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

Good morning, everyone, and welcome, and thank you for standing by, and welcome to Volare's second quarter 2020 financial results conference call. All lines are in a listen-only mode. Following the company's prepared commentary, we will open the call for your questions and answers. Instructions on how to ask a question will be provided at that time. Please note that this event is being recorded. At this point, I would now like to turn the call over to Ms. María Elena Rodríguez, Polaris Corporate Finance and Investor Relations Director. Please go ahead, Ms. Rodríguez.

Good morning, everyone, and thank you for joining the call. With us today is our President and CEO, Enrique Beltranena, our Airline Executive Vice President, Holger Blankenstein, and our Senior Vice President, Chief Financial Officer, Jaime Pous. We will be discussing the company's second quarter 2020 results. Afterwards, we will move on to your questions. Please note that this call is for investors and analysts only. 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 filing with the U.S. Securities and Exchange Commission and the Comisión Nacional Bancaria de Valores. Furthermore, Volaris undertakes no obligation to publicly update or revise any forward-looking statements. Now my pleasure to turn the call over to Volaris' President and CEO, Mr. Enrique Beltranena.

Thank you, Maria Elena, and thank you very much for everybody for joining us. I hope everybody's healthy. I want to start by giving a special mention to our family of ambassadors and our board members who have been fully committed to the company through their service, passion, and dedication during this difficult situation, which has certainly proven to be extraordinary. We have taken the following five core actions to address the impact of COVID-19 in a rigorous way. We first diligently manage our liquidity position. Second, we delivered a conservative plan to face the impacts of the COVID-19 with growth flexibility. Third, we achieved a fast recovery in terms of capacity. And fourth, COVID-19 provided the opportunity to further reduce costs. Finally, fifth, We implement the safety and health measures. Let me start by the first one where we diligently manage our liquidity position. Volari's second quarter cash and cash equivalents position of $436 million is a very similar level to the position at the end of the first quarter despite an 82 year-on-year reduction in revenues, 82%. The company, given the circumstances, has taken decisive actions to preserve cash and to continue to operate. We have diligently managed our liquidity position by controlling the variable costs and taking an extreme, discerning examination toward our fixed costs. The aggregate benefit of our liquidity preservation plan for 2020 is $266 million, Mostly through payment deferrals with main suppliers, aircraft, engine-less source, and airport groups. Additionally, we were able to postpone over $200 million of the next two and a half years CAPEX requirements for pre-delivery payments. The second item is we delivered a conservative plan to face the impacts of the COVID-19 with growth flexibility. We sharply curtail our fleet expansion plan. We negotiated an amendment to our fleet delivery schedule with Airbus to halt the total number of aircraft until 2023 to a maximum of 88 shells, which provides Volaris a conservative contractual fleet plan with the flexibility for opportunistic growth to stay straight operating leases if appropriate or needed. Given that our unit cost remains our main business driver, we'll be replacing the old shells with new fuel-efficient NEO aircraft, doubling our current percentage of NEO fleet to 60% by 2023. We estimate this improvement will bring additional total fuel burn savings of approximately 5% versus the current fleet. Third, we achieved a fast recovery in terms of capacity. As Holger will further elaborate, there are five main reasons that explain why Volaris was able to ramp up to 60% of its capacity in July and now 70% for August versus the originally published schedule. The first one is the strength of our VFR traffic operating in a point-to-point network, which is the market segment that has recovered in the fastest way. The second is a strong domestic Mexican leisure market recovery. The third, a very active bus switching marketing campaign. And the fourth, less competition in the Mexican market. And finally, the fifth one, a deeper cost reduction initiatives which have strengthened our ultra-low cost structure. And then, the COVID-19 provided the opportunity to further reduce costs. For the last year and a half, the company has worked on its cost structure to become the lowest unit cost operator in the Americas and is now amongst the lowest cost unit cost airlines in the world. We have seized an opportunity in the current crisis to strengthen our cost structure. Specifically, we have negotiated cost reductions with more than 360 suppliers and have temporarily switched material fixed payment agreement to a variable scheme. Additionally, a labor contract is based on a variable compensation per hour. In sum, a lower and more variable cost structure will allow the company to better withstand the pressure revenue environment and provide a greater ability to ramp up. Finally, As I said, we implemented safety and health measures. Operational quality and safety are fundamental in this moment. We are encompassing all our efforts to ensure the well-being of Volaris' personnel and passengers. We have implemented and actively communicated the new biosecurity and preventive measures so that we can continue to offer the best travel experience. We will continue to update our protocols and adopt best international practices to guarantee safety. But let me pass it over to our airline executive vice president, Holger Blankenstein, to comment on revenues and on the commercial strategy that we've been implementing to ramp up. Holger, please.