troladora Vuela pania de Aviacion(VLRS) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total operating revenues for Q2 2022 were $691 million, a 20% increase compared to 2021, driven by higher capacity and healthy load factors [44] - CASM ex-fuel decreased by 1% year-over-year, closing at $0.042, due to disciplined cost control and higher aircraft utilization [44] - Net loss for Q2 2022 was $49 million, translating to a loss per share of $0.04 and a loss per ADS of $0.42 [47] - EBITDAR decreased by 54% to $107 million, with the EBITDAR margin diminishing by 25.3 percentage points to 15.5% [47] Business Line Data and Key Metrics Changes - The average revenue passenger was $93, which is 21% higher than 2019 and up from $81 in Q1 2022 [10] - Load factor closed at 85.6%, with TRASM at record levels for Q2 at $8.26 cents [12] - Ancillary revenues accounted for 40% of overall revenues, with $37 per passenger, aiming for 50% in the medium term [31] Market Data and Key Metrics Changes - Domestic network capacity grew by 17% year-over-year, while international capacity grew by 25% year-over-year [29] - The U.S. market saw demand higher than pre-COVID-19 levels, but growth was limited due to Mexico's category 2 rating [17] - Central America showed strong demand recovery, with new routes initiated [16] Company Strategy and Development Direction - The company plans to stimulate travel demand in the Mexico City metropolitan area by returning to Toluca Airport and inaugurating new routes at Felipe Ángeles Airport [16] - The growth plans remain flexible, with a focus on balancing growth and profitability while maintaining a strong balance sheet [20] - The company aims to return to a measured growth rate, likely moderating capacity growth to a single-digit level in 2023 [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by rising fuel costs and inflationary pressures, emphasizing cost control measures [8] - The company remains optimistic about demand resilience, particularly in the VFR market, despite economic pressures [27] - Future growth opportunities are not jeopardized, with over 300 potential new routes identified [106] Other Important Information - The company generated positive cash flow, finishing the quarter with $759 million in cash and cash equivalents, representing 30% of the last 12 months operating revenue [48] - The net debt-to-EBITDAR ratio was 2.9x, with no refinancing risk in the foreseeable future [49] - The fleet grew by 23% year-over-year, ending Q2 with 113 aircraft [36] Q&A Session Summary Question: What are the main issues regarding the airports not being serviced? - Management indicated that smaller airports are prioritized for later due to their current unattractiveness [62] Question: What is the pricing and capacity deployment environment among domestic competitors? - The pricing environment remains healthy, with disciplined growth focused on the Mexico City metropolitan area [64] Question: What drives the single-digit growth forecast for 2023? - The company is being conservative in growth due to capacity concerns and the CAT 2 rating, balancing growth with profitability [73][74] Question: How has operational performance trended in Q2? - The company reported stable operational performance with no significant staffing issues affecting reliability [81] Question: How will demand and load factors be maintained in a challenging environment? - Management noted that advanced booking behavior is strong, indicating continued demand despite potential fare pushback [85]