MEXICO CITY, Oct. 26, 2018 /PRNewswire/ — Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announced its financial results for the third quarter 2018.

The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS).

Third Quarter 2018 Highlights

  • Total operating revenues reached Ps.7,316 million for the third quarter, an increase of 11.3% year over year.   
  • Total ancillary revenues were Ps.2,220 million for the third quarter, an increase of 23.5% year over year. The total ancillary revenues per passenger for the third quarter were Ps.474, increasing 10.1% year over year.    
  • Total operating revenues per available seat mile (TRASM) were Ps.134.9 cents for the third quarter, a decrease of 1.9% year over year.     
  • Operating expenses per available seat mile (CASM) were Ps.130.4 cents for the third quarter, an increase of 4.8% year over year; with an average economic fuel cost per gallon of Ps.43.5, increasing 36.9% year over year, and an average exchange rate of Ps.18.98, a year over year increase of 6.5%. Operating expenses per available seat mile excluding fuel (CASM ex fuel) were Ps.81.9 cents for the third quarter, a decrease of 7.9% year over year.    
  • Operating income was Ps.246 million for the third quarter, with an operating margin of 3.4%, equal to a year over year operating margin decrease of 6.1 percentage points.    
  • Net loss was Ps.119 million (Ps. (0.12) per share / US$(1.17) per ADS for the third quarter, with a net loss margin of (1.6%), equal to a year over year net margin decrease of 12.6 percentage points.    
  • At the close of the third quarter, the Mexican peso had appreciated 5.3% against the U.S. dollar with respect to the end of period exchange rate of the previous quarter. The Company booked a foreign exchange loss of Ps.419 million as a consequence of our U.S. dollar net monetary asset position.     
  • Net cash flow used in operating activities was Ps.136 million, in conjunction with cash flow provided by investing activities of Ps.20 million, net cash flow used in financing activities of Ps.247 million, and a negative net foreign exchange difference of Ps.326 million; the net cash decrease in the third quarter was Ps.689 million. As of September 30, 2018, cash and cash equivalents were Ps.6,082 million.

Stable Macroeconomics and Domestic Consumer Demand with Exchange Rate Depreciation and Fuel Price Pressures

  • Resilient macroeconomics and domestic consumer demand: The macroeconomic indicators in Mexico during the third quarter were stable, with same store sales[1] increasing 5.3% year over year; remittances[2] increased 9.68% year over year during July and August 2018; and the Mexican Consumer Confidence Balance Indicator (BCC)[3] increasing 17% year over year in third quarter 2018.    
  • Air traffic volume increase: The Mexican DGAC reported overall passenger volume growth for Mexican carriers of 8.1% year over year in July and August; domestic overall passenger volume increased 7.4%, while international overall passenger volume increased 10.4%.    
  • Exchange rate volatility: The Mexican peso depreciated 6.5% year over year against the US dollar, from an average exchange rate of Ps.17.82 pesos per US dollar in the third quarter 2017 to Ps.18.98 pesos per US dollar during the third quarter 2018. At the close of the third quarter, the Mexican peso had appreciated 5.3% with respect to the end of period exchange rate of the previous quarter. The Company booked a foreign exchange loss of Ps.419 million, mainly as a consequence of our US dollar net monetary asset position.     
  • Higher fuel prices: The average economic fuel cost per gallon increased 36.9% to Ps.43.5 per gallon (US$2.3) in the third quarter 2018, year over year.

