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

Good morning, everyone. Thank you for standing by. Welcome to Volaris' fourth quarter and full year 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 via a live webcast and may be accessed through the Volaris website. Those following the presentation via webcast may post their questions on the platform. The management team will answer them during this call, or the Volaris Investor Relations team will answer them after the conference call is finished. To send your questions via the webcast platform, click on the question mark below the video area and type your inquiry in the upper left corner. At this point, I would like to turn the call over to Ricardo Martinez, Investor Relations Director. Please go ahead, Ricardo.

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 Blankesten, and our Chief Financial Officer, Jaime Pous. They will be discussing the company's fourth quarter and full year 2022 results. Afterward, we will move on to your questions. Again, please note that this call is for investors and analysts only. Before we begin, please remind 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 results to differ materially from expectations. as described in the company's filings with the United States SEC and Mexico's CNBB. These statements speak only as of the date they are made, and Volaris undertakes no obligation to update or modify any forward-looking statement. As in our earnings pre-release, our numbers are in US dollars compared to the fourth quarter of 2021, unless otherwise noted. And with that, I will turn the call over to Enrique.

Thank you Ricardo and everyone for joining us today. We are pleased to be speaking again after seeing many of you in New York for our Investors Day in early December. In the few months since then, you have undoubtedly heard from our peers about Global Airlines' prevalent challenges as they look across 2023 and beyond. We are not in the same position. As we recap our full year 2022 and turn to our expectations for this year, Golaris has taken the necessary measures to ensure our stability and profitable growth. We prepare for our growth by hiring and training almost 1,500 pilots and over 2,800 flight attendants among others in 2022 alone. Our net debt will remain stable in 2023. Our leverage is well below industry levels and will drop sequentially in the upcoming quarters. We have a strong balance sheet and cash generation capabilities with a conservative debt position and healthy financing conditions. Our new fleet financing is signed until 2025 and covers sales and leasebacks and capex associated with pre-delivery payments. 91% of our total debt is related to long-term growth through lease liabilities with no exposure to rising interest rates. In addition, in April, we will enter a new era for Volaris, receiving the first NEO delivery from the largest ever Airbus order placed by us, along with Indigo's portfolio airlines, allowing us to reduce our CASMEX fuel going forward through improved fleet ownership costs. Our fleet plan aims to drive further efficiencies, low costs going lower. Bottom line, we remain committed to delivering sustainable and profitable growth in a disciplined manner. A combination of a differentiated revenue management strategy and strict control of costs enabled our operating earnings to offset the around $550 million of full-year fuel price impact, resulting in a margin of 5.9% in the second half of the year. And throughout 2023, as you will see in our guidance, we expect significant EBITDA response. Speaking of a differentiated revenue management strategy, we moderated fares in specific price-sensitive domestic markets to deliver strong low factors and raise base fares in the international markets, including Central America, to offset the higher fuel costs in our longest sectors. During the last quarter, ancillary revenues per passenger posted a 6% increase compared to the same period in 2021. For the full year 2022, ASMs grew 26% in line with our guidance, comprising 22% growth in the domestic market and despite Mexico's FAA category status limitations, a remarkable 34% growth in our international markets. We were able to grow in the trans-border market between Mexico and the U.S., plus our Central American operation structures played an essential role in this international growth, offsetting the Cat 2 limitations and diversifying our growth expansion without relying on any particular region. As we said at our investor day, such growth was driven by a unique opportunity during the pandemic and in the future will continue growing at a moderate rate, very well conscious of the market pricing behavior. Looking back at 2022, our team is proud to have transported more than 30 million customers last year, consolidating our position as the largest airline in Mexico by passengers. To put this into perspective, we transported over 85,000 passengers across our more than 560 operations each day. This means that the number of passengers we fly daily is almost equivalent to the combined capacity of Yankee Stadium and City Field. Finally, even in the fourth quarter, we closed negotiations for 2023, with our labor union committing to an 8.2% salary and benefits increase. In contrast, our low-cost competitors in the U.S. have instituted labor pay increases well into the double digits, sometimes into percentages in the 30s and 40s, and are still struggling to staff their operations. Approval of the labor contract, its clauses, and the percentage increase in volaris was achieved based on the new Mexican law with 88% of personnel voting in favor. Moving on to costs and to demonstrate