Volaris Reports March 2024 Traffic Results: 87% Load Factor

Rhea-AI Summary

Controladora Vuela Compañía de Aviación (VLRS) reports March 2024 traffic results with a 15.8% ASM capacity decrease due to engine inspections. Despite this, load factor rose to 86.8%. Mexican domestic RPMs dropped by 24.2%, while international RPMs increased by 7.1%. Volaris transported 2.3 million passengers in March.

Insights

Aviation Industry Analyst

From the perspective of an aviation industry analyst, the preliminary traffic results of Volaris for March 2024 are indicative of strategic capacity management in response to external operational challenges. The reduction in ASM capacity is a significant move, typically indicating a forced scaling back of operations, often due to unforeseen circumstances such as the need for Pratt & Whitney engine inspections. It's essential to note that while a decrease in capacity can adversely affect revenue potential, the increase in load factor suggests Volaris has effectively optimized the available space on its flights. This is a positive sign of demand management and could mitigate some of the financial impacts of reduced capacity.

The shift in focus towards international routes ahead of the peak summer season is a tactical decision that could be beneficial. By reallocating capacity to potentially more profitable international routes, Volaris may be aiming to capitalize on higher-yielding markets. However, the decreased domestic RPMs raise concerns about the domestic market's performance and the company's ability to maintain its market share within Mexico. Investors should monitor how this reallocation affects the company's revenue mix and whether it can sustain international growth without compromising its domestic base.

Market Research Analyst

Examining the data from a market research standpoint, the contrasting trends in domestic and international RPMs for Volaris are noteworthy. A 24.2% decrease in domestic RPMs coupled with a 7.1% increase in international RPMs could reflect changing consumer preferences or economic factors influencing travel patterns. The airline's ability to transport 2.3 million passengers despite a significant decrease in capacity showcases a resilient demand for air travel, which is a positive sign for the industry as a whole.

Furthermore, the robust load factor indicates that Volaris is maintaining operational efficiency. A load factor of 86.8% is relatively high for the industry, suggesting that Volaris is succeeding in filling a large proportion of its seats despite fewer available seat miles. This could be a result of effective pricing strategies, schedule optimization, or a strong brand presence in its chosen markets. For stakeholders, this performance metric is a double-edged sword; while it indicates efficient use of assets, it may also signal that there is little room for growth without additional capacity, which could be a limiting factor in the future.

Financial Analyst

From a financial analysis angle, the preliminary traffic results of Volaris have several implications for both short-term and long-term financial performance. In the short term, the decrease in capacity due to engine inspections could lead to a temporary dip in revenue. However, the improved load factor and strategic capacity reallocation may help offset some of the revenue losses. The key will be to analyze the yield, or revenue per passenger mile, to truly understand the financial impact. If Volaris has managed to increase yield through higher fares or ancillary revenue, the financial effects of the decreased capacity might be lessened.

In the long run, the company's ability to navigate operational challenges while maintaining a strong load factor is a positive indicator of management's ability to adapt to changing conditions. However, investors should remain cautious and seek further information on the costs associated with the engine inspections and any potential long-term impacts on fleet availability. Additionally, the shift in strategy towards the international market must be monitored to ensure that it does not come at the expense of domestic market share and profitability.

MEXICO CITY, April 03, 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 March 2024 preliminary traffic results.

In March 2024, Volaris' ASM capacity decreased by 15.8% year-over-year due to the accelerated Pratt & Whitney engine inspections and the resulting aircraft groundings. However, load factor increased by 1.3 pp YoY to 86.8%, as RPMs decreased by less than capacity. Mexican domestic RPMs decreased by 24.2%, while international RPMs increased by 7.1%. Volaris transported 2.3 million passengers during the month.

Enrique Beltranena, Volaris’ President and CEO, said: “In March, we decreased ASMs in the Mexican domestic market while reallocating capacity to the international market in preparation for the peak summer season. Throughout the quarter, we achieved a robust load factor, with a well-balanced market mix aimed at maximizing profitability.”

	Mar 2024		Mar 2023		Variance		YTD Mar 2024		YTD Mar 2023		Variance
RPMs (million, scheduled & charter)
Domestic	1,452		1,916		-24.2	%	4,329		5,546		-21.9	%
International	922		861		7.1	%	2,817		2,521		11.8	%
Total	2,374		2,777		-14.5	%	7,146		8,067		-11.4	%
ASMs (million, scheduled & charter)
Domestic	1,576		2,230		-29.3	%	4,768		6,537		-27.1	%
International	1,160		1,019		13.8	%	3,449		2,951		16.9	%
Total	2,736		3,249		-15.8	%	8,217		9,488		-13.4	%
Load Factor (%, scheduled, RPMs/ASMs)
Domestic	92.1	%	85.9	%	6.2 pp		90.8	%	84.8	%	5.9 pp
International	79.5	%	84.5	%	(5.0) pp		81.7	%	85.4	%	(3.7) pp
Total	86.8	%	85.5	%	1.3 pp		87.0	%	85.0	%	2.0 pp
Passengers (thousand, scheduled & charter)
Domestic	1,674		2,233		-25.0	%	4,985		6,440		-22.6	%
International	636		589		8.0	%	1,939		1,746		11.0	%
Total	2,310		2,822		-18.1	%	6,924		8,186		-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 211 and its fleet from 4 to 134 aircraft. Volaris offers more than 500 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 the 15.8% ASM capacity decrease for VLRS in March 2024?

The ASM capacity decrease for VLRS in March 2024 was due to accelerated Pratt & Whitney engine inspections and resulting aircraft groundings.

How much did the load factor increase for VLRS in March 2024?

The load factor for VLRS increased to 86.8% in March 2024.

What was the percentage change in Mexican domestic RPMs for VLRS in March 2024?

Mexican domestic RPMs for VLRS decreased by 24.2% in March 2024.

How many passengers did VLRS transport in March 2024?

VLRS transported 2.3 million passengers in March 2024.