Q1 2025 Controladora Vuela Compañía de Aviación S.A.B. de C.V. Earnings Call

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Good morning, everyone. Thank you for standing by lots of Alere first quarter of 2025 financial results Conference call.

All lines are in listen only mode. Following the company's presentation, we will open the call for your questions and answers. Please note that we are recording this event.

This event is also being broadcast live via webcast and can be accessed through to the last website.

Ricardo Martinez: At this point I would like to turn the call over to Ricardo Martinez Investor Relations director.

Ricardo: Please go ahead Ricardo.

Ricardo Martinez: Good morning. Thank you for joining the call. With us is our President and CEO, Enrique Beltranena, our Airline Executive Vice President, Holger Blankenstein, and our Chief Financial Officer, Jaime Pous. They will be discussing the company's Q1 2025 results. Afterward, we will move on to your questions. Please note that this call is for investors and analysts only. Before we begin, please remember that this call may include forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to several factors that could cause the company's results to differ materially from expectations, as described in the company's filings with the US SEC and Mexico's CNBV. These statements speak only as of the day they are made. Volaris undertakes no obligation to update or modify any forward-looking statements.

Speaker Change: Good morning, and thank you for joining the call with US is our president and CEO and Rick I will turn into our airline executive Vice President Holger blanket thing and our Chief Financial Officer Jaime books, they will be discussing the company's first quarter 2012.

Ricardo: Fiber sold.

Ricardo: Afterwards, we will move on to your questions. Please.

Speaker Change: Please note that this call is for investors and analysts only before we begin. Please remember that this call may include forward looking statements within the meaning of applicable securities laws.

Speaker Change: Forward looking statements are subject to several factors that could cause the company's results to differ materially from expectations are described in the company's filings with the United States.

Speaker Change: And Mexico E M. B B. These statements speak only as of the date they are made.

Speaker Change: <unk> undertakes no obligation to update or modify any forward looking statement.

Ricardo Martinez: As in our earnings press release, our numbers are in US dollars compared to Q1 2024, unless otherwise noted. With that, I will turn the call over to Enrique.

Speaker Change: In our earnings press release.

Speaker Change: Our numbers are in U S dollars compared to the first quarter of 'twenty 'twenty four unless otherwise noted and.

Eric: And with that I will turn the call over to Eric.

Enrique Beltranena: Good morning, everyone, and thank you for joining us. To kick off our call today, I will address the current geopolitical environment affecting the North American airline industry and how Volaris remains well-positioned to capitalize on long-term, sustainable growth in our most valuable markets. This is a result of our team's proven ability to adapt during downturns and accelerate when opportunities arise. We delivered practically in full on our Q1 2025 guidance, despite highly volatile conditions. Holger and Jaime will speak about the strengths that drive our optimism about the future. Over the past 3 months, political and trade dynamics between the United States and key economic partners, particularly Mexico, have seen ongoing volatility. This has created an uncertainty across industries and among consumers, prompting a more cautious outlook.

Eric: Good morning, everyone and thank you for joining us to kick off our call today I will address the current geopolitical environment affecting the north American airline industry, and how we'll always remains well positioned to capitalize on long term sustainable growth in our most valuable markets.

Eric: This is a result of our team's proven ability to adapt during downturns and accelerates when opportunities arise. We believe are practically in full on our first quarter 2025 guidance. Despite highly volatile conditions Hogan Jaime will speak about the strengths that drive our optima.

Eric: Ms them about the future.

Speaker Change: For the past three months political and trade dynamics between the United States in key economic partners, particularly Mexico has seen ongoing volatility.

Speaker Change: This has created an uncertainty across industries and among consumers, prompting a more cautious outlook as we mentioned on our previous earnings call travelers are waiting for greater clarity around what the policies tariffs and broader economic conditions before making bookings in response.

Enrique Beltranena: As we mentioned on our previous earnings call, travelers are waiting for greater clarity around border policies, tariffs, and broader economic conditions before making bookings. In response, Volaris has and will continue to adjust capacity to align with evolving consumer behavior. I want to emphasize that Volaris recognizes the Mexican government's rigorous commitment to swiftly addressing issues in the US-Mexico relationship. Managing these matters requires a constructive, forward-looking, and bilateral approach, one we fully endorse and view as a positive step toward regional stability. From my personal perspective, Mexico's cautious, responsible, and proactive response to various US initiatives has enabled it to make significant progress on key issues in the bilateral agenda, positioning both the country and Volaris as an appealing investment opportunity. Even in this environment, we continue to see the resilience of the VFR travelers in the Mexican domestic market, where we drove a load factor of 89%.

Speaker Change: Has and will continue to adjust capacity to align with evolving consumer behavior I want to emphasize that golar is recognized as the Mexican government rigorous commitment to swiftly addressing issues in the U S Mexico relationship.

Speaker Change: Imagine this matters requires a constructive what were looking and buying apparel approach one we fully endorse and view as a positive step toward regional stability from my personal perspective, Mexico's cautious responsible abroad in response to various U S.

Speaker Change: Asia has enabled it to make significant progress on key issues in the bilateral agenda positioning both the country and Polaris at an appealing investment opportunity even in this environment. We continue to see the resilience of the VFR travelers in the Mexican domestic market, where we drove a load factor of 80.

Enrique Beltranena: On the international front, our load factor in the US transborder market came in slightly below last year's result. We grew RPMs in both our domestic and international markets, and staying true to our ultra-low-cost carrier model, we proactively implemented competitive pricing strategies to sustain these high occupancy levels while optimizing TRASM. Our consolidated load factors of 85%, just under last year's result, despite markedly different industry conditions, underscores the effectiveness of our approach to capacity management and fare modulation. We remain firmly anchored in our ultra-low-cost carrier value proposition, offering attractive fares, operating a reliable schedule, and expanding high-value ancillary options that enhance the customer experience. On the profitability front, our Q1 EBITDA margin was within our expectations, reinforcing the strength of our execution and disciplined cost control.

Speaker Change: 9% on international front, our load factor in the U S. Transborder market came in slightly below last year's result, we rule rpms in both our domestic and international markets and staying true to our ultra low cost carrier model, we've proactively implemented competitive pricing strategies to sustain this high.

Speaker Change: Occupancy levels, while optimizing T rise our.

Speaker Change: Our consolidated load factor of 85% just under last year's result, despite markedly different industry conditions underscores the effectiveness of our approach to capacity management unfair modulation. We remain firmly on court, you know where all the low cost carrier value proposition offer.

Speaker Change: Attractive fares operating a reliable schedule and expanding high value ancillary options that enhance the customer experience on the profitability front, our first quarter EBITDAR margin was within our expectations reinforcing the strength of our execution and disciplined cost control and failures.

Enrique Beltranena: Ancillaries continue to be a resilient and strategic contributor, highlighting the relevance to our customers and supporting our diversified revenue model, particularly during periods of base fare pressure. Ancillary revenue once again accounted for over 50% of total quarterly revenue. This is important, as when combined with our low base fares, we're able to remain in a sweet spot where we can support market elasticity while attracting passengers to our value-added services. I like to recognize the outstanding coordination across our operations, scheduling, and maintenance teams, particularly navigating the industry-wide Pratt & Whitney engine challenge over the past 18 months. The current impact and our mitigation is consistent with our previous disclosures.

Speaker Change: Continue to be a resilience and strategic contributor highlighting their relevance to our customers and supporting our diversified revenue model, particularly during periods of base fare pressure ancillary revenue once again accounted for over 50% of total quarterly revenue and this is important.

Speaker Change: When combined with our low base fares were able to remain in a sweet spot, where we can support market elasticity, while attracting passengers to our value added services I'd like to recognize the outstanding coordination across our operations scheduling and maintenance teams, particularly navigating the industry wide breadth.

Speaker Change: Whitney engine challenge over the past 18 months the current impact on our mitigation is consistent with our previous disclosures our proactive management of aircraft and engine availability has ensured operational continuity and is reflected in our customer satisfaction metrics, including on time performance of <unk>.

Enrique Beltranena: Our proactive management of aircraft and engine availability has ensured operational continuity and is reflected in our customer satisfaction metrics, including on-time performance of 83.8%, a scheduled completion rate of 99.6%, and a Net Promoter Score of 39%, one of the highest quarterly scores in our history. Looking ahead, the flexibility embedded in our operations, cost structure, fleet plan, and variable labor agreements position us to adapt quickly and effectively to market shifts. Additionally, with disciplined management of engine removals, maintenance planning, spare engine deployment, and redeliveries, all supported by our updated Airbus fleet delivery schedule, we are well-equipped to adjust our growth trajectory as needed. Our capacity decisions will remain grounded in two guiding priorities, customer demand and sustained profitability.

Speaker Change: 83, 8%, a scheduled completion rate of 99, 6% and a net promoter score of 39% one of the highest quality scores in our history.

Looking ahead, the flexibility embedded in our operations cost structure flip plan and variable labor agreements position us to adapt quickly and effectively to market shifts are internally with disciplined management of engine remove outs maintenance planning spare engine deployment and ready libraries all support.

Speaker Change: By our updated Airbus fleet delivery schedule, we are well equipped to adjust our growth trajectory as needed our capacity decisions will remain grounded in two guiding priorities customer demand and sustained profitability given the evolving dynamics between the U S and Mexico, we believe.

Enrique Beltranena: Given the evolving dynamics between the US and Mexico, we believe it is both timely and prudent to recalibrate our capacity plan to remain aligned with current demand trends and reaffirm our commitment to disciplined and sustainable growth. For full year 2025, we are now targeting ASM growth in the range of 8% to 9%, revised from our original guidance of 13% to 15% growth. This adjustment reflects Volaris' agility and flexible approach to capacity deployment. By moderating growth across our network, including a rationalization in the US transborder market, we expect sequential improvement in TRASM, particularly during the high-demand H2 of the year, supporting margins. We view this capacity moderation as a prudent step to navigate current headwinds while protecting profitability.

