Volaris Reports Second Quarter 2020 Results: Robust Liquidity Preservation Plan with Minimal Cash Burn, End Cash Balance of Ps.10 Billion

Rhea-AI Summary

Volaris (NYSE: VLRS) reported a significant decrease in financial performance for Q2 2020, largely due to the COVID-19 pandemic. Total operating revenues fell by 81.7% year-over-year to Ps.1,526 million, while ancillary revenues dropped 75.5%. Operating loss reached Ps.2,347 million compared to a profit of Ps.659 million a year earlier. Despite a 80.5% decline in passenger numbers, the airline managed a 25.2% rise in ancillary revenue per passenger. As of June 30, 2020, cash and cash equivalents stood at Ps.10,013 million, representing 35% of last year's revenue.

Positive

• Ancillary revenue per passenger increased by 25.2% year-over-year.
• Cash and cash equivalents were Ps.10,013 million, representing 35% of last year’s revenue.
• Volaris demonstrated a rapid recovery in June with ASMs operating at 41% of 2019 levels.

Negative

• Total operating revenues decreased by 81.7% year-over-year to Ps.1,526 million.
• Operating loss of Ps.2,347 million compared to a profit of Ps.659 million last year.
• Passenger traffic decreased by 80.5% year-over-year.

MEXICO CITY, July 27, 2020 /PRNewswire/ -- Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announces its financial results for the second quarter 2020.

The following financial information, unless otherwise indicated, is presented in accordance with the International Financial Reporting Standards (IFRS).

Second Quarter 2020 Highlights

During the second quarter 2020, the Company carefully managed its capacity, measured by available seat miles (ASMs), in response to the decline in demand for air travel due to the virus SARS-CoV-2 (COVID-19).

In April, 2020 the Company announced that pursuant to a decree published in the Official Gazette of the Federation, the Government of the United Mexican States, acting through the General Health Council (Consejo de Salubridad General ("GHC")) declared a health emergency due to force majeure, as a result of the disease pandemic caused by the COVID-19, which would be in effect until new notification (the "Declaration of Emergency").

The Declaration of Emergency and the health security measures announced by the GHC, such as the suspension of non-essential activities in the public, private and social sector, as well as the call to the population to comply with stay at home, impacted the demand for passenger air transportation.

The second quarter of 2020 was characterized by three very different months: in April and May, the fall in demand required significant capacity cuts. In April, Volaris operated 18% ASMs vs the same period in 2019 and in May this fell still further to 12%. This trend was reversed in June, when Volaris operated 41% ASMs compared to those operated in the same period in 2019. This was a ramp-up of more than 234% compared to May 2020, taking advantage of the early signs of recovery particularly in the domestic market and the ramp-up was significantly faster than our domestic competitors. The domestic market held up better than the international markets and Central America remained closed altogether.

For the ramp-up in June and further into the third quarter, Volaris has taken a breadth over depth approach to network recovery, focusing on marginal contribution of flights. By end of June 2020 service re-started in 49% of domestic routes and 22% of US markets, albeit both at a lower frequency vs. 2019.

The main effects of the reductions and the gradual recovery of demand and capacity at the end of the second quarter, are described as follows:

