Volaris Reports July 2024 Traffic Results: 90% Load Factor

Rhea-AI Summary

Volaris, the ultra-low-cost carrier serving Mexico, the United States, Central, and South America, reported its July 2024 preliminary traffic results. Key highlights include:

- ASM capacity decreased by 15.0% year-over-year due to accelerated Pratt & Whitney engine inspections and aircraft groundings
- Load factor increased by 2.0 pp YoY to 89.8%
- RPMs decreased by 13.0%
- Mexican domestic RPMs decreased by 20.0%, while international RPMs increased by 1.0%
- Transported 2.7 million passengers during the month

The company's strategic fleet mitigation plan is on track, with a well-balanced market mix and increased presence in the cross-border market, strengthening unit revenues. Booking curves indicate robust performance for the summer high season.

Positive

• Load factor increased by 2.0 percentage points year-over-year to 89.8%
• International RPMs increased by 1.0%
• Strategic fleet mitigation plan is on track and delivering favorable outcomes
• Increased presence in the cross-border market, strengthening unit revenues
• Booking curves indicate robust performance for the summer high season

Negative

• ASM capacity decreased by 15.0% year-over-year due to engine inspections and aircraft groundings
• Overall RPMs decreased by 13.0%
• Mexican domestic RPMs decreased by 20.0%
• Total passengers transported decreased by 12.3% compared to July 2023

Insights

Aviation Industry Analyst

Volaris' July 2024 traffic results reveal a mixed performance amidst operational challenges. The 15.0% decrease in ASM capacity due to Pratt & Whitney engine inspections is concerning, but the company has shown resilience. The 2.0 percentage point increase in load factor to 89.8% is impressive, indicating strong demand despite reduced capacity.

The 20.0% decrease in domestic RPMs versus a 1.0% increase in international RPMs suggests a strategic shift towards cross-border markets. This pivot may help mitigate domestic challenges and potentially improve unit revenues. The overall 13.0% decrease in RPMs, while significant, is less severe than the capacity reduction, reflecting effective capacity management.

Volaris' ability to transport 2.7 million passengers despite these challenges demonstrates operational adaptability. However, investors should monitor the ongoing impact of engine inspections on fleet utilization and financial performance in the coming months.

Financial Analyst

From a financial perspective, Volaris' July 2024 results present a nuanced outlook. The increased load factor of 89.8% is a positive indicator for revenue efficiency, potentially offsetting some of the impact from reduced capacity. However, the 15.0% decrease in ASMs likely translates to reduced overall revenue, which may pressure margins.

The shift towards international markets, with a 1.0% increase in international RPMs, could be financially beneficial if these routes offer higher yields. Investors should focus on upcoming financial reports to assess the impact on unit revenues and profitability. The company's ability to maintain a high load factor during fleet challenges suggests strong demand, which could support pricing power.

While the traffic reduction is significant, Volaris' strategic fleet mitigation plan and market mix adjustment indicate proactive management. This adaptability could be important for financial stability in the face of ongoing operational challenges.

Market Research Analyst

Volaris' July 2024 traffic results offer intriguing insights into market dynamics. The 2.0 percentage point increase in load factor to 89.8% suggests robust consumer demand, even as capacity decreased. This high load factor, especially during the summer season, indicates strong market positioning despite operational challenges.

The divergence between domestic and international performance is noteworthy. The 20.0% decrease in domestic RPMs versus a 1.0% increase in international RPMs points to shifting market preferences or strategic reallocation of resources. This could reflect changing travel patterns post-pandemic or a deliberate strategy to capture higher-yield international traffic.

The CEO's statement about a well-balanced market mix and strengthening unit revenues is encouraging. However, the true test will be sustaining this performance beyond the summer peak. Investors should watch for any shifts in consumer behavior or competitive responses that could impact Volaris' market share and pricing power in the ultra-low-cost carrier segment.

MEXICO CITY, Aug. 05, 2024 (GLOBE NEWSWIRE) -- Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS and BMV: VOLAR) (“Volaris” or “the Company”), the ultra-low-cost carrier (ULCC) serving Mexico, the United States, Central, and South America, reports its July 2024 preliminary traffic results.

