UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of July 2019
 
Commission File Number: 001-36059

 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V.
(Name of Registrant)
 
Av. Antonio Dovalí Jaime No. 70, 13 Floor, Tower B
Colonia Zedec Santa Fe
United Mexican States, Mexico City 01210
+(52) 55-5261-6400
(Address of Principal Executive Offices)

 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F x                 Form 40-F ¨
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
 
Yes ¨          No  x
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
 
Yes ¨          No  x
 
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes ¨          No  x
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- __________

 

 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, Controladora Vuela Compañía de Aviación, S.A.B. de C.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 	Controladora Vuela Compañía de Aviación, S.A.B. de C.V.	
 	 	 	
Date: July 25, 2019	By:	/s/ Sonia Jerez Burdeus	
 	Name:	Sonia Jerez Burdeus	
 	Title:	Senior Vice President
Chief Financial Officer	
 	 	 	
 	By:	/s/ Jaime E. Pous Fernández	
 	Name:	Jaime E. Pous Fernández	
 	Title:	Senior Vice President
Chief Legal Officer and Corporate Affairs	

 
 
EXHIBIT INDEX
 
The following exhibit is filed as part of this Form 6-K:
 
Exhibit	 	Description	
 	 	
 99.18	 	Press release dated July 25, 2019	

 

Exhibit 99.18
 
VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	
 
General information about financial statements
 
Ticker:	VLRS	
Period covered by financial statements:	2019-01-01 to 2019-06-30	
Date of end of reporting period:	2019-06-30	
Name of reporting entity or other means of identification:	VLRS	
Description of presentation currency:	MXN	
Level of rounding used in financial statements:	Thousands	
Consolidated:	Yes	
Number of quarter:	2	
Type of issuer:	ICS	
Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period:	 	
Description of nature of financial statements:	 	

 	1   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Follow-up of analysis

 
 
Analyst Coverage
 
Firm	 	Analyst	
Banorte	 	José Itzamna Espitia	
Barclays	 	Pablo Monsivais	
Bradesco BBI - Equity Research	 	Victor Mizusaki	
Citi	 	Stephen Trent	
Cowen Securities	 	Helane Becker	
Deutsche Bank	 	Michael Linenberg	
Evercore Partners	 	Duane Pfennigwerth	
GBM	 	Mauricio Martinez	
HSBC	 	Alexandre P Falcao	
Intercam Casa de Bolsa	 	Alejandra Marcos	
Morgan Stanley	 	Joshua Milberg	
Santander	 	Pedro Bruno	
UBS	 	Rogerio Araujo	
Vector	 	Marco Antonio Montañez	
Goldman Sachs	 	Bruno Amorim	

 	2   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Consolidated Statements of financial position
 
 	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Consolidated statement of financial position	 	 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	8,123,683	 	 	 	5,862,942	 	
Trade and other current receivables	 	 	1,675,668	 	 	 	1,128,891	 	
Recoverable Income tax	 	 	447,032	 	 	 	337,799	 	
Financial instruments	 	 	91,657	 	 	 	62,440	 	
Inventories	 	 	293,982	 	 	 	297,271	 	
Current biological assets	 	 	0	 	 	 	0	 	
Other current non-financial assets	 	 	1,681,513	 	 	 	1,233,426	 	
Total current assets other than non-current assets or disposal groups classified as held for sale or as held for distribution to owners	 	 	12,313,535	 	 	 	8,922,769	 	
Non-current assets or disposal groups classified as held for sale or as held for distribution to owners	 	 	0	 	 	 	0	 	
Total current assets	 	 	12,313,535	 	 	 	8,922,769	 	
Non-current assets	 	 	 	 	 	 	 	 	
Trade and other non-current receivables	 	 	0	 	 	 	0	 	
Current tax assets, non-current	 	 	0	 	 	 	0	 	
Non-current inventories	 	 	0	 	 	 	0	 	
Non-current biological assets	 	 	0	 	 	 	0	 	
Financial instruments	 	 	0	 	 	 	0	 	
Investments accounted for using equity method	 	 	0	 	 	 	0	 	
Investments in subsidiaries, joint ventures and associates	 	 	0	 	 	 	0	 	
Rotable spare parts, furniture and equipment, net	 	 	5,840,393	 	 	 	5,782,282	 	
Investment property	 	 	0	 	 	 	0	 	
Right-of-use assets that do not meet definition of investment property	 	 	32,415,801	 	 	 	31,985,598	 	
Goodwill	 	 	0	 	 	 	0	 	
Intangible assets, net	 	 	170,214	 	 	 	179,124	 	
Deferred income tax	 	 	2,708,532	 	 	 	2,864,333	 	
Other non-current non-financial assets	 	 	6,860,173	 	 	 	6,566,215	 	
Total non-current assets	 	 	47,995,113	 	 	 	47,377,552	 	
Total assets	 	 	60,308,648	 	 	 	56,300,321	 	
Equity and liabilities	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	
Short-term liabilities	 	 	 	 	 	 	 	 	
Trade and other current payables	 	 	8,378,600	 	 	 	5,473,872	 	
Income tax payable	 	 	795	 	 	 	4,065	 	
Other current financial liabilities	 	 	1,648,437	 	 	 	1,335,207	 	
Current lease liabilities	 	 	4,517,265	 	 	 	4,970,492	 	
Accrued liabilities	 	 	2,644,382	 	 	 	2,318,392	 	
Short-term provisions	 	 	 	 	 	 	 	 	
Current provisions for employee benefits	 	 	0	 	 	 	0	 	
Other liabilities	 	 	201,134	 	 	 	25,835	 	
Total short-term provisions	 	 	201,134	 	 	 	25,835	 	
Total short-term liabilities other than liabilities included in disposal groups classified as held for sale	 	 	17,390,613	 	 	 	14,127,863	 	
Liabilities included in disposal groups classified as held for sale	 	 	0	 	 	 	0	 	
Total short-term liabilities	 	 	17,390,613	 	 	 	14,127,863	 	

 	3   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Long-term liabilities	 	 	 	 	 	 	 	 	
Trade and other non-current payables	 	 	0	 	 	 	0	 	
Current tax liabilities, non-current	 	 	0	 	 	 	0	 	
Other non-current financial liabilities	 	 	2,426,269	 	 	 	2,310,939	 	
Non-current lease liabilities	 	 	34,625,411	 	 	 	34,585,208	 	
Other non-current non-financial liabilities	 	 	120,963	 	 	 	137,233	 	
Non-current provisions	 	 	 	 	 	 	 	 	
Non-current provisions for employee benefits	 	 	20,869	 	 	 	18,153	 	
Other non-current provisions	 	 	386,013	 	 	 	327,934	 	
Total non-current provisions	 	 	406,882	 	 	 	346,087	 	
Deferred tax liabilities	 	 	1,243,562	 	 	 	1,095,452	 	
Total non-current liabilities	 	 	38,823,087	 	 	 	38,474,919	 	
Total liabilities	 	 	56,213,700	 	 	 	52,602,782	 	
Equity	 	 	 	 	 	 	 	 	
Capital stock	 	 	2,973,559	 	 	 	2,973,559	 	
Additional paid in capital	 	 	1,822,433	 	 	 	1,837,073	 	
Treasury shares	 	 	122,169	 	 	 	122,661	 	
Retained earnings	 	 	(569,605	)	 	 	(1,208,265	)	
Other reserves	 	 	(9,270	)	 	 	217,833	 	
Total equity attributable to owners of parent	 	 	4,094,948	 	 	 	3,697,539	 	
Non-controlling interests	 	 	0	 	 	 	0	 	
Total equity	 	 	4,094,948	 	 	 	3,697,539	 	
Total equity and liabilities	 	 	60,308,648	 	 	 	56,300,321	 	

 	4   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Consolidated Statements of Operations
 
 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	 	For the three
months ended
June 30, 2019	 	 	For the three
months ended
June 30, 2018
(Unaudited)	 	
Consolidated statement of operations	 	 	 	 	 	 	 	 	 	 	 	 	
Profit (loss)	 	 	 	 	 	 	 	 	 	 	 	 	
Operating revenues	 	 	15,521,654	 	 	 	12,080,416	 	 	 	8,329,249	 	 	 	6,230,242	 	
Cost of sales	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Gross profit	 	 	15,521,654	 	 	 	12,080,416	 	 	 	8,329,249	 	 	 	6,230,242	 	
Sales, marketing and distribution expenses	 	 	621,253	 	 	 	739,138	 	 	 	349,962	 	 	 	381,687	 	
Administrative expenses	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other operating income	 	 	123,309	 	 	 	231,766	 	 	 	123,235	 	 	 	231,020	 	
Other operating expense	 	 	[1] 14,338,432	 	 	 	[2] 12,280,751	 	 	 	[3] 7,443,164	 	 	 	[4] 6,242,689	 	
Operating income (loss)	 	 	685,278	 	 	 	(707,707	)	 	 	659,358	 	 	 	(163,114	)	
Finance income	 	 	1,249,603	 	 	 	1,673,158	 	 	 	397,455	 	 	 	37,257	 	
Finance costs	 	 	1,022,509	 	 	 	2,802,423	 	 	 	859,660	 	 	 	2,368,827	 	
Share of profit (loss) of associates and joint ventures accounted for using equity method	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Income (loss) before income tax	 	 	912,372	 	 	 	(1,836,972	)	 	 	197,153	 	 	 	(2,494,684	)	
Income tax expense (benefit)	 	 	273,712	 	 	 	(531,879	)	 	 	77,750	 	 	 	(728,190	)	
Income (loss) from continuing operations	 	 	638,660	 	 	 	(1,305,093	)	 	 	119,403	 	 	 	(1,766,494	)	
Income (loss) from discontinued operations	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Net income (loss)	 	 	638,660	 	 	 	(1,305,093	)	 	 	119,403	 	 	 	(1,766,494	)	
Income (loss), attributable to	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss), attributable to owners of parent	 	 	638,660	 	 	 	(1,305,093	)	 	 	119,403	 	 	 	(1,766,494	)	
Income (loss), attributable to non-controlling interests	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share from continuing operations	 	 	0.63	 	 	 	(1.29	)	 	 	0.12	 	 	 	(1.75	)	
Basic earnings (loss) per share from discontinued operations	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total basic earnings (loss) per share	 	 	0.63	 	 	 	(1.29	)	 	 	0.12	 	 	 	(1.75	)	
Diluted earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings (loss) per share from continuing operations	 	 	0.63	 	 	 	(1.29	)	 	 	0.12	 	 	 	(1.75	)	
Diluted earnings (loss) per share from discontinued operations	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total diluted earnings (loss) per share	 	 	0.63	 	 	 	(1.29	)	 	 	0.12	 	 	 	(1.75	)	
 
[1] ↑     Includes the following expenses: i) Fuel by Ps. 5,770,066 ii) Depreciation and amortization by Ps. 2,627,052, iii) Landing, take-off and navigation expenses by Ps. 2,420,333, iv) Salaries and benefits by Ps. 1,739,151, v) Maintenance by Ps. 722,701, vi) Aircraft and engine rent expenses by Ps. 542,734 and vii) Other operating expenses by Ps. 516,395.
 
[2] ↑     Includes the following expenses: i) Fuel by Ps. 4,619,699, ii) Landing, take-off and navigation expenses by Ps. 2,273,115, iii) Depreciation and amortization by Ps. 2,206,569, iv) Salaries and benefits by Ps. 1,496,129, v) Maintenance by Ps. 722,182, vi) Aircraft and engine rent expenses by Ps. 421,897 and vii) Other operating expenses by Ps. 541,160.
 
[3] ↑     Includes the following expenses: i) Fuel by Ps. 3,087,189, ii) Depreciation and amortization by Ps. 1,335,029, iii) Landing, take-off and navigation expenses by Ps. 1,188,166, iv) Salaries and benefits by Ps. 887,493, v) Maintenance by Ps. 369,307, vi) Aircraft and engine rent expenses by Ps. 315,588 and vii) Other operating expenses by Ps.260,392.
 
[4] ↑     Includes the following expenses: i) Fuel by Ps. 2,444,818, ii) Landing, take-off and navigation expenses by Ps. 1,149,296, iii) Depreciation and amortization by Ps. 1,135,093, iv) Salaries and benefits by Ps. 749,837, v) Maintenance by Ps. 375,846, vi) Aircraft and engine rent expenses by Ps. 104,502 and vii) Other operating expenses by Ps. 283,297.

