Q2 2021 Controladora Vuela Compania de Aviacion SAB de CV Earnings Call

[music].

Good morning, everyone. Thank you for standing by.

Welcome to <unk> second quarter 2021 financial results conference call on.

All lines are in a listen only mode.

Following the company's presentation, we will open the call for your questions and answers instructions on how to ask a question will be provided at that time per.

Please note that this event is being recorded.

This event is also being broadcast live via webcast and may be accessed through the Valero website.

Those following the presentation via the webcast may pose their questions on the platform and their questions will be answered to either a by the management either a during the call or by the Polaris Investor Relations team. After the conference is finished.

And to send your questions via the web at cash platform you need a click on a question Mark just below the video area and the upper left corner and typing your question.

At this point I would like to turn the call over to MS. Maria Elena Rodriguez, well Theres, a investor Relations Director. Please go ahead Maria Elena.

Yeah.

Good morning, everyone and thank you for joining the call.

With us today, as a president and CEO and we get a tenant or our line executive Vice President Holger blank and spine and our Chief Financial Officer High net bullish still.

And there will be discussing the company's second quarter 2021 vessels.

Afterwards, we will move on to your questions.

Please note that this call and for investors and analysts only.

Any questions from a media will be taken on an individual basis.

Before we begin please.

Please let me remind everyone that this call may include forward looking statements.

Whitney and many of applicable securities laws.

Forward looking statements are subject to share all of factors that could cause a company sexual brussels to differ materially from expectations for reasons described and the company's filings with the U S Securities and Exchange Commission, and the commission and National Vanguardia and evaluate.

Furthermore, a lora undertakes no obligation to publicly update or revise any forward looking statements.

Similar to the press release, we are comparing a russell and the second quarter of 2019, instead of a second quarter 2020 with.

We believe this will provide a better comparison to the financial unapproved performance of the company.

It is now my pleasure to turn the call over to Lars <unk>, President and CEO and Mr. Enrique back on it.

Thank you very much Maria Elena.

And to everyone joining us today I would like to begin by thanking all malarious ambassadors, where their airports over the past months airports that have been rewarded with solid results.

With a growing recovery and travel demand what Larry's class responded to old challenges not only by strengthening its operations, but also a increasing its capacity while maintaining its ultra low cost structure.

This quarter once again, we can affirm that malaria has been leaving the airline industry's recovery and I would like to highlight the most important milestones for the second quarter first valores de lever a healthy capacity expansion and 14% higher a S M and the second quarter.

And in a 2019.

The company has led demand recovery and the Mexican airline industry and continues to take full advantage of the rebound in air travel demand and our capacity expansion has been a strategic and the result translated to higher T rosin, and lower CASM and better leverage among publicly traded peers.

And second Valero has achieved double digit P raws and expansion of 22% versus 2019 due to his strong operations and ability to adapt to new circumstances with higher capacity healthy load factors and a stronger unit revenue per passenger and we acknowledge that this growth has been.

Really fueled by unprecedented void left in the Mexican market and pent up demand, which allowed us to deploy capacity strategically for a fast recovery and we are budgeting to RASM levels to stabilize as market comes back to a quick review.

Third Boulerice EBITDAR margin was 41%, which represented a highest margin for a second quarterly and the history of the company a testament to Polaris has the ability to turn around and come out stronger for it any crisis EBITDAR of $4.7 billion vessels almost doubled.

Compared to the second quarter of 2019, and such expansion was the result of a strong theorize my diet controls.

Fourth and the second quarter, where a large delivered cash generation a $1.2 million per day, which is above our revised guidance due to a sequential improvement in sales throughout the board.

EBITDA growth and margin expansion naturally led to a strong cash generation. Despite a material reduction in accounts payable and defer a rentals.

And so June 13th where low you have cash and cash equivalents, a $532 million, which represents 128 days of operating expense.

And last the fifth point is what larry's outlook for growth and expansion plans as a company has recovered operationally and financially to brick and beam 19 levels if households, a consolidated its lowest cost position and solid balance sheet, which places the company and a very strong position for a girl.

And with cycle, we're planning to incorporate 25, new aircraft into our fleet in the next 18 months month being highly productive and fleet utilization getting journal aircraft are mainly plan to increase the frequency of flights and the Mexican domestic market and to strengthen our operations in Central America.

And my closing remarks, I will elaborate on such growth plan.

And our strong results, we are leading the recovery and the global aviation industry. It will be challenging to find another airline with a similar operational and financial performance anywhere in the world.

Finally, I want to highlight how proud I am of our team's ability to deliver strong results, which are truly best in class.

Thank you again to all Polaris ambassadors I would now like to turn the call over a 2 hour airline executive Vice President Holger blank and Stein to discuss our operations.

Thank you very much.

Thank you Enrique.

Polaris was a heck effective and ramping up capacity quickly and and the right markets. Following a weak first quarter due to the second wave of COVID-19 infections in Mexico and the U S.

In the second quarter.

Our capacity recovery continued and we operate a 14% more ASM and the same quarter a 2019.

S market had a strong recovery as we saw the vaccination rollout contribute to more confidence for international travel.

On the domestic front capacity in Mexico also recovered well, especially within leisure destination.

And a sam's were 18% higher compared to the same quarter of 2019.

Hence our American progress was slower and reached 74% of a acm's compared to the second quarter 2019 figures.

Going forward capacity increases will focus on Mexico city and domestic routes, while also solidifying our presence in the core markets of Tijuana and Guadalajara.

We plan to launch a flight to Colombia in the fourth quarter and as of June have already started telling does a 10 year treasury.

We are on track to launch we're largely a salvador.

By the late third quarter to complement our presence and Costa Rica.

And enable us to take advantage of route rights from El Salvador.

The biggest central American VFR markets to the U S.

Growth in Central America is increasingly important.

2 diversify the Mexican revenue base generate more U S dollar denominated revenues, maintaining our low operating costs and.

Very importantly, take advantage of market opportunities left by a weaker competitors in the region.

Traveling for the second quarter was solid at 165 peso cents, a 22% increase over the same period of 2019, mostly driven by and improved fare environment.

And improved while maintaining high load factors and rebuilding the network and solidifying our presence in the main Mexican and U S VFR markets in.

In addition, higher fares were accompanied by better ancillary revenue levels than in the same period of 2019.

For the third quarter of a year, we continue to forecast healthy fares and strong ancillary revenue.

And that's head ask.

Market capacity increases beyond 2019 levels and demand recovers pairs might experience some pressure in the most competed markets.

A large network and cost structure, a well positioned to deal with fair pressures at 46% of a route space Little no air competition, and our operating costs, a 1 of the lowest in the industry.