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

Good morning, everyone. Thank you for standing by. Welcome to the Velaris First Quarter 2024 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. Please note that we are recording this event. This event is also being broadcast via live webcast and can be accessed through the Velaris website. 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 is our President and CEO, Enrique Beltranena, our Airline Executive Vice President, Holger Blankesten, and our Chief Financial Officer, Jaime Poz. They will be discussing the company's first quarter 2024 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 the Mexico CNBB. These statements speak only as of the day 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 first quarter of 2023, unless otherwise noted. And with that, I will turn the call over to Enrique.

Good morning everyone and thank you for joining us today. I am proud to start by saying our Volaris team delivers strong first quarter results. It was certainly a challenging quarter as we ramped up the engine accelerated inspection processes that drove challenges in delivering a good schedule, but I'm proud that the team was able to execute on our plans so well. Over the last six months, Our primary focus has been directing operations to enhance our customer service, managing ongoing changes to the schedule as the fleet plan changes, and continuing our emphasis on obsessive cost control. Despite the ongoing challenges with engine and aircraft issues, we continue to execute well and remain focused on delivering shareholder value. During the first quarter, we undertook preventive accelerating inspections resulting in the grounding of approximately 60 engines for which we received prearranged compensation from Pratt & Whitney. We'll continue to look for ways to mitigate the impact of these engine removals and we'll continue to work closely with Pratt to accelerate the required work on the new engine. However, despite Pratt & Whitney's optimistic discourse on enhancing MRO capacity and availability of materials and spare parts, Volaris remains skeptical about tangible progress in these areas. While engine removals to date have gone accordingly to schedule, and aircraft on ground during the quarry were consistent with the plan, we are being conservative in our expectations for when engines will return into service. Even with all this complexity, we have been able to drive strong results through nimble planning, a flexible network, and our ability to make rapid strategic adjustments, we generated a strong increase in TRASM and ancillaries while costs remained controlled. As a result, we achieved net profitability in the first quarter, posting a 33 million net income. This marks a significant achievement, as historically, due to seasonality, our first quarter has resulted in net losses. The last time we recorded a net profit in the first quarter was back in 2019. As we execute our strategy, we continue to prioritize profitability when allocating capacity. On last quarter's call, we outlined three core pillars for navigating the current environment. One, protecting our fleet and capacity. two, optimizing our network and driving profitability, and three, elevating the passenger experience and cultivating talent for our future growth. Volaris continues to deliver against each of these pillars, and our strategy has proven effective and is bearing fruit. Now, let's review how we closed the quarter. Total operating revenue grew 5%, with unit revenue rising 21%, Our ASMs contracted 13% due to engine accelerated inspections, which was better than our prior guidance of 16 to 18%. This improvement of our guidance is mainly driven by the timing of aircraft deliveries. EBIT and EBITDA margins were 14 and 31% respectively. expanding by 18 and 14 percentage points as compared to the prior year, respectively, and ahead of our expectations. As capacity returns to our fleet, we are committed to being prudent and rational with our growth, again prioritizing profitability based on current planning for engine shop visits we expect to fully recover 2023 capacity levels by the end of 2025. In the first quarter, we received two new A321neos from Airbus ahead of schedule, both of which had engines with full-life engine disks. The timing of these additional capacities enabled us to incrementally capture robust demand from Mexico's Holy Week and Easter. With the rationalization of Mexican capacity and the restoration of FAA Category 1 status, we have implemented a completely new base schedule that delivers a more consistent and reliable itinerary. The changes to the network were necessary given we had to reduce operations at Mexico City International Airport to 43 slots per hour and we needed to develop better recovery in the schedule given ongoing engine challenges. Additionally, we reallocated significant capacity from the Mexican domestic market to U.S.-Mexico routes while preserving our position in core domestic markets. This strategy shift enables us to prioritize routes that should have stronger unit revenues while managing a network with reduced ASMs and no growth. In addition, we're working to reactivate and grow our culture with Frontier, which will drive incremental market opportunities, but we don't expect to see any impact until late summer. Overall, we're pleased with our business performance at this capacity levels despite increased unit costs due to reduced ASMs. Our team will remain focused on executing our operational plans. We will continue to focus on managing capacity, driving unit revenues, delivering margin expansion, strict cost control, being conservative with debt, and achieving results that are in line with our guidance. For years, we have been discussing building an airline with cost discipline, the ability to execute as planned and the flexibility to adjust as needed. Today, Volaris is delivering results and we are confident we can continue to do so in a consistent basis. With that, I'll now turn the call over to Holger to discuss the quarter's commercial trends and operating performance.