• Total operating revenues were Ps.1,526 million for the second quarter, a decrease of 81.7% year over year.
• Total ancillary revenues were Ps.711 million for the second quarter, a decrease of 75.5% year over year. Total ancillary revenues per passenger for the second quarter reached Ps.644, an increase of 25.2% year over year. Total ancillary revenues represented 46.6% of total operating revenues for the second quarter 2020, increasing 11.7 percentage points with respect to the same period of last year.
• Total operating revenues per available seat mile (TRASM) were Ps.108.9 cents for the second quarter, a decrease of 19.7% year over year.
• Operating expenses per available seat mile (CASM) were Ps.274.4 cents for the second quarter, an increase of more than 100% year over year; with an average economic fuel cost per gallon of Ps.43.8 for the second quarter, a decrease of 10.4% year over year.
• Operating expenses per available seat mile excluding fuel, (CASM ex fuel) reached Ps.234.3 cents for the second quarter, an increase of more than 100% year over year; with an average exchange rate depreciation of the Mexican peso against the U.S. dollar of 22.2% year over year.
• Operating loss was Ps.2,347 million for the second quarter, a significant decrease compared with the operating income of Ps.659 million for the same period of last year. Operating margin for the second quarter was (153.8%), a deterioration of (161.7) percentage points year over year.
• Net loss was Ps.1,644 million (Ps.1.62 loss per share / U.S.$0.71 loss per ADS), giving a negative net margin of (107.7%) for the second quarter.
• At the close of the second quarter, the Mexican peso appreciated 2.3% against the U.S. dollar (Ps.22.97 per U.S. dollar) with respect to the exchange rate at the close of the previous quarter (Ps.23.51 per U.S. dollar). The Company booked a net foreign exchange gain of Ps.1,109 million derived from our U.S. dollar net monetary liability position.
• During the second quarter of 2020, the net cash flow generated by operating activities was Ps.584 million. The net cash flow generated by investing activities reached Ps.71 million. The net cash flow used in financing activities was Ps.1,179 million, which included Ps.806 million of aircraft rental payments. The negative net foreign exchange difference was Ps.120 million, thus leading to a net decrease of cash and cash equivalents in the second quarter of Ps.644 million. As of June 30, 2020, cash and cash equivalents were Ps.10,013 million.

Fuel Price reduction and Peso Depreciation

• Fuel price reduction: The average economic fuel cost per gallon decreased 10.4% in the second quarter of 2020, year over year, reaching Ps.43.8 per gallon (U.S.$1.9).
• Peso depreciation: The Mexican peso depreciated 22.2% against the U.S. dollar year over year, from an average exchange rate of Ps.19.12 per U.S. dollar in the second quarter of 2019 to Ps.23.37 per U.S. dollar during the second quarter of 2020. At the end of the second quarter of 2020, the Mexican peso (Ps.22.97 per U.S. dollar) depreciated 19.8% with respect to the exchange rate at the end of the same period of the last year (Ps.19.17 per U.S. dollar).

Passenger Traffic Contraction, Ancillary Revenue Expansion, and TRASM decrease

• Passenger traffic contraction: Volaris had 1.1 million passengers booked in the second quarter of 2020, a decrease of 80.5% year over year. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) decreased 78.8% year over year. System load factor during the second quarter decreased 8.1 percentage points year over year to a level of 79.2%.
• Total ancillary revenue reduction: For the second quarter of 2020, total ancillary revenue decreased 75.5% year over year. Total ancillary revenue per passenger in the second quarter of 2020 increased 25.2% year over year. The total ancillary revenue generation continues to grow with new and mature products, appealing to customers' needs, representing 46.6% of total operating revenue of the second quarter, an increase of 11.7 percentage points year over year.
• TRASM decrease: For the second quarter of 2020, TRASM decreased 19.7% year over year. During the second quarter of 2020, the total capacity, in terms of ASMs, decreased 76.6% year over year.

Total Unit Cost Raise and Peso depreciation 

• CASM and CASM ex fuel in the second quarter of 2020 reached Ps.274.4 (U.S.$11.94 cents) and Ps.234.3 cents (U.S.$10.20), respectively. This represented an increase of more than 100% for CASM and CASM ex fuel, year over year; mainly driven by the capacity reduction as measured by available seat miles (ASMs), and the average exchange rate depreciation of the Mexican peso against the U.S. dollar of 22.2%.

Young and Fuel-Efficient Consumption Fleet

• During the second quarter of 2020, the Company returned one A319 aircraft and incorporated one A320 NEO aircraft to its fleet. As of June 30, 2020, Volaris' fleet comprised 82 aircraft (7 A319s, 59 A320s and 16 A321s), with an average age of 5.4 years. At the end of the second quarter of 2020, Volaris' fleet had an average of 187 seats per aircraft, 76% of our aircraft were sharklet-equipped, and 29% were NEO.

