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

Good morning, everyone. Thank you for standing by. Welcome to Volata's second quarter 2022 financial results conference call. All lines are in 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. It may be accessed through the Volata's 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 Velaris 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 Salamone, Velaris' Senior Corporate Finance and Investor Relations Director. Please go ahead, Renato.

Good morning, everyone, and thank you for joining the call. With us is our President and CEO, Enrique Beltranena, our Airline Executive Vice President, Holger Blankenstein, and our Chief Financial Officer, Jaime Pols. They will be discussing the company's second quarter 2022 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, as described in the company's filings with the United States SEC and Mexico's CNBV. These statements speak only as to the date that they were made, and Volaris undertakes no obligation to update or revise any forward-looking statement. As in our earnings press release, all our numbers are in US dollars and compared to the second quarter of 2021, unless otherwise noted. And with that, I'll turn the call over to Enrique.

Thank you very much, Renato, and thank you everyone for joining us today. The second quarter was again a very challenging one. The impact from exogenous forces and rapidly increasing fuel costs and other inflationary pressures were high. As a result, we prioritized our efforts on costs we could control. We were successful since Chasm X Fuel, reported for this quarter, closed at $4.2, which is below the first quarter 2022 level. The company created more than 2000 new jobs in the last 18 months to execute our strategy to fill the void left by some of our competitors. Volaris today is fully operating its 113 aircraft at our industry leading utilization rates and flying more than 80 hours per month per crew all while delivering high scheduled reliability and on-time performance. We were prepared for this growth. As a result, we have not incurred additional costs from overtime or premium pay for our people. This is a tribute to our operation and recruiting areas that planned and executed this strategy. Having said that, The company today remains at the ratio of 59 full-time equivalents per aircraft. Fuel price impact in the quarter was an incremental cost of $150 million versus second quarter 2019 or $185 million versus the same period of 2021. Offsetting the hit from this highest economic fuel price was quite a challenge. Nevertheless, the company did pass through $160 million or 75% of this impact to the customers versus 2019. Our average revenue passenger was $93, 21% higher than 2019 and up from $81 in the first quarter of 2022. Our remarkable performance in 2021 proved to be a difficult basis for comparison when we were the fastest recovering and best performing publicly listed airline in the world. In 2021, the demand for travel in Mexico began to recover in March well ahead of the other geographic regions, such as Mexico led the global air travel rebound. This strong recovery drove out of the ordinary volume that allowed us to post a very strong tierasm. Volaris also benefited in the second quarter of 2021 from vaccination travel from Mexico to the US. These trends led to a 36% growth of our EBITDA during the first half of 2021 compared to 2019. Second quarter EBITDA was $107 million. down 54% year-over-year, pressured by the high fuel prices. To illustrate the company's efforts at cost control and revenue management during this recent quarter, assuming an economic fuel price equal to the second quarter 2021, Volaris would have produced an EBITDA of $292 million, or 42% margin. During the second quarter, Volaris filled up its additional capacity, reported double-digit revenue, and our low factor closed at 85.6%. TRASM was at record levels for the second quarter at $8.26. During the second quarter, total revenue was $691 million, an increase of 20% compared to the same period of 2021, and 59% versus 2019. During the quarter, we experienced several reactions from our airports to pass-through fuel prices. On U.S. routes, passengers absorbed higher prices at the slightly lower low factor. On our exclusive routes, competing only with the buses, which account for 46% of our routes, we were also able to price more aggressively with little impact on violence. Finally, Central America's demand is coming back very strongly. Holder will dive deeper into this, but I want to emphasize that despite passing through much of our higher fuel costs, we have seen strong demand and no pullback, thus demonstrating the VFR market resilience. For the second half of 2022, we'll be more sensitive to stimulating low factors on our trunk routes while pushing for pass-through in markets that are sustaining volumes at higher prices. We will leverage our market leadership positions in Tijuana, Guadalajara, and Cancun. The key reasons behind our strong performance since the beginning of the pandemic and success story haven't changed. First, Bolaris has demonstrated its ability to adapt to changing environment, meeting the growing demand while gradually passing through the impact of the rise in fuel prices. Second, despite the pressures caused by the increase in fuel prices, Bolaris has plenty of market opportunities, both at home and abroad. Volaris' trend continues with our VFR customers who value our schedule reliability and our leisure customers attracted to our many point-to-point leisure destinations. Third, our growth plans remain flexible. Our mission remains to create long-term value for our shareholders. Fourth, our ultra-low cost and strong balance sheet allow us to absorb volatility better than our competitors and position Volaris well for the future. Speaking about market opportunities, throughout this quarter, we took a bold step in our strategy to stimulate air travel demand in the Mexico City metropolitan area by returning to Toluca Airport and inaugurating new routes at the Felipe Angeles Airport. At both of these stations, newly negotiated, low-cost airport contracts will expand our capacity to service the roughly 30 million people who live in the Mexico City metropolitan area. We also opened new routes in Central America and increased the number of flights within and to and from the region. The US market also saw demand higher than pre-COVID-19 levels. However, our growth has been limited in this market due to Mexico's category two rating, which disappointingly did not progress in the last FAA audit of our aviation authority. For the second half of the year, we still have space for two additional aircraft to operate from Mexico to the US. In the medium term, we are adjusting our network growth plans to the U.S. given the recent CATII results. Long-term growth opportunities are not in jeopardy. Volaris has more than 300 potential new routes not yet serviced. In turbulent times, one of the most important functions must be focused on strengthening the balance sheet. Volaris took several important achievements during the quarter. We generated positive cashflow. We firmed up financing for our fleet growth through the end of 2025 through sale and leasebacks and PDP financing of more than $500 million. We finished the query with net debt to EBITDA ratio of 2.9 times with no refinancing risk in the foreseeable future. We have more favorable financing conditions compared to our Latin American peers and have not taken on the debt incurred by our North American competitors. Volaris achieved terms and conditions for a spare part pool contract, which provides the company a 10 year deal at a lower cost than our previous contract, despite inflationary pressures. This is an important part of the effective cost control measures we implemented to offset inflationary pressures and commodity incremental costs. We have grown quickly over the last two years to fill the void left by some of our competitors and we have now met these objectives. we will return to a measured growth rate in the upcoming years, most likely moderating our capacity growth rate to a single digit level in 2023. Our focus is to achieve a healthy balance between growth and profitability, maintaining a strong balance sheet and our competitive cost advantage. Now, I'd like to hand it over to Holger who will talk more about our quarterly operating results and cover our mitigation strategy for rising fuel costs. Thank you, Enrique.