Volaris Reports Record First Quarter 2016 Results: 42% Adjusted EBITDAR Margin
OREANDA-NEWS. Volaris* (NYSE:VLRS and BMV:VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announced its financial results for the first quarter 2016.
The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS).
First Quarter 2016 Highlights
-- Total operating revenues were Ps.5,182 million for the first quarter, an
increase of 37.5% year over year.
-- Non-ticket revenues were Ps.1,276 million for the first quarter, an
increase of 50.8% year over year. Non-ticket revenues per passenger for
the first quarter was Ps.372, increasing 10.4% year over year.
-- Total operating revenues per available seat mile (TRASM) rose to
Ps.133.2 cents for the first quarter, an increase of 7.5% year over
year.
-- Operating expenses per available seat mile (CASM) were Ps.111.7 cents
for the first quarter, a decrease of 0.7% year over year.
-- Adjusted EBITDAR was Ps.2,175 million for the first quarter, an increase
of 80.6% year over year. Adjusted EBITDAR margin was 42.0% for the first
quarter, a margin expansion of 10.0 percentage points.
-- Operating income was Ps.836 million for the first quarter, with an
operating margin of 16.1%, equal to a year over year operating margin
improvement of 6.9 percentage points.
-- Net income was Ps.602 million (Ps.0.59 per share / US$0.34 per ADS) for
the first quarter, with a net margin of 11.6%.
-- Net increase of cash and cash equivalents was Ps.1,209 million for the
first quarter. Unrestricted cash and cash equivalents was Ps.6,366
million.
Volaris CEO Enrique Beltranena commented: "The strong passenger demand environment in the first quarter of 2016, supported by seasonality, continued fueling Volaris' financial results and achieving record first quarter margins. Our low base fares and bus switching campaign strategy continue to be the cornerstone of our unbundled business model to stimulate demand for both domestic and international travel in Mexico and the United States."
Macroeconomic Environment Supports Traffic Volume Growth; Still Exchange Rate Volatile
-- Air traffic volume increase: The Mexican DGAC reported an overall
passenger volume growth for Mexican carriers of 15.0% year over year in
January and February. Domestic passenger volume increased 13.2%, while
international passenger volume increased 21.9%.
-- Exchange rate volatility: The Mexican peso depreciated 21% year over
year against the US dollar, from an average of Ps.14.93 pesos per US
dollar in the first quarter 2015 to Ps.18.02 pesos per US dollar during
the first quarter 2016.
-- Lower fuel prices: The average economic fuel cost per gallon decreased
25.6% to Ps.22.1 per gallon (US$1.3) in the first quarter 2016, year
over year.
Unit Revenues Improvements Driven by a Strong Demand and Seasonality, with Non-Ticket Revenue Expansion
-- Passenger traffic stimulation: Volaris booked 3.4 million passengers in
the first quarter of 2016, a 36.6% year over year growth. Volaris
traffic (measured in terms of revenue passenger miles, or RPMs)
increased 35.8% for the same period.
-- Unit revenues improvement and demand driven capacity growth: For the
first quarter of 2016, TRASM increased 7.5%, while yield decreased 1.6%,
year over year. During the first quarter, in terms of ASMs, domestic
capacity grew 28.4%, while international capacity increased 26.7%
responding to a seasonally strong demand in both markets.
-- Non-ticket revenues growth: Non-ticket revenues per passenger increased
10.4% year over year for the first quarter of 2016, as the Company
continued implementing dynamic pricing strategies and increasing car
rental and hotel content.
-- New routes: In the first quarter 2016, Volaris launched four new
domestic routes.
Fuel Savings Offset Exchange Rate Pressures
In the first quarter 2016, Volaris continued to experience pressure in US-dollar denominated costs, such as aircraft rents, international airport costs, and maintenance expenses due to the depreciation of the Mexican peso. Despite these challenges, the CASM for the first quarter was Ps.111.7 cents, a 0.7% decrease compared to the first quarter 2015, mainly driven by lower fuel prices.
Young and Fuel Efficient Fleet
As of March 31, 2016, Volaris fleet was comprised of 59 aircraft (18 A319s, 39 A320s and 2 A321s), with an average age of 4.6 years.
