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Controladora Vuela Cia De Aviacion (VLRS)

Participants
Renato Salomone Senior Corporate Finance and Investor Relations Director
Enrique Beltranena President and CEO
Holger Blankenstein Airline Executive Vice President
Jaime Pous Chief Financial Officer
Duane Pfennigwerth Evercore ISI
Helane Becker Cowen
Michael Linenberg Deutsche Bank
Stephen Trent Citi
Pablo Monsivais Barclays
Alejandro Zamacona Credit Suisse
Call transcript
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Operator

Hi. Welcome to Volaris’s First Quarter 2022 Financial Results Conference Call. All lines are in a listen-only mode.

Following the company’s presentation, we will open the call for your question and answers. Please note, that we are recording this event. being the via Volaris also be and is through accessed website. event broadcast webcast live may This Those following be the Volaris finished. your management questions presentation this Investor via the the during the and webcast, Relations platform team they conference or will call either after by on answered by may is post type your send the webcast the mark below just the left question area upper need in you To platform, via your corner and the questions on to inquiry. video click would I Renato Corporate and point, At turn to Investor to this call over like Salomone, the Director. Volaris Finance Senior Relations go Please Renato. ahead,

Renato Salomone

morning, Jaime Good CEO, to is With Enrique investors you that They the discussing Pous. our President, quarter joining and us Airline note, this our call the and Executive Vice will results. on be everyone call. move thank first Afterward, and we’ll Beltranena; Holger analysts-only. your company’s President Officer, is XXXX for Please Financial our questions. Blankenstein; for Chief and

me that applicable let securities please of begin, remind laws. meaning may we this include statements the everyone, Before within forward-looking call

These States’ as Forward-looking are and to or – made, company’s factors cause no several to filings any that undertakes in materially obligation actual the they as to company’s update of revise differ with the United the date subject statement. results from CNBV. the only statements Mexico expectations could statements that are speak described SEC of and Volaris forward-looking

Volaris’s US Enrique numbers turn of in to is our As over my XXXX, It all CEO, noted. Beltranena. dollars compared call in otherwise now to the and our press earnings first to unless are and the quarter release, President pleasure

Enrique Beltranena

thank us Thank you you, for everyone joining very today. and Renato much,

In a the market, traffic results ago. in Mexico’s continue success started similar In haven’t our see experience that other recovery Slide of continued began and markets and report to reasons strong year recovery. strong first to changed. strong the key behind happy a domestic We’re demand we revenue carriers the a domestic have that as to performance such highlights On US, recently X quarter.

to in able to prices. gradually adapt also fuel Volaris recent demonstrated First, to ability rising quickly, and has of demand an change the the pass impact through has been

Second, has fair with our customers our our schedule to strength reliability continues abroad. destinations. opportunities, Volaris’s who plenty both Volaris of leisure the customers at environment value and leisure VFR in many home our market and point-to-point attracted

for plans flexible. confirms remain growth our profitability. that the current and in Fourth, sacrificing allow us without strong our well strengths absorb sheet cost than fill ultra-low the Third, volatility guidance better Volaris our we balance demand the And mid-XXs to ASM future. competitors can year growth and for position

operating first million. from generated of our quarter of performance, flow the of generated $XXX period, versus the XXXX We million positive an revenue cash and total XX% Regarding increase XXXX. versus we in $XXX XX% activities

increased by $XX Our Today, main XX% two EBITDAR I like topics. million. would to on to focus

pass Our rationale to costs through growth the and ability increasing behind the strategy. Volaris’s fuel

the the pass the lowest sustained excellent the fourth costs trading pass demand the Let wave, superior of quarters, performance. fourth We strong Omicron quarter, the in the through once our the we quarter. with load entry-level helped operations fact have of in the XX% begins The publicly continue we which factor and incremental first from operator the the with that cost. an demonstrated with quarter through first quarter in unit to a Volaris’s ability me ancillaries and base again. start company’s fuel to was entered fuel cost any with in Through fares of Americas. both reliability XX%

able to sacrificing cost the a $XXX year. level pushed healthy that gradually to the volume. ancillary at January factor increase of million, increased without prices. Once the and closing the quarter time, impacted revenues for negatively pass of volume Volaris built February. $X.X. absorb through inventory pressure early in increases fares quarter, first quarter to period we and point, fuel factor sustaining of the selectively in our with good Due bookings same the quarter, fares base the the quarter upcoming XX% demand the and implemented During a fare first was Omicron price the first more in late to through and fuel foundation COVID a XX% cost At of volume XXX% XXXX, cases The versus the decreased, for we quarter TRASM a of last throughout during was and pushed the incremental quarters. or forward up load we first gradually in

the So our travel strong with forward quarter, that bookings passengers core sustained load and we current are far, to and seen this VFR demand. demonstrating strong, the and factor in growth eager remain leisure second plan our consistent have is our

