Volaris Reports Financial Results

for the Third Quarter 2023

Mexico City, Mexico, October 24th, 2023 - 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, Central and South America, today announces its financial results for the third quarter 20231.

Third Quarter 2023 Highlights

(All figures are reported in U.S. dollars and compared to 3Q 2022 unless otherwise noted)

  • Total operating revenues of $848 million, a 10% increase.
  • Total revenue per available seat mile (TRASM) increased 1.8% to $8.37 cents.
  • Available seat miles (ASMs) increased 8.2% to 10.1 billion.
  • Total operating expenses of $809 million, representing 95% of total operating revenue.
  • Total operating expenses per available seat mile (CASM) increased 1.7% to $7.98 cents.
  • Average economic fuel cost decreased 20% to $3.17 per gallon.
  • CASM ex fuel increased 21% to $4.91 cents.
  • Adjusted CASM ex fuel increased 20% to $4.49 cents.
  • Net loss of $39 million. Loss per share of $0.03 and loss per ADS of $0.34 cents.
  • EBITDAR of $207 million, an 18% increase.
  • EBITDAR margin was 24.4%, an increase of 1.6 percentage points.
  • Total cash, cash equivalents, restricted cash, and short-terminvestments totaled $764 million, representing 24% of the last twelve months' total operating revenue.
  • Net debt-to-LTMEBITDAR2 ratio of 3.5 times, remaining unchanged when compared to the previous quarter.

Enrique Beltranena, President & Chief Executive Officer, said: "Volaris' performance in the third quarter showed resilience, resulting in revenue growth. This growth was mainly due to increased passenger volumes and record-high ancillary revenue per passenger. We achieved this by maintaining strong cost control, especially when it came to non-fuel expenses.

Despite facing challenges related to Pratt & Whitney's GTF preventive accelerated inspections, Volaris is fully committed to ensuring the safety, financial stability, and long-term success of our airline. We are actively addressing the global issue of engine inspections affecting multiple airlines and are working closely with Pratt & Whitney to obtain the necessary technical support and financial compensation for the affected engines.

We've developed a mitigation plan to partially offset the impact. Our focus for 2024 is to maximize unit revenues and margins while optimizing our network to the best extent possible given the current environment."

  1. The financial information, unless otherwise indicated, is presented in accordance with the International Financial Reporting Standards (IFRS).
  2. Includes short-term investments.

1

Third Quarter 2023 Consolidated Financial and Operating Highlights

(All figures are reported in U.S. dollars and compared to 3Q 2022 unless otherwise noted)

Third Quarter

Consolidated Financial Highlights

2023

2022

Var.

Total operating revenue (millions)

848

769

10.3%

TRASM (cents)

8.37

8.22

1.8%

ASMs (million, scheduled & charter)

10,126

9,355

8.2%

Load Factor (scheduled, RPMs/ASMs)

86.4%

85.6%

0.7 pp

Passengers (thousand, scheduled & charter)

8,691

8,125

7.0%

Fleet (at the end of the period)

125

113

12

Total operating expenses (millions)

809

734

10.2%

CASM (cents)

7.98

7.85

1.7%

CASM excl. fuel (cents)

4.91

4.07

20.6%

Adjusted CASM excl. fuel (cents)3

4.49

3.74

20.1%

Operating income (EBIT) (millions)

39

35

11.4%

% EBIT Margin

4.6%

4.6%

0.0 pp

Net (loss) income (millions)

(39)

40

N/A

% Net (loss) income Margin

(4.6%)

5.2%

(9.8 pp)

EBITDAR (millions)

207

175

18.3%

% EBITDAR Margin

24.4%

22.8%

1.6 pp

Net debt-to-EBITDAR4

3.5x

3.4x

0.1x

Reconciliation of CASM to Adjusted CASM ex fuel:

Third Quarter

Reconciliation of CASM

2023

2022

Var.

CASM (cents)

7.98

7.85

1.7%

Fuel expense

(3.07)

(3.78)

(18.8%)

CASM ex fuel

4.91

4.07

20.6%

Aircraft and engine variable lease expenses5

(0.42)

(0.34)

23.5%

Sale and lease back gains

0.00

0.01

(99.8%)

Adjusted CASM ex fuel

4.49

3.74

20.1%

Note: Figures are rounded for convenience purposes. Further detail can be found in financial and operating indicators.

