Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE:VLRS) Q2 2019 Earnings Conference Call July 26, 2019 10:00 AM ET
ControladoraVuelaCompañíadeAviación，S.A.B。 de C.V. （纽约证券交易所代码：[VLRS]）2019年第二季度收益电话会议2019年7月26日美国东部时间上午10:00
Maria Elena Rodriguez - Corporate Finance & Investor Relations Director
Enrique Beltranena - President & Chief Executive Officer
Holger Blankenstein - Executive Vice President, Airline
Sonia Jerez - Vice President & Chief Financial Officer
- Maria Elena Rodriguez - 企业融资与投资者关系总监
- Enrique Beltranena - 总裁兼首席执行官
- Holger Blankenstein - 航空公司执行副总裁
- Sonia Jerez - 副总裁兼首席财务官
Duane Pfennigwerth - Evercore
Michael Linenberg - Deutsche Bank
Josh Milberg - Morgan Stanley
Conor Cunningham - Cowen
Rogério Araújo - UBS
Stephen Trent - Citi
- Duane Pfennigwerth - Evercore
- Michael Linenberg - 德意志银行
- 乔希米尔伯格 - 摩根士丹利
- 康纳坎宁安 - 考恩
- RogérioAraújo - 瑞银
- 斯蒂芬特伦特 - 花旗
Thank you for standing by and welcome to Volaris' Second Quarter 2019 Financial Results Conference Call. All lines are in a listen-only mode. Following the company's prepared remarks, we will open the call for question-and-answer. Instructions on how to ask a question will be provided at that time. Please note that this event is being recorded.
At this point, I would now like to turn the call over to Ms. Maria Elena Rodriguez, Volaris' Corporate Finance and Investor Relations Director. Please go ahead.
感谢您的支持，欢迎参加Volaris 2019年第二季度财务业绩电话会议。 所有线路都处于只听模式。 在公司准备好的评论之后，我们将打开问答电话。 届时将提供有关如何提问的说明。 请注意，此活动正在录制中。
在这一点上，我现在想把这个电话转给Volaris的企业融资和投资者关系总监Maria Elena Rodriguez女士。 请继续。
Maria Elena Rodriguez
Good morning everyone and thank you for joining the call. With us today is our President and CEO, Enrique Beltranena; our Airline Executive Vice President, Holger Blankenstein; and our Vice President and CFO, Sonia Jerez.
We will be discussing the company's second quarter results announced yesterday. Afterwards, we will move on to your questions. Please note that this call is for investors and analysts only. Any questions from the media will be taking separately.
Before we begin, please let me remind everyone that this call may include forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to several factors that could cause the company's actual results to differ materially from expectations for reasons described in the company's filings with the U.S. Securities and Exchange Commission. Furthermore, Volaris undertakes no obligation to publicly update or revise any forward-looking statements.
It's now my pleasure to turn the call over to Volaris' President and CEO, Mr. Enrique Beltranena.
大家早上好，谢谢你加入我们的电话。今天和我们一起是我们的总裁兼首席执行官Enrique Beltranena;我们的航空公司执行副总裁Holger Blankenstein;我们的副总裁兼首席财务官Sonia Jerez。
Thank you, Maria Elena and good morning to everyone and thank you for joining us today. Let me begin with some key facts and that of the second quarter. Volaris is one of the three lowest unit cost publicly traded airlines in the world with a unit cost ex-fuel during the quarter of $0.0389. CASM ex-fuel decreased 3.3% year-over-year. Total unit revenue in the quarter improved 10% year-over-year.
Let me explain some of the elements. Total ancillary revenues increased 39% year-over-year. Volaris' ancillary revenues per passenger increased 10% and now, Volaris is among the top four airlines in the world.
Second, Volaris is the largest passenger operator in the Mexican market with 40% more passengers carrier than our closest competitor during the quarter. In this market, Volaris operates with a load factor of 90%.
Third, Volaris is the global carrier with most direct routes to the U.S. In the last 10 years we have carried almost 20 million passengers in the transborder market. In addition to that, with this new Frontier codeshare, we now connect almost 100 U.S. destinations with our Mexican markets. Volaris completed important strategic financial transactions during the second quarter.
The first one was that we secured the landmark sale and leaseback transaction for 22 aircraft that will be delivered between 2020 to year 2022. The terms and lease rates are highly attractive and are historically unprecedented for the company.
The second one is that Volaris successfully issued a Ps. 1.5 billion denominated long-term bond in the Mexican public market at a very competitive term notwithstanding the difficult capital market conditions during the process of placing the instrument.
To facilitate development of our Central American initiative, Volaris has established a subsidiary in El Salvador and obtained its airline operator certificate from the Civil Aviation Authority. We are targeting operations to start during August 2019. These achievements led to the following second quarter 2019 results.
Total operating revenues increased by 34% with a year-over-year TRASM improvement of 10%. EBITDA margin improved by 10.4 percentage points versus last year closing at 27.7% and operating cash flow generation of Ps. 1.5 billion a year-over-year improvement of Ps. 680 million.
For on-time performance is on track and scheduled completion is at 99.5% return on invested capital pretax of 16% at the end of the quarter. Nevertheless, I would like to additionally highlight that the earnings per ADS for the first half of the year at $0.33.
Now I would like to turn the call over to our airline Executive Vice President, Holger Blankenstein to talk about the detail of revenues margin dynamics and give an operational update. Please, Holger.