So mature markets now emerging strategy. investment not Volaris’s core GDP is true air Volaris in This speaking about operates growth, growth Volaris’s Capacity in we matches an typically with low penetration. the markets. travel have concern growth identified growth. recurring market for regarding

years, average just ASMs X%. annual growth XX% growth GDP XX compound was the of last the Over rate company’s versus Mexico’s

sustain extremely managed generating grow, by existing new growth with a difficult or while entrants. why to we shareholders to building value have profitability. here’s market-leading franchise can we for we trend difficulty] that We the believe players be believe [technical our and And is replicated

First, and the is size designed fares our Much Jerusalem. to is ultra-low New core markets concentrated markets and to Los distance or Volaris’s Tijuana, Angeles demand strength between roughly to and Cancun Cancun. stimulate The York as local and in three aviation in of the Mexico’s financial revenue are Guadalajara Mexico. And Paris of as territorial population. underpenetrated same such Tijuana

in growth growth Tijuana this GDP an plan this there performance Our resembles existing primarily explained to is by to Guadalajara. markets These we have by markets. adding historical to northern is grow our considering two primarily in strength continue for network and destinations. top surprising, frequencies us. region Mexican growth And been not emerging the And

Mexican to continue southern to our market plan in Cancun. of also grow We

around It weaker have has Although, estimated is growth region, support region migrated tourism GDP unique in to grow from that also, the Last Southeast outside into US the the remittance in at home million been Mexicans XX destination. economy. this continues that to mature and last decades. emerging of exist The billion X% an effect their around Mexico’s developed $XX GDP. equivalent remittances, they or market year, co-nationals sent a to does in not in

relatives system in same money Our has seeing And become to Central the a the from transfer webpage the effect fly. for we remittance now Mexico are US to America. to

what the last US three from done successfully XX have to in can believe Speaking we similar and about replicate Mexico years. countries, Central the have we patterns this that American region, in we

produced company transporting fact conceived pressure even their have network, well growth themselves. in lower air exclusively average and model population of is switching to base and successfully low air per its one remains routes, of with travel are unit An tackle Volaris’s market. and cost fitted component fare worldwide, bus with higher we and the essential of one known segment, which second specific compete domestic competition. strategy structures bus Volaris’s perfectly Having lowest creates characteristics. XX% Mexico’s to domestic $XX of The with relatives are of a tackled used market bus middleclass. this the the market. usually point-to-point, It from market the in The target themselves from which VFR no travel. is our buses with to bus for is They We cost by was that a

Mexico, market unique than from have to buses. hours. trips grabbing on We and Volaris interest value of from us conflict share larger proposition appealing This six that more a is than has no buses prevents

segment product is offering to in core is from markets. total who to emerging of XXXX of the have INEGI. tailor Mexico equivalent designed fastest these promoting target to to the the to and according appeal our population low Our income-growing ancillaries segment Germany. We million our targeted XX This It X% This domestic we use fares segment needs grew the base to growth our travel. buses for passengers. to middleclass by is in to Mexicans XXXX

come giving from a ancillaries, of As bus a powerful profitability. us formula result, total market tackle to XX% our the revenues

are third fact dynamics. The air the travel

per XXXX, proof that to Volaris buses the Mexico bigger fliers our aspire uptrend domestic to the we for the is size doubling domestic coming in aviation case, first-time of than be to to growth Turkish In back market from or now of founding the primarily of an times X.XX our accounted and trips Chileans, passengers. of trips from virtually XX% X.X Mexican indicator capita success, this market domestic XXXX be X.X the capita. in per Suppose, Colombians, in with Malaysians in period, to today. and air As at could doubled that terms

ideally low-cost, fit identified to over potential business with routes XXX that model. have grow new low-fare We our

network. any sign frequencies However, existing this and weakness, see remain We year growth. flexible if we And to by will discipline. it to rein do we quickly adding begin our in will that we of

