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

Good morning, everyone. Thank you for standing by, and welcome to Volaris' fourth 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. Maria Elena Rodriguez, Volaris Corporate Finance and Investor Relations Director. Please go ahead, Mr. Rodriguez.

Good morning, everyone, and thank you for joining the call. With us today is our President and CEO, Enrique Beltanena, our Airline Executive Vice President, Holger Blankenstein, and our Senior Vice President and Chief Financial Officer, Jaime Boas. We will be discussing the company's first quarter 2020 results. Afterwards, we will move on to your questions. Please note that this call is for adventures and analysis only. Any questions from the media will be taken on an individual basis. Before we begin, please let me remind everyone that this comment includes 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 Exchange Commission and the Comisión Nacional Bancaria de Valores. Furthermore, Volaris reflects no obligation to publicly update or revise any forward statement. It's now my pleasure to turn the call over to Volaris' President and CEO, Mr. Enrique Valdez.

Thank you very much, Marielena, and thanks for everybody for being here today. Thanks for joining us. Volaris' topic priorities during 2020 were cash preservation, capacity management, cost discipline, and increasing total revenues per available SIFMA. During the fourth quarter, we returned to profitability, demonstrating the potential of our sound ultra-low-cost business model. Within the current competitive landscape, Volaris has been able to take advantage of market opportunities, cementing its leadership in terms of passenger market share amongst the Mexican carriers. During 2020, Volaris transported more than 14.7 million passengers. Despite the progress in the fourth quarter of 2020, some key challenges remain in the current period with COVID-19 case counts increasing in both Mexico and the U.S., something we will comment upon later in the call. While we enjoyed a great result in the fourth quarter, markets are still dealing with COVID-19, and that will result in a challenging demand environment. We'll continue to capitalize on our low-cost position. We'll continue to look for opportunities to expand our network, and we will continue to focus on cash preservation as our highest priority as we navigate the rest of the crisis. First of all, I want to express my sincere gratitude to all of Volaris' ambassadors and our board of directors for the passion and commitment. Our prayers go out to those impacted by COVID-19, and we thank all frontline workers, including our flight crews, for their great efforts. During 2020, Volaris posted one of the fastest recoveries worldwide, as measured by available SIPMiles, a result of our strong, ultra-low-cost business model, focused on the visiting friends and relatives, and leisure segments in Mexico and the U.S. trans-border markets. Let me leave for you very important messages, six very important messages that I would like to leave very clear. The first one, four-quarter profitable results proved the potential of Volari's ultra-low-cost business model despite the current crisis environment. For the fourth quarter, the company posted an operating margin of 12% and an EBITDA margin of 37%, an EBITDA margin of 37%, an excellent result, even in normal conditions. These results reflect that Volaris is truly different from any carrier in the continent and should be benchmarked and valued alongside the best ultra-low-cost airlines in the world. Due to Volaris' strong fundamentals, we believe the company is a long-term winner, and our results and metrics show we have an experienced team, cost discipline, and a very strong focus on long-term goals. The fourth quarter outcome, underlying Volaris' ability to deliver profitability, confirming its leadership among Mexican carriers, in both the domestic and international markets, not only from the passenger market share position, but from a profitable business standpoint as well. The second message that I would like to deliver is that Volaris' cost-per-available Sigma X fuel, by the end of the fourth quarter, closed at 4.13 U.S. dollar cents. 4.13 U.S. dollar cents. which means we are back to pre-COVID-19 levels. The CASM levels for the fourth quarter of 2020 prove the power and strength of our ultra-low-cost business model. Volaris' cost structure is its key competitive advantage in the current environment. Volaris closed the fourth quarter of 2020 with the referred CASM ex-fuel level mainly explained by the following measures. The first one, capacity recovery. The second one, variable cost structure. The third one, flexible labor contracts. And the fourth one, capital expenditure discipline. The third message that I would like to leave very clear is that December ASM's capacity was at 102% versus same period of previous year with healthy low factors. Volaris posted one of the fastest recoveries worldwide as measured by ASMs during the fourth quarter of 2020. Capacity was 95% versus 2019. The fourth message that I want to leave very clear is that we do have a strong balance sheet and that Volaris closed the fourth quarter with $506 million in cash and cash equivalents. During the fourth quarter, the cash flow was a third of that expected as a result of higher sales, further payment referrals, and lower cash collateralization requirements on financing facilities. Last December, we strengthened our balance sheet through a successful primary follow-on offering with net proceeds of $164 million. There's a fifth message that I want to leave very clear. Volaris' current conservative fleet plan has flexibility for opportunistic growth as demand recovers. Volaris already started taking the opportunities left by the reduction of capacity from our competitors. During 2020, we launched five new domestic routes and eight international routes, increasing sustainability substantially our market share in Mexico City Airport. Additional aircraft capacity for 2021 is under evaluation, depending on the demand outlook. The sixth message is how important our labor forces are for Volaris. Volaris Union, the SCIA, legitimized, as per the amendment Mexican labor laws, our bargaining collective agreement at the beginning of this year. As a conclusion, despite 2020, Being a very difficult year, Volaris today has one of the most competitive fleet plans and engine agreements in the market. We received our concession renewal for a 20-year term. We executed one of the fastest capacity recoveries in the world. We returned to the pre-pandemic and ultra-low-cost unit levels. We capitalize the company, and we guarantee labor continuity with productive and flexible terms and conditions. We are prepared to maintain Bolares as the most important airline in Mexico with strong fundamentals for the future. We want to reiterate, however, historically, our first quarter is more challenging, and in pandemic times, it's even more so. For the first quarter, the company is experiencing demand weakness and compressed booking curves as a result of increased COVID-19 claims and the new US regulations on international travel. As a result, the company's network plans for the first quarter of 2021 will be more conservative, focused on deploying appropriate levels of capacity aligned with a changing demand environment and on preserving liquidity. For the first quarter of 2021, Golaris intends to operate approximately 80% of capacity compared to the same period of last year. And let me remind you that the first quarter for Golaris last year was still on track with a normality period. Even with the challenges we are seeing in the first quarter, this still represents a strong capacity comeback from the pandemic versus the global industry, which is currently operating at approximately 55% of capacity compared to the previous year. It also shows the flexibility of our network as we respond to the changing demand environment. Reparation. and forward planning have always been the strengths of Varaz. We came into 2021 well-prepared with the strongest balance sheet among Mexican airlines and what we believe is the most successful business model. I want to highlight, though, the proven agility and flexibility of this company to ramp up in order to take advantage of opportunities that are presented. Let me pass it over to our airline vice president executive, Holger Blankenstein. comment on revenues and on the commercial strategy. Please go over. Thank you, Enrique.