Volaris Reports June 2024 Traffic Results: 86% Load Factor

Rhea-AI Summary

Volaris, an ultra-low-cost carrier, reported its June 2024 traffic results. The company's ASM capacity fell by 13.7% year-over-year due to Pratt & Whitney engine inspections and aircraft groundings.

Despite this, Volaris saw a load factor increase of 2.2 percentage points to 85.6%. RPMs decreased by 11.4%, with domestic RPMs down by 16.2% and international RPMs by 1.8%.

The airline transported 2.4 million passengers in June 2024. CEO Enrique Beltranena noted that the fleet mitigation plan is effective, with strong demand in the domestic market and maturing capacity in the international market.

For the year-to-date (YTD) June 2024, total RPMs were down by 13.9%, ASMs by 15.3%, and passengers by 15.4% compared to YTD June 2023.

Positive

• Load factor increased by 2.2 percentage points to 85.6%.
• International RPMs only slightly decreased by 1.8%.
• Fleet mitigation plan is on track and yielding positive results.
• Strong demand in the domestic market and maturing capacity in the international market.
• Booking trends for the summer high season show robust performance.

Negative

• ASM capacity decreased by 13.7% year-over-year.
• RPMs decreased by 11.4%, with domestic RPMs down by 16.2%.
• Domestic ASMs fell by 22.1%.
• Year-to-date (YTD) June 2024 RPMs were down by 13.9%, ASMs by 15.3%, and passengers by 15.4% compared to YTD June 2023.

Financial Analyst

Volaris' June 2024 traffic results reveal a mixed bag of data points worth deeper examination. A year-over-year 13.7% decrease in Available Seat Miles (ASMs) is notable. This drop is primarily due to accelerated inspections of Pratt & Whitney engines, leading to aircraft groundings. Such operational interruptions can create short-term financial strain, yet it's encouraging to see a 2.2 percentage point (pp) increase in the load factor to 85.6%. This indicates that, despite the lower capacity, the airline has managed to keep its planes relatively full. From a financial perspective, this balancing act between capacity reduction and maintaining high load factors is critical to sustaining revenue levels.

Revenue Passenger Miles (RPMs) decreased by 11.4% year-on-year, with a sharper 16.2% decline in the domestic market compared to a smaller 1.8% drop internationally. The CEO's strategy of reallocating capacity from the domestic to international markets reflects a tactical maneuver to optimize revenue streams. However, it's risky as it hinges on international demand continuing to mature as expected.

The overall takeaway is a cautiously optimistic outlook. The groundwork for handling the engine inspections seems solid and the improved load factor could hint at underlying demand resilience. Yet, the ongoing capacity reduction and demand shifts warrant close monitoring.

Market Research Analyst

The traffic performance of Volaris in June 2024 highlights some interesting market dynamics. The significant reduction in Available Seat Miles (ASMs) by 13.7% due to engine inspections indicates a substantial operational challenge. Yet, the load factor improvement to 85.6% suggests strong market demand and efficient capacity management. This metric, being a important indicator of airline efficiency, points to the company's adeptness in utilizing available capacity.

The diversification in focus, shifting capacity to international routes, shows a strategic pivot to balance market risks and opportunities. While the domestic RPMs saw a substantial 16.2% decline, the international RPMs only mildly decreased by 1.8%. This strategic reallocation aims to capitalize on potentially higher-yielding international routes, reflecting savvy market positioning.

Investors should note the robust booking trends projected for the summer. This foresight provides an optimistic view, suggesting that the negative impacts of capacity reductions might be mitigated by strong seasonal demand. However, it remains vital to monitor how these shifts play out in actual earnings and overall market performance.

MEXICO CITY, July 08, 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 June 2024 preliminary traffic results.

In June 2024, Volaris' ASM capacity decreased by 13.7% year-over-year due to the accelerated Pratt & Whitney engine inspections and the resulting aircraft groundings. Load factor in the month increased by 2.2 pp YoY to 85.6%, as RPMs only decreased by 11.4%. Mexican domestic RPMs decreased by 16.2%, while international RPMs decreased by 1.8%. Volaris transported 2.4 million passengers during the month.

Enrique Beltranena, Volaris’ President and CEO said: "Our fleet mitigation plan is on track and yielding positive results. As part of this plan, we reduced capacity in the Mexican domestic market and reallocated it to the international market, resulting in an overall capacity reduction of around 14% in June. Demand in the domestic market remains strong, and our capacity in the international market continues to mature with a well-balanced market mix aimed at maximizing profitability. Looking ahead, our booking trends for the summer high season are showing robust performance, in line with our expectations in both markets."

	June 2024	June 2023	Variance	YTD June 2024	YTD June 2023	Variance
RPMs (million, scheduled & charter)
Domestic	1,506	1,797	-16.2%	8,717	11,191	-22.1%
International	879	895	-1.8%	5,417	5,226	3.7%
Total	2,385	2,692	-11.4%	14,134	16,417	-13.9%
ASMs (million, scheduled & charter)
Domestic	1,674	2,148	-22.1%	9,636	13,151	-26.7%
International	1,112	1,081	2.9%	6,754	6,211	8.7%
Total	2,786	3,229	-13.7%	16,390	19,362	-15.3%
Load Factor (%, RPMs/ASMs)
Domestic	89.9%	83.6%	6.3 pp	90.5%	85.1%	5.4 pp
International	79.1%	82.9%	(3.8) pp	80.2%	84.1%	(3.9) pp
Total	85.6%	83.4%	2.2 pp	86.2%	84.8%	1.4 pp
Passengers (thousand, scheduled & charter)
Domestic	1,811	2,064	-12.3%	10,309	12,958	-20.4%
International	598	614	-2.6%	3,702	3,601	2.8%
Total	2,408	2,677	-10.1%	14,010	16,559	-15.4%

^{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 booked by passengers multiplied by the number of miles 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 203 and its fleet from 4 to 136 aircraft. Volaris offers more than 500 daily flight segments on routes that connect 44 cities in Mexico and 29 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 fifteen 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 were Volaris' load factor results for June 2024?

Volaris reported a load factor of 85.6% for June 2024, an increase of 2.2 percentage points year-over-year.

How did Volaris' ASM capacity change in June 2024?

Volaris' ASM capacity decreased by 13.7% year-over-year in June 2024 due to Pratt & Whitney engine inspections and aircraft groundings.

What was the year-over-year change in Volaris' domestic RPMs in June 2024?

Volaris' domestic RPMs decreased by 16.2% year-over-year in June 2024.

How many passengers did Volaris transport in June 2024?

Volaris transported 2.4 million passengers in June 2024.

What were the year-to-date changes in RPMs, ASMs, and passengers for Volaris?

Year-to-date June 2024, RPMs were down by 13.9%, ASMs by 15.3%, and passengers by 15.4% compared to year-to-date June 2023.