troladora Vuela pania de Aviacion(VLRS) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $567 million, an increase of 80% compared to 2021 and 53% compared to 2019 [12] - EBITDAR increased by 52% to $97 million, with a net loss of $49 million reported for the quarter [54] - Cash flow from operating activities was $196 million, with cash and cash equivalents closing at $750 million, representing 31% of the last 12-month operating revenue [55] Business Line Data and Key Metrics Changes - Domestic network ASMs grew by 41% year-over-year, while international capacity increased by 77% year-over-year [36][37] - Ancillary revenues accounted for 43% of total revenues, with an average of $35 per passenger [39] - Average fare for the quarter was $46, up from $37 a year ago, indicating successful fare increases [35] Market Data and Key Metrics Changes - The load factor for Q1 2022 was 83.5%, an increase of 5.4 percentage points year-over-year [36] - The company reported strong demand in both domestic and international markets, particularly in the Mexico to US routes [38][43] - Central America represented 3% of capacity, with a year-on-year growth of 123% driven by VFR and leisure traffic [44] Company Strategy and Development Direction - The company aims to continue its growth strategy by increasing frequencies to existing destinations and expanding into Central America [45][46] - Volaris is focused on capturing market share from the bus sector, with 46% of its routes competing exclusively against buses [24] - The company plans to maintain a flexible growth strategy, adjusting capacity based on market conditions [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to pass through rising fuel costs to customers, achieving a 95% pass-through rate in Q1 2022 [15][109] - The company anticipates continued volatility in fuel prices and inflationary pressures but remains focused on cost efficiencies [51] - Management highlighted the strong recovery in demand and the potential for further growth in both domestic and international markets [30][104] Other Important Information - The average economic fuel cost increased by 64% to $3.15 per gallon in Q1 2022 [50] - The company has a robust balance sheet with a net debt to EBITDAR ratio of 2.3 times, significantly improved from 11.2 times in the same period of 2021 [56] - Volaris expects to end 2022 with approximately 115 aircraft, increasing the proportion of NEO models in its fleet [57] Q&A Session Summary Question: Fuel price estimates for Q2 - Management provided guidance for economic fuel prices between $3.7 to $3.8 per gallon for Q2, with current spot prices around $4.09 [69][70] Question: Potential for closer US-Mexico relations - Management noted that relationships have been tense recently but acknowledged the need for improved relations due to the new world order [72] Question: Capacity growth clarification - Management confirmed that mid-teens capacity growth includes all operating divisions, not just Mexico [76] Question: Customer loyalty after switching from bus to air - Data shows that over 90% of customers who switch from buses to air travel remain loyal to Volaris [78] Question: Acceptance of price increases in the Mexican market - Management indicated that customers accepted price increases, successfully offsetting 95% of fuel price increases while maintaining healthy load factors [108]