The Leading Ultra-Low-Cost Airline Serving
Mexico and the US
December 2014
Disclaimer
The information ("Confidential Information") contained in this presentation is confidential and is provided by Controladora
Vuela Compañía de Aviación, S.A.B. de C.V., (d/b/a Volaris, the "Company") confidentially to you solely for your reference
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similar meaning. Such forward-looking statements are not guarantees of future performance and actual results may differ
significantly from those in the forward-looking statements as a result of various factors and assumptions. You are cautioned
not to place undue reliance on these forward looking statements, which are based on the current view of the management of
the Company on future events. The Company does not undertake to revise forward-looking statements to reflect future
events or circumstances.
2
Third quarter 2014 highlights and recent developments
Focused on international growth and domestic capacity
discipline: 3Q14 Domestic ASMs 3% growth, resulting in
yield stabilization. International ASMs growth for the same
period was 18%, responding to a stronger fare and demand
environment
Unit revenue improvement: 3Q14 TRASM increased 1% yo-y, with stable yield and non-ticket revenues expansion
Non-ticket revenues growth: 3Q14 Non-ticket revenues
ex-cargo per passenger increased 58% y-o-y (44% including
cargo). Ramping-up new products and services, while
increasing customer acceptance
Cost control: 3Q14 CASM(1) at USD 8.9 cents, lowest unit
cost producer in the Americas
Notes:
(1) Converted to USD at an average exchange rate corresponding for the period, $13.1114
3
Volaris – a Mexican Ultra-Low-Cost Carrier
Serving 54 destinations throughout Mexico and the US
2008
Unit cost
(CASM ex-fuel;
cents, USD)(1)
2013
Volaris’ destinations
CAGR
Portland
5.5
5.5
0.0%
Fresno
Passenger
demand
(RPMs, bn)
3.2
9.0
+23.0%
Chicago/Midway/O’Hare
Sacramento
San Francisco/Oakland
Reno
San Jose
Los Angeles
San Diego
Denver
Las Vegas
LTM Int. Pax
Revenue 27%
Ontario
Mexicali
Phoenix
Tijuana
Ciudad Juárez
Aircraft
(End of Period)
21
44
+15.9%
Passengers
(mm)(2)
3.5
8.9
+20.5%
LTM Dom. Pax
Revenue 73%
Orlando
Hermosillo
San Antonio
Chihuahua
Ciudad Obregón
Monterrey
Los Mochis
La Paz
Fort Lauderdale (Miami)
Culiacán Zacatecas
Tampico
San Luis Potosí
Mazatlán León
Aguascalientes
Mérida
Tepic
Cancún
Querétaro
Guadalajara
Morelia
Puerto Vallarta
Cd. de México/D.F.
Colima
Veracruz
Toluca
Villahermosa
Puebla
Uruapan
Tuxtla Gutiérrez
Acapulco Oaxaca
Tapachula
Huatulco
Los Cabos
Operating
revenue
(mm, USD)(1)
397
Adj. EBITDAR
(mm. USD)(1)
67
Adj. ROIC (pretax)
1,018 +20.7%
220
+26.8%
Domestic market share(3)
11.0% 15.1% +4.1pp
Notes:
(1) Converted to USD at an average annual exchange rate
(2) Corresponds to the number of booked passengers
(3) Based on number of passengers
Source: Company data, SCT-DGAC
12,2%
2008
20,7%
22,7%
23,1%
2012
2013
Oct YTD
2014
4
Volaris’ low base fares stimulate demand and drive
sustainable profitable growth
Since launch, Volaris has stimulated new demand in the Mexican market
through an aggressive revenue management strategy
Lower
base
fares
Lower
cost
Stimulation
of
demand
Resilient ULCC
business model
driving high,
profitable growth
More
ancillary
revenue
More
capacity
5
Volaris’ ULCC business model is differentiated from legacies,
hybrids and other LCCs
Aeromexico
Interjet
VivaAerobus
Volaris




14.0
14.2
9.0
8.9
Low ticket prices 3Q14

≈


Average Fare (USD)(1)
171.8
104.5
71.1
94.1




4.9
4.1
-
19.9

≈


9.8 (2)
6.0 (2)
20.6 (2)
4.3
High daily utilization




Block hours per day
11.6
8.8
9.4
12.5
Other/ eg. (No GDS)