Strong Cash Flow Generation, Solid Balance Sheet and Good Liquidity
The net increase in cash and cash equivalents was equal to Ps.1,209 million during the first quarter, mainly driven by generation of operating cash flow of Ps.1,329 million. As of March 31, 2016, Volaris' unrestricted cash and cash equivalents balance was Ps.6,366 million. Volaris registered negative net debt (or a positive net cash position) of Ps.5,265 million and total equity of Ps.7,484 million.
During the first quarter 2016, Volaris obtained positive cash flow from investing activities of Ps.435 million, which included reimbursements of aircraft pre-delivery payments of Ps.446 million and net acquisition of rotable spare parts, furniture and equipment and intangibles assets for Ps.11 million.
Active in Fuel Risk Management
Volaris has continued to remain active in its fuel risk management program. Volaris hedged 55% of its first quarter fuel consumption of 2016, at an average strike price of US $1.94 per gallon, which combined with the 45% unhedged consumption, resulted in a blended average economic fuel cost of US$1.27 per gallon.
Investors are urged to carefully read the Company's periodic reports filed with or furnished to the Securities and Exchange Commission, for additional information regarding the Company.
About Volaris:
Controladora Vuela Compania de Aviacion, 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 beginning operations in March 2006, Volaris has increased its routes from five to more than 150 and its fleet from four to 59 aircraft. Volaris offers more than 280 daily flight segments on routes that connect 40 cities in Mexico and 22 cities in the United States and Central America with the youngest aircraft fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business people and leisure travelers in Mexico and to select destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for six consecutive years.
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 or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "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. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 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.
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators
Unaudited Three months
ended March 31,
(In Mexican pesos, 2016 Three months Three months Variance
except otherwise ended March ended March
indicated) (US Dollars)* 31, 2016 31, 2015 (%)
Total operating revenues
(millions) 298 5,182 3,768 37.5%
Total operating expenses
(millions) 250 4,346 3,422 27.0%
EBIT (millions) 48 836 346 >100%
EBIT margin 16.1% 16.1% 9.2% 6.9 pp
Adjusted EBITDA
(millions) 55 956 449 >100%
Adjusted EBITDA margin 18.4% 18.4% 11.9% 6.5 pp
Adjusted EBITDAR
(millions) 125 2,175 1,204 80.6%
Adjusted EBITDAR margin 42.0% 42.0% 32.0% 10.0 pp
Net income (millions) 35 602 306 96.4%
Net income margin 11.6% 11.6% 8.1% 3.5 pp
Earnings per share:
Basic (pesos) 0.03 0.59 0.30 96.4%
Diluted (pesos) 0.03 0.59 0.30 96.4%
Earnings per ADS:
Basic (pesos) 0.34 5.95 3.03 96.4%
Diluted (pesos) 0.34 5.95 3.03 96.4%
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) - 3,892 3,043 27.9%
Domestic - 2,730 2,126 28.4%
International - 1,162 917 26.7%
Revenues passenger miles
(RPMs) (millions)(1) - 3,306 2,435 35.8%
Domestic - 2,317 1,719 34.8%
International - 989 716 38.2%
Load factor(2) - 85.0% 80.0% 5.0 pp
Domestic - 84.9% 80.9% 4.0 pp
International - 85.1% 78.0% 7.1 pp
Total operating revenues
per ASM (TRASM) (cents)
(1) 7.7 133.2 123.8 7.5%
Passenger revenues per
ASM (RASM) (cents)(1) 5.8 100.4 96.0 4.5%
Passenger revenues per
RPM (Yield) (cents)(1) 6.8 118.1 120.0 (1.6%)
Average fare(2) 65.6 1,141 1,165 (2.0%)
Non-ticket revenues per
passenger (1) 21.4 372 337 10.4%
Operating expenses per
ASM (CASM) (cents)(1) 6.4 111.7 112.5 (0.7%)
Operating expenses per
ASM (CASM) (US cents)(1) - 6.4 7.4** (13.5%)
CASM ex fuel (cents)(1) 4.9 85.6 77.9 9.9%
CASM ex fuel (US cents)
(1) - 4.9 5.1** (4.3%)
Booked passengers
(thousands)(1) - 3,430 2,511 36.6%
Departures(1) - 24,061 19,313 24.6%
Block hours(1) - 64,868 50,695 28.0%
Fuel gallons consumed
(millions) - 45.8 35.4 29.6%
Average economic fuel
