Volaris Reports Financial Results for the Second Quarter 2021

MEXICO CITY, July 15, 2021 /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, and Central America, today announces its financial results for the second quarter 2021^[1].

Second Quarter 2021 Highlights
(All metrics are compared to 2Q 2019 unless otherwise noted)

Volaris reported a strong second quarter with double-digit growth in revenue and EBITDAR, driven by a continued recovery of passenger demand in the Company´s markets.

• Total operating revenue of Ps.11,501 million, a 38% increase. Total revenue per available seat mile (TRASM) increased 22% to Ps.165 cents.
• Operating expenses of Ps.8,850 million, a 15% increase. Operating expenses per available seat mile (CASM) decreased 3% to US$ 6.31 cents, while CASM ex-fuel increased 8% to US$ 4.22 cents.
• Net income of Ps.1,538 million with a net margin of 13.4%. Earnings per share of Ps.1.32 and earnings per ADS of US$ 0.67.
• EBITDAR of Ps.4,696 million, increased 103% with an EBITDAR margin of 40.8%, an expansion of 13.1 percentage points.
• Cash generation of Ps.2,072 million with a cash and cash equivalents position of Ps.10,534 million or US$ 532 million, representing 44% of the last twelve months operating revenue.
• Net debt-to-EBITDAR ratio of 4.5 times, back to pre-pandemic levels.

"I am proud of what our team was able to achieve in the second quarter 2021, delivering considerable improvement in almost all operating and financial metrics. We were able to significantly increase capacity while improving TRASM and maintaining our cost control discipline. This efficient growth allowed us to more than double EBITDAR compared to the second quarter of 2019," said Enrique Beltranena, President & Chief Executive Officer. "We have demonstrated yet again that the Volaris business model is sound and can deliver superior results in various market conditions. Our team has taken the opportunities that presented themselves from the CoVID-19 pandemic and come out stronger in the market." Enrique added.

Second Quarter 2021 Financial and Operations Highlights
(All metrics are compared to 2Q 2019 unless otherwise noted)

Total operating revenue was Ps.11,501 million, a 38% increase, driven by higher capacity, healthy load factors and stronger unit revenue per passenger. Demand in the quarter was exceptionally strong both in the transborder and Mexican domestic market.

Volaris booked 6.2 million passengers in the quarter, an increase of 10%. Domestic and international passengers increased 9% and 11%, respectively; while total capacity, in terms of available seat miles (ASMs), increased 14% to 7.0 billion. Load factor reached 86.6%, back to pre-pandemic levels.

TRASM of Ps.165 cents, increased 22%. Average base fare was Ps.1,086, an increase of 13%. Ancillary revenue per passenger was Ps.785, a 53% increase, due to the continued growth of new and mature products, such as More Flexibility, Combo Business and Combo Health. Ancillary revenue represented 42% of total operating revenue, compared to 35% in the same period of 2019. Finally, total revenue per passenger increased 27% to Ps.1,870.

Operating expenses were Ps.8,850 million, a 15% increase, mainly impacted by maintenance and redelivery expenses. CASM ex-fuel increased 8% to US$ 4.22 cents. The average economic fuel cost per gallon declined 13% to Ps.42.6 per gallon (US$ 2.2), which totaled a CASM decrease of 3% to US$ 6.31 cents.

Comprehensive financing result decreased 2% driven by a foreign exchange gain of Ps.164 million, despite an increase of 23% of financial cost mainly related to the increase in the Company's fleet. The Mexican peso depreciated 5% against the US dollar, from an average exchange rate of Ps.19.12 per US dollar in the second quarter of 2019 to Ps.20.05 per US dollar during the second quarter of 2021. At the end of the second quarter of 2021, the Mexican peso (Ps.19.80 per US dollar) appreciated 4% compared to the exchange rate at the end of the first quarter of 2021 (Ps.20.60 per US dollar).

Income tax expense was Ps.659 million, compared to Ps.78 million in the second quarter of 2019.

Net income was Ps.1,538 million with a net margin of 13.4%. Earnings per share totaled Ps.1.32 and earnings per ADS were US$ 0.67.

EBITDAR was Ps.4,696 million, an increase of 103% due to capacity increase, higher unit revenues, and tight cost controls. EBITDAR margin was 40.8%, an increase of 13.1 percentage points.

Balance Sheet, Liquidity and Capital Allocation

During the second quarter 2021 Volaris generated cash flow of Ps.2,072 million. As of June 30, cash and cash equivalents were Ps.10,534 million or US$ 532 million, representing 44% of the last twelve months operating revenue. The net cash flow generated by operating activities was Ps.5,807 million, while cash outflows in investing and financing activities were Ps.776 million and Ps.2,959 million, respectively. Negative net foreign exchange difference was Ps.255 million.

As of June 30, 2021, the Company had only $18 million dollars outstanding of the working capital relief received on goods and services during 2020. By the end of the second quarter, the Company's suppliers and accrued liabilities were equal to 62 days of operating expenses.

As of the quarter end, net debt was Ps.39,849 million, which included Ps.5,332 million of financial debt, Ps.45,051 million of leasing liabilities, less cash and cash equivalents of Ps.10,534 million. The Company registered a negative adjusted net debt of Ps.5,202 million (excluding lease liability recognized under the IFRS16). The net debt-to-EBITDAR ratio was 4.5 times, in line with 2Q 2019.

Fleet

During the second quarter, the Company incorporated 5 new A320neo aircraft to its fleet. As of June 30, 2021, Volaris' fleet was composed of 92 aircraft (6 A319s, 70 A320s and 16 A321s), with an average age of 5.4 years. Volaris' fleet had an average of 188 seats per aircraft. 80% of its aircraft are sharklet-equipped and 39% are New Engine Option (NEO) models.

The Company plans to incorporate 25 A320neo family aircraft to its fleet in the next 18 months, ending 2021 with 101 aircraft and closing the year 2022 with 113 aircraft. Volaris anticipates the percentage of A320neo family aircraft of its fleet to be 54% by year end 2022, aligned to the Company's sustainability strategy.

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:
María Elena Rodríguez / Félix Martínez / [email protected] 

Media Contact:
Gabriela Fernández / [email protected]/ +52 55 3104 5264

Conference call and webcast details                              

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 5 to more than 180 and its fleet from 4 to 93 aircraft. Volaris offers more than 450 daily flight segments on routes that connect 43 cities in Mexico and 28 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 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 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 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 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
(All metrics are compared to 2019 unless otherwise noted)

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

Financial and Operating Indicators
(All metrics are compared to 2020 unless otherwise noted)

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

Financial and Operating Indicators
(All metrics are compared to 2020 unless otherwise noted)

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

Consolidated Statement of Operations
(All metrics are compared to 2020 unless otherwise noted)

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

Consolidated Statement of Operations
(All metrics are compared to 2020 unless otherwise noted)

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

Reconciliation of total ancillary revenue per passenger
(All metrics are compared to 2020 unless otherwise noted)

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

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

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger
(All metrics are compared to 2020 unless otherwise noted)

The following table shows the first one half of the year additional detail about the components of total ancillary revenue:

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

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

Consolidated Statement of Financial Position
(All metrics are compared to 2020 unless otherwise noted)

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

Consolidated Statement of Cash Flows – Cash Flow Data Summary
(All metrics are compared to 2020 unless otherwise noted)

**Includes aircraft rental payments of Ps.2,901 million and Ps.806 million for the three months ended period June 30, 2021, and 2020, respectively.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary
(All metrics are compared to 2020 unless otherwise noted)

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

SOURCE Volaris