Volaris Reports Fourth Quarter and Full Year 2015: Record 37% and 36% Adjusted EBITDAR Margin

Volaris* (NYSE: VLRS and BMV: VOLAR), the ultra-low-cost airline serving Mexico, the United States and Central America, today announced its financial results for the fourth quarter and full year 2015.

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

Fourth Quarter and Full Year 2015 Highlights

• Total operating revenues were Ps.5,092 million and Ps.18,180 million for the fourth quarter and full year, an increase of 28.7% and 29.5% year over year, respectively.
• Non-ticket revenues were Ps.1,163 million and Ps.4,049 million for the fourth quarter and full year, an increase of 42.1% and 48.1% year over year, respectively. Non-ticket revenue per passenger for the fourth quarter and full year was Ps.357 and Ps.338, increasing 14.3% and 21.3% year over year, respectively.
• Total operating revenue per available seat mile (TRASM) rose to Ps.134.2 and Ps.129.4 cents for the fourth quarter and full year, an increase of 2.8% and 9.0% year over year, respectively.
• Operating expenses per available seat mile (CASM) were Ps.114.8 cents and Ps.111.5 cents for the fourth quarter and full year, a decrease of 1.4% and 4.6% year over year, respectively.
• Adjusted EBITDAR was Ps.1,886 million and Ps.6,492 million for the fourth quarter and full year, an increase of 52.2% and 110.7% year over year. Adjusted EBITDAR margin was 37.0% and 35.7% for the fourth quarter and full year, a margin expansion of 5.7 and 13.7 percentage points, respectively.
• Operating income was Ps.736 million and Ps.2,510 million for the fourth quarter and full year, with an operating margin of 14.4% and 13.8%, respectively, representing a year over year operating margin improvement of 3.6 and 12.3 percentage points, respectively.
• Net income was Ps.654 million (Ps.0.65 per share / US$0.38 per ADS) and Ps.2,464 million (Ps.2.43 per share / US$1.42 per ADS) for the fourth quarter and full year, with a net margin of 12.8% and 13.6%, respectively.
• Net increase of cash and cash equivalents was Ps.750 million for the fourth quarter. Unrestricted cash and cash equivalents was Ps.5,157 million, representing 28% of the last twelve month operating revenues.

Volaris´ CEO Enrique Beltranena commented: “We are pleased with the results achieved by the Company during the fourth quarter and the full year 2015. Once again, Volaris demonstrated resilient performance and achieved outstanding operating, commercial and financial indicators, reaping the benefits of a strong passenger air travel environment within its domestic and international VFR markets in Mexico. Our ultra-low-cost carrier business model and flexibility to growing demand has positioned Volaris as a strong player in the aviation industry.”

Sound Macroeconomic Environment Supports Solid Traffic Volume Growth; Exchange Rate Volatile

• Mexican macroeconomic indicators show growth:
  • GDP growth for full year 2015 was 2.5%.
  • Consumer confidence changed 0.8%, -0.4% and -0.6% year over year in October, November and December of 2015, respectively.
  • The Mexican General Economic Activity Indicator (IGAE) increased 2.7% year over year in November of 2015.
• Exchange rate volatility: The Mexican peso depreciated 21% year over year against the US dollar, as the exchange rate devalued from an average of Ps.13.84 pesos per US dollar in the fourth quarter 2014 to Ps.16.75 pesos per US dollar during the fourth quarter 2015.
• Lower fuel prices: The average economic fuel cost per gallon decreased 26.4% year over year in the fourth quarter 2015 to Ps.26.23 per gallon (US$1.52).
• Air traffic volume increase: The Mexican DGAC reported an overall passenger volume growth for Mexican carriers of 15.2% in 2015. Domestic passenger volume increased 12.9%, while international increased 25.8%.

