Volaris Investor Day March 15, 2016
Volaris Investor Day
March 15, 2016
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Disclaimer
2
Agenda
12:15 pm Enrique Beltranena, CEO
1:00 pm Holger Blankenstein, CCO
1:40 pm José Luis Suárez D., COO
2:00 pm Fernando Suárez G., CFO
2:20 pm Q&A session
3:00 pm Event concludes
3
Enrique Beltranena
CEO
Volaris´ first 10 years: setting the foundations for a
more “democratic” air travel market
100
routes
10 million
passengers
50
aircraft / 50
million
passengers
Entry into
Mexico City
airport
2006 2008 2010 2012 2014 2016
Placement of
incremental 44
aircraft order
First A320 First A321
Launch of
USA routes
Start of
operations
“You decide”
unbundling
campaign
IPO
Launch of
Central
America
routes
2007 2009 2011 2013 2015
5
Volaris has been a key player in the Mexican air
travel market growth
(1) Among domestic carriers
Source: DGAC-SCT
6
0%
25%
50%
75%
100%
Market Volaris
9%
22
%
22
%
21
%
22
%
23
%
(million passengers)
Domestic market penetration
(million passengers)
International passenger penetration(1)
0%
25%
50%
75%
100%
Market Volaris
13
%
15
%
18
%
20
%
23
%
23
%
25
%
12
%
8%
22 27 28 24 24 25 28 30 33 37 7 7 7 7 6 5 6 7 8 10
Volaris has achieved sustained high growth
2008 2009 2010 2011 2012 2013 2014 2015
12 million
passengers
Non-ticket per
pax. (MXN):
$338
TRASM (MXN
cents):
$129
Avg. fare (MXN):
$1,181
7
Low cost structure, record EBITDAR margins
and ROIC increase
Adj. EBITDAR margin: 36%
CASM ex-fuel: 4.5 US cents(1)
Adj. ROIC: 22%(2)
(-6.9% yoy)
(+13.7pp yoy)
(+8.2pp yoy)
Full year 2015 highlights
(1) Converted to USD at a period end exchange rate
(2) Pre-tax; adjusted to aircraft rents
8
Routes Destinations Domestic
airports
International
airports Aircraft
148 63 40
23 59
Volaris today: The first successful ULCC in Latin
America, ready for the next stage of growth
Passenger
market penetration(1)
29%
(1) Passenger market penetration for January 2016
Source: Company data; DGAC
9
-0.6
6.0
4.8
2013 2014 2015
1.3
2.3 2.5
1.5
2.5
3.1
2013 2014 2015
GDP Non-oil GDP
The Mexican macro environment is poised to support
Volaris´ continued growth
Private Consumption growth (%) General Economic Activity Indicator growth (1) (%)
USD Remittances growth (%) GDP growth (%)
(1) IGAE (Mexican General Economic Activity Indicator)
Source: INEGI; Banxico
1.4
2.1
2.5
2013 2014 2015
1.71
2.79
5.19
2013 2014 2015
10
2.05
0.55 0.45 0.42 0.27 0.25 0.21 0.04 0.01
USA Chile Brazil Colombia Peru Mexico Argentina Costa Rica Paraguay
Domestic air trips per capita (2)
2010 demographic composition by age Middle class as a % of Mexican population (1)
(1) Classes are defined by the following monthly family income: AB<MXN $98,500, C+MXN $40,600- $98,499, C MXN $13,500- $40,599, D+ MXN $7,880 $13,499,
D MXN $3,130- $7,879 and E <MXN $3,129
(2) ALTA 2014 Yearbook air trips per capita
Source: INEGI; CONAPO
Mexico’s best kept secret: Favorable demographics
and underpenetrated air travel market
10 5 0 5 10
Male Female
2030 estimate
Million inhabitants
0-19 years 20-64 years 65+ years
11
26% 20%
35%
25%
17%
30%
14% 17%
7% 8%
2010 2025E
D/E D+ C C+ AB
Mexico’s geography supports air traffic growth
