PR Newswire | Oct 22, 2020 11:03PM EDT

revenues and lower CASM

10/22 22:02 CDT

Volaris reports third quarter 2020 results: Increased capacity drives stronger revenues and lower CASM MEXICO CITY, Oct. 22, 2020

MEXICO CITY, Oct. 22, 2020 /PRNewswire/ -- Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announces its financial results for the third quarter 2020.

The following financial information, unless otherwise indicated, is presented in accordance with the International Financial Reporting Standards (IFRS).

Third Quarter 2020 Highlights

During the third quarter 2020, Volaris continued to successfully navigate the uncertainties caused by the SARS-CoV-2 (COVID-19) pandemic. The Company has recovered much of the capacity resulting from COVID-19 as measured by available seat miles (ASMs), a result of its strong ultra-low-cost business model focused on the VFR (Visiting Friends and Relatives) and leisure segments in the domestic and US-transborder markets.

As the Company has been able to recover services and add new routes, management has remained focused on ensuring the well-being of its crews, personnel, and passengers. Volaris has carried more than 4.5 million passengers following its successful biosafety protocol implementation in April 2020. Volaris was recognized with the "Safe travels" stamp, by the World Travel and Tourism Council, as well as the certificates of biosecurity best practices by the governments of Yucatan and Mexico City.

The Company was able to ramp up service to 63% of prior year in July and expanded further to 79% of prior year in August. September is typically a low travel month so management cautiously increased capacity to 84% of prior year while focusing on increasing total revenue per available seat mile (TRASM). For the full period, Volaris operated 75% of ASMs compared to the same period in 2019. The domestic market led the capacity recovery, where Volaris operated 85% ASMs versus the same period in 2019. In the international market, Volaris operated 54% ASMs compared to the same period in 2019. Central American operations remained closed.

The main effects of the continuing recovery of demand and capacity at the end of the third quarter, are as follows:

* Total operating revenues were Ps.4,724 million for the third quarter, a decrease of 50.3% year over year. * Total ancillary revenues were Ps.2,131 million for the third quarter, a decrease of 29.7% year over year. Total ancillary revenues per passenger for the third quarter reached Ps.614, an increase of 13.9% year over year. However, total ancillary revenues represented 45.1% of total operating revenues for the third quarter 2020, increasing 13.2 percentage points with respect to the same period of last year. * Total operating revenues per available seat mile (TRASM) were Ps.102.8 cents for the third quarter, a decrease of 31.6% year over year. * In the third quarter 2020, the Company recorded a one-time charge of Ps.746 million. * Operating expenses per available seat mile (CASM) were Ps.149.2 cents for the third quarter, an increase of 20.9% year over year; with an average economic fuel cost per gallon of Ps.40.2 for the third quarter, a decrease of 10.5% year over year. Excluding the one-time charge, CASM was Ps.133.5 cents. * Operating expenses per available seat mile excluding fuel, (CASM ex-fuel) were Ps.111.3 cents for the third quarter, an increase of 43.6% year over year; with an average exchange rate depreciation of the Mexican peso against the U.S. dollar of 13.9% year over year. Excluding the one-time charge, CASM ex-fuel was Ps.95.7 cents. * Operating loss was Ps.2,227 million for the third quarter, a significant decrease compared with the operating income of Ps.1,703 million for the same period of last year. Operating margin for the third quarter was negative 47.1%, a deterioration of 65.0 percentage points year over year. Excluding the one-time charge, operating loss was Ps.1,481 million, a negative operating margin of 31.4%. * Net loss was Ps.2,175 million (Ps.2.15 loss per share / U.S.$0.96 loss per ADS), a negative net margin of 46.0% for the third quarter. Excluding the one-time charge, net loss was Ps.1,429 million (Ps.1.41 loss per share / U.S.$0.63 loss per ADS), a negative net margin of 30.3%. * At the close of the third quarter, the Mexican peso appreciated 2.2% against the U.S. dollar (Ps.22.46 per U.S. dollar) with respect to the exchange rate at the close of the previous quarter (Ps.22.97 per U.S. dollar). The Company booked a net foreign exchange gain of Ps.186 million derived from our U.S. dollar net monetary liability position. * During the third quarter of 2020, the net cash flow used in operating activities was Ps.113 million. The net cash flow used in investing activities reached Ps.179 million. The net cash flow used in financing activities was Ps.1,357 million, which included Ps.1,724 million of aircraft rental payments. The negative net foreign exchange difference was Ps.163 million, thus leading to a net decrease of cash and cash equivalents in the third quarter of Ps.1,812 million. As of September 30, 2020, cash and cash equivalents were Ps.8,202 million.

