CONTROLADORA VUELA COMPAÑÍA DE AVIACIÓN, S.A.B. DE C.V. MEXICO CITY, July 28, 2014 /PRNewswire/ -- Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico and the US, today announced its financial results for the second quarter 2014.
Second Quarter 2014 Highlights
The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS). Unless otherwise stated, all comparisons with prior periods refer to the second quarter of 2013.
-- Total operating revenues were Ps.3,308 million for the second quarter,
an increase of 9%, due to a seasonally stronger second quarter and
non-ticket revenue growth.
-- Non-ticket revenues increased 44%, reaching Ps.659 million. Non-ticket
revenue per passenger increased 26%, reaching Ps.275 (US$21), an
important step forward in achieving our product unbundling strategy.
-- Total operating revenue per available seat mile (TRASM) decreased to
Ps.113.2 cents (US$8.7 cents), a 5% decrease.
-- Operating expenses per available seat mile (CASM) excluding fuel
decreased 1%, reaching Ps.70.4 cents (US$5.4 cents), reflecting Volaris'
constant sharp focus on cost control.
-- Adjusted EBITDAR was Ps.595 million with a net loss of Ps.75 million
(Ps.0.07 per share / US$0.06 per ADS).
Volaris CEO Enrique Beltranena commented: "In the second quarter of 2014, fare and demand environment showed early signs of stabilization and then gradual recovery from the challenging fourth quarter 2013 and first quarter 2014 market conditions. The Volaris team turned around our key performance indicators throughout the most difficult months of the last years, resulting in an improvement compared to the first quarter. We consciously managed ASM capacity both, in terms of quantity and quality. Volaris delivered a monthly sequential improvement in total unit revenues. Capacity growth was controlled and redeployed where needed. Such improvement is uncommon in the aviation industry in such short timeframe. We are cautiously encouraged by the recent trends, and continue to see evidence of improvement in the economic environment and in our business performance going forward."
An Improving, But Still Fragile, Macroeconomic Environment and Competitive Landscape Contribute to the Beginning of a Turnaround in the Second Quarter
-- The Mexican macroeconomic environment:
-- GDP growth estimates for the full year are 2.6%, according to the
Mexican Central Bank survey from June 2014.
-- Consumer confidence decreased 2.4% year over year in June of 2014.
-- The Mexican General Economic Activity Indicator (IGAE) increased
1.4% in May of 2014 compared to the same period in 2013.
-- Mexican peso volatility: The Mexican peso depreciated 4.3% year over
year against the US dollar, as the exchange rate devalued from an
average of Ps.12.46 pesos per US dollar in the second quarter of 2013 to
Ps.13.00 pesos per US dollar during the second quarter of 2014.
-- Fuel costs increase: The average economic fuel cost per gallon increased
6.5% year over year in the second quarter of 2014.
The Volaris ULCC Model Drives Progress in a Slightly Improved Market Environment
-- Unit revenue improvement: Quarter-over-quarter TRASM improved 12% as a
result of a sequential monthly improvement average base fare and
non-ticket revenue per passenger growth.
-- Rational capacity management in the domestic market and redeployment to
the international market: Domestic market capacity grew 12% and
international market capacity increased 25% in the second quarter year
over year, coupled with network diversification.
-- Non-ticket revenues growth: Non-ticket revenues excluding cargo per
passenger increased 46% year over year. Our non-ticket revenues strategy
continued to unfold during the second quarter 2014, as the new baggage
policy and the retail on-board program was rolled-out and the entire
ancillary suite expanded and gained greater customer acceptance.
-- Air traffic volume increase: The DGAC (Direccion General de Aeronautica
Civil) reported an overall passenger increase for Mexican carriers of
12% for the first five months of 2014 and Volaris market share remained
at 23% in total market, the second largest operator among Mexican
carriers.
-- New routes and operations: During the second quarter, Volaris launched
three new point-to-point routes (two domestic and one international),
focusing on our VFR customer base.
