Volaris Investor Day March 15, 2016
Disclaimer The information ("Confidential Information") contained in this presentation is confidential and is provided by Controladora Vuela Compañía de Aviación, S.A.B. de C.V., (d/b/a Volaris, the "Company") confidentially to you solely for your reference and may not be retransmitted or distributed to any other persons for any purpose whatsoever. The Confidential Information is subject to change without notice, its accuracy is not guaranteed, it has not been independently verified and it may not contain all material information concerning the Company. Neither the Company, nor any of their respective directors makes any representation or warranty (express or implied) regarding, or assumes any responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information or opinions contained herein. None of the Company nor any of their respective directors, officers, employees, stockholders or affiliates nor any other person accepts any liability (in negligence, or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. No reliance may be placed for any purposes whatsoever on the information set forth in this presentation or on its completeness. This presentation does not constitute or form part of any offer or invitation for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this presentation as legal, tax or investment advice and should consult their own advisers in this regard. This presentation contains statements that constitute forward-looking statements which involve risks and uncertainties. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition, and future events and plans of the Company. These statements can be recognized by the use of words such as "expects," "plans," "will," "estimates," "projects," or words of similar meaning. Such forward-looking statements are not guarantees of future performance and actual results may differ significantly from those in the forward-looking statements as a result of various factors and assumptions. You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of the management of the Company on future events. The Company does not undertake to revise forward-looking statements to reflect future events or circumstances. 2
Agenda 12:15 pm Enrique Beltranena, CEO 1:00 pm Holger Blankenstein, CCO 1:40 pm José Luis Suárez D., COO 2:00 pm Fernando Suárez G., CFO 2:20 pm Q&A session 3:00 pm Event concludes 3
Enrique Beltranena CEO
Volaris ´ first 10 years: setting the foundations for a more “democratic” air travel market Entry into First A321 Start of Mexico City First A320 100 operations airport Launch of routes Central America routes 2007 2009 2011 2013 2015 2008 2010 2012 2006 2014 2016 IPO Launch of Placement of USA routes incremental 44 “You decide” aircraft order 50 unbundling 10 million aircraft / 50 campaign passengers million passengers 5
Volaris has been a key player in the Mexican air travel market growth Domestic market penetration International passenger penetration (1) (million passengers) (million passengers) 22 27 24 24 25 28 30 33 37 7 7 7 5 6 10 28 7 6 7 8 100% 100% 8% 12% 22% 22% 21% 22% 13% 15% 18% 20% 23% 23% 25% 9% 23% 75% 75% 50% 50% 25% 25% 0% 0% Market Volaris Market Volaris 6 (1) Among domestic carriers Source: DGAC-SCT
Volaris has achieved sustained high growth Non-ticket per pax. (MXN): $338 12 million passengers TRASM (MXN cents): $129 Avg. fare (MXN): $1,181 2008 2009 2010 2011 2012 2013 2014 2015 7
Low cost structure, record EBITDAR margins and ROIC increase Full year 2015 highlights CASM ex-fuel: 4.5 US cents (1) (-6.9% yoy) Adj. EBITDAR margin: 36% (+13.7pp yoy) Adj. ROIC: 22% (2) (+8.2pp yoy) 8 (1) Converted to USD at a period end exchange rate (2) Pre-tax; adjusted to aircraft rents
Volaris today: The first successful ULCC in Latin America, ready for the next stage of growth 148 63 40 Domestic Destinations Routes airports 23 59 29% International Aircraft Passenger airports market penetration (1) 9 (1) Passenger market penetration for January 2016 Source: Company data; DGAC
The Mexican macro environment is poised to support Volaris ´ continued growth USD Remittances growth (%) GDP growth (%) 6.0 GDP Non-oil GDP 3.1 4.8 2.5 2.5 2.3 1.5 1.3 -0.6 2013 2014 2015 2013 2014 2015 General Economic Activity Indicator growth (1) (%) Private Consumption growth (%) 5.19 2.5 2.1 2.79 1.4 1.71 2013 2014 2015 2013 2014 2015 10 (1) IGAE (Mexican General Economic Activity Indicator) Source: INEGI; Banxico
