (5)

2.4

45.8

49.1

(6.8%)

Aircraft at end of period

                      -  

82

77

6.5%

Average aircraft utilization (block hours)

                      -  

12.8

13.1

(2.6%)

Average exchange rate

                      -  

19.28

19.83

(2.8%)

End of period exchange rate

                      -  

18.85

19.68

(4.3%)

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

(1) Includes schedule and 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”

(5) Excludes non-derivatives financial instruments

 

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

Financial and Operating Indicators

Unaudited

 

Twelve months ended December 31, 2019

Twelve months ended December 31, 2019

 

Twelve months ended

 December 31, 2018

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars)*

(%)

Total operating revenues (millions)

1,844

34,753

27,305

27.3%

Total operating expenses (millions)

1,613

30,397

26,770

13.5%

EBIT (millions)

231

4,355

535

>100%

EBIT margin

12.5%

12.5%

2.0%

10.5 pp

Depreciation and amortization

288

5,429

4,629

17.3%

Aircraft and engine rent expense

48

911

871

4.5%

Net income (loss) (millions)

140

2,639

(943)

NA

Net income (loss) margin

7.6%

7.6%

(3.5%)

11.1 pp

Income (loss) per share:

       

Basic (pesos)

                   0.14

              2.61

             (0.93)

NA

Diluted (pesos)

                   0.14

              2.61

             (0.93)

NA

Income (loss) per ADS:

       

Basic (pesos)

                   1.38

            26.08

             (9.32)

NA

Diluted (pesos)

                   1.38

            26.08

             (9.32)

NA

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)

                        -

24,499

21,010

16.6%

     Domestic

 -

16,891

14,519

16.3%

     International

 -

7,607

6,490

17.2%

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

                        -

21,032

17,748

18.5%

     Domestic

 -

14,871

12,655

17.5%

     International

 -

6,162

5,093

21.0%

Load factor (2)

                        -

85.9%

84.5%

1.4 pp

     Domestic

 -

88.0%

87.2%

0.8 pp

     International

 -

81.0%

78.5%

2.5 pp

Total operating revenue per ASM (TRASM) (cents) (1) (5)

7.5

142.2

130.0

9.4%

Total ancillary revenue per passenger (4) (5)

28.2

532

479

11.0%

Total operating revenue per passenger (5)

84.1

1,585

1,484

6.8%

Operating expenses per ASM (CASM) (cents) (1) (5)

6.60

124.3

127.4

(2.4%)

Operating expenses per ASM (CASM) (US cents) (3) (5)

                      -  

6.45

6.62

(2.6%)

CASM ex fuel (cents) (1) (5)

4.07

76.6

79.2

(3.2%)

CASM ex fuel (US cents) (3) (5)

                      -  

3.98

4.12

(3.4%)

Booked passengers (thousands) (1)

                      -  

21,975

18,396

19.5%

Departures (1)

                      -  

138,084

117,920

17.1%

Block hours (1)

                      -  

350,572

322,054

8.9%

Fuel gallons consumed (millions)

                      -  

251.8

227.4

10.7%

Average economic fuel cost per gallon (5)

2.5

46.4

44.6

4.1%

Aircraft at end of period

                      -  

82

77

6.5%

Average aircraft utilization (block hours)

                      -  

12.9

13.2

(2.0%)

Average exchange rate

                      -  

19.26

19.24

0.1%

End of period exchange rate

                      -  

18.85

19.68

(4.3%)

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

(1) Includes schedule and 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”

(5) Excludes non-derivatives financial instruments

 

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

Consolidated Statement of Operations

 

Unaudited

 

Three months ended December 31, 2019

Three months

ended

December 31,

2019

 

Three months

ended

December 31, 2018

Variance

(In millions of Mexican pesos)

(US Dollars) *

 (%)

Operating revenues:

       

Passenger revenues

500

                 9,414

                7,643

23.2%

 Fare revenues

349

6,568

5,370

22.3%

 Other passenger revenues (1)

151

2,846

2,273

25.2%

 

       

Non-passenger revenues

19

349

265

31.5%

 Other non-passenger revenues (1)

15

285

194

46.7%

 Cargo

3

64

71

(10.2%)

 

 

 

 

 

 Non-derivatives financial instruments

(2)

(33)

-

NA

 

 

 

 

 

Total operating revenues

516

9,729

7,909

23.0%

 

 

 

 

 

Other operating income

(3)

(63)

(147)

(57.1%)

Total fuel expense, net (2)