Fuel Price reduction and Peso Depreciation

* Fuel price reduction: The average economic fuel cost per gallon decreased 10.5% in the third quarter of 2020, year over year, reaching Ps.40.2 per gallon (U.S.$1.8). * Peso depreciation: The Mexican peso depreciated 13.9% against the U.S. dollar year over year, from an average exchange rate of Ps.19.42 per U.S. dollar in the third quarter of 2019 to Ps.22.11 per U.S. dollar during the third quarter of 2020. At the end of the third quarter of 2020, the Mexican peso (Ps.22.46 per U.S. dollar) depreciated 14.4% with respect to the exchange rate at the end of the same period of the last year (Ps.19.64 per U.S. dollar).

Passenger Traffic Contraction, Ancillary Revenue Reduction, and TRASM decrease

* Passenger traffic contraction: Volaris had 3.4 million passengers booked in the third quarter of 2020, a decrease of 38.3% year over year. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) decreased 35.2% year over year. System load factor during the third quarter decreased 11.7 percentage points year over year to a level of 73.4%. * Total ancillary revenue reduction: For the third quarter of 2020, total ancillary revenue decreased 29.7% year over year. However, total ancillary revenue per passenger in the third quarter of 2020 increased 13.9% year over year. The total ancillary revenue generation continues to grow with new and mature products, appealing to customers' needs, representing 45.1% of total operating revenue of the third quarter, an increase of 13.2 percentage points year over year. * TRASM decrease: For the third quarter of 2020, TRASM decreased 31.6% year over year. During the third quarter of 2020, the total capacity, measured by ASMs, decreased 24.9% year over year.

Total Unit Cost Increase and Peso Depreciation

* CASM and CASM ex fuel in the third quarter of 2020 reached Ps.149.2 (U.S.$6.64 cents) and Ps.111.3 cents (U.S.$4.96), respectively. This represented an increase of 20.9% for CASM and an increase of 43.6% for CASM ex fuel, year over year; mainly driven by the capacity reduction as measured by available seat miles (ASMs), and the depreciation of the Mexican peso against the U.S. dollar by 13.9%. Excluding the one-time charge, CASM was Ps.133.5 cents and CASM ex-fuel was Ps.95.7 cents.

Young and Fuel-Efficient Fleet

* During the third quarter of 2020, the Company returned one A320 aircraft and incorporated three new A320 NEO aircraft to its fleet. As of September 30, 2020, Volaris' fleet comprised 84 aircraft (7 A319s, 61 A320s and 16 A321s), with an average age of 5.4 years. At the end of the third quarter of 2020, Volaris' fleet had an average of 187 seats per aircraft 77% of our aircraft were sharklet-equipped, and 32% were NEOs.

Liquidity Preservation Plan with a Net Cash Flow Generated by Operating Activities

* Since the COVID-19 pandemic started, the Company's main objective has been to preserve its liquidity position. Specifically, for the third quarter, our liquidity preservation plan brought $1.9 billion pesos in benefits; of which $406 million pesos were cost reductions. * During the third quarter of 2020, the net cash flow used in operating activities was Ps.113 million. The net cash flow used in investing activities was Ps.179 million. The net cash flow used in financing activities was Ps.1,357 million, which included Ps.1,724 million of aircraft rental payments. The negative net foreign exchange difference was Ps.163 million. As a result, there was a net decrease of cash and cash equivalents in the third quarter of Ps.1,812 million. As of September 30, 2020, cash and cash equivalents were Ps.8,202 million, representing 34.5% of last twelve months of the operating revenue. Volaris registered a negative net debt (or a positive net cash position) of Ps.2,387 million (excluding lease liability recognized under the IFRS16 adoption).