Speaker Change: It is both timely and prudent to recalibrate our capacity plan to remain aligned with current demand trends and reaffirm our commitment to disciplined and sustainable growth for full year 2025, we're now targeting ASM growth in the range of 8% to 9% revised from our original guidance of <unk>.

Speaker Change: 13% to 15% growth.

Speaker Change: This adjustment reflects Polaris is agility and flexible approach to capacity deployment.

Speaker Change: By moderating growth across our network, including the rationalization in the U S. Transborder market, we expect sequential improvement in PRASM, particularly during the high demand second half of the year supporting margins. We view this capacity moderation, that's a prudent step to navigate current heads.

Speaker Change: While protecting profitability.

Enrique Beltranena: While there is much uncertainty in the market, we know it will prompt many to look at Mexico with fresh eyes, and we see a lot of positives. Volaris stands out among North American carriers for its resilience. Our ultra-low-cost model, robust liquidity, and healthy balance sheet position us to serve the most resilient customer segment, our VFR base, during economic slowdowns. I am sure you are all asking yourselves what is on my mind as we are navigating recent dislocation and the environment I've mentioned. I want to reinforce a few key points. What it really comes down to is that our traffic is materially VFR traffic. Families in Mexico and the US that need to travel to see each other, they're not going back to the buses. After six months or more of being away from their families, we believe they will start traveling more during the summer.

Speaker Change: While there is much uncertainty in the market. We know it will prompt many to look at Mexico with fresh eyes, and we see a lot of positives.

Speaker Change: <unk> stands out among north American carriers for its resilience, our ultra low cost model robust liquidity and healthy balance sheet position us to serve the most resilient customer segment, our VFR base during economic slowdowns.

Speaker Change: I am sure you are all asking yourself what is on my mind as we are navigating recent dislocation in the environment Ive mentioned I went to reinforce a few key points, but it really comes down to is that our traffic is materially VFR traffic families in Mexico, and the U S that need too.

Traveled to see each other they're not going back to the buses and after six months or more of being away from their families. We believe they will start traveling more during the summer. The most important thing is that we gained traction on traffic as dissipates and for the VFR traveler. It always does.

Enrique Beltranena: The most important thing is that we gain traction on traffic as fear dissipates, and for the VFR traveler, it always does. I'm using the playbook we've developed over 20 years throughout many different crises, focusing on preserving cash while prioritizing investments that will ensure we exit this period continuing to lead. It's easy to forget that Volaris snapped back fastest in our industry after COVID. I want to be positioned the same way now. Our flexibility and agility is how we will continue to deliver for our customers and our shareholders. Holger will tell you more about the trends we are seeing and the initiatives we are implementing to ensure passengers continue to choose Volaris. With that, I will now turn the call over to Holger.

Speaker Change: So I'm using the playbook, we've developed over 20 years throughout many different crisis, focusing on preserving cash while prioritizing investments that will ensure we exit the spirit continuing to leave it's easy to forget that Polaris snapback fastest in our industry after COVID-19.

Speaker Change: I want to be positioned the same way now.

Speaker Change: Our flexibility and agility is how we will continue to deliver for our customers and our shareholders.

Speaker Change: We'll tell you more about the trends we are seeing and the initiatives. We're implementing to ensure passengers continue to choose the alerts with that I will now turn the call over to Paul.

Holger Blankenstein: Thank you, Enrique. Good morning, everyone. For the quarter, our ASMs increased by 6% versus Q1 2024. As Enrique mentioned, we flew a reliable schedule during the quarter, a testament to our coordination across operations and commercial teams. Operational performance, once again, was very solid in the quarter, with an on-time performance of 83.6% and a scheduled completion rate of 99.6%. We also continue to implement multiple initiatives to improve customer service and are seeing results, as reflected in our Q1 Net Promoter Score of 39%. During the quarter, although travel came slightly below guidance, we sustained healthy loads through fare stimulation. This resulted in a 17% decline in quarterly TRASM, which reached $0.078. Our total load factor for the quarter was 85.4%, down 1.6 percentage point compared to the prior year.

Paul: Thank you Enrique and good morning, everyone for the quarter, our <unk> increased by 6% versus the first quarter of 2024.

Speaker Change: And Ricky mentioned, we flew a reliable schedule during the quarter, a testament to our coordination across operations and commercial teams.

Speaker Change: Operational performance once again was very solid in the quarter with an on time performance of 83, 6% and the scheduled completion rate of 99, 6%. We also continue to implement multiple initiatives to improve customer service and are seeing results.

Speaker Change: As reflected in our first quarter net promoter score of 39%.

Speaker Change: During the quarter, although travelers came slightly below guidance, we sustained healthy loads through fair stimulation. This resulted in a 17% decline in quarterly traveling which reached seven eight cents.

Speaker Change: Our total load factor for the quarter was 85, 4% down one six percentage points compared to the prior year.

Holger Blankenstein: True to our ULCC business model, we adjusted our base fare by 29% network-wide during the quarter to maintain load factors. This reduction was also largely impacted by a 20% depreciation of the Mexican peso against the US dollar. However, ancillaries once again demonstrated low price elasticity and played a key role in supporting overall revenue, underscoring the relevance of our offerings to customers, particularly those flying on longer, higher-margin sectors. Average ancillary revenues per passenger reached $53, marking our sixth consecutive quarter above the $50 threshold. While this represents a 7% year-over-year decline, it still accounted for over 50% of total operating revenues, which is relevant because we are preserving ancillary services as a value added to the customer. To that end, we continue to make progress in evolving our ancillary strategy.

Speaker Change: Are you LTC business model, we adjusted our base fare by 29% network wide during the quarter to maintain load factors. This reduction was also largely impacted by a 20% depreciation of the Mexican peso against the U S. Dollar however, and salaries once again.

Speaker Change: Concentrated low price elasticity and played a key role in supporting overall revenue underscoring the relevance of our offerings to customers, particularly those flying on longer higher margin sectors average ancillary revenues per passenger reached $53, marking our <unk>.

Speaker Change: Sixth consecutive quarter above $50 threshold, while this represents a 7% year over year decline, it's still accounted for over 50% of total operating revenues, which is relevant because we are preserving ancillary services as a value added to the customer to that.

Speaker Change: And we continue to make progress in evolving our ancillary strategy during the quarter. The new <unk> App was launched designed to significantly enhance the passenger experience and ancillary upsell during the day of travel the app streamlined personalized bookings boarding access to our affinity.

Holger Blankenstein: During the quarter, the new Volaris app was launched, designed to significantly enhance the passenger experience and ancillary upsell during the day of travel. The app streamlines personalized bookings, boarding, access to our affinity programs, and self-service options. It also strengthens our direct sales channels, where approximately 85% of our total sales are made, allowing us to avoid dependency on third parties and reduce commission expense. Our core ancillary offerings, Annual Pass, v.pass, v.club, and our co-branded credit card, have performed solidly. We expect their momentum to accelerate with the launch of our in-house loyalty program later this year. We are designing the program to enable new product offerings, unlock additional revenue streams, and reach a more diversified customer base.

Speaker Change: The programs and self service options. It also strengthens our direct sales channels were approximately 85% of our total sales are made allowed us to avoid dependency on third parties and reduced commission expense.

Speaker Change: Our core ancillary offerings annual pass the pass the club and our co branded credit card have performed solidly we expect their momentum to accelerate with the launch of our in house loyalty program. Later. This year, we are designing the program to enable new product offerings unlock additional revenues.

Speaker Change: Dreams and reached a more diversified customer base as recently shared we continue to position <unk> as the preferred airline for value seeking passengers across our core markets, including frequent fliers corporate passengers small and medium sized businesses the leisure travelers alongside our strong.

Holger Blankenstein: As recently shared, we continue to position Volaris as the preferred airline for value-seeking passengers across our core markets, including frequent flyers, corporate passengers, small- and medium-sized businesses, the leisure travelers, alongside our strong VFR customer base. For example, sales from Ya Vas, our vacation business, have increased by over 50%, significantly ahead of our expectations since we revamped the platform to better cater to travelers. In parallel, we've been testing additional southbound leisure routes, such as Ontario, California, to Los Cabos and Oakland to Los Cabos. Early results are encouraging, and we plan to increase frequencies as we refine our distribution strategy. If the demand trends persist longer term, we will continue to favor broadening our footprint with new routes rather than adding depth to existing routes in our capacity planning. This should alleviate pressures on softer markets and enhance the diversification and resilience of our network.

Speaker Change: VFR customer base for example sales from your boss or vacation business have increased by over 50% significantly ahead of our expectations. Since we revamped the platform to better cater to travelers in parallel we've been testing additional.

Speaker Change: Housebound leisure routes, such as Ontario, California to Los Cabos, and Oakland to Los Cabos early results are encouraging and we plan to increase frequencies as we refine our distribution strategy if.

Speaker Change: If the demand trends persist longer term, we will continue to favor broadening our footprint with new routes rather than adding depth to existing routes in our capacity planning this should alleviate pressures on softer markets and enhance the diversification and resilience of our network. We see continued.

Holger Blankenstein: We see continued growth opportunities across multiple avenues and geographies, including Mexico domestic as well as higher-margin transborder routes to the US and Central America, giving us ample flexibility to deploy capacity. Additionally, we continue to strengthen our network and expand passenger choice through strategic codeshare partnerships, building on our productive agreements with Frontier in the US and Iberia in Europe. I am pleased to announce that tomorrow we will be signing a new codeshare with Copa Airlines. This collaboration will expand connectivity between Mexico and Latin America through Copa's hub in Panama City, providing South and Central American travelers access to our 44 Mexican destinations while offering our customers greater access to destinations across Central and South America. This agreement reflects our commitment to delivering more travel options while maintaining our low-cost DNA.

Speaker Change: Growth opportunities across multiple avenues, and geographies, including Mexico domestic as well as higher margin transporter routes to the U S and Central America, giving us ample flexibility to deploy capacity. Additionally.

