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2020 results: Operating Margin at 12%; CASM ex-fuel at $4.13 U.S. dollar cents; Strong Balance Sheet and Sound Business Model


PR Newswire | Feb 18, 2021 10:47PM EST

2020 results: Operating Margin at 12%; CASM ex-fuel at $4.13 U.S. dollar cents; Strong Balance Sheet and Sound Business Model

02/18 21:46 CST

Volaris, the Lowest Cost Public Airline in the Americas reports fourth quarter 2020 results: Operating Margin at 12%; CASM ex-fuel at $4.13 U.S. dollar cents; Strong Balance Sheet and Sound Business Model MEXICO CITY, Feb. 18, 2021

MEXICO CITY, Feb. 18, 2021 /PRNewswire/ -- Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States of America and Central America, today announces its financial results for the fourth quarter 2020.

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

Fourth Quarter 2020 Highlights

During the fourth quarter of 2020, Volaris continued reinforcing its strategy to navigate the uncertainties of the SARS-CoV-2 (COVID-19) pandemic, focusing on its financial strength, cost reduction, liquidity preservation, capacity recovery and taking advantage of market opportunities.

For the fourth quarter, the Company posted an operating margin of 11.9%. Volaris continued to implement cost reduction initiatives and achieved a reduction in operating expenses per available seat mile in U.S. dollars of 8.7% as compared to 2019.

On December 11, 2020, the Company concluded an upsized, primary follow-on equity offering of 134,000,000 of its Ordinary Participation Certificates (Certificados de Participacin Ordinarios), or CPOs, in the form of American Depositary Shares, or ADSs, at a price to the public of U.S.$11.25 per ADS in the United States of America and other countries outside Mexico, pursuant to the Company's shelf registration statement filed with the Securities and Exchange Commission. In connection with the offering, the underwriters exercised their option to purchase up to 20,100,000 additional CPOs in the form of ADSs. The Company received net proceeds of approximately U.S.$164 million dollars, which it will use for general corporate purposes. Volaris ended the fourth quarter of 2020 with Ps.$10,103 million in cash and cash equivalents and total equity of Ps.2,796 million.

During the fourth quarter, the Company was able to ramp up service (ASMs) to 94.9% when compared to the same period of the prior year. The domestic market led the capacity recovery, where Volaris operated 99.1% ASMs versus the same period in 2019. In the international market, Volaris operated 85.5% ASMs compared to the same period in 2019. During the fourth quarter 2020, Volaris began operations on two new domestic and seven new international routes.

During 2020, Volaris carried more than 14.7 million passengers after successfully implementing its biosecurity protocol in April 2020.

The main results for the fourth quarter are described as follows:

* Total operating revenues were Ps.8,086 million for the fourth quarter, a decrease of 16.9% year over year. * Total ancillary revenues were Ps.3,877 million for the fourth quarter, an increase of 21.4% year over year. Total ancillary revenues per passenger for the fourth quarter reached Ps.798, an increase of 43.3% year over year. Total ancillary revenues represented 48.0% of total operating revenues for the fourth quarter 2020, increasing 15.2 percentage points with respect to the same period of last year. * Total operating revenues per available seat mile (TRASM) were Ps.138.1 cents for the fourth quarter, a decrease of 10.9% year over year. * Operating expenses per available seat mile (CASM) were Ps.120.6 cents for the fourth quarter, a decrease of 2.3% year over year, with an average economic fuel cost per gallon of Ps.37.2 for the fourth quarter, a decrease of 18.8% year over year. * Operating expenses per available seat mile excluding fuel, (CASM ex-fuel) were Ps.85.3 cents for the fourth quarter, an increase of 12.2% year over year, with an average exchange rate depreciation of the Mexican peso against the U.S. dollar of 7.0% year over year. * Operating income was Ps.960 million for the fourth quarter, a decrease of 51.2% compared with the same period of last year. Operating margin for the fourth quarter was 11.9%, a decrease of 8.4 percentage points year over year. * Net income was Ps.897 million (Ps.0.85 earnings per share / U.S.$0.43 earnings per ADS), a net margin of 11.1% for the fourth quarter. * At the close of the fourth quarter, the Mexican peso appreciated 11.2% against the U.S. dollar (Ps.19.95 per U.S. dollar) with respect to the exchange rate at the close of the previous quarter (Ps.22.46 per U.S. dollar). The Company booked a net foreign exchange gain of Ps.1,048 million derived from its U.S. dollar net monetary liability position. During the fourth quarter of 2020, the net cash flow generated by operating activities was Ps.1,551 million. The net cash flow generated by investing activities was Ps.77 million. The net cash flow generated by financing activities was Ps.883 million, which included Ps.2,242 million of aircraft rental payments. The negative net foreign exchange difference was Ps.609 million. As a result, there was a net increase in cash and cash equivalents in the fourth quarter of Ps.1,901 million. As of December 31, 2020, cash and cash equivalents were Ps.10,103 million. * Despite the progress made in the fourth quarter 2020, there remain significant challenges in the current period with COVID-19 case counts increasing in both Mexico and the USA. Historically, the first quarter of any year tends to be a challenging quarter for airlines and in the context of the COVID-19 pandemic, it is even more so. For the first quarter 2021, the Company expects weakness in demand and booking curves to compress. Volaris operates approximately 30% of its network from Mexico to the USA and expects a short-term reduction in demand for cross border flights as a result of recent USA regulations requiring international passengers arriving to the USA to have completed a negative COVID-19 test not more than 72 hours prior to departure. As a result, the Company's network plans for the first quarter of 2021 will be more conservative, focused on deploying appropriate levels of capacity to align with the changing demand environment. At present, Volaris intends to operate approximately 80% of capacity as compared to the same period of last year, as measured by ASMs. This still represents a strong capacity comeback from the COVID-19 pandemic as compared to the global industry, which is currently operating at 56% of capacity compared to the previous year. Nonetheless, as the first quarter is still in progress, Volaris cannot offer any assurance as to how actual results will compare to the expected results mentioned herein.

Fuel Price reduction and Peso Depreciation

* Fuel price reduction: The average economic fuel cost per gallon decreased 18.8% in the fourth quarter of 2020, year over year, to Ps.37.2 per gallon (U.S.$1.9). * Peso depreciation: The Mexican peso depreciated 7.0% against the U.S. dollar year over year, from an average exchange rate of Ps.19.28 per U.S. dollar in the fourth quarter of 2019 to Ps.20.63 per U.S. dollar during the fourth quarter of 2020. At the end of the fourth quarter of 2020, the Mexican peso (Ps.19.95 per U.S. dollar) depreciated 5.9% with respect to the exchange rate at the end of the same period of the last year (Ps.18.85 per U.S. dollar).

Passenger Traffic Contraction, Ancillary Revenue Growth and Increased Route Network

* Passenger traffic contraction: Volaris had 4.9 million booked passengers in the fourth quarter of 2020, a decrease of 15.3% year over year. Volaris traffic (measured in revenue passenger miles, or RPMs) decreased 13.1% year over year. System load factor during the fourth quarter decreased 7.4 percentage points year over year to 80.2%. * Total ancillary revenue growth: For the fourth quarter of 2020, total ancillary revenue and total ancillary revenue per passenger increased 21.4% and 43.3% year over year, respectively. The total ancillary revenue generation continues to grow with new and mature products, focusing on customers' needs, and represents 48.0% of total operating revenue of the fourth quarter, an increase of 15.2 percentage points year over year. * TRASM decrease: For the fourth quarter of 2020, TRASM decreased 10.9% year over year. During the fourth quarter of 2020, the total capacity, measured by ASMs, decreased 5.1% year over year. * New routes: During the fourth quarter of 2020, Volaris began operations in two new domestic routes and seven new international routes. In the domestic market: 1) Mexico City to Campeche, Campeche; and 2) Cancun, Quintana Roo to Oaxaca, Oaxaca. In the international market: 1) Mexico City to Dallas, Texas; 2) Mexico City to Houston, Texas; 3) Mexico City to Fresno, California; 4) Mexico City to Ontario, California; 5) Mexico City to San Jose, California; 6) Mexico City to Sacramento, California; and 7) Morelia, Michoacn to Chicago O?Hare, Illinois.

