Controladora Vuela Compañía de Aviación SAB de CV Q4 FY2025 earnings call

• Enrique highlighted disciplined execution, operational agility in 2025 despite challenges like engine constraints. Fourth quarter had 5.6% capacity growth, TRASM towards 2024 levels, ancillary revenues 56% of total. Initiated targeted capacity growth in US. Full year EBITDAR margin 32.5%. Mexican economy showing improvement in 2026. 2026 growth managed through 3 levers: Airbus deliveries, AOG reduction, aircraft lease returns. - Holger discussed Q4 operations with cross - border market recovery, 79% load factor in Q4, domestic load factor 89.8%. TRASM $0.0935 in Q4. Ancillary performance strong, Premium+ product ramp - up. Announced 33 new routes in summer. Optimizing slots and schedules, expanding connectivity via codeshares. - Jaime covered financial results: Q4 EBITDAR $328 million, margin 37.2%; full year EBITDAR $988 million, margin 32.5%. Cash flow and balance sheet data: Q4 operating cash flow $252 million, liquidity $774 million, net debt - to - EBITDAR ratio 3.1x. Fleet plan with 155 aircraft, average age 6.6 years, 66% new models. AOGs at inflection point, expecting reduction.

In the fourth quarter of 2025, total operating revenues were $882 million, a 5.6% increase vs prior year quarter. CASM was $0.0829, with CASM ex fuel $5.76. For full year 2025, total operating revenues were $3 billion, a 3% decrease. CASM was $0.0804, CASM ex fuel $0558. Ancillary revenues comprised 56% of total operating revenues in Q4. Cross - border market had 79% load factor in Q4, domestic market had 89.8% load factor. 2026 ASM growth expected at ~7%, with most incremental capacity to international markets. Domestic market to support balanced supply - demand. Ancillary revenues per passenger up 6% vs 2024, Premium+ product showing positive performance despite ramp - up.

For full year 2026, expect ASM growth around 7%, EBITDAR margin around 33%, CapEx net of finance fleet predelivery payments ~$350 million. First quarter 2026 targets ASM growth ~3%, TRASM ~$0.085, CASM ex fuel ~$0.06, EBITDAR margin ~25%. Expect deleveraging in second half of 2026, finishing with net debt - to - EBITDAR ratio ~2.6x. Nonrecurring items like accelerated engine inductions and merger - related expenses affect first quarter CASM ex fuel.

Engine - related issues leading to grounded aircraft and AOGs initially. FX volatility and geopolitical developments influencing cross - border travel sentiment. Weather - related disruptions impacting capacity and P&L. Potential impact of proposed merger regulatory process on the company.

Q: You reported a tax rate of 89% in the quarter. Could you help us understand the key drivers behind that?

A: Jaime explained that first 3 quarters used 30% legal tax rate, fourth quarter adjusts to actual rate, full year effective tax rate 11.8%, recommend using 30% effective tax rate for modeling.

Q: Another question on the 7% capacity growth for 2026. How should we think about it in terms of the domestic versus international mix?

A: Holger said capacity decisions anchored on demand and profitability, 7% growth with more skewed towards international market, domestic growth low to mid - single digits, flexibility to move within a few percentage points based on demand trends.

Q: Just as you talk about the flat fleet count through 2030, could you perhaps talk about what that means for the multiyear capacity growth outlook and potential CapEx?

A: Jaime said capacity growth in 7% range with flexibility, growth from unproductive fleet, leverage from aircraft redeliveries, Airbus deliveries, managing capacity to match demand.

Q: Can you just remind us on how many planes are being returned this year and what the associated redelivery expense is?

A: Jaime said returning 14 aircraft this year, CapEx around $350 million related to redelivery and major maintenance to reduce AOGs.

Q: My question is about leverage. So leverage went from 2.6x to 3.1 from Q4 '24 to '25. And with higher CapEx ahead and only marginal margin improvement guidance, what's the path back towards deleveraging? And there is a leverage target that the Board is working towards?

A: Jaime said deleverage has been sequentially improving, expects 2026 net debt - to - EBITDAR ratio ~2.6x, result of AOG reduction and improvement in fleet