Tijuana
Cancun Mexico City
Tapachula
Reynosa
Seattle
Atlanta
Chetumal
Omaha
Denver
12
22
37
18
26
5
12
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Domestic USA Other international
Mexican air travel market has the characteristics of
a high growth emerging market
Segment passenger volume (millions)
45
53
75
(1) Includes regular and charter
Source: DGAC-SCT; INEGI; Banco de México
5.7% CAGR
Yoy Growth 15.0% 2.1% -11.9% 3.3% 4.0% 8.3% 8.3% 8.3% 12.3%
GDP growth 5% 3.2% -4.7% 5% 4.0% 3.8% 1.7% 2.1% 2.5%
GDP multiplier 3.0 0.7 2.5 0.6 1.0 2.2 4.9 4.0 4.9
52 47 49 51
55 60
65
13
Fuel prices and the Mexican peso inversely
correlated
0
20
40
60
80
100
120
10
11
12
13
14
15
16
17
18
19
20
2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
USD/MXN WTI
Source: Bloomberg
MXN/USD FX rate and WTI prices (Mar 2014 - Feb 2016)
MXN/USD FX rate WTI prices
14
Volaris ULCC model perfect fit for such a market
The first 10 years: set the foundations for a more
“democratic” air travel market in Mexico
The Mexican macro environment is poised to
support Volaris´ continued growth
Mexico’s geography supports air traffic growth
Volaris is the first successful ULCC in Latin
America and is ready for the next stage of
growth
Mexico’s best kept secret is its favorable
demographics and underpenetrated air travel
market
15
Mexican air travel market has the characteristics
of a high growth emerging market
Holger Blankenstein
Chief Commercial Officer
Fernando Suárez G.
Chief Financial Officer
José Luis Suárez D.
Chief Operating Officer
The Volaris flight crew
Enrique Beltranena
Chief Executive Officer
16
Holger Blankenstein
CCO
Volaris serves 148 routes to 63 destinations throughout Mexico, USA and Central America
Volaris footprint after 10 years of flight:
A point-to-point network with growth potential
Portland
Reno Sacramento San Francisco/Oakland
San Jose Fresno
Ontario Los Angeles
San Diego
Las Vegas
Phoenix
Denver
Dallas
Houston
San Antonio
Chicago New York
Orlando
Fort Lauderdale
Tijuana
Mexicali
La Paz Los Cabos
Hermosillo
Cd. Juarez
Chihuahua
Cd. Obregon
Monterrey Los Mochis Torreon Culiacan
Mazatlan
Durango
Tampico Zacatecas
San Luis Aguascalientes
Guadalajara Puerto Vallarta Leon
Uruapan Morelia
Queretaro Mex.City
Toluca
Veracruz
Acapulco
Huatulco Tapachula
Puebla
Oaxaca Tuxtla
Villahermosa
Chetumal
Cancun Merida
Guatemala
San Jose, CR
San Juan, PR
Routes Dom. USA CAM
Tijuana 29 1 -
Mexico City 25 8 -
Guadalajara 19 20 2
Monterrey 18 1 -
Cancun 16 1 2
Other 3 13 -
Total 100 44 4
Note: Not mutually exclusive; E.g. Tijuana-Mexico City is included both in Tijuana and Mexico City
18
Resilient
Volaris Ultra-Low
Cost Model
19
Strong,
diversified
growth Ultra low
costs
“Clean”,
low
base
fares
More price
sensitive
customers
More
ancillaries (“You decide”)
We have created a resilient ULCC model by
stimulating demand by reducing base fares
Commercial metrics: Our low fare philosophy
enables profitable growth
Important Less Important Not important
•Route profitability
•TRASM
•Volume/price elasticity
•ASM growth
•Yield
•RASM
•Market share
•Other airlines fares
•“Trophy” routes
We manage the network for profitability
