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

Good day and welcome to the Velara's third quarter 2022 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions, and please note that this event is being recorded. I would now like to turn the conference over to Renato Salamone, Velara's Senior Corporate Finance and Investor Relations Director. Please go ahead, sir.

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 Poz. They'll be discussing the company's third quarter 2022 results. Afterward, we'll move on to our 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 CNBV. These statements speak only as of the date they are 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 third quarter of 2021, unless otherwise noted. And with that, I'll turn the call over to Enrique.

Thank you, Renato, and thank you everyone for joining us today. I'm very proud of our third quarter results as they distinctly reflect the unique flexibility and resiliency of Volaris' ultra-low-cost business model, the progress of our long-term growth strategy, and the discipline of our executive team. Total operating revenue grew by 20% to $769 million in the third quarter, and EBITDA came in at $175 million, with an EBITDA margin of 22.8%, rising 7 percentage points from the second quarter of 2022 due to our remarkable utilization levels and cost advantage, coupled with a slight contraction in jet fuel prices. Cost per available seat mile ex-fuel for the third quarter was 4.07 US cents in an operating environment that continues to prove to be challenging for our industry. We demonstrated continuous success in spite of inflationary pressures, executing in areas where we continue to excel, highlighting our success of having one of the lowest cost structures in the world, overcoming geopolitical impacts and stimulating demand through the surgical expansion of our network. ASMs grew by 22% for the third quarter compared to 2021 and by 48% compared to 2019. Our strategically planned growth has been both consistent and profitable. We posted net income of $40 million for the quarter. As evidenced by our third quarter results released yesterday, Volaris continues to distinguish itself in the global aviation industry delivering solid performance that translates to enduring disciplined growth. We have consistently anticipated strong demand in our visiting friends and relatives and leisure markets, which show no signs of a slowdown, and where we have demonstrated our ability to fill capacity and overtake bus demand at far better fares than any public competitor in the continent. During the summer peak, we had strong on-time performance despite the congestion at the Mexico City International Airport and had positive net promoter scores as well. These results are especially remarkable given they accompany the aforementioned increase in our capacity and expansion of our network. We had no shortages of pilots, crew members or operational interruptions due to staffing and we successfully anticipated this need by hiring and integrating more than 3,500 ambassadors in the past 18 months. While typically we see low factor peak in July and reductions towards the end of summer, in this year our low factors increased every month in the third quarter from 84.7 in July to 84.9 in August and we reached an all-time monthly record high of 87.4 in September. Forward bookings are solid and we expect to maintain a strong low factor for the remainder of the year. Holger will discuss these developments more later on. We remain in a very solid financial position, with leverage ratios below the industry average. We ended the quarter with $750 million in cash and equivalents. At the end of September, our net debt to EBITDA ratio was 3.4 times. Commenting on Mexico's FAA category status, we have been diligent in conveying to national authorities that recovering Category 1 is a foremost concern challenging the growth of Mexican carriers and domestic economic development. We acknowledge that there has been a renewed effort and that there is a diligent and expedited remediation plan in place from the civil aviation authorities going forward. Taking advantage of the disruption in the Mexican market as a result of the pandemic, Volaris' capacity outgrew the industry, increasing 48% in terms of ASMs versus 2019, filling in the void that was created by significant industry attrition. This was an extraordinary opportunity and we grabbed it. In fact, according to Serum, Volaris was the largest airline in Latin America in terms of passengers in 2021. For 2023, we believe that profitable and prudent growth is the best strategy, and we're planning for ASM capacity growth of up to 10% year-over-year. However, we are prepared with a flexible plan that allows us to accelerate that growth should the environment improve. We can leverage aircraft lease extensions to capture additional demand if needed. It is important to note that with this tactical modulation of 2023 capacity growth, we are not compromising our medium-term growth rate. All things considered, we view our success and strategic vision as stepping stones to strong growth potential for Volaris. To remind everyone, Volaris is structurally one of the best airlines in the world, and we remain focused on an ultra-low-cost business model. our disciplined approach to containing controllable costs has allowed us to sustain our casmex fuel despite the strong rate of inflation in the recent past rewarding both our customers and shareholders we are well positioned to perform and grow regardless of the operating environment Our highly experienced and stable management team has overcome every magnitude of operating an external challenge while becoming the leader in markets with huge growth potential due to low air travel penetration. Since our founding, every time we have aimed to grow and fill capacity, we have achieved it, always with a firm commitment towards long-term shareholder returns. Regarding our debt and capital flexibility, it is worth noting that we received no governmental support during the pandemic and needed no emergency liquidity during demand crashes. As a result, our leverage ratios and maturity profile are far better than most of our peers. Our strong liquidity and having already secured our mid-term financing needs from the pre-delivery payments provide us with the balance sheet flexibility to invest in growth opportunities. Finally, we remain in the early innings of growth when comparing Mexico to similar economies and geographies. We believe Volaris is on track to double its size driven by an increase in flights per capita in Mexico. Total flights per capita reached 0.55 versus 0.20 when we started flying. Meanwhile, many Central American markets share the same economic profile as Mexico, providing a premier source of growth in parallel as we increase service in that region. Also, we remain prepared to execute our full U.S. growth strategy once Cat 1 is restored. Now, I will turn it over to Holger, who will present in greater detail the company's third quarter commercial and operational dynamics.