谢谢Maria Elena，大家早上好，感谢您今天加入我们。让我先谈谈第二季度的一些重要事实。 Volaris是全球三家成本最低的单位成本航空公司之一，本季度单位成本为0.0389美元。 CASM前燃料同比下降3.3％。本季度的单位总收入同比增长10％。
总营业收入增长了34％，TRASM同比增长了10％。息税折旧摊销前利润率比去年收盘率上升10.4个百分点，收益率为27.7％，经营现金流量为Ps。 Ps的年同比增长15亿。 6.8亿。
Thank you, Enrique. Total ASM growth was 22% above our previous stated guidance, as a result of higher utilization, new routes and a focus on our core markets. Domestic ASM growth for the quarter was also 22%. VFR traffic and the bus markets remain our most important drivers of growth. We have been diversifying our point-to-point network focusing on non-competed routes to sustain our double-digit growth. The also low-cost model penetration in the Mexican market is expected to continue throughout 2019 and beyond.
In the international market, our ASM capacity growth was 21%. We continue observing a more sustainable transborder market. The VFR segment showed solid demand, supported by remittances from the U.S. Capacity in Central America represented only 3.4% of our total ASMs by the end of the second quarter. The region is maturing well and is contributing to our U.S. dollar-denominated collection. While still a smaller part of our business, it is growing well and performing to our expectations.
As Enrique mentioned, we obtained a foreign air carrier permit to operate direct flights from El targeting to start during August of this year. El Salvador and Guatemala are the most fertile VFR markets in Central America. In the second quarter, we started operations in five new domestic and four new international routes from existing stations in order to continue developing our point-to-point services and attracting first-time flyers.
We are strengthening point-to-point presence in cities like Queretaro with three new domestic and one new international route and from Durango with two new domestic and one new international route. In the second quarter, we achieved a passenger volume growth of 26% year-over-year. We improved our total load factor by 1.5 percentage points, which shows that our ultra-low-cost model has been well accepted by the market.
In the domestic market, the load factor was 90%, while the international route -- while in the international routes it was 82%. This represents an improvement of one percentage point and 2.8 percentage points respectively versus last year. During the second quarter of 2019, total ancillary revenues reached Ps.2.9 billion, an increase of 39% year-over-year and now accounts for 35% of total operating revenues.
We continued improving our v.club and v.pass memberships. By redesigning our purchasing flows and optimizing overall usability and payment processes, we can reach more customers allowing them to become frequent flyers. We also launched a new combo ancillary product in the first quarter, which has shown good uptake from our customers in the second quarter.
We are in the process of introducing a new dynamic pricing tool for ancillary revenues in order to maximize revenue in selected products. The rise of ancillary revenues allows us to keep offering the lowest base fares in order to stimulate passenger demand. Such increase in volume supports our growth in terms of TRASM.
In the third quarter of this year, we will be adding two Airbus A320 neo aircraft to a young and fuel-efficient fleet. Volaris bus switching has been the cornerstone of our growth strategy. As the bus industry in Mexico and Central America accounts for almost three billion trips per year Volaris marketing campaigns are tailor-made to specific media outputs across our customer journey.
在国内市场，载客率为90％，而国际航线 - 在国际航线上则为82％。与去年相比，这分别提高了一个百分点和2.8个百分点。在2019年第二季度，总辅助收入达到了29亿比索，同比增长了39％，现在占营业总收入的35％。
In 2014, we have carried over four million bus switchers. 86% claimed, they wouldn't travel again by bus. Over 11% of our customers check bus fares first, yet they choose to fly on Volaris.
In 2019 we are also giving special focus to upgrading our digital channels. As a digital airline, almost 70% of our sales are made through our own digital channels. And if we include indirect digital channels like OTAs and agencies, it represents 90% of our total sales.
Today 90% of Mexican Internet users have a smartphone versus 22% in 2009. The preference of our customers have clearly shifted from desktop to mobile. Currently traffic from mobile devices represents 64% of our visits to our digital channels. The focus on mobile phones has been a cornerstone of our digital strategy.
Our mobile phone chatbot now handles over 80% of customer service interactions which delivers significant reductions in call center costs. We will continue to invest into our digital storefronts throughout the year with improvements in the purchasing process on the desktop side and better upsell of ancillaries in all channels.
All this has resulted in Volaris becoming one of the best airlines in the world in terms of low-cost in sales, marketing and distribution. At the same time Volaris is rated one of the top brands in Mexico measured by Merca2.0. And our mobile app is the number 5 downloaded app in Mexico.
In terms of our culture with Frontier, we now – customers almost 100 cities in the U.S. at minimal incremental cost for the company. During the second quarter this represented 3.3 percentage points of load factor on U.S. routes.
We are especially pleased with the strength of the VFR traffic. Therefore we are now planning ASM growth for the third quarter in the high teens for the entire network relatively evenly split between international and domestic growth. It is important to highlight that we are planning to achieve it through healthy capacity growth which means high utilization of existing assets.
In summary we would like to emphasize that TRASM improvement trend of the last 12 months is going to continue supported by strong performance in ancillaries and an increasing traffic demand. We achieved a TRASM of Ps.135.5 in the second quarter 2019, 10% higher than the second quarter of 2018.
We are keeping up the year with a positive revenue momentum delivering margin improvements. Higher TRASM continues to be the commercial team's numbers 1 priority.
Now I'd like to hand it over to our Vice President and CFO, Sonia Jerez to further discuss our financial performance for the quarter.
就我们与Frontier的文化而言，我们现在 - 以最低的公司增量成本为美国近100个城市的客户提供服务。在第二季度，这表示美国航线的载客率为3.3个百分点。
Thank you, Holger. I will now review the five main achievements of the second quarter. First, CASM ex-fuel closed at $0.0389 which represents a 3.3% year-over-year reduction.