We’re growing internationally XX% category, we with our quarter. Mexico’s will the optimizing by our end expect transporter currently market, upgraded enhanced the border capacity. by our of be to the of Codeshare we which VFR performance year, the in also Frontier fully restrained hope FAA with US end is of the Toward partnership Airlines. by be third This

Costa our Volaris’s operator we’re are to levels focused similarities financial than with our Rica, repaying avenues. its debt, is believe are now that certificates before and focusing El is we resilience position the growth stronger consistent our are It during on in essential air demonstrates characteristics taken we financial while that, We ourselves Salvador to debt Central where international and Volaris in and performance in lower cash and positioning with recovery transportation on with and Finally, adaptability. executing future and all strategy. the growth America, pandemic, looking ahead the from the pandemic South highlight earnings higher population growing and separate dynamics. a

reliable Vice ambassadors would part the an I to more strong them operations for and our Airline Our discuss essential like have now providing staying and want been Their provide strategy remain part over our thank vital on of focused safe, and Holger to travel to guests. efforts turn on Blankenstein of performance. call for our a experience our this details to our I performance. consistent Executive President, a

Holger Blankenstein

you, Enrique. Thank

the to Moving more like on would I next slide, some our financial quarterly on results. color provide to

level, careful despite in and at having performance late side, quarter revenue through prices. since throughout the fares us enabled quarter. to January the entered the fare higher December reason February. the response behind TRASM the On increased in in strong Demand a to beat remained rising strong gradually The which Omicron’s strength demand fuel we quarter, expectations. push fare increases our during effect was This

bookings. In bookings. As far bookings a a on closing on We can January less offset effect conclude since impact a in traffic seasonally performance, COVID is in a February, of quarter, our this we that cases, healthy the time consistent less of observed impact had healthy as with sales monthly Omicron with us. three-week a new rise we a travel Every for low quarter, forward reported the COVID a wave revenues. had decline especially dip in demand and trends demand by with on throughout corresponding slight minor in

low Our $XX quarter was a for versus terms. in absolute fare the average still $XX year ago,

and increases fare selectively implemented to from in small $X Our passenger. amounts, $X ranging per were

We up benefiting international our are levels. growth from in fare also also overall markets, are the which driving

X% the quarter ASMs of XXXX quarter XX% quarter increased March the XXXX. for On or first December the the capacity versus side, from

points percentage Our healthy X.X of increasing remained load factor year-over-year. XX.X% at levels,

of was International XX% out of demand. markets first this Most and City growth US XX% year-over-year. ASMs strong. representing Our where also we capacity with existing domestic to XX% on by Like this quarter year-over-year. routes, Mexico Mexico leisure remaining most grew VFR network, was saw of growth healthy of the grew quarter, in market, our last both by

base quarter We America, X this position to abandoned we able fill is competitors, by our first switching taking where think are capacity XXXX. to have currently of quarter which of and this market. unique weaker low we complete. off flew We also advantage our a success attribute the momentum We Central now being aircraft in coming of bus the in in the in

versus demand leisure there’s quarter. VFR the $X.XX. that XX% also XX.X%, strong traveling by the pent-up for to in with be the showing continued remains markets XXXX a believe quarter weakening. Overall, at strain both factor strengthening TRASM We COVID appears and now Load for to first increased

overall Volaris revenue reminder, business Ancillary large consists the traffic. very mainly selection a and our part a revenues continue bundles flexibility be to These like As combo. seat baggage, of has little mix. of

XX% the reported our also and for our per expanding of and passenger. of number ancillary card from adding drove ancillaries the revenues year We $XX further co-branded credit growth we this quarter by members. members were in overall discount programs to revenues

revenues operating per X% to $XX. Finally, passenger increased total

to revenues, an international average half quarter. growing on of fleet on especially help XXXX, years website. in We with a the these end focused through at drive remain continue will personalized growth experience this a We back our age had For more of X.X aircraft the of of our the ancillary first year. XXX revenues

Volaris For a aircraft, had the last XX same growth. period year, XX%

higher. utilization However, the EBITDA high now day aircraft with for is XX.X maintained We our fleet. productive aircraft per quarter hours during per

a of As maintain with ASM airline reminder, and similar XX%, at the and has types growth to models. against was demand globally a airlines again, strong stimulate And when load healthy Volaris even we one utilizations highest factor. aircraft other measured though managed