cost per gallon 1.3 22.1 29.7 (25.6%)
Aircraft at end of
period - 59 51 15.7%
Average aircraft
utilization (block
hours) - 13.1 12.1 8.4%
Average exchange rate - 18.02 14.93 20.7%
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only
**Peso amounts were converted to U.S. dollars at the rate of Ps.15.1542 for
convenience purposes only
(1) Includes schedule +
charter (2) Includes
schedule
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Three months
Unaudited ended March 31,
2016 Three months Three months Variance
(In millions of Mexican ended March ended March
pesos) (US Dollars)* 31, 2016 31, 2015 (%)
Operating revenues:
Passenger 224 3,906 2,922 33.7%
Non-ticket 73 1,276 846 50.8%
298 5,182 3,768 37.5%
Other operating income (11) (195) (23) >100%
Fuel 58 1,013 1,051 (3.6%)
Aircraft and engine rent
expense 70 1,219 755 61.5%
Landing, take-off and
navigation expenses 45 791 574 37.8%
Salaries and benefits 32 564 424 33.0%
Sales, marketing and
distribution expenses 17 295 216 36.9%
Maintenance expenses 20 340 181 87.5%
Other operating expenses 11 200 142 40.9%
Depreciation and
amortization 7 120 103 16.2%
Operating expenses 250 4,346 3,422 27.0%
Operating income 48 836 346 >100%
Finance income 2 34 9 >100%
Finance cost - (7) (4) 67.3%
Exchange gain, net 1 9 86 (89.1%)
Comprehensive financing
result 2 37 91 (59.9%)
Income before income tax 50 872 437 99.4%
Income tax expense (16) (270) (131) >100%
Net income 35 602 306 96.4%
Attribution of net income:
Equity holders of the
parent 35 602 306 96.4%
Non-controlling interest - - - -
Net income 35 602 306 96.4%
*Peso amounts were converted to U.S. dollars at the rate
of Ps.17.4015 for convenience purposes only.
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
March 31, 2016
Unaudited March 31, 2016 December 31,
(In millions of Mexican pesos) (US Dollars)* Unaudited 2015 Audited
Assets
Cash and cash equivalents 366 6,366 5,157
Accounts receivable 34 594 464
Inventories 10 171 163
Prepaid expenses and other current
assets 29 496 585
Financial instruments 2 39 10
Guarantee deposits 60 1,052 861
Total current assets 501 8,718 7,241
Rotable spare parts, furniture and
equipment, net 126 2,187 2,550
Intangible assets, net 6 97 95
Financial instruments 17 294 69
Deferred income tax 31 546 545
Guarantee deposits 270 4,703 4,704
Other assets 3 59 58
Total non-current assets 453 7,887 8,020
Total assets 954 16,604 15,261
Liabilities
Unearned transportation revenues 147 2,558 1,957
Accounts payable 41 714 795
Accrued liabilities 104 1,802 1,471
Other taxes and fees payable 85 1,473 1,107
Income taxes payable 16 281 338
Financial instruments 3 45 44
Financial debt 49 845 1,371
Other liabilities 1 22 19
Total short-term liabilities 445 7,739 7,103
Financial instruments - 2 11
Financial debt 15 256 220
Accrued liabilities 9 158 157
Other liabilities 3 61 49
Employee benefits 1 11 10
Deferred income taxes 51 894 885
Total long-term liabilities 79 1,381 1,333
Total liabilities 524 9,120 8,436
Equity
Capital stock 171 2,974 2,974
Treasury shares (5) (91) (91)
Contributions for future capital
increases - - -
Legal reserve 2 38 38
Additional paid-in capital 103 1,792 1,791
Retained earnings 173 3,010 2,408
Accumulated other comprehensive
losses (14) (238) (295)
Total equity 430 7,484 6,825
Total liabilities and equity 954 16,604 15,261
Total shares outstanding fully
diluted 1,011,876,677 1,011,876,677
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary
Three months
ended March 31, Three months Three months
Unaudited (In millions of 2016 ended March 31, ended March
Mexican pesos) (US Dollars)* 2016 31, 2015
Net cash flow provided by
operating activities 76 1,329 949
Net cash flow provided by (used
in) investing activities 25 435 (51)
Net cash flow used in financing
activities (32) (549) (37)
Increase in cash and cash
equivalents 70 1,216 862
Net foreign exchange differences - (7) 29
Cash and cash equivalents at
beginning of period 296 5,157 2,265
Cash and cash equivalents at end
of period 366 6,366 3,156
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.4015 for
convenience purposes only
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