Passenger Traffic Stimulation, Further Ancillary Revenue Expansion, and Positive TRASM Trend Reaching Almost the Same Level Last Year

  • Passenger traffic stimulation: Volaris booked 4.7 million passengers in the third quarter of 2018, up 12.1% year over year. Volaris traffic (measured in terms of fare revenue miles, or RPMs) increased 9.9% for the same period. System load factor during the quarter decreased 2.7 percentage points year over year to 83.5%.    
  • Positive TRASM trend almost at the same level of last year: For the third quarter of 2018, yield decreased 2.8% with TRASM decreasing 1.9%, year over year. During the third quarter 2018, in terms of ASMs, domestic capacity grew 15.8%, while international capacity increased 8.4%, year over year.     
  • Total ancillary revenue growth: For the third quarter of 2018, total ancillary revenues and total ancillary revenues per passenger increased 23.5% and 10.1% year over year, respectively. The total ancillary revenue generation continues to grow with new and matured products, appealing to customers’ needs, representing 30.3% of the total operating revenues.    
  • New routes: In the third quarter 2018, Volaris announced 11 domestic routes from its focus cities Tijuana and Guadalajara, as well as from Mexico City and Bajio; and three international routes, two from Bajio to Sacramento and San Jose, California and one from Guadalajara to Charlotte, North Carolina.

Cost Control and Discipline, Despite Fuel Price Pressure and Exchange Rate Depreciation

  • CASM and CASM ex fuel for the third quarter 2018 were Ps.130.4 (US$6.9 cents) and Ps.81.9 cents (US$4.3 cents), respectively. This represented an increase of 4.8% and a decrease of 7.9%, respectively; mainly driven by higher average economic fuel cost per gallon of 36.9% and an average exchange rate depreciation of 6.5%, which were offset by a tightening cost control discipline.

Young and Fuel-efficient Fleet

  • During the third quarter 2018, the Company incorporated three aircraft (two A320 neo and one A321 neo) to its fleet; during this quarter no redeliveries were registered. As of September 30, 2018, Volaris’ fleet was composed of 73 aircraft (8 A319s, 52 A320s and 13 A321s), with an average age of 4.6 years. At the end of the third quarter 2018, Volaris’ fleet had an average of 184 seats, 72% of which were in sharklet-equipped aircraft.

Solid Balance Sheet and Good Liquidity

  • Net cash flow used in operating activities was Ps.136 million, in conjunction with cash flow provided by investing activities of Ps.20 million, net cash flow used in financing activities of Ps.247 million, and a negative net foreign exchange differences of Ps.326 million; the net cash used in the third quarter 2018 was Ps.689 million. As of September 30, 2018, cash and cash equivalents were Ps.6,082 million, representing now 23% of last twelve months operating revenues. Volaris registered negative net debt (or a positive net cash position) of Ps.2,889 million and total equity of Ps.8,863 million.

Active in Risk Management

  • Volaris remains active in its fuel risk management program. Volaris used call options to hedge 58% of its third quarter 2018 fuel consumption, at an average strike price of US $1.78 per gallon, which combined with the 42% unhedged consumption, resulted in a blended average economic fuel cost of US$2.3 per gallon.

IFRS 15: Revenue from Contracts with Customers

  • During 1Q 2018, we adopted IFRS 15 “Revenue from Contracts with Customers” which replaces existing revenue recognition guidance, including IAS 18 “Revenue”. IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.    
  • The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed in the consolidated statement of operations including in these quarterly earnings release as “other passenger revenue”).      
  • Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance, hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.   
  • This quarterly earnings release includes supplemental information for comparable basis, with recast amounts with the IFRS 15 adoption effects, and were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017.  

