Group 1: Volaris Performance - Volaris reported a year-over-year increase in revenue passenger miles (RPMs) for May, indicating growth in air traffic [1] - The company experienced a 9% year-over-year increase in consolidated capacity, measured in available seat miles (ASMs), while the load factor decreased by 4.3 percentage points to 81.8% [2][8] - In May, Volaris transported 2.5 million passengers, reflecting a 4.2% year-over-year increase [2] Group 2: Domestic and International Metrics - Domestic RPMs and ASMs increased by 5.7% and 10.4% respectively compared to May 2024, with a domestic load factor of 86.5%, down 3.8 percentage points year-over-year [3] - In international markets, RPMs decreased by 0.2% year-over-year, while ASMs rose by 6.8%, leading to a decrease in the international load factor by 5.2 percentage points to 74.7% [3][8] Group 3: Industry Context - Other airlines, such as Ryanair, reported positive traffic numbers for May 2025, with Ryanair transporting 18.9 million passengers, a 4% year-over-year increase, and a load factor of 95% [4] - Copa Holdings, another airline in the sector, reported a 10.1% year-over-year increase in RPMs for Q1 2025, with expectations of a 4% increase in passenger revenues for the year [6][7]

Core Insights - Volaris reported a 9.0% year-over-year increase in ASM capacity for May 2025, while RPMs grew by 3.5% [2][3] - The load factor decreased by 4.3 percentage points year-over-year to 81.8%, with 2.5 million passengers transported in May [2][3] Traffic Results - Domestic RPMs increased by 5.7% to 1,553 million, while international RPMs were effectively flat at 889 million [2][3] - Total RPMs for May 2025 reached 2,442 million, up from 2,360 million in May 2024, marking a 3.5% increase [2][3] Capacity Metrics - Domestic ASMs increased by 10.4% to 1,795 million, and international ASMs rose by 6.8% to 1,190 million [2][3] - Total ASMs for May 2025 were 2,985 million, compared to 2,739 million in May 2024, reflecting a 9.0% increase [2][3] Load Factor Analysis - The domestic load factor decreased to 86.5% from 90.4%, while the international load factor fell to 74.7% from 79.9% [2][3] - Overall, the total load factor for May 2025 was 81.8%, down from 86.1% in May 2024 [2][3] Passenger Statistics - Domestic passengers increased by 5.4% to 1,894 thousand, while international passengers rose by 0.8% to 608 thousand [2][3] - Total passengers transported in May 2025 were 2,502 thousand, compared to 2,400 thousand in May 2024, representing a 4.2% increase [2][3] Management Commentary - The CEO of Volaris indicated that capacity growth aligns with adjustments made during the earnings call, focusing on maximizing unit revenue performance [3] - The company remains optimistic about booking trends as it approaches the summer high season [3]

Group 1: Volaris Performance - Volaris reported a year-over-year increase in revenue passenger miles (RPMs) for April, indicating growth in air traffic [1] - The company experienced a 16.9% year-over-year increase in consolidated capacity, measured in available seat miles (ASMs) [2] - The load factor decreased by 3.1 percentage points to 81.6%, as the increase in consolidated traffic (12.7%) was less than the increase in consolidated capacity [2] - Volaris transported 2.6 million passengers in April, reflecting a 14.8% year-over-year increase [2] - Domestic RPMs and ASMs increased by 12.9% and 17.1%, respectively, compared to April 2024 levels, while the domestic load factor was 86.9%, down 3.2 percentage points [3] - In international markets, RPMs increased by 12.2% year-over-year, and ASMs rose by 16.7% year-over-year [3] Group 2: Ryanair Performance - Ryanair reported a 6% year-over-year increase in the number of passengers transported, totaling 18.3 million in April 2025 [4] - The load factor for Ryanair in April was 93%, an increase from 92% in the previous year, indicating strong passenger demand [4] Group 3: Investment Considerations - Volaris currently holds a Zacks Rank of 4 (Sell), suggesting a less favorable investment outlook [5] - Copa Holdings (CPA) is highlighted as a potential investment opportunity, with a Zacks Rank of 1 (Strong Buy) [6] - CPA has an expected earnings growth rate of 11.4% for the current year and has consistently outperformed earnings estimates, with an average beat of 5.5% over the last four quarters [7] - Shares of CPA have increased by 12.8% year to date [7]