 	5   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Consolidated Statements of Comprehensive Income
 
 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	 	For the three
months ended
June 30, 2019	 	 	For the three
months ended
June 30, 2018
(Unaudited)	 	
Consolidated statement comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) for the period	 	 	638,660	 	 	 	(1,305,093	)	 	 	119,403	 	 	 	(1,766,494	)	
Other comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Components of other comprehensive income that will not be reclassified to profit or loss, net of tax	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income, net of tax, gains (losses) from investments in equity instruments	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, gains (losses) on revaluation	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, gains (losses) on remeasurements of defined benefit plans	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, change in fair value of financial liability attributable to change in credit risk of liability	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, gains (losses) on hedging instruments that hedge investments in equity instruments	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total other comprehensive income that will not be reclassified to profit or loss, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Components of other comprehensive income that will be reclassified to profit or loss, net of tax	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Exchange differences on translation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on exchange differences on translation, net of tax	 	 	6,144	 	 	 	20,773	 	 	 	1,616	 	 	 	(8,744	)	
Reclassification adjustments on exchange differences on translation, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, exchange differences on translation	 	 	6,144	 	 	 	20,773	 	 	 	1,616	 	 	 	(8,744	)	
Available-for-sale financial assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on remeasuring available-for-sale financial assets, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reclassification adjustments on available-for-sale financial assets, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, available-for-sale financial assets	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Cash flow hedges	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Losses) gains on cash flow hedges, net of tax	 	 	(354,808	)	 	 	59,285	 	 	 	336,769	 	 	 	59,285	 	
Reclassification adjustments on cash flow hedges, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amounts removed from equity and included in carrying amount of non-financial asset (liability) whose acquisition or incurrence was hedged highly probable forecast transaction, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive (loss) income, net of tax, cash flow hedges	 	 	(354,808	)	 	 	59,285	 	 	 	336,769	 	 	 	59,285	 	
Hedges of net investment in foreign operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on hedges of net investments in foreign operations, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reclassification adjustments on hedges of net investments in foreign operations, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, hedges of net investments in foreign operations	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	6   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	 	For the three
months ended
June 30, 2019	 	 	For the three
months ended
June 30, 2018
(Unaudited)	 	
Change in value of time value of options	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains on change in value of time value of options, net of tax	 	 	121,561	 	 	 	107,740	 	 	 	20,442	 	 	 	103,544	 	
Reclassification adjustments on change in value of time value of options, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, change in value of time value of options	 	 	121,561	 	 	 	107,740	 	 	 	20,442	 	 	 	103,544	 	
Change in value of forward elements of forward contracts	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on change in value of forward elements of forward contracts, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reclassification adjustments on change in value of forward elements of forward contracts, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, change in value of forward elements of forward contracts	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Change in value of foreign currency basis spreads	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on change in value of foreign currency basis spreads, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reclassification adjustments on change in value of foreign currency basis spreads, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, change in value of foreign currency basis spreads	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Financial assets measured at fair value through other comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gains (losses) on financial assets measured at fair value through other comprehensive income, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reclassification adjustments on financial assets measured at fair value through other comprehensive income, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amounts removed from equity and adjusted against fair value of financial assets on reclassification out of fair value through other comprehensive income measurement category, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income, net of tax, financial assets measured at fair value through other comprehensive income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss, net of tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total other comprehensive income that will be reclassified to profit or loss, net of tax	 	 	(227,103	)	 	 	187,798	 	 	 	358,827	 	 	 	154,085	 	
Total other comprehensive (loss) income	 	 	(227,103	)	 	 	187,798	 	 	 	358,827	 	 	 	154,085	 	
Total comprehensive income (loss)	 	 	411,557	 	 	 	(1,117,295	)	 	 	478,230	 	 	 	(1,612,409	)	
Comprehensive income attributable to	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss), attributable to owners of parent	 	 	411,557	 	 	 	(1,117,295	)	 	 	478,230	 	 	 	(1,612,409	)	
Comprehensive income, attributable to non-controlling interests	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	7   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Consolidated statement of cash flows, indirect method
 
 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	
Consolidated statement of cash flows	 	 	 	 	 	 	 	 	
Cash flows from (used in) operating activities	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	638,660	 	 	 	(1,305,093	)	
Adjustments to reconcile profit (loss)	 	 	 	 	 	 	 	 	
Discontinued operations	 	 	0	 	 	 	0	 	
Adjustments for income tax expense	 	 	273,712	 	 	 	(531,879	)	
Adjustments for finance costs	 	 	(335,678	)	 	 	934,441	 	
Adjustments for depreciation and amortization expense	 	 	2,627,052	 	 	 	2,206,569	 	
Adjustments for impairment loss (reversal of impairment loss) recognised in profit or loss	 	 	0	 	 	 	0	 	
Adjustments for provisions	 	 	0	 	 	 	0	 	
Adjustments for unrealised foreign exchange losses (gains)	 	 	0	 	 	 	0	 	
Adjustments for share-based payments	 	 	14,550	 	 	 	4,824	 	
Adjustments for fair value losses (gains)	 	 	0	 	 	 	0	 	
Adjustments for undistributed profits of associates	 	 	0	 	 	 	0	 	
Adjustments for gains on disposal of non-current assets	 	 	(95,565	)	 	 	(218,814	)	
Participation in associates and joint ventures	 	 	0	 	 	 	0	 	
Adjustments for decrease (increase) in inventories	 	 	3,289	 	 	 	(21,416	)	
Adjustments for (increase) decrease in trade accounts receivable	 	 	(331,955	)	 	 	51,358	 	
Adjustments for increase in other operating receivables	 	 	(205,845	)	 	 	(113,289	)	
Adjustments for increase in trade accounts payable	 	 	375,617	 	 	 	100,052	 	
Adjustments for increase in other operating payables	 	 	759,958	 	 	 	650,948	 	
Other adjustments for non-cash items	 	 	(32,343	)	 	 	(51,873	)	
Other adjustments for which cash effects are investing or financing cash flow	 	 	0	 	 	 	0	 	
Straight-line rent adjustment	 	 	0	 	 	 	0	 	
Amortization of lease fees	 	 	0	 	 	 	0	 	
Setting property values	 	 	0	 	 	 	0	 	
Other adjustments to reconcile profit	 	 	1,521,529	 	 	 	1,674,313	 	
Total adjustments to reconcile profit	 	 	4,574,321	 	 	 	4,685,234	 	
Net cash flows provided by operations	 	 	5,212,981	 	 	 	3,380,141	 	
Dividends paid	 	 	0	 	 	 	0	 	
Dividends received	 	 	0	 	 	 	0	 	
Interest paid	 	 	0	 	 	 	0	 	
Interest received	 	 	92,180	 	 	 	70,943	 	
Income taxes refund	 	 	47,580	 	 	 	134,336	 	
Other inflows (outflows) of cash	 	 	0	 	 	 	0	 	
Net cash flows provided by operating activities	 	 	5,257,581	 	 	 	3,316,748	 	
Cash flows from (used in) investing activities	 	 	 	 	 	 	 	 	
Cash flows from losing control of subsidiaries or other businesses	 	 	0	 	 	 	0	 	
Cash flows used in obtaining control of subsidiaries or other businesses	 	 	0	 	 	 	0	 	
Other cash receipts from sales of equity or debt instruments of other entities	 	 	0	 	 	 	0	 	
Other cash payments to acquire equity or debt instruments of other entities	 	 	0	 	 	 	0	 	
Other cash receipts from sales of interests in joint ventures	 	 	0	 	 	 	0	 	
Other cash payments to acquire interests in joint ventures	 	 	0	 	 	 	0	 	
Proceeds from sales of rotable spare parts, furniture and equipment	 	 	597,013	 	 	 	524,160	 	
Purchase of rotable spare parts, furniture and equipment	 	 	779,978	 	 	 	1,162,278	 	
Proceeds from sales of intangible assets	 	 	0	 	 	 	0	 	
Purchase of intangible assets	 	 	24,779	 	 	 	23,364	 	
Proceeds from sales of other long-term assets	 	 	0	 	 	 	0	 	

 	8   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	
Purchase of other long-term assets	 	 	0	 	 	 	0	 	
Proceeds from government grants	 	 	0	 	 	 	0	 	
Cash advances and loans made to other parties	 	 	0	 	 	 	0	 	
Cash receipts from repayment of advances and loans made to other parties	 	 	0	 	 	 	0	 	
Cash payments for futures contracts, forward contracts, option contracts and swap contracts	 	 	0	 	 	 	0	 	
Cash receipts from futures contracts, forward contracts, option contracts and swap contracts	 	 	0	 	 	 	0	 	
Dividends received	 	 	0	 	 	 	0	 	
Interest paid	 	 	0	 	 	 	0	 	
Interest received	 	 	0	 	 	 	0	 	
Income taxes refund (paid)	 	 	0	 	 	 	0	 	
Other inflows (outflows) of cash	 	 	0	 	 	 	0	 	
Net cash flows used in investing activities	 	 	(207,744	)	 	 	(661,482	)	
Cash flows from (used in) financing activities	 	 	 	 	 	 	 	 	
Proceeds from changes in ownership interests in subsidiaries that do not result in loss of control	 	 	0	 	 	 	0	 	
Payments from changes in ownership interests in subsidiaries that do not result in loss of control	 	 	0	 	 	 	0	 	
Proceeds from issuing shares	 	 	0	 	 	 	0	 	
Proceeds from issuing other equity instruments	 	 	0	 	 	 	0	 	
Payments to acquire or redeem entity's shares	 	 	0	 	 	 	0	 	
Payments of other equity instruments	 	 	0	 	 	 	0	 	
Proceeds from borrowings	 	 	1,588,570	 	 	 	380,119	 	
Repayments of borrowings	 	 	934,056	 	 	 	428,815	 	
Payments of finance lease liabilities	 	 	0	 	 	 	0	 	
Payments of lease liabilities	 	 	3,130,389	 	 	 	2,717,410	 	
Proceeds from government grants	 	 	0	 	 	 	0	 	
Dividends paid	 	 	0	 	 	 	0	 	
Interest paid	 	 	71,742	 	 	 	73,439	 	
Income taxes refund (paid)	 	 	0	 	 	 	0	 	
Other outflows of cash	 	 	(85,728	)	 	 	(16,575	)	
Net cash flows used in financing activities	 	 	(2,633,345	)	 	 	(2,856,120	)	
Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes	 	 	2,416,492	 	 	 	(200,854	)	
Effect of exchange rate changes on cash and cash equivalents	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	 	 	(155,751	)	 	 	20,754	 	
Net increase (decrease) in cash and cash equivalents	 	 	2,260,741	 	 	 	(180,100	)	
Cash and cash equivalents at beginning of period	 	 	5,862,942	 	 	 	6,950,879	 	
Cash and cash equivalents at end of period	 	 	8,123,683	 	 	 	6,770,779	 	

 	9   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
Consolidated Statements of changes in equity - Accumulated Current
 
 	 	Statements of changes in equity	 	
 	 	Capital stock
	 	 	Additional paid in capital
	 	 	Treasury shares
	 	 	Retained earnings	 	 	Revaluation surplus	 	 	Exchange differences
on translation of
foreign operations	 	 	Cash flow hedges	 	 	Reserve of gains and losses on hedging instruments that hedge investments in equity instruments	 	 	Reserve of change in value of time value of options	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	2,973,559	 	 	 	1,837,073	 	 	 	122,661	 	 	 	(1,208,265	)	 	 	0	 	 	 	10,222	 	 	 	9,969	 	 	 	0	 	 	 	(93,872	)	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	638,660	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	6,144	 	 	 	(354,808	)	 	 	0	 	 	 	121,561	 	
Total comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	638,660	 	 	 	0	 	 	 	6,144	 	 	 	(354,808	)	 	 	0	 	 	 	121,561	 	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	(492	)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through share-based payment transactions, equity	 	 	0	 	 	 	(14,640	)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total (decrease) increase in equity	 	 	0	 	 	 	(14,640	)	 	 	(492	)	 	 	638,660	 	 	 	0	 	 	 	6,144	 	 	 	(354,808	)	 	 	0	 	 	 	121,561	 	
Equity at end of period	 	 	2,973,559	 	 	 	1,822,433	 	 	 	122,169	 	 	 	(569,605	)	 	 	0	 	 	 	16,366	 	 	 	(344,839	)	 	 	0	 	 	 	27,689	 	

 	10   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 

 	 	Statements of changes in equity	 	
 	 	Reserve of change in
value of forward
elements of forward
contracts	 	 	Reserve of change in
value of foreign
currency basis spreads	 	 	Reserve of gains and
losses on financial
assets measured at fair
value through other
comprehensive income	 	 	Reserve of gains and
losses on remeasuring
available-for-sale
financial assets	 	 	Reserve of share-based
payments	 	 	Remeasurements of
defined benefit plans	 	 	Amount recognised in
other comprehensive
income and
accumulated in equity
relating to non-current
assets or disposal
groups held for sale	 	 	Reserve of gains and
losses from
investments in equity
instruments	 	 	Reserve of
change in
fair value of
financial
liability
attributable
to change in
credit risk of
liability	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	335	 	 	 	0	 	 	 	0	 	 	 	0	 	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through share-based payment transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total (decrease) increase in equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Equity at end of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	335	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	11   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	 	Statements of changes in equity	 	
 	 	Reserve for catastrophe	 	 	Reserve for
equalization	 	 	Reserve of
discretionary
participation features	 	 	Other comprehensive
income	 	 	Other reserves	 	 	Equity attributable to
owners of parent	 	 	Non-controlling
interests	 	 	Total equity	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	291,179	 	 	 	217,833	 	 	 	3,697,539	 	 	 	0	 	 	 	3,697,539	 	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	638,660	 	 	 	0	 	 	 	638,660	 	
Other comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(227,103	)	 	 	(227,103	)	 	 	0	 	 	 	(227,103	)	
Total comprehensive income (loss)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(227,103	)	 	 	411,557	 	 	 	0	 	 	 	411,557	 	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	492	 	 	 	0	 	 	 	492	 	
(Decrease) increase through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through share-based payment transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(14,640	)	 	 	0	 	 	 	(14,640	)	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total (decrease) increase in equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(227,103	)	 	 	397,409	 	 	 	0	 	 	 	397,409	 	
Equity at end of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	291,179	 	 	 	(9,270	)	 	 	4,094,948	 	 	 	0	 	 	 	4,094,948	 	

 	12   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Consolidated Statement of changes in equity - Accumulated Previous (Unaudited)