Speaker Change: Additionally, we continue to strengthen our network and expand passenger choice through strategic culture partnerships building on our productive agreements with frontier in the U S and Iberia in Europe, I am pleased to announce that tomorrow, we will be signing a new co chair with Copa Airlines. This.

Speaker Change: Collaboration will expand connectivity between Mexico, and Latin America to Copa hub in Panama City, providing south and Central American travelers access to our 44 Mexican destinations, while offering our customers greater access to destinations across central and South America.

Speaker Change: Agreement reflects our commitment to delivering more travel options, while maintaining our low cost DNA. We are excited about the opportunities. This partnership with Copa creates for both airlines and most importantly, our shared customers.

Holger Blankenstein: We are excited about the opportunities this partnership with Copa creates for both airlines and, most importantly, our shared customers. Current demand trends in the Mexican domestic market reflect a natural short-term adjustment in consumer spending, driven in part by broader economic slowdown rather than any shift in long-term travel behavior. Volaris continues to retain strong customer loyalty and drive repeat flying on our airline. Notably, we are not seeing any signs of customers returning to bus travel. With that, turning now to our outlook. Bookings for the Q1 and Q2 of the year were impacted by the previously mentioned factors. As uncertainty clears, we expect consumers to reassess any postponed travel plans to visit friends and relatives. To address these conditions, we are leveraging our flexibility to allocate capacity and are now targeting ASM growth in the range of 8% to 9% for the full year.

Speaker Change: Current demand trends in the Mexican domestic market reflect a natural short term adjustment in consumer spending driven in part by broader economic slowdown rather than any shift in long term travel behavior.

Speaker Change: <unk> continues to retain strong customer loyalty and drive repeat flying on our airline.

Speaker Change: Notably we are not seeing any signs of customers returning to bus travel.

Speaker Change: With that turning now to our outlook bookings for the first and second quarter of the year were impacted by the previously mentioned factors as uncertainty clears, we expect consumers to reassess any postpone travel plan to visit friends and relatives.

Speaker Change: To address these conditions, we are leveraging our flexibility to allocate capacity and are now targeting ASM growth in the range of 8% to 9% for the full year. We believe that moderating capacity is the rational course of action in the current environment to protect profitability and traveling.

Holger Blankenstein: We believe that moderating capacity is the rational course of action in the current environment to protect profitability and TRASM. In terms of capacity adjustments, we will implement the most significant reductions during the low season periods and the days of week with historically lower demand to optimize network efficiency. That said, we expect traffic to rebound, consistent with past periods of demand normalization following similar volatility, and as the H2 of the year is seasonally stronger due to the summer and holiday travel. However, visibility into the exact timings of this recovery remains limited at this stage. As we've shown time and again, Volaris flexibility will allow it to be the first one to capitalize on a fast recovery. It's important to note that we are maintaining the capabilities to ramp back up quickly should demand conditions improve sooner than expected.

Speaker Change: In terms of capacity adjustments, we will implement the most significant reductions during the low season periods and the days of week with historically lower demand to optimize network efficiency.

Speaker Change: That said, we expect traffic to rebound consistent with past periods of demand normalization following similar volatility and as the second half of the year is seasonally stronger due to the summer and holiday travel however visibility into the exact timing of this recovery remains limited.

Speaker Change: At this stage as we've shown time and again will allow us flexibility will allow it to be the first wanted to capitalize on our fast recovery. It's important to note that we are maintaining the capability to ramp back up quickly should demand conditions improve sooner than expected we can.

Holger Blankenstein: We continue to actively monitor demand across our network, including for the upcoming summer high season, and we will adjust capacity accordingly. Now, I will turn the call over to Jaime to cover our Q1 2025 financial results and guidance.

Speaker Change: To actively monitor demand across our network, including for the upcoming summer ice season, and we will adjust capacity. Accordingly, now I will turn the call over to highlight to cover our first quarter 2025 financial results and guidance. Thank.

Jaime Pous: Thank you, Holger. As the team has discussed, financial results during the Q1 were challenged by geopolitical dynamics. Even so, we stayed focused on what we can control and responded quickly to shifting conditions. Our Q1 results are aligned with the guidance we provided. For the quarter, total operating revenues were $678 million, a 12% decrease year over year, driven by the depreciation of the Mexican peso against the US dollar and a lower total revenue per pax. On the cost side, CASM was $0.0788, a 3% decrease year over year, while CASM ex-fuel was $0.054, up 5% year over year. Average economic fuel cost declined 13% to $2.63 per gallon. In these times of volatility, maintaining one of the lowest unit costs in the industry remains our main competitive advantage.

Speaker Change: Thank you holder as a theme has this cost financial results. During the first quarter were challenged by geopolitical dynamics, even so we stay focused on what we can control and responded quickly to shifting conditions. Our first quarter results are aligned with the guidance we provided for the quarter total operating <unk>.

Speaker Change: Revenues were $678 million, a 12% decrease year over year, driven by the precision of the Mexican peso against the U S dollar and a lower total revenue per Pax on the cost side Castle was seven point 88 cents, a 3% decrease year over year, while CASM ex fuel was.

Speaker Change: 5.4 cents up 5% year over year average economic fuel cost declined 13% to $2 $63 per gallon with these types of volatility maintaining one of the law was unit cost in the industry remains our main competitive advantage in line with our long standing focus on.

Jaime Pous: In line with our longstanding focus on cost discipline, we are intensifying company-wide cost control efforts and preserving an efficient cost structure with approximately 70% of our costs being variable or semi-fixed. On our P&L, while depreciation and amortization expense was roughly flat sequentially, it rose 49% compared to Q1 2024, primarily due to an increase in major maintenance events for aircraft and engine, but aligned with our forecast. Additionally, in the other operating income line, we booked sale and leaseback gains of MXN 7.4 million related to the delivery of 3 aircraft. This line also includes our aircraft grounding compensation from Pratt & Whitney. Q1 EBIT was a loss of MXN 10 million, representing a margin of -1.5%.

Speaker Change: Cost discipline, we are intensifying company wide cost control efforts and preserving an efficient cost structure with approximately 70% of our costs being buyable or semi fixed on our P&L, while depreciation and amortization expense was roughly flat sequentially at rose 49%.

Speaker Change: Prior to the first quarter of 2024, primarily due to an increase in major maintenance events or aircraft and engine were aligned with our forecast.

Speaker Change: Finally in the other operating income line, we booked sale and leaseback gains of seven 4 million related to the delivery of three aircraft. This.

Speaker Change: This line also includes our airport welding compensation compatible with.

Speaker Change: First quarter EBITDA was a loss of $10 million, representing a margin of minus one 5% the benefits from increased capacity and lower fuel costs were partially offset by a weaker peso as well as the assets of a one time benefit of 41 million recorded in the first quarter of 2024 on there.

Jaime Pous: The benefits from increased capacity and lower fuel costs were partially offset by a weaker peso, as well as the absence of a one-time benefit of $41 million recorded in Q1 2024 under aircraft and engine variable lease expenses line. The benefit reflected the remeasurement of redelivery accruals of some lease extensions. This quarter, we recognized a total of $54 million, mostly related to redelivery costs on this line. EBITDAR totaled $203 million, down 14% year-over-year, with a margin of 29.9%, a 0.7 percentage point decline aligned with the guidance provided for the quarter despite market volatility during the period. In line with our historical seasonality, we incurred a net loss of $51 million in the quarter, translating into a loss per ADS of $0.45. Turning now to cash flow and balance sheet data.

Speaker Change: Aircraft and engine barrier or at least expenses line.

Speaker Change: The benefit reflected the remeasurement of a delivery of calls of some of these expansions. This quarter. We recognized a total of 54 million mostly related to a delivery cost from this line.

Speaker Change: Our total 203 million down 14% year over year with a margin of 29, 9% a 0.7 percentage point decline in line with the guidance provided for the quarter. Despite market volatility during the period in line with our historical seasonality, we incurred a net loss of 51.

$1 million in the quarter translating into a loss per eds of forty-five stance, turning now to cash flow and balance sheet data the cash flow provided by operating activities in the first quarter was $157 million the cash outflows us investing and financing activities were 6 million.

Jaime Pous: The cash flow provided by operating activities in Q1 was $157 million. The cash outflows used in investing and financing activities were $6 million and $212 million respectively. Our Q1 CapEx, excluding financed fleet pre-delivery payments, totaled $64 million, primarily driven by the acquisition of 1 aircraft and major maintenance events. Volaris ended the quarter with a total liquidity position of $862 million, representing 28% of the last 12 months' total operating revenues. Our net debt to EBITDA ratio was 2.7 times at the Q1 end, compared to 2.6 times at the end of 2024, but down from 3.1 times a year ago. Our strong balance sheet with no near-term debt maturities, excellent liquidity position, and discipline in controllable costs give us confidence that Volaris is well-positioned to navigate current markets. Now, I would like to provide an update on our engine availability and our fleet plan.

Speaker Change: And $212 million, respectively, our first quarter Capex, excluding finance fleet pre delivery payments totaled $64 million, primarily driven by the acquisition of one aircraft and mayor maintain on events Polaris ended the quarter with a total liquidity position of $862 million.

Speaker Change: Representing 28% over the last 12 months total operating revenues, our net debt to EBITDA ratio was two seven times at the first quarter and compared to two six times at the end of 2024 down from three one times a year ago, our strong balance sheet with.

Speaker Change: No near term debt maturities excellent liquidity position and disciplined control of costs give us confidence that <unk> is well positioned to navigate current market now I would like to provide an update on our engine availability and our fleet plan as of March 31st our slate consistent.

