Volaris: the leading ULCC airline serving Mexico, USA and Central America March 2018 1
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
Volaris: snapshot at 30,000 feet Serving 69 destinations throughout Mexico (40), USA (25) and Central America (4) CAGR 2008 2017 (08-17) Unit cost (CASM ex-fuel; cents, 5.5 4.7 -1.7% USD) (1) Passenger demand (RPMs, 3.2 15.9 19.5% bn) Aircraft 21 71 14.5% (End of period) Routes 42 174 17.11% (End of period) Passengers (mm) 3.5 16.4 18.7% Operating revenue 4.4 24.8 21.2% (bn, MXN) Adj. EBITDAR 0.7 6.6 28.3% (bn. MXN) Adj. ROIC (pre- 11% 12.6% +1.6 pp. tax) 3 (1) Converted to USD at an average period exchange rate
Volaris ’ flight path for demand stimulation and continued growth 4
Volaris ’ consistent execution of its ULCC business model well positioned for growth Opportunities Accomplishments Attractive emerging air travel market in Strong penetration of Mexican air Mexico travel market Continue geographic diversification Diversified and resilient point-to-point through international growth and network Codeshare (1) Bus to air substitution Continue route frequency increase Successful price unbundling Upside in ancillary revenue Flexible fleet plan and utilization; Proven ancillary revenue model capacity management Sustained profitability with strong Continue cost reductions balance sheet 5 (1) On January 16, 2018; Volaris and Frontier Airlines executed a Codeshare agreement, and is undergoing regulatory approvals
Accomplishments 6
Volaris has a best-in-class unit cost structure Long-term unit cost advantage CASM and CASM ex-fuel (4Q 2017 (1), USD cents) Cost structure • Economies of scale - Dilute fixed costs In line with best-in-class ULCCs - High seat density • Young and fuel efficient fleet 15.3 14.4 14.1 - Sharklet roll-out 12.2 - Average age of 4.6 years 3.3 2.6 11.3 10.6 10.5 4.0 - NEO Engines rollout 10.3 2.8 9.3 9.1 2.7 - Lower fuel burn 8.3 2.9 2.7 7.5 7.4 3.3 7.1 7.0 2.6 • Productive network 3.0 1.8 12.0 2.3 3.1 11.5 2.1 4.5 10.4 4.3 2.8 - Point-to-point 9.5 8.6 1.3 7.7 7.5 7.2 1.5 6.4 6.5 - No connections complexity 5.7 5.2 5.2 4.9 4.3 3.2 2.8 • High aircraft utilization - FY 2017 average 12.6 block hours per day US network Latin American carriers US LCCs WW LCCs carriers CASM ex-fuel Continued cost CASM improvement potential (1) DCOMPS public information for 4Q 2017, except Latam and AirAsia which public information is as of 3Q 2017 (2) DCOMPS = Direct Competitors: Delta, American Airlines, Alaska Airlines and United | (Average CASM and CASM ex-fuel) 7 Note: Non-USD data converted to USD using an average exchange rate for the period Source: Airlines public information
Non-ticket revenues continue to grow, with upside potential Non-ticket revenue per passenger Volaris (MXN) per passenger Ancillaries • Apply revenue management techniques 2011-2017 CAGR: + 20.9% - Pricing by route, season, day 429 - Fully dynamic pricing for some products 381 338 • Add products 279 - New products & services 211 204 142 - Enhancements to existing products • Improve presence - More touch-points to sell ancillaries 2011 2012 2013 2014 2015 2016 2017 throughout the journey Best-in class ULCCs, including first bag fee - Allow customization (FY 2017, as % of total operating revenue) (1) • Benefit from network diversification 46% 48% 41% - More international capacity 28% • First checked bag - USA Costa Rican AOC Volaris Wizz Allegiant Spirit Non-ticket revenue per Increasing non-ticket revenue allows to $22 $26 $56 $53 pax (USD) reduce fare further and stimulate demand (1) Converted to USD using an average exchange rate for the period 8 Source: Airlines public information
Network enhancement: connecting the dots and diversifying further FY 2017 Volaris diversified its network by starting operations in 31 routes and 5 stations New routes Domestic International Guadalajara 3 2 Mexico City - 4 Costa Rica - 3 Tijuana - 2 Los Angeles - 4 Monterrey 3 - Other 1 9 Total 7 24 New stations Central DOM USA America Cozumel Miami San Salvador Milwaukee Managua Codeshare agreement between Volaris and Frontier New access to cities in the U.S. offering customers the New International ability to purchase the lowest fares across an New Domestic extensive and well-served network. New Volaris Costa Rica 9 Note: Excludes routes and stations announced to start operations
…supporting strong capacity growth 2017 capacity growth contribution + Additional frequencies 6.8% + Joining existing airports 3.1% + New airports 1.5% + 1.5% Volaris Costa Rica = 12.9% Total ASM growth Our network is well positioned for diversified growth 10
Growth opportunities 11
In recent years, Mexico’s volume growth has been robust despite challenging economic environment Mexico passenger market volume has increased since 2011 Passenger volume (millions) Main industry growth drivers 2011 - 2017 CAGR: +5% 90 • Strong demand and 82 increasing middle class 75 15 13 66 • LCC gaining market through 61 12 57 11 52 29 low fares 10 27 9 26 8 44% LCC share (1) 23 21 19 19 • High improvement potential: 45 42 -Domestic air trips per 37 33 30 28 25 capita in Mexico 0.37 vs. Best-in class ULCCs, including first bag fee Chile 0.7 (FY 2017, as % of total operating revenue) (1) 2011 2012 2013 2014 2015 2016 2017 Domestic USA Other international 4.0% 8.3% 8.3% 8.3% 12.3% 10.4% 8.8% Yoy growth 4.6x GDP multiplier in recent 4.0% 4.0% 1.4% 2.3% 2.6% 2.3% 2.1% GDP growth (2) years 1.0 2.1 6.1 3.7 4.7 4.5 4.6 GDP multiplier (1) Considers Volaris and VivaAerobus domestic market share 2017 12 (2) Values according to INEGI´s new methodology Source: DGAC-SCT, INEGI and Banco de México
Volaris growth has surpassed market growth in both domestic and international markets Domestic passenger growth (%) 25.2% 24.8% 23.0% 19.7% 13.0% 12.8% 10.3% 8.7% 8.6% 7.9% 8.0% 7.7% 2012 2013 2014 2015 2016 2017 Market Volaris International passenger growth (%) 33.3% 26.9% 23.4% 19.6% 12.4% 11.6% 11.0% 10.3% 8.8% 8.1% 8.0% 6.5% 2012 2013 2014 2015 2016 2017 Market Volaris 13 Source: DGAC
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