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| Statement |
|---|
| The positive trajectory extends further with the increasing adoptions of the ancillary offerings, particularly popular among passengers on extended journeys combined with improved domestic yield, attributed to lower industry capacity, we are poised for robust TRASM results in 2024 |
| Our quarterly and full-year 2023 performance demonstrated resilience in the face of the challenge encountered throughout the years, such as the extended FAA downgrade of Mexico to CAT 2, aircraft on ground -- AOGs due to Pratt & Whitney preventive accelerated inspections, and slot restrictions at the Mexico City International Airport |
| Compared to the same period last year our fourth quarter 2023 results are, total operating revenues of $899 million, a 10% increase notwithstanding the 1% year-over-year reduction in ASMs due to the continued strong demand and outstanding ancillary revenue improvement |
| Notably, fourth quarter TRASM increased to $0.096, marking a 10.7% rise compared to last year, an achievement ranking among the best in our history |
| This encouraging trend, initiated in the fourth quarter of 2023 is already evident and booking curves indicate a continuation of this favorable trend in the coming months aligned with our 2024 guidance |
| We're seeing also a very solid, fair environment, and we are pushing ancillary revenues further |
| Operating revenue grew 9.6% year-over-year, with unit revenue rising 10.7% on ASMs that contracted 1.1% |
| EBIT and EBITDAR margins expanded by 11 points and 6 points, respectively, versus the same period of 2022 |
| Clearly, this year, we're seeing an improved unit revenue that is driven by the solid demand we see in the domestic market and international market despite the reduction in capacity |
| We took advantage of strong demand, while adjusting our network size, placing focus on prioritizing passenger service, which led to positive outlook |
| We managed capacity so that RPM growth was flat despite a decrease of 1% in ASMs, highlighting demand remains especially strong in our core markets and stations |
| We are entering this year with important financial tailwinds that put us in a good position to meet our yearly goals |
| Volaris' analytical tools for predicting engine performance has proven accurate, ensuring our successful efforts towards maintaining a reliable passenger schedule |
| So, in both markets, really quite solid bookings throughout the first quarter and into the Easter high season |
| And international remains strong despite increases in capacity that we put in the network, taking advantage of the renewed Category 1 status |
| And if I break that down between domestic and international, we're seeing quite solid demand in the domestic, obviously, also helped by the reduction capacity that we put through in the network |
| We are confident that our corporate sustainability initiatives will foster long-term commitments from our stakeholders |
| And I can tell you that bookings for the first quarter look solid across our network and is very much in line with the quarterly guidance that we provided to you |
| We are well positioned with our enhanced brand presence and greater distribution power |
| EBIT total $164 million, an increase of 173%, reflecting the improvement in TRASM, the benefit of aircraft lease extensions and favorable fuel cost |
| We successfully boosted ancillary revenues to an all-time high, accounting for over 50% of total operating revenues in the fourth quarter |
| This will enhance customer satisfaction with an increasing mobile affinity |
| Our full-year 2023 results included a robust fourth quarter, which benefited from strong demand over the holiday season, our excellent operational execution, and steps to address the impact of the aircraft on ground |
| Instead, unit revenue was primarily driven by effectively capturing demand and by robust growth in our ancillary offering |
| Our network-wide load factor rose to a strong 88.1%, including a 91.8% load |
| During 2023, we learned a lot when resizing the operations and turned a very complex situation into a solid financial result for the fourth quarter |
| Concurrently, we've witnessed Frontier's growth in their market position |
| The inclusion of longer flight sectors not only ensures the more efficient utilization of our fleet but also holds the potential for other substantial benefits |
| We view our GTF capacity reduction as an opportunity and we will capitalize on this opportunity to achieve strong profitability as we did bouncing back from the pandemic |
| Capitalizing on the return of Category 1, we plan to increase higher-margin international flights and take advantage of reduced capacity throughout Mexico, aiming for stronger yields and unit revenues without compromising network defensibility |
| Statement |
|---|
| Like the past several months, the year ahead will be challenging and rewarding |
| It's important to highlight that despite witnessing strong fare trends in the domestic market, including a 17.4% increase in December, our average base share in the fourth quarter was actually 2% lower than last year |
| Passenger experience remains a priority however, in the second-half of last year, our passengers experienced an unfortunate number of cancellations due to the mentioned challenges earlier on |
| However, despite an approximate 30% increase in shop capacity announced by Pratt, persistent delays in materials availability at engine shops are anticipated |
| So, we will see a slowdown of the accelerated growth that we saw last year |
| CASM was $0.0731, decelerating 2% year-over-year |
| All of the costs remain controlled, with the lower ASMs expected to be the primary constraint on cost performance this year |
| To address this, during the second-half of last year, we needed to re-accommodate and/or compensate affected passengers, which meant absorbing in a resized capacity, low-fare bookings that consequently diluted unit revenues and added some incremental costs |
| And headcount came down in the fourth quarter, I think you mentioned |
| We reduced capacity in the domestic Mexican market, while we continued to re-accommodate our affected passengers |
| During the last year, we navigated the prolonged recovery of Category 1, government related capacity reductions at Mexico City International Airport, and the announcement of GTF engine-related accelerated inspections leading to aircraft groundings |
| And now, given the fleet constraints, you're redeploying to international, but also cutting back domestic, something like 25% in the first-half of this year |
| The average economic fuel cost for the full-year decreased by 18% to $3.11 per gallon |
| For the first quarter of 2024, we expect ASM reduction of 16% to 18% year-over-year, TRASM of $0.085 to $0.087, CASM ex fuel in the range of $0.055 to $0.057 |
| Any guess on what is going to be a normalized margin when aircraft are back to operate? In terms of you having a positive effect on cost dilution, but at the same time a negative one on margins and the compensation already done |
| Unlike the challenges faced by U.S |
| And I think it's compensating the vast majority of our fixed costs and it's not covering full of that and it's not recovering the revenues that we are losing |
| However, in the fourth quarter, we had to reduce domestic ASMs by 11.2% year-over-year, while growing international ASMs by 21.7% due to the accelerated inspections required by Pratt & Whitney |
| Forward-looking statements are subject to several factors that could cause the company results to differ materially from expectations as described in the company's filings with the United States' SEC and Mexico's CNBV |
| During this quarter, Volaris analyzed wet lease capacity and we concluded that it was not strategically productive or cost-efficient |
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