Jaime Pous: As of 31 March, our fleet consisted of 145 aircraft with an average age of 6.4 years, with 60% of the fleet being fuel-efficient NEO models. We incorporated 2 A320neo and 1 A321neo aircraft during the quarter and retired 1 A319. We had an average of 36 aircraft on ground during the quarter due to engines. As previously mentioned, we adjusted our contractual delivery schedule with Airbus, more evenly distributed through 2031. Those changes have already been incorporated into our current full-year capacity expectations. Just a reminder, our approach to managing the productive fleet allows us to flex capacity up or down in line with demand trends. Turning to guidance, due to ongoing economic geopolitical uncertainty, we are currently unable to reaffirm our full-year EBITDA guidance until we have greater clarity. That said, we remain focused on the areas within our control.

Speaker Change: 145, aircrafts with an average age of six four years with 60% of the fleet being fuel efficient new models, we incorporate it to wait with 20, Neil and wanted to 21 Neo aircraft during the quarter and retired 182019, we had an average of 36 aircraft on ground during the quarter.

Speaker Change: Two engines as previously mentioned.

Speaker Change: We adjusted our contractual delivery schedule with Airbus more evenly distributed through the 31 those changes have already been incorporated into our current full year capacity expectations you have.

Speaker Change: A reminder of where.

Speaker Change: Our approach to management that provoked the fleet allow us to flex capacity up or down in line with demand trends turning to guidance due to ongoing economic geopolitical uncertainty. We are currently unable to reaffirm our full year EBITDA guidance until we have greater clarity that said we remain.

Speaker Change: Focus on the areas within our control. This includes moderating capacity road with the reduction of concentrated during low season periods of lower the mandates of the week actively managing costs and staying ready to respond quickly as demand recovers. Therefore for full year 2025, our latest guidance because.

Jaime Pous: This includes moderating capacity growth, with the reduction concentrated during low-season periods and lower demand days of the week, actively managing costs, and staying ready to respond quickly as demand recovers. For full-year 2025, our latest guidance is as follows. ASM growth of 8% to 9% year-over-year, down from our initial expectation of 13% to 15%, and CapEx net of financed fleet Pre-Delivery Payments to be approximately $250 million. For Q2 2025, we expect an ASM increase of approximately 9% to 10%. We also expect TRASM between $0.074 and $0.075. We expect CASM ex-fuel to fall in the range of $0.057 to $0.058, an EBITDA margin of 24% to 25%.

Speaker Change: Paulo, ASM growth of 8% to 9% year over year down from our in our expectation of 30% to 50% and Capex net of finance fleet pre delivery payments to be approximately $250 million for the second quarter of 2025, we expect an ASM increase of a proxy.

Speaker Change: Roughly 9% to 10%. We also expect RASM between seven four and seven 5%. Finally, we expect CASM ex fuel to call in the range of five seven to 5.8 cents, an EBITA margin of 24% to 25%. This quarterly outlook assumes an average foreign exchange.

Jaime Pous: This quarterly outlook assumes an average foreign exchange rate of MXN 20.20 to 20.40 Mexican pesos per US dollar and an average economic fuel price of approximately $2 to 2.10 per gallon during the quarter. Now, I will turn the call back over to Enrique for closing remarks.

Speaker Change: James Raitt of 2022 'twenty 40, Mexican pesos per U S dollar and an average economic fuel price of approximately two to $2 $10 per gallon during the quarter now I will turn the call back over to Enrique for closing remarks.

Enrique Beltranena: Thank you, Jaime. Before we finish, I want to call your attention on the following five points. Number one, we can operate and execute changes in our network with flexibility, agility, and resilience, taking advantage of around 70% of our variable and semi-fixed cost structure. This capability is tremendously valuable in moments when we need to tactically and quickly adjust capacity up or down to meet market demand. The second one, as VFR traffic-oriented airline, Volaris is uniquely positioned to capitalize on the growing need for families to reunite. We strongly believe we are experiencing a delay in travel rather than a shift in long-term travel behavior. We transport travelers in full compliance with cross-border regulations, and our customer satisfaction is high. We will continue to win in those markets.

Enrique: Thank you Jaime before we finish I want to call your attention on the following five points number one we can operate and execute changes in our network with flexibility agility and resilience taking advantage of around 70% of our variable and semi fixed cost structure. This capability is there.

Enrique: Mendoza develop all the moments when we need to tactically and quickly adjust capacity up or down to meet market demand. The second one is VFR traffic oriented airline Polaris is uniquely position to capitalize on the growing need for families to reunite we strongly believe we are experiencing a delay.

Enrique: <unk> profit rather than a shift in long term travel behavior with transport travellers in full compliance with cross border regulations, and our customer satisfaction is high.

Enrique: We will continue to win in those markets.

Enrique Beltranena: Third, we will keep delivering on our value proposition, offering low fares, maintaining an attractive and reliable schedule, and providing relevant ancillary options that enhance the travel experience. Fourth, the Mexican government's strong commitment to swiftly addressing issues in the US-Mexico relationship positions both the country and Volaris as attractive investment opportunities. Five, Volaris was the best-performing public airline in its recovery after the pandemic. We invested our human and technical resources during the crisis to prepare for a fast restart once uncertainty eases. We are preparing once more for a strong comeback. Thank you very much for listening. Operator, please open the line for questions.

Enrique: Third we will keep delivering on our value proposition offering loafers, maintaining an attractive partner.

Enrique: Schedule and providing relevant ancillary options that enhance the travel experience fourth the Mexican governments strong commitment to swiftly addressing issues in the U S. Mexico relationship positions, both the country and galleries.

Enrique: Attractive investment opportunities and five <unk> was the best performing public early in its recovery. After the pandemic, we invested our human in technical reserves as during the crisis to prepare for a faster restart once uncertainties. We are preparing once more for a strong comeback.

Enrique: Thank you very much for listening operator, please open the line for questions.

Operator: Thank you. The floor is now open for questions. If you have a question, please dial star 11 on your phone at this time or any time. If at any point your question is answered, you may remove yourself from the queue by pressing star 11 again. Questions will be taken in the order they are received. We ask that when you pose your question, you pick up your handset to provide optimum sound quality. Those following the presentation via the webcast may pose their questions on the platform. The management team will answer them during this call, or the Volaris investor relations team will follow up after the conference call is finished. To send your questions via the webcast platform, click on the Ask a Question button and type your inquiry. Please hold while we poll for questions.

Enrique: Thank you the floor is now open for questions. If you have a question. Please dial star one one on your phone at this time or anytime.

Enrique: At any point. Your question is answered you may remove yourself. Thank you by pressing star one again.

Enrique: Questions will be taken in the order. They are received we accident. When you post your question you pick up your handset to provide optimum south policy.

Speaker Change: Those following the presentation via the webcast may post their questions on the platform. The management team will answer them. During this call or the Valero <unk> Investor Relations team will follow up after the conference call is finished.

Speaker Change: To send your questions via the webcast platform click on the ask a question button and type your inquiry. Please hold while we poll for questions.

Operator: Our first question is from the line of Michael Linenberg with Deutsche Bank. Your line is now open.

Speaker Change: Our first question is from the line of Michael Lindenberg with Deutsche Bank. Your line is now open.

Michael Linenberg: Oh, hey. Good afternoon, team. I got two questions here. One, when I look at your

Speaker Change: Hey, good afternoon team.

Speaker Change: I guess two questions here.

Speaker Change: <unk>.

Michael Linenberg: TRASM performance down 17% to $0.0776. I look at the guidance. It looks like sequentially, your Q2 may even be worse. On an absolute basis, those are the type of numbers that we saw back in 2022 when Omicron and COVID were hitting the industry. My question to you is, obviously you're driving loads with lower yields here. The fact is, are you not seeing the level of stimulation that you would normally see in traditional discounting, and therefore you're being forced to just take fares down to dramatically low levels here just to fill the airplanes up? What's the response through the consumer, and then what gives you any sort of confidence that the consumer will bounce back in H2 2025? Thanks.

Speaker Change: When I look at your key RASM performance down seven 7% to 776 cents.

Speaker Change: And then I look at kind of the guidance it looks like sequentially. Your June quarter may even be worse.

Speaker Change: On an absolute basis those are the type of numbers that we saw back in 2022 when omicron in Covid, we are hitting the industry.

Speaker Change: So my question to you is.

Speaker Change: Obviously, youre driving leverage with lower yields here.

Speaker Change: The factors are you are you not seeing the level of stimulation that you would normally see in traditional discounting and therefore, you are being forced to just take fares down.

Speaker Change: To dramatically low levels here, just fulfill the airplanes up what.

Speaker Change: Yeah.

Speaker Change: What's the response of the consumer and then what gives you any sort of confidence that the consumer will bounce back in the second half of.

Speaker Change: 2025.

Holger Blankenstein: Hello, Michael. This is Holger. This Q2, in the Q2, we experienced a benefit from the shift of Easter to April. I would say that the shift was not the typical Easter shift, and the regular seasonality pattern that we observed in previous years.

Speaker Change: Hello, Michael this is the disorder. So.

Speaker Change: This quarter in the second quarter, we experienced a bet.

Speaker Change: <unk> from from the shift.

Speaker Change: Of Easter to April, but I would say that the shift was not the typical Easter shift.

Speaker Change: The regular seasonality pattern that we observed in previous years.

Holger Blankenstein: With the unusual external forces affecting demand in the international market and also the domestic market, it is quite difficult to quantify exactly the individual factors, and isolate the impacts of the forces that are currently impacting the demand environment.

Speaker Change: It'd be unusual external forces affecting demand in the international market and also the domestic market.

Speaker Change: It's quite difficult to quantify exactly the individual sectors.

Speaker Change: And isolate the impact of the forces that are currently.

Speaker Change: Impacting the.

Speaker Change: Demand environment.

Michael Linenberg: Okay.

Holger Blankenstein: The Q2, yes, it has the Easter benefit, but we are seeing relatively low fares also impacted by the lower exchange rate.

Speaker Change: Okay.

Speaker Change: So.

Speaker Change: Second quarter, yes, it has the Easter benefit, but we are seeing.