 	 	Statements of changes in equity	 	
 	 	Capital stock	 	 	Additional paid in
capital	 	 	Treasury shares	 	 	Retained earnings	 	 	Revaluation surplus	 	 	Exchange differences
on translation of
foreign operations	 	 	Cash flow hedges	 	 	Reserve of gains and
losses on hedging
instruments that hedge
investments in equity
instruments	 	 	Reserve of
change in
value of time
value of
options	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	2,973,559	 	 	 	1,804,528	 	 	 	85,034	 	 	 	(447,394	)	 	 	0	 	 	 	(11,934	)	 	 	0	 	 	 	0	 	 	 	114,681	 	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(1,305,093	)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	20,773	 	 	 	59,285	 	 	 	0	 	 	 	107,740	 	
Total comprehensive (loss) income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(1,305,093	)	 	 	0	 	 	 	20,773	 	 	 	59,285	 	 	 	0	 	 	 	107,740	 	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	(531	)	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through share-based payment transactions, equity	 	 	0	 	 	 	4,824	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total increase (decrease) in equity	 	 	0	 	 	 	4,824	 	 	 	(531	)	 	 	(1,305,093	)	 	 	0	 	 	 	20,773	 	 	 	59,285	 	 	 	0	 	 	 	107,740	 	
Equity at end of period	 	 	2,973,559	 	 	 	1,809,352	 	 	 	84,503	 	 	 	(1,752,487	)	 	 	0	 	 	 	8,839	 	 	 	59,285	 	 	 	0	 	 	 	222,421	 	

 	13   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 

 	 	Statements of changes in equity	 	
 	 	Reserve of change in
value of forward
elements of forward
contracts	 	 	Reserve of change in
value of foreign
currency basis spreads	 	 	Reserve of gains and
losses on financial
assets measured at fair
value through other
comprehensive income	 	 	Reserve of gains and
losses on remeasuring
available-for-sale
financial assets	 	 	Reserve of share-based
payments	 	 	Remeasurements of
defined benefit plans	 	 	Amount recognised in
other comprehensive
income and
accumulated in equity
relating to non-current
assets or disposal
groups held for sale	 	 	Reserve of gains and
losses from
investments in equity
instruments	 	 	Reserve of
change in
fair value of
financial
liability
attributable
to change in
credit risk of
liability	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(3,857	)	 	 	0	 	 	 	0	 	 	 	0	 	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other comprehensive income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total comprehensive (loss) income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through share-based payment transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total increase (decrease) in equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Equity at end of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(3,857	)	 	 	0	 	 	 	0	 	 	 	0	 	

 

 	14   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
 	 	Statements of changes in equity	 	
 	 	Reserve for catastrophe
	 	 	Reserve for
equalization
	 	 	Reserve of
discretionary
participation features
	 	 	Other comprehensive
income
	 	 	Other reserves
	 	 	Equity attributable to
owners of parent 	 	 	Non-controlling
interests	 	 	Total equity
	 	
Consolidated statements of changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at beginning of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	291,179	 	 	 	390,069	 	 	 	4,635,728	 	 	 	0	 	 	 	4,635,728	 	
Changes in equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	(1,305,093	)	 	 	0	 	 	 	(1,305,093	)	
Other comprehensive income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	187,798	 	 	 	187,798	 	 	 	0	 	 	 	187,798	 	
Total comprehensive (loss) income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	187,798	 	 	 	(1,117,295	)	 	 	0	 	 	 	(1,117,295	)	
Issue of equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividends recognised as distributions to owners	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through other contributions by owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Decrease through other distributions to owners, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
(Decrease) increase through other changes, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	531	 	 	 	0	 	 	 	531	 	
Increase (decrease) through treasury share transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Increase through share-based payment transactions, equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	4,824	 	 	 	0	 	 	 	4,824	 	
Amount removed from reserve of cash flow hedges and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of time value of options and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of forward elements of forward contracts and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Amount removed from reserve of change in value of foreign currency basis spreads and included in initial cost or other carrying amount of non-financial asset (liability) or firm commitment for which fair value hedge accounting is applied	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total increase (decrease) in equity	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	187,798	 	 	 	(1,111,940	)	 	 	0	 	 	 	(1,111,940	)	
Equity at end of period	 	 	0	 	 	 	0	 	 	 	0	 	 	 	291,179	 	 	 	577,867	 	 	 	3,523,788	 	 	 	0	 	 	 	3,523,788	 	

 	15   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Informative data about the Consolidated Statement of financial position
 
 	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Informative data of the Consolidated Statement of Financial Position	 	 	 	 	 	 	
Capital stock	 	 	2,973,559	 	 	 	2,973,559	 	
Restatement of capital stock	 	 	0	 	 	 	0	 	
Plan assets for pensions and seniority premiums	 	 	0	 	 	 	0	 	
Number of executives	 	 	0	 	 	 	0	 	
Number of employees	 	 	4,748	 	 	 	4,600	 	
Number of workers	 	 	0	 	 	 	0	 	
Outstanding shares	 	 	1,011,876,677	 	 	 	1,011,876,677	 	
Repurchased shares	 	 	0	 	 	 	0	 	
Restricted cash	 	 	77,907	 	 	 	0	 	
Guaranteed debt of associated companies	 	 	0	 	 	 	0	 	

 	16   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
Informative data about the Consolidated Statement of Operations
 
 	 	For the six
months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	 	For the three
months ended
June 30, 2019	 	 	For the three
months ended
June 30, 2018
(Unaudited)	 	
Informative data of the Consolidated Statements of operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	2,627,052	 	 	 	2,206,569	 	 	 	1,335,029	 	 	 	1,135,093	 	

 	17   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Informative data – Consolidated Statements of operations for 12 months
 
 	 	For the twelve
months ended
June 30, 2019	 	 	For the twelve
months ended
June 30, 2018
(Unaudited)	 	
Informative data – Consolidated Statements of operations for 12 months	 	 	 	 	 	 	 	 	
Operating revenues	 	 	30,746,388	 	 	 	25,176,137	 	
Operating income	 	 	2,107,598	 	 	 	990,771	 	
Net income (loss)	 	 	1,182,868	 	 	 	(1,114,686	)	
Net income (loss), attributable to owners of parent	 	 	1,182,868	 	 	 	(1,114,686	)	
Depreciation and amortization	 	 	5,044,637	 	 	 	5,147,109	 	

 	18   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Breakdown of credits

 	 	 	 	 	 	 	 	 	 	Denomination	 	
 	 	 	 	 	 	 	 	 	 	Credits in domestic currency	 	 	Credits in foreign currency	 	
 	 	 	 	 	 	 	 	 	 	Time interval	 	 	Time interval	 	
Credit type /
Institution	 	Foreign
institution
(yes/no)	 	Contract
signing date	 	Expiration
date	 	Interest
rate	 	Current
year	 	 	Until
1 year	 	 	Until
2years	 	 	Until
3 years	 	 	Until
4 years	 	 	Until
5 years
or more	 	 	Current
year	 	 	Until
1 year	 	 	Until
2 years	 	 	Until
3 years	 	 	Until
4 years	 	 	Until
5 years
or more	 	
Banks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign trade	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Banks - secured	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Commercial banks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Banco Santander - Bancomext (1)	 	NO	 	2011-07-27	 	2022-05-31	 	LIBOR + 2.60%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	262,767	 	 	 	1,387,572	 	 	 	821,058	 	 	 	124,592	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	262,767	 	 	 	1,387,572	 	 	 	821,058	 	 	 	124,592	 	 	 	0	 	 	 	0	 	
Other banks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total banks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	262,767	 	 	 	1,387,572	 	 	 	821,058	 	 	 	124,592	 	 	 	0	 	 	 	0	 	
Stock market	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Listed on stock exchange - unsecured	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CEBUR	 	NO	 	2019-06-20	 	2024-06-20	 	TIIE + 1.75%	 	 	1,383	 	 	 	(3,285	)	 	 	(7,127	)	 	 	493,459	 	 	 	495,825	 	 	 	498,462	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	1,383	 	 	 	(3,285	)	 	 	(7,127	)	 	 	493,459	 	 	 	495,825	 	 	 	498,462	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Listed on stock exchange - secured	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Private placements - unsecured	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Private placements - secured	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total listed on stock exchanges and private placements	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	1,383	 	 	 	(3,285	)	 	 	(7,127	)	 	 	493,459	 	 	 	495,825	 	 	 	498,462	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other current and non-current liabilities with cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other current and non-current liabilities with cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total other current and non-current liabilities with cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Suppliers	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Suppliers	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landing, take off and navigation expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	279,410	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fuel expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	261,534	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Administrative expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	59,248	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales, marketing and distribution expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	33,717	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Technology and communication expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	19,629	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maintenance expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	19,154	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other services expenses	 	NO	 	2019-04-22	 	2019-07-18	 	 	 	 	2,091	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maintenance expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	626,088	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Technology and communication expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	74,492	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landing, take off and navigation expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	58,962	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Administrative expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	29,106	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other services expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	990	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales, marketing and distribution expenses USD	 	SI	 	2019-04-22	 	2019-07-18	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	943	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	674,783	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	790,581	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total suppliers	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	674,783	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	790,581	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other current and non-current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other current and non-current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total other current and non-current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total credits	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	 	 	 	 	 	 	 	676,166	 	 	 	(3,285	)	 	 	(7,127	)	 	 	493,459	 	 	 	495,825	 	 	 	498,462	 	 	 	1,053,348	 	 	 	1,387,572	 	 	 	821,058	 	 	 	124,592	 	 	 	0	 	 	 	0	 	

 	19   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
 
Annex - Monetary foreign currency position
 
Disclosure of monetary foreign currency position

 
U.S. dollar amounts at June 30, 2019 have been included solely for the convenience of the reader and are translated from Mexican pesos, using an exchange rate of Ps.19.1685 per U.S. dollar, as reported by the Mexican Central Bank (Banco de Mexico) as the ride for the payment of obligations denominated in foreign currency payable in Mexico in effect on June 30, 2019.

 

 	 	Currencies	 	
 	 	Dollars	 	 	Dollar equivalent in
pesos	 	 	Other currencies
equivalent in dollars	 	 	Other currencies
equivalent in pesos	 	 	Total pesos	 	
Foreign currency position	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Monetary assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Short-term monetary assets	 	 	456,366	 	 	 	8,747,852	 	 	 	0	 	 	 	0	 	 	 	8,747,852	 	
Long-term monetary assets	 	 	344,214	 	 	 	6,598,066	 	 	 	0	 	 	 	0	 	 	 	6,598,066	 	
Total monetary assets	 	 	800,580	 	 	 	15,345,918	 	 	 	0	 	 	 	0	 	 	 	15,345,918	 	
Liabilities position	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Short-term liabilities	 	 	420,084	 	 	 	8,052,380	 	 	 	0	 	 	 	0	 	 	 	8,052,380	 	
Long-term liabilities	 	 	1,852,920	 	 	 	35,517,697	 	 	 	0	 	 	 	0	 	 	 	35,517,697	 	
Total liabilities	 	 	2,273,004	 	 	 	43,570,077	 	 	 	0	 	 	 	0	 	 	 	43,570,077	 	
Net monetary liabilities	 	 	(1,472,424	)	 	 	(28,224,159	)	 	 	0	 	 	 	0	 	 	 	(28,224,159	)	

 	20   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
Annex - Distribution of income by product
 
 	 	Income type	 	
 	 	National income	 	 	Export income	 	 	Income of
subsidiaries abroad	 	 	Total income	 	
Operating Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic (Mexico)	 	 	10,888,758	 	 	 	0	 	 	 	0	 	 	 	10,888,758	 	
International (United States of America and Central America)	 	 	0	 	 	 	0	 	 	 	4,632,896	 	 	 	4,632,896	 	
Total operating revenues	 	 	10,888,758	 	 	 	0	 	 	 	4,632,896	 	 	 	15,521,654	 	

 	21   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Annex - Financial derivate instruments
 
Management’s discussion about derivative financial instrument policies explaining whether these policies allow them to be used only for hedging or other purposes such as trading.
 
The Company´s activities are exposed to different financial risks resulting from exogenous variables that are not under its control, but whose effects can be potentially adverse. The Company’s global risk management program is focused on existing uncertainty in the financial markets and is intended to minimize potential adverse effects on net earnings and working capital requirements. Volaris uses derivative financial instruments to mitigate part of these risks and does not acquire financial derivative instruments for speculative or trading purposes.
 
The Company has a Risk Management team which identifies and evaluates the exposure to different financial risks. It is also in charge of designing strategies to mitigate them. Accordingly, it has a Hedging Policy in place and procedures related thereto, on which those strategies are based. All policies, procedures and strategies are approved by different administrative entities based on the Corporate Governance.
 
The Hedging Policy, as well as its processes are approved by different administrative entities according to the Corporate Governance. The Hedging Policy establishes that derivative financial instrument transactions will be approved and implemented/monitored by certain committees. Compliance with the Hedging Policy and its procedures are subject to internal and external audits as well as a Corporate Governance.
 
The Hedging Policy holds a conservative position regarding derivative financial instruments, since it only allows the company to enter into positions that are correlated with the primary position to be hedged (in accordance with International Financial Reporting Standards  “IFRS” , under which the Company prepares its financial information). The Company’s objective is to apply hedge accounting treatment to all derivative financial instruments.
 