XXXX, launch day, increase our over XXX the from service and upon States, recently United departures to and Jose, Colombia we opened to June three XXXX. first into Costa in of start Salvador, Lima, for October, San different City, Mexico, XX the Guatemala, the in Mexico Honduras to Building destinations routes Cancun During El Colombia. last of flight Rica compared sale close Volaris Costa for Peru, serving quarter, per XX% flew an Rica,

quarter, Looking on shift Easter ahead the the of had impact positive has mid-April to second to a TRASM.

domestic VFR strong with solid. leisure Our and bookings appear markets both

growth for existing increase to destinations. focus primary remains Our frequencies to

market market of account growth our benefit is northbound remains and passengers, of leisure also year-on-year high the traditional Central We lag relatives growth to the Central in our Visiting to to our continues capacity. traffic CAT region. and for in to representing four we our our relatively Overall, friends XX% side, by the still Mexico’s X, domestic have leisure six in saw quarter. most in due capacity VFR US remains driven to small, is international healthy. US, from three the from recovery constrained routes. On America Mexico Mexico capacity and currently by X% while Mexican traffic of the the VFR We shares months. relative XXX% America aircraft

as region an a low-cost presence establishing time. this area emerging and this we region, We up its inhabitants. this a XX significant our are we substantial currently We in Central to more than next million We characterize other over that with promise is as Central no in XX scale. approximately infancy aircraft years. There American market to have American-based opportunity over carrier the is an – the market grow in market think opportunity five grows to in see much with it

the second plenty We the expect operating to to Salvadorian in start certificate US flying see We of directly growth. quarter. for with runway the

Our growth year, of first will adding market primarily be the frequencies. concentrated the in half the for new domestic

in Towards the Central we also US and recovered America the with X the expect of more that recovers. growth end year, region as CAT

market and flexibility, we adjust conditions. Our depending plan on has will

flexible Our Central strategic growth and network the three and domestic many certificates options. the market, provide main avenues us US of the Mexican market America. remain three airlines operating into Volaris’s with transporter

the currently high growth second be And quarter load without the of We versus year. into this XX% expected entire X% given the will for the of quarter will XXXX, of the the XXXX. growth around additional mid the of this comps budgeting operated Consolidated first XX% of about first increase second quarter last We’re traditionally range is first that half, percentage ASM XXXX. be year ASM growth of compared to ASMs the frontloaded weak XXXX capacity to implying believe versus quarter factors. in

of capacity will in our mid-teens. be half second the For growth the XXXX,

GDP switch we upon. and class and from Mexico continue exciting long-haul an investment thesis middle growing and travel, pillars main Over the population years, capitalize large we the to from the to will to benefit of stand, continued story air continue organic bus next that growth in growth, five Volaris

performance Now, I Financial call Jaime will Officer, the turn our Pous the over financial to Chief to the quarter. discuss for

Jaime Pous

Holger. Thanks,

The $XXX increase quarter first as its period America the to accruals neutral a and despite with would for at maintain detailed million, results, X% the first quarter by CASM closing I redelivery to US the fleet. in our quarter financial decreased to low-cost Mexico, and [ph]. Central XXXX the disciplined compared associated revenues compared were Total pressures XXXX, first Holger. Now, inflationary [$X.XX] renewal of the XX% XXXX performance. the like company of for our operating same ex-fuel financial our structure, an discuss highlighting higher strong

the measure of first XX% have We higher fleet, gallon by these quarter $X.XX the environment. first up Equally quarter high increase per the or of CASM first COX of XXXX and aircraft to million. the means, to reducing by fuel aircraft XXXX, the our of XXXX. closed The by pressures efficiency first $XX.X of elements by $X.XX our We believe mitigated this of renewal the driven is benefit in gallon and financial an important, to less XXXX average focusing economic prices, fares ASMs improved increasing than XX%, quarter, controllable move X.X to XX% seating to on and a XXXX, utilization. Volaris’s the costs Volaris’s Confirming renewal higher quarter the savings cost increased in that need our rising against first this resulting fuel RPK costs. per our compared in Total fuel from at the X.X% fuel quarter. of competitors for per fleet hedge with density in effective in are of fuel emissions of fuel efficiency million gallons goal compared our critical

pursue further fuel volatility follow and to company Volaris’s a globally structure. continue we cost the swiftly maintain pressures. to trends efficiencies macroeconomic additional of to XXXX, seeing healthy the expects management, react inflationary we cost For rest to prices will continue in and