What the most important drivers were: one the continuous company-wide cost reduction program; two, the operation of the company with the most fuel-efficient fleet in the market with an average of 186 seats per aircraft and with 24% of our aircraft with NEO technology; and three utilization, utilization of our fleet is at 13.1 block hours per day. Block hours per day had an increase of 13.5% year-over-year.
Second achievement: Total CASM was $0.065 for the second quarter in line with last year. The cost-cutting program initiatives continue offsetting the increase in the average economic fuel cost per gallon which was mainly driven by the new transfer fees added by the jet fuel suppliers in the domestic market.
During the second quarter, Volaris executed a fuel tender in order to partially rectify these incremental transfer costs. The fuel cost savings achieved from the initiative may began materializing during the second half of the year. Additionally, Volaris hedged 30% of its projected jet fuel consumption for the remainder of 2019 mainly through Asian call options at an average stock price of $1.91 per gallon.
Third achievement our solid balance sheet and good liquidity. Volaris had a net cash flow provided by operating activities for the second quarter of Ps.1.5 billion closing the quarter with cash and cash equivalents of Ps.1.1 billion. This represents 36% of the last 12 months operating revenues. The adjusted net debt-to-EBITDA ratio closed at 4.4 times.
Fourth as initially – as Enrique mentioned later during the June, the company successfully completed the first tranche of a 5-year Ps.3billion local bond program with a first issuance of Ps.1.5 billion at the Mexican interbank rate TIIE plus 175 basis points. The bond is rated AA+ with a stable outlook by two local rating agencies. The investor rate is well-diversified comprising brokerage houses, private banks and private pension funds. It is a Mexican peso denominated debt and it diversifies our financing portfolio.
And our fifth more important achievement the company executed sales and leaseback documentation of 22 neo aircraft to be delivered from 2020 to 2022. We achieved very attractive lease rate factors from different lessors mainly from Asia. All these aircraft are fully financed including the per delivery payments.
In terms of exchange rate status the Mexican peso has appreciated 1.1% against the U.S. dollar compared to the end of the previous quarter. The company's second quarterly U.S. dollar-denominated collections ticket sold were 44%, partially helping us to insulate the company from exchange rate pressures and reflecting the company's effort to have a natural hedge [Technical Difficulty]. This growing trend in our collections substantially closes the gap of the FX mismatch and bring us closer to becoming FX neutral.
第四个是最初 - 正如Enrique在6月份提到的那样，该公司成功地完成了5年期Ps.3billion本地债券计划的第一次付款，首次发行15亿卢比，墨西哥银行同业拆息率加上175个基点。该债券评级为AA ，两家当地评级机构的前景稳定。投资率很高，包括经纪行，私人银行和私人养老基金。这是墨西哥比索计价的债务，它使我们的融资组合多样化。
Moving on to our financial results. We exceeded our guidance for adjusted EBITDA margin in the second quarter reaching 27.7% or Ps.2.3 billion and a 7.9% EBIT margin or Ps.659 million.
Net income for the quarter was 1.5% or Ps.119 million. Our EBITDA margin guidance for the third quarter assuming current exchange rate and fuel prices is expected to be in the low 30s or bear in mind on our performance in the second half of 2018 was much improved versus the first half which will make our second half 2019 year-over-year comparisons small. We expect healthy actual results.
Now I'll hand the call back to Enrique for closing remarks.
本季度的净收入为1.5％或1.19亿比索。 假设当前汇率和燃料价格预计在30年代低位或考虑到我们2018年下半年的表现，我们对第三季度的EBITDA利润率指引比上半年大大改善，这将使我们的2019年下半年 年比较小。 我们期待健康的实际结果。
Thank you, Sonia. Volaris been proactive during the last 2.5 years in counteracting the economic upward pressure on costs. From the beginning of 2017, the net jet fuel impact on total costs for the company was Ps.1.6 billion. The company-wide efforts to improve our financial performance also focused on the revenue side accounting for Ps.1.8 billion incremental revenues during the same 30-month period.
All-in-all the company had a strategy for its healthy capacity growth and deliberate management of departures, station and fleet utilization, passenger demand, load factor, base fares and ancillaries offset the cost hit. Volaris managed it's network systems to drive higher departures and healthy ASMs and is now number three in the world, measuring ASMs per aircraft per day, differentiate itself in the strong productivity of our fleet.
Stronger regional market demand produced higher RPMs and load factors that reached 87% across the system. This demand supported higher yields and with Volaris robust ancillary revenue model, produced stronger TRASM increase and top line revenues. We work hard to rethink and simplify the earning, to the extent that we produced Ps. 4.2 billion, let me repeat that number, Ps. 4.2 billion in non-oil cost reductions over the same month period. This amount is the equivalent to operating the airline for four months without incurring any fuel expense.
We have talked about our strong passenger growth, but let me explain and unpack what we see occurring in our markets. Over the last six months Volaris' 21% passenger growth comfortably exceeded our ASMs growth of 17%. But this is not luck, or an anomaly, but it is supported by the following macroeconomic indicators. I think, there's a lot of moving variables that you must analyze.
Let me start with the first one. GDP growth across Mexico is not uniform. The GDP growth, with or without oil production of the individual Mexican states in which we operate, is higher than the national average GDP. Remittances growth shows a positive trend with record highs.
The U.S. migration limitations and the U.S. economic performance is allowing the U.S. Hispanic population to send more money to their relatives in Mexico, who as a result are flying more into the domestic Mexican market. This explains our stronger domestic demand and continuous internal tourist growth.