Volaris aims to transfer a portion of market risk to its financial counterparties through the use of derivative financial instruments, described as follows:
 
	1.	Fuel price fluctuation risk: Volaris’ contractual agreements with its fuel suppliers are linked to the market price index of the underlying asset; therefore, it is exposed to an increase in such price. Volaris enters into derivative financial instruments to hedge against significant increases in the fuel price. The instruments are traded on over-the-counter (“OTC”) markets, with approved counterparties and within limits specified on the Hedging Policy. As of the date of this report, the Company uses Asian call options and Zero Cost Collars, being U.S. Gulf Coast Jet Fuel 54 the underlying asset. Asian instruments consider the monthly average price of the underlying, hence it matches the outflows of Volaris main fuel supplier. All derivative financial instruments qualified as hedge accounting.	
 
 	2.	Foreign currency risk: While Mexican Peso is the functional currency of the company, a significant portion of its operating expenses is denominated in U.S. dollar; thus, Volaris relies on sustained U.S. dollar cash flows coming from operations in the United States of America and Central America to support part of its commitments in such currency, however there’s still a mismatch. Foreign currency risk arises from possible unfavorable movements in the exchange rate which could have a negative impact in the company’s cash flows. To mitigate this risk, the Hedging Policy allows the Company to use foreign exchange derivative financial instruments. As of the date of this report, the Company does not have any outstanding position on foreign exchange financial instruments.	

 	22   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	3.	Interest rate variation risk: The Company’s exposure to the risk of changes in market interest rates is related primarily to the Company’s flight equipment operating lease agreements and long-term debt obligations with floating interest rates. The Company enters into derivative financial instruments to hedge a portion of such exposure. As of the date of this report, the Company does not have any outstanding position on interest rate derivatives.	
 
Outstanding derivative financial instruments may require collateral to guarantee a portion of the unsettled mark-to-market loss prior to maturity. The amount of collateral delivered in pledge, is presented as part of current assets under the caption guarantee deposits. It is assessed reviewed and adjusted accordingly on a daily basis., 
 
Trading markets and eligible counterparties
 
The Company only operates in over the counter (“OTC”) markets. To minimize counterparty risk, the Company enters into ISDA agreements with counterparties with recognized financial capacity; therefore, significant risks of default on any of them are not foreseen. As of June 30, 2019, the Company has 8 ISDAs in place with different financial institutions and was active with 2 of them during the second quarter 2019.
 
Those agreements have a Credit Support Annex ("CSA") section, which sets credit conditions and guidelines for margin calls that are stipulated therein, including minimum amounts and rounding off. Hedging positions are distributed among different counterparties with the purpose of diversifying our exposure, and thus, optimizing financial conditions of different CSA thresholds. Moreover, the Company has internal resources to meet the requirements related to derivative financial instruments. 
 
Generic description of the valuation techniques, distinguishing instruments that are valued at cost or fair value, as well as valuation methods and techniques.
 
The designation of calculation agents is documented at the ISDAs whereby Volaris operates. The Company uses the valuations provided by the financial institutions of each derivative financial instrument. Afterwards, that fair value is compared with internally developed valuation techniques that use valid and recognized methodologies based on the assets listed on its respective market and using Bloomberg as the main source of information for the levels.
 
In accordance with International Financial Reporting Standards ("IFRS"), the Company elaborate its financial statements; Volaris performs prospective effectiveness tests, as well as hedging records in which derivative financial instruments are classified in accordance with the type of underlying asset (monitored and updated constantly). As of the date of this report, all of the Company’s financial derivative instruments are considered effective and therefore, are recorded under hedge accounting assumptions.
 
Management discussion on internal and external sources of liquidity that could be used to meet the requirements related to derivative financial instruments
 
The Company only operates with financial counterparties with which it has an ISDA agreement. Those agreements have a Credit Support Annex ("CSA") section, which sets credit conditions and guidelines for margin calls that are stipulated therein, including minimum amounts and rounding off. Hedging positions are distributed among different counterparties with the purpose of diversifying our exposure, and thus, optimizing financial conditions of different CSA thresholds. Moreover, the Company has internal resources to meet the requirements related to derivative financial instruments.

 	23   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Explanation of changes in exposure to the main risks identified and in managing them, as well as contingencies and events known or expected by management that can affect future reports.
 
The Company’s activities are exposed to several market risks, such as fuel price, exchange rates and interest rates. During the second quarter of 2019, there was no evidence of significant changes that could modify the exposure to the risks described above, a situation that can change in the future.
 
Quantitative information
 
As of the date of this report, all the derivative financial instruments held by the Company qualified as hedge accounting; for this reason, the changes in their fair value will only be the result of changes in the price levels of the underlying asset, and it will not modify the objective of the hedge for which it was initially entered for.

 	24   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 

Notes - Subclassifications of assets, liabilities and equities
 
 	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Subclassifications of assets, liabilities and equities	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	
Cash	 	 	 	 	 	 	 	 	
Cash on hand	 	 	5,255	 	 	 	5,238	 	
Balances with banks	 	 	2,955,902	 	 	 	1,061,150	 	
Total cash	 	 	2,961,157	 	 	 	1,066,388	 	
Cash equivalents	 	 	 	 	 	 	 	 	
Short-term deposits, classified as cash equivalents	 	 	0	 	 	 	0	 	
Short-term investments, classified as cash equivalents	 	 	5,162,526	 	 	 	4,796,554	 	
Other banking arrangements, classified as cash equivalents	 	 	0	 	 	 	0	 	
Total cash equivalents	 	 	5,162,526	 	 	 	4,796,554	 	
Other cash and cash equivalents	 	 	0	 	 	 	0	 	
Total cash and cash equivalents	 	 	8,123,683	 	 	 	5,862,942	 	
Trade and other current receivables	 	 	 	 	 	 	 	 	
Current trade receivables	 	 	550,349	 	 	 	237,610	 	
Current receivables due from related parties	 	 	75,039	 	 	 	8,266	 	
Current prepayments	 	 	 	 	 	 	 	 	
Current advances to suppliers	 	 	0	 	 	 	0	 	
Current prepaid expenses	 	 	0	 	 	 	0	 	
Total current prepayments	 	 	0	 	 	 	0	 	
Current receivables from taxes other than income tax	 	 	643,797	 	 	 	612,146	 	
Current value added tax receivables	 	 	0	 	 	 	0	 	
Current receivables from sale of properties	 	 	0	 	 	 	0	 	
Current receivables from rental of properties	 	 	0	 	 	 	0	 	
Other current receivables	 	 	406,483	 	 	 	270,869	 	
Total trade and other current receivables	 	 	1,675,668	 	 	 	1,128,891	 	
Classes of current inventories	 	 	 	 	 	 	 	 	
Current raw materials and current production supplies	 	 	 	 	 	 	 	 	
Current raw materials	 	 	0	 	 	 	0	 	
Current production supplies	 	 	0	 	 	 	0	 	
Total current raw materials and current production supplies	 	 	0	 	 	 	0	 	
Current merchandise	 	 	0	 	 	 	0	 	
Current work in progress	 	 	0	 	 	 	0	 	
Current finished goods	 	 	0	 	 	 	0	 	
Spare parts and accessories of flight equipment	 	 	286,454	 	 	 	289,737	 	
Property intended for sale in ordinary course of business	 	 	0	 	 	 	0	 	
Miscellaneous supplies	 	 	7,528	 	 	 	7,534	 	
Total current inventories	 	 	293,982	 	 	 	297,271	 	
Non-current assets or disposal groups classified as held for sale or as held for distribution to owners	 	 	 	 	 	 	 	 	
Non-current assets or disposal groups classified as held for sale	 	 	0	 	 	 	0	 	
Non-current assets or disposal groups classified as held for distribution to owners	 	 	0	 	 	 	0	 	
Total non-current assets or disposal groups classified as held for sale or as held for distribution to owners	 	 	0	 	 	 	0	 	
Trade and other non-current receivables	 	 	 	 	 	 	 	 	
Non-current trade receivables	 	 	0	 	 	 	0	 	
Non-current receivables due from related parties	 	 	0	 	 	 	0	 	
Non-current prepayments	 	 	0	 	 	 	0	 	
Non-current lease prepayments	 	 	0	 	 	 	0	 	
Non-current receivables from taxes other than income tax	 	 	0	 	 	 	0	 	
Non-current value added tax receivables	 	 	0	 	 	 	0	 	

 	25   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
 	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Non-current receivables from sale of properties	 	 	0	 	 	 	0	 	
Non-current receivables from rental of properties	 	 	0	 	 	 	0	 	
Revenue for billing	 	 	0	 	 	 	0	 	
Other non-current receivables	 	 	0	 	 	 	0	 	
Total trade and other non-current receivables	 	 	0	 	 	 	0	 	
Investments in subsidiaries, joint ventures and associates	 	 	 	 	 	 	 	 	
Investments in subsidiaries	 	 	0	 	 	 	0	 	
Investments in joint ventures	 	 	0	 	 	 	0	 	
Investments in associates	 	 	0	 	 	 	0	 	
Total investments in subsidiaries, joint ventures and associates	 	 	0	 	 	 	0	 	
Rotable spare parts, furniture and equipment	 	 	 	 	 	 	 	 	
Land and buildings	 	 	 	 	 	 	 	 	
Land	 	 	0	 	 	 	0	 	
Buildings	 	 	0	 	 	 	0	 	
Total land and buildings	 	 	0	 	 	 	0	 	
Machinery	 	 	0	 	 	 	0	 	
Vehicles	 	 	 	 	 	 	 	 	
Ships	 	 	0	 	 	 	0	 	
Aircraft	 	 	0	 	 	 	0	 	
Motor vehicles	 	 	0	 	 	 	0	 	
Total vehicles	 	 	0	 	 	 	0	 	
Fixtures and fittings	 	 	0	 	 	 	0	 	
Office equipment	 	 	35,252	 	 	 	38,306	 	
Tangible exploration and evaluation assets	 	 	0	 	 	 	0	 	
Mining assets	 	 	0	 	 	 	0	 	
Oil and gas assets	 	 	0	 	 	 	0	 	
Construction in progress	 	 	3,809,803	 	 	 	3,830,063	 	
Construction prepayments	 	 	0	 	 	 	0	 	
Other Rotable spare parts, furniture and equipment	 	 	1,995,338	 	 	 	1,913,913	 	
Total Rotable spare parts, furniture and equipment	 	 	5,840,393	 	 	 	5,782,282	 	
Investment property	 	 	 	 	 	 	 	 	
Investment property completed	 	 	0	 	 	 	0	 	
Investment property under construction or development	 	 	0	 	 	 	0	 	
Investment property prepayments	 	 	0	 	 	 	0	 	
Total investment property	 	 	0	 	 	 	0	 	
Intangible assets and goodwill	 	 	 	 	 	 	 	 	
Intangible assets other than goodwill	 	 	 	 	 	 	 	 	
Brand names	 	 	0	 	 	 	0	 	
Intangible exploration and evaluation assets	 	 	0	 	 	 	0	 	
Mastheads and publishing titles	 	 	0	 	 	 	0	 	
Computer software	 	 	114,147	 	 	 	80,530	 	
Licenses and franchises	 	 	2,472	 	 	 	2,724	 	
Copyrights, patents and other industrial property rights, service and operating rights	 	 	0	 	 	 	0	 	
Recipes, formulae, models, designs and prototypes	 	 	0	 	 	 	0	 	
Intangible assets under development	 	 	53,595	 	 	 	95,870	 	
Other intangible assets	 	 	0	 	 	 	0	 	
Total intangible assets other than goodwill	 	 	170,214	 	 	 	179,124	 	
Goodwill	 	 	0	 	 	 	0	 	
Total intangible assets and goodwill	 	 	170,214	 	 	 	179,124	 	
Trade and other current payables	 	 	 	 	 	 	 	 	
Current trade payables	 	 	1,465,364	 	 	 	1,085,499	 	
Current payables to related parties	 	 	40,399	 	 	 	17,775	 	