158

2,972

2,885

3.0%

Depreciation and amortization

76

1,439

1,257

14.5%

Landing, take-off and navigation expenses

73

1,384

1,156

19.8%

Salaries and benefits

51

953

795

19.8%

Maintenance expenses

19

360

387

(6.9%)

Sales, marketing and distribution expenses

22

409

422

(3.1%)

Aircraft and engine rent expense

8

142

100

42.4%

Other operating expenses

9

165

278

(40.7%)

Operating expenses

412

7,762

7,133

8.8%

 

     

 

Operating income

104

1,967

776

>100%

 

       

Finance income

3

55

44

24.1%

Finance cost

(36)

(675)

(496)

36.2%

Exchange gain (loss), net

24

456

(1,137)

NA

Comprehensive financing result

(9)

(164)

(1,588)

(89.6%)

 

     

 

Income (loss) before income tax

96

1,803

(812)

NA

Income tax (expense) benefit

(27)

(516)

203

NA

Net income (loss)

68

1,287

(610)

NA

 

 

                

                 

 

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

(1) 4Q 2018 figures include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.54 million, as result of the IFRS 15 adoption

(2) 4Q 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.17 million

 

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

Consolidated Statement of Operations

 

Unaudited

Twelve months ended December 31, 2019

Twelve months

ended December 31, 2019

 

Twelve months ended December 31, 2018

Variance

(In millions of Mexican pesos)

(US Dollars) *

 (%)

Operating revenues:

       

Passenger revenues

1,788

33,699

26,380

27.7%

 Fare revenues

1,227

23,130

18,488

25.1%

 Other passenger revenues (1)

561

10,569

7,892

33.9%

 

       

Non-passenger revenues

60

1,126

925

21.8%

 Other non-passenger revenues (1)

48

898

697

28.7%

 Cargo

12

229

227

0.6%

 

 

 

 

 

 Non-derivatives financial instruments

(4)

(73)

-

NA

 

 

 

 

 

Total operating revenues

1,844

34,753

27,305

27.3%

 

 

 

 

 

Other operating income

(17)

(327)

(622)

(47.4%)

Total fuel expense, net (2)

617

11,626

10,135

14.7%

Depreciation and amortization

288

5,429

4,629

17.3%

Landing, take-off and navigation expenses

271

5,108

4,573

11.7%

Salaries and benefits

191

3,601

3,125

15.2%

Maintenance expenses

79

1,488

1,498

(0.6%)

Sales, marketing and distribution expenses

77

1,448

1,501

(3.6%)

Aircraft and engine rent expense

48

911

871

4.5%

Other operating expenses

59

1,113

1,059

5.1%

Operating expenses

1,613

30,397

26,770

13.5%

 

     

 

Operating income

231

4,355

535

>100%

 

       

Finance income

11

208

153

36.2%

Finance cost

(120)

(2,270)

(1,876)

21.0%

Exchange gain (loss), net

76

1,441

(104)

NA

Comprehensive financing result

(33)

(622)

(1,827)

(66.0%)

 

       

Income (loss) before income tax

198

3,734

(1,293)

NA

Income tax (expense) benefit

(58)

(1,095)

350

NA

Net income (loss)

140

2,639

(943)

NA

 

 

                

                 

 

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

(1)  December YTD 2018 figures include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

(2) December YTD 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.57 million

 

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

Three months ended December 31, 2019

(US Dollars)*

Three months ended December 31, 2019

 

Three months ended December 31, 2018

Variance

(%)

(In millions of Mexican pesos)

 

 

 

 

 

Other passenger revenues (1)

151

2,846

2,273

25.2%

Non-passenger revenues (1)

19

349

265

31.5%

Total ancillary revenues

170

3,195

2,539

25.8%

 

       

Booked passengers (thousands)

                      -  

                 5,738

                4,963

15.6%

 

       

Total ancillary revenue per passenger

29.5

557

512

8.8%

 

 

 

 

 

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

(1) 4Q 2018 figures include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.54 million, as result of the IFRS 15 adoption

 

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

 

Unaudited

Twelve months ended December 31, 2019

(US Dollars)*

Twelve months ended December 31, 2019

 

Twelve months ended December 31, 2018

Variance

(%)

(In millions of Mexican pesos)

 

 

 

 

 

Other passenger revenues (1)

561

10,569

7,892

33.9%

Non-passenger revenues (1)

60

1,126

925

21.8%

Total ancillary revenues

621

11,696

8,817

32.6%

 

       

Booked passengers (thousands)