The third measurement is the real wages. In Mexico, real wages and private consumption which remain hyper resilient. The fourth one is the Mexican Consumer Confidence Index which continues to grow at a sound pace. And then, exports remain positive, mainly in the states where we have more presence.
Fare index for the Mexican air transportation industry improved versus previous year. And finally, the company's growth is not only organic, but also, as Holger mentioned, it is a result of a conscious strategy, which started its new passenger segment. The bus switching strategy has substantially increased our volume over the last decade.
Let me give you the numbers. The available bus switching market in Mexico is approximately 38 million people. In 2007, air trips per-capita in Mexico were 0.25 times growing to 0.40 times by the end of 2018, which is still below other developing economies in the region. Mexico's air traffic grew from 55 million annual passengers in 2007 to 97 million annual passengers by the end of 2018. And this is despite ups and downs in the GDP each of the years that we lived.
In conclusion, we certainly look at several competitive strengths that support our user growth. The first, our capacity to grow as a point-to-point operator in the most important airports in Mexico and our top-tier on-time performance is a clear differentiator, together with our low base fares that have allowed us to become the best travel option in those markets.
Second, our focus on cost per available seat mile ex-fuel positions us among the three lowest cost operators in the world. Based on public data and audited accounting practices. This cost advantage allows Volaris to expand the ultra-low-cost model in a very profitable way, while benefiting a large domestic population with very affordable airfares. Third, on the operational side, the company executes more than 400 daily take-offs which allows Volaris to fly a broad diversified system schedule that keeps us attracting new customers.
I want to finish this morning thanking all of our ambassadors who have done so much to achieve this solid second quarter results, whilst also continuing to deliver excellent service and reliability to our customers. I need to thank you, to our Board of Directors in supporting us to find ways to increase efficiency and drive productivity. We would like to leave a special thank for Roberto Kriete, for Rodrigo Salcedo and for John R. Wilson for their dedication this many years to the board. Thank you to our investors who are believing in our commitment to the continuous development of a successful business. We continue our track record of no excuses and for four quarters in a row, achieving our expected results.
Let me now pass it over to the operator and we are ready to open the call for questions.
我想在今天早上结束，感谢所有为实现第二季度业绩取得如此巨大成就的大使们，同时继续为我们的客户提供优质的服务和可靠性。我要感谢您，我们的董事会支持我们寻找提高效率和提高生产力的方法。我们要特别感谢Roberto Kriete，Rodrigo Salcedo以及John R. Wilson多年来对董事会的奉献精神。感谢我们的投资者，他们相信我们对不断发展成功企业的承诺。我们继续保持没有任何借口并连续四个季度的记录，实现我们的预期结果。
[Operator Instructions] We'll take our first question from Duane Pfennigwerth of Evercore. Your line is open.
[操作员说明]我们将从Evercore的Duane Pfennigwerth收到我们的第一个问题。 你的线是开放的。
Hi, thank you. So double-digit TRASM growth, very solid declines in nonfuel cost. Not a lot of models around the world that offer that right now, driving very strong margin expansion. Can you talk sort of high level your view or your prospects for margin expansion in the back half of the year?
嗨，谢谢你。 因此，TRASM的两位数增长，非燃料成本的下降非常稳固。 现在世界上并没有很多模型能够提供这样的优势，从而推动了非常强劲的利润率扩张。 您能否在今年下半年谈谈您的观点或您的利润扩张前景？
Yes Duane, thank you very much and thanks for your comments. We strongly think Duane that we can basically sustain the performance that we had during the first half of the year. Obviously, as I explained I mean or Sonia explained them sorry. The numbers of last year in the second half improved dramatically versus the first half. So our comparison is really higher than in the first half. So I'm expecting to continue performing the way we are performing, but probably at a smaller pace.
是杜安，非常感谢你，感谢你的评论。 我们强烈认为Duane我们基本上能够维持上半年的表现。 显然，正如我所解释的那样，或者索尼娅解释说他们很抱歉。 与上半年相比，下半年的去年数量大幅改善。 所以我们的比较确实高于上半年。 所以我期待继续按照我们的表现来表现，但可能会以较小的速度表现。
Okay. And then, on the A321neo deliveries, are there any recent or incremental delays or supply chain issues that you're seeing? And I know you had to re-slot some of those in the past, but let's say in the last 30, 60 days, are you seeing any incremental A321neo delays?
好的。 然后，在A321neo交付时，您是否有任何近期或渐进的延迟或供应链问题？ 而且我知道你不得不重新插入过去的一些，但是让我们说在过去的30天，60天内，你是否看到任何增加的A321延迟？
We only have one month delay this year in the two deliveries that we took in the first semester. So, we are expecting some where there could be the second half.
Okay. And then just lastly, 10% TRASM growth, could you put a -- would you be willing to offer a view on how did that look in domestic versus transborder versus maybe the Central American operation? And thanks for taking the questions.
好的。 然后最后，TRASM增长10％，你能否提出 - 你是否愿意提供一个观点，看看国内与跨界的情况与中美洲的运作情况有何不同？ 并感谢您提出问题。
Thank you, Duane. I will ask Holger to answer that one please?
Yes. Thanks Duane. TRASM expansion was relatively equal between the domestic and international. And obviously Central America as it's in ramp-up was probably a little bit higher than 10%. That's the breakdown.
是。 谢谢杜安。 TRASM在国内和国际之间的扩张相对平等。 显然，中美洲的增长可能略高于10％。 那是故障。
Okay. Thank you.
Thanks to you Duane.
