Volaris Reports September 2024 Traffic Results: 85% Load Factor

Rhea-AI Summary

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

- ASM capacity decreased by 12.8% year-over-year due to accelerated Pratt & Whitney engine inspections and aircraft groundings
- Transported 2.3 million passengers with a load factor of 85.0%, a 1.2 pp increase from last year
- RPMs decreased by 11.5%, with domestic RPMs down 18.5% and international RPMs up 2.1%

CEO Enrique Beltranena noted strong demand in both domestic and international markets for Q3. The company expects more normalized comparables in Q4, considering the timing of engine inspections and the recovery of Cat 1 in Q4 2023. The engine inspection process is progressing as forecasted, and the company's performance aligns with expectations.

Positive

• Load factor increased by 1.2 percentage points to 85.0% compared to last year
• International RPMs increased by 2.1% year-over-year
• Strong demand reported in both domestic and international markets for Q3

Negative

• ASM capacity decreased by 12.8% year-over-year due to engine inspections and aircraft groundings
• Total RPMs decreased by 11.5% compared to September 2023
• Domestic RPMs declined by 18.5% year-over-year
• Total passenger count decreased by 9.0% compared to the same period last year

Insights

Financial Analyst

Volaris' September 2024 traffic results reveal mixed signals for investors. The 12.8% year-over-year decrease in ASM capacity due to engine inspections is concerning, as it directly impacts revenue potential. However, the 1.2 percentage point increase in load factor to 85.0% suggests improved efficiency in capacity utilization.

The 11.5% decrease in total RPMs is significant, with domestic RPMs down 18.5%. This decline in domestic travel demand could pressure revenues. On the positive side, international RPMs grew by 2.1%, indicating some resilience in cross-border travel.

Year-to-date figures show a more pronounced 13.7% decrease in total RPMs and a 15.0% decrease in ASMs, highlighting the ongoing challenges. The overall 14.4% decrease in total passengers year-to-date is a key metric to watch, as it directly impacts top-line growth.

Investors should monitor the progress of engine inspections and their impact on capacity, as well as the company's ability to maintain strong load factors amid reduced capacity. The recovery of Cat 1 status in Q4 2023 could provide a tailwind for international operations going forward.

Aviation Industry Expert

The accelerated Pratt & Whitney engine inspections are a critical factor impacting Volaris' operations. This industry-wide issue affects multiple airlines, but Volaris seems to be managing it relatively well, maintaining a strong 85% load factor despite capacity constraints.

The 2.1% increase in international RPMs is noteworthy, suggesting Volaris is capitalizing on cross-border travel demand. This could be partly attributed to the recovery of Mexico's Category 1 aviation safety rating, which allows for expansion of U.S. routes.

The 19.8% decrease in domestic ASMs versus a smaller 12.2% decrease in domestic passengers indicates Volaris is optimizing its reduced fleet effectively. However, the significant domestic market contraction is a concern for the ultra-low-cost carrier model, which typically relies on high-volume domestic traffic.

Looking ahead, the normalization of comparables in Q4 and the potential resolution of engine inspection issues could provide a more accurate picture of Volaris' performance trajectory. The company's ability to quickly restore capacity once aircraft return to service will be important for its competitive positioning in the Mexican aviation market.

MEXICO CITY, Oct. 03, 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 September 2024 preliminary traffic results.

In September 2024, Volaris' ASM capacity decreased by 12.8% year-over-year due to the accelerated Pratt & Whitney engine inspections and the resulting aircraft groundings. Volaris transported 2.3 million passengers during the month at a load factor of 85.0%, a 1.2 pp increase compared to last year. RPMs for the month decreased by 11.5%, with Mexican domestic RPMs down by 18.5%, while international RPMs increased 2.1%.

Enrique Beltranena, Volaris’ President and CEO said: “Volaris finished the third quarter with strong demand in both domestic and international markets. As we enter the final quarter of the year, we will have more normalized comparables, considering the timing of the accelerated engine inspections and the recovery of Cat 1 in the fourth quarter of 2023. The engine inspections’ process has evolved according to our forecast, and the Company continues to perform in line with our expectations.”

	September 2024	September 2023	Variance	YTD September 2024	YTD September 2023	Variance
RPMs (million, scheduled & charter)
Domestic	1,390	1,706	-18.5%	13,399	17,065	-21.5%
International	892	874	2.1%	8,309	8,096	2.6%
Total	2,282	2,580	-11.5%	21,709	25,161	-13.7%
ASMs (million, scheduled & charter)
Domestic	1,562	1,947	-19.8%	14,837	19,798	-25.1%
International	1,122	1,132	-0.9%	10,223	9,690	5.5%
Total	2,684	3,079	-12.8%	25,060	29,488	-15.0%
Load Factor (%, RPMs/ASMs)
Domestic	89.0%	87.6%	1.4 pp	90.3%	86.2%	4.1 pp
International	79.5%	77.2%	2.3 pp	81.3%	83.6%	(2.3) pp
Total	85.0%	83.8%	1.2 pp	86.6%	85.3%	1.3 pp
Passengers (thousand, scheduled & charter)
Domestic	1,714	1,951	-12.2%	15,960	19,683	-18.9%
International	607	598	1.4%	5,665	5,566	1.8%
Total	2,321	2,549	-9.0%	21,625	25,250	-14.4%

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. Figures are rounded for convenience purposes.

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 220 and its fleet from 4 to 137 aircraft. Volaris offers more than 450 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 September 2024?

Volaris reported a load factor of 85.0% in September 2024, which was a 1.2 percentage point increase compared to the same month last year.

How many passengers did Volaris transport in September 2024?

Volaris transported 2.3 million passengers in September 2024, representing a 9.0% decrease compared to September 2023.

What caused the decrease in Volaris' ASM capacity in September 2024?

Volaris' ASM capacity decreased by 12.8% year-over-year in September 2024 due to accelerated Pratt & Whitney engine inspections and resulting aircraft groundings.

How did Volaris' international RPMs perform in September 2024?

Volaris' international RPMs increased by 2.1% in September 2024 compared to the same month in the previous year.