Volaris announces its financial results for the second quarter 2016
OREANDA-NEWS. Volaris* (NYSE:VLRS and BMV:VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announced its financial results for the second quarter 2016.
The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS).
Second Quarter 2016 Highlights
-- Total operating revenues reached Ps.5,131 million for the second
quarter, an increase of 25.2% year over year.
-- Non-ticket revenues were Ps.1,317 million for the second quarter, an
increase of 34.7% year over year. Non-ticket revenues per passenger for
the second quarter were Ps.362, increasing 6.6% year over year.
-- Total operating revenues per available seat mile (TRASM) rose to
Ps.128.9 cents for the second quarter, an increase of 4.8% year over
year.
-- Operating expenses per available seat mile (CASM) were Ps.119.2 cents
for the second quarter, an increase of 5.9% year over year.
-- Adjusted EBITDAR was Ps.1,819 million for the second quarter, an
increase of 42.1% year over year. Adjusted EBITDAR margin was 35.5% for
the second quarter, a margin expansion of 4.3 percentage points.
-- Operating income was Ps.388 million for the second quarter, with an
operating margin of 7.6%, equal to a year over year operating margin
decrease of 0.9 percentage points.
-- Net income was Ps.935 million (Ps.0.92 per share / US$0.49 per ADS) for
the second quarter, with a net margin of 18.2%, a year over year margin
increase of 9.6 percentage points.
-- Net increase of cash and cash equivalents was Ps.564 million for the
second quarter. As of June 30, 2016, unrestricted cash and cash
equivalents were Ps.6,930 million.
Volaris CEO Enrique Beltranena commented: "Volaris' performance highlights the resilience of its ULCC model that combines high growth, expanding unit revenue, and managing unit costs down. These results reflect our ability to stimulate demand with low base fares, successfully switch bus passengers to air travel and further unbundle our product offering. We will work to continue balancing our growth with profitability to create shareholder value."
Solid Demand Supports Traffic Volume Growth, Despite Exchange Rate and Fuel Price Volatility
-- Air traffic volume increase: The Mexican DGAC reported overall passenger
volume growth for Mexican carriers of 9.0% year over year in April and
May. Domestic passenger volume increased 9.2%, while international
passenger volume increased 8.2%.
-- Exchange rate volatility: The Mexican peso depreciated 17.9% year over
year against the US dollar, from an average of Ps.15.31 pesos per US
dollar in the second quarter 2015 to Ps.18.05 pesos per US dollar during
the second quarter 2016.
-- Lower fuel prices: The average economic fuel cost per gallon decreased
8.6% to Ps.28.3 per gallon (US$1.5) in the second quarter 2016, year
over year.
Unit Revenue Improvements Driven by Volume and Non-Ticket Revenue Expansion, Despite Adverse Seasonality
-- Passenger traffic stimulation: Volaris booked 3.6 million passengers in
the second quarter of 2016, up 26.4% year over year. Volaris traffic
(measured in terms of revenue passenger miles, or RPMs) increased 24.0%
for the same period.
-- Unit revenue improvement and demand driven capacity growth: For the
second quarter of 2016, TRASM increased 4.8%, while yield decreased
1.5%, year over year. During the second quarter, in terms of ASMs,
domestic capacity grew 19.3%, while international capacity increased
19.9% responding to a strong demand from both markets. This was
accomplished despite the effects of adverse seasonality due to high
traffic in Holy and Easter weeks falling in the first quarter, unlike
2015 when they fell predominantly in the second quarter. System load
factor during the quarter increased 3.2 percentage points year over year
to 86.1%.
-- Non-ticket revenues growth:Non-ticket revenues and non-ticket revenues
per passenger increased 34.7% and 6.6% year over year for the second
quarter of 2016, respectively. The Company has been expanding its
product offering and improving its presence in mobile, web and airport
kiosks, while more dynamically pricing its ancillaries.
-- New routes:In the second quarter 2016, Volaris launched eight new
routes, six domestic and two international.