Second Quarter Operating Revenues: Challenging Start to the Quarter, Trends Improving
Volaris booked 2.4 million passengers in the second quarter 2014. This equates to a 15% growth rate in the second quarter 2014 as compared to the second quarter in 2013.
Volaris traffic (measured in terms of revenue passenger miles or RPMs) increased 14% in the second quarter 2014 year over year.
For the second quarter 2014, Volaris' total operating revenues were Ps.3,308 million, an increase of 9% year over year. Average fare decreased 10% in the second quarter 2014 year over year.
During the second quarter 2014, our non-ticket revenues and non-ticket revenue per passenger reached Ps.659 million and Ps.275, respectively. Non-ticket revenues excluding cargo per passenger increased 46% in the second quarter year over year.
Passenger revenue per available seat mile (RASM) was 11% lower compared to the second quarter 2013, and total operating revenue per available seat mile (TRASM) was 5% lower, resulting from a weak fare environment, partially offset by stronger non-ticket revenues.
Rigorous Cost Discipline: A Key Component of the Volaris ULCC Model
CASM for the second quarter 2014 was Ps.116.4 cents (US$8.9 cents), a 1% increase compared to the second quarter of 2013, driven by a higher economic fuel cost per gallon and a higher average exchange rate during the quarter. CASM excluding fuel decreased 2% year over year to Ps.70.4 cents (US$5.4 cents) in the second quarter.
Young and Fuel Efficient Fleet: Increasing Cost Efficiency
Reflecting our strategy to further reduce unit costs, Volaris has continued to take deliveries of larger sharklet-equipped A320 aircraft. During the second quarter of 2014 Volaris received two new sharklet-equipped A320s, bringing our seat mix of A320/A319 to a 65/35 percent split.
As of June 30, 2014, the Company´s fleet was comprised of 48 aircraft (29 A320s and 19 A319s), with an average age of 4.1 years.
Strong Balance Sheet and Liquidity: A Foundation for Long Term Growth
As of June 30, 2014, Volaris had Ps.2,088 million in unrestricted cash and cash equivalents. The Company recorded negative net debt (or a positive net cash position) of Ps.1,330 million and total equity was Ps.3,526 million.
Volaris was net cash flow from operating activities neutral during the second quarter. During the second quarter 2014, Volaris incurred capital expenditures of Ps.215 million, which included pre-delivery payments for future deliveries of aircraft net of refunds of Ps.89 million and acquisitions of rotable spare parts, furniture and equipment of Ps.126 million.
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:
Volaris will conduct a conference call to discuss these results today, July 28, 2014, at 11:00 a.m. ET. A live audio webcast of the conference call will be available to the public on a listen-only basis at http://ir.volaris.com
About Volaris:
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. ("Volaris" or the "Company") (NYSE: VLRS and BMV: VOLAR), is an ultra-low-cost carrier (ULCC), with "point to point" operations, serving Mexico and the US. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since beginning operations in March 2006, Volaris has increased its routes from five to more than 115 and its fleet from four to 48 aircraft. Volaris offers more than 220 daily flight segments on routes that connect 35 cities in Mexico and 15 cities in the United States with the youngest aircraft fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business people and leisure travelers in Mexico and to select destinations in the United States. Volaris has received the ESR Award for Social Corporate Responsibility for five 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 or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "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. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 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.
