Volaris Reports Fourth Quarter and Full Year 2015: Record 37% and 36% 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 fourth quarter and full year 2015.
The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS).
Fourth Quarter and Full Year 2015 Highlights
-- Total operating revenues were Ps.5,092 million and Ps.18,180 million for the fourth quarter and full year, an increase of 28.7% and 29.5% year over year, respectively.
-- Non-ticket revenues were Ps.1,163 million and Ps.4,049 million for the fourth quarter and full year, an increase of 42.1% and 48.1% year over year, respectively. Non-ticket revenue per passenger for the fourth quarter and full year was Ps.357 and Ps.338, increasing 14.3% and 21.3% year over year, respectively.
-- Total operating revenue per available seat mile (TRASM) rose to Ps.134.2 and Ps.129.4 cents for the fourth quarter and full year, an increase of 2.8% and 9.0% year over year, respectively.
-- Operating expenses per available seat mile (CASM) were Ps.114.8 cents and Ps.111.5 cents for the fourth quarter and full year, a decrease of 1.4% and 4.6% year over year, respectively.
-- Adjusted EBITDAR was Ps.1,886 million and Ps.6,492 million for the fourth quarter and full year, an increase of 52.2% and 110.7% year over year. Adjusted EBITDAR margin was 37.0% and 35.7% for the fourth quarter and full year, a margin expansion of 5.7 and 13.7 percentage points, respectively.
-- Operating income was Ps.736 million and Ps.2,510 million for the fourth quarter and full year, with an operating margin of 14.4% and 13.8%, respectively, representing a year over year operating margin improvement of 3.6 and 12.3 percentage points, respectively.
-- Net income was Ps.654 million (Ps.0.65 per share / US$0.38 per ADS) and Ps.2,464 million (Ps.2.43 per share / US$1.42 per ADS) for the fourth quarter and full year, with a net margin of 12.8% and 13.6%, respectively.
-- Net increase of cash and cash equivalents was Ps.750 million for the fourth quarter. Unrestricted cash and cash equivalents was Ps.5,157 million, representing 28% of the last twelve month operating revenues.
Volaris CEO Enrique Beltranena commented: "We are pleased with the results achieved by the Company during the fourth quarter and the full year 2015. Once again, Volaris demonstrated resilient performance and achieved outstanding operating, commercial and financial indicators, reaping the benefits of a strong passenger air travel environment within its domestic and international VFR markets in Mexico. Our ultra-low-cost carrier business model and flexibility to growing demand has positioned Volaris as a strong player in the aviation industry."
Sound Macroeconomic Environment Supports Solid Traffic Volume Growth; Exchange Rate Volatile
-- Mexican macroeconomic indicators show growth:
o GDP growth for full year 2015 was 2.5%.
o Consumer confidence changed 0.8%, -0.4% and -0.6% year over year in October, November and December of 2015, respectively.
o The Mexican General Economic Activity Indicator (IGAE) increased 2.7% year over year in November of 2015.
-- Exchange rate volatility: The Mexican peso depreciated 21% year over year against the US dollar, as the exchange rate devalued from an average of Ps.13.84 pesos per US dollar in the fourth quarter 2014 to Ps.16.75 pesos per US dollar during the fourth quarter 2015.
-- Lower fuel prices: The average economic fuel cost per gallon decreased 26.4% year over year in the fourth quarter 2015 to Ps.26.23 per gallon (US$1.52).
-- Air traffic volume increase: The Mexican DGAC reported an overall passenger volume growth for Mexican carriers of 15.2% in 2015. Domestic passenger volume increased 12.9%, while international increased 25.8%.
Unit Revenue Improvements Driven by Strong Demand and Non-Ticket Revenue Growth
-- Unit revenue improvement and demand driven capacity growth: TRASM and yield increased 2.8% and 0.2% for the fourth quarter year over year, respectively. During the fourth quarter, in terms of ASMs, domestic capacity grew 21.3%, while international capacity increased 35.1%, reflecting increasing market demand in both markets.
-- Non-ticket revenue growth: Non-ticket revenues per passenger increased 14.3% year over year for the fourth quarter, as the Company continued with dynamic pricing strategies and launch of new products, such as a fast pass and rental car on board.
-- New routes: In the fourth quarter, Volaris launched four new routes (two domestic and two international). For the full year a total of 22 routes were launched.
Operating Revenue Growth from Solid Traffic and Capacity Management
Volaris booked 3.3 million passengers in the fourth quarter, a 24.3% year over year growth. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) increased 24.9% for the same period. Volaris' passenger market share, the second largest among Mexican carriers and first in the low cost segment, was 25.2% in the fourth quarter in both domestic and international markets.