changes tax added call, the $X.XX tax. the the by of amount amendments of review careful to certain million, which annual have Mexican of reform in in to increase quantified an and include $XX After in is implemented company, XXXX As value in a actions mitigation last laws discussed CASM. the we conference our approximate impact an

new fourth flow quarter flow In $XX months, a a $XX an obtained in and by delivered record million XXXX the in at $XXX increased be first delivered in aggregate and ADS best legal The addition, $X amount equivalents, the and past history. pre-delivery most $X.XX. to of first for quarter incorporated cash was by end cash judicially XXXX the with global quarter, in via amendments’ the aircraft the representing reported has of million to $X.XX to respectively. financing the three peers. XXXX, debt X.X financing In XX%. aircraft of of XX% quarter. the At operating times, times the the in AXXXneo in into cash EBITDAR XX% in continue of Latin period $XXX times quarter, of a generated and in balance has future. proceeding. constitutionality Volaris points of ratio per closing last our of and Volaris carriers the loss million, margin per XXXX revenue. quarter, a company’s was of fleet the million $XXX in contracted the the $XXX American we the believe XX-month of our Furthermore, challenged net EBITDAR use few share $X our and same payments loss and Volaris activities million, to EBITDAR million percentage million. one loss fourth X.X for company’s in the We Net net reported to activities the first have conditions investing level cash robust during X.X our a was used the attractive cash to the million. XX to cash of among XX.X We network invest fleet generation operating for and is for first sheets company that and the the compared company

on of average of aircraft X.X sharklet-equipped average years. XXX are of its and fleet New per XXst, age As seats with an XXX composed or XX% Volaris’s had XX% Option XXXX, of March of Engine aircraft, fleet Volaris’s models. an NEO aircraft was

dollar macroeconomic compared we XXXX with no an XX% EBITDA exchange to billion an of end economic gallon, guidance to XXX to the regulatory $X.X significant of rate fuel geopolitical million our revenue guidance billion. our margin depending COVID-XX Increase aircraft Airbus events previous an $X.X and year business $XXX on high schedule guidance on delivery from follows. to our growth XX.X to with to MXN and expect the price full to $X increasing to approximately MXN and NEOs budgeting as to and rate, mid XXs We fleet, assuming of Volaris’s Rate terms XX.X disruption compliance, impact related in per $X.X XXXX ASMs a in by Introduced XXs. XXXX. update per of

ex-fuel increase CASM to X% year to full compared the expect XXXX. between and We X%

to an Finally, $XXX second of low-to-mid be And $XXX quarter, million. CapEx we million margin EBITDAR the guiding to expect we between for are XXs.

We carriers the cost continue This healthy a events. ultra-low a with disciplined We dollar are budgeting and rate macroeconomic of best XX.X XX.X sheet. of geopolitical allow quarter. for volatility $X.X Volaris fuel our with believe an economic an $X.X to absorb growth one the brought strategy to per MXN MXN to is per flexibility executing run by price exchange gallon us to balance of globally

remarks. will turn closing for to I over Enrique the Now, call

Enrique Beltranena

Thank you much, very Jaime.

Finally, model, help the an importantly, levels a airline presence our healthy navigate and our solid In [ph] towards consistent market, recovery increase experienced sheet, between cost strong in noise] with business to of we profitability. a our have and to effective a ultra-low opportunities the crucial. volatile team a balance and [sign resilient leverage, maintaining a sequential ample most and management is distinguishing commitment of markets,

shows of EBITDAR This much profitable quarters. for model cumulative to one we the the have ability confidence for Thank next open a listening. of statement margin the Operator, the the in past our you in please in believe very questions. most similar line Volaris Volaris we XX%. business and in remain the we airlines margin world. quarter, deliver a EBITDAR Over cumulative can And six had six

Operator

floor questions video The can just now mark to questions. your Participants Thank webcast question. the left open send on and for the question [Operator is click via in upper also type platform, you area corner Instructions] need the you. below the

Our comes Duane Evercore from go Please first ISI. question ahead. with Pfennigwerth

Duane Pfennigwerth

you. morning. Hi, Good thank

maybe be some. I I think fuel which put for one. might your First easy helpful you price just now traffic an noticed in monthly

You investors know based know the in hear we of are, little analysts from timely things as your on of now course, prices of a are of that you just we bit some day. where you frustration But well. it not on fuel traffic which sort Street the updating can see every put