Core Insights - Volaris reported a 16.9% year-over-year increase in ASM capacity and a 12.7% growth in RPMs for April 2025, indicating strong operational performance despite macroeconomic volatility [2][3] - The load factor decreased by 3.1 percentage points year-over-year to 81.6%, reflecting a slight decline in efficiency [2][3] - The company transported 2.6 million passengers in April 2025, marking a 14.8% increase compared to the same month in 2024 [2][3] Traffic Results - **RPMs (Revenue Passenger Miles)**: - Domestic RPMs increased by 12.9% to 1,596 million, while international RPMs rose by 12.2% to 932 million [2][3] - Year-to-date (YTD) RPMs reached 9,990 million, up 6.4% from 9,389 million in 2024 [2][3] - **ASMs (Available Seat Miles)**: - Domestic ASMs grew by 17.1% to 1,836 million, and international ASMs increased by 16.7% to 1,260 million [2][3] - YTD ASMs totaled 11,833 million, an 8.9% increase from 10,864 million in 2024 [2][3] - **Load Factor**: - Domestic load factor decreased to 86.9% from 90.1%, while international load factor fell to 73.9% from 76.9% [2][3] - The overall load factor for April was 81.6%, down from 84.7% in the previous year [2][3] - **Passenger Numbers**: - Domestic passengers rose by 14.6% to 1,967 thousand, and international passengers increased by 15.4% to 649 thousand [2][3] - Total passengers for April reached 2,616 thousand, a 14.8% increase compared to 2,278 thousand in April 2024 [2][3] Management Commentary - The CEO of Volaris highlighted the complexity of forecasting capacity in a volatile macroeconomic environment, emphasizing the company's focus on competitive pricing strategies to maintain high occupancy levels while optimizing TRASM [3]

Financial Performance and Outlook - The company reported a full year 2025 outlook and guidance, focusing on the delivery schedule of aircraft on order[9] - The company reported consolidated financial statements for the years ended December 31, 2022, 2023, and 2024, prepared in accordance with IFRS standards[32] - The financial statements include audited results as of December 31, 2023, and 2024, indicating a focus on transparency and compliance[32] - The financial performance metrics include key indicators such as available seat miles (ASMs) and revenue passenger miles (RPMs), which are critical for assessing operational efficiency[29] Operational Challenges - The company faces significant competition in the airline industry, impacting routes, fares, and services[20] - Fuel costs represent a considerable portion of operating expenses, and fluctuations could materially affect financial performance[20] - The company relies heavily on major airports, with the Mexico City International Airport at full capacity, posing potential operational risks[24] - The company has experienced delays in the delivery of A320neo and A321neo aircraft due to technical issues with P&W's PW1100G-JM engines[24] - Economic conditions in Mexico and other operating countries could adversely affect demand for flights[20] - Public health threats, such as infectious disease outbreaks, could significantly impact operations and financial condition[21] - The company operates under a low-cost structure, which is sensitive to various uncontrollable factors impacting cost control[24] Revenue and Profitability - Non-passenger revenue is crucial for profitability but may not remain stable or increase[24] Market Position and Strategy - The company operates in a competitive landscape with U.S.-based publicly traded competitors such as Alaska, Allegiant, and Delta[30] - The company aims to enhance its market position through strategic initiatives, including potential market expansions and new product developments[28] Data and Reporting - The company utilized various third-party sources for industry and market data, including INEGI and the U.S. Census Bureau, but has not independently verified this information[34] - The market share estimates for specific cities are based on published information for the respective states, which may not be independently verified[34] - The company emphasizes the importance of reliable data sources but acknowledges potential inaccuracies in third-party publications[34] Environmental, Social, and Governance (ESG) - The report highlights the significance of environmental, social, and governance (ESG) matters in the company's operational strategy[28]

Core Insights - Volaris, the dominant Mexican airline carrier, reported a wider-than-expected loss in its Q1 earnings, leading to a significant decline in its stock price, which fell over 15% to new 52-week lows [1]. Company Performance - The airline's Q1 earnings report indicated a loss that exceeded market expectations, prompting traders to sell off shares aggressively [1]. Market Reaction - Following the earnings announcement, Volaris shares experienced a sharp decline, reflecting negative investor sentiment and concerns about the company's financial health [1].