  1. Excludes fuel expense, aircraft and engine variable lease expenses and sale and lease-back gains.
  2. Includes short-term investments.
  3. Aircraft redeliveries.

2

Total operating revenues in the quarter were $848 million, a 10% increase driven by robust demand across our network and a rise in ancillary revenue per passenger.

Booked passengers amounted to 8.7 million in the quarter, an increase of 7.0%. Domestic and international booked passengers increased 2.8% and 24%, respectively. Total capacity, in terms of available seat miles (ASMs), increased 8.2% to 10.1 billion.

The load factor for the quarter reached 86.4%, representing an increase of 0.7 percentage points compared to the same period in 2022.

TRASM increased 1.8% to $8.37 cents in the quarter, helped by a stronger peso. The average base fare was $48, a decrease of 13%. Ancillary revenue per passenger was $49, a 26% increase. Ancillary revenue represented 50% of total operating revenue, 9.3 percentage points above the third quarter 2022. Finally, total operating revenue per passenger stood at $98, representing a 3.0% increase.

Total operating expenses in the quarter were $809 million, representing 95% of total operating revenue, remaining consistent with the same quarter in 2022.

CASM totaled $7.98 cents, a 1.7% increase when compared to the same period of 2022. The average economic fuel cost decreased 20% to $3.17 per gallon in the period.

CASM ex fuel increased 21% to $4.91 cents and adjusted CASM ex fuel increased 20% to $4.49 cents, primarily driven by a strong appreciation of the Mexican peso compared to the prior year.

Comprehensive financing result represented an expense of $73 million in the third quarter of 2023, compared to a $44 million expense in the same period of 2022. For the period, the average exchange rate was Ps.17.06 per U.S. dollar, a 16% appreciation compared to the same quarter of 2022. At the end of the third quarter, the exchange rate stood at Ps.17.62 per U.S. dollar.

Income tax expense for the quarter was $5 million, compared to a benefit of $49 million registered in the same period of 2022.

Net loss in the quarter was $39 million, with a loss per share of $0.03 and a loss per ADS of $0.34 cents.

EBITDAR for the quarter was $207 million, an increase of 18% compared to the same period in 2022. EBITDAR margin stood at 24.4%, an increase of 1.6 percentage points compared to the same quarter of the previous year.

Balance Sheet and Cash Flow

Total cash, cash equivalents, restricted cash, and short-term investments totaled $764 million, representing 24% of the last twelve months' total operating revenue.

3

Net cash flow provided by operating and financing activities in the quarter was $145 million and $87 million, respectively. Net cash flow used in investing activities amounted to $138 million.

Net debt-to-LTMEBITDAR6 ratio stood at 3.5 times, in line with the second quarter of 2023 and 0.4 times lower when compared to the end of 2022.

2023 Guidance

2023 Guidance

Updated Guidance

Prior Guidance

ASM growth

~10%

Total operating revenues

~$3.2 billion

CASM ex fuel

~$4.8 cents

EBITDAR margin

~26%

Net debt-EBITDAR ratio6

~3.5x

~13%

$3.2 to $3.4 billion $4.7 to $4.8 cents 29% to 31% ~2.8x

For the full-year 2023, CAPEX is expected to be approximately $300 million, net of financed fleet predelivery payments. This outlook assumes a full-year average USD/MXN rate of approximately Ps.17.75 and an average U.S. Gulf Coast jet fuel price of approximately $2.80 per gallon; it also assumes no significant unexpected disruptions related to COVID-19, macroeconomic factors, or other negative impacts on its business. The Company's full-year 2023 outlook is based on several assumptions, including the foregoing, which are subject to change and may be outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurances that Volaris will achieve these results.

Fleet

During the third quarter, Volaris added two A321neo aircraft to its fleet, bringing the total number of aircraft to 125 as of September 30th, 2023. At the end of the quarter, Volaris' fleet has an average age of 5.6 years and an average seating capacity of 194 passengers per aircraft. Of the total fleet, 58% of the aircraft are New Engine Option (NEO) models. Volaris plans to increase its fleet to approximately 127 aircraft by the end of 2023, considering an Airbus potential delay of at least two aircraft until 2024.

