Volaris Reports February 2024 Traffic Results: 86% Load Factor

Rhea-AI Summary

Volaris Reports February 2024 Preliminary Traffic Results: ASM Capacity Decreases, Load Factor Increases, Passenger Numbers Drop

Positive

• Volaris reported a 13.7% decrease in ASM capacity in February 2024 due to engine inspections and groundings.
• RPMs decreased by 10.9%, with a load factor increase of 2.8 pp YoY to 85.9%.
• Passenger numbers dropped by 15.2% compared to February 2023, with Mexican domestic RPMs decreasing by 21.5%.
• International RPMs increased by 13.2%, and Volaris transported 2.1 million passengers in February 2024.
• Volaris' strategic plan includes reallocating capacity to the international market, achieving a robust load factor in February.
• The future performance of Volaris depends on various factors, and past performance may not indicate future results.

Negative

• None.

Insights

Market Research Analyst

An analysis of Volaris' February 2024 traffic results indicates a strategic shift in their operational focus. The decrease in ASM capacity by 13.7% year-over-year, primarily due to Pratt & Whitney engine inspections, suggests a significant impact on the airline's fleet availability. Despite the reduced capacity, the increase in load factor to 85.9% reflects efficient capacity management and could signal a positive adjustment in pricing strategies or demand forecasting. The reallocation of capacity from the Mexican domestic market to international routes is a noteworthy development, potentially indicating a response to market dynamics or a strategic pivot towards more lucrative international segments.

From a market perspective, the 21.5% decrease in domestic RPMs coupled with a 13.2% increase in international RPMs could imply that Volaris is experiencing a shift in consumer preference or is actively targeting international growth markets. This strategic reallocation might be a proactive measure to optimize revenue streams and could result in different competitive dynamics in both domestic and international markets. The reported performance aligns with the CEO’s statement on meeting quarterly guidance, which could reassure investors about the company's short-term outlook despite operational challenges.

Financial Analyst

The reported 15.2% decrease in passenger numbers year-over-year presents a potential concern for revenue, but this must be contextualized with the increase in load factor and the shift in operational strategy. The financial implications of these metrics will depend on the yield (revenue per passenger mile) and cost management. The increase in load factor typically indicates better revenue efficiency, but it is essential to assess whether this has been achieved at the expense of yield due to potential discounting to fill seats.

Furthermore, the decrease in ASMs and the costs associated with the Pratt & Whitney engine inspections need to be evaluated in terms of their impact on the company's cost structure and profitability. Investors should look for trends in operational expenses and how they correlate with these traffic results in the upcoming earnings report. The ability of Volaris to manage these operational disruptions and maintain financial performance will be critical in assessing the company's resilience and operational efficiency.

Aviation Industry Expert

The aviation industry often faces challenges such as the one Volaris encountered with the need for accelerated Pratt & Whitney engine inspections. Such maintenance issues are not uncommon but can have a significant impact on an airline's operations. Volaris' proactive measures, such as capacity reallocation, demonstrate a strategic approach to mitigating the adverse effects of grounded aircraft. This also highlights the importance of fleet management and maintenance operations in the airline industry.

The shift in focus to international routes is a strategic move that could be interpreted as a response to the competitive landscape or as a pursuit of higher-margin opportunities. Understanding the broader industry trends, such as regional economic conditions, travel restrictions and consumer behavior, is crucial in evaluating the long-term implications of Volaris' strategy. The airline's ability to adapt to these trends and optimize its route network accordingly will be a key factor in its sustained growth and market share.

MEXICO CITY, March 06, 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 February 2024 preliminary traffic results.

In February 2024, Volaris' ASM capacity decreased by 13.7% year-over-year due to the extraordinary Pratt & Whitney engine accelerated inspections and the resulting aircraft groundings. RPMs decreased by 10.9%, resulting in a load factor increase of 2.8 pp YoY to 85.9%. Volaris transported 2.1 million passengers during the month, a 15.2% decrease compared to February 2023. Mexican domestic RPMs decreased by 21.5%, while international RPMs increased by 13.2%.

Enrique Beltranena, Volaris’ President and CEO, said: “Following our strategic plan for the year, we have reduced ASMs in the Mexican domestic market and reallocated capacity to the international market. Moreover, a robust load factor was achieved in February, exceeding the average for such a low-season month. This confirms the positive trends observed in recent months and positions us well to meet our quarterly guidance.”

	Feb 2024		Feb 2023		Variance	YTD Feb 2024		YTD Feb 2023		Variance
RPMs (million, scheduled & charter)
Domestic	1,332		1,697		-21.5%	2,877		3,630		-20.8%
International	850		751		13.2%	1,896		1,660		14.2%
Total	2,183		2,449		-10.9%	4,772		5,290		-9.8%
ASMs (million, scheduled & charter)
Domestic	1,469		2,035		-27.8%	3,192		4,306		-25.9%
International	1,070		908		17.8%	2,289		1,932		18.4%
Total	2,540		2,943		-13.7%	5,481		6,239		-12.1%
Load Factor (%, scheduled, RPMs/ASMs)
Domestic	90.7%		83.4%		7.3 pp	90.1%		84.3%		5.8 pp
International	79.5%		82.7%		(3.3) pp	82.8%		85.9%		(3.1) pp
Total	85.9%		83.2%		2.8 pp	87.1%		84.8%		2.3 pp
Passengers (thousand, scheduled & charter)
Domestic	1,539		1,984		-22.4%	3,310		4,207		-21.3%
International	584		519		12.5%	1,303		1,157		12.5%
Total	2,122		2,502		-15.2%	4,613		5,365		-14.0%

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 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 211 and its fleet from 4 to 134 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 one of the youngest fleets 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. Volaris routinely posts information that may be important to investors on its investor relations website. The Company encourages investors and potential investors to consult the Volaris website regularly for important information about Volaris.

 

FAQ

What caused Volaris' ASM capacity to decrease in February 2024?

Volaris' ASM capacity decreased by 13.7% in February 2024 due to Pratt & Whitney engine accelerated inspections and resulting aircraft groundings.

How did Volaris' RPMs and load factor change in February 2024?

RPMs decreased by 10.9% in February 2024, but the load factor increased by 2.8 percentage points year-over-year to 85.9%.

What was the percentage change in passenger numbers for Volaris in February 2024 compared to February 2023?

Passenger numbers for Volaris dropped by 15.2% in February 2024 compared to the same period in 2023.

How did Volaris' Mexican domestic RPMs and international RPMs change in February 2024?

In February 2024, Volaris' Mexican domestic RPMs decreased by 21.5%, while international RPMs increased by 13.2%.

What is Volaris' President and CEO's comment on the February 2024 results?

Enrique Beltranena, Volaris' President and CEO, mentioned that they reduced ASMs in the Mexican domestic market and reallocated capacity to the international market, achieving a robust load factor in February.