 	26   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Accruals and deferred income classified as current	 	As of June 30,
2019	 	 	As of December 31,
2018
(Unaudited)	 	
Accruals and deferred income classified as current	 	 	 	 	 	 	 	 	
Deferred income classified as current	 	 	4,226,013	 	 	 	2,438,516	 	
Rent deferred income classified as current	 	 	0	 	 	 	0	 	
Accruals classified as current	 	 	0	 	 	 	0	 	
Short-term employee benefits accruals	 	 	0	 	 	 	0	 	
Total accruals and deferred income classified as current	 	 	4,226,013	 	 	 	2,438,516	 	
Current payables on social security and taxes other than income tax	 	 	2,646,824	 	 	 	1,932,082	 	
Current value added tax payables	 	 	0	 	 	 	0	 	
Current retention payables	 	 	0	 	 	 	0	 	
Other current payables	 	 	0	 	 	 	0	 	
Total trade and other current payables	 	 	8,378,600	 	 	 	5,473,872	 	
Other current financial liabilities	 	 	 	 	 	 	 	 	
Bank loans current	 	 	1,650,339	 	 	 	1,212,259	 	
Stock market loans current	 	 	(1,902	)	 	 	0	 	
Other current liabilities at cost	 	 	0	 	 	 	0	 	
Other current liabilities no cost	 	 	0	 	 	 	0	 	
Other current financial liabilities	 	 	0	 	 	 	122,948	 	
Total Other current financial liabilities	 	 	1,648,437	 	 	 	1,335,207	 	
Trade and other non-current payables	 	 	 	 	 	 	 	 	
Non-current trade payables	 	 	0	 	 	 	0	 	
Non-current payables to related parties	 	 	0	 	 	 	0	 	
Accruals and deferred income classified as non-current	 	 	 	 	 	 	 	 	
Deferred income classified as non-current	 	 	0	 	 	 	0	 	
Rent deferred income classified as non-current	 	 	0	 	 	 	0	 	
Accruals classified as non-current	 	 	0	 	 	 	0	 	
Total accruals and deferred income classified as non-current	 	 	0	 	 	 	0	 	
Non-current payables on social security and taxes other than income tax	 	 	0	 	 	 	0	 	
Non-current value added tax payables	 	 	0	 	 	 	0	 	
Non-current retention payables	 	 	0	 	 	 	0	 	
Other non-current payables	 	 	0	 	 	 	0	 	
Total trade and other non-current payables	 	 	0	 	 	 	0	 	
Other non-current financial liabilities	 	 	 	 	 	 	 	 	
Bank loans non-current	 	 	945,650	 	 	 	2,310,939	 	
Stock market loans non-current	 	 	1,480,619	 	 	 	0	 	
Other non-current liabilities at cost	 	 	0	 	 	 	0	 	
Other non-current liabilities no cost	 	 	0	 	 	 	0	 	
Other non-current financial liabilities	 	 	0	 	 	 	0	 	
Total Other non-current financial liabilities	 	 	2,426,269	 	 	 	2,310,939	 	
Other provisions	 	 	 	 	 	 	 	 	
Other non-current provisions	 	 	386,013	 	 	 	327,934	 	
Other current provisions	 	 	201,134	 	 	 	25,835	 	
Total other provisions	 	 	587,147	 	 	 	353,769	 	
Other reserves	 	 	 	 	 	 	 	 	
Revaluation surplus	 	 	0	 	 	 	0	 	
Reserve of exchange differences on translation	 	 	0	 	 	 	0	 	
Reserve of cash flow hedges	 	 	0	 	 	 	0	 	
Reserve of gains and losses on hedging instruments that hedge investments in equity instruments	 	 	0	 	 	 	0	 	
Reserve of change in value of time value of options	 	 	0	 	 	 	0	 	
Reserve of change in value of forward elements of forward contracts	 	 	0	 	 	 	0	 	
Reserve of change in value of foreign currency basis spreads	 	 	0	 	 	 	0	 	
Reserve of gains and losses on financial assets measured at fair value through other comprehensive income	 	 	0	 	 	 	0	 	
Reserve of gains and losses on remeasuring available-for-sale financial assets	 	 	0	 	 	 	0	 	
Reserve of share-based payments	 	 	0	 	 	 	0	 	
Reserve of remeasurements of defined benefit plans	 	 	0	 	 	 	0	 	

 	27   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

  

 	 	 	As of June 30,
2019	 	 	 	As of December 31,
2018
(Unaudited)	 	
Amount recognised in other comprehensive income and accumulated in equity relating to non-current assets or disposal groups held for sale	 	 	0	 	 	 	0	 	
Reserve of gains and losses from investments in equity instruments	 	 	0	 	 	 	0	 	
Reserve of change in fair value of financial liability attributable to change in credit risk of liability	 	 	0	 	 	 	0	 	
Reserve for catastrophe	 	 	0	 	 	 	0	 	
Reserve for equalization	 	 	0	 	 	 	0	 	
Reserve of discretionary participation features	 	 	0	 	 	 	0	 	
Reserve of equity component of convertible instruments	 	 	0	 	 	 	0	 	
Contributions for future capital increases	 	 	1	 	 	 	1	 	
Merger reserve	 	 	0	 	 	 	0	 	
Legal reserve	 	 	291,178	 	 	 	291,178	 	
Other comprehensive income	 	 	(300,449	)	 	 	(73,346	)	
Total other reserves	 	 	(9,270	)	 	 	217,833	 	
Net assets (liabilities)	 	 	 	 	 	 	 	 	
Assets	 	 	60,308,648	 	 	 	56,300,321	 	
Liabilities	 	 	56,213,700	 	 	 	52,602,782	 	
Net assets	 	 	4,094,948	 	 	 	3,697,539	 	
Net current assets (liabilities)	 	 	 	 	 	 	 	 	
Current assets	 	 	12,313,535	 	 	 	8,922,769	 	
Current liabilities	 	 	17,390,613	 	 	 	14,127,863	 	
Net current liabilities	 	 	(5,077,078	)	 	 	(5,205,094	)	

 	28   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Notes - Analysis of income and expense
 
 	 	For the six
 months ended
June 30, 2019	 	 	For the six
months ended
June 30, 2018
(Unaudited)	 	 	For the three
months ended
 June 30, 2019	 	 	For the three
months ended
June 30, 2018
(Unaudited)	 	
Analysis of income and expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue from rendering of services	 	 	15,521,654	 	 	 	12,080,416	 	 	 	8,329,249	 	 	 	6,230,242	 	
Revenue from sale of goods	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Interest income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Royalty income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Dividend income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Rental income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Revenue from construction contracts	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other revenue	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total revenue	 	 	15,521,654	 	 	 	12,080,416	 	 	 	8,329,249	 	 	 	6,230,242	 	
Finance income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	92,180	 	 	 	70,943	 	 	 	54,375	 	 	 	37,257	 	
Net gain on foreign exchange	 	 	1,157,423	 	 	 	1,602,215	 	 	 	343,080	 	 	 	0	 	
Gains on change in fair value of derivatives	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Gain on change in fair value of financial instruments	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other finance income	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Total finance income	 	 	1,249,603	 	 	 	1,673,158	 	 	 	397,455	 	 	 	37,257	 	
Finance costs	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Net loss on foreign exchange	 	 	0	 	 	 	1,964,331	 	 	 	339,696	 	 	 	1,925,817	 	
Losses on change in fair value of derivatives	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Loss on change in fair value of financial instruments	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Other finance cost	 	 	1,022,509	 	 	 	838,092	 	 	 	519,964	 	 	 	443,010	 	
Total finance costs	 	 	1,022,509	 	 	 	2,802,423	 	 	 	859,660	 	 	 	2,368,827	 	
Income tax (benefit) expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current tax	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Deferred income tax expense (benefit)	 	 	273,712	 	 	 	(531,879	)	 	 	77,750	 	 	 	(728,190	)	
Total income tax expense (benefit)	 	 	273,712	 	 	 	(531,879	)	 	 	77,750	 	 	 	(728,190	)	

 	29   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Notes - List of notes

CONTROLADORA VUELA COMPAÑÍA DE AVIACIÓN, S.A.B. DE C.V. AND SUBSIDIARIES
(d.b.a. VOLARIS)
 
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
 
At June 30, 2019 and December 31, 2018
 
(In thousands of Mexican pesos and thousands of U.S. dollars,
except when indicated otherwise)
 
1. Description of the business and summary of significant accounting policies
 
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (“Controladora” or the “Company”) was incorporated in Mexico in accordance with Mexican Corporate laws on October 27, 2005.
 
Controladora is domiciled in Mexico City at Av. Antonio Dovali Jaime No. 70, 13th Floor, Tower B, Colonia Zedec Santa Fe, Mexico D.F.
 
The Company, through its subsidiary Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V. (“Concesionaria”), has a concession to provide air transportation services for passengers, cargo and mail throughout Mexico and abroad.
 
Concesionaria’s concession was granted by the Mexican federal government through the Mexican Communications and Transportation Ministry ( Secretaría de Comunicaciones y Transportes ) on May 9, 2005 initially for a period of five years and was extended on February 17, 2010 for an additional period of ten years.
 
Concesionaria made its first commercial flight as a low-cost airline on March 13, 2006. The Company operates under the trade name of “Volaris”. On June 11, 2013, Controladora Vuela Compañía de Aviación, S.A.P.I. de C.V. changed its corporate name to Controladora Vuela Compañía de Aviación, S.A.B. de C.V.
 
On September 23, 2013, the Company completed its dual listing Initial Public Offering (“IPO”) on the New York Stock Exchange (“NYSE”) and on the Mexican Stock Exchange ( Bolsa Mexicana de Valores, or “BMV” ), and on September 18, 2013 its shares started trading under the ticker symbol “VLRS” and “VOLAR”, respectively.
 
On November 16, 2015, certain shareholders of the Company completed a secondary follow-on equity offering on the NYSE.
 
On November 10, 2016, the Company, through its subsidiary Vuela Aviación, S.A. (“Volaris Costa Rica”), obtained from the Costa Rican civil aviation authorities an air operator certificate to provide air transportation services for passengers, cargo and mail, in scheduled and non-scheduled flights for an initial period of five years. On December 1, 2016, Volaris Costa Rica started operations.
 
The accompanying unaudited interim condensed consolidated financial statements and notes were authorized for their issuance by the Company’s President and Chief Executive Officer, Enrique Beltranena, and Vice President and Chief Financial Officer, Sonia Jerez, on July 25 , 2019. Subsequent events have been considered through that date.
 
a) Relevant events
 
Issuance asset backed trust notes.
 
On June 20, 2019, the Company, through its subsidiary Concesionaria, completed the issuance 15,000,000 (fifteen million) asset backed trust notes (Certificados Bursátiles Fiduciarios) (the “ Trust Notes ”), to be issued under the ticker VOLARCB 19 for the amount of Ps.1,500,000,000.00 (one billion five hundred million Mexican Pesos) by CIBanco, S.A., Institución de Banca Multiple, acting as Trustee under the Irrevocable Trust number CIB/3249 created by Concesionaria in the first issuance under a program approved by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) for an amount of up to Ps.3,000,000,000.00 (three billion Mexican Pesos). The Trust Notes will be backed by future under the agreements entered into with the credit card processors with respect to funds coming from the sale of airplane tickets and ancillaries denominated in Mexican pesos, through credit card processors with respect to funds coming from the sale of airplane tickets and ancillaries denominated in Mexican Pesos, through credit cards VISA and MasterCard in its website, mobile app and travel agencies (the “Trust Notes”). The Trust Notes were listed on the Mexican Stock Exchange and have a maturity of five years and will pay an interest rate of TIIE + one hundred and seventy-five (175) percentage points.

 	30   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Shares conversion
 
On February 16, 2018, one of the Company’s shareholders concluded the conversion of 45,968,598 Series B Shares for the equivalent number of Series A Shares. This conversion has no impact either on the total number of outstanding shares or on the earnings-per-share calculation.
 
New code-share agreement
 
On January 16, 2018, the Company and Frontier Airlines (herein after Frontier) entered into a code-share operations agreement, which started operations in September.
 
Through this alliance, the Company´s customers gain access to additional cities in the U.S. beyond the current available destinations as the Company’s customers are able to buy a ticket throughout any of Frontier’s actual destinations; and Frontier customers gain first-time access to new destinations in Mexico through Volaris presence in Mexican airports. Tickets from Frontier can be purchased directly from the Volaris’ website.
 
b) Basis of preparation
 
The unaudited interim condensed consolidated financial statements, which include the consolidated statements of financial position as of June 30, 2019 (unaudited) and December 31, 2018 (audited), and the related consolidated statements of operations, comprehensive income for each of the three and six months period ended, changes in equity and cash flows for each of the six months period ended June 30, 2019 and 2018 (unaudited), have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting and using the same accounting policies applied in preparing the annual financial statements, except as explained below .
 
The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2018, 2017 and 2016, and for the three years’ period ended December 31, 2018.
 
c) Basis of consolidation
 
The accompanying unaudited interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries. At June 30, 2019 and December 31, 2018, for accounting purposes the companies included in the unaudited interim condensed consolidated financial statements are as follows:
 
 	 	 	 	 	 	% Equity interest	 	
Name	 	Principal
activities	 	Country	 	June
30, 2019	 	 	December
31, 2018	 	
Concesionaria	 	Air transportation services for passengers, cargo and mail throughout Mexico and abroad	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Volaris Costa Rica	 	Air transportation services for passengers, cargo and mail in Costa Rica and abroad	 	Costa Rica	 	 	100	%	 	 	100	%	

 	31   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Vuela, S.A. (“Vuela”)*	 	Air transportation services for passengers, cargo and mail in Guatemala and abroad	 	Guatemala	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Vuela El Salvador, S.A. de C.V.*	 	Air transportation services for passengers, cargo and mail in El Salvador and abroad	 	El Salvador	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Comercializadora Volaris, S.A. de C.V.	 	Merchandising of services	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Servicios Earhart, S.A. *	 	Recruitment and payroll	 	Guatemala	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Servicios Corporativos Volaris, S.A. de C.V.
(“Servicios Corporativos”)	 	Recruitment and payroll	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Servicios Administrativos Volaris, S.A. de C.V
(“Servicios Administrativos”)	 	Recruitment and payroll	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Comercializadora V Frecuenta, S.A. de C.V. (“Loyalty Program)**	 	Loyalty Program	 	México	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Viajes Vuela, S.A. de C.V.
(“Viajes Vuela”) (1)	 	Travel agency	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Deutsche Bank México, S.A., Trust 1710	 	Pre-delivery payments financing	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Deutsche Bank México, S.A., Trust 1711	 	Pre-delivery payments financing	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Irrevocable Administrative Trust number F/307750 “Administrative Trust”	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Irrevocable Administrative Trust number F/745291	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Irrevocable Administrative Trust number CIB/3081 “Administrative Trust”	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Irrevocable Administrative Trust number CIB/3249 “Administrative Trust”	 	Asset backed securities trustor & administrator	 	Mexico	 	 	100	%	 	 	-	 	
 
  *The Companies have not started operations yet in Guatemala and El Salvador.
**The Company has not started operations yet.
(1) With effect from July 16, 2018, the name of the Company was changed from Operaciones Volaris, S.A. de C.V. to Viajes Vuela, S.A. de C.V.

