Volaris reports strong 2Q16 results

tVolaris has announced that its net income for the second quarter of 2016 (2Q16) reached Ps.935 million, an increase of 9.6 percentage points year-over-year.tThe carrier booked 3.6 million passengers during the period, up 26.4% on 2Q15. Available seat miles (ASMs) grew by 19.3% on Volaris’s domestic flights and 19.9% on international routes against an overall rise in revenue passenger miles of 24%, resulting in a load factor increase of 3.2 percentage points to 86.1%.However, the airline’s 2Q16 operating income was Ps.388 million, with an operating margin of 7.6%, equal to a year-over-year operating margin decrease of 0.9 percentage points. One reason for this is the depreciation of the Mexican peso by 17.9% against the US dollar, putting pressure on aircraft and engine rent expenses, international airport costs and maintenance expenses.The total operating revenues per ASM rose by 4.8% year-over-year to Ps.128.9 cents, but the benefits of this were mostly neutralised by a 5.9% increase in operating expenses per ASM to Ps.119.2 cents.Elsewhere, non-ticket revenues for 2Q16 were Ps.1,317 million, an increase of 34.7% in comparison to 2Q15, which the airline attributes to an expanding product offering of dynamically priced ancillaries and an improved mobile presence.The carrier also benefited from a decrease in the average economic fuel cost per gallon by 8.6%. After hedging 62% of its 2Q16 fuel consumption at an average strike price of $1.95 per gallon, and combining this with the 38% unhedged consumption, Volaris achieved a blended average economic fuel cost of $1.50 per gallon.CEO of Volaris, Enrique Beltranena, declared, “Volaris’s performance highlights the resilience of its ULCC model that combines high growth, expanding unit revenue, and managing unit costs down. These results reflect our ability to stimulate demand with low base fares, successfully switch bus passengers to air travel and further unbundle our product offering. We will work to continue balancing our growth with profitability to create shareholder value.”

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