Total Unit Cost Increase and Peso Depreciation

* CASM and CASM ex fuel in the fourth quarter of 2020 was Ps.120.6 (U.S.$6.04 cents) and Ps.85.3 cents (U.S.$4.27), respectively. This represented a decrease of 2.3% for CASM and an increase of 12.2% for CASM ex fuel, year over year, mainly driven by the capacity reduction measured in available seat miles (ASMs), and the depreciation of the Mexican peso against the U.S. dollar by 7.0%.

Young and Fuel-Efficient Fleet

* During the fourth quarter of 2020, the Company returned one A319 aircraft and incorporated three new A320 NEO aircraft into its fleet. As of December 31, 2020, Volaris' fleet comprised 86 aircraft (6 A319s, 64 A320s and 16 A321s), with an average age of 5.3 years. At the end of the fourth quarter of 2020, Volaris' fleet had an average of 188 seats per aircraft, 79% of our aircraft were sharklet-equipped, and 35% were NEOs.

Solid Balance Sheet and Liquidity with Net Cash Flow Generated by Operating Activities

* As of December 31, 2020, cash and cash equivalents were Ps.10,103 million, representing 45.6% of last twelve months operating revenue. Volaris registered a negative net debt (or a positive net cash position) of Ps.4,749 million (excluding the lease liability recognized under IFRS16) and total equity of Ps.2,796 million. * During the fourth quarter of 2020, the net cash flow generated by operating activities was Ps.1,551 million. The net cash flow generated by investing activities was Ps.77 million. The net cash flow generated by financing activities was Ps.883 million, which included Ps.2,242 million of aircraft rental payments. The negative net foreign exchange difference was Ps.609 million. As a result, there was a net increase of cash and cash equivalents in the fourth quarter of Ps.1,901 million.

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 fourth quarter 2020, the impact of these hedges was Ps.174 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 fourth quarter 2020, the impact of these hedges was Ps.84 million, which is included 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 affects the result of the period. As of December 31, 2020, OCI includes a negative foreign exchange impact of Ps.1,577 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 Mr. Enrique Beltranena, President & CEOCompany:

Mr. Holger Blankenstein, Airline Commercial and Operation EVP

Mr. Jaime Pous, Chief Legal Officer and Corporate Affairs SVP and Interim CFO

Date: Friday, February 19, 2021

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 in: + 1-785-424-1726

Participant passcode: VOLARIS

Webcast will be https://services.choruscall.com/links/available at: vlrs210219KKfUd2nS.html

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 177 and its fleet from four to 87 aircraft. Volaris offers more than 337 daily flight segments on routes that connect 43 cities in Mexico and 25 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 SubsidiariesFinancial and Operating Indicators

Three months Three months Three monthsUnaudited ended December ended ended December Variance 31, 2020 December 31, 31, 2019

(In Mexican pesos, except otherwise indicated) (US Dollars)* 2020 (%)

Total operating revenues (millions) 405 8,086 9,729 (16.9%)

Total operating expenses (millions) 357 7,126 7,762 (8.2%)

EBIT (millions) 48 960 1,967 (51.2%)

EBIT margin 11.9% 11.9% 20.2% (8.3) pp

Depreciation and amortization 77 1,546 1,389 11.3%

Aircraft and engine variable lease expenses 25 507 193 >100%

Net income (millions) 45 897 1,287 (30.3%)