                      -  

21,975

18,396

19.5%

 

       

Total ancillary revenue per passenger

28.2

532

479

11.0%

 

 

 

 

 

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

(1) December YTD 2018 figures include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

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, 2019 Unaudited

December 31, 2019 Unaudited

December 31, 2018 Unaudited

(US Dollars)*

Assets

   

 

Cash and cash equivalents

423

7,980

5,863

Accounts receivable

123

2,320

1,467

Inventories

16

302

297

Prepaid expenses and other current assets

41

781

443

Financial instruments

7

134

62

Guarantee deposits

32

600

791

Total current assets

643

12,117

8,923

Rotable spare parts, furniture and equipment, net

392

7,385

5,782

Right of use assets

1,814

34,190

31,995

Intangible assets, net

9

167

179

Financial instruments

-

3

-

Deferred income taxes

78

1,462

3,312

Guarantee deposits

406

7,644

6,337

Other assets

9

166

155

Other accounts receivable

7

141

74

Total non-current assets

2,715

51,160

47,834

Total assets

3,358

63,277

56,757

Liabilities

     

Unearned transportation revenue

195

3,680

2,439

Accounts payable

88

1,656

1,103

Accrued liabilities

136

2,557

2,318

Lease liabilities

250

4,721

4,976

Other taxes and fees payable

112

2,102

1,932

Income taxes payable

7

141

4

Financial instruments

-

-

123

Financial debt

111

2,086

1,212

Other liabilities

22

407

26

Deferred income taxes

-

-

28

Total short-term liabilities

921

17,349

14,161

Financial debt

153

2,890

2,311

Accrued liabilities

7

128

137

Lease liabilities

1,900

35,797

34,589

Other liabilities

78

1,470

1,820

Employee benefits

2

38

18

Deferred income taxes

8

156

1,095

Total long-term liabilities

2,148

40,478

39,971

Total liabilities

3,069

57,827

54,132

Equity

 

 

 

Capital stock

158

2,974

2,974

Treasury shares

(9)

(167)

(123)

Contributions for future capital increases

                             -

                            -

                            -

Legal reserve

15

291

291

Additional paid-in capital

100

1,877

1,837

Retained earnings (losses)

19

358

(2,281)

Accumulated other comprehensive income (losses) (1)

6

116

(73)

Total equity

289

5,450

2,625

Total liabilities and equity

3,358

63,277

56,757

 

     

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

(1) As of December 31, 2019, the figures include a negative foreign exchange effect of Ps.14 million related to non-derivatives financial instruments              

             

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, 2019

Three months

 ended December 31, 2019

 

Three months ended December 31, 2018

(In millions of Mexican pesos)

(US Dollars)*

 

 

 

 

Net cash flow generated by operating activities

118

     2,228

1,693

Net cash flow used in investing activities

(44)

        (823)

(748)

Net cash flow used in financing activities**

(51)

          (960)

(1,440)

Increase (decrease) in cash and cash equivalents

                              24

     445

(495)

Net foreign exchange differences

(15)

                 (275)

277

Cash and cash equivalents at beginning of period

414

     7,810

6,082

Cash and cash equivalents at end of period

423

                              7,980

5,863

       

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

**Includes aircraft rental payments of Ps.1,713 million and Ps.1,591 million for the three months ended period December 31, 2019 and 2018, respectively

 

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, 2019

Twelve months ended December 31, 2019

 

Twelve months ended December 31, 2018

(In millions of Mexican pesos)

(US Dollars)*

 

 

 

 

Net cash flow generated by operating activities

502

      9,469

6,277

Net cash flow used in investing activities

(100)

       (1,879)

(1,389)

Net cash flow used in financing activities**

(276)

        (5,199)

(1)                  (5,946)

Increase (decrease) in cash and cash equivalents

127

      2,391

(1,059)

Net foreign exchange differences

(15)

                     (274)

(29)

Cash and cash equivalents at beginning of period

311

      5,863

6,951

Cash and cash equivalents at end of period

423

      7,980

5,863

       

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

**Includes aircraft rental payments of Ps.6,500 million and Ps.5,711 million for the twelve months ended period December 31, 2019 and 2018, respectively

(1) Includes inflows of Ps.1,500 million related to the issuance of 15,000,000 asset backed trust notes (certificados bursátiles fiduciarios)

 

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

The following table shows unaudited adjusted balances after the adoption of IFRS 16 "Leases", on the quarterly statements of operations for each quarter of 2018. These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2018.

