Key Financial Results
- Q1 Total Revenue: $770 million (14% YoY on 2.3% capacity growth)
- Q1 TRASM: $0.0862 (11% YoY, in line with guidance)
- Q1 EBITDAR Margin: 22.9% (2 points below guidance due to fuel)
- Q1 EBIT: – $21 million (- 2.8% margin)
- Q1 Net Loss: $71 million (- $0.62 per ADS)
- Q1 CASM-ex: $0.0604 (in line with guidance, 12% YoY)
- Average Economic Fuel Cost: $3.06/gallon (16% vs guidance assumption of $2.20)

Balance Sheet & Liquidity
- Cash: $766 million (24% of trailing 12-month revenue, -$8M from prior quarter)
- Net Leverage: 3.2x EBITDAR
- Operating Cash Flow: $251 million
- CapEx (ex-fleet PDP): $87 million (in line with plan)
- No material near-term debt maturities
- All predelivery payments financed through mid-2028

Revised 2026 Guidance & Outlook

Full Year Guidance Suspended due to fuel volatility and geopolitical uncertainty

Capacity:
- Full year ASM growth: ~4% (down from original 7% guidance)
- Q2 ASM growth: 0% to 2% (domestic -3%, international mid-to-high single digits)
- Maintains flexibility for further reductions; actions primarily in domestic market

Q2 Guidance:
- TRASM: ~$0.095
- CASM-ex: ~$0.068 (representing peak for the year)
- EBITDAR margin: ~13%
- FX assumption: MXN 17.85/USD
- Fuel assumption: ~$4/gallon Gulf Coast jet fuel

CASM-ex Drivers:
- Q2 increase of $0.007 from nonrecurring items (merger costs, fleet redeliveries, maintenance)
- 4 major maintenance events in Q2
- 43 engine shop visits (vs 15 in Q1 2025) – accelerating Pratt & Whitney shop inductions
- Full year CASM-ex expected ~$0.062 as fleet productivity improves

Fuel Crisis Response

Fuel Recovery:
- Q2: Expect 20%-30% fuel cost recapture
- Progressive improvement in second half as pricing/capacity actions fully reflected
- By Q4: Trending back toward original expectations (per forward curve)

Pricing Actions:
- ~10% base fare increases implemented
- ~20% increases on selected ancillary products
- Double-digit fare adjustments in domestic and international
- Stronger absorption in transborder segment (lower elasticity)
- “Faster than historical ability to recapture fuel” given disciplined industry

Capacity Management:
- April: -2 points reduction
- May: -9 points reduction
- June and second half: Prepared for further cuts if needed
- Rolling 6-8 week planning horizon for dynamic schedule adjustments
- Focus on off-peak frequency optimization without canceling routes
- Maintaining network connectivity during key travel periods
- Greater flexibility than US carriers due to fewer crew rostering constraints

Fuel Efficiency:
- Every 10 aircraft shifted from CEO to NEO: $2M monthly fuel savings at current prices
- NEO mix increasing to ~70% average for 2026 (vs 52% in 2025)

Hedging:
- 20% of April consumption hedged for peak travel (Semana Santa/Spring Break) at $2.05 strike
- Represents 7% of Q2 consumption; ~$11M benefit
- Evaluating additional hedging opportunities

Operational Performance

Q1 Traffic:
- Passengers: 5.2 million (implied from 2.3% ASM growth)
- System Load Factor: 85% (flat YoY)
– Domestic: 89% (steady demand)
– International: 80.1% (improving, trending toward historical levels)
- Capacity breakdown: Domestic -6%, International strong growth

Network:
- Over 40% exposure to higher-yielding transborder markets (strategic asset)
- Transborder showing “lower elasticity” and stronger pricing absorption
- Trade-down effect from legacy carriers to ULCC model in US-Mexico routes
- Temporary softness in early March related to Jalisco security events (since recovered)

Revenue Quality & Ancillaries
- Ancillary Revenue: 57% of total operating revenues (from 51% prior year)
- Ancillary per Passenger: 8% YoY
- Driven by: Finer customer segmentation, credit card revenue, Ya Vas vacation packages
- Less elastic than base fares (important offset lever)
- Altitude Loyalty: 1 million active members
- Credit card integration launching end of Q2 (points earning from all transactions)

Fleet Strategy & GTF Situation

Current Fleet (March 31):
- Total aircraft: 155 (average age 6.8 years, 66% NEOs)
- Average AOGs: 36 aircraft in Q1
- AOG progression: Peaked at 41, closed quarter at 32 (-9 from start)

Fleet Evolution:
- Contractual fleet declining: 155 (Dec 2025) → ~137 (Dec 2027)
- Productive fleet increasing: 112 (end 2025) → ~125 (2026)
- Benefits: ~$50M annual lease savings, ~$360M lease liability reduction by 2027

2026 Deliveries & Changes:
- 14 CEO deliveries planned (all fuel-efficient)
- Sold 4 2026 deliveries to lessor
- Postponed 7 2027 deliveries and 3 2028 deliveries
- Most 2027-2028 deliveries rescheduled
- No incremental aircraft investment until GTF advantage engines enter service

Four-Piece Fleet Management:
1. Return of Pratt & Whitney engines
2. Redelivery of leased aircraft
3. New Airbus arrivals
4. Balanced ASM growth based on demand

Cost Structure & Flexibility
- ~70% of costs variable or semi-fixed
- Able to adjust crew schedules closer to flights than US peers
- Faster capacity and cost response capability
- Evaluating noncritical CapEx deferrals to preserve cash

Demand & Booking Trends
- Demand remains resilient across network despite fare increases
- Strong demand in both domestic and international
- Peak in sales occurred March (post-Iran war) – unusual
- Solid booking trends into summer high season
- Mexican macro stable (consumption, wages)
- Cross-border improving steadily since mid-2025

Timing Considerations:
- Fuel impacts P&L current basis; cash flow ~30-day lag
- Booking curve ~45 days marks lag in fare adjustment translation
- Ancillaries more linear/closer-in (faster response)
- Q1/April significantly pre-booked before fuel spike

FIFA World Cup Impact
- Expect moderate traffic increase (conservative view)
- Fares converged industry-wide to expected levels
- Gradually releasing June seats; host city fares tracking historical trends
- Potential upside from close-in bookings

Viva Merger Update
- Filed with Mexico’s National Antitrust Commission
- First round of information requests completed
- Second information request received last week; teams working on response
- Shareholder vote (March 25): 94% quorum, 92% approval of outstanding shares
- Regulatory review: Up to 12 months from announcement expected
- Scale becomes “even more relevant” in higher fuel environment
- No adjustment mechanisms in transaction based on relative profitability
- Conditions precedent exist; Board will make value-creating decisions

Strategic Positioning
Management emphasized structural resilience versus 2022 fuel spike:
- More diversified business model
- Broader commercial toolkit
- Stronger network discipline
- >40% transborder exposure (higher-yielding, lower elasticity)
- Variable cost structure enables nimble response
- Two structurally growing markets (Mexico domestic + US-Mexico transborder)

Focus remains on: disciplined growth, cash preservation, profitability over growth, restoring fleet productivity, and maintaining ULCC value proposition attractiveness.