Net income margin 11.1% 11.1% 13.2% (2.1) pp

Earnings per share:

Basic (pesos) 0.04 0.85 1.27 (32.9%)

Diluted (pesos) 0.04 0.85 1.27 (32.9%)

Earnings per ADS:

Basic (pesos) 0.43 8.54 12.72 (32.9%)

Diluted (pesos) 0.43 8.54 12.72 (32.9%)

Weighted average shares outstanding:

Basic - 1,050,401,677 1,011,876,677 3.8%

Diluted - 1,050,401,677 1,011,876,677 3.8%

Available seat miles (ASMs) (millions) ^(1) - 5,979 6,300 (5.1%)

Domestic - 4,307 4,343 (0.8%)

International - 1,673 1,957 (14.5%)

Revenue passenger miles (RPMs) (millions)^ (1) - 4,797 5,521 (13.1%)

Domestic - 3,594 3,888 (7.6%)

International - 1,203 1,633 (26.3%)

Load factor ^(2) - 80.2% 87.6% (7.4) pp

Domestic - 83.5% 89.5% (6.0) pp

International - 71.9% 83.5% (11.6) pp

Total operating revenue per ASM (TRASM) (cents)^ (1) (5) 6.9 138.1 155.0 (10.9%)

Total ancillary revenue per passenger^ (4) (5) 40.0 798 557 43.3%

Total operating revenue per passenger^ (5) 85.2 1,699 1,701 (0.1%)

Operating expenses per ASM (CASM) (cents)^ (1) (5) 6.04 120.6 123.5 (2.3%)

Operating expenses per ASM (CASM) (US cents)^ (1) (3) (5) - 5.84 6.40 (8.7%)

CASM ex fuel (cents)^ (1) (5) 4.27 85.3 76.0 12.2%

CASM ex fuel (US cents)^ (1) (3) (5) - 4.13 3.94 4.8%

Booked passengers (thousands) ^(1) - 4,861 5,738 (15.3%)

Departures^ (1) - 31,652 35,261 (10.2%)

Block hours^ (1) - 80,163 89,714 (10.6%)

Fuel gallons consumed (millions) - 56.8 65.2 (13.0%)

Average economic fuel cost per gallon^ (5) 1.9 37.2 45.8 (18.8%)

Aircraft at end of period - 86 82 4.9%

Average aircraft utilization (block hours) - 11.8 12.8 (7.8%)

Average exchange rate - 20.63 19.28 7.0%

End of period exchange rate - 19.95 18.85 5.9%

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

^(1) Includes schedule andcharter. ^(3) Dollaramounts 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 SubsidiariesFinancial and Operating Indicators

Twelve monthsUnaudited Twelve months Twelve months Variance ended December ended ended 31, 2020

(In Mexican pesos, except otherwise indicated) (US Dollars)* December 31, December 31, (%) 2020 2019

Total operating revenues (millions) 1,111 22,160 34,753 (36.2%)

Total operating expenses (millions) 1,274 25,413 30,397 (16.4%)

EBIT (millions) (163) (3,254) 4,355 NA

EBIT margin (14.7%) (14.7%) 12.5% (27.2) pp

Depreciation and amortization 298 5,947 5,378 10.6%

Aircraft and engine variable lease expenses 93 1,845 962 91.9%

Net (loss) income (millions) (215) (4,294) 2,639 NA

Net (loss) income margin (19.4%) (19.4%) 7.6% (27.0) pp

(Loss) income per share:

Basic (pesos) (0.21) (4.20) 2.61 NA

Diluted (pesos) (0.21) (4.20) 2.61 NA

(Loss) income per ADS:

Basic (pesos) (2.11) (42.03) 26.08 NA

Diluted (pesos) (2.11) (42.03) 26.08 NA

Weighted average shares outstanding:

Basic - 1,021,560,557 1,011,876,677 1.0%

Diluted - 1,021,560,557 1,011,876,677 1.0%

Available seat miles (ASMs) (millions) ^(1) - 18,275 24,499 (25.4%)