IFRS 16: Leases

  • The Accounting Standards Board (IASB) issued IFRS 16 Leases, which is effective for annual reporting periods beginning on or after January 1, 2019, with limited earlier application permitted. This new standard will replace the current IAS 17 Leases standard.   
  • Under IFRS 16, leases are accounted for based on a ‘right-of-use model’. The model reflects that, at the commencement date, a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The lessor conveys that right to use the underlying asset at lease commencement, which is the time when it makes the underlying asset available for use by the lessee.     
  • The most significant impacts of the new standard in airlines:   
    • The new standard requires almost all lease agreements to be recognized on the balance sheet; assets and liabilities will be increased significantly.
    • Almost all the lease payments will no longer be recognized as part of the “rent expenses”, but as part of the “depreciation expense”.
    • The standard includes certain recognition exemptions: a) leases with a lease term of 12 months, and b) leases where the underlying asset has a low value when new, of US$5,000 or less.
    • IFRS 16 permits two different adoption models. Full retrospective model or modified retrospective model.
    • The impact of U.S. dollar volatility will have greater impact in Mexican airlines with Mexican peso as functional currency. Accounting and taxes implication for the impact of non-cash foreign exchange gain or losses as consequence of the recognition of the required lease liabilities under the adoption of this new standard.
    • Cash Flows impact. Under IAS 17 (current standard) cash flows related to rent payments are recorded as part of the operating cash flows, but under IFRS 16 the cash flows related to rental payments will be presented as part of the financial cash flows.
    • Income tax accounting. a) Recognition and measurement of deferred tax assets and liabilities; and b) Assessment of the recoverability of deferred tax assets.
    • Additional disclosures       
  • The Company is in process of completing an assessment of the potential impact of adopting IFRS 16.

Investors are urged to carefully read the Company’s periodic reports filed with or furnished to the Securities and Exchange Commission, for additional information regarding the Company.

Conference Call/Webcast Details:

Presenters for the Company:

 

 

Date:

Mr. Enrique Beltranena, CEO

Mr. Holger Blankenstein, Airline EVP

Ms. Maria Elena Rodriguez, Investor Relations & Corporate Finance Director

 

Friday, October 26, 2018

Time:

10:00 am U.S. EDT (9:00 am Mexico City Time)

United States dial in (toll free):

1-877-830-2576

Mexico dial in (toll free):

001-800-514-6145

Brazil dial in (toll free):

0-800-891-6744

International dial in:

+ 1-785-424-1726

Participant passcode:

VOLARIS (8652747)

Webcast will be available at:

https://webcasts.eqs.com/volaris20181026

About Volaris:
*Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (“Volaris” or the “Company”) (NYSE: VLRS and BMV: VOLAR), is an ultra-low-cost carrier, with point-to-point operations, serving Mexico, the United States and Central America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since beginning operations in March 2006, Volaris has increased its routes from five to more than 167 and its fleet from four to 73 aircraft. Volaris offers more than 319 daily flight segments on routes that connect 40 cities in Mexico and 27 cities in the United States and Central America with the youngest fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business people and leisure travelers in Mexico and to select destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for eight consecutive years. For more information, please visit: www.volaris.com

Forward-looking Statements:
Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company’s expectations, beliefs or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words “expects,” “intends,” “estimates,” “predicts,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “potential,” “outlook,” “may,” “continue,” “will,” “should,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company’s objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company’s intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. Forward-looking statements should not be read as a guarantee or assurance of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.  Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements are subject to a number of factors that could cause the Company’s actual results to differ materially from the Company’s expectations, including the competitive environment in the airline industry; the Company’s ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company’s ability to generate non-ticket revenues; and government regulation. Additional information concerning these, and other factors is contained in the Company’s Securities and Exchange Commission filings. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above.  Forward-looking statements speak only as of the date of this release.  You should not put undue reliance on any forward-looking statements.  We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable law.  If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Investor Relations Contact:
Maria Elena Rodríguez & Andrea González / Investor Relations / ir@volaris.com / +52 55 5261 6444
Media Contact:
Gabriela Fernández / volaris@gcya.net / +52 55 5246 0100

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Financial and Operating Indicators

Unaudited

Three months
ended September 30,
2018

Three months ended
September 30,
2018

Three months
ended September 30,
2017

(Adjusted)

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars)*

(%)

Total operating revenues (millions)

389

7,316

6,571

11.3%

Total operating expenses (millions)

376

7,070

5,948

18.9%

EBIT (millions)

13

246

623

(60.5%)

EBIT margin

3.4%

3.4%

9.5%

(6.1) pp

Depreciation and amortization

6

115

150

(23.4%)

Aircraft and engine rent expense

85

1,593

1,384

15.1%

Net (loss) income (millions)

(6)

(119)

720

NA

Net (loss) income margin

(1.6%)

(1.6%)

