Volaris Reports 4Q22, Full-Year Financial Results
Mexican ultra-low-cost airline Volaris has released its financial results for 2022, reporting an increase of 29% in operating income compared with 2021 for a total of MX$2.847 billion (US$158 million). Despite registering two consecutive quarters with net profit, Volaris reported a net loss of US$30 million in 2022 as its expenses also grew during the year.
Last year “was an important touchstone for Volaris, as it showcased our ability to deliver on the important financial expectations that are within our control. We flexed our organization to post strong topline results and expand capacity by 26%, while keeping controllable expenses roughly flat as our adjusted CASM [expenses per available seat mile] ex fuel was down 0.4%, all during periods of significant economic volatility,” says Enrique Beltranena, President and CEO, Volaris.
Despite facing increased operating expenses that represented 98% of operating income for the year, Volaris closed 2023 with an adequate financial performance, says the airline. The team's focus and discipline throughout this "challenging" year positions Volaris to lead the air travel market in Mexico in the next decade as the main ultra-low-cost airline globally, says Beltranena.
The airline’s report revealed a 27% increase in passengers transported, with 31.1 million people traveling with Volaris compared to just over 24 million in 2021. In 4Q22 alone, Volaris transported 8.475 million passengers, a 16% increase from the same period in the previous year.
In a challenging environment with high jet fuel costs, the company managed to maintain its unit cost, contrasting with other ultra-low-cost airlines that increased their unit costs by approximately 24%, says the company.
Volaris faced a 55% increase in operating expenses and a 68% increase in fuel costs, bringing net fuel spending to US$1.299 billion in 2022 from US$609 million in 2021. In 4Q22, the company reported a profit before interest, taxes, depreciation, amortization, and rents (EBITDAR) of US$586 million, a 27% decrease from 2021. The airline closed 4Q22 with a net profit of US$28 million, a significant increase over the US$10 million loss in the same period of 2021.
Despite the company's net loss for the year, the increase in demand was met with a 26% increase in capacity compared to 2021, and the cost per available seat-mile was reduced by 0.4%. In 2023, Volaris expects its operating income to range between US$3.2 billion to US$3.4 billion.
In 4Q22, Volaris added four A321neo and one A320neo aircraft to its fleet, bringing the total number of aircraft to 117 as of December 31, 2022. The fleet consisted of four A319s, 88 A320s and 25 A321s, with an average age of 5.4 years and an average seating capacity of 192 passengers per plane. Of the total fleet, 54% of the aircraft are New Engine Option (neo) models. The carrier plans to increase its fleet to about 125 aircraft by the end of 2023.