Domestic - 13,446 16,891 (20.4%)

International - 4,829 7,607 (36.5%)

Revenue passenger miles (RPMs) (millions)^ (1) - 14,597 21,032 (30.6%)

Domestic - 10,900 14,871 (26.7%)

International - 3,696 6,162 (40.0%)

Load factor ^(2) - 79.9% 85.9% (6.0) pp

Domestic - 81.1% 88.0% (6.9) pp

International - 76.6% 81.0% (4.4) pp

Total operating revenue per ASM (TRASM) (cents)^ (1) (5) 6.2 123.5 142.2 (13.1%)

Total ancillary revenue per passenger^ (4) (5) 33.0 659 532 23.9%

Total operating revenue per passenger^ (5) 76.9 1,534 1,585 (3.2%)

Operating expenses per ASM (CASM) (cents)^ (1) (5) 7.1 141.3 124.3 13.7%

Operating expenses per ASM (CASM) (US cents)^ (1) (3) (5) - 6.6 6.5 1.9%

CASM ex fuel (cents)^ (1) (5) 5.1 102.7 76.6 34.1%

CASM ex fuel (US cents)^ (1) (3) (5) - 4.78 3.98 20.1%

Booked passengers (thousands) ^(1) - 14,712 21,975 (33.1%)

Departures^ (1) - 97,819 138,084 (29.2%)

Block hours^ (1) - 248,952 350,572 (29.0%)

Fuel gallons consumed (millions) - 176.6 251.8 (29.8%)

Average economic fuel cost per gallon^ (5) 2.0 39.9 46.4 (14.0%)

Aircraft at end of period - 86 82 4.9%

Average aircraft utilization (block hours) - 11.3 12.9 (12.7%)

Average exchange rate - 21.50 19.26 11.6%

End of period exchange rate - 19.95 18.85 5.9%

*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 SubsidiariesConsolidated Statement of Operations

Three months Three monthsUnaudited Three months Variance ended December ended ended 31, 2020

December 31, December 31,(In millions of Mexican pesos) (US Dollars) * (%) 2020 2019

Operating revenues:

Passenger revenues 394 7,863 9,414 (16.5%)

Fare revenues 220 4,382 6,568 (33.3%)

Other passenger revenues 174 3,481 2,846 22.3%

Non-passenger revenues 20 397 349 13.7%

Other non-passenger revenues 16 327 285 14.8%

Cargo 3 70 64 8.8%

Non-derivatives financial instruments (9) (174) (33) >100%

Total operating revenues 405 8,086 9,729 (16.9%)

Other operating income (8) (162) (63) >100%

Fuel expense, net ^(1) 102 2,027 2,972 (31.8%)

Depreciation of right of use assets 65 1,297 1,181 9.8%

Landing, take-off and navigation expenses 58 1,148 1,384 (17.0%)

Sales, marketing and distribution expenses 17 335 409 (18.1%)

Salaries and benefits 49 983 953 3.2%

Aircraft and engine variable lease expenses 25 507 193 >100%

Maintenance expenses 23 454 360 26.0%

Other operating expenses 14 288 165 74.6%

Depreciation and amortization 12 249 208 19.7%

Operating expenses 357 7,126 7,762 (8.2%)

Operating income 48 960 1,967 (51.2%)

Finance income - 8 36 (76.8%)

Finance cost (33) (654) (656) (0.4%)

Exchange gain, net 53 1,048 456 >100.0%

Comprehensive financing result 20 403 (164) NA

Income before income tax 68 1,362 1,803 (24.4%)

Income tax expense (23) (465) (516) (9.7%)

Net income 45 897 1,287 (30.3%)

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

^(1) 4Q 2020 and 4Q 2019 figures include a benefit from non-derivativesfinancial instruments by an amount of Ps.84.2 million and Ps.16.7 million,respectively.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and SubsidiariesConsolidated Statement of Operations