Exchange Rate Pressures Challenge Fuel Savings
In the second quarter 2016, Volaris continued to experience pressure in US-dollar denominated costs, such as aircraft and engine rent expenses, international airport costs, and maintenance expenses due to the depreciation of the Mexican peso. The CASM for the second quarter was Ps.119.2 cents, a 5.9% increase compared to the second quarter 2015, mainly driven by FX pressures.
Young and Fuel Efficient Fleet Supporting Lower Operating Costs
During the second quarter, the Company incorporated five additional aircraft comprised of three A320s and two A321s. As of June 30, 2016, Volaris fleet was composed of 64 aircraft (18 A319s, 42 A320s and 4 A321s), with an average age of 4.5 years. At the end of the second quarter 2016 Volaris' fleet had an average of 171 seats per aircraft, an increase from 168 seats in the second quarter of 2015, and 51% of our seats were in sharklet-equipped aircraft.
Cash Flow Generation, Solid Balance Sheet and Good Liquidity
The net increase in cash and cash equivalents was equal to Ps.564 million during the second quarter, mainly driven by positive operating cash flow of Ps.194 million and by net foreign exchange differences on cash balance by Ps.409 million. As of June 30, 2016, Volaris' unrestricted cash and cash equivalents balance was Ps.6,930 million. Volaris registered negative net debt (or a positive net cash position) of Ps.6,109 million and total equity of Ps.8,611 million.
Active in Fuel Risk Management
Volaris remains active in its fuel risk management program. Volaris utilized call options to hedge 62% of its second quarter 2016 fuel consumption, at an average strike price of US $1.95 per gallon, which combined with the 38% unhedged consumption, resulted in a blended average economic fuel cost of US$1.50 per gallon.
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.
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, 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 beginning operations in March 2006, Volaris has increased its routes from five to more than 154 and its fleet from four to 64 aircraft. Volaris offers more than 286 daily flight segments on routes that connect 40 cities in Mexico and 25 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 people and leisure travelers in Mexico and to select destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for six consecutive years.
Financial and Operating Indicators
Three months
ended June 30, Three months Three months
Unaudited 2016 ended June 30, ended June 30, Variance
(In Mexican pesos,
except otherwise
indicated) (US Dollars)* 2016 2015 (%)
Total operating
revenues (millions) 271 5,131 4,099 25.2%
Total operating
expenses (millons) 251 4,743 3,750 26.5%
EBIT (millions) 21 388 349 11.2%
EBIT margin 7.6% 7.6% 8.5% (0.9) pp
Adjusted EBITDA
(millions) 28 526 474 11.0%
Adjusted EBITDA margin 10.3% 10.3% 11.6% (1.3) pp
Adjusted EBITDAR
(millions) 96 1,819 1,281 42.1%
Adjusted EBITDAR
margin 35.5% 35.5% 31.2% 4.3 pp
Net income (millions) 49 935 351 >100%
Net margin 18.2% 18.2% 8.6% 9.6 pp
Earnings per share:
Basic (pesos) 0.05 0.92 0.35 >100%
Diluted (pesos) 0.05 0.92 0.35 >100%
Earnings per ADS:
Basic (pesos) 0.49 9.24 3.47 >100%
Diluted (pesos) 0.49 9.24 3.47 >100%
Weighted average shares outstanding:
Basic - 1,011,876,677 1,011,876,677 0.0%
Diluted - 1,011,876,677 1,011,876,677 0.0%
Available seat miles
(ASMs) (millions)(1) - 3,980 3,332 19.4%
Domestic - 2,819 2,364 19.3%
International - 1,161 969 19.9%
Revenue passenger
miles (RPMs)
(millions)(1) - 3,428 2,764 24.0%
Domestic - 2,421 1,944 24.6%
International - 1,007 820 22.8%
Load factor(2) - 86.1% 82.9% 3.2 pp
Domestic - 85.9% 82.2% 3.7 pp
International - 86.7% 84.5% 2.2 pp
Total operating
revenue per ASM
(TRASM) (cents)(1) 6.8 128.9 123.0 4.8%
Passenger revenue per
ASM (RASM) (cents)(1) 5.1 95.8 93.7 2.3%
Passenger revenue per
RPM (Yield) (cents)(1) 5.9 111.3 113.0 (1.5%)
Average fare(2) 55.6 1,052 1,087 (3.2%)
Non-ticket revenue per
passenger(1) 19.1 362 339 6.6%
Operating expenses per
ASM (CASM) (cents)(1) 6.3 119.2 112.5 5.9%
Operating expenses per
ASM (CASM) (US cents)
(1) - 6.3* 7.2* (12.8%)
CASM ex fuel (cents)
(1) 4.5 85.0 76.3 11.4%
CASM ex fuel (US
cents)(1) - 4.5* 4.9* (8.3%)
Booked passengers
(thousands)(1) - 3,640 2,880 26.4%
Departures(1) - 24,919 21,187 17.6%
Block hours(1) - 65,520 55,067 19.0%
Fuel gallons consumed
(millions) - 48.0 39.0 23.1%
Average economic fuel
cost per gallon 1.5 28.34 31.01 (8.6%)
Aircraft at end of
period - 64 53 20.8%
Average aircraft
utilization (block
hours) - 12.5 12.5 0.4%
Average exchange rate - 18.05 15.31 17.9%
End of period exchange
rate - 18.91 15.57 21.5%
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only
(1) Includes schedule + charter (2)
Includes schedule
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators
Six months
ended June 30, Six months Six months
Unaudited 2016 ended June 30, ended June 30, Variance
(In Mexican pesos,
except otherwise
indicated) (US Dollars)* 2016 2015 (%)
Total operating
revenues (millions) 545 10,313 7,867 31.1%
Total operating
expenses (millons) 481 9,089 7,172 26.7%
EBIT (millions) 65 1,224 695 76.0%
EBIT margin 11.9% 11.9% 8.8% 3.1 pp
Adjusted EBITDA
(millions) 78 1,482 923 60.5%
Adjusted EBITDA margin 14.4% 14.4% 11.7% 2.7 pp
Adjusted EBITDAR
(millions) 211 3,994 2,485 60.7%
Adjusted EBITDAR
margin 38.7% 38.7% 31.6% 7.1 pp
Net income (millions) 81 1,536 658 >100%
Net margin 14.9% 14.9% 8.4% 6.5 pp
Earnings per share:
Basic (pesos) 0.08 1.52 0.65 >100%
Diluted (pesos) 0.08 1.52 0.65 >100%
Earnings per ADS:
Basic (pesos) 0.80 15.18 6.50 >100%
Diluted (pesos) 0.80 15.18 6.50 >100%
Weighted average shares outstanding:
Basic - 1,011,876,677 1,011,876,677 0.0%
Diluted - 1,011,876,677 1,011,876,677 0.0%
Available seat miles
(ASMs) (millions)(1) - 7,872 6,375 23.5%
Domestic - 5,549 4,489 23.6%
International - 2,323 1,886 23.2%
Revenue passenger
miles (RPMs)
(millions)(1) - 6,735 5,199 29.5%
Domestic - 4,739 3,663 29.4%
International - 1,996 1,536 29.9%
Load factor(2) - 85.6% 81.5% 4.1 pp
Domestic - 85.4% 81.6% 3.8 pp
International - 85.9% 81.3% 4.6 pp
Total operating
revenue per ASM
(TRASM) (cents)(1) 6.9 131.0 123.4 6.2%
Passenger revenue per
ASM (RASM) (cents)(1) 5.2 98.1 94.8 3.4%
Passenger revenue per
RPM (Yield) (cents)(1) 6.1 114.6 116.3 (1.4%)
Average fare(2) 58 1,095 1,123 (2.5%)
Non-ticket revenue per
passenger (1) 19.4 367 338 8.4%
Operating expenses per
ASM (CASM) (cents)(1) 6.1 115.5 112.5 2.6%
Operating expenses per
ASM (CASM) (US cents)
(1) - 6.1* 7.2* (15.5%)
CASM ex fuel (cents)
(1) 4.5 85.3 77.1 10.7%