Speaker Change: Our relatively low fares also impacted by the lower exchange rates.

Michael Linenberg: Right. Oh, go ahead.

Speaker Change: Alright.

Speaker Change: Oh go ahead.

Holger Blankenstein: Go ahead, please, Michael.

Speaker Change: Go ahead Michael.

Michael Linenberg: Oh, I was going to say, is it accurate that the year-over-year unit revenue decline will be larger in Q2 than what we saw in Q1? Is that accurate?

Michael Lindenberg: I was going to say, but is it accurate that the.

Michael Lindenberg: The year over year unit revenue decline.

Michael Lindenberg: Will be larger in the June quarter than what we saw in the March quarter or is that.

Speaker Change: Is that accurate.

Holger Blankenstein: Similar.

Michael Linenberg: Okay. Just by half the H2, I know you talked about the bounce back seen in the past. Are you hearing that from your customers as well? What gives you that confidence? Maybe there's other channel checks or survey information where you think it will bounce back in H2 2025. Maybe that's an unfair question. Whatever you can provide, any color. Thanks.

Michael Lindenberg: Similar.

Michael Lindenberg: Okay. Okay.

Michael Lindenberg: And then just finally ask the back half I know you.

Michael Lindenberg: You talked about the bounce back seen in the past.

Speaker Change: Are you hearing that from your customers as well I mean again.

Michael Lindenberg: What gives you that confidence maybe if theres other channel checks.

Speaker Change: Survey information where.

Speaker Change: You think people will it will bounce back in the second half of 2025, maybe that maybe that's an unfair question whatever you can.

Speaker Change: Yeah.

Speaker Change: Any color thanks.

Holger Blankenstein: We are confident that the H2 of the year is going to be better. We've seen in the past that VFR traffic bounces back quite significantly, especially in the summer season and in the H2 of the year. Typically, visiting friends and relatives want to see their families and do travel in the high seasons. Remember that the H2 of the year is seasonality adjusted better than the H1 of the year.

Speaker Change: So.

Speaker Change: We are confident that the second half of the year is going to be better we have seen in the past that VFR traffic bounces back quite significantly, especially in the summer season.

Speaker Change: And in the second half of the year.

Speaker Change: Typically our visiting friends and relatives want to see their families and do travel in the high seasons.

Speaker Change: Remember that the second half of the year as seasonality adjusted better than the first half of the year.

Michael Linenberg: Okay.

Holger Blankenstein: We are monitoring bookings very carefully for any signs of improvement, and we believe that the H2 of the year in July and August are going to be much more stable than the H1 of the year.

Speaker Change: Monitoring bookings very carefully for any signs of improvement and we believe that the second half of the year in July and August are going to be.

Speaker Change: Much more stable than the first half of the year.

Michael Linenberg: Okay. Thanks, everyone.

Speaker Change: Okay. Okay. Thanks, everyone.

Speaker Change: Okay.

Operator: Thank you. Our next question comes from the line of Stephen Trent with Citi. Your line is now open.

Speaker Change: Thank you. Our next question comes from the line of Stephen Trent with Citi. Your line is now open.

Stephen Trent: Good afternoon, gentlemen. Thanks very much for taking my question. The first one is sort of a little bit of a follow-up on Michael's question to a degree. When you look at, certainly there's been a lot of geopolitical craziness, everybody sees that. When you look at price action with your shares back to COVID lows, operations certainly not back at COVID lows or free cash flow. Any sort of high-level thoughts about share purchases at these levels, or it's not really something in the cards?

Speaker Change: Okay.

Speaker Change: Good afternoon, gentlemen, and.

Speaker Change: Thanks, very much for taking my question.

Speaker Change: The first one is sort of.

Speaker Change: Little bit of a follow up on Mikes question chip to a degree.

Speaker Change: When you look at it.

Speaker Change: There's been a lot of geopolitical craziness, everybody everybody sees that but.

Speaker Change: But when you look at it.

Speaker Change: Price action.

Speaker Change: <unk> shares.

Speaker Change: Back to.

Speaker Change: Colgate lows.

Speaker Change: Operations, certainly not back at Colgate lowers our free cash flow.

Speaker Change: Any sort of high level thoughts about <unk>.

Speaker Change: Share repurchases at these levels or it's not really something.

Speaker Change: And the clients.

Enrique Beltranena: Steve, how are you? I think our priority this year is cash preservation, and we're going to be focusing in that, Steve, to maintaining a strong balance sheet, lowering the debt, and preserving cash. No action on buybacks in our mind.

Speaker Change: Steve how are you I think our priority. This year is cash preservation, and we're going to be focusing in digestive to.

Speaker Change: Maintaining a strong balance sheet.

Speaker Change: Lowering the depth and preserving cash.

Speaker Change: Not action on buybacks in our mind.

Stephen Trent: Great. Appreciate that, Enrique. Just 1 really quick follow-up. When we look at your guys' fuel prices, jet fuel, kerosene prices, are there any particular airports where the pricing or the regional crack spreads are very high, for example, versus other airports that you service?

Enrique: Great I appreciate that Enrique.

Speaker Change: And just one really quick follow up when we look at.

Speaker Change: Your guys fuel prices.

Speaker Change: Garrison crises.

Speaker Change: Are there any particular airports.

Speaker Change: You know where the pricing or the regional crack spreads there are very high for example versus.

Speaker Change: The airports that you service.

Enrique Beltranena: Yes, Steve. Normally, Tijuana, Guadalajara is more expensive than doing fueling in Mexico City or Monterrey, and basically the network, that's why the total economic fuel cost is higher than other competitors.

Speaker Change: Yeah, So Steve normally pick one Lakota is more.

Speaker Change: <unk> Duane fueling in Mexico City, Monterrey, and basic that network, that's why the total economic fuel cost each carrier that and other competitors.

Stephen Trent: Okay. Very helpful. Thanks, Enrique.

Richard: Okay very helpful. Thank you Richard.

Operator: Thank you. Our next question comes from the line of Duane Pfennigwerth with Evercore ISI. Your line is now open.

Duane: Thank you. Our next question comes from the line of Duane <unk> with Evercore ISI. Your line is now open.

Duane Pfennigwerth: Hey, thanks. Wonder if you could just walk us through monthly trends, trying to better understand the trajectory into Q2 here. What was the RASM decline in March? How is that playing out in April, and are you seeing any signs of stabilization in domestic yet?

Richard: Okay.

Speaker Change: Hey, thanks.

Richard: I'm wondering if you could just walk us through.

Richard: Monthly trends trying to better understand the trajectory into <unk> here.

Richard: What was the RASM decline in March.

Richard: How is that playing out in April and are you seeing any signs of stabilization and domestic yes.

Holger Blankenstein: Duane, this is Holger. Good morning. This March, we did not have the effect of Easter and the spring break. Versus last year, we had a relatively weak March. However, this shifted into April, and we're seeing better results for April in terms of travel. As I mentioned earlier, we are closely monitoring a range of indicators to assess demand trends going into May and June, while we are also focusing on what we can control, which is capacity, and that's why we've pulled back capacity for Q2. It's very important to note that we have a lot of flexibility in adjusting capacity, and that enables us to respond very quickly if there's clear signs of demand recovery as we go into Q3 and the summer season.

Duane: Duane this is <unk>.

Speaker Change: Good morning so.

This March we did not have the effect of Easter and.

The spring break so.

Speaker Change: We had.

Speaker Change: Versus last year, we had a relatively weak.

Speaker Change: <unk>.

Speaker Change: March however, this shifted into April and we're seeing better.

Speaker Change: Results for April in terms of traveling.

Speaker Change: And as I mentioned earlier, we are closely monitoring.

Speaker Change: A range of indicators to assess demand trends going into May and June.

Speaker Change: While we are also focusing on what we can control, which is capacity and that's why we pulled back capacity for the second quarter.

Speaker Change: It's very important to notice that.

Speaker Change: We have a lot of flexibility in adjusting capacity and that enables us to respond very quickly if there's clear signs of demand recovery as we go into the third quarter in the summer season.

Holger Blankenstein: We are engaging, we are observing very closely the different distribution channels and tracking microeconomic and macroeconomic factors to identify early signs of demand improvement. The booking curves for July and August make us cautiously optimistic that there will be a recovery of the VFR traffic. We believe that VFR traffic has to travel in the high seasons to visit friends and family, both in the US and Mexico.

Speaker Change: We are engaging we are observing very closely the different distribution channels.

And tracking microeconomic macroeconomic sectors to identify early signs of demand improvement.

Speaker Change: And.

Speaker Change: The booking curve towards July and August make us cautiously.

Speaker Change: Cautiously optimistic that there will be a recovery of the VFR traffic, we believe that.

Speaker Change: If our traffic has to travel in the high seasons to visit friends and family.

Speaker Change: In the U S and Mexico.

Duane Pfennigwerth: Just to maybe put a finer point on that, are there any differences at this point in point-of-sale Mexico demand versus point-of-sale US for your transborder?

Speaker Change: Just to maybe put a finer point on that are there any differences at this point in point of sale Mexico demand.

Speaker Change: Versus point of sale U S for your trans border.

Holger Blankenstein: No. There is no difference in the point of sale, Duane.

Speaker Change: No there is no difference.

Speaker Change: In the point of sale Duane.

Duane Pfennigwerth: Okay. Then maybe just lastly on the Copa relationship, how do you see that relationship playing out in Central America versus the Panama originating to Mexico, which you highlighted? Maybe to ask you a different way, how would you see your Central American operation changing, if at all, as a result of this partnership?

Speaker Change: Okay, and then maybe just lastly on the on the Copa relationship.

Speaker Change: How do you see that relationship playing out in in Central America.

Speaker Change: Versus the Panama originating to Mexico, which you highlighted maybe to ask it a different way how would you see your central American operation changing.

Speaker Change: If at all as a result of this partnership.