So just where comment think have in sort I would wonder prices spot just if on here? everybody help of fuel if price out you you on that’s know a you settle or you the will to XQ fuel line here

Operator

interruption. question. we ISI. resume to with Please Duane speaker reconnect. location. Pardon Evercore our reconnected Pfennigwerth stand line, Pardon me, speaker have lost appears while It our [Technical Please have by connection your and difficulty] we gentlemen, the main ladies we

Duane Pfennigwerth

to you’re Sure. you Will ask and traffic. monthly XQ wanted that Hi, I or spot number and if fuel a you commend again. had try for I putting fuel for in wanted the to fuel realizing today good you morning. just estimate good a

Jaime Pous

with forward that WTI the between the like we economy guidance to you, spot with [develop] [ph] $XXX.XX. we that was we that month. $XX.XX and Thank the the of traffic nothing and March, $X.X continue the during as use that we what crack publish provided is curve had the fuel Duane. we did was in together $X.X, to The the in Basically but economic report and price – average crude will complicated at fuel use Is we a price $X.XX. at yet

Duane Pfennigwerth

Okay.

the you but I in You be like right for – price the your feel would fuel number there year like what you that’s for know XQ that spot feel put right now?

Jaime Pous

Second that The it a Duane numbers you But right relatable? spot that complete the – are have – about have yet number provided for the I We that the are you, now what for Q X.XX. is numbers to price Q. do the

Duane Pfennigwerth

the like a changed maybe broader And last we about perfect. just back follow-up, my there question in is, just disruptions then you are clearly States energy and a years Enrique potential. feels United and between the sourcing has a how Asia, Okay, global okay, for ingredients few is know think step from lot for closer a for supply there It the just world chain relationship Mexico disruptions. supply of

with US maybe and course about for distant? a relation in getting be closer potential – Of be what US signs – can the this what looking be you But in do relationship? watching is or be how relationship improving think potential that this this should delayed Mexico. cycles for political for And we more should investors

Enrique Beltranena

some think going – Well, Duane some I days things are really well.

Some I direction. the think going that things right are in not days

of changing energy I constitutional of at reform the in relationships think, decree which happened with in tense, general, the the relation of the the energy reform, possibility during been solved, weeks that the Senate. say the issue is last ago really link the month, the voting of have because and already I would and two Congress as of part

new relationships up world and one but that, and improved every relationships So, on better yes, and it’s day. order, the I side we say need would more, more because down of

Duane Pfennigwerth

that Appreciate perspective.

Operator

comes – question next Our

Enrique Beltranena

whole question, between Having really is ahead countries well. and that trade moving the please. said ahead, economical exports two the Go the next

Operator

Thank you.

Our next go Becker question Cowen. ahead. comes from Helane with Please

Helane Becker

Thanks time this and very everybody thank you much, for Hi, operator. morning. the

questions. have So I just two

just your Mexico. Rica, a the the divisions, mid-teens? right Costa Salvador, – of growth that’s The operating Is not clarification, is first everything, second just all up El point just on in capacity question that system half

Jaime Pous

Yeah, correct, Helane.

Helane Becker

with shifting. my question then And to is you. thank bus Okay, other respect

said, a that never into somebody again? has then and no, As get taken further time ever and do said, they’ve to Volaris, you they’ve you going there further know for where people is the plane we’re been just knowing

Holger Blankenstein

go six are our Helane, have on the people people the hours, that once air very longer back bus transportation, routes, more of our And loyal have against routes of that customers our to to only around trips buses. buses to shows beyond remind reluctant Well, from remain we than that buses, switched us. network to compete we XX% market, the customers everybody, XX% our to we data build

is continue we to from people to a years. more to transportation next there buses So in switch potential the that air the believe

Helane Becker

And restored? helpful. I word will very that’s thing be X on Great, when is, CAT then only have other the any

Enrique Beltranena

will Helane. new assessment [ph] different FAA that have and after request Yeah, depending see on to the the reality during to end – Mexico reservations second points that the new months, two will by ago, of of how XX take X. two, year the say hope saw from by we the which a let’s their we’ll that topics And What the process X on the year. May full Mexico team done three it [XX] is the to do a end results had again, the CAT sending were Mexico the week return basically - always three a can closed, of CAT XX in organized we of return [indiscernible] weeks

Helane Becker

That’s great. Thank you very much.