Third Quarter

Second Quarter

Total Fleet

2023

2022

Var.

2023

Var.

CEO

A319

3

5

(2)

3

-

A320

40

40

-

40

-

A321

10

10

-

10

-

NEO

A320

51

47

4

51

-

A321

21

11

10

19

2

Total aircraft at the end of the period

125

113

12

123

2

6 Includes short-term investments.

4

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:

Ricardo Martínez / ir@volaris.com

Media Contact:

Israel Álvarez / ialvarez@gcya.net

Conference Call and Webcast Details

Date:

Wednesday, October 25th, 2023

Time:

9:00 am Mexico City / 11:00 am New York (USA) (ET)

Webcast link:

Volaris Webcast(View the live webcast)

Dial-in& Live Q&A link:VolarisDial-inand Live Q&A

  1. Click on the call link and complete the online registration form.
  2. Upon registering you will receive the dial-in info and a unique PIN to join the call, as well as an email confirmation with the details.
  3. Select a method for joining the call:
    1. Dial-In:A dial-in number and unique PIN are displayed to connect directly from your phone.
    2. Call Me: Enter your phone number and click "Call Me" for an immediate callback from the system.

5

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 245 and its fleet from 4 to 126 aircraft. Volaris offers more than 550 daily flight segments on routes that connect 43 cities in Mexico and 28 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 fourteen consecutive years. For more information, please visit: ir.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 full year outlook and intentions and expectations regarding the delivery schedule of aircraft on order, amount of aircrafts at year end, amount of forward bookings during the holiday season, ability to maintain the load factor, 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.

Supplemental Information on Non-GAAP Measures

We evaluate our financial performance by using various financial measures that are not performance measures under International Financial Reporting Standards ("non-IFRS measures"). These non-IFRS measures include CASM, CASM ex-fuel, Adjusted CASM ex-fuel, EBITDAR, Net debt-to-LTM EBITDAR and Total cash, cash equivalents, restricted cash, and short-term investments. We define CASM as total operating expenses by available seat mile. We define CASM ex-fuel as total operating expenses by available seat mile, excluding fuel expense. We define Adjusted CASM ex fuel as total operating expenses by available seat mile, excluding fuel expense, aircraft and engine variable lease expenses and sale and lease back gains. We define EBITDAR as earnings before interest, income tax, depreciation and amortization, depreciation of right of use assets and aircraft and engine variable lease expenses. We define Net debt-to-LTM EBITDAR as Net debt divided by LTM EBITDAR. We define Total cash, cash equivalents, restricted cash, and short-term investments as the sum of cash, cash equivalents, restricted cash, and short-term investments.

These non-IFRS measures are provided as supplemental information to the financial information presented in this release that is calculated and presented in accordance with International Financial Reporting Standards ("IFRS"), because we believe that they, in conjunction with the IFRS financial information, provide useful information to management's, analysts' and investors' overall understanding of our operating performance.

Because non-IFRS measures are not calculated in accordance with IFRS, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related IFRS measures presented in this release and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in the method of calculation and in the items being adjusted.

We encourage investors to review our financial statements and other filings with the Securities and Exchange Commission in their entirety for additional information regarding the Company and not to rely on any single financial measure.

6

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

Financial and Operating Indicators

Unaudited

Three months ended

Three months ended

Variance

September 30, 2023

September 30, 2022

(In millions U.S. dollars, except otherwise indicated)

Total operating revenues (millions)

848

769

10.3%

Total operating expenses (millions)

809

734

10.2%

EBIT (millions)

39

35

11.4%

EBIT margin

4.6%

4.6%

0.0 pp

Depreciation and amortization (millions)

126

107

17.8%

Aircraft and engine variable lease expenses (millions)

42

32

31.3%

Net (loss) income (millions)

(39)

40

N/A

Net (loss) income margin

(4.6%)

5.2%

(9.8 pp)

(Loss) earnings per share (6):

Basic

(0.03)

0.03

N/A

Diluted

(0.03)

0.03

N/A

(Loss) earnings per ADS *:

Basic

(0.34)

0.34

N/A

Diluted

(0.33)

0.34

N/A

Weighted average shares outstanding:

Basic

1,153,301,262

1,155,533,163

(0.2%)