Holger Blankenstein: We don't foresee a change in the Central American operation. Our Central American operation is focused very much on VFR traffic between Central America and the US, which we would continue to service directly. The Copa relationship is built as a bilateral codeshare, especially between South America, Central America, and Mexico.

Speaker Change: We don't foresee a change in the Central American operation of our Central American Operation is focused very much on VFR traffic between Central America, and the U S, which we would continue to service directly.

Speaker Change: And the corporate relationship is built.

Speaker Change: Bilateral codeshare, especially between South America Central America and Mexico.

Duane Pfennigwerth: Okay. Thank you.

Speaker Change: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Tom Fitzgerald with TD Cowen. Your line is now open.

Speaker Change: Thank you and our next question comes from the line of Tom Fitzgerald with TD Cowen. Your line is now open.

Tom Fitzgerald: Hi, everyone. Thanks so much for the time. I wonder if you could just help us think about the range of outcomes here, and I appreciate it's incredibly fluid, but in the event demand does recover as well as you think it will, how should we think about capacity growth in 2026? Is low double digits reasonable? In the event it's a more sustained downturn or the border just remains muddled, that it's just depressing VFR traffic, like in the more risk-off scenario, how are you thinking about capacity growth in the next year?

Tom Fitzgerald: Thanks, so much for the time.

Tom Fitzgerald: I Wonder if you could just help us think about the range of outcomes here and I appreciate it's incredibly fluid but.

Tom Fitzgerald: In the event demand does recover as well as you think it will.

Tom Fitzgerald: <unk>.

Tom Fitzgerald: How should we think about capacity growth in 2020 factory in low double digits reasonable and then in the event that some more sustained downturn or the border just remains model better.

Speaker Change: VFR traffic and the more risk off scenario, how are you thinking about capacity growth into next year.

Enrique Beltranena: Hi, Tom. I think it is important that we maintain ourselves focused on what we're doing right now and how to manage the situation right now. Having said that, so far, we are thinking about the low single-digit growth in the next year.

Tom Fitzgerald: Yes.

Tom Fitzgerald: Hey, Tom I think it is important.

Tom Fitzgerald: We maintain ourselves focused on what we're doing right now and how to manage the situation right now having said that we remain very very very good.

Tom Fitzgerald: Concentrated in managing this capacity down so so far we are thinking about the low single digit growth in the next year.

Tom Fitzgerald: Okay. That's incredibly helpful. Thank you so much, Enrique. Just as a follow-up, how would you characterize the competitive capacity environment in the domestic market? Do you view your peers as deploying capacity rationally as well, or does anybody cheat at all? Thanks very much again for the time.

Tom Fitzgerald: Yes.

Speaker Change: Okay. That's incredibly helpful. Thank you so much Enrique and then just as a follow up how would you characterize the competitive capacity environment in the domestic market JV your peers is deploying.

Speaker Change: Deploying capacity rationally as well or is anybody chi thanks, very much again for the time.

Holger Blankenstein: Yeah. Tom, we do expect, or we do see capacity moderation as well from our domestic peers and also international peers. As we go through Q2, in the short term, we do expect our peers to also cut capacity, supporting a recovery of travel. That's what we are currently observing. Capacity moderation in the market as a whole.

Speaker Change: Yes.

Speaker Change: We do expect or we do seek capacity moderation as well from our domestic peers and also international peers.

Speaker Change: As we go through second quarter in the short term. We do expect appears to also cut capacity supporting a recovery of <unk>.

Speaker Change: And Thats, what we are currently observing so capacity moderation in the market as a whole.

Operator: Thank you. Our next question comes from the line of Rogerio Araujo with Bank of America. Your line is now open.

Speaker Change: Thank you.

Our next question comes from the line of Ross <unk> with Bank of America. Your line is now open.

Rogério Araújo: Hi, gentlemen. Thanks for the opportunity. I have one here. When we are looking at previous years where Volaris delivered EBITDA margins close to the mid-thirties, which was the previous guidance, we look at the Q2 margins on those years, which was 2015, 2021, and 2024. Q2 margins were somewhere between 31% and 41%. Now with the guidance at 24% to 25%, it seems that it's significantly below than what the usual seasonality would indicate for the previous guidance to be reached. My question is, what if uncertainties remain for longer? What kind of margins could we see for the year, if the 6 to 16 percentage points difference on the second Q versus other years, if there is any kind of proxy or not. What can you share with us on that scenario?

Speaker Change: Yes, hi, gentlemen, thanks for the opportunity.

Speaker Change: So I had one year when we are looking at previous years, whereby <unk> delivered EBITDAR margins close to the maturities, which was the previous guidance.

Speaker Change: We look at it and secondly margins on those years, which was it other than to continue in 'twenty, one and 'twenty four.

Speaker Change: And second your margins War.

Speaker Change: Somewhere between 31% and 41% and now with the guidance of $24 95, it seems.

Speaker Change: That.

Significantly below than what you know the.

Speaker Change: Usual.

Speaker Change: Sure.

Speaker Change: Seasonality would indicate for the previous guidance to be Richard. So my question is why do you feel uncertainties remain for longer.

Speaker Change: What kind of margins could we see for the year.

Speaker Change: If we seek to 16 percentage points difference on the second Q.

Speaker Change: Versus other years, if there is any kind of proxy or not.

Speaker Change: Can share with us on that scenario also we solve try and 2% higher.

Rogério Araújo: Also, we saw 20% higher passengers in Mexico versus pre-COVID levels, or even more than that, despite the ongoing Pratt & Whitney engine recall. Do you see some kind of overcapacity in Mexico? If that uncertainty remains for longer, would you see competitors and even Volaris postponing some aircraft deliveries, or even retiring current leases? Lastly, what about when all the grounded capacity returns to the market? Does this worry the company somehow? That's it. Thank you very much.

Speaker Change: That's new Jersey, Mexico versus pre COVID-19 levels or even more than that.

Speaker Change: Despite the ongoing threat than weakening engine recall.

Speaker Change: Do you see some kind of overcapacity, Mexico and.

Speaker Change: If that in fact, it remains for longer.

Speaker Change: What do you see competitors and even when there are we supposed to pointing some aircraft deliveries or even retiring current lasers.

Speaker Change: And lastly.

Speaker Change: What about when all the grounded capacity returns to the market.

Speaker Change: Does this worried the company somehow.

Speaker Change: That's it thank you very much.

Enrique Beltranena: Let me try to wrap up a little bit on what you are asking, okay. The first thing is, due to this ongoing economic and geopolitical uncertainty, we are currently unable to reaffirm our full-year EBITDA guidance or guidance through the rest of the year other than the quarter, okay. The second thing is really important is, and I think we are showing it in a very important way, a cut down from 13% to 15% of ASM growth down to 8% to 9%, tells you how concerned we are to produce a better TRASM. We are confident that these actions will lead to a sequential TRASM improvement starting in the summer, positioning us for recovery in the H2 of the year.

Speaker Change: Let me try to wrap up a little bit on what you are asking okay.

Speaker Change: The first thing is we due to this ongoing economic and geopolitical uncertainty. We are currently unable to really affirm our full year EBITDAR guidance or guidance.

Speaker Change: Rest of the year or the quarter.

Speaker Change: The second thing.

Speaker Change: It's really important Denise and I think we are showing it in a very important way a cut down from 13% to 15% of ASM growth down to 89% tells you how concerned we are too broad to produce a better T rise and we are confident that these actions will lead to a sequential RASM improvement.

Speaker Change: Starting in the summer positioning us for recovery in the second half of the year.

Enrique Beltranena: Finally, I think it is important to say that we remain concerned about the ASM growth going forward, and we are managing that again, as I already told. Having said this, it's really important to maintain, in the back of your minds, the capacity of the company to adapt capacity up or down, okay. We think that if we get the traction that we need, we might be changing that in a much better performance for the end of the year, okay. I think it's really important that you guys don't make yourselves a premise that assumes that the TRASM is going to be similar to the last 2 quarters, because we strongly think that we can get a better TRASM and an improvement through the end of the year.

Speaker Change: Finally, I think it is important to say that we remain concerned about the ASM growth going forward.

Speaker Change: And we are managing that the gain as I already told.

Speaker Change: Having said this it's really important to maintain in the back of your minds.

Speaker Change: Paucity of the company to adapt capacity or down okay, and we think that.

Speaker Change: Get the traction that we need we might be changing that.

Speaker Change: In a much better performance for the end of the year, Okay, but I think it's really important that you guys don't make yourselves.

Speaker Change:

Speaker Change: Premise that assumes.

Speaker Change: That the two RASM is going to be similar to the last two quarters, because we strongly think that we can get better the RASM and then improvement through the end of the year.

Jaime Pous: Just adding up on the fleet size. What we planned when we started with the engine troubles was to reduce capacity in 2024, planning in the long future, whenever all of the engines are going to be flying again. We already rescheduled our fleet plan with Airbus. In addition, we have 40% of the fleet is going to be leaving within the same period of time. We can manage capacity up and down with the redeliveries that we are going to be experiencing within the next five years, so that our capacity match the demand of the market.

Speaker Change: Just starting off on the fleet size.

Speaker Change: What we planned when we started with the engine troubles was to reduce capacity in 2020 for planning the lumpy torso whenever all the engines are going to be flying again, so we already rescheduled our fleet plan with variables. In addition, we have 40% of the fleet is going to be leaving.

Speaker Change: Within the same period of time, so we can manage capacity up and down with re deliveries that we're gonna be experiencing within the next five years, so that our capacity match the demand of the market.

Enrique Beltranena: Yeah, I think, If we think about Pratt, okay, I think, it is well understood and very well managed by our team. We do have a multi-year compensation agreement we have in place. Although I cannot provide further details due to confidentiality, we continue to work with Pratt, and we need to improve the throughput. Having said that, we're expecting our down level of fleet to be similar to the last 2 quarters throughout the rest of the year. I think the strong coordination across our operations and scheduling and maintenance team has maintained operational continuity. Our schedule completion ratio is more than 98.5%, and we are confident in our ability to execute as this situation evolves.