Developing an efficient network to support a
low cost operation is fundamental
“Clean”,
low
base
fares
Strong,
diversified
network
Ultra low
costs
More price
sensitive
customers
More
ancillaries (“You decide”)
Volaris focuses on offering low base fares to be
competitive with bus fares
70
75
80
85
90
95
100
1,000
1,100
1,200
1,300
1,400
1,500
…and competitive with bus fares
Monitoring competition (15-16)
Lowest base fares most of the time…
Volaris average fare (MXN)*
We continue to lower base fares…
Source: Company data, Excelsior
Market Bus
Average
Culiacan-Tijuana $1,260 $1,310
Guadalajara-
Hermosillo $1,190 $1,420
Guadalajara-Tijuana $1,870 $1,910
Mexico–Tijuana $1,940 $2,120
Bajío-Tijuana $2,160 $2,090
Cancún-México $1,600 $1,620
Durango-Tijuana $1,580 $2,050
Guadalajara-Monterrey $1,170 $1,060
México-Monterrey $1,240 $1,100
22
“Clean”,
low
base
fares
Strong,
diversified
network
Ultra low
costs
More price
sensitive
customers
More
ancillaries (“You decide”)
Volaris has the right customer focus for future
demand stimulation
Core customers: Price sensitive
travelers
Visiting Friends & Relatives (VFR)
Leisure Small & medium enterprises (SME)
• 49% of total
• +37%
• From 38% to 49%
• 26%
• +24%
• 18% to 29%
• 25%
• +29%
• 10% to 19%
Passenger growth from 4 M in 2010 to 12 M in 2015 Passenger growth from 4 M in 2010 to 12 M in 2015
• Routes today
• Market growth
2010-2015
• Volaris share
growth 2010-2015
24
Source: Company data, DGAC-SCT
ULCC model
First sale
Trial
Ticket giveaway
#NoMásCamión
Strong conversion
rate
Stimulating demand from bus to air substitution
Source: Company data, Secretaría de Comunicaciones y Transportes (SCT), Dec. 2014
Mass media campaigns
Digital capabilities
Attracting 1st
time flyers
Education
Bus Switching Program Key Highlights
• 15M targeted impacts in bus cities
• 40M digital impacts with #NoMásCamión
• Geo-fenced communication near bus terminals
• 30K free tickets distributed in bus stations
• 2 week road show in key bus cities
• 30% of our costumers first considered bus
• 85% of costumers had never flown Volaris
• 50K pre paid cards in convenience stores
• Incremental online sales during first 6 months with
“Air travel at the price of a bus ticket”
25
ULCC
Customer
ULCC
Customer
Trial Trial
Education
First Sale First Sale
26
Geo-fencing
Reaching over 35 million customers on and off-
line with our bus switching campaign
0
2,000
4,000
6,000
8,000
10,000
12,000
0 5 10 15 20 25
Trip time on bus (Hrs)
Weekly bus seats
We have more than 20 million potential customers
to capture in 50+ domestic bus routes
Routes with a distance longer than 200 miles
Source: Company data and analysis; SCT, bus websites
57 more domestic
Mexico routes in scope
for bus switching Too short for air
travel
Too small for profitable A320 operation
Bus routes
27
Low base fares have also stimulated price
sensitive leisure travelers
Cancun 728 2,329 220%
Los Cabos 133 405 205%
Puerto Vallarta 68 257 279%
Mazatlán 69 135 96%
Acapulco 72 133 85%
Huatulco 2 45 1,863%
Initiatives
• Improved vacation
packages value
proposition
• Stepped-up online
presence on
volaris.com
• Maximized cross
and up-sell of
hotel, car, tours,
etc.
