Volaris corporate-presentation-september

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  • The Leading Ultra-Low-Cost Airline Serving

    Mexico, US and Central America

    September 2015

  • Disclaimer

    2

    The information ("Confidential Information") contained in this presentation is confidential and is provided by Controladora

    Vuela Compaa de Aviacin, 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. 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 or 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.

  • Strong first half 2015 financial results

    Positive cash flow and strong balance sheet: Net increase of cash by Ps. 1,679

    million, mainly driven by operating activities. Unrestricted cash of Ps. 4,028 million (US

    $252 (1) million), 26% of LTM revenues.

    Total operating revenues: Increase of 29% for the 1H YoY, reaching Ps. 7,867 million.

    TRASM increased to Ps. 123 cents (+15% YoY).

    Notes:

    (1) Converted to USD at June end of period spot exchange rate corresponding for the period, $15.5676.3

    Disciplined capacity management and network diversification: International ASMs

    grew 33% in 1H YoY, while domestic ASMs grew 6% for same period with a continuous

    domestic capacity discipline. Total ASMs grew 13% during the first half and twelve new

    routes were launched during the first half.

    New ancillary combos driving non-ticket revenue growth: Non-ticket revenue excl.

    cargo per pax reached Ps. 321 (US. $21(1)), an increase of +39% for the first half YoY;

    driven by new ancillary combos, commission based products during the booking flow and

    new a la carte products.

    Costs control & strong profitability: Maintaining lowest unit cost in the Americas, CASM

    of US $7.2 cents, decreased 20% YoY (CASM excl. fuel US $4.9 cents); EBITDAR margin

    for the period 32% (+19.2 pp, YoY).

  • Volaris Mexicos Ultra-Low-Cost Carriers snapshot at

    30,000 feet

    Notes:

    (1) Converted to USD at an average annual exchange rate

    (2) Corresponds to the number of booked passengers

    (3) Based on number of passengers, domestic and international passengers

    Source: Company data, SCT-DGAC

    Serving 62 destinations throughout Mexico, US and Central America

    Volaris destinations

    4

    Domestic market share(3)

    LTM Int. Total

    Revenue 29%

    LTM Dom. Total

    Revenue 71%

    12.2%

    20.5% 23.1% 23.3%26.1%

    2008 2012 2013 2014 July YTD2015

    2008 2014

    LTM

    Jun

    2015

    2008-

    14

    CAGR

    Unit cost

    (CASM ex-fuel;

    cents, USD)(1)5.5 5.4 5.2 -0.4%

    Passenger

    demand

    (RPMs, bn)

    3.2 9.7 10.3 +20.5%

    Aircraft

    (End of Period)21 50 53 +15.6%

    Passengers

    (mm)(2)3.5 9.8 10.6 +18.7%

    Operating

    revenue

    (mm, USD)(1)397 1,056 1,107 +17.7%

    Adj. EBITDAR

    (mm. USD)(1)67 232 336 +23.0%

    Adj. ROIC (pre-

    tax)11% 14% 19% +3 pp.

  • Volaris low base fares stimulate demand and drive

    continuing growth

    Stimulation

    of

    demand

    More

    ancillary

    revenue

    More capacity

    Lower base

    fares

    Resilient ULCC business

    model driving high,

    profitable growthLower cost

    Since its launch, Volaris has stimulated new demand in the Mexican market through an aggressive

    revenue management strategy that drives lower fares and higher load factors

    5

  • Notes;

    (1) Converted to USD at an average exchange rate corresponding to the period

    (2) Figures updated as per latest public reports as of September 2014

    Source: Company data, data airlines public information, DGAC reports, Diio Mi

    Aeromexico Interjet VivaAerobus Volaris

    CASM 1H 2015

    (cents, USD)(1) 11.3 10.3 7.4 7.4

    Low ticket prices 1H 2015

    Average Fare (USD)(1) 140 84 35 74

    Non-ticket rev. incl. Cargo 1H 2015

    Non-ticket rev. incl. Cargo per pax (USD)(1) 19.1 7.53 21.7 22.4

    Modern & uniform fleet

    Average age fleet (years) 7.9 6.4 20.7 4.3

    High daily utilization

    Block hours per day 11.3 9.1 8.6(2) 11.8

    Other/ eg. (No GDS)

    Legacy < Hybrid/LCC < ULCC

    6

    Volaris ULCC business model is clearly differentiated from

    legacies, hybrids and other LCCs

  • 5.2

    12.0

    9.0 8.88.1

    7.2

    5.66.4

    8.4

    6.65.8

    9.9

    2.8

    4.6

    4.33.6

    3.64.2

    4.23.4

    3.3

    3.4

    3.0

    3.5

    Avianca LatAm Aeromexico Interjet Gol VivaAerobus Copa SouthWest Allegiant Spirit DCOMPS

    Volaris has a best-in-class unit cost structure

    Denotes fuel

    cost per ASM

    Lowest unit cost in the Americas(1)

    CASM and CASM ex-fuel (LTM June 2015, USD cents)(3)

    Latin American Carriers US Network

    Carriers(2)US LCCs

    Notes:

    (1) Based on CASM among the publicly-traded airlines

    (2) DCOMPS= Direct Competitors: Average CASM and CASM ex-fuel; US network carriers include: Delta, United, Alaska Airlines, American Airlines

    (3) Non-USD data converted to USD at an average exchange rate corresponding for the period

    (4) VivaAerobus as per public report of September 2014

    Source: Company data, Airlines public information, Diio Mi

    7

    8.0

    16.6

    13.2

    12.411.7

    9.9 9.8 10.0

    8.8

    13.4

    11.411.7

    (4)

  • 12.5 11.3

    9.1 8.6 8.8 8.1

    Aeromexico Interjet VivaAerobus GlobalA320

    GlobalA319

    20.7

    10.8 8.5

    6.5 4.3

    VivaAerobus Mexicanindustry

    Aeromexico Interjet Volaris

    Young, fuel efficient fleet

    Interjet

    Focus on fleet utilization and efficiency drives higher revenue

    and lower cost: A320 retrofit and A321 arrival(1)

    Notes:

    (1) A320 retrofit and factory fit to 179 seats/A321 arrival with 220 seats

    (2) Implied passengers per aircraft is calculated as average seats per aircraft multiplied by the load factor. VivaAerobus figures as of FY 2014

    (3) Block hours per day figures updated as per DGAC latest reports.

    (4) Block hours per day calculated as ((Total block hours for the period / Monthly average number of aircraft) / Number of days for the period)

    (5) Aeromexico, Interjet and VivaAerobus represent domestic competitors of Volaris

    (6) Average seats per aircraft calculated as seats flown over departures. Aeromexico only RJ and NB.

    Source: Company data, airlines public information, DGAC, Airbus, Diio Mi

    Load factor

    (2Q 2015)Passengers

    per aircraft(2)

    83%

    77%

    79%

    137

    104

    81Interjet A320

    150 seats per aircraft

    Aeromexico 737-800

    160 seats per aircraft

    High daily utilization

    Volaris A320

    179 seats per aircraft

    High density configuration(5)

    Aeromexico

    Block hours per day (2Q 2015)(4) Average age (Yrs, as of June 30, 2015)

    8

    VivaAerobus 737-300

    148 seats per aircraftVivaAerobus 75% 122

    (3) (3) (3)

    Avg. seats

    per aircraft(6)

    162

    135

    102

    165

  • 2014

    International

    Domestic

    2014

    First, econom