Liquidity Preservation Plan with a Net Cash Flow Generated by Operating Activities

• Since the COVID-19 contingency started, the Company´s main objective has been to preserve the liquidity position. The Company implemented a "liquidity preservation plan" which achieved a total of $6.1 billion pesos or $266 million in US dollar terms through payment deferrals and cost reductions for 2020. Around $1.6 billion pesos ($61 million dollars) were deferred to 2021. Specifically, for the second quarter, our liquidity preservation plan brought $2.2 billion pesos in benefits; of which $357 million pesos were cost avoidance.
• During the second quarter of 2020, the net cash flow generated by operating activities was Ps.584 million. The net cash flow generated by investing activities reached Ps.71 million. The net cash flow used in financing activities was Ps.1,179 million, which included Ps.806 million of aircraft rental payments. The negative net foreign exchange difference was Ps.120 million, thus having a net decrease of cash and cash equivalents in the second quarter of Ps.644 million. As of June 30, 2020, cash and cash equivalents were Ps.10,013 million, representing 35.0% of last twelve months of the operating revenue. Volaris registered a negative net debt (or a positive net cash position) of Ps.4,568 million (excluding lease liability recognized under the IFRS16 adoption).

Non derivatives financial instruments

• During 2019, the Company established hedges on its U.S. dollar denominated revenues through a non-derivative financial instrument, using the lease liabilities denominated in U.S. dollar as a hedge instrument. This hedging relationship was designated as a cash flow hedge of forecasted revenues to mitigate the volatility of the foreign exchange variation arising from the revaluation of the lease liabilities. During the second quarter 2020, the impact of these hedges was Ps.39 million, which has been presented as part of the total operating revenue.
• Additionally, during 2019, the Company established hedges on a portion of its forecasted fuel expense, through a non-derivative financial instrument, using as a hedge instrument a portion of its U.S. dollar denominated monetary assets. This hedging relationship was designated as a cash flow hedge of forecasted fuel expense to mitigate the volatility of the foreign exchange variation arising from the revaluation of this portion of U.S. dollar denominated monetary asset. During the second quarter 2020, the impact of these hedges was Ps.71 million, which has been presented as part of the total fuel expense.
• For the hedging relationships described, the effective portion of the hedging instrument's change in fair value is recognized in Other Comprehensive Income or OCI. The accounting records corresponding to the recycling of the OCI are made in accordance with IFRS 9. Under this Standard, the portion recorded in OCI is recognized in the results in the same period in which the expected hedging for cash flows affect the result of the period. As of June 30, 2020, OCI includes a negative foreign exchange effect of Ps.5,847 million. As of December 31, 2019, OCI includes a positive foreign exchange effect of Ps.14 million.

Investors are urged to carefully read the Company's periodic reports filed with or provided to the Securities and Exchange Commission, for additional information regarding the Company.

Conference Call/Webcast Details:

Presenters for the Company:	Mr. Enrique Beltranena, President & CEO Mr. Holger Blankenstein, Airline  Commercial and Operation EVP Mr. Jaime Pous,  Senior Vice President Chief Legal Officer and Corporate Affairs and Interim CFO
Date:	Monday, July 27, 2020
Time:	10:00 am U.S. EDT (9:00 am Mexico City Time)
United States dial in (toll free):	1-877-830-2576
Mexico dial in (toll free):	001-800-514-6145
Brazil dial in (toll free):	0800-891-6744
International dial in:	+ 1-785-424-1726
Participant passcode:	VOLARIS
Webcast will be available at:	https://services.choruscall.com/links/vlrs200727iiu07GYo.html

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 and Central 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 five to more than 96 and its fleet from four to 82 aircraft. Volaris offers more than 229 daily flight segments on routes that connect 39 cities in Mexico and 15 cities in the United States and Central 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 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.

Forward-looking Statements:

Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations, beliefs or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words "expects," "intends," "estimates," "predicts," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "potential," "outlook," "may," "continue," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. Forward-looking statements should not be read as a guarantee or assurance of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.  Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. Additional information concerning these, and other factors is contained in the Company's Securities and Exchange Commission filings. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above.  Forward-looking statements speak only as of the date of this release.  You should not put undue reliance on any forward-looking statements.  We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable law.  If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Financial and Operating Indicators
	Unaudited	Three months ended June 30, 2020	Three months ended June 30, 2020	Three months ended June 30, 2019	Variance
	(In Mexican pesos, except otherwise indicated)	(US Dollars)*			(%)
	Total operating revenues (millions)	66	1,526	8,329	(81.7%)
	Total operating expenses (millions)	169	3,873	7,670	(49.5%)
	EBIT (millions)	(102)	(2,347)	659	NA
	EBIT margin	(153.8%)	(153.8%)	7.9%	(161.7) pp
	Depreciation and amortization	63	1,451	1,335	8.7%
	Aircraft and engine variable lease expenses	19	426	316	34.9%
	Net (loss) income (millions)	(72)	(1,644)	119	NA
	Net (loss) income margin	(107.7%)	(107.7%)	1.4%	(109.1) pp
	(Loss) income per share:
	Basic (pesos)	(0.07)	(1.62)	0.12	NA
	Diluted (pesos)	(0.07)	(1.62)	0.12	NA
	(Loss) income per ADS:
	Basic (pesos)	(0.71)	(16.24)	1.18	NA
	Diluted (pesos)	(0.71)	(16.24)	1.18	NA
	Weighted average shares outstanding:
	Basic	-	1,011,876,677	1,011,876,677	0.0%
	Diluted	-	1,011,876,677	1,011,876,677	0.0%
	Available seat miles (ASMs) (millions) (1)	-	1,437	6,154	(76.6%)
	Domestic	-	1,202	4,250	(71.7%)
	International	-	235	1,904	(87.7%)
	Revenue passenger miles (RPMs) (millions) (1)	-	1,138	5,370	(78.8%)
	Domestic	-	936	3,812	(75.4%)
	International	-	202	1,558	(87.0%)
	Load factor (2)	-	79.2%	87.3%	(8.1) pp
	Domestic	-	77.8%	89.7%	(11.9) pp
	International	-	86.3%	81.9%	4.4 pp
	Total operating revenue per ASM (TRASM) (cents) (1) (5)	4.7	108.9	135.5	(19.7%)
	Total ancillary revenue per passenger (4) (5)	28.0	644	514	25.2%
	Total operating revenue per passenger (5)	61.7	1,417	1,475	(4.0%)
	Operating expenses per ASM (CASM) (cents) (1) (5)	11.94	274.4	124.9	>100%
	Operating expenses per ASM (CASM) (US cents) (3) (5)	-	11.74	6.53	79.9%
	CASM ex fuel (cents) (1) (5)	10.20	234.3	74.5	>100%
	CASM ex fuel (US cents) (3) (5)	-	10.03	3.89	>100%
	Booked passengers (thousands) (1)	-	1,105	5,654	(80.5%)
	Departures (1)	-	7,785	34,848	(77.7%)
	Block hours (1)	-	19,472	87,686	(77.8%)
	Fuel gallons consumed (millions)	-	13.1	63.4	(79.3%)
	Average economic fuel cost per gallon (5)	1.9	43.8	48.9	(10.4%)
	Aircraft at end of period	-	82	78	5.1%
	Average aircraft utilization (block hours)	-	7.7	13.1	(41.1%)
	Average exchange rate	-	23.37	19.12	22.2%
	End of period exchange rate	-	22.97	19.17	19.8%
	*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only. (1) Includes schedule and charter.                                                                    (3) Dollar amounts were converted at average exchange rate of each period.
	(2) Includes schedule.                                                                                       (4) Includes "Other passenger revenues" and "Non-passenger revenues". (5) Excludes non-derivatives financial instruments.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Financial and Operating Indicators
	Unaudited	Six months ended June 30, 2020	Six months ended June 30, 2020	Six months ended June 30, 2019	Variance
	(In Mexican pesos, except otherwise indicated)	(US Dollars)*			(%)
	Total operating revenues (millions)	407	9,350	15,522	(39.8%)
	Total operating expenses (millions)	496	11,389	14,836	(23.2%)
	EBIT (millions)	(89)	(2,039)	685	NA
	EBIT margin	(21.8%)	(21.8%)	4.4%	(26.2) pp
	Depreciation and amortization	126	2,893	2,627	10.1%
	Aircraft and engine variable lease expenses	35	801	543	47.5%
	Net (loss) income (millions)	(137)	(3,137)	639	NA
	Net (loss) income margin	(33.5%)	(33.5%)	4.1%	(37.6) pp
	(Loss) income per share:
	Basic (pesos)	(0.13)	(3.10)	0.63	NA
	Diluted (pesos)	(0.13)	(3.10)	0.63	NA
	(Loss) income per ADS:
	Basic (pesos)	(1.35)	(31.00)	6.31	NA
	Diluted (pesos)	(1.35)	(31.00)	6.31	NA
	Weighted average shares outstanding:
	Basic	-	1,011,876,677	1,011,876,677	0.0%
	Diluted	-	1,011,876,677	1,011,876,677	0.0%
	Available seat miles (ASMs) (millions) (1)	-	7,533	11,858	(36.5%)
	Domestic	-	5,455	8,221	(33.6%)
	International	-	2,078	3,637	(42.9%)
	Revenue passenger miles (RPMs) (millions) (1)	-	6,304	10,114	(37.7%)
	Domestic	-	4,596	7,198	(36.2%)
	International	-	1,708	2,916	(41.4%)
	Load factor (2)	-	83.7%	85.3%	(1.6) pp
	Domestic	-	84.2%	87.6%	(3.4) pp
	International	-	82.2%	80.3%	1.9 pp
	Total operating revenue per ASM (TRASM) (cents) (1) (5)	5.4	125.0	131.0	(4.6%)
	Total ancillary revenue per passenger (4) (5)	25.2	578	515	12.2%
	Total operating revenue per passenger (5)	64.2	1,475	1,463	0.8%
	Operating expenses per ASM (CASM) (cents) (1) (5)	6.7	152.8	125.2	22.0%
	Operating expenses per ASM (CASM) (US cents) (3) (5)	-	7.1	6.5	8.2%
	CASM ex fuel (cents) (1) (5)	4.8	111.1	76.5	45.3%
	CASM ex fuel (US cents) (3) (5)	-	5.14	3.99	28.9%