Non-Derivative Financial Instruments

* During 2019, the Company established hedges on its U.S. dollar denominated revenues through a non-derivative financial instrument, using the lease liabilities denominated in U.S. dollar as a hedge instrument. This hedging relationship was designated as a cash flow hedge of forecasted revenues to mitigate the volatility of the foreign exchange variation arising from the revaluation of the lease liabilities. During the third quarter 2020, the impact of these hedges was Ps.171 million, which has been included as part of the total operating revenue. * Additionally, during 2019, the Company established hedges on a portion of its forecasted fuel expense, through a non-derivative financial instrument, using as a hedge instrument a portion of its U.S. dollar denominated monetary assets. This hedging relationship was designated as a cash flow hedge of forecasted fuel expense to mitigate the volatility of the foreign exchange variation arising from the revaluation of this portion of U.S. dollar denominated monetary asset. During the third quarter 2020, the impact of these hedges was Ps.154 million, which has been presented as part of the total fuel expense. * For the hedging relationships described, the effective portion of the hedging instrument's change in fair value is recognized in Other Comprehensive Income or OCI. The accounting records corresponding to the recycling of the OCI are made in accordance with IFRS 9. Under this Standard, the portion recorded in OCI is recognized in the results in the same period in which the expected hedging for cash flows affect the result of the period. As of September 30, 2020, OCI includes a negative foreign exchange effect of Ps.5,265 million. As of December 31, 2019, OCI includes a positive foreign exchange effect of Ps.14 million.

Investors are urged to carefully read the Company's periodic reports filed with or provided to the Securities and Exchange Commission, for additional information regarding the Company.

Conference Call/Webcast Details:

Presenters for the Company: Mr. Enrique Beltranena, President & CEO Mr. Holger Blankenstein, Airline Commercial and Operation EVP

Mr. Jaime Pous, Senior Vice President Chief Legal Officer and Corporate Affairs and Interim CFODate: Friday, October 23, 2020

Time: 10:00 am U.S. EDT (9:00 am Mexico City Time)

United States dial in 1-877-830-2576(toll free):

Mexico dial in (toll 001-800-514-6145free):

Brazil dial in (toll 0800-891-6744free):

International dial + 1-785-424-1726in:

Participant passcode: VOLARIS

https://services.choruscall.com/links/Webcast will be vlrs201023S5hzfKlM.htmlavailable at:

About Volaris:*Controladora Vuela Compaa de Aviacin, S.A.B. de C.V. ("Volaris" or the "Company") (NYSE: VLRS and BMV: VOLAR), is an ultra-low-cost carrier, with point-to-point operations, serving Mexico, the United States and Central America. Volaris offers low base fares to build its market, providing quality service and extensive customer choice. Since the beginning of operations in March 2006, Volaris has increased its routes from five to more than 142 and its fleet from four to 84 aircraft. Volaris offers more than 300 daily flight segments on routes that connect 44 cities in Mexico and 20 cities in the United States and Central America with the youngest fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business and leisure travelers in Mexico, the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for eleven consecutive years. For more information, please visit: www.volaris.com.

Forward-looking Statements:Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations, beliefs or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words "expects," "intends," "estimates," "predicts," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "potential," "outlook," "may," "continue," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. Forward-looking statements should not be read as a guarantee or assurance of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. Additional information concerning these, and other factors is contained in the Company's Securities and Exchange Commission filings. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date of this release. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Investor Relations Contact:Maria Elena Rodrguez & Andrea Gonzlez / Investor Relations /ir@volaris.com +52 55 5261 6444

Media Contact:Gabriela Fernndez / volaris@gcya.net / +52 55 5246 0100

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Financial and Operating Indicators

Unaudited Three months Variance Three months ended September 30, 2020 ended September 30, 2020 Three months ended September 30, 2019(In Mexican pesos, except otherwise indicated) (US Dollars)* (%)

Total operating revenues (millions) 210 4,724 9,502 (50.3%)

Total operating expenses (millions) 310 6,951 7,799 (10.9%)