11.0%

(12.6) pp

(Loss) income per share:

Basic (pesos)

(0.01)

(0.12)

0.71

NA

Diluted (pesos)

(0.01)

(0.12)

0.71

NA

(Loss) income per ADS:

Basic (pesos)

(0.06)

(1.17)

7.11

NA

Diluted (pesos)

(0.06)

(1.17)

7.11

NA

Weighted average shares outstanding:

Basic

1,011,876,677

1,011,876,677

0.0%

Diluted

1,011,876,677

1,011,876,677

0.0%

Available seat miles (ASMs) (millions) (1)

5,422

4,780

13.4%

     Domestic

3,752

3,239

15.8%

     International

1,670

1,541

8.4%

Revenue passenger miles (RPMs) (millions) (1)

4,526

4,119

9.9%

     Domestic

3,230

2,852

13.3%

     International

1,296

1,267

2.3%

Load factor (2)

83.5%

86.2%

(2.7) pp

     Domestic

86.1%

88.1%

(2.0) pp

     International

77.6%

82.2%

(4.6) pp

Total operating revenue per ASM (TRASM) (cents) (1)

7.2

134.9

137.5

(1.9%)

Fare revenue per ASM (RASM) (cents) (1)

5.0

94.0

99.9

(5.9%)

Fare revenue per RPM (Yield) (cents) (1)

6.0

112.6

115.9

(2.8%)

Average fare (2)

58

1,091

1,146

(4.8%)

Average other passenger revenue (1)

22

419

362

15.7%

Average non-passenger revenue (1)

2.9

55

68

(19.4%)

Total ancillary revenue per passenger (4)

25.2

474

431

10.1%

Operating expenses per ASM (CASM) (cents) (1)

6.9

130.4

124.4

4.8%

Operating expenses per ASM (CASM) (US cents) (3)

6.9

7.0

(1.6%)

CASM ex fuel (cents) (1)

4.4

81.9

88.9

(7.9%)

CASM ex fuel (US cents) (3)

4.3

5.0

(13.5%)

Booked passengers (thousands) (1)

4,680

4,173

12.1%

Departures (1)

30,391

26,999

12.6%

Block hours (1)

82,977

73,725

12.5%

Fuel gallons consumed (millions)

60.5

53.4

13.2%

Average economic fuel cost per gallon

2.3

43.5

31.8

36.9%

Aircraft at end of period

73

67

9.0%

Average aircraft utilization (block hours)

13.1

12.5

4.4%

Average exchange rate

18.98

17.82

6.5%

End of period exchange rate

18.81

18.20

3.4%

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

(1) Includes schedule + charter                                                                    (3) Dollar amounts were converted at average exchange rate of each period

(2) Includes schedule                                                                                   (4) Includes “other passenger revenues” and “non-passenger revenues”

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Financial and Operating Indicators

Unaudited

Nine months
ended
September 30, 2018

Nine months
ended September 30,
2018

Nine months
ended September 30,
2017
(Adjusted)

Variance

(In Mexican pesos, except otherwise indicated)

(US Dollars) *

(%)

Total operating revenues (millions)

1,031

19,396

18,264

6.2%

Total operating expenses (millions)

1,097

20,632

18,319

12.6%

EBIT (millions)

(66)

(1,235)

(55)

>100%

EBIT margin

(6.4%)

(6.4%)

(0.3%)

(6.1) pp

Depreciation and amortization

20

371

418

(11.2%)

Aircraft and engine rent expense

249

4,693

4,461

5.2%

Net loss (millions)

(64)

(1,199)

(1,106)

8.4%

Net loss margin

(6.2%)

(6.2%)

(6.1%)

(0.1) pp

Loss per share:

Basic (pesos)

(0.06)

(1.18)

(1.09)

8.4%

Diluted (pesos)

(0.06)

(1.18)

(1.09)

8.4%

Loss per ADS:

Basic (pesos)

(0.63)

(11.85)

(10.93)

8.4%

Diluted (pesos)