- Increased share
of wallet of leisure
customers
Destinations Volaris Seats
2010 (K)
Volaris Seats
2015 (K) %
28
Market
growth
Volaris
growth
Tijuana
Guadalajara
Los Cabos
Cancun
Vallarta
Note: Markets not mutually exclusive, contested domestic markets
Source. Company data, airlines public information
Culiacán
Hermosillo
Segment passenger
CAGR
Market vs Volaris
(2010-2015)
Monterrey
Mexico City
15.3% 2.3%
10.2% 6.6%
27.2% 6.6% 22.5% 5.3%
38.2% 9.7%
32.3% 6.0%
20.6% 7.2%
74.3% 10.3%
27.9% 10.8%
29
Volaris is the engine of growth for leisure and
VFR markets in Mexico
“Clean”,
low
base
fares
Strong,
diversified
network
Ultra low
costs
More price
sensitive
customers
More
ancillaries (“You decide”)
Non-ticket revenue has been a major growth driver
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
50
100
150
200
250
300
350
400 (billion, MXN)
Non-ticket revenues
(MXN)
Non-ticket revenues per passenger
31
Several successful initiatives over the last two years
have driven ancillary revenue growth to current level
Initiative Description Sales Contribution
2015
Baggage policy • Introduced carry on fee
• Improved checked bag fees
Travel commerce
Dynamic pricing
Seat assignments
Combos
• Launched sale of travel products in
booking and preflight journey
• Optimized ancillaries price points through
the customer journey
• Segmented seat zones to maximize seat
value location
VClub
Strong contribution
Minor contribution
$$$$
$$$$
$$$$
$$$$
$$$$
$$$$
$$$$
$$$$
• Improved options with a targeted ancillary
combos offering
• Started fee based loyalty program with
exclusive access to discounted fares
32
Three avenues of ancillary growth in the coming
years
30+ product pipeline
30+ product pipeline
2
1
Dynamic pricing &
revenue
management
More touch points to
sell throughout
customer journey
Data COLLECTION and ANALYTICS Data COLLECTION and ANALYTICS
Product
Price
Channels 3
Today
Full
Potential
33
“Clean”,
low
base
fares
Strong,
diversified
network
Ultra low
costs
More price
sensitive
customers
More
ancillaries (“You decide”)
Our growth comes from a mix of factors: demand,
expansion, market and route performance
8
9
10
11
12
13
14
15
2014 additional frequencies
new routes joining existing airports
2015
Bil
lio
ns
Domestic International
Note: Includes Charter operations
Source: Company data
Key Notes
• Fleet increase
from 50 to 56
• Density: 161 vs.
168 seats per
departure
• Favorable
domestic
conditions
generated market
opportunities
• 25 new routes
were operated
during 2015
• Beginning of
Guatemala, San
Jose, CR and San
Juan, PR
74%
26%
54%
46%
70%
30% 11.8
1.8 0.3
14.1 Growth
(%)
36.5%
12.5%
Volaris capacity (ASMs)
Growth
(%) 15.6% 2.4% 0.8% 18.8%
35
0.1
For 2016, we will carefully adapt capacity growth based
on market conditions and route performance
New destinations & countries New destinations & countries + 3.0% - 4.0%
2016 capacity growth contribution
Additional frequencies Additional frequencies 12.5% - 13.0% +
Joining existing airports Joining existing airports +
Total ASM growth Total ASM growth =
We have flexibility to modify our growth up or down, through
aircraft utilization, lease extensions and new leases
1.5% - 2.0%
17% - 19%
36
103 103
116 112
126 119 119
129
2008 2009 2010 2011 2012 2013 2014 2015
Positive unit revenue momentum
TRASM (MXN, cents)
TRASM focus as part of key commercial objective
3% CAGR
38
Accelerating digital
transformation
As a ULCC, Volaris will remain focused on
direct, online distribution
Volaris’ distribution channels mix
Online channels Online channels
2006 2015
Online channels
(web & mobile)
Online travel
agencies
Call center
Airports
Traditional travel
agencies
0% 8%
20%
50%
20%
10%
11%
66%
11%
4%
39
Low cost digital channels require presence on
multiple screens throughout the customer journey
Inspiration Planning Booking Experience Sharing
Shows usage of device throughout the customer journey
Improve content and speed to
attract organic search
TA
BLE
T
Focus on speed of transaction,
site usability and quality
DE
SK
TO
P
Improving automated
customer assistance
functions
Enhance self-service
functions; sell
services at the airport
Add destination
related services
MO
BIL
E Add relevant & up-
to-date flight
information
40
41
Desktop
only website
Fully
responsive
& adaptive
website
Creative
driven
projects
Data
informed
projects
Anonymous
marketing
Predictive
marketing
Static
marketing
Test & learn
marketing
Test Measure
Analyze Learn
Understand Predict Target
Develop campaign
Measure results
Develop new campaign
….
