Volaris (VOLARA) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 EBITDAR/EBITDA and net income of $10 million, with EPS of $0.09 per ADS, despite a 17% capacity reduction from engine groundings.

• Operating revenue declined 7% year-over-year to $726 million, while load factor improved to 85.5%-86% and ancillary revenue per passenger rose 15% to $53, now over 49% of total revenue.

• Maintained strong market position as Mexico's largest airline by passengers, leveraging ultra-low-cost model and ancillary revenue strategies.

• Mitigation plan for engine groundings is on track, with improved turnaround times and positive coordination with Pratt & Whitney.

• Focused on cost control, network flexibility, and customer service, with improved on-time performance and Net Promoter Score above 40%.

Financial highlights

• EBITDAR/EBITDA rose 23% to $261 million, with margin up 8.8 points to 35.9%; EBIT increased 29% to $66 million (9.1% margin); net income reached $10 million.

• Total operating revenues for Q2 2024 decreased 7% to $726 million, despite a 17% capacity reduction.

• Cash flow from operations was $304 million; liquidity at quarter-end was $774 million (24% of LTM revenues).

• Ancillary revenue per passenger rose 15% year-over-year to $53, comprising over 49% of total revenues.

• Net debt to EBITDA/EBITDAR ratio improved to 2.9x from 3.3x at end-2023.

Outlook and guidance

• Full-year 2024 ASM guidance improved to a 14% reduction year-over-year (from prior -16% to -18%).

• Q3 2024 outlook: ASM down ~14% YoY, TRASM ~9.3 cents, CASM ex fuel ~5.6 cents, EBITDAR/EBITDA margin ~33%.

• Full-year 2024: EBITDAR/EBITDA margin expected at 32%-34%, CapEx net to finance PDPs at $400 million.

• Revenue for 2024 projected to be close to 2023 levels despite double-digit capacity reduction.

• Gradual capacity restoration expected through at least 2026; 2023 capacity levels not expected in 2025.