≈


CASM 3Q14
(cents, USD)(1)
Non-ticket rev. exc. Cargo 3Q14
Non-ticket rev. exc. Cargo per pax
(USD)(1)
Modern Fleet
Average age fleet (years)
Legacy < Hybrid/LCC < ULCC
Notes;
(1) Converted to USD at an average exchange rate corresponding for the period, $13.1114
(2) Figures updated as per DGAC report as of June 2014.
Source: Company data, data airlines public information, DGAC reports, MI DIIO
6
Volaris has a the lowest unit cost structure
Lowest unit cost in the Americas(1)
CASM and CASM ex-fuel (September YTD 2014, USD cents)(3)
15.2
15.1
13.9
13.6
13.3
4,5
5,2
4,8
4,7
5,5
10.6
10.6
10.0
8.9
4,1
4,5
4,0
3,5
9,9
10,6
9,1
8,5
8,0
6,5
6,0
6,0
Copa
Allegiant
Spirit
5,4
LatAm
Aeromexico
Gol
Interjet
Latin American Carriers
Denotes fuel
cost per ASM
Best-In-Class
US LCCs
Notes:
(1) Based on CASM among the publicly-traded airlines
(2) DCOMPS= Direct Competitors: Average CASM and CASM ex-fuel; US network carriers include: Delta, United, Alaska Airlines, American Airlines
(3) Non-USD data converted to USD at an average exchange rate corresponding for the period, $13.1167
Source: Company data, Airlines public information
DCOMPS
US Network
Carriers(2)
7
Efficiency and high asset utilization drive lower costs and
higher revenue
High density configuration(3)
Load factor Implied passengers
(Sept YTD 2014)
per aircraft(1)
Volaris A320
174 seats per aircraft
Aeromexico 737-800
160 seats per aircraft
Interjet A320
150 seats per aircraft
82%
143
Aeromexico
80%
128
Interjet
72%
108
High daily utilization(3)
Young, fuel efficient fleet (3)
Block hours per day (September YTD 2014) (2)
Average age (Yrs, September YTD 2014)
12.4
10,3
11.4
9.4
8,7
8,8
8,1
6,0
4.3
Aeromexico
Interjet
Global
A320
Global
A319
Mexican (4)
average
Aeromexico (4)
Interjet (4)
Notes:
(1) Implied passengers per aircraft is calculated as available seats per aircraft multiplied by the load factor
(2) Block hours per day calculated as ((Total block hours for the period / Monthly average number of aircraft) / Number of days for the period)
(3) Aeromexico and Interjet represent domestic competitors of Volaris
(4) Fleet average age updated as per DGAC report as of June 2014
Source: Company data, airlines public information, DGAC, Airbus, miDiio
8
Bus passenger shift to air travel
Significant upside for air travel
Total bus trips
(mm)
Air travel time and cost savings
Total air travel trips
(mm)
Mexico City – Tijuana
Travel time (Hrs)
2,781
145
40.5
36.5 hours less
2,706
Fare (USD)(2,3)
24% cost savings
110
60
75
4,0
30
30
2013
First, economy
and other
2013
International
Domestic
Bus
(1)
Air
Bus (1)
• Mexico is almost three times the size of the state of Texas
• The distance between Tijuana and Cancún is similar to the
distance between New York City and San Francisco
Notes:
(1) Executive and luxury class
(2) Fare figures calculated with average prices for September 2014
(3) Non-USD data converted to USD at an average exchange rate corresponding for the period
Source: Company data, Secretaría de Comunicaciones y Transportes (SCT)
9
Unbundled strategy: “Tú decides” – You decide
Pre-flight(1)
• V-Club
subscription
(94k active
suscriptions)
• Co-branded
credit cards
(80k active
cardholders)
• Manage my
booking
Flight
planning
At the
airport
• Seat
assignment
• Excess
baggage
• Change /
booking fees
• Checked
bag limited
to 1 piece
(25kgs.)
• Insurance
• Packages
•Additional forms
of payment
• VEmpresa
Onboard
aircraft
• Advertising
• Food and
beverage
Post-flight
• Hotel
rooms
• Car rentals
• Airport
shuttle
• Carry-on
(oversized)
• Strollers
• Priority
boarding
• Check-in
Notes:
(1) V-Club & Co-branded credit cards figures as of September 30 th,2014
10
Acceleration of Volaris’ non-ticket revenues
Increased contribution of non-ticket revenue to the top line
Non-ticket revenue
(USD mm)(1)
2009 – 2013 CAGR: +57.6%
Contribution
to Operating
Revenue
148
181
115
68
39
24
2009
2010
2011
7%
7%
9%
2012
13%
2013
LTM Sep 14
18%
14%
Non-ticket revenue per passenger
Best-in class US LCC’s
(3Q14, USD)
Volaris (USD)(1)
54
45
2009 – 2013 CAGR: +24.0%
7,0
8,9
2009
2010
11,4
2011
15,5
16,5
2012
2013
Notes:
(1) Converted to USD at an average exchange rate corresponding for the period
Source: Company data, Airlines public information
19,0
LTM Sep 14
Allegiant
Spirit
11
Attractive growth opportunities in Mexico and
throughout the Americas
50
Domestic – growth potential of nearly 160
routes (4)
International – growth potential of about 154
routes (4)
Number of routes(1)
Number of routes(2)
48
45
90
41
40
99
100
48
40
38
80
35
70
30
60
25
50
20
40
48
32
15
13
30
10
20
5
10
0
0
USA (Leisure)
Routes served
(3)
USA (VFR)
CAM, SAM,
Canada,
Caribbean
Growth potential
Notes:
(1) Minimum stage length of 170 miles
(2) Minimum stage length of 200 miles; CAM stands for Central America; SAM stands for South America
(3) South and northbound leisure routes
(4) Figures calculated as of August 2014.
Source: Company data and DIIO MI Market Intelligence for the Aviation Industry
12
Substantial growth opportunity in the US-Mexico VFR /
leisure travel market
Portland
0.2mm
San
Francisco
0.7mm
Bakersfield
0.4mm
Sacramento
0.3mm
Fresno
0.5mm
Las Vegas
0.4mm
San Jose
0.4mm
Albuquerque
0.2mm
Phoenix
1.2mm
Los Angeles
4.6mm
Tucson
0.3mm
San
Diego
0.9mm
San
Bernardino
1.7mm
Chicago
1.5mm
Denver
0.5mm
Austin
0.4mm
El Paso
0.6mm
Washington
0.1mm
Dallas
1.5mm
San Antonio
0.9mm
New York
0.5mm
Philadelphia
0.1mm
Atlanta
0.3mm
Houston
1.5mm
Mission
0.6mm
Orlando
0.1mm
Tampa
0.1mm
Miami
0.1mm
San Benito
0.3mm
Denotes Volaris
presence(1)
Denotes other cities with large
Mexican origin populations(1,2)
Notes:
(1) Represents Mexican origin population figures as per population data released on May 26, 2011
(2) Mexican origin is based on self-described ancestry, lineage, heritage, nationality group or country of birth.
Source: Pew Research Hispanic Center
Significant Mexican origin
population(2) of 33.7 million
in the US
13
Positive expansion, managing capacity and diversification of
routes
Solid expansion for Volaris
Volaris flown domestic routes
Volaris flown international routes
More than 2x
More than 1.5x
78
89
17
50
39
Dec '11
Dec '12
Dec '13
Sep '14
Dec '11
23
26
28
Dec '12
Dec '13
Sep '14
A significant portion of our capacity faces no competition(1)
Percentage of Volaris’ 4Q14 domestic capacity competing with:
68%
54%
34%
20%
Aeromexico
Notes:
(1) Capacity measured by ASM’s
Source: Data company, SCT-DGAC, DIIO MI
Interjet
Vivaaerobus
Non-competed
14
A higher density fleet generates more incremental capacity
with fewer additional aircraft
Projected fleet under current contracts (number of aircraft)(1)
47%
29%
18%
44
24
59
55
50
2
9
14
23
22
3
2
23
19
20
FY13
A319
A320
A320 w/Sharklets
Seat growth
18
17
FY14
FY15
A320 NEO w/Sharklets
7%
A321 w/Sharklets
13%
12
%
FY16
% of year-end fleet
w/Sharklets
14%
Backlog of 64 Aircraft to support growth(2)
Notes:
(1) Net fleet after additions and returns
(2) Figure calculated as of the end of September 2014
Source: Company data
16
Solid financial performance
Operating revenues(1)
1 200
1 018
887
536
600
220
188
200
714
800
374
200
0
150
178
140
117
100
100
50
0
2009
2010
2011
2012
2013
LTM
Sep 14
Operating Revenues CAGR 2009 - 2013
30%
250
1 013
(USD mm)
(USD mm)
1 000
400
Adj. EBITDAR(1)
2009
2011
2013
LTM
Sep 14
27.9%
20%
20,0%
20%
2012
LTM September 2014 Adj. EBITDAR margin
30,0%
28%
2010
17.5%
18.7%
17.8%
Gol
AM
14%
10%
10%
0%
10,0%
0,0%
Copa
GOL
LATAM
Note:
(1) Converted to USD at an average exchange rate corresponding for the period
Source: Company data, airlines public information
Copa
17
Changes in the landscape
New Bilateral – We are focused on VFR & Northbound
Leisure; we see increased competition in Business,
Southbound Leisure and Hub Connectivity. Even with the
current bilateral, in most of our routes up to five competitors
could initiate service
Immigration Reform – Best positioned to benefit from
increased demand. Already looking into non-traditional
Mexican-heritage cities (Eastward expansion)
New Mexico City Airport – Essential for the Mexican
Industry, less so for Volaris. We already lead in 3 of the 4
largest airports in Mexico (TIJ, GDL and CUN) and growing
quickly in the fourth (MTY); adding A321s to maximize slot
productivity
17