EBIT (millions) (99) (2,227) 1,703 NA

EBIT margin (47.1%) (47.1%) 17.9% (65.0) pp

Depreciation and amortization 67 1,509 1,363 10.7%

Aircraft and engine variable lease expenses 24 537 226 >100%

Net (loss) income (millions) (97) (2,175) 713 NA

Net (loss) income margin (46.0%) (46.0%) 7.5% (53.5) pp

(Loss) income per share:

Basic (pesos) (0.10) (2.15) 0.70 NA

Diluted (pesos) (0.10) (2.15) 0.70 NA

(Loss) income per ADS:

Basic (pesos) (0.96) (21.50) 7.05 NA

Diluted (pesos) (0.96) (21.50) 7.05 NA

Weighted average shares outstanding:

Basic - 1,011,876,677 1,011,876,677 0.0%

Diluted - 1,011,876,677 1,011,876,677 0.0%

Available seat miles (ASMs) (millions) ^(1) - 4,763 6,341 (24.9%)

Domestic - 3,685 4,328 (14.9%)

International - 1,078 2,014 (46.5%)

Revenue passenger miles (RPMs) (millions)^ (1) - 3,496 5,398 (35.2%)

Domestic - 2,711 3,785 (28.4%)

International - 785 1,613 (51.3%)

Load factor ^(2) - 73.4% 85.1% (11.7) pp

Domestic - 73.6% 87.5% (13.9) pp

International - 72.8% 80.1% (7.3) pp

Total operating revenue per ASM (TRASM) (cents)^ (1) (5) 4.6 102.8 150.3 (31.6%)

Total ancillary revenue per passenger^ (4) (5) 27.3 614 539 13.9%

Total operating revenue per passenger^ (5) 62.8 1,411 1,696 (16.8%)

Operating expenses per ASM (CASM) (cents)^ (1) (5) 6.64 149.2 123.4 20.9%

Operating expenses per ASM (CASM) (US cents)^ (1) (3) (5) - 6.75 6.36 6.1%

CASM ex fuel (cents)^ (1) (5) 4.96 111.3 77.5 43.6%

CASM ex fuel (US cents)^ (1) (3) (5) - 5.03 3.99 26.1%

Booked passengers (thousands) ^(1) - 3,470 5,620 (38.3%)

Departures^ (1) - 24,721 35,777 (30.9%)

Block hours^ (1) - 62,678 90,323 (30.6%)

Fuel gallons consumed (millions) - 44.9 64.9 (30.8%)

Average economic fuel cost per gallon^ (5) 1.8 40.2 44.9 (10.5%)

Aircraft at end of period - 84 80 5.0%

Average aircraft utilization (block hours) - 10.6 13.2 (19.8%)

Average exchange rate - 22.11 19.42 13.9%

End of period exchange rate - 22.46 19.64 14.4%

*Peso amounts were converted to U.S. dollars at end of period exchange rate forconvenience purposes only.

^(1) Includes schedule andcharter. ^(3) Dollar amounts were converted at average exchange rate of each period.

^(2) Includesschedule. ^(4) Includes "Other passenger revenues" and "Non-passenger revenues".

^(5) Excludes non-derivatives financial instruments.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Financial and Operating Indicators

Unaudited Nine months Nine months Variance ended September 30, 2020 Nine months ended ended September 30, 2020 September 30, 2019(In Mexican pesos, except otherwise indicated) (US Dollars)* (%)

Total operating revenues (millions) 627 14,074 25,023 (43.8%)

Total operating expenses (millions) 814 18,287 22,635 (19.2%)

EBIT (millions) (188) (4,213) 2,388 NA

EBIT margin (29.9%) (29.9%) 9.5% (39.4) pp

Depreciation and amortization 196 4,402 3,990 10.3%

Aircraft and engine variable lease expenses 60 1,338 769 74.1%

Net (loss) income (millions) (231) (5,191) 1,352 NA

Net (loss) income margin (36.9%) (36.9%) 5.4% (42.3) pp

(Loss) income per share:

Basic (pesos) (0.23) (5.13) 1.34 NA

Diluted (pesos) (0.23) (5.13) 1.34 NA

(Loss) income per ADS:

Basic (pesos) (2.28) (51.30) 13.36 NA

Diluted (pesos) (2.28) (51.30) 13.36 NA

Weighted average shares outstanding:

Basic - 1,011,876,677 1,011,876,677 0.0%

Diluted - 1,011,876,677 1,011,876,677 0.0%

Available seat miles (ASMs) (millions) ^(1) - 12,295 18,199 (32.4%)

Domestic - 9,140 12,549 (27.2%)

International - 3,156 5,650 (44.2%)

Revenue passenger miles (RPMs) (millions)^ (1) - 9,800 15,511 (36.8%)

Domestic - 7,307 10,983 (33.5%)

International - 2,493 4,528 (44.9%)

Load factor ^(2) - 79.7% 85.3% (5.6) pp

Domestic - 79.9% 87.5% (7.6) pp

International - 79.0% 80.2% (1.2) pp

Total operating revenue per ASM (TRASM) (cents)^ (1) (5) 5.2 116.4 137.7 (15.5%)

Total ancillary revenue per passenger^ (4) (5) 26.3 591 524 12.8%

Total operating revenue per passenger^ (5) 64.7 1,453 1,544 (5.9%)

Operating expenses per ASM (CASM) (cents)^ (1) (5) 6.7 151.4 124.6 21.5%

Operating expenses per ASM (CASM) (US cents)^ (1) (3) (5) - 6.9 6.5 7.4%

CASM ex fuel (cents)^ (1) (5) 5.0 111.2 76.8 44.8%

CASM ex fuel (US cents)^ (1) (3) (5) - 5.10 3.99 27.9%

Booked passengers (thousands) ^(1) - 9,852 16,237 (39.3%)

Departures^ (1) - 66,167 102,823 (35.6%)

Block hours^ (1) - 168,789 260,858 (35.3%)

Fuel gallons consumed (millions) - 119.9 186.6 (35.7%)

Average economic fuel cost per gallon^ (5) 1.8 41.2 46.6 (11.6%)

Aircraft at end of period - 84 80 5.0%

Average aircraft utilization (block hours) - 11.1 13.0 (14.7%)

Average exchange rate - 21.79 19.26 13.1%

End of period exchange rate - 22.46 19.64 14.4%

*Peso amounts were converted to U.S. dollars at end of period exchange rate forconvenience purposes only.

^(1) Includes schedule andcharter. ^(3) Dollar amounts were converted at average exchange rate of each period.

^(2) Includesschedule. ^(4) Includes "Other passenger revenues" and "Non-passenger revenues".

^(5) Excludes non-derivatives financial instruments.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Operations

Three monthsUnaudited Three months Variance Three months ended September 30, 2020 ended ended September 30, September 30,(In millions of Mexican pesos) (US Dollars) * 2020 (%) 2019

Operating revenues:

Passenger revenues 207 4,640 9,271 (50.0%)

Fare revenues 123 2,764 6,501 (57.5%)

Other passenger revenues 84 1,876 2,770 (32.3%)

Non-passenger revenues 11 255 260 (1.8%)

Other non-passenger revenues 9 206 208 (1.3%)

Cargo 2 49 51 (3.8%)

Non-derivatives financial instruments (8) (171) (29) >100%

Total operating revenues 210 4,724 9,502 (50.3%)

Other operating income (12) (267) (141) 89.5%

Fuel expense, net ^(1) 73 1,648 2,884 (42.8%)

Depreciation of right of use assets 57 1,278 1,186 7.7%

Landing, take-off and navigation expenses 46 1,028 1,304 (21.2%)

Sales, marketing and distribution expenses 43 964 417 >100%

Salaries and benefits 39 865 909 (4.8%)

Aircraft and engine variable lease expenses 24 537 226 >100%

Maintenance expenses 14 315 406 (22.4%)

Other operating expenses 16 352 432 (18.4%)

Depreciation and amortization 10 231 177 30.8%

Operating expenses 310 6,951 7,799 (10.9%)

Operating (loss) income (99) (2,227) 1,703 NA

Finance income 1 17 79 (79.0%)

Finance cost ^(2) (32) (730) (591) 23.5%

Exchange gain (loss), net 8 186 (173) NA

Comprehensive financing result (23) (527) (684) (22.9%)

(Loss) income before income tax (123) (2,754) 1,019 NA

Income tax benefit (expense) 26 579 (306) NA

Net (loss) income (97) (2,175) 713 NA

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

^(1) 3Q 2020 and 3Q 2019 figures include a benefit from non-derivativesfinancial instruments by an amount of Ps.153.5 million and Ps.26.4 million,respectively.