(0.63)

(11.85)

(10.93)

8.4%

Weighted average shares outstanding:

Basic

1,011,876,677

1,011,876,677

0.0%

Diluted

1,011,876,677

1,011,876,677

0.0%

Available seat miles (ASMs) (millions) (1)

15,538

13,966

11.3%

     Domestic

10,687

9,379

13.9%

     International

4,851

4,587

5.8%

Revenue passenger miles (RPMs) (millions) (1)

13,017

11,875

9.6%

     Domestic

9,227

8,165

13.0%

     International

3,790

3,710

2.2%

Load factor (2)

83.8%

85.0%

(1.2) pp

     Domestic

86.3%

87.1%

(0.8) pp

     International

78.2%

80.8%

(2.6) pp

Total operating revenue per ASM (TRASM) (cents) (1)

6.6

124.8

130.8

(4.5%)

Fare revenue per ASM (RASM) (cents) (1)

4.5

84.4

93.4

(9.6%)

Fare revenue per RPM (Yield) (cents) (1)

5.4

100.8

109.9

(8.3%)

Average fare (2)

52

978

1,074

(8.9%)

Average other passenger revenue

21

402

356

13.0%

Average non-passenger revenue (1)

3.5

65

71

(8.7%)

Total ancillary revenue per passenger (4)

24.8

467

427

9.4%

Operating expenses per ASM (CASM) (cents) (1)

7.1

132.8

131.2

1.2%

Operating expenses per ASM (CASM) (US cents) (3)

7.0

6.9

0.6%

CASM ex fuel (cents) (1)

4.6

86.1

93.3

(7.7%)

CASM ex fuel (US cents) (3)

4.5

4.9

(8.3%)

Booked passengers (thousands) (1)

13,434

12,200

10.1%

Departures (1)

87,076

80,182

8.6%

Block hours (1)

237,485

217,562

9.2%

Fuel gallons consumed (millions)

168.7

157.2

7.3%

Average economic fuel cost per gallon

2.3

43.0

33.6

27.9%

Aircraft at end of period

73

67

9.0%

Average aircraft utilization (block hours)

13.4

12.5

7.1%

Average exchange rate

19.04

18.93

0.6%

End of period exchange rate

18.81

18.20

3.4%

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

(1) Includes schedule + charter                                                                    (3) Dollar amounts were converted at average exchange rate of each period

(2) Includes schedule                                                                                   (4) Includes “other passenger revenues” and “non-passenger revenues”

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Operations

Unaudited

Three months
ended September 30,
2018

Three months

ended
September 30, 2018

Three months
ended September 30,
2017

(Adjusted)

Variance

(In millions of Mexican pesos)

(US Dollars) *

(%)

Operating revenues:

Passenger revenues

375

7,058

6,286

12.3%

   Fare revenues

271

5,096

4,773

6.8%

   Other passenger revenues

104

1,962

1,513

29.7%

Non-passenger revenues

14

258

285

(9.5%)

   Cargo

3

55

38

44.7%

   Other non-passenger revenues

11

203

247

(17.8%)

Total operating revenues

389

7,316

6,571

11.3%

Other operating income

(13)

(243)

(8)

>100%

Fuel

140

2,631

1,698

54.9%

Aircraft and engine rent expense

85

1,593

1,384

15.1%

Landing, take-off and navigation expenses

61

1,150

989

16.2%

Salaries and benefits

44

834

695

19.9%

Maintenance expenses

21

393

324

21.3%

Sales, marketing and distribution expenses

18

340

468

(27.4%)

Other operating expenses

14

257

248

3.6%

Depreciation and amortization

6

115

150

(23.4%)

Operating expenses

376

7,070

5,948

18.9%

Operating income

13

246

623

(60.5%)

Finance income

2

37

30

23.3%

Finance cost

(4)

(64)

(20)

>100%

Exchange (loss) gain, net

(22)

(419)

125

NA

Comprehensive financing result

(24)

(446)

135

NA

(Loss) income before income tax

(11)