 	32   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

d) Retrospective changes in classification
 
During 2019, the Company modified certain amounts in the consolidated statements of financial position as of December 31, 2018 and in the consolidated statements of operations for the three- and six-months period ended June 30, 2018 as required by IAS 1 Presentation of Financial Statements . These modifications resulted from the adoption of IFRS 16 Leases.
 
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).
 
At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset).
 
Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. In addition, for leases denominated in a foreign currency other than the functional currency of the Company (which is the Mexican Peso) the lease liability will be remeasured with a charge to foreign exchange of the period.
 
IFRS 16 also requires lessees to make more extensive disclosures than under IAS 17.
 
IFRS 16 is effective for annual periods beginning on or after January 1, 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.
 
Transition to IFRS 16
 
The Company adopted IFRS 16 on the mandatory date January 1, 2019, through the full retrospective method starting on January 1, 2017.The Company applied the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4, see Note 12 for more information on the Company´s lease agreements.
 
The estimated impact on the statements of financial situation as of January 1, 2017, December 31, 2017 and December 31, 2018:
 
 	 	As of January 1 st ,
 2017	 	 	As of
December 31,
2017	 	 	As of
December 31,
2018	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment
(Right-of-use-assets)	 	Ps.	23,709,968	 	 	Ps.	25,075,501	 	 	Ps.	31,985,598	 	
Deferred income tax	 	 	2,699,552	 	 	 	2,231,702	 	 	 	2,271,031	 	
Prepaid expenses	 	 	(266,959	)	 	 	-	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Lease liabilities	 	Ps.	32,639,927	 	 	Ps.	32,436,015	 	 	Ps.	39,463,811	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	
Retained Earnings	 	Ps.	6,497,366	 	 	Ps.	5,128,812	 	 	Ps.	5,207,182	 	

 	33   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The estimated impact on the statement of operations for the years ended December 31, 2017 and 2018:
 
 	 	For the year ended
December 31, 2017	 	 	For the year ended
December 31, 2018	 	
Depreciation expense	 	Ps.	3,522,738	 	 	Ps.	4,123,513	 	
Operating lease expense	 	 	(5,038,920	)	 	 	(5,718,657	)	
Operating income	 	 	(1,516,182	)	 	 	(1,595,144	)	
Financial costs	 	 	1,381,027	 	 	 	1,682,420	 	
Foreign exchange (gain) loss	 	 	(1,434,290	)	 	 	30,423	 	
Income tax expense (benefit)	 	 	467,850	 	 	 	(39,328	)	
Net (income) loss	 	Ps.	(1,101,595	)	 	Ps.	78,371	 	
 
Due to the adoption of IFRS 16, the Company operating profit will improve, while its interest expense will increase. This is due to the change in the accounting for expenses of leases that were classified as operating leases under IAS 17.
 
Since all the aircraft and engine lease contracts are denominated in USDs, starting on March 25, 2019, the Company established a hedge on its USD denominated revenues using the lease liabilities denominated in USD as a hedge instrument. This hedging relationship is designated as a cash flow hedge of forecasted revenues to mitigate the volatility of the foreign exchange variation arising from the revaluation of its lease liabilities. The impact of this hedge will be presented as part of the total operating revenues; however, it was not material for the results of this second quarter.
 
Additionally, on the same date, the Company established a hedge on a portion of its forecasted fuel expense using as hedge instrument a portion of its USD denominated monetary assets. This hedging relationship is designated as a cash flow hedge of forecasted fuel expense to mitigate the volatility of the foreign exchange variation arising from the revaluation of this portion of USD denominated monetary asset. The impact of this hedge will be presented as part of the total fuel expense; however, it was not material for the results of this second quarter.
 
2. Impact of new International Reporting Standard
 
New and amended standards and interpretations
 
The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2018, except for the adoption of new standards and interpretations effective as of January 1, 2019. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
 
The nature and the effect of these changes are disclosed below.
 
IFRIC 22 — Foreign Currency Transactions and Advance Considerations
 
IFRIC 22 clarifies that the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration.
 
This interpretation does not have any impact on the Company’s consolidated financial statements.

 	34   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
 
The IASB issued amendments to IFRS 2 Share-based Payment that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The Company’s accounting policy for cash-settled share-based payments is consistent with the approach clarified in the amendments. In addition, the Company has no share-based payment transaction with net settlement features for withholding tax obligations and had not made any modifications to the terms and conditions of its share-based payment transaction. Therefore, these amendments do not have any impact on the consolidated financial statements.
 
IFRIC 23 — Uncertainty over Income Tax Treatments
 
IFRIC 23 clarifies the accounting for uncertainties in income taxes, the interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.
 
An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, that it used or plans to use in its income tax filing; if the entity concludes that it is probable that a particular tax treatment is accepted, the entity has to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings.
 
IFRIC 23 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted. The Company expects to adopt this interpretation at the effective date.
 
3. Significant accounting judgments, estimates and assumptions
 
The preparation of these unaudited interim condensed consolidated financial statements in accordance with IAS 34 requires management to make estimates, assumptions and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s unaudited interim condensed consolidated financial statements.
 
4. Convenience translation
 
U.S. dollar amounts at June 30, 2019 shown in the unaudited interim condensed consolidated financial statements have been included solely for the convenience of the reader and are translated from Mexican pesos, using an exchange rate of Ps.19.1685 per U.S. dollar, as reported by the Mexican Central Bank (Banco de México) as the rate for the payment of obligations denominated in foreign currency payable in Mexico in effect on June 30, 2019. Such translation should not be construed as a representation that the peso amounts have been or could be converted into U.S. dollars at this or any other rate. The referred information in U.S. dollars is solely for information purposes and does not represent the amounts are in accordance with IFRS or the equivalent in U.S. dollars in which the transactions were conducted or in which the amounts presented in Mexican pesos can be translated or realized.
 
5. Seasonality of operations
 
The results of operations for any interim period are not necessarily indicative of those for the entire year because the business is subject to seasonal fluctuations. The Company expect demand to be greater during the summer in the northern hemisphere, in December and around Easter, which can fall either in the first or second quarter, compared to the rest of the year. The Company and subsidiaries generally experience their lowest levels of passenger traffic in February, September and October, given their proportion of fixed costs, seasonality can affect their profitability from quarter to quarter. This information is provided to allow for a better understanding of the results; however management has concluded that this does not constitute “highly seasonal” as considered by IAS 34.

 	35   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

6. Risk management
 
Financial risk management
 
The Company’s activities are exposed to different financial risks stemmed from exogenous variables which are not under their control but whose effects might be potentially adverse such as: (i) market risk, (ii) credit risk, and (iii) liquidity risk. The Company’s global risk management program is focused on uncertainty in the financial markets and tries to minimize the potential adverse effects on net earnings and working capital requirements. The Company uses derivative financial instruments to hedge part of such risks. The Company does not enter into derivatives for trading or speculative purposes.
 
The sources of these financial risks exposures are included in both “on balance sheet” exposures, such as recognized financial assets and liabilities, as well as in “off-balance sheet” contractual agreements and on highly expected forecasted transactions. These on and off-balance sheet exposures, depending on their profiles, do represent potential cash flow variability exposure, in terms of receiving less inflows or facing the need to meet outflows which are higher than expected, therefore increase the working capital requirements.
 
Also, since adverse movements also erode the value of recognized financial assets and liabilities, as well some other off-balance sheet financial exposures such as operating leases, there is a need for value preservation, by transforming the profiles of these fair value exposures.
 
The Company has a Finance and Risk Management unit, which identifies and measures financial risk exposures, in order to design the strategies to mitigate or transform the profile of certain risk exposures, which are taken up to the Corporate Governance level for approval.
 
Market risk
 
a) Jet fuel price risk
 
Since the contractual agreements with jet fuel suppliers include reference to jet fuel index, the Company is exposed to fuel price risk which might have an impact in the forecasted consumption volumes. The Company’s jet fuel risk management policy aims to provide the Company with protection against increases in jet fuel prices. In an effort to achieve the aforesaid, the risk management policy allows the use of derivative financial instruments available on over the counter (“OTC”) markets with approved counterparties and within approved limits. Aircraft jet fuel consumed in the three months ended June 30, 2019 and 2018 represented 40% and 38%, of the Company’s operating expenses, respectively. Additionally, the Aircraft jet fuel consumed in the six months ended June 30, 2019 and 2018 represented 39% and 36%, of the Company’s operating expenses, respectively.
 
During the three months period ended June 30, 2019, the Company entered into US Gulf Coast Jet fuel 54 Asian call options and Zero-Cost Collars designated to hedge 27 million gallons. Such hedges represent a portion of the projected consumption for the next six months. During the three months period ended June 30, 2018, the Company did not enter into any fuel derivative financial instrument.
 
During the six months ended June 30, 2019, the Company entered into US Gulf Coast Jet fuel 54 Asian call options and Zero-Cost Collars designated to hedge 27 million gallons. Such hedges represent a portion of the projected consumption for the next six months. During the six months ended June 30, 2018, the Company did not enter into any fuel derivative financial instrument.
 
The Company decided to early adopt IFRS 9 (2013), beginning on October 1, 2014, which allows the Company to separate the intrinsic value and time value of an option contract and to designate as the hedging instrument only the change in the intrinsic value of the option. Because the external value (time value) of the Asian call and put options are related to a “transaction related hedged item,” it is required to be segregated and accounted for as a “cost of hedging” in other comprehensive income (“OCI”) and accrued as a separate component of stockholders’ equity until the related hedged item affects profit and loss.

 	36   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The underlying (US Gulf Coast Jet Fuel 54) of the options held by the Company is a consumption asset (energy commodity), which is not in the Company’s inventory. Instead, it is directly consumed by the Company’s fleet at different airport terminals. Therefore, although a non-financial asset is involved, its initial recognition does not generate a book adjustment in the Company’s inventories. Rather, it is initially accounted for in the Company’s OCI and a reclassification adjustment is made from OCI to profit and loss and recognized in the same period or periods in which the hedged item is expected to be allocated to profit and loss. Furthermore, the Company hedges its forecasted jet fuel consumption month after month, which is congruent with the maturity date of the monthly serial Asian call options and Zero-Cost collars.

As of June 30, 2019, the fair value of the outstanding US Gulf Coast Jet Fuel Asian call options was an unrealize gain of Ps.70,370; as for the Zero- Cost collars it was an unrealize gain of Ps.21,28 7 and is presented as part of the financial assets in the unaudited interim condensed consolidated statement of financial position.
 
As of December 31, 2018, the fair value of the outstanding US Gulf Coast Jet Fuel Asian call options was an unrealize gain of Ps. 48,199; as for the Zero- Cost collars it was an unrealize loss of Ps.122,948 and is presented as part of the financial assets in the unaudited interim condensed consolidated statement of financial position.
 
During the three months ended June 30, 2019 and 2018, the intrinsic value of the Asian call options recycled to the fuel cost was an expense and a (benefit) of Ps. 642 and Ps. (133,098), respectively.
 
During the three months ended June 30, 2019, the intrinsic value of the Zero-Cost Collars recycled to the fuel cost was an expense of Ps.1,016. As of June 30, 2018, the Company did not have an outstanding position in Zero-Cost Collars.
 
During the six months ended June 30, 2019 and 2018, the intrinsic value of the Asian call options recycled to the fuel cost was an expense and a (benefit) of Ps.766 and Ps. (201,474), respectively.
 
During the six months ended June 30, 2019, the intrinsic value of the Zero-Cost Collars recycled to the fuel cost was an expense of Ps.17,797. As of June 30, 2018, the Company did not have an outstanding position in Zero-Cost Collars.
 
The amount of positive cost of hedging derived from the extrinsic value changes of the jet fuel hedged position as of June 30, 2019 recognized in other comprehensive income totals Ps.22,689 (the cost of hedging in December 2018 totals Ps.134,096), and will be recycled to the fuel cost during 2019, as these options expire on a monthly basis.
  
The following table includes the notional amounts and strike prices of the derivative financial instruments outstanding as of the end of the year:
 
 	 	Position as of June 30, 2019	 	
 	 	Jet fuel contracts maturities	 	
Jet fuel risk	 	3Q 2019	 	 	4Q 2019	 	 	2019 Total	 	
Notional volume in gallons Asian Calls (thousands)*	 	US$	6,888	 	 	US$	20,446	 	 	US$	27,334	 	
Notional volume in gallons Zero- Cost collars (thousands)*	 	 	13,492	 	 	 	-	 	 	 	13,492	 	
Asian Calls Strike price agreed rate per gallon (U.S. dollars)**	 	US$	1.84	 	 	US$	1.88	 	 	US$	1.87	 	
Zero-Cost collars Strike price agreed rate per gallon (U.S.dollars)**	 	US$	1.68/1.88		 	US$	-	 	 	US$	1.68/1.88		
All-in	 	 	 	 	 	 	 	 	 	 	 	 	
Approximate percentage of hedge (of expected   consumption value) Asian Calls	 	 	10	%	 	 	30	%	 	 	20	%	
Approximate percentage of hedge (of expected     consumption value) Zero-Cost collars	 	 	20	%	 	 	 	 	 	 	10	%	
 
* US Gulf Coast Jet 54 as underlying asset
** Weighted average

 	37   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 	 	Position as of December 31, 2018	 	
 	 	Jet fuel contracts maturities	 	
Jet fuel risk	 	1 Half 2019	 	 	2 Half 2019	 	 	2019 Total	 	
Notional volume in gallons Asian Calls (thousands)*	 	US$	12,790	 	 	US$	13,842	 	 	US$	26,632	 	
Notional volume in gallons Zero- Cost collars (thousands)*	 	 	18,963	 	 	 	-	 	 	 	18,963	 	
Asian Calls Strike price agreed rate per gallon (U.S. dollars)**	 	US$	1.84	 	 	US$	1.84	 	 	US$	1.84	 	
Zero-Cost collars Strike price agreed rate per gallon (U.S.dollars)**	 	US$	1.91/2.46		 	US$	-	 	 	US$	1.91/2.46		
All-in	 	 	 	 	 	 	 	 	 	 	 	 	
Approximate percentage of hedge (of expected     consumption value) Asian Calls	 	 	10	%	 	 	10	%	 	 	10	%	
Approximate percentage of hedge (of expected     consumption value) Zero-Cost collars	 	 	15	%	 	 	 -	%	 	 	15	%	
Approximate percentage of hedge (of expected   consumption value)	 	 	25	%	 	 	10	%	 	 	18	%	
 
* US Gulf Coast Jet 54 as underlying asset
** Weighted average
 
b) Foreign currency risk
 
While Mexican Peso is the functional currency of the Company, a significant portion of its operating expenses is denominated in U.S. dollar; thus, Volaris relies on sustained U.S. dollar cash flows coming from operations in the United States of America and Central America to support part of its commitments in such currency, however there’s still a mismatch. Foreign currency risk arises from possible unfavorable movements in the exchange rate which could have a negative impact in the Company’s cash flows. To mitigate this risk, the Company may use foreign exchange derivative financial instruments.
 