	Booked passengers (thousands) (1)	-	6,382	10,617	(39.9%)
	Departures (1)	-	41,446	67,046	(38.2%)
	Block hours (1)	-	106,110	170,534	(37.8%)
	Fuel gallons consumed (millions)	-	75.0	121.7	(38.3%)
	Average economic fuel cost per gallon (5)	1.8	41.8	47.5	(12.0%)
	Aircraft at end of period	-	82	78	5.1%
	Average aircraft utilization (block hours)	-	11.4	12.9	(11.6%)
	Average exchange rate	-	21.62	19.17	12.8%
	End of period exchange rate	-	22.97	19.17	19.8%
	*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only. (1) Includes schedule and charter.                                                                    (3) Dollar amounts were converted at average exchange rate of each period.
	(2) Includes schedule.                                                                                       (4) Includes "Other passenger revenues" and "Non-passenger revenues". (5) Excludes non-derivatives financial instruments.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Consolidated Statement of Operations
	Unaudited	Three months ended June 30, 2020	Three months ended June 30, 2020	Three months ended June 30, 2019	Variance
	(In millions of Mexican pesos)	(US Dollars) *			(%)
	Operating revenues:
	Passenger revenues	63	1,436	8,038	(82.1%)
	Fare revenues	37	854	5,431	(84.3%)
	Other passenger revenues	25	582	2,607	(77.7%)
	Non-passenger revenues	6	129	302	(57.3%)
	Other non-passenger revenues	4	102	250	(59.1%)
	Cargo	1	27	52	(48.3%)
	Non-derivatives financial instruments	(2)	(39)	(11)	>100%
	Total operating revenues	66	1,526	8,329	(81.7%)
	Other operating income	(8)	(180)	(123)	46.1%
	Depreciation of right of use assets	54	1,240	1,180	5.1%
	Salaries and benefits	29	665	887	(25.0%)
	Fuel expense, net (1)	22	505	3,087	(83.6%)
	Landing, take-off and navigation expenses	19	438	1,188	(63.2%)
	Aircraft and engine variable lease expenses	19	426	316	34.9%
	Sales, marketing and distribution expenses	8	179	350	(48.8%)
	Maintenance expenses	7	166	369	(55.2%)
	Other operating expenses	10	224	260	(14.0%)
	Depreciation and amortization	9	210	155	35.9%
	Operating expenses	169	3,873	7,670	(49.5%)
	Operating (loss) income	(102)	(2,347)	659	NA
	Finance income	1	27	54	(49.9%)
	Finance cost (2)	(50)	(1,137)	(520)	>100%
	Exchange gain, net	48	1,109	3	>100%
	Comprehensive financing result	-	(1)	(462)	(99.7%)
	(Loss) income before income tax	(102)	(2,348)	197	NA
	Income tax benefit (expense)	31	704	(78)	NA
	Net (loss) income	(72)	(1,644)	119	NA
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only. (1) 2Q 2020 and 2Q 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.70.5 million and Ps.13.7 million, respectively.
	(2) During second quarter 2020, as a result of the capacity reduction due to COVID-19, the Company recorded the ineffective portion related to the derivative financial instruments by an amount of Ps.429 million, which is presented as part of the financial costs.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Consolidated Statement of Operations
	Unaudited	Six months ended June 30, 2020	Six months ended June 30, 2020	Six months ended June 30, 2019	Variance (%)
	(In millions of Mexican pesos)	(US Dollars) *
	Operating revenues:
	Passenger revenues	391	8,984	15,015	(40.2%)
	Fare revenues	249	5,727	10,061	(43.1%)
	Other passenger revenues	142	3,257	4,954	(34.3%)
	Non-passenger revenues	19	433	518	(16.5%)
	Other non-passenger revenues	15	350	404	(13.5%)
	Cargo	4	83	114	(27.0%)
	Non-derivatives financial instruments	(3)	(66)	(11)	>100%
	Total operating revenues	407	9,350	15,522	(39.8%)
	Other operating income	(13)	(301)	(123)	>100%
	Fuel expense, net (1)	131	3,018	5,770	(47.7%)
	Depreciation of right of use assets	108	2,474	2,336	5.9%
	Landing, take-off and navigation expenses	83	1,915	2,420	(20.9%)
	Salaries and benefits	70	1,605	1,739	(7.7%)
	Aircraft and engine variable lease expenses	35	801	543	47.5%
	Sales, marketing and distribution expenses	24	542	621	(12.7%)
	Maintenance expenses	17	399	723	(44.7%)
	Other operating expenses	23	517	516	0.2%
	Depreciation and amortization	18	419	291	43.9%
	Operating expenses	496	11,389	14,836	(23.2%)
	Operating (loss) income	(89)	(2,039)	685	NA
	Finance income	3	76	92	(17.1%)
	Finance cost (2)	(78)	(1,794)	(1,023)	75.4%
	Exchange (loss) gain, net	(32)	(725)	1,157	NA
	Comprehensive financing result	(106)	(2,442)	227	NA
	(Loss) income before income tax	(195)	(4,481)	912	NA
	Income tax benefit (expense)	59	1,344	(274)	NA
	Net (loss) income	(137)	(3,137)	639	NA
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only. (1) 2Q YTD 2020 and 2Q YTD 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.118.7 million and Ps.13.9 million, respectively.
	(2) During second quarter 2020, as a result of the capacity reduction due to COVID-19, the Company recorded the ineffective portion related to the derivative financial instruments by an amount of Ps.429 million, which is presented as part of the financial costs.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Reconciliation of total ancillary revenue per passenger
	The following table shows quarterly additional detail about the components of total ancillary revenue:
	Unaudited	Three months ended June 30, 2020 (US Dollars)*	Three months ended June 30, 2020	Three months ended June 30, 2019	Variance (%)
	(In millions of Mexican pesos)
	Other passenger revenues	25	582	2,607	(77.7%)
	Non-passenger revenues	6	129	302	(57.3%)
	Total ancillary revenues	31	711	2,909	(75.5%)
	Booked passengers (thousands)	-	1,105	5,654	(80.5%)
	Total ancillary revenue per passenger	28	644	514	25.2%
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

