Volaris 2024 Q4: Navigating Contradictions in Capacity Growth, Fleet Strategy, and Engine Challenges

These are the key contradictions discussed in Controladora Vuela Compania de Aviacion, S.A.B. de C.V.'s latest 2024Q4 earnings call, specifically including: Capacity Growth Expectations and Fuel Hedging Strategy, Fleet Capacity Strategy and International Expansion, and GTF Engine Grounding and Compensation:



Finance and Growth Amid Challenges:
- Despite facing GTF engine inspections and aircraft groundings, Volaris generated a full-year EBITDAR margin of 36% and maintained a net profit each quarter.
- The company effectively managed capacity reductions and engine purchases, maintaining 99.5% scheduled reliability and 83% on-time performance.
- These results were driven by strategic fleet adjustments and operational efficiency, ensuring schedule integrity and customer satisfaction.

Revenue and Ancillary Revenue Growth:
- Total revenue for the year was $3.1 billion, nearly matching 2023 levels despite flying 13% fewer ASMs in 2024.
- Ancillaries accounted for more than 50% of total revenues, with ancillary sales per passenger reaching a record $55.
- This growth was driven by effective commercial strategies and strong customer engagement with ancillary offerings.

Aircraft Fleet and Delivery Schedule:
- Volaris received 15 out of its 144 aircraft from 2017 and 2021 orders, with plans to operate over 90% of its fleet with NEO technology by 2030.
- The company renegotiated delivery schedules with Airbus, staggering aircraft arrivals to align with operational requirements.
- These strategic adjustments aim to manage capacity and preserve market leadership.

Market Dynamics and Border Impact:
- Volaris adjusted capacity for the first half of 2025 due to a cautious response to evolving border dynamics and concerns about travel decisions.
- The company witnessed a decline in US-VFR traffic influenced by geopolitical uncertainties following the US elections.
- These adjustments reflect the company's agility in responding to external factors affecting demand.