Speaker Change: Yes.

Speaker Change: If we think it will speak about brought okay.

Speaker Change: Inc.

Speaker Change: It is well understood and very well managed by our team we do have a multi year compensation agreement we have in place.

Speaker Change: Although I cannot provide further details due to consider in Charlotte, we continue to work with PREPA and we need to improve the throughput having said that we're expecting our down.

Speaker Change: The level of fleet to be similar to the last two quarters throughout the rest of the year I think the strong coordination across our operations and scheduling and maintenance team has maintained operational continuity. Our schedule completion ratio is more than 98, 5% and we are currently.

Speaker Change: And in our ability to execute those DSO.

Speaker Change: The situation evolves.

Rogério Araújo: Okay. That was very clear. Thanks, gentlemen. If I can ask only one last point here on redelivery costs. It was $54 million this quarter, 8% of revenue. Can you remind us when this is going to normalize and by how much? Thank you.

Speaker Change: Okay that was very clear thanks, gentlemen, if I can ask on one last point here on re delivery costs. It was $54 million this quarter, 8% of revenue Ken.

Speaker Change: Can you remind us when this is going to normalize and by how much. Thank you.

Jaime Pous: This year, 2025, and start to go lower on 2026, and getting back to normality in 2027. It's a mix of the redelivery expenses plus the AOGs of the aircraft on ground due to the engines, and that's why it's the highest at the moment. It should normalize them back to 2023 levels until 2028.

Speaker Change: This year 2025, and will start to go lower in 2026, and then getting back to normality in 2027.

It's a mix of the re delivery expenses.

So they are aggressive around due to the engines and thats why the carriers.

Speaker Change: At the moment.

Speaker Change: It should normalize them back.

Speaker Change: <unk> 23 levels.

Speaker Change: Until 2028.

Rogério Araújo: Thanks so much.

Speaker Change: Yes.

Speaker Change: Thanks, so much.

Operator: Thank you. Our next question comes from the line of Jens Spiess with Morgan Stanley. Your line is now open.

Speaker Change: Thank you. Our next question comes from the line of Steve <unk> with Morgan Stanley. Your line is now open.

Jens Spiess: Yes. Hello, thank you for taking my question. Just regarding the lower capacity guide, just to be very clear. The reduction versus your previous guide is mainly driven by more redeliveries, right? How many aircraft do you expect to redeliver this year? How much do you expect in terms of redelivery expenses for the full year 2025? Could you please elaborate? Thank you.

Speaker Change: Yes.

Speaker Change: Hello. Thank you for taking my question just regarding the lower capacity guide just to be very clear.

Speaker Change: The reduction versus your previous guidance is mainly driven by more re deliveries right. So how many aircraft do you expect to redeliver this year and how much do you expect in terms of free delivery expenses for the full year 2025.

Speaker Change: Please elaborate thank you.

Jaime Pous: Hi, how are you? We're going to be redelivering 5 aircraft this year. Other plans that we have, we are still managing redeliveries of 2026, which is why we have 2024, and we need to decide what we're going to keep and what we are going to extend to optimize the cost side. If you look this year compared to last year, you should have an impact of an additional $90-plus million in the redelivery line, just associated with the redeliveries of this year and 2026.

Speaker Change: Hi, how are you were going to be the leader in <unk>, perhaps this year.

Speaker Change: <unk> Plaza, we have we are still managing re deliveries of 2026, which way we have 2024, and we didn't need to decide what we're going to keep on what we're going to extend to optimize the cost side, but if you look this year compared to last year, you should have an impact of an additional.

Speaker Change: 90 plus million dollars in the re delivery line just associated with the delivery so easier in 2026.

Jens Spiess: Okay, perfect. Considering that you and your main competitor are both reacting by reducing scheduled capacity, should we not expect higher yields or load factors down the road? In other words, how conservative is your Q2 TRASM guide? Really, how much could we expect that to increase in the H2 of the year? Just one follow-up. Also, if the MXN stays closer to the current spot, how would that impact your Q2 EBITDAR margin guidance? Thank you.

Speaker Change: Okay perfect.

Speaker Change: I mean, considering that you and your main competitor are both reacting.

Speaker Change: Reducing like scheduled capacity.

Speaker Change: Should we not expect higher yields.

Speaker Change: Or load factors down the road I mean in other words, how conservative is your <unk> guide and really how much could we expect that to increase in the second half of the year and just one follow up also.

Speaker Change: The mix then.

Speaker Change: <unk> closer to the current spot.

Speaker Change: How would that impact your <unk> EBITDAR margin guidance. Thank you.

Enrique Beltranena: Jens, precisely, that's the reason we're reducing capacity. We are confident that the capacity reduction will lead to a sequential TRASM improvement, starting in the summer, and positioning us very well for a recovery for the H2 of the year, which is seasonality adjusted, always stronger. With these additional capacity actions, we believe that we are in a good starting position to improving yields, and TRASM. The Q2 guidance is what we are seeing today, and it assumes an FX between MXN 20.20 to 20.40 and a fuel around 2 to 2.10. You already have the macros there. The visibility that we have now to the Q2 is the guidance that we are providing.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: That's the reason, we're reducing capacity.

Speaker Change: We are confident that the capacity reduction.

Speaker Change: It leads to a sequential traveling improvement.

Speaker Change: Starting in the summer.

Speaker Change: And positioning us very well for a recovery for the second half of the year, which is.

Speaker Change: Seasonality adjusted always stronger, but we did see additional capacity actions. We believe that we are in a good starting position improving yields.

Speaker Change: And and President.

Speaker Change: And the <unk> guidance is what we are seeing today and it assumes an FX between 'twenty, one 'twenty vessels to 2040 vessels.

Speaker Change: Fuel around two to $2 10.

So do you already have the macros there the visibility that we have now to the second Q is the guidance that we're providing.

Jens Spiess: Yes, the FX is already quite stronger, right? Assuming it stays at the current level.

Speaker Change: Yes.

Speaker Change: The FX already quite stronger right so that.

Speaker Change: I mean, assuming it stays at the current level.

Enrique Beltranena: Yeah, it will be a lot like that when we provided the assumption.

Speaker Change: We've provided the assumptions.

Jens Spiess: Correct. Okay. All right, perfect. Thank you. Appreciate it.

Speaker Change: Correct, Okay, alright, perfect. Thank you I appreciate it.

Operator: Thank you. Our next question comes from the line of Guilherme Mendes with JPMorgan. Your line is open.

Speaker Change: Thank you. Our next question comes from the line of <unk> Mendez with Jpmorgan. Your line is now open.

Guilherme Mendes: Hey, Enrique Holger joining. Thanks for taking my question. I have two quick follow-ups. The first one is on demand breakdown. You speak about how VFR demand has been performing, but in terms of leisure demand, how has it been performing? The second point is on the Q1 yield performance. If you could break down the different effects impacting negatively in terms of geopolitical effects, how would it be? Thank you.

Mendez: A an hakea yogurt, Jamie Thanks for taking my question I have two quick follow ups. The first one is the on demand breakdown.

Mendez: You speak about the how VFR demand has been performing but in terms of leisure demand how has it been performing and the second point is on the first quarter yield performance.

Mendez: If you could break down the different effects impacting negatively in terms of geopolitical effects how would it be thank you.

Holger Blankenstein: Okay. Let me take the first part of the question. This is Holger. In terms of the traffic customer segment groups most affected, clearly the VFR is currently the most affected. We are seeing relatively strong leisure demand, which is also, as you can see it in our traffic report, the domestic load factor continues to be quite strong. That is also driven by domestic leisure travel, to the beaches here in Mexico. As we mentioned in the prepared remarks, we opened 2 routes that are southbound leisure, from the US to Mexico. We are also seeing relatively stable and strong demand in that niche segment of ours, southbound leisure. The VFR is clearly the most affected right now. To reiterate what we already said, in Q1, TRASM clearly was impacted by various factors, which includes a 20% depreciation of the peso.

Mendez: Okay. So let me take the first part of the question is this hugger.

Mendez: In terms of.

The traffic.

Mendez: Customer segment groups, most effected clearly the VFR is currently the most affected were seeing relatively strong leisure demand which is.

Mendez: So as you can see it in our traffic reports domestic load factor continues to be quite strong that is also driven by domestic leisure travel to the beaches here in Mexico, and we are as we mentioned in the prepared remarks, we opened two routes that are housebound leisure.

Mendez: From the U S to Mexico, and we're also seeing relatively stable and strong demand in that niche segment of ours South part leisure.

Mendez: So the VFR is created.

Mendez: Most affected right now.

Mendez: To reiterate what we already said in the first quarter.

Mendez: <unk>.

Mendez: Clearly was impacted by various factors, which includes a 20% depreciation of the peso and if you take away that.

Holger Blankenstein: If you take away that peso depreciation in constant currencies, TRASM would have only declined by approximately 7%, which is a testament to the strength of the domestic market, the relative strength of the domestic market, and the leisure business.

Mendez: Peso.

Mendez: The depreciation in constant currencies.

Mendez: Traveling would have only declined by approximately 7%, which is a testament to the strength of the domestic market.

Mendez: The relative strength of the domestic market and the leisure business.

Guilherme Mendes: Very clear. Thank you, Holger.

Mendez: Yeah.

Mendez: Very clear thank yoga.

Operator: Thank you. Our next question comes from the line of Pablo Mancillas with Barclays. Your line is now open.

Speaker Change: Thank you. Our next question comes from the line of Pablo <unk> with Barclays. Your line is now open.

Pablo Mancillas: Hi. Thanks for taking my questions. A bit of a follow-up from previous questions. You have mentioned repeatedly this call that you can adapt to a new environment in terms of demand. Can you please provide an example of, I don't know, a period of time when demand for VFR was down and you were able to put more seats in the leisure market or in the business market, and how that play out for us to try to extrapolate that experience in the past to what might happen here? That's my first question. My second question is about cash flows. If you provide a little bit more detail on your CapEx, I think that you have $250 million of CapEx this year. Put a little bit more color on the items there. Also on the working capital needs. Thank you.