 

	The following table shows the first one half of the year additional detail about the components of total ancillary revenue:
	Unaudited	Six months ended June 30, 2020 (US Dollars)*	Six months ended June 30, 2020	Six months ended June 30, 2019	Variance (%)
	(In millions of Mexican pesos)
	Other passenger revenues	142	3,257	4,954	(34.3%)
	Non-passenger revenues	19	433	518	(16.5%)
	Total ancillary revenues	161	3,689	5,472	(32.6%)
	Booked passengers (thousands)	-	6,382	10,617	(39.9%)
	Total ancillary revenue per passenger	25.2	578	515	12.2%
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Consolidated Statement of Financial Position
	(In millions of Mexican pesos)	June 30, 2020 Unaudited	June 30, 2020 Unaudited	December 31, 2019 Audited
		(US Dollars)*
	Assets
	Cash and cash equivalents	436	10,013	7,980
	Accounts receivable	119	2,743	2,320
	Inventories	12	278	302
	Prepaid expenses and other current assets	45	1,045	781
	Financial instruments	1	28	134
	Guarantee deposits	62	1,416	600
	Total current assets	676	15,522	12,117
	Rotable spare parts, furniture and equipment, net	306	7,021	7,385
	Right of use assets	1,428	32,799	34,129
	Intangible assets, net	7	167	167
	Financial instruments	-	2	3
	Deferred income taxes	139	3,194	1,543
	Guarantee deposits	381	8,759	7,644
	Other assets	5	120	166
	Other long- term assets	9	199	141
	Total non-current assets	2,275	52,261	51,178
	Total assets	2,951	67,783	63,295
	Liabilities
	Unearned transportation revenue	254	5,832	3,680
	Accounts payable	160	3,678	1,656
	Accrued liabilities	77	1,759	2,532
	Lease liabilities	298	6,844	4,721
	Other taxes and fees payable	99	2,267	2,102
	Income taxes payable	-	2	141
	Financial instruments	38	869	-
	Financial debt	155	3,569	2,086
	Other liabilities	13	304	407
	Total short-term liabilities	1,094	25,124	17,324
	Financial instruments	-	-	-
	Financial debt	82	1,876	2,890
	Accrued liabilities	3	72	91
	Lease liabilities	1,842	42,307	35,797
	Other liabilities	103	2,371	1,470
	Employee benefits	2	45	38
	Deferred income taxes	7	156	156
	Total long-term liabilities	2,038	46,827	40,441
	Total liabilities	3,132	71,951	57,765
	Equity
	Capital stock	129	2,974	2,974
	Treasury shares	(8)	(176)	(170)
	Contributions for future capital increases	-	-	-
	Legal reserve	13	291	291
	Additional paid-in capital	81	1,851	1,880
	Retained (losses) earnings	(117)	(2,698)	438
	Accumulated other comprehensive income (losses) (1)	(279)	(6,409)	116
	Total equity	(181)	(4,167)	5,530
	Total liabilities and equity	2,951	67,783	63,295
	Total shares outstanding fully diluted		1,011,876,677	1,011,876,677
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
	(1) As of June 30, 2020 and as of December 31, 2019 the figures include a negative foreign exchange effect of Ps.5,847 million and a positive foreign exchange effect of Ps.14 million, respectively, related to non-derivatives financial instruments.