(200)

758

NA

Income tax benefit (expense)

4

81

(38)

NA

Net (loss) income

(6)

(119)

720

NA

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Operations

Unaudited

 

Nine months
ended September 30,
2018

Nine months

 ended September 30,
2018

Nine months
ended September 30,
2017

(Adjusted)

Variance

(In millions of Mexican pesos)

(US Dollars)*

(%)

Operating revenues:

Passenger revenues

984

18,520

17,392

6.5%

   Fare revenues

697

13,118

13,050

0.5%

   Other passenger revenues

287

5,402

4,342

24.4%

Non-passenger revenues

47

877

872

0.5%

   Cargo

9

156

118

32.2%

   Other non-passenger revenues

38

720

754

(4.5%)

Total operating revenues

1,031

19,396

18,264

6.2%

Other operating income

(25)

(475)

(19)

>100%

Fuel

385

7,250

5,284

37.2%

Aircraft and engine rent expense

249

4,693

4,461

5.2%

Landing, take-off and navigation expenses

182

3,425

3,029

13.1%

Salaries and benefits

124

2,330

2,108

10.5%

Maintenance expenses

60

1,126

1,037

8.5%

Sales, marketing and distribution expenses

57

1,079

1,212

(11.0%)

Other operating expenses

45

832

789

5.4%

Depreciation and amortization

20

371

418

(11.2%)

Operating expenses

1,097

20,632

18,319

12.6%

Operating loss

(66)

(1,235)

(55)

>100%

Finance income

6

108

72

50.0%

Finance cost

(7)

(129)

(62)

>100%

Exchange loss, net

(24)

(457)

(1,578)

(71.0%)

Comprehensive financing result

(25)

(477)

(1,567)

(69.5%)

Loss before income tax

(91)

(1,713)

(1,623)

5.5%

Income tax benefit

27

514

517

(0.6%)

Net loss

(64)

(1,199)

(1,106)

8.4%

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger

The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed below as “other passenger revenue“). 

Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance, hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.  

The following table shows quarterly additional detail about the components of total ancillary revenue:

Unaudited

Three months
ended
September 30, 2018

(US Dollars)*

Three months
ended
September 30,
2018

Three months
ended
September 30, 2017

(Adjusted)

Variance

(%)

(In millions of Mexican pesos)

Other passenger revenues

104

1,962

1,513

29.7%

Non-passenger revenues

14

258

285

(9.5%)

Total ancillary revenues

118

2,220

1,798

23.5%

Booked passengers (thousands)

4,680

4,680

4,173

12.1%

Total ancillary revenue per passenger

25.2

474

431

10.1%

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Financial Position

(In millions of Mexican pesos)

September 30, 2018
Unaudited

September 30, 2018
Unaudited

December 31, 2017
(Adjusted)

(US Dollars)*

Assets

Cash and cash equivalents

323

6,082

6,951

Accounts receivable

110

2,045

1,449

Inventories

16

309

295

Prepaid expenses and other current assets

36

678

768

Financial instruments

12

228

497

Guarantee deposits

49

925

1,353

Total current assets

546

10,267

11,313

Rotable spare parts, furniture and equipment, net

270

5,081

4,376

Intangible assets, net

9

162

190

Deferred income taxes

30

571

563

Guarantee deposits

291

5,477

6,098

Other assets

7

126

126

Total non-current assets

607

11,417

11,353

Total assets

1,153

21,684

22,666

Liabilities

Unearned transportation revenue

149

2,806

2,293

Accounts payable

57

1,065

1,118

Accrued liabilities

120

2,263

2,051

Other taxes and fees payable

89

1,665

1,245

Income taxes payable

8

155

111

Financial instruments

4

Financial debt

127

2,393

2,404

Other liabilities

5

85

281

Total short-term liabilities

555

10,436

9,503

Financial debt

43

800

1,079

Accrued liabilities

8

153

200

Other liabilities

15

291

217

Employee benefits

1

22

19

Deferred income taxes

60

1,119

1,617

Total long-term liabilities

127

2,385

3,132

Total liabilities

682

12,821

12,635

Equity

Capital stock

158

2,974

2,974

Treasury shares

(5)