Web site
heat map
analysis
Volaris is in the process of digital transformation
Before Volaris Today
Multiscreen
42
42
Growth
&
Digital
marketing and
distribution
Strong,
diversified
growth Ultra low
costs
“Clean”,
low
base
fares More
price
sensitive
customer
s
More
ancillaries (“You decide”)
Commercial strategy for 2016
Digital marketing and distribution
• Focus on digital channels • App, mobile and traditional website
• Data informed decisions
• Lower base fares
• Be least expensive
option to fly
• Be competitive with
bus fares
• Focus on price sensitive
travelers
• Stimulating demand from
bus to air substitution
• Capacity growth in
Mexico, USA and
Central America
• Focus on non-
competed or high
fare markets
• Increase VFR and
leisure markets
• More products
• Intelligent pricing
• More presence of
products throughout
customer journey
José Luis Suarez D.
COO
Running an efficient
operation focused on
our customers and
safety
Volaris Spirit Southwest JetBlue Virgin
America Frontier
On-time
performance(1) 81% 69% 80% 76% 80% 73%
Schedule
completion(2) 99.8% 98.3% 98.5% 99.7% 98.2% 99.0%
Aircraft utilization(3) 12.7 12.5 NA 11.9 10.9 NA
Mishandled bags(4) 1.1 2.6 3.3 1.8 0.8 3.1
World class operation translates into high
efficiency and low cost
(1) Arrivals + 15 minutes
(2) Total scheduled flights minus cancelations
(3) Block hour per day
(4) Reports per 1,000 passengers
Source: DOT; airlines public information
45
4.6
4.5
2015 2020E
Fleet utilization (block hours per day)
11
12
13
14
15
1Q15 2Q15 3Q15 4Q15
Fleet age (years)
Fuel consumption (gal/ASM)
0.0112
0.0113
0.0114
0.0115
0.0116
0.0117
0.0118
0.0119
0.0120
0.0121
Average seats per aircraft
A young and fuel efficient fleet is the key to an
effective and low cost operation
46
168
189
2015 2020E
Cost efficient operation
15 12 5
13 13
13
28 28
28
2 8 18
10 10
10
0
2
6
2016E 2017E 2018E
A319 A320
A320 w/sharklets A320 NEO w/sharklets
A321 w/sharklets A321 NEO w/sharklets
Fleet plan with flexibility that enables capacity
management
Note: NEO stands for the Airbus new engine option; CEO stands for the Airbus current engine option
(1) Net fleet after additions and returns
68
73
80
Contractual fleet obligations (number of aircraft)(1)
• A321 (CEO and NEO)
- 230 seats (up-gauge)
- Cost dilution
• A320 NEO
- Combined fuel consumption
reduction by approx. 17%
• A320 CEO with sharklets
- Fuel consumption reduction by
approx. 3%
• A319
- Decrease A319 fleet
- Operations to Midway and
Central America
- Ramping up markets
47
Source: Airbus
A320 A321 A320 NEO A321 NEO
Illustrative NEO range NEO characteristics
• Pratt & Whitney Pure Power
PW1100G-JM engine
• 17% combined fuel efficiency (approx.)
• 3% sharklet fuel efficiency (approx.)
• 50% noise reduction (approx.)
• CO2 and NOx emissions reduction
• Maintenance:
- Fewer stages
- Lower parts count
48
NEO engine-powered fleet provides enhanced fuel
efficiency ideal for ULCC operation
Improving facilities, for an efficient operation
Tijuana hangar
• Proximity to the U.S., (spare parts)
• Line maintenance
• DGAC certifications
• FAA licenses - FAR 129 and 145
Training center
• New Airbus facility in Mexico City
• Flight attendant training center
• Maintenance, mechanics school alliances
Pilot sourcing
• Cadet program since 2007, source of
approx. 40% of actual pilots
• Development of 5 crew bases
49
Tijuana bi-national terminal
• Market leader in Tijuana with over 30
destinations
• Convenient and seamless border-crossing
Focus on airport operations and technology
improvements
Efficiency enhancement in the
travel process
• Mobile paperless boarding
• Home printed bag tag
• Airport new innovative table top self
check-in
• Ancillary revenue airport strategy
New airport signaling
• Clear, efficient and direct communication
• New web check-in boarding pass
50
IATA Operational Safety Audit (IOSA) System
Operational and safety certifications
IATA Safety Audit for Ground Operations (ISAGO)
ISO 9001:2008 and 14001:2004
51
Fernando Suárez G.
