Controladora Vuela Compania de Aviacion, S.A.B. de C.V.

Good morning, everyone, and thank you for joining the call. With us today is our President and Chief Executive Officer Enrique Beltranena, our Airline Executive Vice President, Holger Blankenstein, and our Vice President and Chief Financial Officer, Sonia Jerez. We will be discussing the company's fourth quarter and full year 2018 results. Afterwards, we will move on to your questions. Please note that this call is for investors and analysts Any questions from the media will be taken on an individual basis. Before we begin, please let me remind everyone that this call may include forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to several factors that could cause the company's actual results to differ materially from expectations for reasons described in the company's filings with the U.S. Securities and Exchange Commission. Valar Sonder takes no obligation to publicly update or revise any forward-looking statements. Now my pleasure to turn the call over to Valar's President and Chief Executive Officer, Mr. Enrique Beltranena.

Thank you, Marielena. Good morning to everybody and thank you for joining us today. Throughout 2018, our commercial efforts and cost-efficiency initiatives helped us overcome a very challenging year. A year with significant moves in fuel, along with a change in geopolitical landscape in Mexico. Let me give you some examples of what we accomplished during the year. I'll start with TRASM. TRASM increased 8.4% year-over-year in the fourth quarter, following a trajectory of sequential quarterly improvement that was the result of the company's efforts to recover top-line total revenues. This result exceeded our guidance and put us back above 2017 levels. This TRASM increase represents a 23% improvement versus the first quarter of 2018. Volaris achieved a full year reduction in unit cost excluding fuel of 9.3% versus 2017 in U.S. dollar cents, fully offsetting A 29% annual average economic fuel cost per gallon, equivalent to 2.9 billion pesos. This was the realization of a bottoms-up company-wide cost savings initiative. As a result, the total U.S. dollar chasm for the year remained at the same level as the previous year. We were and we are fully dedicated to maintaining our ultra-low-cost structure which remains among the lowest in the industry. The combination of the unit revenue improvement and efficiencies produced a positive second half EBIT of 601 million or 4% margin, an EBITDA of 4.1 billion Mexican pesos for a 27% margin Reflecting our commitment to turn around our main indicators. Our fourth quarter results were even better than the third quarter, showing a sequential improvement with an EBIT of 355 million Mexican pesos, or 4.5 margin, an EBITDA of 2.1 billion pesos, or 27% margin. As a result, Volaris was able to finish the full year with a positive operating cash flow generation at 566 million pesos for the 12 months and 102 million pesos for the fourth quarter. However, despite the huge effort from the team to improve both TRASM and CASM, the improved and positive performance during the second half was sadly not enough to offset the operating losses from the first half. Volaris grew ASMs by 12% in the fourth quarter. The main growth driver was the healthy capacity generated by better utilization of our existing assets. Aircraft utilization was up 5% for the full year, with passenger growth of 12%. Holger Blankenstein will report that an important percentage of our passengers were first-time It shows that our growth is mainly driven by the generation of new passengers resulting from a better penetration of the ultra-low cost model and the bus switching. Consequently, Volaris ended 2018 as Mexico's number one carrier in the domestic market. In 2018, the company faced tough competition at the beginning of the year, but in the second half we saw a better revenue environment, especially in the trans-border market. The Consumer Confidence Index in Mexico kept on soaring to record highs. In January 2019, it scored its highest level since 2001, climbing 32% year-over-year to 112%, showing a constructive outlook for the current year and most important for our VFR traffic. The U.S. economic performance drove stronger wages that helped support our VFR traffic and remittances grew 11% in 2018 versus 2017 that helped drive domestic traffic. These positive economic trends worked with our network and capacity adjustment efforts to produce the improved second half 2018 top line results discussed earlier. Now let me pass it over to our Airline Executive Vice President, Holger Blankenstein, to elaborate further on the drivers of the revenues. Holger, please.