While most of the Company’s revenue is generated in Mexican pesos, although 32% of its revenues came from operations in the United States of America and Central America for the year ended at December 31, 2018.
 
For the three months ended June 30, 2019, 31% of the Company´s revenues came from operations in the United States of America and Central America (33% for the three months ended June 30, 2018).
 
For the six months ended June 30, 2019, 30 % of the Company´s revenues came from operations in the United States of America and Central America (33% for the six months ended June 30, 2018).
 
U.S. dollar denominated collections accounted for 43% and 38% of the Company’s total collections as of June 30, 2019 and December 31, 2018, respectively. However, certain of its expenditures, particularly those related to aircraft leasing and acquisition, are also U.S. dollar denominated also and although jet fuel for those flights originated in Mexico are paid in Mexican pesos, the price formula is impacted by the Mexican Pesos /U.S. dollars exchange rate.
 
The Company’s foreign exchange on and off-balance sheet exposure as of June 30, 2019 and December 31, 2018 is as set forth below:
 
 	 	Thousands of U.S. dollars	 	
 	 	 	 	
 	 	June 30, 2019	 	 	December 31, 2018	 	
Assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	US$	383,143	 	 	US$	279,829	 	
Other accounts receivable	 	 	29,696	 	 	 	10,957	 	
Aircraft maintenance deposits paid to lessors	 	 	342,743	 	 	 	329,983	 	
Deposits for rental of flight equipment	 	 	40,216	 	 	 	32,166	 	
Derivative financial instruments	 	 	4,782	 	 	 	3,172	 	
Total assets	 	 	800,580	 	 	 	656,107	 	
 	 	 	 	 	 	 	 	 	
Liabilities:	 	 	 	 	 	 	 	 	
Financial debt	 	 	135,430	 	 	 	155,455	 	
Foreign suppliers	 	 	2,121,584	 	 	 	2,055,831	*	
Taxes and fees payable	 	 	15,990	 	 	 	14,823	 	
Derivative financial instruments	 	 	-	 	 	 	6,246	 	
Total liabilities	 	 	2,273,004	 	 	 	2,232,355	 	
Net foreign currency position	 	US$	1,472,424	 	 	US$	1,576,248	 	
(*) Includes the adjustment of IFRS 16 adoption.

 	38   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

At July 25 , 2019, date of issuance of these financial statements, the exchange rate was Ps. 19.1315 per U.S. dollar.
 
 	 	Thousands of U.S. dollars	 	
 	 	 	 	
 	 	June 30, 2019	 	 	December 31, 2018	 	
Off-balance sheet transactions exposure:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Aircraft and engine commitments (Note 15)	 	 	1,065,570	 	 	 	1,070,187	 	
Total foreign currency	 	US$	1,065,570	 	 	US$	1,070,187	 	
 
As of June 30, 2019, and December 31, 2018, the Company did not enter foreign exchange rate derivatives financial instruments.
 
All the Company’s remaining position in FX plain vanilla forwards matured throughout the first quarter of 2019 (January).
 
For the three and six months ended June 30, 2019, the net gain on the foreign currency forward contracts was Ps.0 and Ps.4,199, respectively, which was recognized as part of rental expense in the consolidated statements of operations.
 
c) Interest rate risk
 
Interest rate risk is the risk that the fair value of future cash flows will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations and flight equipment operating lease agreements with floating interest rates.
 
The Company’s results are affected by fluctuations in certain benchmark market interest rates due to the impact that such changes may have on operational lease payments indexed to the London Inter Bank Offered Rate (“LIBOR”). The Company uses derivative financial instruments to reduce its exposure to fluctuations in market interest rates and accounts for these instruments as an accounting hedge. In most cases, when a derivative can be tailored within the terms and it perfectly matches cash flows of a leasing agreement, it may be designated as a “cash flow hedge” and the effective portion of fair value variations are recorded in equity until the date the cash flow of the hedged lease payment is recognized in unaudited interim condensed consolidated statements of operations.
 
For the six and three months ended June 30, 2019 and 2018, the Company did not have interest rate swaps.
 
d) Liquidity risk
 
Liquidity risk represents the risk that the Company has insufficient funds to meet its obligations.
 
Because of the cyclical nature of the business, the operations, and its investment and financing needs related to the acquisition of new aircraft and renewal of its fleet, the Company requires liquid funds to meet its obligations.

 	39   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The Company attempts to manage its cash and cash equivalents and its financial assets, relating the term of investments with those of its obligations. Its policy is that the average term of its investments may not exceed the average term of its obligations. This cash and cash equivalents position is invested in highly liquid short-term instruments through financial entities.
 
The Company has future obligations related to maturities of bank borrowings and derivative contracts.
 
The Company’s off-balance sheet exposure represents the future obligations related to operating lease contracts and aircraft purchase contracts. The Company concluded that it has a low concentration of risk since it has access to alternate sources of funding.
 
The table below presents the Company’s contractual principal payments required on its financial liabilities and the derivative financial instruments fair value:
 
  	 	June 30, 2019	 	
 	 	Within one
year	 	 	One to five
years	 	 	Total	 	
Interest-bearing borrowings:	 	 	 	 	 	 	 	 	 	 	 	 	
Pre-delivery payments facilities	 	Ps.	1,627,989	 	 	Ps.	945,650	 	 	Ps.	2,573,639	 	
Asset backed trust note	 	 	(6,177	)	 	 	1,480,619	 	 	 	1,474,442	 	
 Total	 	Ps.	1,621,812	 	 	Ps.	2,426,269	 	 	Ps.	4,048,081	 	
 
 	 	December 31, 2018	 	
 	 	Within one
year	 	 	One to five
years	 	 	Total	 	
Interest-bearing borrowings:	 	 	 	 	 	 	 	 	 	 	 	 	
Pre-delivery payments facilities	 	Ps.	734,635	 	 	Ps.	2,310,939	 	 	Ps.	3,045,574	 	
Short-term working capital facilities	 	 	461,260	 	 	 	-	 	 	 	461,260	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivative financial instruments:	 	 	 	 	 	 	 	 	 	 	 	 	
Jet fuel Asian Zero-Cost collars options contracts	 	 	122,948	 	 	 	-	 	 	 	122,948	 	
Total	 	Ps.	1,318,843	 	 	Ps.	2,310,939	 	 	Ps.	3,629,782	 	
 
e) Credit risk
 
Credit risk is the risk that any counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments including derivatives.
 
Financial instruments that expose the Company to credit risk involve mainly cash equivalents and accounts receivable. Credit risk on cash equivalents relate to amounts invested with major financial institutions.
 
Credit risk on accounts receivable relates primarily to amounts receivable from the major international credit card companies.
 
The Company has a high receivable turnover; hence management believes credit risk is minimal due to the nature of its businesses, which have a large portion of their sales settled in credit cards.
 
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

 	40   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Some of the outstanding derivative financial instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company does not expect any of its counterparties to fail to meet their obligations. The amount of such credit exposure is generally the unrealized gain, if any, in such contracts. To manage credit risk, the Company selects counterparties based on credit assessments, limits overall exposure to any single counterparty and monitors the market position with each counterparty. The Company does not purchase or hold derivative financial instruments for trading purposes. At June 30, 2019, the Company concluded that its credit risk related to its outstanding derivative financial instruments is low, since it has no significant concentration with any single counterparty and it only enters into derivative financial instruments with banks with high credit-rating assigned by international credit-rating agencies.
 
f) Capital management
 
Management believes that the resources available to the Company are enough for its present requirements and will be enough to meet its anticipated requirements for capital expenditures and other cash requirements for the 2019 fiscal year.
 
The primary objective of the Company’s capital management is to ensure that it maintains healthy capital ratios to support its business and maximize the shareholder’s value. No changes were made in the objectives, policies or processes for managing capital during the six months ended June 30, 2019. The Company is not subject to any externally imposed capital requirement, other than the legal reserve.
 
7. Fair value measurements
 
The only financial assets and liabilities recognized at fair value on a recurring basis are the derivative financial instruments.
 
Fair value is the price that would be received from sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
 
	(i)	In the principal market for the asset or liability, or	
 
	(ii)	In the absence of a principal market, in the most advantageous market for the asset or liability.	
 
The principal or the most advantageous market must be accessible to the Company.
 
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
 
The assessment of a non-financial asset’s fair value considers the market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
 
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
 
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
 
 	·	Level 1 – Quoted (unadjusted) prices in active markets for identical assets or liabilities.	
 
 	·	Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.	
 
 	·	Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.	

 	41   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
 
Set out below, is a comparison by class of the carrying amounts and fair values of the Company’s financial instruments, other than those for which carrying amounts are reasonable approximations of fair values:
 
  	 	Carrying amount	 	 	Fair value	 	
 	 	June 30, 2019	 	 	December 31, 2018	 	 	June 30, 2019	 	 	December 31, 2018	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivative financial instruments	 	Ps.	91,657	 	 	Ps.	62,440	 	 	Ps.	91,657	 	 	Ps.	62,440	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financial debt	 	 	(4,048,081	)	 	 	(3,506,834	)	 	 	(4,229,979	)	 	 	(3,515,550	)	
Derivative Financial instruments	 	 	-	 	 	 	(122,948	)	 	 	-	 	 	 	(122,948	)	
Total	 	Ps.	3,956,424	 	 	Ps.	(3,567,342	)	 	Ps.	4,138,322	 	 	Ps.	(3,576,058	)	
 
The following table summarizes the fair value measurements at June 30, 2019:
 
  	 	Fair value measurement	 	
 	 	Quoted prices
in active
markets
Level 1	 	 	Significant
observable
inputs
Level 2	 	 	Significant
unobservable
inputs
Level 3	 	 	Total	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivatives financial instruments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Jet fuel Asian call options contracts*	 	Ps.	          -	 	 	Ps.	70,370	 	 	Ps.	          -	 	 	Ps.	70,370	 	
Jet fuel Zero-Cost collars contracts*	 	 	-	 	 	 	21,287	 	 	 	-	 	 	 	21,287	 	
Liabilities for which fair values are   disclosed:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest-bearing loans and borrowings**	 	 	-	 	 	 	(4,229,979	)	 	 	-	 	 	 	(4,229,979	)	
Net	 	Ps.	-	 	 	Ps.	(4,138,322	)	 	Ps.	-	 	 	Ps.	(4,138,322	)	
 
* Jet fuel forwards levels and LIBOR curve:
**LIBOR curve and TIIE Mexican Interbank Rate. Includes short-term and long-term debt.
There were no transfers between level 1 and level 2 during the period.