Speaker Change: Hi, Thanks for taking my questions.

Speaker Change: Question, Oh can follow ups from previous questions.

Speaker Change: You have mentioned repeatedly this call that you are that you can adapt to.

Speaker Change: The environment in terms of demand, but can you. Please provide an example of.

Speaker Change: <unk>.

I don't know a period of time when demand for beer was down and you were able to put more seats.

Speaker Change: Leisure market or in the business market and how would that play out for us to try to extrapolate that experienced in the past to what might happen here. That's my first question and my second question is about cash flows.

You provide.

Speaker Change: More detail on your Capex, you I think you have $250 million of Capex.

Speaker Change: Capex this year.

Speaker Change: On.

Speaker Change: But a little bit more.

Speaker Change: Color on the <unk>.

Speaker Change: Items there.

Speaker Change: Also on the working capital Thank you.

Enrique Beltranena: I think we have several examples of what has happened. I remember it very well through the crisis of H1N1 in 2009, where we had a recovery. The recovery was fascinating, the way the VFR traffic recovers and the speed it recovers. The second one, I would say it's the pandemic, and I want to remind you that Volaris was the fastest recovery airline after the pandemic, and it's exactly because of that, because the VFR traffic recovers very rapidly. Okay? The third example is the first period of Trump, okay? We lived something similar in the first two periods of Trump. Probably it's much more accentuated right now.

Speaker Change: I think we have several examples of what has happened I mean, I remember it very well through the crisis of H, one and one in 2009, where.

Speaker Change: Where we had a recovery the recovery was fascinating the way the VFR traffic recovers and speedy recovery. The second one I would say, it's the pandemic I want to remind you that <unk> was the fastest recovery after the pandemic and it's exactly because of that because the VFR traffic recovered it's very rare you.

Speaker Change: Rapidly okay and this is very acceptable is the first period of Trump, Okay, and we leave something similar in the first two periods of chrome probably it's much more accentuated right now, but by then we had a fast recovery for maybe airport traffic.

Jaime Pous: By then, we had a fast recovery from VFR traffic in a very effective way. I think we have several examples throughout the 20 years of the company that shows that the traffic recovers much more faster in that segment. Okay. Something which is really important also to mention is that we are preparing ourselves for that fast recovery, okay. The things that we're doing, like preparing the people, preparing the lines of maintenance, preparing our IT structure, preparing our systems, everything is aligned towards that so we can have a very fast first position in the table, so we can depart in a very fast way. In terms of CapEx, most of the CapEx, you know we provide a full-year guidance of $250, excluding PDPs, Pablo, are related with major maintenance events, engines, and aircrafts.

Speaker Change: Effective way so I think we have several several examples throughout the 20 years of the company that shows that the traffic recovers much more faster in that segment okay.

Speaker Change: Which is really important also to mention it.

Speaker Change: That we're preparing ourselves for that fast recovery, okay, and the things that we're doing like preparing the people, preferring the lines or maintenance preparing.

Speaker Change: Our ICD structure of preparing our systems everything is aligned towards that so we can have a very fast first position in the table. So we can get the part in a very very fast way.

Speaker Change: In terms of Capex.

Speaker Change: Most of the Capex would you know we provide our full year guidance of 250, excluding PDP Pablo are related with major <unk> events and engines on aircrafts.

Jaime Pous: The other is minimal, is related just to IT infrastructures and things that we are working on it.

Speaker Change: The other is minimal is related just to IP infrastructure things that we are.

Speaker Change: Working on it.

Speaker Change: Okay.

Pablo Mancillas: Perfect. The working capital needs?

Speaker Change: Perfect and then the working capital needs.

Jaime Pous: This year, we don't plan to do any debt. We're focusing on preserving the cash. However, we have the availability to do it in the case we need to do it. Right now, we're just focused on preserving cash, and we are not budgeting for any additional working capital.

Speaker Change: This year, we don't plan to do any debt.

Speaker Change: We're focusing on preserving their cash however, we have the availability to do it in the case, we would need to do it.

Speaker Change: But right now we're just focused on preserving cash and we are not budgeting for any additional working capital.

Speaker Change: Okay.

Pablo Mancillas: Perfect. Thank you very much.

Speaker Change: Thank you very much.

Operator: Thank you. Our last question comes from the line of Alberto Valerio with UBS. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Last question comes from the line of Liberto Valerio with UBS. Your line is now open.

Alberto Valerio: Thank you. Hi, gentlemen. Thanks for the opportunity. A quick question on my side. We have some revisions on the airports, the MDPs. We had ASUR 3 years ago. Last year, we have GAP. Wondering on this environment of declining yields, how is the negotiation with the airports? I know you have a hub in Guadalajara, but you also utilize ASUR, and this year we have OMA as well. Just to have an idea, if you have some flexibility on this negotiation, or if this is more regulatory and independent of the demand, that will be the readjustment. Thank you.

Thank you hi, gentlemen, thanks for the opportunity a quick question on my side, we have some revisions on the airports are the pieces we have.

Speaker Change: Korea is a role that <unk> has that whether you're on this.

Speaker Change: Environment.

Speaker Change: Declining yields.

Speaker Change: Is the negotiation with their thoughts I know you have a hub in Guadalajara, but you also utilize a soda and reviewing heads all my as well. So just to if you have any idea. If you have some flexibility on these negotiations are always if you do see more regulatory and independent of the demand did that it would be the.

Speaker Change: Readjustment. Thank you.

Holger Blankenstein: Regarding the TUA situation, we've been quite vocal, with the government and the airport groups, that any increase that exceeds inflation is disproportionate. We believe that fees and charges should be aligned and consistent with the type of travel segment that presents in Mexico and the customer's ability to pay. We stand for reasonable and fair levels of those fees. We believe that it is important that these fees are in consistent with the goal of democratizing aviation and enabling more passengers to fly. We've been quite vocal on that topic.

Speaker Change: So regarding the situation we've been quite vocal with the government at the airport groups.

Speaker Change: Any increase.

Speaker Change: That exceeds inflation is disproportionate and we believe that the key and charges should be aligned and consistent with the type of travel segment.

Speaker Change: That presents in Mexico, and the customer's ability to pay.

Speaker Change: So we stand for reasonable and fair levels of those those fees.

Speaker Change: And we believe that is important that these fees are inconsistent with the goal of democratizing aviation and enabling more.

Speaker Change: Passengers to fly.

Speaker Change: So we've been quite vocal on that topic.

Alberto Valerio: Perfect. Very clear. If I may, just one more about the Mexico City Airport, the increase on slots. How are the ongoing discussions with governments? Will it be possible to increase the slots back to what it was back in 2019, or you think that the restrictions on the slots close to 43, 44 slots per day would remain?

Speaker Change: Perfect directly and if I may just one more about the Mexico City Airport. The increase on slots how is the ongoing discussions with governments will be possible to increase back to what it was back in 2019 or you think.

Speaker Change: The restrictions on basically what's close to 43 44 slots per day would remain.

Enrique Beltranena: This is Enrique again, and let me be honest with you. I think there's a lot of talk around Mexico City Airport, there's nothing concrete and nothing has been issued as a change. So far, we continue operating in the same path, expecting a much better allocation of slots. Having said that, Volaris has improved dramatically its slot situation since 2019 until today.

Speaker Change: So these are the league Amen.

Speaker Change: Be honest with you I think there's a lot of talk around Mexico City airport, but theres nothing concrete and nothing has been.

Speaker Change: He should.

Speaker Change: So so far we continue operating in the same path.

Speaker Change: Expecting a much better.

Speaker Change: Allocation of slots, having said that Polaris has improved dramatically its situations since 2019 until today.

Alberto Valerio: Thank you very much, gentlemen.

Speaker Change: Thank you very much gentlemen.

Operator: Excuse me. This concludes today's question and answer session. I would like to invite Mr. Beltranena to proceed with his closing remarks. Please go ahead, sir.

Speaker Change: Yes.

Speaker Change: Excuse me. This concludes today's question and answer session I would like to invite Mr belts with Luna to proceed with his closing remarks. Please go ahead Sir.

Enrique Beltranena: Very proud of our company's resilience and of what the Volaris team has achieved. I have a positive sentiment on the future, but I want to say that through every cycle, we have been proactive in doing all the things we should be doing to serve our customers, solidify our best-in-class cost position, preserve our financial strength, and maintain top-ranking operational efficiency, safety, and customer satisfaction standards. By staying true to our long-term vision, creating sustainable shareholder value while leading in our core markets, Volaris is well-positioned for continued success, even amid a dynamic environment. As always, we are grateful to our family of ambassadors, to our board of directors, to you, our investors, partners, lessors, and suppliers for their support. I look forward to speaking to you all on the next call. Thank you very much. Thanks for your time.

Speaker Change: Very proud of our company's resilience.

Speaker Change: <unk> has achieved a positive sentiment in the future.

Speaker Change: I want to say that through every cycle, we have been proactive in doing all the things we should be doing to serve our customers. So ladies via our best in class cost position will serve our financial strength and maintaining top ranking operational efficiency safety and customer satisfaction standards by staying cool.

Our long term vision, creating sustainable shareholder value, while leading in our core markets, where <unk> is well positioned for continued success.

Speaker Change: A dynamic environment.

Speaker Change: We are grateful to our family of ambassadors.

Speaker Change: Our board of directors to you our investors bonkers, Messrs and suppliers for their support and look forward to speaking to you all in the next call. Thank you very much.

Operator: This concludes the Volaris conference call for today. Thank you very much for your participation. Have a nice day.

Speaker Change: Thank you.

Speaker Change: This concludes nevertheless conference call for today. Thank you very much for your participation have a nice day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].