^ (2) During third quarter 2020, as a result of the capacity reduction due toCOVID-19, the Company recorded the ineffective portion related to thederivative financial instruments by an amount of Ps.19.6 million, which ispresented as part of the financial costs.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Operations

Nine monthsUnaudited Nine months ended September 30, Nine months Variance ended 2020 ended September 30, September 30,(In millions of Mexican pesos) (US Dollars) * 2020 (%) 2019

Operating revenues:

Passenger revenues 607 13,624 24,286 (43.9%)

Fare revenues 378 8,491 16,562 (48.7%)

Other passenger revenues 229 5,133 7,724 (33.5%)

Non-passenger revenues 31 688 778 (11.6%)

Other non-passenger revenues 25 555 613 (9.4%)

Cargo 6 132 165 (19.8%)

Non-derivatives financial instruments (11) (237) (40) >100%

Total operating revenues 627 14,074 25,023 (43.8%)

Other operating income (25) (568) (264) >100%

Fuel expense, net ^(1) 205 4,614 8,654 (46.7%)

Depreciation of right of use assets 167 3,752 3,522 6.5%

Landing, take-off and navigation expenses 131 2,943 3,725 (21.0%)

Salaries and benefits 110 2,470 2,648 (6.7%)

Sales, marketing and distribution expenses 67 1,506 1,038 45.0%

Aircraft and engine variable lease expenses 60 1,338 769 74.1%

Maintenance expenses 32 714 1,128 (36.7%)

Other operating expenses 39 869 948 (8.3%)

Depreciation and amortization 29 650 468 38.9%

Operating expenses 814 18,287 22,635 (19.2%)

Operating (loss) income (188) (4,213) 2,388 NA

Finance income 4 93 153 (39.0%)

Finance cost ^(2) (112) (2,523) (1,594) 58.3%

Exchange (loss) gain, net (19) (419) 985 NA

Comprehensive financing result (127) (2,849) (457) >100%

(Loss) income before income tax (314) (7,062) 1,931 NA

Income tax benefit (expense) 83 1,872 (579) NA

Net (loss) income (231) (5,191) 1,352 NA

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

^(1) 3Q YTD 2020 and 3Q YTD 2019 figures include a benefit from non-derivativesfinancial instruments by an amount of Ps.324.9 million and Ps.40.4 million,respectively.

^(2) During third quarter 2020, as a result of the capacity reduction due toCOVID-19, the Company recorded the ineffective portion related to thederivative financial instruments by an amount of Ps.448.6 million, which ispresented as part of the financial costs.

Controladora Vuela Compaa de Aviacin, S.A.B. de C.V. and SubsidiariesReconciliation of total ancillary revenue per passenger

The following table shows quarterly additional detail about the components of total ancillary revenue:

ThreeUnaudited months ended Three September months Three Variance 30, 2020 ended months September ended (%)(In millions of Mexican pesos) (US 30, 2020 September Dollars)* 30, 2019

Other passenger revenues 84 1,876 2,770 (32.3%)

Non-passenger revenues 11 255 260 (1.8%)

Total ancillary revenues 95 2,131 3,030 (29.7%)

Booked passengers (thousands) - 3,470 5,620 (38.3%)

Total ancillary revenue per passenger 27 614 539 13.9%

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

The following table shows the September YTD additional detail about the components of total ancillary revenue:

NineUnaudited months ended Nine September months Nine Variance 30, 2020 ended months September ended (%)(In millions of Mexican pesos) (US 30, 2020 September Dollars)* 30, 2019

Other passenger revenues 229 5,133 7,724 (33.5%)

Non-passenger revenues 31 688 778 (11.6%)

Total ancillary revenues 259 5,820 8,502 (31.5%)

Booked passengers (thousands) - 9,852 16,237 (39.3%)