In July 2024, Volaris' ASM capacity decreased by 15.0% year-over-year due to the accelerated Pratt & Whitney engine inspections and the resulting aircraft groundings. Load factor in the month increased by 2.0 pp YoY to 89.8%, as RPMs decreased by 13.0%. Mexican domestic RPMs decreased by 20.0%, while international RPMs increased by 1.0%. Volaris transported 2.7 million passengers during the month.

Enrique Beltranena, Volaris’ President and CEO said: “Our strategic fleet mitigation plan is on track and continues to deliver favorable outcomes; we have achieved our goals since the engine inspections began. We currently have a well-balanced market mix, with an increased presence in the cross-border market, that is strengthening our unit revenues. As shown with our July traffic, our booking curves similarly indicate robust performance for the summer high season.”

	July 2024		July 2023		Variance		YTD July 2024		YTD July 2023		Variance
RPMs (million, scheduled & charter)
Domestic	1,657		2,071		-20.0	%	10,374		13,263		-21.8	%
International	1,034		1,024		1.0	%	6,451		6,250		3.2	%
Total	2,692		3,095		-13.0	%	16,826		19,513		-13.8	%
ASMs (million, scheduled & charter)
Domestic	1,819		2,352		-22.7	%	11,455		15,503		-26.1	%
International	1,178		1,174		0.3	%	7,932		7,385		7.4	%
Total	2,997		3,526		-15.0	%	19,387		22,888		-15.3	%
Load Factor (%, RPMs/ASMs)
Domestic	91.1	%	88.1	%	3.1 pp		90.6	%	85.6	%	5.0 pp
International	87.8	%	87.2	%	0.5 pp		81.3	%	84.6	%	(3.3) pp
Total	89.8	%	87.8	%	2.0 pp		86.8	%	85.3	%	1.5 pp
Passengers (thousand, scheduled & charter)
Domestic	1,979		2,356		-16.0	%	12,288		15,314		-19.8	%
International	705		705		0.1	%	4,407		4,306		2.3	%
Total	2,685		3,061		-12.3	%	16,695		19,620		-14.9	%

The information included in this report has not been audited and does not provide information on the Company’s future performance. Volaris’ future performance depends on several factors. It cannot be inferred that any period’s performance or its comparison year-over-year will indicate a similar performance in the future.

Glossary

Revenue passenger miles (RPMs): Number of seats booked by passengers multiplied by the number of miles flown.

Available seat miles (ASMs): Number of seats available for passengers multiplied by the number of miles flown.

Load factor: RPMs divided by ASMs and expressed as a percentage.

Passengers: The total number of passengers booked on all flight segments.

Investor Relations Contact
Ricardo Martínez / ir@volaris.com

Media Contact
Israel Álvarez / ialvarez@gcya.net

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, Central, and South America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since the beginning of operations in March 2006, Volaris has increased its routes from 5 to more than 201 and its fleet from 4 to 137 aircraft. Volaris offers more than 500 daily flight segments on routes that connect 44 cities in Mexico and 29 cities in the United States, Central, and South America, with one of the youngest fleets in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico, the United States, Central, and South America. Volaris has received the ESR Award for Social Corporate Responsibility for fifteen consecutive years. For more information, please visit ir.volaris.com. Volaris routinely posts information that may be important to investors on its investor relations website. The Company encourages investors and potential investors to consult the Volaris website regularly for important information about Volaris.

FAQ

What was Volaris' load factor in July 2024?

Volaris reported a load factor of 89.8% in July 2024, which was an increase of 2.0 percentage points compared to the same month in 2023.

How did Volaris' ASM capacity change in July 2024?

Volaris' ASM capacity decreased by 15.0% year-over-year in July 2024 due to accelerated Pratt & Whitney engine inspections and resulting aircraft groundings.

What was the impact on Volaris' domestic and international RPMs in July 2024?

In July 2024, Volaris' Mexican domestic RPMs decreased by 20.0%, while international RPMs increased by 1.0% compared to the same period last year.

How many passengers did Volaris transport in July 2024?

Volaris transported 2.7 million passengers during July 2024, which represents a 12.3% decrease compared to July 2023.

What is Volaris' outlook for the summer high season based on their July 2024 traffic results?

According to Volaris' CEO, booking curves indicate robust performance for the summer high season, suggesting a positive outlook despite the challenges faced in July 2024.