Unit Revenue Improvements Driven by Strong Demand and Non-Ticket Revenue Growth

• Unit revenue improvement and demand driven capacity growth: TRASM and yield increased 2.8% and 0.2% for the fourth quarter year over year, respectively. During the fourth quarter, in terms of ASMs, domestic capacity grew 21.3%, while international capacity increased 35.1%, reflecting increasing market demand in both markets.
• Non-ticket revenue growth: Non-ticket revenues per passenger increased 14.3% year over year for the fourth quarter, as the Company continued with dynamic pricing strategies and launch of new products, such as a fast pass and rental car on board.
• New routes: In the fourth quarter, Volaris launched four new routes (two domestic and two international). For the full year a total of 22 routes were launched.

Operating Revenue Growth from Solid Traffic and Capacity Management

Volaris booked 3.3 million passengers in the fourth quarter, a 24.3% year over year growth. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) increased 24.9% for the same period. Volaris’ passenger market share, the second largest among Mexican carriers and first in the low cost segment, was 25.2% in the fourth quarter in both domestic and international markets.

Volaris’ total operating revenues were Ps.5,092 million in the fourth quarter, an increase of 28.7% year over year. Non-ticket revenue and non-ticket revenue per passenger reached Ps.1,163 million and Ps.357 in the fourth quarter, an increase of 42.1% and 14.3% year over year, respectively.

Fuel Savings Offset Exchange Rate Pressures

In the fourth quarter, Volaris continued to experience pressures in US-dollar denominated costs such as aircraft rents, international airport costs, and maintenance expenses due to the depreciation of the Mexican peso. Despite these challenges, the CASM for the fourth quarter was Ps.114.83 cents, a 1.4% decrease compared to the fourth quarter 2014, mainly driven by lower fuel prices.

Young and Fuel Efficient Fleet

As of December 31, 2015, Volaris fleet was comprised of 56 aircraft (36 A320s, 18 A319s and 2 A321s), with an average age of 4.6 years.

Strong Cash Flow Generation, Solid Balance Sheet and Good Liquidity

The net increase of cash and cash equivalents was Ps.750 million during the fourth quarter, mainly driven by the resources provided by operating activities of Ps.930 million. As of December 31, 2015, Volaris had a balance of Ps.5,157 million in unrestricted cash and cash equivalents, representing 28% of the last twelve month operating revenues. Volaris recorded negative net debt (or a positive net cash position) of Ps.3,566 million and total equity of Ps.6,825 million.

During the fourth quarter, Volaris incurred capital expenditures of Ps.356 million, which included pre-delivery payments for acquisition of aircraft and rotable spare parts, furniture and equipment for Ps.520 million and intangibles assets for Ps.24 million. These acquisitions were offset by reimbursements of aircraft pre-delivery payments of Ps.137 million, and proceeds from disposals of rotable spare parts, furniture and equipment of Ps.51 million.

Active in Fuel Risk Management

Volaris has continued to remain active in its fuel risk management program. Volaris hedged 50% of its fourth quarter fuel consumption at an average strike price of US $2.07 per gallon, which combined with the 50% unhedged consumption, resulted in a blended average economic fuel cost of US$1.52 per gallon for the quarter.

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

Conference Call/Webcast Details:

Volaris will conduct a conference call to discuss these results on February 22, 2016, at 11:00 a.m. EST (10:00 a.m. Mexico City). A live audio webcast of the conference call will be available to the public on a listen-only basis at http://ir.volaris.com

About Volaris:

Controladora Vuela Compañía de Aviación, 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 beginning operations in March 2006, Volaris has increased its routes from five to more than 148 and its fleet from four to 57 aircraft. Volaris offers more than 270 daily flight segments on routes that connect 40 cities in Mexico and 22 cities in the United States and Central America with the youngest aircraft fleet in Mexico. Volaris targets passengers who are visiting friends and relatives, cost-conscious business people and leisure travelers in Mexico and to select destinations in the United States and Central America. Volaris has received the ESR Award for Social Corporate Responsibility for six 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 or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "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. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 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.

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