And we'll take our next question from Michael Linenberg of Deutsche Bank.
Hey, good morning everybody. I just have a couple here. Just to start with you, Holger, you talked about the capacity growth. 22% and then high teens second half of the year, but sort of what caught my ear is that, you have been focusing on routes where there is either little to no competition. I think you said non-competed routes. And I know, we've been seeing that in both your transborder and to maybe a lesser extent in domestic Mexico. Do you have any sort of breakdown where if you were to look at your domestic city pairs, what percent have head-to-head competition which presumably actually a decent number of them probably have competition head-to-head. But in the transborder, if you look at the number of city pairs that you're flying today and what percent of them actually have head-to-head competition, I suspect it's actually quite low. But would you actually have any of that data just to support my premise.
嘿，大家早上好。 我这里有一对。 刚开始，Holger，你谈到了容量增长。 一年中下半年22％，然后是青少年，但有点吸引我的是，你一直专注于那些竞争很少甚至没有竞争的路线。 我想你说过非竞争路线。 而且我知道，我们已经在你的跨境国家和国内墨西哥的较小程度上看到了这一点。 如果你要看看你的国内城市对，你有什么样的细分吗？有多少百分比有可能实际上有相当数量的竞争对手可能会面对面竞争。 但是在跨界，如果你看一下你今天飞行的城市对的数量，以及它们实际上有多少比例，我怀疑它实际上很低。 但是你真的有任何这些数据只是为了支持我的前提。
So Michael, what we can tell you is that, about 25% of our capacity in terms of ASMs is operated in non-competed routes. That translates into about 80 routes that have no competition. And if you look at the transborder market it's actually – we're also focused on the VFR niches that connect directly to the center of Mexico. So we do have a sizable number of routes that don't have any direct competition in the U.S. as well.
迈克尔，我们可以告诉你的是，我们在ASM方面的容量中约有25％是在非竞争路线上运行的。 这转化为大约80条没有竞争的路线。 如果你看看跨境市场实际上是 - 我们也专注于直接连接到墨西哥中心的VFR壁龛。 因此，我们确实有相当数量的路线在美国也没有任何直接竞争。
Okay. Okay, great. Can I ask a question about in Central America with the FAA moving Costa Rica to Level 2 from a sort of a safety aspect? As you start obviously your – the new operation out of El Salvador will you – I guess, you won't be able to add any additional capacity to the Costa Rican operation until that safety level rating is moved back to what it was previously. Is that correct? Number one. Number two, does it really matter all that much now that you have an El Salvadorian operation any sort of growth that you were planning for the region you can take advantage of since the U.S. and many of the Central American countries have open skies and therefore they allow fifth freedoms. So it really shouldn't change your plan down there. Can you just – can you talk about that I guess this would be to you Enrique?
好的。 好，太棒了。 我是否可以在中美洲问一个关于美国联邦航空局将哥斯达黎加从某种安全方面移到2级的问题？ 当你开始显然你 - 萨尔瓦多的新操作将是你 - 我想，你将无法为哥斯达黎加的操作增加任何额外的能力，直到安全等级评级恢复到以前的水平。 那是对的吗？ 第一。 第二，你现在拥有萨尔瓦多运营的任何类型的增长都是非常重要的，因为美国和许多中美洲国家拥有开放的天空，因此你可以利用这个区域进行任何增长 允许第五种自由。 所以它真的不应该改变你的计划。 你可以 - 你能谈谈我想这会对你恩里克吗？
Yeah. Sure. Hi, Mikey.
是啊。 当然。 嗨，Mikey。
Well, let me tell you, yes, the U.S. rating clearly freezes expansion to the U.S. not to the rest of the areas. Okay?
The second point, I would like to clarify is this is a qualification that is given to the Costa Rican aviation surveillance authority. So I want to be very clear that we are working with them to support their efforts to run to normality as soon as possible. But Volaris Costa Rica AOC recently obtained its AOS certificate, which makes our certificate and our operations really safe. Okay? The third statement, I would like to make is that, we have launched so much capacity before this happened that in reality what we're doing is maturing that capacity. So it is not having an impact on the numbers rather than that it's making the numbers better. And fourth, I would like to say that, yes the El Salvador operation is going to pick some of that.
第二点，我想澄清的是，这是给予哥斯达黎加航空监督机构的资格。 所以我想非常清楚，我们正在与他们合作，以支持他们尽快恢复正常的努力。 但Volaris哥斯达黎加AOC最近获得了AOS证书，这使我们的证书和我们的运营非常安全。 好的？ 第三个声明，我想说的是，在发生这种情况之前，我们已经发挥了如此多的能力，实际上我们正在做的是使这种能力日趋成熟。 因此，它不会对数字产生影响，而是使数字变得更好。 第四，我想说，是的，萨尔瓦多的行动将会选择一些。
Okay. Okay. That's really helpful. And I think I'm aware and I'm sure we'll make investors aware that this FAA rating is applicable to the country and not the airlines that are serving the country. So I think we're – we feel pretty good about your operation. And just an add-on about the Central American operation is one of your competitors in the region has been scaling back in some of the large markets. I think they recently indicated that they're going to pull out of Miami El Salvador, Miami Guatemala City. When I think about Volaris, I know historically when you fly internationally from some of those markets you may move into some of the smaller markets, you may target as you target VFR markets. But is it possible that we could see you move into some of what I would call the trunk routes that are being abandoned by one of your largest competitors? Is there an opportunity say for you to fly from Miami into some of the key Central American cities?