Twelve months Twelve TwelveUnaudited ended December 31, months months Variance

2020 ended ended

December 31, December 31,(In millions of Mexican pesos) (US Dollars) * (%) 2020 2019

Operating revenues:

Passenger revenues 1,077 21,487 33,699 (36.2%)

Fare revenues 645 12,873 23,130 (44.3%)

Other passenger revenues 432 8,613 10,569 (18.5%)

Non-passenger revenues 54 1,084 1,126 (3.7%)

Other non-passenger revenues 44 882 898 (1.7%)

Cargo 10 202 229 (11.8%)

Non-derivatives financial instruments (21) (411) (73) >100%

Total operating revenues 1,111 22,160 34,753 (36.2%)

Other operating income (37) (730) (327) >100%

Fuel expense, net ^(1) 333 6,641 11,626 (42.9%)

Depreciation of right of use assets 253 5,049 4,703 7.4%

Landing, take-off and navigation expenses 205 4,091 5,108 (19.9%)

Salaries and benefits 173 3,453 3,601 (4.1%)

Sales, marketing and distribution expenses 92 1,841 1,448 27.2%

Aircraft and engine variable lease expenses 93 1,845 962 91.9%

Maintenance expenses 59 1,168 1,488 (21.5%)

Other operating expenses 58 1,157 1,113 4.0%

Depreciation and amortization 45 898 676 33.0%

Operating expenses 1,274 25,413 30,397 (16.4%)

Operating (loss) income (163) (3,254) 4,355 NA

Finance income 5 102 208 (51.1%)

Finance cost ^(2) (159) (3,177) (2,270) 40.0%

Exchange gain, net 32 629 1,441 (56.3%)

Comprehensive financing result (123) (2,446) (622) >100%

(Loss) income before income tax (286) (5,700) 3,734 NA

Income tax benefit (expense) 70 1,406 (1,095) NA

Net (loss) income (215) (4,294) 2,639 NA

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

^(1) 4Q YTD 2020 and 4Q YTD 2019 figures include a benefit from non-derivativesfinancial instruments by an amount of Ps.409.2 million and Ps.57.0million, respectively.

^(2) During fourth 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 Compa??a de Aviaci?n, S.A.B. de C.V. and SubsidiariesReconciliation of total ancillary revenue per passenger

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

ThreeUnaudited months Three Three ended months months December ended ended Variance 31, December December 2020 31, 31, (%)(In millions of Mexican pesos) 2020 2019 (US Dollars)*

Other passenger revenues 174 3,481 2,846 22.3%

Non-passenger revenues 20 397 349 13.7%

Total ancillary revenues 194 3,877 3,195 21.4%

Booked passengers (thousands) - 4,861 5,738 (15.3%)

Total ancillary revenue per 40 798 557 43.3%passenger

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

The following table shows the December YTD additional detail about thecomponents of total ancillary revenue:

TwelveUnaudited months Twelve Twelve ended months months December ended ended Variance 31, December December 2020 31, 31, (%)(In millions of Mexican pesos) 2020 2019 (US Dollars)*

Other passenger revenues 432 8,613 10,569 (18.5%)

Non-passenger revenues 54 1,084 1,126 (3.7%)

Total ancillary revenues 486 9,698 11,696 (17.1%)

Booked passengers (thousands) - 14,712 21,975 (33.1%)

Total ancillary revenue per 33 659 532 23.9%passenger

* 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 SubsidiariesConsolidated Statement of Financial Position