Unaudited adjusted figures*

 

 

 

 

(In millions of Mexican pesos)

 

Three months ended

March 31,

2018

 

 

Three months ended

June 30,

2018

 

 

Three months ended September 30, 2018

 

 

Three months ended   December 31, 2018

 

 

Full Year 2018

Operating revenues:

 

 

 

 

 

 Passenger revenues

5,610

5,989

7,138

7,643

26,380

   Fare revenues

3,886

4,136

5,096

5,370

18,488

   Other passenger revenues (1)

1,724

1,853

2,042

2,273

7,892

 

 

 

 

 

 

 Non-passenger revenues

240

240

179

265

925

   Other non-passenger revenues (1)

192

187

124

194

697

   Cargo

48

53

55

71

227

 

 

 

 

 

 

Total operating revenues

5,850

6,229

7,317

7,909

27,305

 

 

 

 

 

 

Other operating income

(1)

(231)

(243)

(147)

(622)

Fuel

2,175

2,445

2,630

2,885

10,135

Landing, take-off and navigation expenses

 

1,122

 

1,148

 

1,147

 

1,156

 

4,573

Depreciation and amortization

1,073

1,136

1,163

1,257

4,629

Salaries and benefits

746

750

834

795

3,125

Sales, marketing and distribution expenses

 

357

 

382

 

340

 

422

 

1,501

Maintenance expenses

346

376

389

387

1,498

Aircraft and engine rent expense

362

150

259

100

871

Other operating expenses

258

283

240

278

1,059

Operating expenses

6,439

6,439

6,759

7,133

26,770

 

 

 

 

 

 

Operating (loss) income

(589)

(210)

558

776

535

Operating margin

(10.1%)

(3.4%)

7.6%

9.8%

2.0%

 

 

 

 

 

 

Finance income

34

38

37

44

153

Finance cost

(413)

(461)

(506)

(496)

(1,876)

Exchange gain (loss), net

1,563

(1,926)

1,396

(1,137)

(104)

Comprehensive financing result

1,184

(2,350)

927

(1,588)

(1,827)

 

 

 

 

 

 

Income (loss) before income tax

595

(2,560)

1,484

(812)

(1,293)

Income tax (expense) benefit

(177)

747

(423)

203

350

Net income (loss)

417

(1,811)

1,061

(610)

(943)

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

Basic (pesos)

0.41

(1.79)

1.05

(0.60)

(0.93)

Diluted (pesos)

0.41

(1.79)

1.05

(0.60)

(0.93)

Earnings (loss) per ADS:

 

 

 

 

 

Basic (pesos)

4.12

(17.90)

10.49

(6.02)

(9.32)

Diluted (pesos)

4.12

(17.90)

10.49

(6.02)

(9.32)

 

 

 

 

 

 

(1) The annual figures of 2018 include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

 *Small revisions to the previously estimated amounts reported for the prior year and quarters have been made upon completion of our implementation of IFRS 16 during 2019

 

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

The following table shows quarterly unaudited adjustments made due to the adoption of IFRS 16 "Leases", on the statements of operations for 2018.

Unaudited adjusted figures*

Full Year 2018 (Reported)

Three months ended March 31, 2018

Three months ended June 30, 2018

Three months ended September 30, 2018

Three months ended   December 31, 2018

Full Year 2018

(In millions of Mexican pesos)

Operating revenues:

 

 

 

 

 

 

 Passenger revenues

26,380

                        -

                         -

                         -

                         -

26,380

   Fare revenues

18,488

                        -

                         -

                         -

                         -

18,488

   Other passenger revenues (1)

                 7,892

                        -

                         -

                         -

                         -

                  7,892

 

           

 Non-passenger revenues

925

                        -

                         -

                         -

                         -

925

   Cargo

227

                        -

                         -

                         -

                         -

227

   Other non-passenger revenues (1)

697

                        -

                         -

                         -

                         -

697

 

           

Total operating revenues

27,305

                        -

                         -

                         -

                         -

27,305

 

           

Other operating income

(622)

                        -

                         -

                         -

                         -

(622)

Fuel

10,135

                        -

                         -

                         -

                         -

10,135

Aircraft and engine rent expense

6,315

(1,234)

(1,355)

(1,333)

(1,522)

871

Landing, take-off and navigation expenses

4,583

(2)

(2)

(3)

(3)

4,573

Salaries and benefits

3,125

                        -

                         -

                         -

                         -

3,125

Maintenance expenses

1,518

(5)

(5)

(5)

(5)

