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

Good morning, everyone. Thank you for standing by. Welcome to Velar's second quarter 2023 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 a webcast and may be accessed through the Velar's website. Those following the presentation via the webcast may post their questions on the platform. The management team will answer them during this call, or the Velars Investor Relations team will answer them after the conference is finished. To send your questions via the webcast platform, click on the Ask a Question button and type your inquiry. At this point, I would like to turn the call over to Ricardo Martinez, Investor Relations Director. Please go ahead, Ricardo.

Good morning, and thank you for joining the call. With us today are our President and CEO, Enrique Beltranena, our Airline Executive Vice President, Holger Blankestein, and our Chief Financial Officer, Jaime Post. They will be discussing the company's second quarter 2022 results. Afterward, we will move on to your questions. Please note that this call is for investors and analysts only. Before we begin, please remember 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 per release, our numbers are in US dollars compared to the second quarter of 2022, unless otherwise noted. And with that, I will turn the call over to Enrique.

Thank you, Ricardo, and everyone for joining us today. During the quarter, our company's performance was aligned with our projected full-year outlook, supported by favorable macroeconomic conditions, including lower jet fuel costs and stronger Mexican pesos. We are seeing solid bookings for the summer months and remain confident in the resilience of our BFR passenger base in Mexico and the robust demand we see in Central America and the United States. We eagerly await the return of Mexico's Category 1 status and the growth in the domestic market resulting from the Mexico-U.S. near-shoring. So we would like to start by reiterating our revenue and EBITDA margin guidance for the year. We will continue to focus on delivering total operating revenue between $3.2 and $3.4 billion and an EBITDA margin of 21 to 31%, which is an increase of 8 to 10 percentage points versus 2022. During this last quarter, we moved capacity from the Mexican domestic market to our Central American Air Operator Certificates, or AOCs, alleviating the temporary overcapacity in Mexico and achieving a more balanced supply and demand. As a result, we consciously reduced a few points of market share in the domestic Mexican market to achieve higher network profitability. Throughout the second quarter, we maintained total revenue per passenger flat, taking advantage of strong ancillary revenue to offset domestic base fare reductions. Additionally, we maintained healthy low factors. The second quarter of 2023 featured hallmark progress for our ancillary strategy. Our ancillary revenues as a percentage of total revenues were 49% up from 40% in the second quarter of 2022 and 47% in the first quarter of 2023. The reduction of base fares showed the strength of our ultra-low-cost carrier model stimulating volume through lower base fares. The low factor remained healthy in the mid-80s as we managed pricing in the domestic market to drive volumes. Passengers have responded in kind, resulting in RPMs growing just ahead of ASMs year-to-date. International and pricing there remained robust, showcasing an exceptional response to our increased capacity in Central America for routes to the U.S. and Mexico. Our plan for the second half of this year includes incorporating additional capacity into this market, mainly to serve the growing VFR demand between Central America and the United States. Continuing with international year to date, we have an improvement of 6.5 percentage points on load factor, climbing from high 70s to mid 80s, giving strong demand in VFR markets in California, Texas and Chicago. International passengers during the semester grew 33.5% versus the same period in 2022. This quarter was focused on preparation for the future as we anticipate Mexico's imminent recovery of Category 1 status with the U.S. Our team has been proactive by planning to implement network changes in Mexico, Central America, and later in the year in the cross-border market to the U.S. These adjustments will enable us to relocate some of our growth towards a robust international market. Moving into our results from the quarter, ASMs grew 18% compared to the second quarter of 2022, including a 13% increase in the Mexican domestic market and a 30% increase in our international markets. Initially, we planned to return eight aircraft this year, but decided to extend leases for six of them. This decision will allow us to better handle any operational challenges related to engine availability and aircraft delivery delays during the peak summer and December holiday seasons. While year-to-date our ASM growth remains ahead of our 10% guidance for the entire year, this strength is attributable to our strategy of extending six aircraft air deliveries. As such, we now expect ASMs to grow around 13% in 2023, including the capacity we will deploy to the U.S. upon Category 1 recovery. Turning back to