Volaris Reports Financial Results for the First Quarter 2022

April 27, 2022

MEXICO CITY, April 27, 2022 /PRNewswire/ -- Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS and BMV: VOLAR) ("Volaris" or "The Company"), the ultra-low-cost airline serving Mexico, the United States of America, Central and South America, today announces its financial results for the first quarter 2022[1]

Volaris Logo

First Quarter 2022 Highlights[2] 
(All figures are reported in U.S. dollars and compared to 1Q 2021 unless otherwise noted)

Volaris reported double-digit growth in revenue and EBITDAR in the first quarter, maintained a strong liquidity position and a healthy balance sheet. Strong TRASM growth in the quarter was partially offset by rising fuel prices.

  • Total operating revenue of $567 million, an 80% increase. Total revenue per available seat mile (TRASM) increased 18% to $7.0 cents.
  • Operating expenses of $598 million, a 70% increase. Operating expenses per available seat mile (CASM) increased 13% to $7.4 cents, while CASM ex-fuel decreased 8% to $4.4 cents.
  • Net loss of $49 million. Loss per share $0.04 and loss per ADS of $0.42.
  • EBITDAR of $97 million, a 52% increase. EBITDAR margin was 17.0%, a decrease of 3.2 percentage points.
  • Cash generation of $9 million, with a cash, cash equivalents and restricted cash position of $750 million, representing 31% of the last twelve months total operating revenue.
  • Net debt-to-LTM EBITDAR ratio of 2.3 times, the lowest level in Volaris' history.

"2022 started with sharply rising fuel prices and a new surge in Covid cases. Strong demand trends remained, however, and we are observing less and less of a disruption in demand from new Covid cases and customers recognizing Volaris' reliability. This strong demand allowed us to gradually raise fares to offset rising fuel prices. Our 1Q22 results give us confidence in the overall strength in demand of our existing markets and our ability to closely match it with new capacity." said Enrique Beltranena, President & Chief Executive Officer. "We will continue on our path of a disciplined growth strategy and are well-positioned for the summer season as VFR and leisure travelers are eager to fly." Enrique added.

First Quarter 2022 Financial and Operations Highlights[3] 
(All figures are reported in U.S. dollars and compared to 1Q 2021 unless otherwise noted)


First Quarter

Consolidated Financial Highlights                                  

2022

2021

Var.

Total Revenue (US$ million)

567

315

80%

TRASM (US$ cents)

7.0

6.0

18%

ASMs (million, scheduled & charter)

8,061

5,380

50%

Load Factor (scheduled, RPMs/ASMs)

83.5%

78.1%

5.4 pp

Passengers (thousand, scheduled & charter)

6,989

4,271

64%

Fleet (end of period)

104

87

17

Operating Expenses (US$ million)

598

351

70%

CASM (US$ cents)

7.4

6.6

13%

CASM excl. fuel (US$ cents)

4.4

4.8

(8%)

Operating loss (EBIT) (US$ million)

(31)

(36)

(14%)

% EBIT Margin

(5.5%)

(11.4%)

5.9 pp

Net loss (million) (US$ million)

(49)

(36)

36%

% Net loss margin

(8.7%)

(11.4%)

2.7 pp

EBITDAR (US$ million)

97

64

52%

% EBITDAR Margin

17.0%

20.2%

-3.2 pp

Net debt-to-EBITDAR

2.3x

11.2x

-8.9x

Total operating revenue in the quarter was $567 million, an 80% increase, driven by higher capacity, healthy load factors and stronger unit revenue per passenger. Moreover, demand remained relatively strong throughout the quarter despite the increase of Covid-19 cases (Omicron variant) in our markets early in the quarter.

Volaris transported 7.0 million passengers in the quarter, an increase of 64%. Domestic and international passengers increased 58% and 95%, respectively; while total capacity, in terms of available seat miles (ASMs), increased 50% to 8.1 billion. Load factor reached 83.5%, 5.4 pp higher than the same period of 2021.

TRASM of $7.0 cents represented a 18% increase. Average base fare was $46, an increase of 24%. Ancillary revenue per passenger was $35, a 7% decrease. Ancillary revenue represented 43% of total operating revenue, compared to 51% in the same period of 2021.Total operating revenue per passenger increased 8% to $81.

