Posted on: 25 February 2015 by Ross McSweeny
Volaris has published its financial results for the fourth quarter (4Q14) and full year 2014 (FY2014) with net income of Ps.703 million and Ps.605 million for the respective periods.
The 4Q14 net margin of 17.8% was an improvement of 20.9 percentage points over 4Q13, while for FY2014 net margin was 4.3% for the full year, a net margin improvement of 2.3 pp.
The airline’s total operating revenues were Ps.3,958 million and Ps.14,037 million for 4Q14 and FY2014, respectively, increases of 24.3% and 8.0% year-over-year, respectively.
Total operating revenue per available seat mile (TRASM) increased to Ps.130.5 cents and Ps.118.7 cents 4Q14 and FY2014 respectively, an increase of 20.7% and a decrease of 0.5% year over year, respectively.
Operating expenses per available seat mile (CASM) increased 1.5% and 0.5% for 4Q14 and FY2014, year-over-year, respectively, reaching Ps.116.4 cents and Ps.116.9 cents. CASM expressed in US cents decreased 9.9% and 10.7% for 4Q14 and FY2014, year over year, respectively. CASM excluding fuel expressed in US dollars reached US4.9¢ for the full year 2014.
Adjusted EBITDAR for the fourth quarter was Ps.1,239 million, a 156.1% increase year-over-year with an adjusted EBITDAR margin of 31.3%, a margin increase of 16.1 pp. Adjusted EBITDAR for the full year was Ps.3,081 million, a 9.8% increase year-over-year with an adjusted EBITDAR margin of 22.0%, a margin increase of 0.4 pp.
During 4Q14 the net increase of cash and cash equivalents was Ps.342 million mainly driven by the resources provided by operating activities of Ps.470 million. Unrestricted cash and cash equivalents was Ps.2,265 million, representing 16% of last twelve month revenues.
Volaris CEO Enrique Beltranena commented, "The network adjustments and non-ticket revenue growth strategy together with a continuous focus on cost control produced fourth quarter adjusted EBITDAR, operating, and net margin expansions. We continue to see improvement in the market environment as industry capacity discipline drives a stronger fare environment. We also foresee potential benefits in 2015 from lower fuel costs and the continuation of non-ticket revenue growth."
Volaris noted the effect of exchange rate volatility with the Mexican peso depreciating 6.2% year-over-year against the US dollar, as the exchange rate devalued from an average of Ps.13.03 pesos per US dollar in 4Q13 to Ps.13.84 pesos per US dollar during 4Q14.
Meanwhile, the average economic fuel cost per gallon decreased 10.4% year-over-year in 4Q14, reaching Ps.35.6 ($2.4) per gallon.
In the fourth quarter Volaris experienced pressures in US dollar denominated costs such as aircraft rents, international airport costs, and maintenance expenses. However, Volaris managed to offset most of these increases with efficiencies in salaries and benefits costs and landing, takeoff and navigation expenses.
As of 31 December 2014, the Volaris fleet comprised 50 aircraft (32 A320s and 18 A319s), with an average age of 4 years. The airline expects to end 2015 with 55 aircraft, including its first two A321s in the second quarter of 2015.
As of 31 December 2014, Volaris had Ps.2,265 million in unrestricted cash and cash equivalents, representing 16% of the last twelve months’ revenues. The company recorded negative net debt (or a positive net cash position) of Ps.1,017 million and total equity was Ps.4,470 million.