Diluted

1,165,651,409

1,165,048,915

0.1%

Financial Indicators

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

8.37

8.22

1.8%

Average base fare per passenger

48

56

(13.2%)

Total ancillary revenue per passenger (3)

49

39

26.3%

Total operating revenue per passenger

98

95

3.0%

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

7.98

7.85

1.7%

CASM ex fuel (cents) (1)

4.91

4.07

20.6%

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

4.49

3.74

20.1%

Operating Indicators

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

10,126

9,355

8.2%

Domestic

6,647

6,507

2.2%

International

3,479

2,848

22.2%

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

8,744

8,007

9.2%

Domestic

5,874

5,708

2.9%

International

2,871

2,299

24.8%

Load factor (2)

86.4%

85.6%

0.7 pp

Domestic

88.4%

87.7%

0.6 pp

International

82.5%

80.8%

1.7 pp

Booked passengers (thousands) (1)

8,691

8,125

7.0%

Domestic

6,726

6,544

2.8%

International

1,965

1,581

24.3%

Departures (1)

52,387

50,586

3.6%

Block hours (1)

135,025

130,314

3.6%

Aircraft at the end of the period

125

113

12

Average aircraft utilization (block hours)

13.45

13.35

0.8%

Fuel gallons accrued (millions)

97.89

89.04

9.9%

Average economic fuel cost per gallon (4)

3.17

3.96

(19.9%)

Average exchange rate

17.06

20.24

(15.7%)

Exchange rate at the end of the period

17.62

20.31

(13.2%)

*Each ADS represents ten CPOs and each CPO represents a financial interest in one Series A share.

(1)

Includes schedule and charter.

(6) The basic and diluted loss or earnings per share are calculated in

(2)

Includes schedule.

accordance with IAS 33. Basic loss or earnings per share is calculated by

(3)

Includes "Other passenger revenues" and "Non-passenger

dividing net loss or earnings by the average number of shares outstanding

revenues".

(excluding treasury shares). Diluted loss or earnings per share is calculated by

(4)

Excludes Non-creditable VAT.

dividing net loss or earnings by the average number of shares outstanding

(5)

Excludes fuel expense, aircraft and engine variable lease

adjusted for dilutive effects.

expenses and sale and lease-back gains.

7

(1) Includes schedule and charter.
(2) Includes schedule.
(3) Includes "Other passenger revenues" and "Non-passengerrevenues".
(4) Excludes Non-creditableVAT.
(5) Excludes fuel expense, aircraft and engine variable lease expenses and sale and lease-backgains.

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

Financial and Operating Indicators

Unaudited

Nine months ended

Nine months ended

Variance

(In U.S. dollars, except otherwise indicated)

September 30, 2023

September 30, 2022

Total operating revenues (millions)

2,360

2,027

16.4%

Total operating expenses (millions)

2,302

2,043

12.7%

EBIT (millions)

58

(16)

N/A

EBIT margin

2.5%

(0.8%)

3.3 pp

Depreciation and amortization (millions)

365

305

19.7%

Aircraft and engine rent expenses (millions)

118

90

31.1%

Net loss (millions)

(104)

(58)

79.3%

Net loss margin

(4.4%)

(2.9%)

(1.5 pp)

Loss per share (6):

Basic

(0.09)

(0.05)

79.4%

Diluted

(0.09)

(0.05)

79.0%

Loss per ADS *:

Basic

(0.90)

(0.50)

79.4%

Diluted

(0.89)

(0.50)

79.0%

Weighted average shares outstanding:

Basic

1,152,936,177

1,155,783,240

(0.2%)

Diluted

1,165,317,093

1,165,094,503

0.0%

Financial Indicators

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

8.00

7.86

1.8%

Average base fare per passenger

48

53

(9.7%)

Total ancillary revenue per passenger (3)

46

37

23.8%

Total operating revenue per passenger

93

90

4.1%

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

7.81

7.93

(1.5%)

CASM ex fuel (cents) (1)

4.80

4.22

13.8%

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

4.40

3.92

12.3%

Operating Indicators

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

29,488

25,777

14.4%

Domestic

19,798

18,033

9.8%

International

9,690

7,744

25.1%

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

25,161

21,891

14.9%

Domestic

17,065

15,792

8.1%

International

8,096

6,099

32.7%

Load factor (2)