1,498

Sales, marketing and distribution expenses

1,501

                        -

                         -

                         -

                         -

1,501

Other operating expenses

1,130

(17)

(18)

(18)

(18)

1,059

Depreciation and amortization

501

                    940

                  1,013

                  1,048

                  1,127

4,629

Operating expenses

28,186

(318)

(367)

(311)

(421)

26,770

 

           

Operating (loss) income

(881)

                    318

                     367

                     311

                     421

535

Operating margin

(3.2%)

 

 

 

 

2.0%

 

           

Finance income

153

                        -

                         -

                         -

                         -

153

Finance cost

(120)

(380)

(430)

(441)

(505)

(1,876)

Exchange (loss) gain, net

(72)

                 2,255

(2,579)

                  1,814

(1,521)

(104)

Comprehensive financing result

(40)

                 1,875

(3,009)

                  1,373

(2,026)

(1,827)

 

 

 

 

 

 

 

             

(Loss) income before income tax

(921)

                 2,193

(2,642)

                  1,684

(1,605)

(1,293)

Income tax benefit (expense)

238

(656)

                     794

(504)

                     478

350

Net (loss) income

(683)

                 1,537

(1,848)

                  1,180

(1,127)

(943)

Basic (loss) earnings per share

(0.67)

1.52

(1.83)

1.17

(1.11)

(0.93)

Diluted (loss) earnings per share

(0.67)

1.52

(1.83)

1.17

(1.11)

(0.93)

 

 

 

 

 

 

 

(1) The annual figures of 2018 include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

*Small revisions to the previously estimated amounts reported for the prior year and quarters have been made upon completion of our implementation of IFRS 16 during 2019   

 

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

The following table shows unaudited balances before the adoption of IFRS 16 "Leases", on the quarterly statements of operations for each quarter of 2018.

Unaudited

 

 

 

 

(In millions of Mexican pesos)

Three months ended March 31, 2018

(Reported)

 

Three months ended June 30, 2018

(Reported)

 

Three months ended September 30, 2018

(Reported)

Three months ended   December 31, 2018

(Reported)

Full Year 2018

(Reported)

Operating revenues:

 

 

 

 

 

 Passenger revenues

5,610

5,990

7,138

7,643

26,381

   Fare revenues

3,886

4,137

5,096

5,370

18,489

   Other passenger revenues (1)

1,724

1,853

2,042

2,273

7,892

 

 

 

 

 

 

 Non-passenger revenues

240

240

179

265

924

   Other non-passenger revenues (1)

192

187

124

194

697

   Cargo

49

53

55

71

227

 

 

 

 

 

 

Total operating revenues

5,850

6,230

7,316

7,909

27,305

 

 

 

 

 

 

Other operating income

(1)

(231)

(243)

(147)

(622)

Fuel

2,175

2,445

2,631

2,885

10,135

Aircraft and engine rent expense

1,596

1,504

1,593

1,622

6,315

Landing, take-off and navigation expenses

1,125

1,150

1,150

1,158

4,583

Salaries and benefits

746

750

834

795

3,125

Sales, marketing and distribution expenses

357

382

340

422

1,501

Maintenance expenses

351

381

393

392

1,518

Other operating expenses

274

301

257

297

1,130

Depreciation and amortization

132

124

115

130

501

Operating expenses

6,757

6,805

7,070

7,554

28,186

 

 

 

 

 

 

Operating (loss) income

(906)

(575)

246

355

(881)

Operating margin

(15.5%)

(9.2%)

3.4%

4.5%

(3.2%)

 

 

 

 

 

 

Finance income

34

37

37

45

153

Finance cost

(34)

(31)

(64)

8

(120)

Exchange (loss) gain, net

(691)

653

(419)

384

(73)

Comprehensive financing result

(691)

660

(446)

437

(40)

 

 

 

 

 

 

(Loss) income before income tax

(1,597)

85

(200)

792

(921)

Income tax benefit (expense)

479

(47)

81

(276)

238

Net (loss) income

(1,118)

38

(119)

516

(683)

 

 

 

 

 

 

(Loss) earnings per share:

 

 

 

 

 

Basic (pesos)

(1.10)

0.04

(0.12)

0.51

(0.67)

Diluted (pesos)

(1.10)

0.04

(0.12)

0.51

(0.67)

(Loss) earnings per ADS:

 

 

 

 

 

Basic (pesos)

(11.05)

0.38

(1.18)

5.10

(6.75)

Diluted (pesos)

(11.05)

0.38

(1.18)

5.10

(6.75)

(1) The annual figures of 2018 include a reclassification from “Other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

 

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

Consolidated Statement of Financial Position

The following table shows unaudited annual adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Financial Position as of December 31, 2018.