CFO
8,879
11,686 13,002
14,037
18,180
0
5,000
10,000
15,000
20,000
2011 2012 2013 2014 2015
(MX
N m
m)
20%
16% 15% 14%
10% 7%
5%
0%
10%
20%
30%
1,238
2,475 2,806 3,081
6,492
0
2,000
4,000
6,000
8,000
2011 2012 2013 2014 2015
(MX
N m
m)
Adj. EBITDAR
Revenue growth and margin expansion
(1) Gol as of September 2015, LTM
Source: Company data, airlines public information
53
Revenue
FY 2015 Adj. EBITDAR margin Revenue CAGR 2011-2015
35.7%
24.1% 24.1% 23.3% 19.5%
17.6% 14.4%
0.0%
10.0%
20.0%
30.0%
40.0%
20% CAGR 51% CAGR
4.9
11.3
8.3 8.3 7.8 6.7 6.4
8.6
5.8 5.5
10.4 2.1
3.6
3.2 2.7 2.8
3.6 2.8
2.6
2.6 2.2
2.6
• Economies of scale
- Dilute fixed costs
- High seat density
• Young and fuel efficient fleet
- Sharklet rollout
- Average age of 4.6 years (4)
- Low fuel burn
• Productive network
- Point-to-point
- No connections complexity
• High aircraft utilization
- On average 12.7 block hours a day
during FY 2015
Volaris has a best-in-class unit cost structure
(1) Based on CASM among the publicly-traded airlines
(2) Non-USD data converted to USD at an average exchange rate
(3) DCOMPS= Direct Competitors: Average CASM and CASM ex-fuel; US network carriers include: Delta, United, Alaska Airlines and American Airlines
(4) As of December 2015
(5) Gol as of LTM Sep15
Source: Company data, airlines public information
Latin American carriers US LCCs US network
carriers (3) Continued cost improvement
potential
54
Cost structure
Lowest unit cost in the Americas(1)
In line with best-in-class
ULCCs
CASM ex-fuel (FY2015, USD cents) (2)
7.0
15.0
11.5 11.0
10.6 10.4
9.2
11.2
8.5
7.7
13.0
8.2 7.7
8.5 9.2
10.4 10.6 11.1 11.2 11.5
13.0
15.0
. Spirit Allegiant Copa Gol Interjet Aeromexico Southwest Latam US network carriers
Avianca
Our cost structure enables us to lower base fares
below competitors unit cost
Volaris TRASM is below most competitors CASM (1)
TRASM and CASM (FY2015, USD cents) (2)
(1) Based on CASM and TRASM among the publicly-traded airlines
(2) Non-USD data converted to USD at an average exchange rate
(3) Gol as of LTM September 2015
(4) US network carriers direct competitors include: Delta, United, Alaska Airlines and American Airlines
Source: Company data, airlines public information
Overlap:
Volaris’ resilient ULCC
model
55
2
5
%
TR
AS
M
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
CA
SM
(4) (3)
28.4%
31.2% 30.4%
13.4% 13.4%
11.0% 10.8%
Strong balance sheet and liquidity, well funded
for continued growth
(1) Figures converted to USD at December end of the period spot exchange rate $17.2065 for convenience purposes only
(2) Gol as of LTM September 2015
Source: Company data, airlines public information
LTM liquidity-cash and equivalents as a % of LTM Op. Revenue
56
• Unrestricted cash of $5.2 billion pesos (US$
300 million(1)) as of December 31st 2015.
• Net cash position of $3.6 billion pesos (US$
207 million(1)) as of December 31st 2015.
• Adjusted long term net debt to EBITDAR of
3.3x as of FY2015.
• Fully financed pre-delivery payments
through 2018 and executed sale-
leasebacks for 2016 deliveries.
