troladora Vuela pania de Aviacion(VLRS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total operating revenues for Q3 2025 were $784 million, a 4% decrease compared to the same period in 2024 [24] - EBITDA reached $264 million with a margin of 33.6%, aligned with guidance for the quarter [27] - Net profit was $6 million, translating to earnings per ADS of $0.05 [27] - Cash flow generated by operating activities in Q3 was $205 million, with total liquidity at $794 million, representing 27% of the last 12 months' total operating revenues [28] Business Line Data and Key Metrics Changes - The load factor in the Mexican market reached 89.8%, consistent with last year's levels, while the international load factor was at 77% [6][14] - Average ancillary revenue per passenger for Q3 was $56, marking the eighth consecutive quarter above the $50 threshold [15] - TRASM for Q3 reached $0.0865, down 7.7% year over year, but improved from declines of 17% and 12% in the first and second quarters, respectively [16] Market Data and Key Metrics Changes - Domestic demand remained stable with a rational supply environment, supporting healthier yields [4][6] - Cross-border demand showed a steady recovery, with traffic improving month over month and holiday bookings trending ahead of last year [6][15] - The US-Mexico transborder market has seen sales above last year's levels since mid-August, indicating a positive trend [40] Company Strategy and Development Direction - The company is focused on maintaining cost efficiency while adapting quickly to market conditions, with a capacity growth outlook of approximately 7% for the full year 2025 [7][8] - Volaris aims to enhance its ultra-low-cost carrier model by expanding its product suite and optimizing distribution channels [11][17] - The company is committed to controlling growth with discipline, aligning capacity with market demand [8][36] Management's Comments on Operating Environment and Future Outlook - Management noted that demand momentum is building, with a recovery anticipated for the second half of the year [4] - The geopolitical disruptions have not significantly impacted travel sentiment, which has improved in the cross-border market [4] - The company expects to close 2025 and enter 2026 stronger and more efficient, with sustained profitability [12] Other Important Information - The company has an order book of 122 aircraft, with 84% being A320neo to A321neo models [31] - The average age of the fleet is 6.6 years, with two-thirds being new models [30] - The introduction of AI agents has improved customer service efficiency, with 79% of interactions now handled through digital channels [22] Q&A Session Summary Question: Can you elaborate on the stronger-than-normal seasonality in international markets and the inflection point in the US-Mexico transborder market? - Management indicated that since mid-August, sales in the US-Mexico transborder market have been above last year's levels, showing sustained improvement in booking trends [40] Question: How many lease returns are expected next year, and how does that compare to this year? - The company is budgeting for 17 re-deliveries next year compared to 7 this year, emphasizing the importance of managing capacity in line with consumer demand [42] Question: What is the expected RASM uplift from new initiatives? - Management expects a positive year-over-year impact on RASM from new commercial initiatives starting in 2026 [46] Question: How will the customer mix diversification affect costs? - The company plans to broaden its customer base while maintaining a low-cost, low-complexity model, with no significant impact on costs expected [48] Question: What is the outlook for grounded aircraft and AOGs? - The average number of AOGs is expected to improve to around 32-33 next year, with a goal of no material impacts by the end of 2027 [57][71] Question: What is the expected CapEx for 2026 compared to 2025? - The company expects CapEx for 2026 to be higher than the $250 million planned for 2025 due to investments in maintenance and aircraft re-delivery [61]