                              

 

 

	Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries Consolidated Statement of Cash Flows – Cash Flow Data Summary
	Unaudited	Three months ended June 30, 2020	Three months ended June 30, 2020	Three months ended June 30, 2019
	(In millions of Mexican pesos)	(US Dollars)*
	Net cash flow generated by operating activities	25	584	1,527
	Net cash flow generated by investing activities	3	71	171
	Net cash flow used in financing activities**	(51)	(1,179)	(571)
	(Decrease) increase in cash and cash equivalents	(23)	(524)	1,127
	Net foreign exchange differences	(5)	(120)	(74)
	Cash and cash equivalents at beginning of period	464	10,658	7,071
	Cash and cash equivalents at end of period	436	10,013	8,124
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
	**Includes aircraft rental payments of Ps.806 million and Ps.1,582 million for the three months ended period June 30, 2020 and 2019, respectively.

 

 

	Unaudited	Six months ended June 30, 2020	Six months ended June 30, 2020	Six months ended June 30, 2019
	(In millions of Mexican pesos)	(US Dollars)*
	Net cash flow generated by operating activities	148	3,403	5,257
	Net cash flow generated by (used in) investing activities	1	34	(208)
	Net cash flow used in financing activities**	(133)	(3,048)	(2,633)
	Increase in cash and cash equivalents	17	389	2,416
	Net foreign exchange differences	72	1,645	(155)
	Cash and cash equivalents at beginning of period	347	7,980	5,863
	Cash and cash equivalents at end of period	436	10,013	8,124
	* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
	**Includes aircraft rental payments of Ps.2,626 million and Ps.3,130 million for the six months ended period June 30, 2020 and 2019, respectively.

 

 

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SOURCE Volaris