Volaris’s 2Q15 results show strong non-ticket revenue growth

Volaris has announced its financial results for the second quarter 2015 (2Q15), including an operating revenue of Ps4,099 million, an increase of 23.9% in comparison with 2Q14’s figure.Other highlights include an adjusted EBITDAR for the second quarter of Ps1,281 million, an increase of 115.3% year-over-year.As a result of operating expenses per available seat mile (CASM) decreasing 3.3% year-over-year to Ps112.5 cents, Volaris’s 2Q15 total operating revenue per available seat mile (TRASM) rose to Ps123.0 cents, an increase of 8.7% on 2Q14. The lower operating expenses were enabled by lower fuel prices: the average economic fuel cost per gallon decreased 21.3% year-over-year in 2Q15 to Ps31.01 per gallon.Active in fuel risk management, Volaris hedged 44% of its second quarter fuel consumption at an average strike price of $2.15 per gallon, which combined with the 56% unhedged consumption, resulted in a blended average economic fuel cost of $1.99 per gallon for the quarter.Furthermore, total non-ticket revenues increased 48.3% to Ps977 million in comparison with 2Q14 despite non-ticket revenue per passenger increasing by only 23.2%. These improvements are attributed to refined ancillary services, the implementations of new commission-based products in the booking flow and new à la carte products. In addition, performance of Volaris’s cobranded credit card improved.These positive results were affected by the macroeconomic environment in Mexico. Whilst the Mexican peso depreciated 17.7% year-over-year against the US dollar, which put pressure on Volaris’s US-dollar denominated costs such as aircraft rents, international airport costs, and maintenance expenses, the country also witnessed GDP growth for the first quarter of 2015 of 2.5%, as well as continuing increases in consumer confidence across 2Q15 in comparison with last year.Volaris CEO, Enrique Beltranena, commented, “During the second quarter we continued to see improving market dynamics driven by solid demand and growing customer acceptance of the Volaris ULCC model. We continue to drive our growth through an expanding international presence while maintaining cost discipline and executing our business plan that is focused on generating shareholder value.”The airline’s revenue passenger miles increased 15.8%, with the carrier’s passenger market share among Mexican carriers reaching 23.4% in both domestic and international markets, the second largest share. This occurred even whilst domestic capacity grew 7.3%, and international capacity increased 34.6% (the airline launched three new domestic routes and four new international routes during 2Q15).As of 30 June 2015, Volaris’s fleet comprised 53 aircraft (33 A320s, 18 A319s and 2 A321s), with an average age of 4.3 years. Volaris expects to end 2015 with 55 aircraft.

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