Thank you, Enrique. In the fourth quarter, we achieved strong volumes. In the domestic market, the load factor was 89.5%, 3.6 percentage points better than in 2017. The international market recovered to 79.4%, 4.2 percentage points higher than the same period last year. Central America continues to be a small piece of our business, but also contributed to volume improvements versus 2017. Domestic ASM growth for the quarter was 14%, driven by more capacity in our core markets of Guadalajara and Tijuana, and thanks to new routes, We were able to bring lower fares with customizable travel options to more people and more places. This is a healthy capacity growth achieved through increasing daily utilization and improving capacity production per aircraft per day without sacrificing operational indicators. In the transporter market between the U.S. and Mexico, our ASM capacity growth was only 7%. As we still see some weakness in the demand in major routes. In the fourth quarter, we launched operations in six new domestic routes and three new international routes from airports where we already had a presence. For example, we opened Bajio to Puerto Vallarta and Bajio to Sacramento. The total fare environment has also improved. We were able to stimulate demand and ancillary revenue, which resulted in a positive overall effect on TRASM. For the first quarter of 2019, we expect this positive TRASM trend year-over-year to continue, supported by robust bookings and ancillary revenues. This, despite the drag on the first quarter of 2019 due to a shift of the Holy Week and Easter high season to mid-April this year. Regarding the domestic competitive environment, Volaris has been successfully boosting and defending its core market. Meanwhile, we have observed more cautious capacity additions from the high-cost competitors with practically zero growth, while the ULTCs continue to penetrate the markets. Nevertheless, Mexico's total domestic market grew once again In the international market, Volaris has acted swiftly and carefully, reducing capacity in several U.S. markets where we have seen lower demand growth. We are also observing capacity adjustments by several Mexican and U.S. players, especially in the California market and on routes between large cities in Mexico and the U.S. such as Chicago, Miami, and New York. In 2018, we kept refining our bus switching marketing campaign to better understand first-time flyers. The Volaris team undertook numerous field trips to immerse itself into the local emerging middle-class communities to identify and better understand this segment's travel patterns. We identified a target core Bus switching market of 38 million Mexicans that have never flown before. We are approaching them with new marketing campaigns we call Volaris C. We also refined our marketing campaigns in the U.S. market, advertising in locations such as laundromats and metro stations in areas with high share of Hispanic population. It is important to mention that in the full year of 2018, We increased passenger volumes by 12%, and a third of that growth came from first-time flyers that we were able to switch from buses, which is our key traffic target group, or the visiting friends and relatives segment prevalent in the emerging markets we operate in. During the fourth quarter, non-ticket revenues performed exceptionally well, reaching 512 pesos per passenger, An increase of 21.3% year-over-year. Ancillary revenues accounted for 32% of total operating revenues, up 4.8 percentage points year-over-year. These positive ancillary results were driven by our customer-centric approach. We simplified our booking process and enhanced our customer experience for our most relevant products. We continue to develop to develop strong dynamic pricing strategies, maximizing revenue and product conversion. Finally, our co-branded credit cards and the VPath subscription program continue their strong growth. We see substantial opportunities to grow non-ticket revenues even further in the following years. Central America operations keep maturing. Capacity allocated to Central America represented 3.5% of our total ASMs by the end of 2018, driven mostly by the new flights from Central America to the U.S. Total unit revenue trends in the region are improving, as the ultra-low cost model is more and more accepted by the passengers in Central America. For 2019, we plan to moderately increase Central American capacity and add two to five new destinations, which we will announce shortly. Our co-chair with Frontier is operating at eight connecting airports and over 170 new connecting routes. This represents for Volaris 64 new U.S. destinations. In December, co-chair passengers accounted for over 4% of customers in the Mexico-U.S. routes. For 2019, we plan to implement some co-chair activity enhancements, such as increasing connecting airports to 21, adding connecting countries other than Mexico and the U.S. We are also looking at cost synergies at certain U.S. and Mexican airports. Polaris has invested in digital technologies under the ultra-low-cost model that improves seamless communication with our customers throughout their travel experience. These tools have increased net promoter scores year over year while reducing operating costs. We were recognized by air travel intelligence company AOG and airline ratings for our on-time performance and safe operation. Completion factor, on-time performance, and bag loss ranked among the best for the full year. Regarding guidance for 2019 and the first quarter, we are planning capacity growth in terms of ASMs for both periods between 9% and 12% year-over-year for the entire network. Again, we are planning to achieve this mostly through healthy capacity without sacrificing operational integrity. To date, we have announced the launch of six new domestic routes and three new international routes in 2019. Again, focused on our core niche market with bus competition. For example, Dallas to Durango and Phoenix to Puerto Vallarta. The company reviewed and reduced its aircraft arrivals for 2019 to the lowest level in the last years. Three net new shells. This breaks down into five new deliveries, which is one A321neo and four A320neos with lower fuel burn and the return of two A319seals ending the year 2019 with 80 aircraft. This aircraft growth is in line with a softening outlook of GDP growth that is in line with a slowdown in capital investment in the Mexican economy. Overall, we are very pleased with how well our ticket and non-ticket initiatives performed in the fourth quarter and at the start of this year. The overall benefits from our network and scheduling changes while maintaining the reduction on sales, marketing, and distribution expenses in 2019 will help drive improved results at the end of the year. Now, I'd like to turn over the call to our Vice President and CFO, Sonia Jerez, to elaborate on our financial performance for the quarter and further detail on our guidance.