好的。 好的。 这真的很有帮助。 而且我想我知道并且我相信我们会让投资者意识到这个FAA评级适用于该国，而不适用于为该国服务的航空公司。 所以我想我们 - 我们对你的操作感觉非常好。 而关于中美洲业务的附加信息是该地区的竞争对手之一，已经在一些大型市场中缩减。 我想他们最近表示他们将要离开迈阿密危地马拉城迈阿密萨尔瓦多。 当我想到Volaris时，我从历史上就知道当你从一些市场飞到国际市场时，你可能会进入一些较小的市场，你可能会针对VFR市场而瞄准。 但是，我们是否有可能看到你进入一些我称之为最大竞争对手抛弃的干线路线？ 你有机会从迈阿密飞往一些主要的中美洲城市吗？
I cannot speak about the upcoming capacity yet until we have authorizations. But we are certainly focused on the region.
Okay. Great. All right. Well, listen nice job this quarter Enrique, and it looks like a good forecast well done. Thank you.
好的。 大。 行。 好吧，听听这个季度Enrique的好工作，看起来好的预测做得很好。 谢谢。
Thank you very much, Michael. And I appreciate your comment of making the investors know that the qualification of Costa Rica is not about the safety of Volaris rather than that Volaris is just received the certification which guarantee safety operation.
We'll take our next question from Josh Milberg of Morgan Stanley.
Hi, guys. Thank you for the call and congrats on the results. My question relates to the fuel transfer costs that Sonia highlighted. I was just hoping you could comment a little further on that issue and on the initiatives you've taken to address it? And also just with the initiatives how might we expect those costs to evolve in the second half and next year? That actually seems like it's something that could be a relevant driver in the coming quarters. Correct me, if I'm wrong about that.
嗨，大家好。 感谢您的来电，并祝贺结果。 我的问题涉及索尼娅强调的燃料转移成本。 我只是希望你能就这个问题以及你为解决这个问题而采取的措施进一步发表评论？ 而且只有这些举措我们怎么能期望这些成本在下半年和明年发展？ 实际上，这似乎是未来几个季度可能成为相关驱动因素的东西。 纠正我，如果我错了。
Yeah. Sure. You're completely right. Yeah. So regarding the – specifically, the fuel costs, as I mentioned we finalized a few tenders for domestic market. It was very successful. We were able to reduce our increase on fuel by -- increase that we had due to the increase of tenant -- transfer price and as I also mentioned, so not only the tender help us to offset fuel costs, but also a lot of cost savings initiatives across the board.
Honestly, regarding our expectations from CASM during the same quarter, remember that we have started the cost savings plans in 2018 which means that we're going to see less improvement during the second half of 2019 compared with 2018, but we continuing -- very, very focused on maintaining our cost ex-fuel.
是啊。 当然。 你是完全正确的。是啊。 所以关于 - 特别是燃料成本，正如我所提到的，我们已经为国内市场敲定了一些招标。 这非常成功。 我们能够减少我们的燃料增加 - 由于租户转移价格的增加而增加 - 正如我所提到的，所以不仅招标帮助我们抵消燃料成本，而且还有很多成本 全面的储蓄计划。
老实说，关于我们在同一季度对CASM的期望，请记住我们已经在2018年启动了成本节约计划，这意味着我们将看到2019年下半年与2018年相比改善较少，但我们仍在继续 - 非常 ，非常注重维持我们的成本前燃料。
Yes, I was referring specifically to the fuel transfer costs in the second half. But Sonia you did...
So, most likely it's going to be about a third of the -- for the first semester cost. I mean a reduction of a third to the first semester cost.
Exactly. That's it.
Okay, got it. Thank you.
In the domestic market obviously.
We'll take our next question from Helane Becker of Cowen.
Hey, guys. It's actually Conor Cunningham in for Helene. How are you?
大家好。 对于海伦来说，实际上是Conor Cunningham。 你好吗？
Hi. So, just -- I know you just raised your capacity outlook and it makes sense given the demand environment. Just curious what would need to happen for you guys to either scale back or maybe even push growth further in the coming quarters? Is it simply just a supply and demand equation? Or I mean just how much does like the competitive response play into that decision?
你好。 所以，只是 - 我知道你刚刚提升了你的容量前景，并且考虑到需求环境，这是有意义的。 只是好奇你们需要做些什么才能缩减规模，甚至可能在未来几个季度进一步推动增长？ 它只是一个供需方程吗？ 或者我的意思是竞争反应对这一决定有多大影响？
Well, first I'd like to remind everybody that what we're doing is healthy capacity addition. So, we're increasing the utilization. We're using our existing assets more effectively by producing more ASMs per aircraft per day. So, that's number one.
Number two, clearly the competitive landscape plays a role also in our capacity guidance and plans going forward. You've seen some of the high cost carriers in Mexico scale back domestic capacity and we're taking advantage of that and backfilling in our core markets capacity.
And obviously the demand environment plays a very significant role. And we're seeing very healthy demand in the transborder market in Central America and also in the price-sensitive domestic markets to the beach markets and to the VFR core market.
好吧，首先我想提醒大家，我们正在做的是增加健康的容量。 所以，我们正在提高利用率。 我们通过每架飞机每天生产更多ASM来更有效地利用现有资产。 所以，这是第一名。
Okay that makes sense. And then just on the RASM side. So, it seems like you guys are guiding to RASM to remain positive despite a challenging comp in the third quarter. And I think the comp headwind is really more domestically focused than it is international or Central America.
So, curious your expectations around each region in the coming quarters. Is it fair to assume that domestic will lag a little bit but international and Central America should outperform? Thanks again for the questions.
