Controladora Vuela Compañía de Aviación SAB de CV Q4 FY2024 earnings call

Key Points

• 2024 was a strong year despite GTF engine inspections and aircraft groundings, with net profit each quarter and a 36% EBITDAR margin.
• Addressed engine inspection challenges, successfully completed 2024 early inspections, and anticipates ongoing revisions affecting fleet through 2027.
• Renegotiated aircraft delivery schedule with Airbus, staggering arrivals to 2031 to align with operational needs.
• Customer metrics: 99.5% scheduled reliability, 83% on-time performance, Net Promoter Score of 37.4%, and ancillaries accounting for over 50% of total revenues.
• Sustainability efforts: Limited fuel consumption increase and maintained CO2 emissions per RPK despite fleet challenges.
• 2024 saw arrival of aircraft from Indigo Partners joint procurement, with plans to operate over 90% NEO technology fleet by 2030.

In 2024, Volaris achieved a full-year EBITDAR margin of 36%. Total operating revenues for the full year were $3.1 billion, a 4% decrease despite flying 13% fewer ASMs. For the fourth quarter of 2024, total operating revenues were $835 million, a 7% decline. CASM increased by 3% to $0.0804, while CASM ex-fuel rose by 17%. EBITDAR for the fourth quarter was $331 million, an 18% increase, with an EBITDAR margin of 39.6%.

Forward-Looking Statements

• Full year 2025 EBITDAR margin expected to be 34%-36%, with ASM growth around 13% (lower end of previous guidance due to engine and Airbus delays).
• First quarter 2025 ASM growth around 7%, CASM between $0.079-$0.08, and EBITDAR margin around 28%-29%.
• Assumes average foreign exchange rate of MXN21-MXN21.2 per USD and jet fuel price $2.15-$2.25 per gallon.
• Notes potential upside to full year guidance based on improving bilateral US-Mexico relationship.

Operational and Market Risks

• Ongoing engine inspection revisions affecting a significant portion of fleet in 2025-2027, potentially impacting fleet availability and performance.
• OEM supply chain challenges causing delays in aircraft deliveries from Airbus, affecting capacity planning.
• Border dynamics and US administration rhetoric impacting cross-border travel demand, particularly affecting US to Mexico VFR traffic.

Q: Michael Linenberg inquired about RASM guide, impact of US to Mexico VFR traffic, FX, and Easter effect.

A: Holger Blankenstein responded on traffic impact and noted Easter bookings remain solid.

Q: Duane Pfennigwerth asked about Easter shift impact and RASM shape.

A: Holger Blankenstein discussed Easter season impact and expected mid-single-digit TRASM decline in full year.

Q: Tom Fitzgerald asked about aircraft ownership cost and long-term impact.

A: Enrique Beltranena responded on CapEx and fleet acquisition, noting future fleet benefits without deleveraging.

Q: Jay Singh asked about long-term capital deployment and remittances.

A: Jaime Pous responded on CapEx plans and observed no reduction in remittances yet.

Q: Jens Spiess asked about CASM and aircraft on ground progression.

A: Enrique Beltranena provided insights on aircraft on ground numbers and CASM expectations.

Q: Rafael Simonetti asked about cost details on salaries and leases.

A: Enrique Beltranena responded on salary impacts and revenue profit sharing related to FX and by-law requirements.