• Expected 2016 net CAPEX neutral (US$ 0
to -10 million):
• PDPs: from US$ -50 to -45 million,
net of PDP reimbursements (8 aircraft
order book deliveries)
• Major maintenance: US$ 25 to 35
million
• Other: from US$ 10 to 15 million
Focused on return on invested capital
57
LTM adjusted pre-tax ROIC (1)
Committed to continue increasing shareholder value
11%
14%
17%
19%
21% 22%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
(1) Adjusted to rents
Enrique Beltranena
CEO
Avenues of future growth
Reduce unit costs
Fleet growth
Expand network
Increase total revenues
• Deepen footprint in
markets with high
demand stimulation
• Grow ancillary revenue to
world class ULCC
benchmarks
• Backlog 59 additional
aircraft to be delivered
• Up-gauge fleet from
A319 to A320/A321
• Higher seat density
configuration
• Expand network
geographically,
additional frequencies
• Fuel efficient
NEO engine
incorporation • Price, product,
presence
59
• Lower distribution
cost though
digital innovation
Thank you
Fuel hedging position
61 61
Period Total % hedged(1) Avg. price (gal/USD$) Instrument
1Q16 55% $1.94 Call
2Q16 60% $1.95 Call
3Q16 60% $1.99 Call
4Q16 60% $1.99 Call
1Q17 50% $1.64 Call
2Q17 50% $1.61 Call
3Q17 50% $1.44 Call
4Q17 50% $1.40 Call
1Q18 15% $1.47 Call
(1) Approximate percentage of gallons hedged
(1) Full year 2015 and 4Q 2015 figures converted to USD at December end of the period spot exchange rate $17.2065, respectively, for convenience purposes only
(2) Audited financial information 2013A – 2015A
(3) Includes debt prepayment of Ps.65 million
Source: Company data
Consolidated statements of operations summary
MXN millions unless otherwise stated (2) 2013A 2014A 2015A 2015A (1) 4Q 2015 4Q 2015(1)
% of total
operating
revenues
(USD
millions)
(USD
millions)
Passenger 11,117 11,303 14,130 821 3,930 228 77.2
Non-ticket 1,885 2,733 4,049 235 1,163 68 22.8
Total operating revenues 13,002 14,037 18,180 1,057 5,092 296 100
Fuel 5,086 5,364 4,721 274 1,158 67 22.7
Aircraft and engines rent expense 2,187 2,535 3,525 205 1,043 61 20.5
Landing, take off and navigation expenses 1,924 2,066 2,595 151 712 41 14.0
Salaries and benefits 1,563 1,577 1,903 111 539 31 10.6
Sales, marketing and distribution expenses 704 817 1,089 63 339 20 6.6
Maintenance expenses 572 665 875 51 288 17 5.6
Other operating expense, net 347 468 505 29 171 10 3.4
Depreciation and amortization 302 343 457 27 108 6 2.1
Total operating expenses 12,685 13,833 15,669 911 4,357 253 85.6 6
EBIT 317 204 2,510 146 736 43 14.4
Operating margin (%) 2.4 1.5 13.8 13.8 14.4 14.4
Finance income 25 23 47 3 10 1 0.2
Finance cost (126) (32) (22) (1) (7) 0 (0.1)
Exchange gain, net 66 449 967 56 178 10 3.5
Income tax expense (18) (39) (1,038) (60) (263) (15) (5.2)
Net income 265 (3) 605 2,464 143 654 38 12.8
Net margin (%) 2.0 4.3 13.6 13.6 12.8 12.8
Adjusted EBITDAR 2,806 3,081 6,492 377 1,886 110 37.0
Adj. EBITDAR margin (%) 21.6 22.0 35.7 35.7 37.0 37.0
EPS Basic and Diluted (Pesos) 0.31 0.60 2.43 0.14 0.65 0.04
EPADS Basic and Diluted (Pesos) 3.10 6.00 24.35 1.42 6.46 0.38
62
Consolidated statements of financial position summary
(1) Full year 2015 figures converted to USD at December end of the period spot exchange rate $17.2065 for convenience purposes only
(2) Net debt = financial debt - cash and cash equivalents
(3) Adjusted debt = (LTM aircraft rent expense x 7) + financial debt
(4) Adjusted net debt = adjusted debt - cash and cash equivalents
(5) Audited financial information 2013A – 2015A
Source: Company data
MXN millions unless otherwise stated (5) 2013A 2014A 2015A 2015A (1)