demand, TRASM for the second quarter was $7.92, a 3% increase compared to this year's first quarter and a 4% reduction compared to the second quarter of last year. Our overall low factor for the second quarter was 84.6%, down one percentage point year-on-year. April started with a healthy low factor of 85.8%, our second most robust result for that month in the past decade, even considering flat traffic for Holy Week, the week-long Catholic observance, and the Eastern Holy Day in the first week of the month. Load factors for May and June were sequentially softer at 84.5% and 83.3% respectively. However, we have identified certain temporary or one-off factors that influence this moderation. Late in May, local and social media circulated an anonymous unsigned letter warning of a potential strike and work stoppage by Volaris flight crews in June. This story provided further reverberations in the local press. In addition, the Mexican aviation industry has been dealing with its Category 2 downgrade from the FAA for over two years. While there are signs of regaining Category 1 status soon, the restoration process has been long and burdensome. Mexico's aviation authorities have stated that the government has completed all the necessary procedures and met the requirements set by the FAA. Once the U.S. authorities announce the upgrade, we are prepared to utilize the flexibility in our business model to redeploy approximately 5% of our total capacity to international markets in the fourth quarter. This strategic move will alleviate pressure on those markets while providing the much-needed capacity for U.S. routes. We will also reactivate other important strategic levers upon the return of Category 1. One of our top priorities is resuming the co-share agreement with Frontier, which will strengthen our network and provide enhanced travel options for our passengers. Another upside of the Category 1 restoration is the opportunity to utilize the 35 NEOs delivered to us since Mexico was downgraded. These aircraft are primarily allocated for domestic operations, meaning we are not fully capitalizing on their efficiencies. However, once Category 1 is reinstated, we can leverage these modern and fuel-efficient aircraft on longer routes. This strategic move will optimize fuel consumption and strengthen our competitive cost advantage. Moreover, it aligns with our commitment to sustainable travel. Regarding cost, our chasm for the second quarter was $7.40, making a notable 13% decrease compared to the same period of last year. This reduction is attributable to the stabilization of fuel costs from last year's high levels. Casmex fuel stood at $4.82 for the quarter, in line with our full-year expectations. This achievement was attained despite the strong appreciation of the Mexican peso, non-engine availability costs, and aircraft delivery delays. Moving now to our fleet growth plan, anchored around our outstanding 143 all-new aircraft order book, which includes 117 A321 aircraft. This order was established along with the Indigo Group in 2017. During the second quarter, we took delivery of our first aircraft. This is the start of an era, providing meaningful fleet cost ownership reduction and sets the stage for many benefits in the coming years, like low cost going lower, while our environmental impact will also be reduced. At this time, I would like to highlight significant recent commercial developments that speak to our growth strategies evolution in the future. We announced 40 new domestic routes in Mexico, 33 of which presently have no other air service. We launched our annual pass and all-you-can-fly annual membership program. We are now the only airline in Latin America with an offering of this nature. We founded Volaris to democratize flying and continue to pursue our mission of introducing bus riders to flying. To date, we have served over 10 million first-time flyers, many of whom travel with us again multiple times yearly. At Volaris, we prioritize both switching and loyal passengers, so we have partnered with OXO, the largest retailer in Mexico, for our affinity program. We have improved our ability to convert first-time passengers into loyal customers. Our low fares and new affinity program are crucial in growing and retaining our customer base. Our passengers repeatedly travel with us for a reason. During the second quarter, among all airlines in the year's first half, we registered the lowest complaint ratio at Profeco, Mexico's consumer protection agency, among all airlines in the year's first half. With this achievement, Volaris demonstrates its commitment to quality and customer experience. I'm glad to inform you that Volaris and Indigo Partners Frontier and Wizz Air announced an investment in CleanJewel, a U.S.-based startup focused on accelerating sustainable aviation fuel production. Likewise, in further support of our fleet plan and sustainability program, we announced the selection of Pratt & Whitney eco-efficient GTF engines for 64 Airbus A321neo family aircraft in June. This agreement also includes a long-term maintenance contract. Now, I will turn the call over to Holger to explain our market evolution and commercial innovations in greater detail. Please, Holger, go ahead.