Enrique Beltranena

Helane. Thanks,

Operator

with Mike question from Please next comes Our ahead. go Bank. Deutsche Linenberg

Mike Linenberg

Hey, good is include know that time the Holger, flying that airplanes a back American Does for separate to morning, that be any XX long-term America over about years you segment? talked of service South out. to plans kind everyone. five you Hey, Central your you operation or would

Holger Blankenstein

and Mexico, America. our aircraft certificate XX certificate Rican of west is that South the America medium-term flying El you operating rightly Michael, operating the we Central for Costa say, see and to as potential and intra Salvadorian

So it includes the whole thing.

Mike Linenberg

Okay.

Okay.

your it’s as be American Central I Mexican going so, guess as as your it about well think And certificates. to looks both America, South I certificates like

way of go of it’s So probably right sort – to That’s the both. a combination

Holger Blankenstein

right. You’re

Mike Linenberg

Okay.

Holger Blankenstein

right, That’s Michael.

Mike Linenberg

small, carry maybe even know, respect you corporate said, just just out travel you Holger even and very little more came medium or but that don’t – keep then know always to and I price business looking to know at you’re market And with know, sensitive north you and know you share granularly know traffic know up you’ve you look, we we you carried I business and some, you you enterprises, Okay. of chart know XX%. you’re

very marketplace, that I opportunity I’m – because that the there opportunity. if and taking it’s serve curious maybe corporate profitable of for on real after? a you’re a kind And You in of nobody going it’s you’re Isn’t else here there people share know bigger lot plans sizable seems corporate? a the like of to your Volaris not price-sensitive are you just don’t bus. see long-term And city even snag pairs on it most just real serves. the corporate that,

Holger Blankenstein

absolutely. Yes,

at in have segments. largest player all to Mexico, as think look we I market the

Guadalajara. fortified medium-sized price-sensitive have you customers, out Mexico trunk We business and small of point and Monterrey our some routes to in enterprise the the segments. rightly City of recently out, we getting And are especially as

a new called in bundles additional some also v.business have for we the that customers more geared more features the business We that the corporate ancillary business optionalities are gives fee. more have bundle customer, some towards exchange introduced of of customer, an

resilient inroads are in much So still we bound destinations but domestic make to are And the that traffic levels, Having is to VFR are largest pre-pandemic we actively the also market, the and the in recognize that, segment. as into leisure do segment. more and recovery. looking grow that below we that we at in segments that US, said the business

Mike Linenberg

remind like you look less of across of XX%? – maybe me you just or of that you What passenger was know your passenger, XX% was pre-pandemic business or sort than segments if your it was SMEs? your about, price-sensitive revenue Can XX%, was at Okay.

Holger Blankenstein

XX% of traffic, VFR XX% XX% leisure about was It about XX%. Yeah. pre-pandemic, where and was domestic, to was mostly about our

slightly was still business the precisely leisure that VFR because pre-pandemic participation behind higher right pre-pandemic. and So, traffic And now, levels. we’re is seeing

Mike Linenberg

Okay.

Okay, that’s helpful.

everyone. Okay, Thanks, great. Thanks.

Holger Blankenstein

Thank you, Michael.

Operator

with Our Citi. next Please ahead. from question go comes Stephen Trent

Stephen Trent

quick Helane of on a for I Kind was very about everyone Good thanks morning, the bus, what and much my if question. may. follow-up taking asking

the enhanced bus offer bus a any of the probably of any you operators you to these difference like that – when loyalty have sort in looks they a potential plane of that color that stuff cards, a you of aware I going co-branded or loyalty are for and of or about to on know like guess program? offer? You from Ya you. you just that don’t have know I even sort would And potential wanted high the interstate know you know know know program you something think Thank bit little level get Vas remotely

Holger Blankenstein

gives terms I’d revenues you’re precisely the holiday customers buses, package most available elements the enhanced not products management, Stephen, buses offering and customers attract prices right, more that price-sensitive absolutely, some we with product which options on v.club, the have are our and our to yielding service And in passenger. are that out gives and unsophisticated discounts. relatively in advantage per additional also revenue like the of point generating us which to an Yeah,

Stephen Trent

St. how cetera. Okay. Lucia far and going ops any reaction really are one level and kind you of high you follow-up know the Super, customer so et just just And Holger, in thoughts you. thank know quick about