CASM ex fuel (US
cents)(1) - 4.5* 4.9* (8.9%)
Booked passengers
(thousands)(1) - 7,070 5,391 31.1%
Departures(1) - 48,980 40,500 20.9%
Block hours(1) - 130,389 105,763 23.3%
Fuel gallons consumed
(millions) - 93.8 74.3 26.2%
Average economic fuel
cost per gallon 1.3 25.3 30.4 (16.8%)
Aircraft at end of
period - 64 53 20.8%
Average aircraft
utilization (block
hours) - 12.8 12.3 4.2%
Average exchange rate - 18.05 15.31 17.9%
End of period exchange
rate - 18.91 15.57 21.5%
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only
(1) Includes schedule + charter (2)
Includes schedule
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Three months
ended June 30, Three months Three months
Unaudited 2016 ended June 30, ended June 30, Variance
(In millions of
Mexican pesos) (US Dollars)* 2016 2015 (%)
Operating revenues:
Passenger 202 3,814 3,122 22.2%
Non-ticket 70 1,317 977 34.7%
271 5,131 4,099 25.2%
Other operating income (9) (174) (37) >100%
Fuel 72 1,360 1,209 12.5%
Aircraft and engine
rent expenses 68 1,293 807 60.3%
Landing, take-off and
navigation expenses 38 724 607 19.3%
Salaries and benefits 31 580 448 29.3%
Maintenance expenses 16 306 198 54.5%
Sales, marketing and
distribution expenses 16 300 232 29.2%
Other operating
expenses 11 216 162 33.5%
Depreciation and
amortization 7 138 125 10.5%
Operating expenses 251 4,743 3,750 26.5%
Operating income 21 388 349 11.2%
Finance income 1 20 12 56.8%
Finance cost - (8) (6) 40.1%
Exchange gains, net 49 923 146 >100%
Comprehensive >100%
financing result 49 935 153
Income before income >100%
tax 70 1,323 502
Income tax expense (21) (388) (151) >100%
Net income 49 935 351 >100%
Attribution of net
income:
Equity holders of the >100%
parent 49 935 351
Non-controlling
interest - - - 0%
Net income 49 935 351 >100%
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only.
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Six months
ended June 30, Six months Six months
Unaudited 2016 ended June 30, ended June 30, Variance
(In millions of
Mexican pesos) (US Dollars)* 2016 2015 (%)
Operating revenues:
Passenger 408 7,720 6,044 27.7%
Non-ticket 137 2,593 1,823 42.2%
545 10,313 7,867 31.1%
Other operating income (20) (369) (61) >100%
Fuel 126 2,374 2,260 5.0%
Aircraft and engine
rent expenses 133 2,513 1,562 60.9%
Landing, take-off and
navigation expenses 80 1,514 1,180 28.3%
Salaries and benefits 60 1,143 872 31.1%
Maintenance expenses 34 646 379 70.3%
Sales, marketing and
distribution expenses 31 595 448 32.9%
Other operating
expenses 22 416 304 36.9%
Depreciation and
amortization 14 258 228 13.1%
Operating expenses 481 9,089 7,172 26.7%
Operating income 65 1,224 695 76.0%
Finance income 3 54 22 >100%
Finance cost (1) (15) (10) 51.9%
Exchange gains, net 49 932 233 >100%
Comprehensive >100%
financing result 51 971 244
Income before income >100%
tax 116 2,195 939
Income tax expense (35) (658) (282) >100%
Net income 81 1,536 658 >100%
Attribution of net
income:
Equity holders of the >100%
parent 81 1,536 658
Non-controlling
interest - - - 0%
Net income 81 1,536 658 >100%
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. and Subsidiaries
Adjusted EBITAR Reconciliation
The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent basis. These non-GAAP financial measures have limitations as an analytical tool.