Investor Relations Contact:
Andres Pliego / Investor Relations / ir@volaris.com / +52 55 5261 6444
Media Contact:
Cynthia Llanos / cllanos@gcya.net / +52 1 55 4577 0803
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators
Unaudited Three months Three months Three months Variance
(In Mexican pesos, except otherwise indicated) ended June 30, ended June 30, ended June 30, (%)
2014 2014 2013
(US Dollars)*
Total operating revenues (millions) 254 3,308 3,035 9.0%
Total operating expenses (millions) 261 3,403 2,933 16.0%
EBIT (millions) (7) (95) 102 NA
EBIT margin (2.9%) (2.9%) 3.4% (6.3) pp
Adjusted EBITDA (millions) (2) (34) 156 NA
Adjusted EBITDA margin (1.0%) (1.0%) 5.2% (6.2) pp
Adjusted EBITDAR (millions) 46 595 673 (11.6%)
Adjusted EBITDAR margin 18.0% 18.0% 22.2% (4.2) pp
Net (loss) income (millions) (6) (75) 173 NA
Net margin (2.3%) (2.3%) 5.7% (8.0) pp
Earnings per share:
Basic - (0.07) 0.22 NA
Diluted - (0.07) 0.22 NA
Earnings per ADS:
Basic (0.06) (0.74) 2.15 NA
Diluted (0.06) (0.74) 2.15 NA
Weighted average shares outstanding:
Basic - 1,011,876,677 809,777,350 25.0%
Diluted - 1,011,876,677 809,777,350 25.0%
------- --- ------------- ----------- ----
Available seat miles (ASMs) (millions) - 2,923 2,540 15.1%
Domestic - 2,203 1,965 12.1%
International - 720 574 25.4%
Revenue passenger miles (RPMs) (millions) - 2,386 2,101 13.6%
Domestic - 1,764 1,591 10.9%
International - 622 509 22.0%
Load factor - 81.6% 82.7% (1.1) pp
Domestic - 80.1% 81.0% (0.9) pp
International - 86.4% 88.7% (2.3) pp
Total operating revenue per ASM (TRASM) (cents) 8.7 113.2 119.5 (5.3%)
Passenger revenue per ASM (RASM) (cents) 7.0 90.6 101.5 (10.7%)
Passenger revenue per RPM (yield) (cents) 8.5 111.0 122.8 (9.5%)
Average fare 84.9 1,107 1,234 (10.3%)
Non-ticket revenue per passenger 21.1 275 219 26.0%
Non-ticket revenue excluding cargo per passenger 19.3 252 172 46.4%
Operating expenses per ASM (CASM) (cents) 8.9 116.4 115.5 0.8%
CASM ex fuel (cents) 5.4 70.4 71.5 (1.5%)
------------------- --- ---- ---- -----
Booked passengers (thousands) - 2,393 2,090 14.5%
Departures - 18,498 16,124 14.7%
Block hours - 48,801 42,841 13.9%
Fuel gallons consumed (millions) - 34.1 30.2 13.0%
Average economic fuel cost per gallon 3.0 39.4 37.0 6.5%
Aircraft at end of period - 48 43 11.6%
Average aircraft utilization (block hours) - 12.4 12.1 2.3%
Average exchange rate - 13.00 12.46 4.3%
--------------------- --- ----- ----- ---
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators
Unaudited Six months Six months Six months Variance
(In Mexican pesos, except otherwise indicated) ended June 30, ended June 30, ended June 30, (%)
2014 2014 2013
(US Dollars)*
Total operating revenues (millions) 467 6,084 6,097 (0.2%)
Total operating expenses (millions) 511 6,667 5,957 11.9%
EBIT (millions) (45) (583) 140 NA
EBIT margin (9.6%) (9.6%) 2.3% (11.9) pp
Adjusted EBITDA (millions) (36) (465) 276 NA
Adjusted EBITDA margin (7.6%) (7.6%) 4.5% (12.1) pp
Adjusted EBITDAR (millions) 58 757 1,306 (42.0%)
Adjusted EBITDAR margin 12.4% 12.4% 21.4% (9.0) pp
Net (loss) income (millions) (34) (445) 109 NA
Net margin (7.3%) (7.3%) 1.8% (9.1) pp
Earnings per share:
Basic - (0.44) 0.14 NA
Diluted - (0.44) 0.14 NA
Earnings per ADS:
Basic (0.34) (4.40) 1.40 NA
Diluted (0.34) (4.40) 1.40 NA
Weighted average shares outstanding:
Basic - 1,011,876,677 803,382,392 26.0%
Diluted - 1,011,876,677 803,382,392 26.0%
------- --- ------------- ----------- ----
Available seat miles (ASMs) (millions) - 5,665 5,015 13.0%