our commitment to low-cost leadership, we successfully kept Casmex Fuel for the entire year at 4.26 cents, nearly the same level as in 2021. We are one of the lowest cost operators in the world. In contrast, in the United States, Casmex Fuel rose 17% for the legacy carriers and 24% for the low-cost carriers. This is not only a cost control story, but an improvement of our competitive cost position in the trans-border market. Volaris now has an even better cost structure than the U.S. carriers, widening our cross-border advantage. Volaris is in control of its unit cost trend. Down the road, our cost advantage will remain as unit revenues return to normal levels. As we affirmed at our investor day, For 2023, we are currently planning for ASMs to grow by around 10%. We are maintaining flexibility to add a few percentage points. Should market demand guarantee? Or should Mexico Cat.1 be restored earlier this year? This capacity growth has been planned proactively anticipating potential challenges such as delays from aircraft manufacturers and the availability of spare engines. While we are convinced that moderating the pace of our capacity growth is the best decision, our long-term expansion opportunity is as potent as ever. We continue to capitalize on bus switching and demographic tailwinds in Mexico and Central and South America. We are well positioned to leverage regional shifts in population and transportation trends with diversified growth avenues. Our low factors are stellar and demonstrate latent demand for our low-cost offering. Our routes to the U.S. also remain popular as we continue to connect families across the continent. We are prepared to shift capacity to northbound routes upon Mexico's return to Category 1 status, which we remain optimistic will happen in the next six months. Next, I would like to address specific concerns. December's winter storm, Elliot. The storm hit the US and affected Mexico's northwest airports. 46% of our fleet was operating in the affected areas. Our most important impacted airport was Tijuana. We had a closing due to weather conditions in an airport where we, last year, accommodated more than 9 million passengers, an average of 24,000 passengers per day. The closing started on the 23rd of December and was extended until the 26th, affecting almost 75,000 passengers. On December 27th, in just 72 hours, we regularized operations in all Volaris' systems, mitigated delays of passengers by relocating them to new flights, and compensated them. Currently, Volaris has no outstanding customer complaints at the Mexican customer protection agency Profeco. Volaris did not have a material financial effect due to the storm. This storm could not have come at a worse time for our passengers, who were trying to get home to loved ones over the holidays. We knew how important travel was to our passengers over the holidays. Remember our deep-rooted purpose to serve our visiting friends and family in March. Knowing how important travel was during the festive season, we pushed our system as hard as we could and delayed trips when we otherwise might have canceled, all in the hope of being able to deliver for our passengers. I reiterate, my deepest apologies to our customers. All said, we did learn a lot from these circumstances. As a result, we are preparing much better recovery procedures, upgrading customer resolution software systems, and dramatically improving our communication protocols while we support improving management practices in our third-party contractors. But again, if anything, this situation is a remainder of our strength and a company compared to our peers, the financial cost was minimal and our operations are strong enough to recover quick. Regarding the recovery of Category 1, during the last quarter of 2022 progress was made on three different fronts. The FAA returned to Mexico this month to work on restoring Category 1 status and made substantial progress, closing 29 observations related to budgetary constraints and controls. The remaining ten findings are related to changes in aviation law that are necessary and related to regulations. In December, Mexico's president submitted to Congress amendments to the aviation law that address the remaining changes required to restore Cat 1 status. The Mexican authorities expect the next FAA assessment visit by the end of March. Finally, cabotage rights within Mexico. The initiatives submitted by the President to Congress include some regulations to provide foreign carriers limited cabotage rights within Mexico's domestic market. Two weeks ago, industry leaders met with the Secretary of Transportation's team and Congress members to explain how well the Mexico domestic market is served and why we don't consider the opening of cabotage rights to be needed. We feel the discussions for approval of the law with all necessary regulations to clear CAT II have been possible and have taken into account the industry concerns. We expect the final resolution of this matter before the end of March. Finally, as we enter the year's first quarter, we see no signs of economic deceleration, nearshoring is reducing unemployment, and great warehouse occupancy is taking place in the northern states. In fact, we are seeing healthy levels of traffic and solid booking curves for the upcoming spring season. This is partially due to several tailwinds in our core markets, including the trend of near shortage, low unemployment rates, robust remittance flows, and high levels of foreign direct investment. Now, I will turn it over to Holger, who will provide greater detail on our fourth quarter and full year commercial and operational dynamics.