Three months
ended June 30,
Unaudited 2016
Three months Three months
ended June 30, ended June 30,
(In millions of Mexican pesos) (US Dollars)* 2016 2015
Reconciliation:
Net (loss) income 49 935 351
Plus (minus):
Finance cost - 8 6
Finance income (1) (20) (12)
Provision for income tax 21 388 151
Depreciation and amortization 7 138 125
EBITDA 76 1,449 620
Exchange (gain) loss, net (49) (923) (146)
Adjusted EBITDA 28 526 474
Aircraft and engine rent expense 68 1,293 807
Adjusted EBITDAR 96 1,819 1,281
Six months
ended June 30,
Unaudited 2016
Six months Six months
ended June 30, ended June 30,
(In millions of Mexican pesos) (US Dollars)* 2016 2015
Reconciliation:
Net (loss) income 81 1,536 658
Plus (minus):
Finance cost 1 15 10
Finance income (3) (54) (22)
Provision for income tax 35 658 282
Depreciation and amortization 14 258 228
EBITDA 128 2,414 1,156
Exchange (gain) loss, net (49) (932) (233)
Adjusted EBITDA 78 1,482 923
Aircraft and engine rent expense 133 2,513 1,562
Adjusted EBITDAR 211 3,994 2,485
*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
June 30, 2016
Unaudited June 30, 2016 December 31, 2015
(In millions of Mexican pesos) (US Dollars)* Unaudited Audited
Assets
Cash and cash equivalents 366 6,930 5,157
Accounts receivable 49 926 464
Inventories 10 185 163
Prepaid expenses and other
current assets 25 482 585
Financial instruments 8 155 10
Guarantee deposits 62 1,170 861
Total current assets 521 9,848 7,241
Rotable spare parts, furniture
and equipment, net 99 1,864 2,550
Intangible assets, net 5 98 95
Financial instruments 26 486 69
Deferred income tax 29 544 545
Guarantee deposits 290 5,485 4,704
Other assets 3 53 58
Total non-current assets 451 8,531 8,020
Total assets 972 18,380 15,261
Liabilities
Unearned transportation revenue 159 3,006 1,957
Accounts payable 36 682 795
Accrued liabilities 102 1,937 1,471
Other taxes and fees payable 69 1,309 1,107
Income taxes payable 35 654 338
Financial instruments 2 39 44
Financial debt 21 395 1,371
Other liabilities 1 17 19
Total short-term liabilities 425 8,039 7,103
Financial instruments - - 11
Financial debt 22 425 220
Accrued liabilities 12 222 157
Other liabilities 4 80 49
Employee benefits 1 12 10
Deferred income taxes 52 991 885
Total long-term liabilities 91 1,729 1,333
Total liabilities 517 9,769 8,436
Equity
Capital stock 157 2,974 2,974
Treasury shares (5) (95) (91)
Contributions for future
capital increases - - -
Legal reserve 2 38 38
Additional paid-in capital 95 1,792 1,791
Retained earnings 209 3,945 2,408
Accumulated other comprehensive
losses (2) (43) (295)
Total equity 455 8,611 6,825
Total liabilities and equity 972 18,380 15,261
Total shares outstanding fully
diluted 1,011,876,677 1,011,876,677
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary
Three months
ended June 30, Three months Three months
Unaudited 2016 ended June 30, ended June 30,
(In millions of Mexican pesos) (US Dollars)* 2016 2015
Net cash flow provided by
operating activities 10 194 947
Net cash flow provided by (used
in) investing activities 17 331 (281)
Net cash flow (used in) provided
by financing activities (20) (370) 151
Increase in cash and cash
equivalents 8 155 817
Net foreign exchange differences
on cash balance 22 409 55
Cash and cash equivalents at
beginning of period 337 6,366 3,156
Cash and cash equivalents at end
of period 366 6,930 4,028
*Peso amounts were converted to U.S. dollars at end of period exchange rate for
convenience purposes only
Six months
ended June 30, Six months Six months
Unaudited 2016 ended June 30, ended June 30,
(In millions of Mexican pesos) (US Dollars)* 2016 2015
Net cash flow provided by
operating activities 81 1,523 1,896
Net cash flow provided by (used
in) investing activities 41 766 (331)
Net cash flow (used in) provided
by financing activities (49) (919) 115
Increase in cash and cash
equivalents 72 1,371 1,679
Net foreign exchange differences
on cash balance 21 402 83
Cash and cash equivalents at
beginning of period 273 5,157 2,265
Cash and cash equivalents at end
of period 366 6,930 4,028
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