(100)

(85)

Contributions for future capital increases

Legal reserve

16

291

291

Additional paid-in capital

96

1,813

1,804

Retained earnings

199

3,750

4,948

Accumulated other comprehensive losses

7

135

99

Total equity

471

8,863

10,031

Total liabilities and equity

1,153

21,684

22,666

Total shares outstanding fully diluted

1,011,876,677

1,011,876,677

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Cash Flows – Cash Flow Data Summary

Unaudited

 

Three months

ended
September 30, 2018

Three months
ended
September 30, 2018

Three months
ended
September 30, 2017

(Adjusted)

(In millions of Mexican pesos)

(US Dollars)*

Net cash flow used in operating activities

(7)

(136)

(385)

Net cash flow provided by (used in) investing activities

1

20

(564)

Net cash flow (used in) provided by financing activities

(13)

(247)

268

Decrease in cash and cash equivalents

(19)

(363)

(681)

Net foreign exchange differences

(17)

(326)

73

Cash and cash equivalents at beginning of period

359

6,771

5,981

Cash and cash equivalents at end of period

323

6,082

5,373

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Cash Flows – Cash Flow Data Summary

Unaudited

 

Nine months

ended
September 30, 2018

Nine months
ended
September 30, 2018

Nine months
ended
September 30, 2017

(Adjusted)

(In millions of Mexican pesos)

(US Dollars)*

Net cash flow provided by (used in) operating activities

25

464

(130)

Net cash flow used in investing activities

(34)

(641)

(1,409)

Net cash flow (used in) provided by financing activities

(21)

(386)

533

Decrease in cash and cash equivalents

(30)

(563)

(1,006)

Net foreign exchange differences

(16)

(306)

(692)

Cash and cash equivalents at beginning of period

369

6,951

7,071

Cash and cash equivalents at end of period

323

6,082

5,373

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

The following table shows adjusted balances after the adoption of IFRS 15, “Revenue from Contracts with Customers” on the quarterly statements of operations for each quarter of 2017. These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017.

Unaudited

Three months ended March 31, 2017

Three months ended June 30, 2017

Three months ended September 30, 2017

Three months ended   December 31, 2017

Full Year 2017 Adjusted

(In millions of Mexican pesos)

Operating revenues:

 Passenger revenues

5,407

5,700

6,286

6,257

23,650

   Fare revenues

4,025

4,252

4,773

4,741

17,791

   Other passenger revenues

1,382

1,448

1,513

1,516

5,859

 Non-passenger revenues

292

294

285

267

1,138

   Cargo

41

39

38

53

171

   Other non-passenger revenues

251

255

247

214

967

Total operating revenues

5,699

5,994

6,571

6,524

24,788

Other operating income

(1)

(10)

(8)

(78)

(97)

Fuel

1,892

1,694

1,698

1,972

7,256

Aircraft and engine rent expense

1,699

1,378

1,384

1,612

6,073

Landing, take-off and navigation expenses

1,035

1,006

989

981

4,011

Salaries and benefits

696

717

695

715

2,823

Sales, marketing and distribution expenses

358

387

468

479

1,692

Maintenance expenses

351

362

324

396

1,433

Other operating expenses

270

270

248

300

1,088

Depreciation and amortization

128

139

150

131

548

Operating expenses

6,428

5,943

5,948

6,508

24,827

Operating (loss) income

(729)

51

623

16

(39)

Finance income

21

21

30

34

106

Finance cost

(21)

(22)

(20)

(23)

(86)

Exchange (loss) gain, net

(1,145)

(558)

125

784

(794)

Comprehensive financing result

(1,145)

(559)

135

795

(774)

(Loss) income before income tax

(1,874)

(508)

758

811

(813)

Income tax benefit

556

(38)

(357)

161

Net (loss) income

(1,318)

