troladora Vuela pania de Aviacion(VLRS) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total operating revenues for Q1 2021 were MXN 6.4 billion, representing 89% and 82% of revenues from 2019 and 2020 respectively [48] - EBITDA for Q1 was MXN 1.3 billion, resulting in an EBITDA margin of 20%, down from 27% in the same period of 2020 [51] - Net loss for Q1 was MXN 733 million, with a negative net margin of 11.4% [51] - Cash and cash equivalents at the end of Q1 were $423 million, representing 42% of the last 12 months' operating revenues [52] Business Line Data and Key Metrics Changes - Total ancillary revenue per passenger reached a record high of almost MXN 768, an increase of 36% year-over-year [26] - Non-ticket revenue accounted for 49% of total operating revenues, driven by ancillary revenues [26] - Cost per available seat mile (CASM) ex-fuel for Q1 was US$4.78, one of the lowest in the industry [16][49] Market Data and Key Metrics Changes - The domestic market showed resilience, with Volaris operating 105% of ASMs compared to the same period last year [11] - The U.S. market is recovering, particularly in leisure segments, with strong demand for travel to Texas and Nevada [33] - The company opened two new routes connecting Mexicali and Morelia to Cancun, indicating growth in the domestic market [32] Company Strategy and Development Direction - The company plans to incorporate eight additional A320NEO aircraft in 2021 to strengthen its position in the Mexican domestic market [20] - Focus on maintaining a lean cost structure while expanding operations in Central America and increasing presence at Mexico City airports [22][23] - The strategy includes enhancing digital capabilities and customer experience through a revamped website and app [37][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in passenger demand and TRASM levels, anticipating a return to operating profitability [62] - The company is prepared to adapt capacity in response to fluctuating demand, as demonstrated in Q1 [31] - The vaccination rollout in the U.S. and Mexico is expected to boost confidence in air travel [18] Other Important Information - The company achieved a daily cash burn of approximately $900,000, lower than the original guidance of $1.2 million [53] - Volaris has a strong balance sheet with negative net debt of MXN 3.2 billion, excluding lease liabilities [52] - The company is committed to reducing its carbon footprint and enhancing its ESG initiatives [60] Q&A Session Summary Question: Ticket pricing pressure and yield recovery - Management indicated that ticket prices were reduced in Q1 to stimulate demand, but they expect to recover pricing as demand strengthens in Q2 [69] Question: Capacity outlook for the next quarters - For Q2, the company is targeting 110% of 2019 capacity, with expectations for higher growth in the second half of the year [74] Question: Competitor activity and fleet additions - Management noted that competitors are also recovering, but Volaris is positioned to take advantage of the market gap left by weaker competitors [76][91] Question: Ancillary revenue sustainability - The company aims to maintain ancillary revenue at around 42% of total operating revenue, even as base fares increase [134] Question: Expansion plans in Mexico City and Colombia - Volaris is focusing on price-sensitive leisure customers in Mexico City and has received authorization to start operations in Colombia [144][146]