好的，这是有道理的。 然后就在RASM方面。 因此，尽管第三季度有一个具有挑战性的比赛，看起来你们仍在指导RASM保持积极态度。 而且我认为逆风比国际或中美洲更具国内影响力。
所以，好奇你对未来几个季度每个地区的期望。 假设国内将略有滞后但国际和中美洲的表现应该超越，这是否公平？ 再次感谢您的提问。
So, again a quick clarification. We think about our business in terms of TRASM total RASM which includes the ancillary piece. And what we've been seeing is declines in yields or in RASM and increases in our ancillary business which leads to a higher TRASM overall.
To split it down by regions, we continue to see relatively similar growth in TRASM in both geographies U.S. transborder and the domestic market. And then as Central America is in ramp-up, TRASM growth there would be a little bit higher than the average.
所以，再次快速澄清一下。 我们根据TRASM总RASM考虑我们的业务，其中包括辅助件。 而我们所看到的是收益率或RASM的下降以及我们的辅助业务的增加导致整体TRASM更高。
Great. Thank you.
We'll take our next question from Rogério Araújo of UBS. Your line is open.
Yes, Hi everyone. Morning. Thanks for the opportunity. I have a couple of questions. One is a follow-up on the very strong TRASM. So, is there a possible way that you could break down which routes are explaining this very strong TRASM expansion even with a 22% ASM increase in the period.
So, what I mean is if you break it down routes in which your competitors are taking out capacity from with routes that your competitors' capacity is flattish, is there a huge difference between them? In other words, is most of this very strong TRASM has been explained by those routes in which your competitors are taking out capacity from or not. This is the first question. Thank you.
是的，大家好。 早上。 谢谢你的机会。 我有一些问题。 一个是对非常强大的TRASM的跟进。 那么，是否有一种可能的方法可以解决哪些路线正在解释这种非常强大的TRASM扩张，即使在此期间增加了22％的ASM。
所以，我的意思是，如果你打破了你的竞争对手从你的竞争对手的容量是平坦的路线中获取容量的路线，它们之间是否存在巨大差异？ 换句话说，大多数这种非常强大的TRASM已经被您的竞争对手从中获取或不获取能力的路线所解释。 这是第一个问题。 谢谢。
So we don't break down traffic by geographies specifically, but what we can tell you is that we're seeing chart lift across the network. And here it is important to mention that Volaris' healthy capacity growth is focused on the northwest of the country and less on the southeast of the country. And if you look at regional GDP growth in Mexico, the country's GDP growth has been stronger in the northwest of the country.
For example, we've seen new routes in Querétaro, Aguascalientes, Bajío, Guadalajara. Those are cities secondary cities in Mexico, which are located in the center and in the west of the country and that has contributed definitely positively to our TRASM expansion.
因此，我们不会特别针对地理位置划分流量，但我们可以告诉您的是，我们看到网络中的图表提升。 在这里，值得一提的是，Volaris的健康产能增长主要集中在该国西北部，而不是该国东南部。 如果你看一下墨西哥的地区GDP增长，该国西北地区的GDP增长就会更强劲。
Okay. What about routes in which your competitors I think are taking out capacity from? Is it also boosting the TRASM?
好的。 我认为您的竞争对手从哪些路线中取出产能？ 它是否也促进了TRASM？
We are very clear about our core business in the center and west of the country and we are closely observing capacity movements from the competitors in those markets.
Okay. Thank you. So my second question is on the other operating income. There was a significant gain about Ps.220 million. My question is, is this related to sales and leaseback gains?
And also a follow-up. Is there any non-recurring item in this result in the revenue or in the cost besides this likely -- sale leaseback. Thank you.
好的。 谢谢。 所以我的第二个问题是关于其他营业收入。 大约有2.2亿比索获得了显着的收益。 我的问题是，这与销售和回租收益有关吗？
还有一个后续行动。 除了这个可能的销售回租之外，此结果中是否有任何非经常性项目的收入或成本。 谢谢。
Yes. So here you saw the company in the second quarter has two aircraft arriving and based on IFRS adoption that we did in January this year, we have to amortize those sales and leaseback gains over the lease term. That compares differently to 2018, where those gains were accounted as a one-off.
是。 所以在这里你看到公司在第二季度有两架飞机抵达并根据我们在今年1月份采用的IFRS，我们必须在租赁期内摊销这些销售和租回收益。 与2018年不同的是，这些收益被视为一次性收益。
Sorry, can you explain this better?
Yeah. Sure. So IFRS accounting rules. So allow -- it's an obligation that the sales and leaseback gains must be deferred over the lease period. So -- but before IFRS all those gains were accounted as a one-off. It is clear?
是啊。 当然。 所以IFRS会计准则。 因此，允许 - 在租赁期内必须推迟销售和回租收益。 所以 - 但在IFRS之前，所有这些收益都被视为一次性收益。 很明显？
Yes. It is clear. So the other operating income line, this is not a one-off gain from sales leaseback, right?
是。 很明显。 那么其他营业收入线，这不是销售回租的一次性收益，对吧？
Yeah. So in reality what's going on is, you are comparing versus a year where we used to put the one-time shot…
…when the aircraft arrived. And now that's amortized through let's say 12-year period, okay? So that's the new rule, okay? And that explains the reduction of 46.7% versus previous year. And it's basically because of the new IFRS adoption.
......当飞机到达时 现在，通过让我们说12年的期限来摊销，好吗？ 这就是新规则，好吗？ 这解释了与去年相比减少了46.7％。 这主要是因为采用了新的IFRS。
Yeah. Yeah. It's clear. Thank you. And but there is still a gain. So what is this related to?