Domestic - 4,247 3,822 11.1%
International - 1,418 1,192 18.9%
Revenue passenger miles (RPMs) (millions) - 4,600 4,101 12.2%
Domestic - 3,403 3,067 10.9%
International - 1,197 1,034 15.8%
Load factor - 81.2% 81.8% (0.6) pp
Domestic - 80.1% 80.2% (0.1) pp
International - 84.4% 86.7% (2.3) pp
Total operating revenue per ASM (TRASM) (cents) 8.2 107.4 121.6 (11.7%)
Passenger revenue per ASM (RASM) (cents) 6.7 86.7 103.0 (15.9%)
Passenger revenue per RPM (yield) (cents) 8.2 106.8 126.0 (15.3%)
Average fare 82.7 1,078 1,275 (15.5%)
Non-ticket revenue per passenger 19.8 258 230 12.1%
Non-ticket revenue excluding cargo per passenger 17.7 231 181 28.0%
Operating expenses per ASM (CASM) (cents) 9.0 117.7 118.8 (0.9%)
CASM ex fuel (cents) 5.5 71.2 72.6 (1.9%)
------------------- --- ---- ---- -----
Booked passengers (thousands) - 4,554 4,050 12.4%
Departures - 35,321 31,823 11.0%
Block hours - 94,051 85,073 10.6%
Fuel gallons consumed (millions) - 65.7 59.4 10.6%
Average economic fuel cost per gallon 3.1 40.1 39.0 2.7%
Aircraft at end of period - 48 43 11.6%
Average aircraft utilization (block hours) - 12.4 12.0 3.6%
Average exchange rate - 13.12 12.56 4.4%
--------------------- --- ----- ----- ---
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Unaudited Three months Three months Three months Variance
(In millions of Mexican pesos) ended June 30, ended June 30, (%)
2014 2014 ended June 30,
(US Dollars)* 2013
Operating revenues:
Passenger 203 2,649 2,579 2.7%
Non-ticket 51 659 457 44.3%
254 3,308 3,035 9.0%
Other operating income (0) (1) (2) (61.8%)
Fuel 103 1,345 1,118 20.4%
Aircraft and engine rent expense 48 629 516 21.9%
Landing, take-off and navigation expenses 40 526 458 14.8%
Salaries and benefits 30 390 384 1.6%
Sales, marketing and distribution expenses 15 195 159 22.3%
Maintenance expenses 11 148 151 (2.0%)
Other operating expenses 8 110 94 16.8%
Depreciation and amortization 5 61 54 12.1%
Operating expenses 261 3,403 2,933 16.0%
Operating (loss) income (7) (95) 102 NA
Finance income 0 5 8 (35.7%)
Finance cost (1) (9) (18) (52.6%)
Exchange gain (loss), net (1) (15) 127 NA
Comprehensive financing result (1) (18) 117 NA
Loss before income tax (9) (113) 220 NA
Income tax benefit 3 38 (46) NA
Net (loss) income (6) (75) 173 NA
Attribution of net loss:
Equity holders of the parent (6) (75) 174 NA
Non-controlling interest - - (1) NA
Net (loss) income (6) (75) 173 NA
----------------- --- --- --- ---
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Unaudited Six months Six months Six months Variance
(In millions of Mexican pesos) ended June 30, ended June 30, ended June 30, (%)
2014 2014 2013
(US Dollars)*
Operating revenues:
Passenger 377 4,910 5,166 (5.0%)
Non-ticket 90 1,173 931 26.1%
467 6,084 6,097 (0.2%)
Other operating income (0) (4) (26) (83.1%)
Fuel 202 2,632 2,316 13.6%
Aircraft and engine rent expense 94 1,222 1,031 18.6%
Landing, take-off and navigation expenses 80 1,046 919 13.8%
Salaries and benefits 60 779 747 4.3%
Sales, marketing and distribution expenses 27 352 346 1.9%
Maintenance expenses 23 306 292 4.9%
Other operating expenses 17 215 197 9.3%
Depreciation and amortization 9 118 135 (12.6%)
Operating expenses 512 6,667 5,957 11.9%
Operating (loss) income (45) (583) 140 NA
Finance income 1 10 13 (19.3%)
Finance cost (1) (14) (36) (61.8%)
Exchange gain (loss), net (0) (4) 19 NA
Comprehensive financing result (1) (7) (4) 63.6%
Loss before income tax (45) (590) 136 NA
Income tax benefit 11 145 (27) NA