Volaris' total operating revenues were Ps.5,092 million in the fourth quarter, an increase of 28.7% year over year. Non-ticket revenue and non-ticket revenue per passenger reached Ps.1,163 million and Ps.357 in the fourth quarter, an increase of 42.1% and 14.3% year over year, respectively.
Fuel Savings Offset Exchange Rate Pressures
In the fourth quarter, Volaris continued to experience pressures 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 fourth quarter was Ps.114.83 cents, a 1.4% decrease compared to the fourth quarter 2014, mainly driven by lower fuel prices.
Young and Fuel Efficient Fleet
As of December 31, 2015, Volaris fleet was comprised of 56 aircraft (36 A320s, 18 A319s and 2 A321s), with an average age of 4.6 years.
Strong Cash Flow Generation, Solid Balance Sheet and Good Liquidity
The net increase of cash and cash equivalents was Ps.750 million during the fourth quarter, mainly driven by the resources provided by operating activities of Ps.930 million. As of December 31, 2015, Volaris had a balance of Ps.5,157 million in unrestricted cash and cash equivalents, representing 28% of the last twelve month operating revenues. Volaris recorded negative net debt (or a positive net cash position) of Ps.3,566 million and total equity of Ps.6,825 million.
During the fourth quarter, Volaris incurred capital expenditures of Ps.356 million, which included pre-delivery payments for acquisition of aircraft and rotable spare parts, furniture and equipment for Ps.520 million and intangibles assets for Ps.24 million. These acquisitions were offset by reimbursements of aircraft pre-delivery payments of Ps.137 million, and proceeds from disposals of rotable spare parts, furniture and equipment of Ps.51 million.
Active in Fuel Risk Management
Volaris has continued to remain active in its fuel risk management program. Volaris hedged 50% of its fourth quarter fuel consumption at an average strike price of US $2.07 per gallon, which combined with the 50% unhedged consumption, resulted in a blended average economic fuel cost of US$1.52 per gallon for the quarter.
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.
Conference Call/Webcast Details:
Volaris will conduct a conference call to discuss these results on February 22, 2016, at 11:00 a.m. EST (10:00 a.m.Mexico City).
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 148 and its fleet from four to 57 aircraft. Volaris offers more than 270 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 Three months Three months
(In Mexican pesos, ended December ended ended
except otherwise 31, 2015 December 31, December 31, Variance
indicated) (US Dollars)* 2015 2014 (%)
Operating revenues
(millions) 296 5,092 3,958 28.7%
Operating expenses
(millions) 253 4,357 3,532 23.4%
EBIT (millions) 43 736 426 72.5%
EBIT margin 14.4% 14.4% 10.8% 3.6 pp
Adjusted EBITDA
(millions) 49 844 564 49.6%
Adjusted EBITDA margin 16.6% 16.6% 14.2% 2.4 pp
Adjusted EBITDAR
(millions) 110 1,886 1,239 52.2%
Adjusted EBITDAR margin 37.0% 37.0% 31.3% 5.7 pp
Net income (millions) 38 654 703 (7.0%)
Net income margin 12.8% 12.8% 17.8% (5.0) pp
Earnings per share:
Basic (pesos) 0.04 0.65 0.69 (7.0%)
Diluted (pesos) 0.04 0.65 0.69 (7.0%)
Earnings per ADS:
Basic (pesos) 0.38 6.46 6.95 (7.0%)
Diluted (pesos) 0.38 6.46 6.95 (7.0%)
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) - 3,794 3,033 25.1%
Domestic - 2,657 2,191 21.3%
International - 1,137 842 35.1%
Revenue passenger miles
(RPMs) (millions)(1) - 3,137 2,512 24.9%
Domestic - 2,220 1,824 21.7%
International - 917 688 33.3%
Load factor(2) - 82.7% 82.8% (0.1) pp
Domestic - 83.5% 83.3% 0.2 pp
International - 80.6% 81.7% (1.1) pp
Total operating revenue
per ASM (TRASM) (cents)
(1) 7.8 134.2 130.5 2.8%
Passenger revenue per
ASM (RASM) (cents)(1) 6.0 103.6 103.5 0.0%
Passenger revenue per
RPM (Yield) (cents)(1) 7.3 125.3 125.0 0.2%
Average fare(2) 70.2 1,208 1,200 0.6%
Non-ticket revenue per
passenger (1) 20.8 357 313 14.3%
Non-ticket revenue
excluding cargo per
passenger(1) 19.9 342 293 16.7%
Operating expenses per
