troladora Vuela pania de Aviacion(US:VLRS)2026-02-24 21:30Hedging and Financial Risk Management - The Company has a conservative Hedging Policy that allows derivative financial instruments only for hedging purposes, not for speculative trading [5]. - The Company is exposed to fuel price fluctuation risk and uses derivative financial instruments, including Asian Call Options on Jet Fuel, to hedge against significant increases in fuel prices [8]. - The Company does not currently hold foreign exchange derivative financial instruments, with most exposure related to payments in Mexican pesos [8]. - The Company uses interest rate swaps and options to hedge against interest rate variation risk, holding interest rate CAPs with TIIE 28 as the underlying asset [8]. - 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 uses derivative financial instruments to mitigate financial risks such as jet fuel price volatility and interest rate changes [156]. Financial Reporting and Compliance - The Company’s financial statements are prepared in accordance with IFRS, ensuring compliance with international accounting standards [11]. - The Company has consistently applied its accounting policies across all periods presented in the financial statements [18]. - The presentation currency of the Company’s financial statements is the US dollar, with all values rounded to the nearest thousand [17]. - The Company’s financial statements are prepared in accordance with IFRS, with all values rounded to the nearest thousand US dollars [183]. - The Company’s financial instruments are measured at fair value, with a three-level hierarchy for fair value measurement disclosures required by IFRS 7 [162]. Revenue Recognition - The Company recognizes passenger revenues when the service is provided or when the non-refundable ticket expires [30]. - All tickets sold by the Company are non-refundable, and revenue is recognized only when the service is provided or the ticket expires [31]. - Points accumulated in the "Spin Premia" program are recorded as a reduction in revenues until redeemed [47]. Loyalty Programs - The Company launched its new loyalty program "altitude" on July 16, 2025 [5]. - The Company entered into a coalition agreement with FEMSA for the "Spin Premia®" loyalty program on January 23, 2023 [45]. Asset Management and Impairment - The company recognizes impairment charges on intangible assets when the carrying amount exceeds its recoverable amount, which is determined based on fair value less cost to sell or value in use [72]. - The company assesses the recoverable amount of long-lived assets using a discounted cash flow model, typically projecting operating results for no more than five years [73]. - As of December 31, 2025 and 2024, there were no impairment charges recorded in relation to the right-of-use assets [134]. Employee Compensation and Benefits - The company has a quarterly incentive plan for certain personnel, awarding cash bonuses for meeting performance targets [111]. - The Company approved a new long-term retention plan ("LTRP") for 2024 and 2023, which consists of an equity-settled share purchase plan [115]. - The cost of equity-settled share-based payments is recognized in the consolidated statements of operations over the required service period [116]. - The Company granted share appreciation rights (SARs) to key employees, which entitle them to cash payments based on the increase in share price [118]. - The Management Incentive Plan ("MIP II") was extended for certain key executives, allowing them to receive cash payments based on share price increases [120]. - Employee profit sharing is computed at a rate of 10% based on the taxpayer's taxable income, with a limit of up to three months of the employee's current salary [124]. Lease and Asset Depreciation - The Company recognizes lease liabilities at the present value of lease payments to be made over the lease term [130]. - The right-of-use assets are depreciated on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of the assets [129]. - The company records depreciation on flight equipment at rates ranging from 4.0% to 16.7% annually [95]. - The company evaluates the useful lives of its assets annually, with any changes accounted for prospectively [95]. Financial Liabilities and Credit Losses - Financial liabilities are recognized initially at fair value and subsequently measured at amortized cost [62]. - The Company applies a simplified approach in calculating Expected Credit Losses (ECLs) for trade receivables [60]. Corporate Structure and Control - As of December 31, 2025, the Company does not hold an ownership interest in North Star Financing Limited but exercises control over it [25]. - The company does not hold an ownership interest in North Star Thrust DAC as of December 31, 2025, yet exercises control over it [192]. - The company reassesses control over an investee if facts and circumstances indicate changes to the elements of control [193]. - All intercompany balances and transactions are eliminated completely on consolidation in the consolidated financial statements [194]. - The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies [193]. Financing and Capital Structure - The Company completed the offering of 15,000,000 asset-backed trust notes for an amount of Ps.1.5 billion Mexican pesos (approximately US$85.8 million) on September 28, 2023 [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 issued in 2021 have sustainability objectives to reduce CO2 emissions by 21.54%, 24.08%, and 25.53% by 2022, 2023, and 2024, respectively, compared to 2015 [176]. - The company has a power-by-the-hour agreement for component services, ensuring availability of aircraft components when required [91]. Regulatory and Compliance Updates - The company has not early adopted any standard, interpretation, or amendment that has been issued but is not yet effective [197]. - The amendments to IAS 21 regarding exchangeability will be effective for annual reporting periods beginning on or after January 1, 2025 [199]. - The company uses observable exchange rates for foreign currencies in its financial statements, thus the amendments did not impact its interim condensed consolidated financial statements [200]. Business Operations - The Company operates under a single business unit providing air transportation and has two geographic areas: domestic (Mexico) and international (USA, Central America, and South America) [164]. - The Company has a concession to provide air transportation services, which was extended for a 20-year term starting May 9, 2020 [169]. - The Company announced an agreement with Grupo Viva Aerobus to create a new Mexican Airline Group aimed at increasing low-cost air travel, pending authorization [180].