Core Insights - Controladora Vuela (VLRS) reported a revenue of $678 million for Q1 2025, reflecting an 11.7% year-over-year decline and an EPS of -$0.44 compared to $0.29 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $709.62 million, resulting in a surprise of -4.46%, while the EPS exceeded expectations by 18.52% against a consensus estimate of -$0.54 [1] Financial Performance Metrics - Available Seat Miles (ASMs) totaled $8.74 billion, slightly below the average estimate of $8.75 billion [4] - CASM excluding fuel was reported at 5.4 cents, better than the average estimate of 5.55 cents [4] - Fuel gallons accrued were 81.56 million, compared to the average estimate of 82.34 million [4] - Revenue Passenger Miles (RPMs) totaled $7.46 billion, which was lower than the estimated $7.52 billion [4] - Operating expenses per ASM (CASM) were reported at 7.88 cents, compared to the average estimate of 8.02 cents [4] - The load factor was 85.4%, slightly below the estimated 86% [4] - Passenger revenues from fares were $286 million, significantly lower than the estimated $335.90 million, marking a 23.7% decline year-over-year [4] Stock Performance - Controladora Vuela's shares have returned -13.2% over the past month, contrasting with the Zacks S&P 500 composite's -4.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Hedging and Risk Management - The Company has a conservative Hedging Policy that allows entering derivative financial instrument positions only correlated with the primary position to be hedged [5]. - As of March 31, 2025, the Company holds Asian Call Options on Jet Fuel to hedge against fuel price fluctuations [7]. - The Company does not have foreign exchange derivative financial instruments as of the report date, indicating a focus on domestic operations [7]. - Interest rate swaps and options are used to hedge against interest rate variation risks, with the Company holding interest rate CAPs with TIIE 28 as the underlying asset [7]. - All derivative financial instruments held by the Company qualify for hedge accounting, meaning changes in their fair value will only result from changes in the price levels of the underlying asset [14]. - The Company operates only in over-the-counter (OTC) markets and has 8 ISDAs in place with different financial institutions as of March 31, 2025 [8]. - The Company has a Risk Management team responsible for identifying financial risks and designing mitigation strategies [3]. - The Company has a risk management program that includes the use of derivative financial instruments to mitigate financial risks such as fuel price volatility [156]. - There were no significant changes in exposure to financial risks during the first quarter of 2025, but future changes are possible [13]. Financial Reporting and Compliance - The Company’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), ensuring compliance and transparency [11]. - The Company’s functional currency is the US dollar, and all financial statements are presented in thousands of US dollars [17]. - The unaudited condensed consolidated interim financial statements were approved for issuance on April 24, 2025, covering the three-month period ended March 31, 2025 [179]. - The financial statements include comparative information for the previous period, specifically for the three months ended March 31, 2024 [180]. - The financial statements are prepared in accordance with International Accounting Standards (IAS) 34, using consistent accounting policies as in the annual financial statements [195]. - The Company has consistently applied its accounting policies across all periods presented in the financial statements [183]. - The Company’s subsidiaries' financial statements are prepared for the same reporting period as the parent Company, ensuring consistency in accounting policies [189]. - The Company has not early adopted any new standards or amendments that are not yet effective, including amendments to IAS 21 regarding currency exchangeability [196]. - The amendments to IAS 21 will be effective for annual reporting periods beginning on or after January 1, 2025, and the Company is currently assessing their impact [198]. - IFRS 18, which replaces IAS 1, introduces new requirements for presentation within the statement of profit or loss, effective from April 2024 [199]. Revenue Recognition - The company recognizes passenger revenues when the service