Volaris announces adjustments in hedging relationships in respect of non-derivative financial instruments, which resulted in a benefit

Rhea-AI Summary

Volaris (NYSE: VLRS), the ultra-low-cost airline, announced adjustments to its hedging relationships as of June 30, 2020. The changes, prompted by lower jet fuel consumption due to COVID-19, resulted in a Ps.120 million benefit in the company’s net loss for the six months ended June 30, 2020. Additionally, Ps.53 million were reclassified to operating expenses. Total operating revenues for the period were Ps.1,526 million, with an operating loss of Ps.2,347 million. The total assets reported were Ps.67,783 million with total liabilities at Ps.71,951 million.

Positive

• Ps.120 million benefit in net loss due to adjustments
• Total operating revenues stood at Ps.1,526 million

Negative

• Operating loss of Ps.2,347 million
• Total liabilities exceeded total assets (Ps.71,951 million vs. Ps.67,783 million)

MEXICO CITY, Oct. 5, 2020 /PRNewswire/ -- Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, announces the following adjustments to its hedging relationships in respect of non-derivative financial instruments.

In accordance with IFRS 9, Volaris determined that as of June 30, 2020 certain of its non-derivative financial instruments designated as hedging relationships were no longer effective at offsetting the hedged risk. These accounting changes were due lower jet fuel consumption than anticipated, which was directly related to the adverse affect of COVID-19. The impact of this adjustment for the six months ended June 30, 2020 was a benefit of Ps.120 million in the Company´s net loss for the period. This amount was reclassified from other comprehensive income to comprehensive financial result. Further, Ps.53 million were also reclassified from other comprehensive income to operating expenses as a result of the completion of a forecasted transaction designated in a hedge relationship.

The adjustments are presented below:

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Unaudited adjusted figures		Three months ended June 30, 2020 (Reported)		Adjustments		Three months ended June 30, 2020
(In millions of Mexican pesos)
Total operating revenues		1,526		-		1,526
Operating expenses		3,873		(53)		3,820
Operating loss		(2,347)		53		(2,294)
Comprehensive financial result		(1)		120		119
Income tax benefit		704		(52)		653
Net loss		(1,644)		121		(1,523)

 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
Unaudited adjusted figures		At June 30, 2020 (Reported)		Adjustments		At June 30, 2020
(In millions of Mexican pesos)
Assets
Total current assets		15,522		-		15,522
Total non-current assets		52,261		(52)		52,209
Total assets		67,783		(52)		67,731
Liabilities
Total short-term liabilities		25,124		-		25,124
Total long-term liabilities		46,827		-		46,827
Total liabilities		71,951		-		71,951
Equity
Capital stock		2,974		-		2,974
Other capital accounts		1,967		-		1,967
Retained losses		(2,698)		121		(2,577)
Accumulated other comprehensive losses		(6,409)		(173)		(6,582)
Total equity		(4,167)		(52)		(4,219)

The information included does not provide information on the company's future performance. Volaris' future performance depends on many factors and it cannot be inferred that any period's performance or its comparison year over year will be an indicator of a similar performance in the future.

About Volaris:
*("Volaris" or the "Company") (NYSE: VLRS and BMV: VOLAR), is an ultra-low-cost carrier (ULCC), 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 March 2006, Volaris has increased its routes from five to more than 142 and its fleet from four to 84 aircraft. Volaris offers more than 304 daily flight segments on routes that connect 41 cities in Mexico and 21 cities in the United States with one of the youngest fleets in The Americas. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico and in selected destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for eleven consecutive years. For more information, please visit: www.volaris.com

 

View original content:http://www.prnewswire.com/news-releases/volaris-announces-adjustments-in-hedging-relationships-in-respect-of-non-derivative-financial-instruments-which-resulted-in-a-benefit-301145325.html

SOURCE Volaris

FAQ

What adjustments did Volaris announce regarding hedging relationships on October 5, 2020?

Volaris announced adjustments to hedging relationships due to lower jet fuel consumption, resulting in a Ps.120 million benefit in their net loss.

What was Volaris's net loss for the six months ended June 30, 2020?

Volaris reported a net loss of Ps.1,644 million for the six months ended June 30, 2020.

How did COVID-19 affect Volaris's financial performance?

COVID-19 led to lower jet fuel consumption, prompting adjustments to hedging relationships and contributing to significant operating losses.

What were the total assets and liabilities reported by Volaris?

As of June 30, 2020, Volaris reported total assets of Ps.67,783 million and total liabilities of Ps.71,951 million.