Total operating expenses in the quarter were $598 million, a 70% increase, driven by higher fuel cost, which soared due to geopolitical conflicts in Eastern Europe. The average economic fuel cost per gallon increased 64% to $3.15 per gallon in the period. CASM totaled $7.4 cents, 13% higher when compared to same period of 2021. CASM ex-fuel decreased 8% to $4.4 cents due to higher aircraft utilization in the first quarter of 2022; in the same period of last year aircraft utilization was impacted by second wave of Covid-19.

Comprehensive financing result represented a loss of $33 million in first quarter of 2022, compared to a loss of $16 million in the same period of 2021. This result was impacted by higher financial cost.

In the first quarter, the Mexican peso depreciated 1% against the US dollar to an average of Ps.20.52 per US dollar. At the end of the quarter, the Mexican peso stood at Ps.19.99 per US dollar, a 3% appreciation compared to the exchange rate at the end of the fourth quarter of 2021.

Income tax benefit was $16 million, compared to the $15 million benefit posted in the first quarter of 2021.

Net loss in the quarter stood at $49 million, with loss per share of $0.04 and loss per ADS of $0.42.

EBITDAR was $97 million, an increase of 52%, driven by strong revenue growth, although substantially higher fuel costs were a negative factor during the quarter. EBITDAR margin was 17.0%, a decrease of 3.2 percentage points.

Balance Sheet, Liquidity and Capital Allocation 
During the first quarter, Volaris generated $9 million in cash. As of March 31st, cash, cash equivalents and restricted were $750 million, representing 31% of the last twelve months total operating revenue. Net cash flow provided by operating activities was $196 million, while cash outflows in investing and financing activities were $6 million and $183 million, respectively. Positive net foreign exchange difference was $2 million.

On March 31, net debt was $1,931 million, which included $242 million of financial debt, $2,439 million of leasing liabilities, less cash, cash equivalents and restricted of $750 million. The net debt-to-LTM EBITDAR ratio was 2.3 times, compared to 11.2 times in the same period of 2021 and 2.5 times in fourth quarter of 2021.

Full Year 2022 Outlook 
Despite the macroeconomic and geopolitical challenges around the globe, demand remains strong across Volaris' route system. Accordingly, Volaris expects to continue with its growth plans while closely monitoring demand trends. More specifically, the Company maintains its prior guidance and forecast full year growth in capacity (ASMs) in the mid-twenties compared to 2021 and revises upward its total operating revenue for 2022 in the range of $2.8 to $3.0 billion. Also, the Company expects a full year CASM ex-fuel, to increase between 1% and 3% compared to 2021; and an EBITDAR margin in the high twenties. The Company continues to anticipate capex spend in the range of $140 to $145 million. This outlook assumes a full year average USD/MXN rate of Ps.20.50 to Ps.20.80 and an average economic fuel price of $3.10 to $3.40 per gallon.

This guidance also assumes no significant unexpected disruptions related to COVID-19 or other, exogenous macroeconomic or other negative impacts to its business.

Fleet 
During the first quarter, the Company incorporated three new A320neo aircraft to its fleet. As of March 31st, 2022, Volaris' fleet was composed of 104 aircraft (6 A319s, 81 A320s and 17 A321s), of which 46% are New Engine Option (NEO) models. Volaris' fleet had an average of 188 seats per aircraft and an average age of 5.6 years. The Company plans to end 2022 approximately with 115 aircraft.

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

Investor Relations Contact: 
Félix Martínez / Naara Cortés Gallardo / ir@volaris.com 

Media Contact: 
Gabriela Fernández / gabriela.fernandez@volaris.com

Conference call and webcast details                              

Date:

Thursday, April 28th, 2022

Time:

10:00 am Mexico City (CT) / 11:00 am New York (USA) (ET)

United States dial in:

+1-844-204-8586

Mexico dial in:

+52-55-8880-8040

International dial in:

+1-412-317-6346

Participant code:

Volaris

Webcast & video presentation:

https://webcastlite.mziq.com/cover.html?webcastId=a1ab999b-d688-4955-88e7-b67bf46b59f7

