troladora Vuela pania de Aviacion(VLRS)2025-04-28 12:03Hedging 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].