(508)

720

454

(652)

(Loss) earnings per share:

Basic (pesos)

(1.30)

(0.50)

0.71

0.45

(0.64)

Diluted (pesos)

(1.30)

(0.50)

0.71

0.45

(0.64)

(Loss) earnings per ADS:

Basic (pesos)

(13.02)

(5.02)

7.11

4.49

(6.44)

Diluted (pesos)

(13.02)

(5.02)

7.11

4.49

(6.44)

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries

The following table shows quarterly adjustments made due to the adoption of IFRS 15, “Revenue from Contracts with Customers” on the statements of operations for 2017.

Unaudited

Full Year 2017 as Reported

Three months ended March 31, 2017

Three months ended June 30, 2017

Three months ended September 30, 2017

Three months ended   December 31, 2017

Full Year 2017 Adjusted

(In millions of Mexican pesos)

Operating revenues:

 Passenger revenues

17,791

1,382

1,448

1,513

1,516

23,650

   Fare revenues

17,791

17,791

   Other passenger revenues

1,382

1,448

1,513

1,516

5,859

 Non-passenger revenues

7,054

(1,339)

(1,435)

(1,524)

(1,618)

1,138

   Cargo

171

171

   Other non-passenger revenues

6,883

(1,339)

(1,435)

(1,524)

(1,618)

967

Total operating revenues

24,845

43

13

(11)

(102)

24,788

Other operating income

(97)

(97)

Fuel

7,256

7,256

Aircraft and engine rent expense

6,073

6,073

Landing, take-off and navigation expenses

4,011

4,011

Salaries and benefits

2,823

2,823

Sales, marketing and distribution expenses

1,692

1,692

Maintenance expenses

1,433

1,433

Other operating expenses

1,088

1,088

Depreciation and amortization

548

548

Operating expenses

24,827

24,827

Operating income (loss)

18

43

13

(11)

(102)

(39)

Finance income

106

106

Finance cost

(86)

(86)

Exchange (loss), net

(794)

(794)

Comprehensive financing result

(774)

(774)

(Loss)income before income tax

(756)

43

13

(11)

(102)

(813)

Income tax benefit

161

161

Net (loss) income

(595)

43

13

(11)

(102)

(652)

Basic (loss) earnings per share

(0.59)

0.04

0.01

(0.01)

(0.10)

(0.64)

Diluted (loss) earnings per share

(0.59)

0.04

0.01

(0.01)

(0.10)

(0.64)

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger

The adoption of the IFRS 15 impacted the classification and timing of recognition of certain ancillary items such as bags, advanced seat selection, itinerary changes and other air travel-related fees, since they are deemed part of the single performance obligation of providing passenger transportation. These ancillary items are now recognized in passenger revenue (disclosed below as “other passenger revenue“). 

Non-passenger revenue primarily consists of revenue from the sale of other items such as rental cars, insurance hotels and cargo. This change did not have a material impact on our income statement or balance sheet in any period presented.  

The following table shows quarterly additional detail about the components of total ancillary revenue:

Unaudited

Three months ended March 31, 2017

Three months ended June 30, 2017

Three months ended September 30, 2017

Three months ended   December 31, 2017

Full Year 2017 Adjusted

(In millions of Mexican pesos)

Other passenger revenues

1,382

1,448

1,513

1,516

5,859

Non-passenger revenues

292

294

285

267

1,138

Total ancillary revenues

1,674

1,742

1,798

1,783

6,997

Booked passengers (thousands)

3,964

4,063

4,173

4,226

16,426

Total ancillary revenue per passenger

422

429

431

422

426

 Total ancillary revenue per

passenger (as reported) (*)

411

426

434

446

429

(*) These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2017, under the called name “Non-ticket revenue per passenger”.


[1] Source: Asociación Nacional de Tiendas de Autoservicio y Departamentales, A. C. (ANTAD)
[2] Source: Banco de México (BANXICO)
[3] Source: Instituto Nacional de Estadística y Geografía (INEGI)

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