About Volaris:

*Controladora Vuela Compañía de Aviación, S.A.B. de C.V. ("Volaris" or the "Company") (NYSE: VLRS and BMV: VOLAR), is an ultra-low-cost carrier, with point-to-point operations, serving Mexico, the United States, Central and South America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since the beginning of operations in March 2006, Volaris has increased its routes from 5 to more than 188 and its fleet from 4 to 105 aircraft. Volaris offers more than 500 daily flight segments on routes that connect 44 cities in Mexico and 27 cities in the United States, Central and South 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, Central and South America. Volaris has received the ESR Award for Social Corporate Responsibility for eleven 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 US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended, which represent the Company's expectations, beliefs or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words "expects," "intends," "estimates," "predicts," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "potential," "outlook," "may," "continue," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements 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 several factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenue; and government regulation. Additional information concerning these, and other factors is contained in the Company's US 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
(In U.S. dollars, except otherwise indicated)

Three months
ended
March 31, 2022

Three months
ended
March 31, 2021

Variance





Total operating revenues (millions)

567

315

80.0%



Total operating expenses (millions)

598

351

70.4%



EBIT (millions)

(31)

(36)

(13.1%)



EBIT margin

(5.5%)

(11.4%)

5.9 pp



Depreciation and amortization (millions)

95

79

20.8%



Aircraft and engine variable lease expenses (millions)

25

17

41.2%



Net loss (millions)

(49)

(36)

36.2%



Net loss margin

(8.7%)

(11.4%)

2.8 pp



Loss per share:






Basic

(0.04)

(0.03)

36.2%



Diluted

(0.04)

(0.03)

36.2%



Loss per ADS:






Basic

(0.42)

(0.31)

36.2%



Diluted

(0.42)

(0.31)

36.2%



Weighted average shares outstanding:






Basic

1,165,976,677

1,165,976,677

0.0%



Diluted

1,165,976,677

1,165,976,677

0.0%



Available seat miles (ASMs) (millions) (1)

8,061

5,380

49.8%



     Domestic

5,682

4,038

40.7%



     International

2,379

1,342

77.3%



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

6,728

4,202

60.1%



     Domestic

4,895

3,256

50.4%



     International

1,833

946

93.7%



Load factor (2)

83.5%

78.1%

5.4 pp



     Domestic

86.1%

80.6%

5.5 pp



     International

77.0%

70.5%

6.5 pp



Total operating revenue per ASM (TRASM) (cents) (1)(4)

7.0

6.0

18.0%



Total ancillary revenue per passenger  (3)(4)

35

38

(7.3%)



Total operating revenue per passenger  (4)

81

75

8.1%



Operating expenses per ASM (CASM) (cents) (1)(4)

7.42

6.59

12.7%



CASM ex fuel (cents) (1)(4)

4.40

4.77

(7.7%)



Booked passengers (thousands) (1)

6,989

4,271

63.6%



Departures (1)

44,938

28,962

55.2%



Block hours (1)

113,413

73,171

55.0%



Fuel gallons consumed (millions)

77.22

50.80

52.0%



Average economic fuel cost per gallon  (4)

3.15

1.93

63.7%



Aircraft at end of period

104

87

19.5%



Average aircraft utilization (block hours)

13.26

10.59

25.2%



Average exchange rate

0.05

0.05

(1.0%)



End of period exchange rate

0.05

0.05

3.1%



(1) Includes schedule and charter.                                                                     (3)  Includes "Other passenger revenues" and "non-passenger revenues".
(2) Includes schedule.                                                                                        (4) Excludes non-derivative financial instruments.