Mexico’s best kept secret: F avorable demographics and underpenetrated air travel market Middle class as a % of Mexican population (1) 2010 demographic composition by age 2030 estimate 7% 8% 14% 17% Male Female 17% 30% 35% 25% 26% 20% 10 5 0 5 10 2010 2025E Million inhabitants D/E D+ C C+ AB 0-19 years 20-64 years 65+ years Domestic air trips per capita (2) 2.05 0.55 0.45 0.42 0.27 0.25 0.21 0.04 0.01 USA Chile Brazil Colombia Peru Mexico Argentina Costa Rica Paraguay (1) Classes are defined by the following monthly family income: AB<MXN $98,500, C+MXN $40,600- $98,499, C MXN $13,500- $40,599, D+ MXN $7,880 $13,499, D MXN $3,130- $7,879 and E <MXN $3,129 11 (2) ALTA 2014 Yearbook air trips per capita Source: INEGI; CONAPO
Mexico’s geography supports air traffic growth Seattle Tijuana Reynosa Omaha Denver Cancun Mexico City Atlanta Chetumal Tapachula 12
Mexican air travel market has the characteristics of a high growth emerging market Segment passenger volume (millions) 5.7% CAGR 75 12 65 60 55 53 52 51 49 47 26 45 5 18 37 22 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Domestic USA Other international Yoy Growth 15.0% 2.1% -11.9% 3.3% 4.0% 8.3% 8.3% 8.3% 12.3% GDP growth 5% 3.2% -4.7% 5% 4.0% 3.8% 1.7% 2.1% 2.5% GDP multiplier 3.0 0.7 2.5 0.6 1.0 2.2 4.9 4.0 4.9 13 (1) Includes regular and charter Source: DGAC-SCT; INEGI; Banco de México
Fuel prices and the Mexican peso inversely correlated MXN/USD FX rate and WTI prices (Mar 2014 - Feb 2016) MXN/USD FX rate WTI prices 20 120 19 100 18 17 80 16 15 60 14 40 13 12 20 11 10 0 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 USD/MXN WTI 14 Source: Bloomberg
Volaris ULCC model perfect fit for such a market The first 10 years: set the foundations for a more “democratic” air travel market in Mexico Volaris is the first successful ULCC in Latin America and is ready for the next stage of growth The Mexican macro environment is poised to support Volaris ´ continued growth Mexico’s best kept secret is its favorable demographics and underpenetrated air travel market Mexico’s geography supports air traffic growth Mexican air travel market has the characteristics of a high growth emerging market 15
The Volaris flight crew Enrique Beltranena Holger Blankenstein Chief Executive Officer Chief Commercial Officer Fernando Suárez G. José Luis Suárez D. Chief Operating Officer Chief Financial Officer 16
Holger Blankenstein CCO
Volaris footprint after 10 years of flight: A point-to-point network with growth potential Volaris serves 148 routes to 63 destinations throughout Mexico, USA and Central America Portland Routes Dom. USA CAM New York Chicago Tijuana 29 1 - Denver Reno Sacramento San Francisco/Oakland Mexico City 25 8 - San Jose Fresno Las Vegas Ontario Los Angeles San Diego Guadalajara 19 20 2 Phoenix Tijuana Dallas Mexicali Cd. Juarez Orlando Houston San Antonio Monterrey 18 1 - Hermosillo Chihuahua Fort Lauderdale Cd. Obregon Los Mochis Torreon Monterrey Culiacan San Juan, PR Cancun 16 1 2 Durango La Paz Los Cabos Mazatlan Tampico Cancun Zacatecas Aguascalientes Merida Guadalajara San Luis Leon Other 3 13 - Puerto Vallarta Queretaro Chetumal Uruapan Mex.City Veracruz Morelia Villahermosa Puebla Toluca Oaxaca Tuxtla Acapulco Total 100 44 4 Guatemala Huatulco Tapachula San Jose, CR 18 Note: Not mutually exclusive; E.g. Tijuana-Mexico City is included both in Tijuana and Mexico City
We have created a resilient ULCC model by stimulating demand by reducing base fares Strong, diversified growth Ultra low costs More Resilient ancillaries Volaris Ultra-Low (“You decide”) Cost Model “Clean”, low base fares More price sensitive customers 19
Commercial metrics: Our low fare philosophy enables profitable growth Important Less Important Not important • Route profitability • ASM growth • Market share • TRASM • Yield • Other airlines fares • Volume/price elasticity • RASM • “Trophy” routes Developing an efficient network to support a low cost operation is fundamental We manage the network for profitability
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