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

Assets

Cash and cash equivalents 506 10,103 7,980

Accounts receivable 121 2,417 2,320

Inventories 14 279 302

Prepaid expenses and other current assets 25 492 781

Financial instruments - - 134

Guarantee deposits 57 1,142 600

Total current assets 724 14,434 12,117

Rotable spare parts, furniture and equipment, net 365 7,281 7,385

Right of use assets 1,720 34,316 34,129

Intangible assets, net 10 192 167

Financial instruments - - 3

Deferred income taxes 157 3,129 1,543

Guarantee deposits 422 8,425 7,644

Other assets 6 119 166

Other long- term assets 16 325 141

Total non-current assets 2,696 53,787 51,178

Total assets 3,420 68,221 63,295

Liabilities

Unearned transportation revenue 293 5,851 3,680

Accounts payable 120 2,396 1,656

Accrued liabilities 117 2,333 2,532

Lease liabilities 342 6,828 4,721

Other taxes and fees payable 112 2,236 2,102

Income taxes payable - 4 141

Financial instruments - 10 -

Financial debt 79 1,566 2,086

Other liabilities 5 101 407

Total short-term liabilities 1,069 21,326 17,324

Financial debt 190 3,789 2,890

Accrued liabilities 3 67 91

Lease liabilities 1,871 37,325 35,797

Other liabilities 134 2,668 1,470

Employee benefits 3 51 38

Deferred income taxes 10 200 156

Total long-term liabilities 2,211 44,099 40,441

Total liabilities 3,280 65,424 57,765

Equity

Capital stock 172 3,426 2,974

Treasury shares (11) (224) (170)

Contributions for future capital increases - - -

Legal reserve 15 291 291

Additional paid-in capital 237 4,721 1,880

Retained (losses) earnings (193) (3,855) 438

Accumulated other comprehensive income (losses) ^(1) (78) (1,562) 116

Total equity 140 2,796 5,530

Total liabilities and equity 3,420 68,221 63,295

Total shares outstanding fully diluted 1,165,976,677 1,011,876,677

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

^(1) As of December 31, 2020 and as of December 31, 2019 the figures include anegative foreign exchange effect of Ps.1,577 million and a positiveforeign exchange effect of Ps.14 million, respectively, related tonon-derivatives financial instruments.

Controladora Vuela Compa??a de Aviaci?n, S.A.B. de C.V. and SubsidiariesConsolidated Statement of Cash Flows - Cash Flow Data Summary

Three months Three monthsUnaudited ended December Three months 31, 2020 ended December ended December 31, 2020 31, 2019(In millions of Mexican pesos) (US Dollars)*

Net cash flow generated by operating activities 78 1,551 2,268

Net cash flow generated by (used in) investing activities 4 77 (823)

Net cash flow generated by (used in) financing activities** 44 883 (1,000)

Increase in cash and cash equivalents 126 2,511 445

Net foreign exchange differences (31) (609) (275)

Cash and cash equivalents at beginning of period 411 8,202 7,810

Cash and cash equivalents at end of period 506 10,103 7,980

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

**Includes aircraft rental payments of Ps.2,242 million and Ps.1,713 millionfor the three months ended period December 31, 2020 and 2019,respectively.

Twelve monthsUnaudited ended December Twelve months Twelve months 31, 2020 ended December ended December 31, 2020 31, 2019(In millions of Mexican pesos) (US Dollars)*

Net cash flow generated by operating activities 243 4,840 9,510

Net cash flow used in investing activities (3) (68) (1,879)

Net cash flow used in financing activities** (177) (3,522) (5,239)

Increase in cash and cash equivalents 63 1,251 2,391

Net foreign exchange differences 44 873 (274)

Cash and cash equivalents at beginning of period 400 7,980 5,863

Cash and cash equivalents at end of period 506 10,103 7,980

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

**Includes aircraft rental payments of Ps.6,591 million and Ps.6,500 millionfor the twelve months ended period December 31, 2020 and 2019,respectively.

View original content: http://www.prnewswire.com/news-releases/volaris-the-lowest-cost-public-airline-in-the-americas-reports-fourth-quarter-2020-results-operating-margin-at-12-casm-ex-fuel-at-4-13-us-dollar-cents-strong-balance-sheet-and-sound-business-model-301231458.html

SOURCE Volaris






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