Unaudited adjusted figures*

 

(In millions of Mexican pesos)

 

December 31, 2018

(Reported)

IFRS 16

Adjustments

December 31, 2018

 

Assets

   

 

Cash and cash equivalents

5,863

-

5,863

Accounts receivable

1,467

-

1,467

Inventories

297

-

297

Prepaid expenses and other current assets

710

(267)

443

Financial instruments

62

-

62

Guarantee deposits

791

-

791

Total current assets

9,190

(267)

8,923

Rotable spare parts, furniture and equipment, net

5,782

-

5,782

Right of use assets

-

31,995

31,995

Intangible assets, net

179

-

179

Deferred income taxes

593

2,719

3,312

Guarantee deposits

6,337

-

6,337

Other assets

155

-

155

Other accounts receivable

74

-

74

Total non-current assets

13,121

34,714

47,834

Total assets

22,311

34,447

56,757

Liabilities

     

Unearned transportation revenue

2,439

-

2,439

Accounts payable

1,103

-

1,103

Accrued liabilities

2,318

-

2,318

Lease liabilities

-

4,976

4,976

Other taxes and fees payable

1,932

-

1,932

Income taxes payable

4

-

4

Financial instruments

123

-

123

Financial debt

1,212

-

1,212

Other liabilities

118

(92)

26

Deferred income taxes

-

28

28

Total short-term liabilities

9,249

4,912

14,161

Financial debt

2,311

-

2,311

Accrued liabilities

137

-

137

Lease liabilities

-

34,589

34,589

Other liabilities

328

1,492

1,820

Employee benefits

18

-

18

Deferred income taxes

1,096

-

1,095

Total long-term liabilities

3,890

36,081

39,971

Total liabilities

13,139

40,993

54,132

Equity

 

 

 

Capital stock

2,974

-

2,974

Treasury shares

(123)

-

(123)

Contributions for future capital increases

-

-

 -

Legal reserve

291

-

291

Additional paid-in capital

1,837

-

1,837

Retained earnings (losses)

4,266

(6,547)

(2,281)

Accumulated other comprehensive losses

(73)

-

(73)

Total equity

9,172

(6,547)

2,625

Total liabilities and equity

22,311

34,446

56,757

 

     

Total shares outstanding fully diluted

 

1,011,876,677

1,011,876,677

 

    *Small revisions to the previously estimated amounts reported for the prior year and quarters have been made upon completion

     of our implementation of IFRS 16 during 2019

 

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

Consolidated Statement of Cash Flows – Cash Flow Data Summary

The following table shows fourth quarter unaudited adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Cash Flow for the three months ended December 31, 2018.

Unaudited adjusted figures*

 

Adjustments

 

 

Three months ended December 31, 2018

(In millions of Mexican pesos)

Three months ended December 31, 2018

(Reported)

 

 

 

 

Net cash flow generated by operating activities

102

1,591

1,693

Net cash flow used in investing activities

(748)

-

(748)

Net cash flow generated (used in) financing activities

151

(1,591)

(1,440)

Decrease in cash and cash equivalents

(495)

-

(495)

Net foreign exchange differences

277

                 -

277

Cash and cash equivalents at beginning of period

6,082

-

6,082

Cash and cash equivalents at end of period

5,863

-

5,863

       

*Small revisions to the previously estimated amounts reported for the prior year and quarters have been made upon completion of our implementation of

 IFRS 16 during 2019

 

The following table shows the YTD December 2018 unaudited adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Cash Flow for the twelve months ended December 31, 2018.

Unaudited adjusted figures*

 

Adjustments

 

 

Twelve months ended December 31, 2018

(In millions of Mexican pesos)

Twelve months ended December 31, 2018

(Reported)

 

 

 

 

Net cash flow generated by operating activities

566

5,711

6,277

Net cash flow used in investing activities

(1,389)

-

(1,389)

Net cash flow used in financing activities

(235)

(5,711)

(5,946)

Decrease in cash and cash equivalents

(1,059)

-

(1,059)

Net foreign exchange differences

(29)

                 -

(29)

Cash and cash equivalents at beginning of period

6,951

-

6,951

Cash and cash equivalents at end of period

5,863

-

5,863

       

*Small revisions to the previously estimated amounts reported for the prior year and quarters have been made upon completion of our implementation of

 IFRS 16 during 2019


[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)