 

 

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






Consolidated Statement of Operations






Unaudited
(In millions of U.S. dollars)

Three months ended
March 31, 2022

Three months ended
March 31, 2021

Variance





Operating revenues:






 Passenger revenues

542

302

79.6%



   Fare revenues

322

159

102.4%



   Other passenger revenues

219

142

54.1%









 Non-passenger revenues

25

19

33.2%



   Other non-passenger revenues

22

16

36.0%



   Cargo

3

3

16.7%









Non-derivatives financial instruments

0

(6)

(100.0%)









Total operating revenues

567

315

80.0%









Other operating income

(3)

(3)

(14.4%)



Fuel expense, net (1)

243

95

157.4%



Landing, take-off, and navigation expenses

92

60

54.2%



Depreciation of right of use assets

75

64

16.6%



Salaries and benefits

67

48

40.7%



Aircraft and engine rent expense

33

23

42.6%



Maintenance expenses

26

21

23.5%



Sales, marketing, and distribution expenses

25

17

41.2%



Depreciation and amortization

20

12

63.9%



Other operating expenses

20

14

39.8%



Operating expenses

598

351

70.4%









Operating loss

(31)

(36)

(13.1%)









Finance income

1

1

15.7%



Finance cost

(47)

(28)

69.1%



Exchange gain, net

13

12

11.4%



Comprehensive financing result

(33)

(16)

115.1%









Loss before income tax

(65)

(52)

25.5%



Income tax benefit

16

15

0.4%



Net loss

(49)

(36)

36.2%









(1) Q 2021 figures include a benefit from non-derivative financial instruments by an amount of USD$3 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
March 31, 2022

Three months ended
March 31, 2021

Variance

(In millions of U.S. dollars)





Other passenger revenues

219

142

54.1%

Non-passenger revenues

25

19

33.2%

Total ancillary revenues

245

161

51.6%





Booked passengers (thousands) (1)

6,989

4,271

63.6%





Total ancillary revenue per passenger

35

38

(7.3%)





(1) Includes schedule and charter.

 

 

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






Consolidated Statement of Financial Position






(In millions of U.S. dollars)

March 31,
2022
Unaudited

December 31,
2021*





Assets





Cash, cash equivalents and restricted cash

750

741



Accounts receivable, net

168

106



Inventories

13

14



Prepaid expenses and other current assets

45

38



Guarantee deposits

64

79



Total current assets

1,039

979



Rotable spare parts, furniture and equipment, net

436

455



Right of use assets

1943

1917



Intangible assets, net

12

13



Derivatives Financial Instruments

2

1



Deferred income taxes

160

141



Guarantee deposits

449

455



Other long- term assets

25

23



Total non-current assets

3,026

3,006



Total assets

4,065

3,985



Liabilities





Unearned transportation revenue

373

304



Accounts payable

73

119



Accrued liabilities

223

178



Lease Liabilities

288

284



Other taxes and fees payable

201

131



Income taxes payable

4

4



Financial debt

137

197



Other liabilities

31

35



Total short-term liabilities

1,329

1,252



Financial debt

105

108



Accrued liabilities

0

1



Lease Liabilities

2,151

2,128



Other liabilities

200

167



Employee benefits

4

4



Deferred income taxes

16

11



Total long-term liabilities

2,477

2,420



Total liabilities

3,805

3,671



Equity





Capital stock

248

248



Treasury shares

(9)

(9)



Contributions for future capital increases

-

-



Legal reserve

17

17



Additional paid-in capital

282

281



Accumulated deficit

(125)

(76)



Accumulated other comprehensive income loss

(155)

(149)



Total equity

259

313



Total liabilities and equity

4,065

3,985








Weighted average shares outstanding

1,165,976,677

1,165,976,677



  (*) Unaudited USD figures.



 

 

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








Consolidated Statement of Cash Flows – Cash Flow Data Summary








Unaudited
(In millions of U.S. dollars)

Three months
ended March 31,
2022

Three months
ended March 31,
2021





Net cash flow provided by operating activities

196

37




Net cash flow used in investing activities

(6)

(9)




Net cash flow used in financing activities (1)

(183)

(106)




Increase (decrease) in cash, cash equivalents and restricted cash

7

(79)




Net foreign exchange differences

2

11




Cash, cash equivalents and restricted cash at beginning of period

741

490




Cash, cash equivalents and restricted cash at end of period

750

423




(1)  Includes aircraft rental payments of USD$112 million and USD$104 million for the three months ended period March 31, 2022, and 2021, respectively.




 

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

[2] As of January 1, 2022, all figures are reported in U.S. dollars.

[3] As of January 1, 2022, all figures are reported in U.S. dollars.

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SOURCE Volaris