(USD
millions)
Cash and cash equivalents 2,451 2,265 5,157 300
Current guarantee deposits 499 545 861 50
Other current assets 1,050 879 1,223 71
Total current assets 4,000 3,689 7,241 421
Rotable spare parts, furniture and
equipment, net 1,341 2,223 2,550 148
Non-current guarantee deposits 2,603 3,541 4,704 273
Other non-current assets 434 452 765 44
Total assets 8,378 9,905 15,261 887
Unearned transportation revenue 1,393 1,421 1,957 114
Short-term financial debt 268 823 1,371 80
Other short-term liabilities 2,211 2,524 3,774 219
Total short-term liabilities 3,872 4,768 7,103 413
Long-term financial debt 294 425 220 13
Other long-term liabilities 250 242 1,113 65
Total liabilities 4,415 5,435 8,436 490
Total equity 3,962 4,470 6,825 397
Total liabilities and equity 8,378 9,905 15,261 877
Net debt (2) (1,888) (1,017) (3,566) (207)
Adjusted debt (3) 15,874 18,990 26,268 1,527
Adjusted net debt (4) 13,423 16,725 21,111 1,227
63
Consolidated statements of cash flows summary
(1) Full year 2015 figures converted to USD at December end of the period spot exchange rate $17.2065 for convenience purposes only
(2) Audited financial information 2013A - 2015A.
(3) Includes debt prepayment premium
Source: Company data
MXN millions unless otherwise stated (2) 2013A 2014A 2015A 2015A (1)
(USD
millions)
Cash flow from operating activities
Income before income tax 283 644 3,502 204
Depreciation and amortization 302 343 457 27
Guarantee deposits (620) (695) (1,165) (68)
Unearned transportation revenue 135 27 536 31
Changes in working capital and provisions (61) 14 (261) (15)
Net cash flows provided by operating activities 39 334 3,070 178
Cash flow from investing activities
Acquisitions of rotable spare parts, furniture, equipment and
intangible assets (1,161) (1,603) (1,456) (85)
Pre-delivery payments reimbursements 698 396 670 39
Proceeds from disposals of rotable spare parts, furniture and
equipment 151 22 185 11
Net cash flows used in investing activities (312) (1,185) (601) (35)
Cash flow from financing activities
Payments of Treasury Shares - (7) - -
Net proceeds from initial public offering 2,578 - - -
Transaction costs on issue of shares (38) - - -
Proceeds from exercised treasury shares 26 - 23 1
Interest paid (65) (23) (42) (2)
Other finance costs - (11) (40) (2)
Payments of financial debt (1,084) (3) (400) (801) (47)
Proceeds from financial debt 444 966 925 54
Net cash flows provided by financing activities 1,861 525 65 4
Increase (decrease) in cash and cash equivalents 1,587 (326) 2,533 147
Net foreign exchange differences 41 141 359 21
Cash and cash equivalents at beginning of period 822 2,451 2,265 132
Cash and cash equivalents at end of period 2,451 2,265 5,157 300
64
Adj. EBITDA and Adj. EBITDAR reconciliation
(1) Full year 2015 figures converted to USD at December end of the period spot exchange rate $17.2065 for convenience purposes only
(2) Audited financial information 2013A - 2015A
Source: Company data
MXN millions unless otherwise stated (2) 2013A 2014A 2015A 2015A (1) 4Q 2015 4Q 2015 (1)
(USD
millions) (USD
millions)
Net income 265 605 2,464 143 654 38
Plus (minus):
Finance costs 126 32 22 1 7 -
Finance income (25) (23) (47) (3) (10) (1)
(Benefit)/provision for income taxes 18 39 1,038 60 263 15
Depreciation and amortization 302 343 457 27 108 6
EBITDA 685 995 3,934 229 1,021 59
Exchange (gain) loss, net (66) (449) (967) (56) (178) (10)
Adjusted EBITDA 619 547 2,967 172 844 49
Aircraft and engine rent expense 2,187 2,535 3,525 205 1,043 61
Adjusted EBITDAR 2,806 3,081 6,492 377 1,886 110
65