是啊。是啊。 很明显。 谢谢。 但仍然有收获。 那么这与此有什么关系？
Sorry, can you…
I'm not sure, I'm understanding your question.
Yeah. So I want to know what is included in this other operating income line.
The sale leaseback gain?
It is a more important topic.
We also have administrative expenses, travel expenses, technology and communications, marketing, but that's much more in the other operating expenses line.
Okay. So was there any relevant one-off impact this quarter?
It's just the sale leaseback of the…
Yes. I got it.
Thank you. Thank you very much.
And we'll take our next question from Stephen Trent of Citi. Your line is open.
Thanks very much everybody and good morning. Some of my questions have already been answered, but I wanted to dig in a little bit on some of your digital initiatives. So I know you guys recently launched YAVAS. And any color as to what program growth we can think about over the next six months or so? And how this might contribute to your RASM CASM spread? Thank you.
非常感谢大家和早上好。 我的一些问题已经得到解答，但我想对你的一些数字计划进行一些研究。 所以我知道你们最近推出了YAVAS。 关于未来六个月左右我们可以考虑的计划增长的任何颜色？ 这可能会如何促成您的RASM CASM传播？ 谢谢。
Yeah. Thanks Stephen. So we launched YAVAS publicly in mid-April 2019. So we are talking about a three-month period that it's been running. Currently the project is maturing and this has a positive trend. But I would say that it's currently not material for the ancillary revenues yet.
We see sales of that new business unit growing week over week. And we are seeing quite healthy margins in that business. But clearly we have a roadmap to make this business more meaningful in the future. We're focusing on strengthening the content in those -- in the offering, elevating our online brand awareness, which will obviously boost sales while maintaining the quite healthy margins in the business. So eventually it will contribute in a more meaningful way to the ancillary revenues per passenger.
是啊。 谢谢Stephen。 所以我们在2019年4月中旬公开发布了YAVAS。所以我们谈论它已经运行了三个月。 目前该项目正在成熟，这是一个积极的趋势。 但我会说，目前它对辅助收入来说并不重要。
我们看到该新业务部门的销售额每周都在增长。 而且我们在该业务中看到了相当健康的利润。 但显然我们有一个路线图，可以使这项业务在未来更有意义。 我们专注于加强这些产品中的内容，提升我们的在线品牌知名度，这显然会提高销售额，同时保持业务中相当健康的利润率。 因此，最终它将以更有意义的方式为每位乘客的辅助收入做出贡献。
Okay, very helpful Holger appreciate that. And just one other thing and you've already kind of answered it. You guys had mentioned some time back that there were a couple of dozen routes where no airline was serving only interstate bus and I know you've certainly launched a service on some of those routes. When you think about these new opportunities from some of your competitors pulling back et cetera any broad sense how much is left of that first category that's perhaps only currently served by interstate bus or cross-border bus service et cetera?
好的，非常有帮助的Holger很欣赏。 还有一件事，你已经回答了它。 你们曾经提到过一段时间，有几条航线没有航空公司只提供州际公共汽车，而且我知道你们肯定在这些航线上推出了一项服务。 如果你从一些竞争对手那里想到这些新的机会，那么从广义的角度来看，第一类可能只剩下当时的公交车还是跨境公交服务等等？
So Stephen there are several midsized cities in Mexico that we don't operate yet, we don't have service to. So that's about 10 airports. So we're looking at that. And then we are adding a point-to-point service between cities that we already operate. And we do believe that looking at the bus traffic and the bus runs between those cities there continues to be a sizable opportunity for adding service in those secondary markets between cities that we already operate. So connecting the dots so to say.
所以斯蒂芬在墨西哥有几个中等城市，我们还没有运营，我们没有服务。 这就是大约10个机场。 所以我们正在考虑这个问题。 然后我们在已经运营的城市之间添加点对点服务。 而且我们确实相信，观察这些城市之间的公共汽车交通和公交车运行仍然是在我们已经运营的城市之间的二级市场中增加服务的绝佳机会。 所以连接点就这么说了。
Okay, crystal clear. Thank you very much Holger, and thanks guys.
Thank you, Steve.
Thank you, Steve.
There are no further questions at this time. I'd be happy to return the call to management.
So I would like to close with a topic, which grows in importance daily at Volaris. And it's the corporate sustainability. Each year we work hard to increase our efforts in this area. The IR team will share our annual sustainability report together with a project, which is very near and dear to Volaris. It's called a movie, which is called Serpiente Emplumada that we supported. And this documentary follows the quetzal bird and the environmental impacts on its Mesoamerican habitat. It is our hope that this film will generate awareness and importance of protecting our environment in the areas where we fly.
Finally, I would like to thank you everybody for listening for investing in Volaris and supporting the efforts of these management, which keeps on doing efforts to improve performance. Operator, thank you very much for all your support and I hope you have a great weekend.
所以我想谈谈一个在Volaris日常重要的话题。 这是企业的可持续发展。 每年我们都在努力加强这方面的努力。 IR团队将与一个项目分享我们的年度可持续发展报告，该项目非常接近Volaris。 它被称为电影，我们支持的称为Serpiente Emplumada。 这部纪录片讲述了格查尔鸟及其对中美洲栖息地的环境影响。 我们希望这部电影能够提升我们在飞行地区保护环境的意识和重要性。
This does conclude today's Volaris' second quarter 2019 financial results conference call. You may now disconnect your lines and everyone have a great day.
这确实结束了今天的Volaris 2019年第二季度财务业绩电话会议。 您现在可以断开线路，每个人都有美好的一天。
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