85.3%

84.9%

0.4 pp

Domestic

86.2%

87.6%

(1.4 pp)

International

83.6%

78.8%

4.8 pp

Booked passengers (thousands) (1)

25,250

22,576

11.8%

Domestic

19,683

18,297

7.6%

International

5,566

4,279

30.1%

Departures (1)

153,705

142,100

8.2%

Block hours (1)

398,540

362,614

9.9%

Aircraft at the end of the period

125

113

12

Average aircraft utilization (block hours)

13.41

13.28

1.0%

Fuel gallons accrued (millions)

284.16

248.17

14.5%

Average economic fuel cost per gallon (4)

3.11

3.83

(18.8%)

Average exchange rate

17.82

20.27

(12.1%)

Exchange rate at the end of the period

17.62

20.31

(13.2%)

*Each ADS represents ten CPOs and each CPO represents a financial interest in one Series A share.

(6) The basic and diluted loss or earnings per share are calculated in accordance with IAS 33. Basic loss or earnings per share is calculated by dividing net loss or earnings by the average number of shares outstanding (excluding treasury shares). Diluted loss or earnings per share is calculated by dividing net loss or earnings by the average number of shares outstanding adjusted for dilutive effects.

8

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

Consolidated Statement of Operations

Unaudited

(In millions of U.S. dollars)

Operating revenues:

Passenger revenues

Fare revenues

Other passenger revenues

Three months ended

Three months ended

September 30, 2023

September 30, 2022

812

742

421

453

391

289

Variance

9.4%

(7.1%)

35.3%

Non-passenger revenues

36

27

33.3%

Other non-passenger revenues

31

24

29.2%

Cargo

5

3

66.7%

Total operating revenues

848

769

10.3%

Other operating income

-

(2)

(100.0%)

Fuel expense

312

354

(11.9%)

Landing, take-off and navigation expenses

130

94

38.3%

Salaries and benefits

99

72

37.5%

Depreciation of right of use assets

91

82

11.0%

Sales, marketing and distribution expenses

49

29

69.0%

Aircraft and engine variable lease expenses

42

32

31.3%

Other operating expenses

28

24

16.7%

Maintenance expenses

23

24

(4.2%)

Depreciation and amortization

35

25

40.0%

Operating expenses

809

734

10.2%

Operating income

39

35

11.4%

Finance income

8

4

100.0%

Finance cost

(60)

(46)

30.4%

Exchange loss, net

(21)

(2)

950.0%

Comprehensive financing result

(73)

(44)

65.9%

Loss before income tax

(34)

(9)

277.8%

Income tax (expense) benefit

(5)

49

N/A

Net (loss) income

(39)

40

N/A

9

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

Consolidated Statement of Operations

Unaudited

(In millions of U.S. dollars) Operating revenues: Passenger revenues

Nine months ended

Nine months ended

Variance

September 30, 2023

September 30, 2022

2,259

1,947

16.0%

Fare revenues

1,204

1,191

1.1%

Other passenger revenues

1,055

756

39.6%

Non-passenger revenues

101

80

26.3%

Other non-passenger revenues

87

69

26.1%

Cargo

14

11

27.3%

Total operating revenues

2,360

2,027

16.4%

Other operating income

(4)

(18)

(77.8%)

Fuel expense

888

957

(7.2%)

Landing, take-off and navigation expenses

367

277

32.5%

Salaries and benefits

286

204

40.2%

Depreciation of right of use assets

268

237

13.1%

Sales, marketing and distribution expenses

122

82

48.8%

Aircraft and engine variable lease expenses

118

90

31.1%

Other operating expenses

86

71

21.1%

Maintenance expenses

74

75

(1.3%)

Depreciation and amortization

97

68

42.6%

Operating expenses

2,302

2,043

12.7%

Operating income (loss)

58

(16)

N/A

Finance income

25

6

316.7%

Finance cost

(175)

(137)

27.7%

Exchange loss, net

(30)

(7)

328.6%

Comprehensive financing result

(180)

(138)

30.4%

Loss before income tax

(122)

(154)

(20.8%)

Income tax benefit

18

96

(81.3%)

Net loss

(104)

(58)

79.3%

10

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Controladora Vuela Compañía de Aviación SAB de CV published this content on 24 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 October 2023 23:20:34 UTC.