is provided or when non-refundable tickets expire, with all tickets being non-refundable [31][32]. - Significant passenger revenue sources include fare revenue and other passenger services, with other services recognized as revenue when the transportation obligation is fulfilled [33]. - The company recognizes non-passenger revenues from services such as trip insurance and cargo services at the time the service is provided [37]. - The company entered into a loyalty program agreement with FEMSA on January 23, 2023, allowing customers to accumulate and redeem points with OXXO and Volaris [46]. - The loyalty program "Spin Premia®" offers exclusive benefits and is set to expire in June 2025 [49]. Assets and Liabilities - Financial liabilities are initially recognized at fair value, with loans and borrowings subsequently measured at amortized cost using the Effective Interest Rate method [65]. - The amortization of deferred maintenance costs is recorded as part of depreciation and amortization in the consolidated statements of operations [92]. - The Company reviews annually the useful lives of its assets, with depreciation rates for flight equipment ranging from 4.0% to 16.7% [97]. - The value in use calculation for long-lived assets is based on a discounted cash flow model, typically extending no more than five years [99]. - The Company assesses at each reporting date whether there is objective evidence that long-lived assets are impaired, recording impairment charges when necessary [98]. - The Company capitalizes borrowing costs related to the acquisition or construction of qualifying assets as part of the cost of that asset [96]. - Inventories are carried at the lower of cost and their net realization value, with necessary estimates for decreases in value due to impairment or obsolescence [71]. - The Company recognizes provisions when there is a present obligation, and a reliable estimate can be made of the obligation amount [105]. Employee Compensation and Benefits - The Company has a quarterly incentive plan for certain personnel, with cash bonuses awarded for meeting performance targets [113]. - The Long-term incentive plan ("LTIP") includes a share purchase plan and share appreciation rights plan, accounted under IFRS 2 [115]. - Employee profit sharing is computed at a rate of 10% based on the taxable income of the year, with a limit of up to three months of the employee's current salary [126]. - The latest actuarial computation for defined benefit obligations was prepared as of December 31, 2024, with remeasurement gains and losses recognized in OCI [111]. Financing Activities - On September 28, 2023, the Company completed the offering of 15,000,000 asset-backed trust notes for an amount of Ps.1.5 billion Mexican pesos (US$85.8 million) under the ticker VOLARCB 23 [177]. - The Trust Notes will be backed by future collection rights from credit card processors regarding airline ticket sales and related services [177]. - The Trust Notes have a maturity term of five years and will pay an interest rate of TIIE 28 plus 215 basis points spread [177]. Corporate Structure and Operations - The company has 100% equity interest in multiple subsidiaries across Mexico, Costa Rica, Guatemala, and El Salvador, focusing on air transportation services and specialized services [23]. - The Company operates under a code-share agreement with Frontier, enhancing customer access to additional destinations [40]. - The Company operates under a single business unit providing air transportation and related services, with geographic areas identified as domestic (Mexico) and international (USA, Central America, and South America) [164]. - The Company’s concession for air transportation services was extended for a 20-year term starting on May 9, 2020 [169]. - The Company’s shares are traded under the ticker symbol "VLRS" on the NYSE and "VOLAR" on the BMV [171]. - As of March 31, 2025, and December 31, 2024, the Company did not recognize an ineffective portion with respect to derivative financial instruments [159]. - The Company maintains a 100% equity interest in all its subsidiaries as of March 31, 2025, including Concesionaria Vuela Compañía de Aviación S.A. P. I. in Mexico and Vuela Aviación, S.A. in Costa Rica [186]. Environmental Goals - The Company aims to reduce CO2 emissions by 35.42% per revenue passenger/kilometer by 2030 compared to 2015 levels [176].

