Well Positioned to Benefit from Strong Macro Tailwinds and Market Leadership
Significant Expansion Opportunities in the United States and Central America, with
Additional Expected Upside from Likely Category 1 Upgrade
Young, Fuel-efficient Fleet with Best-in-Class Aircraft Utilization
Strong Financial Profile; Committed to Doubling Revenue, EBITDAR, and Free Cash Flow Generation Over Next Three Years Versus Pre-Pandemic Levels
Company to Host Investor Day at the New York Stock Exchange Today at 8:30 a.m. Eastern Time
MEXICO CITY, Dec. 6, 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 carrier (ULCC) serving Mexico, the United States, Central, and South America, is hosting its 2022 Investor Day today and providing an overview of the Company’s strategic vision and growth avenues. Volaris will also outline its short- and long-term priorities to maximize value for customers, shareholders, and employees.
“The plans we will present today demonstrate how we will aim to leverage Volaris’ strengths and unique ultra-low-cost business model to deliver superior returns to shareholders over the long term,” said Enrique Beltranena, Chief Executive Officer. “Despite significant disruptions during the past three years, Volaris has successfully navigated Covid-related challenges to capture market share, manage costs and solidify our position as one of the largest foreign operators in terms of flights in the U.S., all while advancing our mission to enable more people to travel well.”
Beltranena continued, “Mexico’s favorable demographic and economic trends, together with recent consolidation in the Mexican airline industry, has enabled Volaris to achieve one of the healthiest EBITDAR margins in the airline industry globally and create significant opportunities for continued growth both domestically in Mexico and abroad. Reaching 10 million first-time fliers is clear evidence of the way discretionary travel spend is now allocated, shifting from bus to air travel. Additionally, Volaris is well-positioned to benefit from the likely return to FAA Category 1 status in 2023, which we expect to enable additional routes to the U.S. and drive further opportunities. Looking ahead, we will continue to deepen our engagement with our passengers, expand our routes into new markets, maintain our strong balance sheet and competitive cost advantage, and lean on our experienced team to continue driving our strategies forward.”
At today’s event, Volaris will highlight the following:
- Low-cost leadership: As one of the lowest cost operators in the world, Volaris leverages its ultra-low-cost business model with the goal of creating a virtuous cycle for profitable growth. Volaris has one of the youngest and most efficient fleets in the Americas, with NEOs representing 52% of the total fleet. Volaris expects NEOs to make up 54% of its fleet by year-end, in a path to an all-NEO fleet by 2027. The fleet plan that will be discussed in more detail during today’s presentations enables further cost reduction and passenger capacity that can be adjusted based on market dynamics, naturally hedging against higher fuel prices.
- High growth opportunities: Mexico is an attractive investment market with effective monetary policy and strong USD inflows, an expanding middle class, and favorable tailwinds such as increased economic activity from nearshoring. Additionally, Mexico’s aviation market is in its early stages of growth, and Volaris is positioned to benefit from trends like bus switching as travelers who have traditionally preferred bus travel due to cost and convenience make the switch to air travel. In 2006, Mexicans averaged 0.2 trips per capita per year. Today, they average 0.55 trips per capita, with around 35% of this growth being directly attributed to Volaris. Meanwhile, many Central American markets share the same economic profile as Mexico, which we expect will provide a premier source of growth in parallel as airlines increase service in that region.
- Market and profitability leadership: Consistently among the most profitable airlines in the Americas, Volaris has successfully capitalized on opportunities created by industry consolidation and attrition among peers following Covid-19 to become a market leader. As of November 30, 2022, Volaris is the leading carrier in Mexico by market share and total passengers, where three Mexican carriers collectively hold more than 98% of market share, showing great potential for further EBITDAR expansion.
- Financial strength: Volaris’ disciplined approach to containing controllable costs has enabled the Company to maintain a competitive advantage against peers, with the ability to flex up or down as necessary based on demand and operating environment. As a result, Volaris today has a strong and flexible balance sheet and an attractive financial debt profile, and current levels of liquidity are more than sufficient to cover near-term debt maturities.
Over the next three years, Volaris aims to double its revenue, EBITDAR, and free cash flow generation versus pre-pandemic levels (2019).
To access a replay of today’s Investor Day presentations and slides presented, visit Volaris’ Investor Relations website at https://ir.volaris.com/ under Events & presentations.
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 200, and its fleet from 4 to 116 aircraft. Volaris offers more than 500 daily flight segments on routes that connect 43 cities in Mexico and 28 cities in the United States, Central, and South America, with one of the youngest fleets in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico, the United States, and 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.
This press release was prepared by Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (d/b/a Volaris, the “Company”) with the purpose of providing interested parties certain financial and other information about the Company. This press release is solely for discussion purposes and highlights basic information about the Company. Because it is a summary, it does not contain all the information that you should consider before investing in the securities of the Company. This press release should be read in conjunction with the periodic reports and other information filed by Volaris with the U.S. Securities and Exchange Commission (“SEC”) and the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) (“CNBV”). You may access the SEC filings for free by visiting EDGAR on the SEC website (www.sec.gov) and the CNBV filings at the CNBV website (www.gob.mx/cnbv).
This press release does not constitute or form part of any offer or invitation for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Recipients of this press release are not to construe the contents of this press release as legal, tax or investment advice and should consult their own advisers in this regard.
Statements in this press 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, potential new service routes, the Company’s ability to drive Mexican domestic demand growth and predict future fleet ownership costs 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. The risks and uncertainties regarding these forward-looking statements include, but are not limited to, those set forth under the heading “Risk Factors” in the Company’s Report on Form 20-F for the year ended December 31, 2021, and in the Company’s other filings with the SEC, which are available at www.sec.gov.
In addition to financial information prepared in accordance with the International Financial Reporting Standards (“IFRS”), this press release includes certain non-IFRS financial measures, including EBITDAR and EBITDAR margin. We believe non-IFRS financial measures are useful indicators of our operating performance. We believe the non-IFRS numbers provided are well recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry. Reconciliations of such information to the most directly comparable IFRS financial measures are included in the Appendix to the Investor Day presentations and slides, which can be accessed as described above. The non-IFRS measures have limitations and may not be comparable across all carriers, and you should not consider them in isolation or as a substitute for our IFRS financial information.
This press release contains statistical data, estimates and forecasts that are based on independent publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date of this press release.
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SOURCE Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – Volaris