Volaris (VOLARA) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 EBITDAR/EBITDA and net income of $10 million, up 66.7% year-over-year, despite a 17% capacity reduction from engine groundings and inspections.

• Operating revenue was $726 million, down 7% year-over-year, with strong cost control and operational excellence.

• Load factor improved to 85.5%-86%, and ancillary revenue per passenger rose 15% to $53, now over 50% of total revenue.

• Maintained leading market share in Mexico and robust demand in both domestic and U.S. cross-border markets.

• Mitigation plan for engine inspections is on track, with improved full-year ASM guidance to -14%.

Financial highlights

• Total operating revenue for Q2 2024 was $726 million, down 7% year-over-year, with EBITDAR/EBITDA up 23% to $261 million and margin at 35.9%-36%.

• EBIT increased 29% to $66 million, with a 9.1% margin; net income was $10 million, or $0.09 per ADS.

• Liquidity at quarter-end was $774 million, 24% of LTM revenues; cash flow from operations was $304 million.

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

• Ancillary revenue per passenger rose 15% to $53, with ancillaries comprising over 50% of total revenue.

Outlook and guidance

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

• Q3 2024 guidance: 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 fleet 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.