Enrique Beltranena

of Those are three in have. that in level the the we routes XX%

to develop, the a We watching that improve. have. IFR entire very we flying around the And to at start where year. we from route, carefully. strongly ground St. to we’re observing We observing that routes the the of to traffic And the launch requirement And the did airport. the the reinforces end we’re the we, VFR region update are Lucia that’s the LAX market of operations that the think to that’s

Stephen Trent

for Thanks Okay, much very Enrique. helpful. very that,

Operator

Barclays. question with comes Please go Pablo from Our ahead. Monsivais next

Pablo Monsivais

everybody, taking a The on Hi, just recovery demand. impressive. pent-up thanks for have I Holger’s has comment the to follow-up question. my demand been

still you. to already But color So there’s I a still there’s COVID. learn that improve more to back curious as you thought the I pent-up that, if VFR over idea levels, that provide leisure of quarters? planning low-hanging driven you’re am few perhaps little to because if this Thank can a well. that so was next bit pre-pandemic demand fruit on

Holger Blankenstein

Yeah, Pablo.

seeing me things of we’re now in right sales forward you color bookings. some Let give how and on terms

the quarter, for then, seasonally episodes, Omicron have quarter. reduction So, midway sales, that episode, the And This three-week a time obviously in a the a of did we travel where remember through anyway. see for was you small us we might low had second has bookings did year. a impact continued saw during strength continues, really the And forward into we pricing even of very especially the into strength of successful quarter And and promotion demand into bookings second the half for is that the anniversary mid-March. and which that April. we

the We that segments, demand about And we’re seeing very you’re segments. VFR strong us especially really continue resiliency I been mentioning, our strength And they’ve excited and think the proven continue leisure, the carrying of to that that towards that pent-up the be the in forward. consumer, summer. points

about So, top the we going into continue second to constructive line quarter. the be quite

Pablo Monsivais

Thank very clear. you very much. Perfect,

Operator

Credit Our go next question with from Alejandro Suisse. ahead. Please comes Zamacona

Alejandro Zamacona

Thank you. Hi, Enrique, Holger, Jaime and thank you for the call.

on higher future Mexican Just prices the higher may been environment. come and increases fares that price question the – in on consider oil a quick market thoughts considering how amid the increases inflation the accepting the has base your

So, very any might on useful. that you. color Thank be

Holger Blankenstein

and level. So mentioned we let of the factors in me demonstrated were we we we fuel price that the and the tell you call increases and load traveling that healthy sustained as volume quarter, offset during first XX% to able

our So did really accept the customer increases. price

Now, will some proportionately a of pricing need a the have fuel increases more lot cost structure rationality market fair entire Nevertheless, an we our and AXXXneos, the in to market the fares. the And ultra-low always if as even focus of terms prime remaining in we increases, positioned to of on competitors. be in we the transportation pass obviously our and need era, customers less network look our position, if our at focus you the look believe we as well volume market, are whole, rising post-COVID prices emphasize domestic fuel that carrier, And effects at and of our than increase future. to the then and tourism price the industry on you affect in efficient do all that observed oil cost price given competitors’ from first. fleet extremely to our

able So, into we offset increases fuel higher continue to to travel. be partially about being positive price

Alejandro Zamacona

any of happened question, in in we US? to improve can Holger, similar travel mandate Mexico confidence have may. you. could And believe to then what the safe? where And eventually, Okay, Do saw restriction that lift overturning of or thank mass even you customers’ my we second do I demand it if the potential hurt

Enrique Beltranena

So look for this. two answers there’s

the recommendation on we we of one usage that’s international doing where mask. continue to one where first what going is a a have And what domestic compulsory policy, to strong in flights, authorities’ The and we’re from because using the the moved mask markets second is, requirement. Mexican a compulsory the usage bound in what’s the north flights Mexican

Alejandro Zamacona

Okay. the But update mandate do believe – Mexico? the during have you of potential mask in level on we any

Enrique Beltranena

Not by yet. far the authorities. so No health indication

Alejandro Zamacona

Okay, thank you.

Operator

This concludes –

Enrique Beltranena

– you thank Okay,

Operator

– question-and-answer Today’s

Enrique Beltranena

my family to of our investors, of Thank Directors, I the the you that opportunity. to Thank hear you gratitude our in much very to – and everybody. sincere ambassadors, because to apologize the we participate was system the Board short everybody lessors position this an for And you I express and with that to want great Volaris to of much have. commitment bankers, exciting has driven suppliers to call. very support it this such and and want

Operator

you the concludes This conference and Volaris Thank much have participation a call today. your for for very day. nice