Total ancillary revenue per passenger 26 591 524 12.8%

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only

.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Financial Position

September 30, 2020(In millions of Mexican pesos) Unaudited September 30, 2020 December 31, Unaudited 2019 Audited (US Dollars)*

Assets

Cash and cash equivalents 365 8,202 7,980

Accounts receivable 108 2,416 2,320

Inventories 11 254 302

Prepaid expenses and other current assets 36 803 781

Financial instruments - 1 134

Guarantee deposits 64 1,444 600

Total current assets 584 13,120 12,117

Rotable spare parts, furniture and equipment, net 334 7,498 7,385

Right of use assets 1,512 33,957 34,129

Intangible assets, net 7 167 167

Financial instruments - 1 3

Deferred income taxes 160 3,596 1,543

Guarantee deposits 388 8,709 7,644

Other assets 5 106 166

Other long- term assets 12 278 141

Total non-current assets 2,418 54,311 51,178

Total assets 3,003 67,430 63,295

Liabilities

Unearned transportation revenue 293 6,572 3,680

Accounts payable 120 2,700 1,656

Accrued liabilities 105 2,359 2,532

Lease liabilities 334 7,498 4,721

Other taxes and fees payable 106 2,383 2,102

Income taxes payable - 2 141

Financial instruments 19 429 -

Financial debt 104 2,328 2,086

Other liabilities 3 75 407

Total short-term liabilities 1,084 24,346 17,324

Financial debt 155 3,486 2,890

Accrued liabilities 3 70 91

Lease liabilities 1,875 42,096 35,797

Other liabilities 117 2,638 1,470

Employee benefits 2 46 38

Deferred income taxes 7 156 156

Total long-term liabilities 2,159 48,493 40,441

Total liabilities 3,243 72,839 57,765

Equity

Capital stock 132 2,974 2,974

Treasury shares (9) (198) (170)

Contributions for future capital increases - - -

Legal reserve 13 291 291

Additional paid-in capital 82 1,839 1,880

Retained (losses) earnings (212) (4,752) 438

Accumulated other comprehensive income (losses) ^(1) (248) (5,562) 116

Total equity (241) (5,409) 5,530

Total liabilities and equity 3,003 67,430 63,295

Total shares outstanding fully diluted 1,011,876,677 1,011,876,677

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

^(1) As of September 30, 2020 and as of December 31, 2019 the figures include anegative foreign exchange effect of Ps.5,265 million and a positive foreignexchange effect of Ps.14 million, respectively, related to non-derivativesfinancial instruments.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and Subsidiaries

Consolidated Statement of Cash Flows - Cash Flow Data Summary

Three Three monthsUnaudited months Three ended September months ended 30, 2020 ended September 30, 2020 September 30, 2019(In millions of Mexican pesos) (US Dollars)*

Net cash flow (used in) generated by operating activities (5) (113) 2,207

Net cash flow used in investing activities (8) (179) (1,072)

Net cash flow used in financing activities** (60) (1,357)^ (1,606)

Decrease in cash and cash equivalents (73) (1,649) (470)

Net foreign exchange differences (7) (163) 156

Cash and cash equivalents at beginning of period 446 10,013 8,124

Cash and cash equivalents at end of period 365 8,202 7,810

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

**Includes aircraft rental payments of Ps.1,724 million and Ps.1,657 millionfor the three months ended period September 30, 2020 and 2019, respectively.



Nine Unaudited months Nine months Nine ended ended September months September 30, 2020 ended 30, 2020 September 30, 2019(In millions of Mexican pesos) (US Dollars)*

Net cash flow generated by operating activities 146 3,290 7,465

Net cash flow used in investing activities (6) (145) (1,280)

Net cash flow used in financing activities** (196) (4,405)^ (4,239)

(Decrease) increase in cash and cash equivalents (56) (1,260) 1,946

Net foreign exchange differences 66 1,482 453

Cash and cash equivalents at beginning of period 355 7,980 5,863

Cash and cash equivalents at end of period 365 8,202 7,810

* Peso amounts were converted to U.S. dollars at end of period exchange ratefor convenience purposes only.

**Includes aircraft rental payments of Ps.4,350 million and Ps.4,787 millionfor the nine months ended period September 30, 2020 and 2019, respectively.

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SOURCE Volaris