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

Good morning, everyone. Thank you for standing by. Welcome to Valeris' fourth quarter and full year 2021 financial results conference call. All lines are in a listen-only mode. Following the company's presentation, we will open the call for your questions and answers. Please note that we are recording this event. This event is also being broadcast live via webcast and may be accessed through the Valeris website. Those following the presentation via the webcast may post their questions on the platform, and they will be either answered by the management during this call or by the Valera's investor relations team after the conference is finished. To send your questions via the webcast platform, you need to click on the question mark just below the video area in the upper left corner and type in your inquiry. At this point, I would like to turn the call over to Renato Salomone, Valeris' Senior Corporate Finance and Investor Relations Director. Please go ahead, Renato.

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 Chief Financial Officer, Jaime Pous. They'll be discussing the company's fourth quarter and full year 2021 results. Afterward, We'll move on to your questions. Please note that this call is for investors and analysts only. 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 and the Comisión Nacional Bancaria de Valores. Furthermore, Volaris undertakes no obligation to update or revise any forward-looking statement publicly. Like the earnings press release, we compare results to the fourth quarter and full year 2019 instead of the fourth quarter and full year 2020. We believe this will provide a better comparison to the financial operating performance of the company. It is now my pleasure to turn the call over to Volaris' President and CEO, Enrique Beltranena.

Thank you very much, Renato, and thank you everyone for joining us today. This past year was marked by significant challenges, constantly changing demand, and the fourth quarter was no different. I could not be prouder of the performance of our company, and I would like to thank Volaris' ambassadors for their efforts which have been essential in helping us achieve one of the highest margins in the global airline industry. Looking back to the start of the year, This achievement was not as easy as it appears. We started the year with enormous challenges and lackluster demand. Our response was an initial fleet plan of zero growth as we waited for the year to unfold. Once it became apparent that demand growth was accelerating, we swiftly pivoted. We ended the year with 101 aircraft, a net increase of 15 shells. We accelerated the new conversion, which continues to help our fuel efficiency and cost side. Not only did we backfill capacity routes that competitors abandoned, but we added the personnel needed to operate our growing airline. Our growth in 2021 solidified our strong market position and contributed to the favorable results we are presenting today. It is unfortunate for us to present these strong results for the quarter and for a COVID year in the shadow of the current geopolitical crisis and macroeconomic situation. The company performed well in the fourth quarter and better in the full year. We generated total revenue of 14 billion pesos in the quarter, an increase of 73% versus 2020 and 43% versus 2019. Speaking about our EBITDA and EBIT margins, for the quarter were 37% and 21% respectively. For the full year of 2021, we grew our revenues by 29% to a total of 45 billion pesos and delivered an EBITDA margin of Our disciplined ultra-low-cost strategy, where we remain focused on containing controllable costs, has allowed us to position ourselves as a global airline margin leader and one of the fastest-growing airlines in North America. In addition to solid growth, We generated positive cash flow of $235 million during a pandemic year, equivalent to 11% of our market capitalization at the end of 2021. Moreover, we have one of the most robust balance sheets compared to any other Latin American carrier and our global ultra low-cost carrier peers. At the end of the fourth quarter, Our adjusted net debt to EBITDA ratio was 2.5 times the lowest level in the company's history. I want to highlight what I believe to be the key reasons behind our strong financial performance. First, Volaris has demonstrated our ability to adapt to changing demand quickly. Second, Volaris has plenty of market opportunities, both at home and abroad. Third, our growth plans remain flexible. Fourth, our ultra-low chasm and depth structure position Volaris well for the success. Speaking about our demonstrated ability to adapt to changing demand quickly. Over these last two years, we have seen rapid market changes resulting from the surges of COVID-19 variants. Our seasoned executive team has been through many demand cycles and is able to respond by quickly recognizing these fluctuations and pivoting when needed, resulting in our ability to report strong TRASM and CASM ex-fuel that have delivered EBITDA levels well above our domestic and international peers.