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

Good morning, everyone. Thank you for standing by. Welcome to Valera's third 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 live via webcast and can be accessed through Valera's website. At this point, I would like to turn the call over to Rodrigo 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 Blankenstein, and our Chief Financial Officer, Jaime Pous. They will be discussing the company's third quarter 2024 results. Afterward, we will move on to your question. 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 CNBV. 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 U.S. dollars compared to the third quarter of 2023, unless otherwise noted. And with that, I will turn the call over to Enrique.

Good morning and thank you for joining us. Volaris' third quarter results demonstrate our business model's resilience and commitment to execution. I'm proud to report that Volaris has delivered strong operational and financial results again Marking this our fourth consecutive quarter of net income while providing great ultra-low cost carrier service value to our customers. We have strategically streamlined the company during this period, effectively reducing operations by about a quarter of our fleet during our busiest summer season due to the Pratt & Whitney engine inspections. Our team also effectively mitigated external disruptions like weather-related events without a material impact. Despite these challenges, we managed to contain our reduction in ASMs to only 11% during the last 12 months compared to the 2023 levels. Also, we achieved total operating revenue of $3.2 billion in this period, matching the full year operating revenues of 2023, an impressive accomplishment. We're moving forward to the other side of this engine inspections period, paving the way for sustained shareholder value creation, our most important long-term objective. As part of this process, we are emerging as the preferred airline in our core markets. We offer offers, fly attractive schedules broadly and reliably, and provide relevant ancillaries that add value to our customers. We also deliver on day of departures itineraries and provide digital solutions to our customers and with a proven safety and security record. As the engine inspections began 12 months ago, I am today pleased to highlight key achievements from these last 12 months. First, reductions in RPMs were consistently lower than those in ASMs, indicating a well-calibrated approach to capacity management. This allowed us to sustain similar low factor levels and protect the demand elasticity of our bus switching passengers, ultimately improving our TRAS. We further unbundled our fares, keeping base fares at 2019 levels while increasing our ancillary revenues as a percentage of total operating revenues from 34% in 2019 to 51% over the past 12 months. This is our business model working to perfection and we are committed to continuing to couple low and stable fares with honest value-adding services. Our net promoter score reached 34%, reflecting improving customer recovery and satisfaction, significant reduction in mishandled bags, better on-time performance, reduced complaints, and materially lower involuntary denied boardings on their score disimprovement. Fourth, our network redesign effectively addressed the challenges of grounded aircraft and enabled an 11% increase in ASMs in the U.S. trans-border market versus 2023. We achieved a remarkable system schedule completion rate of 98.5% while controlling our costs despite the aging fleet and grounded aircraft due to engine inspections. A crucial element of this strategy was sustaining ambassador productivity and labor costs. And fifth, we implemented a fleet mitigation plan that did not increase debt leverage, ensuring we could pursue future capacity additions without jeopardizing market pricing and future aircraft leasing costs. Our financial performance over the last 12 months speaks for itself. Our profitability has significantly improved With an EBIT margin of 14%, an EBITDA margin of 34%, and a net margin of 6%, we achieved these results by ensuring that a vast proportion of our network remains profitable, generating strong unit revenues and attracting repealed customers who value out low prices. This contrasts us favorably with the United States ultra-local carrier environment and highlights our ability to execute transformative changes swiftly while maintaining cost control. Notably, around half of our routes compete exclusively against the bus market, allowing us to continue bringing in new flyers without creating excessive capacity growth in key ultra-low-cost carrier markets. While our operating cost structure remains under control, with most costs being variable, we have experienced reduced operating leverage due to aircraft groundings and increased maintenance and redelivery expenses due to our fleet's aging. Both effects are temporary and will not impose structural cost pressure. Our gas mix fuel was 5.2 cents during the last 12 months, keeping us among the three lowest publicly listed operators worldwide. We believe Volaris is not experiencing a cost convergence with full-service carriers that could structurally reduce our margins going forward. On the balance sheet, our net debt to EBITDA ratio improved from 3.5 times in the third quarter of 2023 to 2.7 times in the third quarter of 2024, one of the lowest levels in Volaris' history. This was despite the significant investments we had to make to implement the mitigation plan for the engine inspections we outlined a year ago. The total cash, including short-term investments, stands at $833 million, an improvement of $66 million from the third quarter of 2023. On our third quarter of 2023 call a year ago, despite the engine crisis, Volaris' management made a commitment to our passengers, ambassadors, and investors, which I quote, We would do our best to respond to the challenge and undertake a mitigation plan to manage the variables we could control. Regarding our aircraft on ground, this challenge has only improved as Pratt & Whitney and Volaris gained clarity on how to address the situation, and we continue to coordinate closely with them. The induction slots are within the agreed forecast. Spare parts and materials have been planned as we induct engines into the inspection processes, and we have planned turnaround times together with BRAD based on low, medium, and high maintenance needs. All in all, we are seeing an important improvement in turnaround times. However, the situation remains evolving. I acknowledge that the market may have valid and reasonable capacity concerns for next year if agencies currently under inspection return earlier than expected. However, I want to assure you that we will not deploy excess capacity beyond what emerging markets typically grow and can absorb. We have structural flexibility that allows us to prioritize profitability over market share. We have a plan. Today, I can affirm that we haven't just overcome challenges. We have evolved as a company. We strongly feel that our reliable performance during crises, along with evidence that we have been disciplined in the execution of our plan, makes us a good asset and separates us from our peers. As you know, this is consistent with what you know about Volaris, a seasoned and stable management team. Volaris' position as an ultra-low-cost carrier in Mexico is distinct from that of ultra-low-cost carriers In the United States. As the largest airline in Mexico by passenger volume, we enjoy a robust domestic market share and cost leadership over legacy carriers. Moreover, Mexico's unique ability to convert bus passengers and recurring travelers has driven growth in the country's emerging air travel market in the last 15 years. We continue to see plenty of runway for this secular trend. Considering the uncertainty surrounding recent constitutional reforms, I would like to highlight that Mexico's new president, Claudia Sheinbaum, has pledged to protect investors' rights. She took office on October 1st, becoming the country's first female leader. Let me quote her, I say this very clear, be assured that investments of national and foreign shareholders will be safe in our country. With that, I will now turn the call over to Holger to discuss commercial and operating performance for the Corps.