Net (loss) income (34) (445) 109 NA
Attribution of net loss:
Equity holders of the parent (34) (445) 112 NA
Non-controlling interest - - (3) NA
Net (loss) income (34) (445) 109 NA
----------------- --- ---- --- ---
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
(In millions of Mexican pesos) June 30, 2014 June 30, 2014 December 31,
Unaudited Unaudited 2013 Audited
(US Dollars)*
Assets
Cash and cash equivalents 160 2,088 2,451
Accounts receivable 52 683 602
Inventories 10 124 114
Prepaid expenses and other current assets 29 376 323
Financial instruments 1 8 11
Guarantee deposits 43 558 499
Total current assets 294 3,837 4,000
Rotable spare parts, furniture and equipment, net 129 1,679 1,341
Intangible assets, net 5 68 79
Deferred income tax 35 457 305
Guarantee deposits 212 2,760 2,603
Other assets 4 53 49
Total assets 679 8,854 8,378
Liabilities
Unearned transportation revenue 149 1,940 1,393
Accounts payable 38 499 537
Accrued liabilities 77 1,010 1,033
Taxes and fees payable 66 855 599
Financial instruments 2 32 32
Financial debt 10 131 268
Other liabilities 1 7 9
Total short-term liabilities 343 4,473 3,872
Financial instruments 5 60 74
Financial debt 48 627 294
Accrued liabilities 9 118 138
Other liabilities 1 13 11
Employee benefits - 6 5
Deferred income taxes 2 30 22
Total liabilities 409 5,328 4,415
Equity
Capital stock 228 2,974 2,974
Treasury shares (8) (108) (108)
Contributions for future capital increases - - -
Legal reserve 3 38 38
Additional paid-in capital 137 1,786 1,786
Accumulated losses (85) (1,106) (661)
Accumulated other comprehensive losses (4) (58) (66)
Total equity attributable to equity holders of the parent 271 3,526 3,962
Non-controlling interest - - -
Total equity 271 3,526 3,962
Total liabilities and equity 679 8,854 8,378
Total shares outstanding basic and diluted 1,011,876,677 1,011,876,677
------------------------------------------ ------------- -------------
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows - Cash Flow Data Summary
Unaudited Thee months Three months Three months
(In millions of Mexican pesos) ended ended ended
June 30, 2014 June 30, 2014 June 30, 2013
(US Dollars)*
Net cash flow (used in) provided by operating activities (1) (8) 355
Net cash flow (used in) provided by investing activities (17) (215) 77
Net cash flow provided by (used in) financing activities 7 85 (246)
(Decrease) increase in cash and cash equivalents (11) (139) 185
Net foreign exchange differences (1) (13) 14
Cash and cash equivalents at beginning of period 172 2,240 926
Cash and cash equivalents at end of period 160 2,088 1,126
------------------------------------------ --- ----- -----
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
Unaudited Six months ended Six months ended Six months ended
(In millions of Mexican pesos)
June 30, 2014 June 30, 2014 June 30, 2013
(US Dollars)*
Net cash flow (used in) provided by operating activities (7) (94) 626
Net cash flow (used in) provided by investing activities (34) (443) 138
Net cash flow provided by (used in) financing activities 14 184 (450)
(Decrease) increase in cash and cash equivalents (27) (353) 314
Net foreign exchange differences (1) (9) (11)
Cash and cash equivalents at beginning of period 188 2,451 822
Cash and cash equivalents at end of period 160 2,088 1,126
------------------------------------------ --- ----- -----
*Peso amounts were converted to US dollars at the rate of Ps.13.0323 for convenience purposes only.
SOURCE Volaris
