Volaris Reports December 2023 Traffic Results: 85% Load Factor

Rhea-AI Summary

Volaris (NYSE: VLRS and BMV: VOLAR) reports a 2.3% decrease in RPMs and a 3.1% decrease in ASM capacity in December 2023. Load factor increased to 85.4%, with 2.8 million passengers transported during the month. Mexican domestic RPMs decreased by 11.1%, while international RPMs increased by 18.4%. Volaris' President and CEO expressed confidence in the resilience of the network and the business plan for 2024.

Insights

Market Research Analyst

The reported decrease in Volaris' ASM capacity and RPMs, coupled with a passenger count reduction, may initially suggest a negative outlook. However, the increase in load factor and total unit revenue growth indicates an efficient adjustment of capacity to demand. This is critical for ULCCs like Volaris, which operate on thin margins and rely on high load factors and ancillary revenues to maintain profitability.

The divergence between domestic and international RPMs—with a significant decrease in domestic RPMs and a notable increase in international RPMs—highlights a strategic pivot or market condition change. This could reflect Volaris' successful expansion into international markets or a shift in consumer preferences. The international market's robust growth could offset domestic weaknesses and diversify revenue streams, a positive sign for investors concerned about market saturation or economic downturns in Mexico.

The company's forward-looking statements about the first quarter booking curve suggest confidence in the sustainability of their revenue growth. This is a crucial indicator for investors, as it provides a proxy for future financial performance and potential market share gains.

Financial Analyst

The preliminary traffic results of Volaris for December 2023 show nuanced financial implications. A load factor increase, despite a decrease in RPMs and ASMs, can be interpreted as a positive sign of operational efficiency. High-single-digit year-over-year total unit revenue growth suggests that Volaris has effectively optimized pricing and cost management, which is essential for ULCCs that compete primarily on price.

Investors should consider the year-to-date growth in RPMs and ASMs, which indicates that the company is expanding its operations and potentially capturing greater market share. The financial health of airlines is often closely tied to their ability to manage capacity and demand and Volaris appears to be navigating this balance adeptly. The reported figures may also reflect broader industry trends, such as the recovery of the aviation sector post-pandemic or shifts in travel patterns.

The long-term implications for stakeholders include the potential for sustained profitability if Volaris continues to manage its capacity and demand effectively. However, external factors such as fuel costs, competition and economic conditions in their primary markets will continue to pose risks.

Aviation Industry Analyst

The data from Volaris' preliminary traffic report reveals an interesting dynamic within the aviation industry. The decrease in domestic travel within Mexico could be indicative of economic pressures or competitive dynamics, such as the entry of new players or price wars. Conversely, the growth in international travel suggests that Volaris is successfully capturing cross-border traffic, possibly benefiting from strategic route planning and international tourism trends.

The increase in load factor despite a decrease in capacity is a testament to the airline's ability to optimize its network and adjust to market demands. This is particularly important for a ULCC, which must maintain a delicate balance between keeping costs low and maximizing revenue from each flight.

Understanding the implications of these figures requires a deep dive into the cost structure of the airline, the competitive landscape and the macroeconomic factors at play. For instance, an increase in international RPMs could be more profitable if associated with higher-yielding routes or if it reflects successful penetration into less price-sensitive market segments.

MEXICO CITY, Jan. 04, 2024 (GLOBE NEWSWIRE) -- 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, reports its December 2023 preliminary traffic results.

In December 2023, Volaris' ASM capacity decreased by 3.1% year-over-year, while RPMs decreased by 2.3%; the result was a load factor increase of 0.7 pp YoY to 85.4%. Volaris transported 2.8 million passengers during the month, a 4.6% decrease compared to December 2022. Mexican domestic RPMs decreased by 11.1%, while international RPMs increased by 18.4%.

Enrique Beltranena, Volaris' President and CEO said: "Our December traffic results reinforced our confidence in the resilience of our network and the strength of our business plan for 2024. We are pleased with the demand we experienced during the holiday high season, which, along with the changes we have implemented to our network, helped us achieve high-single-digit year-over-year total unit revenue growth. Equally important, our booking curve gives us confidence that this trend will be sustained in the first quarter".

	Dec 2023		Dec 2022		Variance		YTD Dec 2023		YTD Dec 2022		Variance
RPMs (million, scheduled & charter)
Domestic	1,809		2,034		-11.1%		22,422		21,623		3.7%
International	1,020		861		18.4%		11,027		8,569		28.7%
Total	2,829		2,895		-2.3%		33,449		30,191		10.8%
ASMs (million, scheduled & charter)
Domestic	2,025		2,385		-15.1%		25,630		24,604		4.2%
International	1,286		1,034		24.4%		13,260		10,676		24.2%
Total	3,311		3,419		-3.1%		38,890		35,281		10.2%
Load Factor (%, scheduled, RPMs/ASMs)
Domestic	89.3%		85.3%		4.0 pp		87.5%		87.9%		(0.4) pp
International	79.3%		83.3%		(4.0) pp		83.2%		80.3%		2.9 pp
Total	85.4%		84.7%		0.7 pp		86.0%		85.6%		0.4 pp
Passengers (thousand, scheduled & charter)
Domestic	2,108		2,342		-10.0%		25,909		25,043		3.5%
International	706		606		16.4%		7,588		6,007		26.3%
Total	2,813		2,949		-4.6%		33,497		31,051		7.9%

The information included in this report has not been audited and does not provide information on the Company’s future performance. Volaris’ future performance depends on several factors. It cannot be inferred that any period’s performance or its comparison year over year will indicate a similar performance in the future.

Glossary

Revenue passenger miles (RPMs): Number of seats flown by passengers multiplied by the number of miles the seats are flown.

Available seat miles (ASMs): Number of seats available for passengers multiplied by the number of miles the seats are flown.

Load factor: RPMs divided by ASMs and expressed as a percentage.

Passengers: The total number of passengers booked on all flight segments.

Investor Relations Contact
Ricardo Martínez / ir@volaris.com

Media Contact
Israel Álvarez / ialvarez@gcya.net

About Volaris
*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 231 and its fleet from 4 to 129 aircraft. Volaris offers more than 550 daily flight segments on routes that connect 43 cities in Mexico and 28 cities in the United States, Central, and South America, with the youngest fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico, the United States, Central, and South America. Volaris has received the ESR Award for Social Corporate Responsibility for fourteen consecutive years. For more information, please visit ir.volaris.com.

FAQ

What are Volaris' (NYSE: VLRS and BMV: VOLAR) December 2023 preliminary traffic results?

Volaris reports a 2.3% decrease in RPMs and a 3.1% decrease in ASM capacity in December 2023. Load factor increased to 85.4%, with 2.8 million passengers transported during the month. Mexican domestic RPMs decreased by 11.1%, while international RPMs increased by 18.4%.

What was the total unit revenue growth for Volaris in December 2023?

Volaris achieved high-single-digit year-over-year total unit revenue growth in December 2023.

Who is the President and CEO of Volaris?

Enrique Beltranena is the President and CEO of Volaris.

What is the investor relations contact for Volaris?

Ricardo Martínez can be contacted for investor relations at ir@volaris.com.

What is the media contact for Volaris?

Israel Álvarez can be contacted for media inquiries at ialvarez@gcya.net.