ASM (CASM) (cents)(1) 6.7 114.8 116.4 (1.4%)
Operating expenses per
ASM (CASM) (US cents)(1) - 6.7 7.9** (15.7%)
CASM ex fuel (cents)(1) 4.9 84.3 74.4 13.3%
CASM ex fuel (US cents)
(1) - 4.9 5.1** (3.1%)
Booked passengers
(thousands)(1) - 3,253 2,617 24.3%
Departures(1) - 23,344 19,476 19.9%
Block hours(1) - 61,928 50,519 22.6%
Fuel gallons consumed
(millions) - 44.2 35.8 23.4%
Average economic fuel
cost per gallon 1.5 26.2 35.6 (26.4%)
Aircraft at end of
period - 56 50 12.0%
Average aircraft
utilization (block
hours) - 12.9 12.4 4.2%
Average exchange rate - 16.75 13.84 21.0%
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
**Peso amounts were converted to U.S. dollars at the rate of Ps.14.7180 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
Financial and Operating Indicators
Unaudited
(In Mexican pesos,
except otherwise Full Year 2015 Variance
indicated) (US Dollars)* Full Year 2015 Full Year 2014 (%)
Operating revenues
(millions) 1,057 18,180 14,037 29.5%
Operating expenses
(millions) 911 15,669 13,833 13.3%
EBIT (millions) 146 2,510 204 >100%
EBIT margin 13.8% 13.8% 1.5% 12.3 pp
Adjusted EBITDA
(millions) 172 2,967 547 >100%
Adjusted EBITDA
margin 16.3% 16.3% 3.9% 12.4 pp
Adjusted EBITDAR
(millions) 377 6,492 3,081 >100%
Adjusted EBITDAR
margin 35.7% 35.7% 22.0% 13.7 pp
Net income (millions) 143 2,464 605 >100%
Net income margin 13.6% 13.6% 4.3% 9.3 pp
Earnings per share:
Basic (pesos) 0.14 2.43 0.60 >100%
Diluted (pesos) 0.14 2.43 0.60 >100%
Earnings per ADS:
Basic (pesos) 1.42 24.35 5.98 >100%
Diluted (pesos) 1.42 24.35 5.98 >100%
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) - 14,052 11,830 18.8%
Domestic - 9,845 8,749 12.5%
International - 4,207 3,081 36.5%
Revenue passenger
miles (RPMs)
(millions)(1) - 11,562 9,723 18.9%
Domestic - 8,125 7,128 14.0%
International - 3,437 2,595 32.5%
Load factor(2) - 82.3% 82.2% 0.1 pp
Domestic - 82.5% 81.5% 1.0 pp
International - 81.6% 84.2% (2.6) pp
Total operating
revenue per ASM
(TRASM) (cents)(1) 7.5 129.4 118.7 9.0%
Passenger revenue per
ASM (RASM) (cents)(1) 5.8 100.6 95.5 5.2%
Passenger revenue per
RPM (Yield) (cents)
(1) 7.1 122.2 116.3 5.1%
Average fare(2) 69 1,181 1,152 2.5%
Non-ticket revenue
per passenger (1) 19.6 338 279 21.3%
Non-ticket revenue
excluding cargo per
passenger(1) 18.7 322 256 26.0%
Operating expenses
per ASM (CASM)
(cents)(1) 6.5 111.5 116.9 (4.6%)
Operating expenses
per ASM (CASM) (US
cents)(1) - 6.5 7.9** (18.4%)
CASM ex fuel (cents)
(1) 4.5 77.9 71.6 8.8%
CASM ex fuel (US
cents)(1) - 4.5 4.9 ** (6.9%)
Booked passengers
(thousands)(1) - 11,983 9,809 22.2%
Departures(1) - 87,931 74,659 17.8%
Block hours(1) - 230,569 196,467 17.4%
Fuel gallons consumed
(millions) - 164.0 138.5 18.4%
Average economic fuel
cost per gallon 1.7 28.8 38.7 (25.7%)
Aircraft at end of
period - 56 50 12.0%
Average aircraft
utilization (block
hours) - 12.7 12.4 2.1%
Average exchange rate - 15.85 13.30 19.2%
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
**Peso amounts were converted to U.S. dollars at the rate of Ps.14.7180 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 Three months Three months
Unaudited ended December ended ended
(In millions of Mexican 31, 2015 December 31, December 31, Variance
pesos) (US Dollars)* 2015 2014 (%)
Operating revenues:
Passenger 228 3,930 3,140 25.1%
Non-ticket 68 1,163 818 42.1%
296 5,092 3,958 28.7%
Other operating income (3) (51) (13) >100%
Fuel 67 1,158 1,276 (9.2%)
Aircraft and engine rent
expense 61 1,043 675 54.5%
Landing, take-off and
navigation expenses 41 712 488 45.8%
Salaries and benefits 31 539 402 33.9%
Sales, marketing and
distribution expenses 20 339 227 49.2%
Maintenance expenses 17 288 192 50.2%
Other operating expenses 13 222 148 50.2%
Depreciation and
amortization 6 108 138 (21.5%)
Operating expenses 253 4,357 3,532 23.4%
Operating income 43 736 426 72.5%
Finance income 1 10 6 60.2%
Finance cost - (7) (9) (24.1%)
Exchange gain, net 10 178 336 (47.2%)
Comprehensive financing
result 11 181 334 (45.7%)
Income before income tax 53 917 760 20.6%
Income tax expense (15) (263) (57) >100%
Net income 38 654 703 (7.0%)