Core Insights - Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (Volaris) reported a net loss of $51 million for Q1 2025, a significant decline compared to a net income of $33 million in Q1 2024 [6][7][14] - Total operating revenues decreased by 11.7% to $678 million, primarily due to the depreciation of the Mexican peso and lower revenue per passenger [5][9][11] - The company remains focused on disciplined execution amid geopolitical and economic uncertainties, emphasizing customer demand and sustained profitability [2][3] Financial Performance - Total operating revenues for Q1 2025 were $678 million, down from $768 million in Q1 2024 [5][9] - Total operating expenses increased by 3.6% to $688 million, resulting in an operating loss of $10 million compared to an operating income of $104 million in the previous year [5][6][37] - The average base fare per passenger decreased by 28.8% to $39, while total ancillary revenue per passenger declined by 6.9% to $53 [11][39] Operational Metrics - Available seat miles (ASMs) increased by 6.3% to 8.7 billion, with booked passengers totaling 7.4 million, a 7.1% increase [5][10][34] - The load factor for the quarter was 85.4%, down 1.6 percentage points from the previous year [5][10] - The fleet size at the end of the quarter was 145 aircraft, an increase of 11 from the previous year [5][22] Cost Structure - Total operating expenses per available seat mile (CASM) decreased by 2.5% to $7.88 cents, while CASM excluding fuel increased by 4.5% to $5.40 cents [6][11][33] - The average economic fuel cost decreased by 12.5% to $2.63 per gallon [11][34] - The net debt-to-LTM EBITDAR ratio increased to 2.7x, compared to 2.6x in the previous quarter [6][16] Guidance and Outlook - Volaris has not provided full-year 2025 margin guidance due to ongoing macroeconomic uncertainty but expects ASM growth of 8% to 9% for the full year [18] - For Q2 2025, the company anticipates ASM growth of 9% to 10%, with TRASM projected between $7.4 to $7.5 cents [18][19] - The average USD/MXN exchange rate is expected to be between Ps. 20.20 to 20.40, reflecting a significant depreciation of the Mexican peso [18]

Group 1: Volaris Performance - Volaris reported a year-over-year increase in revenue passenger miles (RPMs) for March [1] - The company experienced a 10.9% year-over-year increase in consolidated capacity, measured in available seat miles (ASMs) [2] - The load factor decreased by 2.4 percentage points to 84.4%, as the increase in consolidated traffic (7.8%) was less than the increase in consolidated capacity [2] - Volaris transported 2.6 million passengers in March, reflecting a 12.3% year-over-year increase [2] Group 2: Domestic and International Metrics - In the domestic market, RPMs and ASMs increased by 9.9% and 13.3%, respectively, compared to March 2024 levels [3] - The domestic load factor was 89.4%, a decrease of 2.8 percentage points from the previous year [3] - In international markets, RPMs increased by 4.6% year-over-year, while ASMs rose by 7.6% year-over-year [3] Group 3: Competitor Performance - Ryanair transported 15 million passengers in March 2025, reflecting a 10% year-over-year increase [4] - Ryanair's March load factor remained flat at 93% year-over-year, higher than the 92% reported in February 2025 [4] Group 4: Investment Considerations - Volaris currently carries a Zacks Rank 4 (Sell) [5] - Air Transport Services Group (ATSG) is highlighted as a potential investment, carrying a Zacks Rank 2 (Buy) [6] - ATSG has an expected earnings growth rate of 31% for the current year and has a strong earnings surprise history [7]