Posted on: 25 April 2016 by Mark Howells
Volaris has revealed its financial results for the first quarter of 2016 (1Q16) featuring a net income of Ps602 million, with a net margin of 11.6%.
The total operating revenues in 1Q16 were Ps5,182 million, an increase of 37.5% year over year. Non-ticket revenues totalled Ps1,276 million, up 50.8% over 1Q15’s result. Non-ticket revenues per passenger in 1Q16 was Ps372, a rise of 10.4% year over year. Finally on the revenue side, the total operating revenues per available seat mile (TRASM) rose to Ps133.2 cents for 1Q16, an increase of 7.5% year over year.
The operating expenses per available seat mile (CASM) were Ps111.7 cents in 1Q16, a decrease of 0.7% year over year, while the adjusted EBITDAR was Ps2,175 million, up 80.6% year over year. The adjusted EBITDAR margin was 42.0% for the first quarter, a margin expansion of 10.0 percentage points.
These figures led to an operating income in 1Q16 of Ps836 million, with an operating margin of 16.1%, equal to a year over year operating margin improvement of 6.9 pp. The net increase of cash and cash equivalents was Ps1,209 million for 1Q16.
Volaris CEO Enrique Beltranena commented, “The strong passenger demand environment in the first quarter of 2016, supported by seasonality, continued fueling Volaris's financial results and achieving record first quarter margins. Our low base fares and bus switching campaign strategy continue to be the cornerstone of our unbundled business model to stimulate demand for both domestic and international travel in Mexico and the United States.”
Macroeconomic factors affecting the results included an overall passenger volume increase for Mexican carriers of 15.0% year over year in January and February. Domestic passenger volume increased 13.2%, while international passenger volume increased by 21.9%.
Financially, there was more exchange rate volatility with the Mexican peso depreciating 21% year over year against the US dollar, from an average of Ps14.93 pesos per US dollar in 1Q15 to Ps18.02 pesos per US dollar during 1Q16. Also, the average economic fuel cost per gallon decreased 25.6% to Ps22.1 per gallon ($1.3) in 1Q16, year over year.
In the first quarter of 2016, Volaris continued to experience pressure in US-dollar denominated costs, such as aircraft rents, international airport costs, and maintenance expenses due to the depreciation of the Mexican peso. Despite these challenges, the CASM for the first quarter was Ps111.7 cents, a 0.7% decrease compared with the first quarter of 2015, mainly driven by lower fuel prices.
As of 31 March 2016, the Volaris fleet comprised 59 aircraft (18 A319s, 39 A320s and 2 A321s), with an average age of 4.6 years.
Volaris has continued to remain active in its fuel risk management programme. The carrier hedged 55% of its 1Q16 fuel consumption at an average strike price of $1.94 per gallon, which combined with the 45% unhedged consumption, resulted in a blended average economic fuel cost of $1.27 per gallon.