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations
Unaudited
(In millions of Full Year 2015 Variance
Mexican pesos) (US Dollars)* Full Year 2015 Full Year 2014 (%)
Operating revenues:
Passenger 821 14,130 11,303 25.0%
Non-ticket 235 4,049 2,733 48.1%
1,057 18,180 14,037 29.5%
Other operating income (11) (193) (22) >100%
Fuel 274 4,721 5,364 (12.0%)
Aircraft and engine
rent expense 205 3,525 2,535 39.1%
Landing, take-off and
navigation expenses 151 2,595 2,066 25.7%
Salaries and benefits 111 1,903 1,577 20.7%
Sales, marketing and
distribution expenses 63 1,089 817 33.2%
Maintenance expenses 51 875 665 31.6%
Other operating
expenses 41 698 490 42.4%
Depreciation and
amortization 27 457 343 33.3%
Operating expenses 911 15,669 13,833 13.3%
Operating income 146 2,510 204 >100%
Finance income 3 47 23 >100%
Finance cost (1) (22) (32) (32.9%)
Exchange gain, net 56 967 449 >100%
Comprehensive >100%
financing result 58 992 440
Income before income >100%
tax 204 3,502 644
Income tax expense (60) (1,038) (39) >100%
Net income 143 2,464 605 >100%
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
December 31, 2015
(In millions of Mexican Unaudited December 31, 2015 December 31,
pesos) (US Dollars)* Unaudited 2014 Audited
Assets
Cash and cash equivalents 300 5,157 2,265
Accounts receivable 27 464 449
Inventories 9 163 140
Prepaid expenses and
other current assets 34 585 228
Financial instruments 1 10 63
Guarantee deposits 50 861 545
Total current assets 421 7,241 3,689
Rotable spare parts,
furniture and equipment,
net 148 2,550 2,223
Intangible assets, net 6 95 73
Financial instruments 4 69 5
Deferred income tax 32 545 328
Guarantee deposits 273 4,704 3,541
Other assets 3 58 46
Total non-current assets 466 8,020 6,216
Total assets 887 15,261 9,905
Liabilities
Unearned transportation
revenue 114 1,957 1,421
Accounts payable 46 795 506
Accrued liabilities 86 1,481 1,122
Taxes and fees payable 84 1,445 677
Financial instruments 3 44 211
Financial debt 80 1,371 823
Other liabilities - 8 9
Total short-term
liabilities 413 7,103 4,768
Financial instruments 1 11 42
Financial debt 13 220 425
Accrued liabilities 9 157 144
Other liabilities 3 49 21
Employee benefits 1 10 8
Deferred income taxes 51 885 27
Total long-term
liabilities 77 1,333 667
Total liabilities 490 8,436 5,435
Equity
Capital stock 173 2,974 2,974
Treasury shares (5) (91) (115)
Contributions for future
capital increases - - -
Legal reserve 2 38 38
Additional paid-in
capital 104 1,791 1,787
Retained earnings
(accumulated losses) 140 2,408 (56)
Accumulated other
comprehensive losses (17) (295) (158)
Total equity 397 6,825 4,470
Total liabilities and
equity 887 15,261 9,905
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.17.2065 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
Unaudited Three months ended Three months Three months
(In millions of Mexican December 31, 2015 ended December ended December
pesos) (US Dollars)* 31, 2015 31, 2014
Net cash flow provided by
operating activities 54 930 470
Net cash flow used in
investing activities (21) (356) (372)
Net cash flow provided by
financing activities 7 127 245
Increase in cash and cash
equivalents 41 700 342
Net foreign exchange
differences 3 50 108
Cash and cash equivalents at
beginning of period 256 4,408 1,814
Cash and cash equivalents at
end of period 300 5,157 2,265
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
Unaudited Full Year 2015
(In millions of Mexican (US Dollars)*
pesos) Full Year 2015 Full Year 2014
Net cash flow provided by
operating activities 178 3,070 334
Net cash flow used in
investing activities (35) (601) (1,185)
Net cash flow provided by
financing activities 4 65 525
Increase (decrease) in cash
and cash equivalents 147 2,533 (326)
Net foreign exchange
differences 21 359 141
Cash and cash equivalents at
beginning of period 132 2,265 2,451
Cash and cash equivalents at
end of period 300 5,157 2,265
*Peso amounts were converted to U.S. dollars at the rate of Ps.17.2065 for
convenience purposes only.
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