 	42   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The following table summarizes the fair value measurements at December 31, 2018:
 
 	 	Fair value measurement	 	
 	 	Quoted prices
in active
markets
Level 1	 	 	Significant
observable
inputs
Level 2	 	 	Significant
unobservable
inputs
Level 3	 	 	Total	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivatives financial instruments:	 	 	 	 	 	 	 	 	 	 	    	 	 	 	 	 	
Jet fuel Asian call options contracts*	 	Ps.	    -	 	 	Ps.	48,199	 	 	Ps.	-	 	 	Ps.	48,199	 	
Foreign currency forward	 	 	-	 	 	 	14,241	 	 	 	-	 	 	 	14,241	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivatives financial instruments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Jet fuel Asian Zero-Cost collars options contracts*	 	 	-	 	 	 	(122,948	)	 	 	-	 	 	 	(122,948	)	
Liabilities for which fair values are disclosed:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest-bearing loans and borrowings**	 	 	-	 	 	 	(3,515,550	)	 	 	-	 	 	 	(3,515,550	)	
Net	 	Ps.	-	 	 	Ps.	(3,576,058	)	 	Ps.	-	 	 	Ps.	(3,576,058	)	
 
* Jet fuel forwards levels and LIBOR curve.
**LIBOR curve and TIIE Mexican Interbank Rate. Includes short-term and long-term debt.There were no transfers between level 1 and level 2 during the period. 
 The following table summarizes the gain (loss) from derivatives financial instruments recognized in the unaudited interim condensed consolidated statements of operations for the six months ended June 30, 2019 and 2018:
 
Consolidated statements of operations
 
 	 	 	 	Six months ended June 30,	 	
Instrument	 	Financial statements line	 	2019	 	 	2018	 	
Jet fuel Asian call options contracts	 	Fuel	 	Ps.	(766	)	 	Ps.	201,474	 	
Jet fuel Asian Zero-Cost collars contracts	 	Fuel	 	 	(17,797	)	 	 	-	 	
Foreign currency forward	 	Aircraft and engine rent expenses	 	 	4,199	 	 	 	-	 	
Total	 	 	 	Ps.	(14,364	)	 	Ps.	201,474	 	
 
The following table summarizes the gain (loss) from derivatives financial instruments recognized in the unaudited interim condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018:
 
Consolidated statements of operations
 
 	 	 	 	Three months ended June 30,	 	
Instrument	 	Financial statements line	 	2019	 	 	2018	 	
Jet fuel Asian call options contracts	 	Fuel	 	Ps.	(642	)	 	Ps.	133,098	 	
Jet fuel Asian Zero-Cost collars contracts	 	Fuel	 	 	(1,016	)	 	 	-	 	
Total	 	 	 	Ps.	(1,658	)	 	Ps.	133,098	 	
 
The following table summarizes the net gain (loss) on CFH before taxes recognized in the unaudited interim condensed consolidated statements of comprehensive income for the three months ended June 30, 2019 and 2018:
 
Consolidated statements of other comprehensive income
 
 	 	 	 	Three months ended	 	
 	 	Financial statements	 	June 30,	 	
Instrument	 	line	 	2019	 	 	2018	 	
Jet fuel Asian call options	 	OCI	 	Ps.	11,954	 	 	Ps.	(147,920	)	
Jet fuel Zero cost collars	 	OCI	 	 	(24,284	)	 	 	-	 	
Foreign currency contracts	 	OCI	 	 	-	 	 	 	(84,693	)	
Total	 	 	 	Ps.	(12,330	)	 	Ps.	(232,613	)	

 	43   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The following table summarizes the net gain (loss) on CFH before taxes recognized in the unaudited interim condensed consolidated statements of comprehensive income for the six months ended June 30, 2019 and 2018:
 
Consolidated statements of other comprehensive income
 
 	 	 	 	Six months ended	 	
 	 	Financial statements	 	June 30,	 	
Instrument	 	line	 	2019	 	 	2018	 	
Jet fuel Asian call options	 	OCI	 	Ps.	(12,550	)	 	Ps.	(153,914	)	
Jet fuel Zero cost collars	 	OCI	 	 	(144,235	)	 	 	-	 	
Foreign currency contracts	 	OCI	 	 	14,241	 	 	 	(84,693	)	
Total	 	 	 	Ps.	(142,544	)	 	Ps.	(238,607	)	
 
8. Financial assets and liabilities
 
At June 30, 2019 and December 31, 2018, the Company’s financial assets are represented by cash and cash equivalents, trade and other accounts receivable, accounts receivable with carrying amounts that approximate their fair value.
 
a) Financial assets
 
 	 	June 30,
2019	 	 	December 31,
2018	 	
Derivative financial instruments designated as cash flow hedges (effective portion recognized within OCI)	 	 	 	 	 	 	 	 	
Jet fuel Asian call options	 	Ps.	70,370	 	 	Ps.	48,199	 	
Jet fuel Zero-Cost collars	 	 	21,287	 	 	 	-	 	
Foreign currency forward contracts	 	 	-	 	 	 	14,241	 	
Total financial assets	 	Ps.	91,657	 	 	Ps.	62,440	 	
 	 	 	 	 	 	 	 	 	
Presented on the consolidated statements of financial position as follows:	 	 	 	 	 	 	 	 	
Current	 	Ps.	91,657	 	 	Ps.	62,440	 	
Non-current	 	Ps.	-	 	 	Ps.	-	 	
 
b) Financial debt
 
i)	At June 30, 2019 and December 31, 2018, the Company’s short-term and long-term debt consists of the following:	
 
 	 	 	 	June 30, 2019	 	 	December 31 2018	 	
I.	 	Revolving line of credit with Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander (“Santander”) and Banco Nacional de Comercio Exterior, S.N.C. (“Bancomext”), in U.S. dollars, to finance pre-delivery payments, maturing on May 31, 2022,bearing annual interest rate at the three-month LIBOR plus a 260 basis points.	 	Ps.	2,573,639	 	 	Ps.	3,045,574	 	
 	 	 	 	 	 	 	 	 	 	 	
II.	 	The Company issued in the Mexican market Asset backed trust notes (“CEBUR”), in Mexican pesos, maturing on June 20th, 2024 bearing annual interest rate at TIIE 28 days plus 175 basis points.	 	 	1,500,000	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	
III.	 	In December 2016, the Company entered into a shortterm working capital facility with Banco Nacional de México S.A. (“Citibanamex”) in Mexican pesos, bearing annual interest rate at TIIE 28 days plus a 90 basis points.	 	 	-	 	 	 	461,260	 	
 	 	 	 	 	 	 	 	 	 	 	
IV.	 	Capitalizable cost	 	 	(25,558	)	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	
V.	 	Accrued interest and other financial cost	 	 	26,625	 	 	 	16,364	 	
 	 	 	 	 	4,074,706	 	 	 	3,523,198	 	
Less: Short-term maturities	 	 	1,648,437	 	 	 	1,212,259	 	
Long-term	 	Ps.	2,426,269	 	 	Ps.	2,310,939	 	

 	44   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

TIIE: Mexican interbank rate
 
(ii) The following table provides a summary of the Company’s scheduled principal payments of financial debt and accrued interest at June 30, 2019:
 
 	 	Within one
year	 	 	July 2020-
June 2021	 	 	July 2021-
June 2022	 	 	 July 2022-
June 2023	 	 	July 2023-
June 2024	 	 	Total	 	
Finance debt:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Santander/Bancomext	 	Ps.	1,650,339	 	 	Ps.	821,058	 	 	Ps.	124,592	 	 	Ps.	-	 	 	Ps.	-	 	 	Ps.	2,595,989	 	
CEBUR	 	 	4,275	*	 	 	-	 	 	 	500,000	 	 	 	500,000	 	 	 	500,000	 	 	 	1,504,275	 	
Capitalizable cost	 	 	(6,177	)	 	 	(7,127	)	 	 	(6,541	)	 	 	(4,175	)	 	 	(1,538	)	 	 	(25,558	)	
Total	 	Ps.	1,648,437	 	 	Ps.	813,931	 	 	Ps.	618,051	 	 	Ps.	495,825	 	 	Ps.	498,462	 	 	Ps.	4,074,706	 	
 
 *Includes accrued interest.
 
The “Santander/Bancomext” loan agreement provides for certain covenants, including limits to the ability to, among others:
 
 	i)	Incur debt above a specified debt basket unless certain financial ratios are met.	

 	ii)	Create liens.	

 	iii)	Merge with or acquire any other entity without the previous authorization of the Banks.	

 	iv)	Dispose of certain assets.	

 	v)	Declare and pay dividends or make any distribution on the Company’s share capital unless certain financial ratios are met.	
 
At June 30, 2019 and December 31, 2018, the Company was in compliance with the covenants under the above-mentioned loan agreement.
 
For purposes of financing the pre-delivery payments, Mexican trust structures were created whereby, the Company assigned its rights and obligations under the Airbus Purchase Agreement with Airbus S.A.S. (“Airbus”), including its obligation to make pre-delivery payments to the Mexican trusts, and the Company guaranteed the obligations of the Mexican trusts under the financing agreement (Deutsche Bank Mexico, S.A. Trust 1710 and 1711).
 
c) Other financial liabilities
 
 	 	June 30,	 	 	December 31,	 	
 	 	2019	 	 	2018	 	
Derivative financial instruments designated as CFH (effective portion recognized within OCI):	 	 	 	 	 	 	 	 	
Zero cost collar options	 	Ps.	-	 	 	Ps.	122,948	 	
Total financial liabilities	 	Ps.	-	 	 	Ps.	122,948	 	
Presented on the consolidated statements of financial position as follows:	 	 	 	 	 	 	 	 	
Current	 	Ps.	-	 	 	Ps.	122,948	 	
Non-current	 	Ps.	-	 	 	Ps.	-	 	

 	45   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

X. Cash and cash equivalents
 
The Company maintains restricted cash of Ps. 77,907 established to cover the reserves derived from the asset backed trust notes that were issued by the CIB/3249 trust.
 
9. Related parties
 
	a)	An analysis of balances due from/to related parties at June 30, 2019 and December 31, 2018 is provided below. All companies are considered affiliates, since the Company’s primary shareholders or directors are also direct or indirect shareholders of the related parties:	
 
 	 	Type of
transaction	 	Country
of origin	 	June 30,
2019	 	 	December 31,
2018	 	 	Terms	
Due from:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Frontier Airlines Inc. (“Frontier”)	 	Code-share	 	USA	 	Ps.	75,039	 	 	Ps.	8,266	 	 	30 days	
 	 	 	 	 	 	Ps.	75,039	 	 	Ps.	8,266	 	 	 	
 
 	 	Type of
transaction	 	Country
of origin	 	June 30,
2019	 	 	December 31,
2018	 	 	Terms	
Due to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aeromantenimiento, S.A. (“Aeroman”)	 	Aircraft and engine
maintenance	 	El Salvador	 	Ps.	30,579	 	 	Ps.	15,024	 	 	30 days	
Frontier Airlines, Inc.	 	Code-share	 	USA	 	 	9,495	 	 	 	2,751	 	 	30 days	
Human Capital International HCI, S.A. de C,V. (“HCI”)	 	Professional Fees	 	México	 	 	325	 	 	 	-	 	 	30 days	
 	 	 	 	 	 	Ps.	40,399	 	 	Ps.	17,775	 	 	 	
 
At June 30, 2019 and December 31, 2018, the Company did not recognize any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. 
 
b)	During the six months ended June 30, 2019 and 2018, the Company had the following transactions with related parties:	
 
Related party transactions	 	Country of origin	 	2019	 	 	2018	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	
Transactions with affiliates	 	 	 	 	 	 	 	 	 	 	
Frontier Airlines Inc	 	USA	 	Ps.	95,980	 	 	Ps.	-	 	
 
Related party transactions	 	Country of origin	 	2019	 	 	2018	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	
Transactions with affiliates	 	 	 	 	 	 	 	 	 	 	
Aeromantenimiento, S.A.	 	 	 	 	 	 	 	 	 	 	
Aircraft and engine maintenance	 	El Salvador/Guatemala	 	Ps.	134,754	 	 	Ps.	184,832	 	
Technical support	 	El Salvador/Guatemala	 	 	1,316	 	 	 	2,145	 	
Servprot, Human Capital Int, Onelink, MACF	 	 	 	 	 	 	 	 	 	 	
Professional fees	 	Mexico/El Salvador	 	 	1,793	 	 	 	88,526	 	

 	46   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

During the three months ended June 30, 2019 and 2018, the Company had the following transactions with related parties:
 
Related party transactions	 	Country of origin	 	2019	 	 	2018	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	
Transactions with affiliates	 	 	 	 	 	 	 	 	 	 	
Frontier Airlines Inc	 	USA	 	Ps.	25,843	 	 	Ps.	-	 	
 
Related party transactions	 	Country of origin	 	2019	 	 	2018	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	
Transactions with affiliates	 	 	 	 	 	 	 	 	 	 	
Aeromantenimiento, S.A.	 	 	 	 	 	 	 	 	 	 	
Aircraft and engine maintenance	 	El Salvador/Guatemala	 	Ps.	49,554	 	 	Ps.	99,876	 	
Technical support	 	El Salvador/Guatemala	 	 	-	 	 	 	1,189	 	
 Servprot, Human Capital Int, Onelink, MACF	 	 	 	 	 	 	 	 	 	 	
 Professional fees	 	Mexico/El Salvador	 	 	1,055	 	 	 	43,876	 	
 
c) Servprot
 
Servprot S.A. de C.V. (“Servprot”) is a related party because Enrique Beltranena, the Company’s President and Chief Executive Officer, and Rodolfo Montemayor, who served as an alternate member of our board of directors until April 19, 2018, are shareholders of such company. Servprot provides security services for Mr. Beltranena and his family, as well as for Mr. Montemayor.
 
As of June 30, 2019, and December 31, 2018, Servprot did not have net balance under this agreement.
 
During the six months ended June 30, 2019 and 2018 the Company expensed Ps.1,513 and Ps.1,237, respectively, for this concept. During the three months ended June 30, 2019 and 2018 the Company expensed Ps.775 and Ps.663, respectively, for this concept.
 
d) Aeroman
 
Aeroman is a related party because Roberto José Kriete Ávila, a member of the Company’s board of directors, and members of his immediate family are shareholders of Aeroman. The Company entered into an aircraft repair and maintenance service agreement with Aeroman on January 1 2017. This agreement provides that we the Company has to use Aeroman, exclusively for aircraft repair and maintenance services, subject to availability. Under this agreement, Aeroman provides inspection, maintenance, repair and overhaul services for aircraft. The Company makes payments under this agreement depending on the services performed. This agreement is for a five-year term.
 
As of June 30, 2019, and December 31, 2018, the balances due under the agreement with Aeroman were Ps.30,579 and Ps.15,024, respectively.
 
During the three months ended June 30, 2019 and 2018, the Company expensed by aircraft maintenance and technical support under this agreement Ps.49,554 and Ps.101,065, respectively for this concept.
 
During the six months ended June 30, 2019 and 2018, the Company expensed by aircraft maintenance and technical support under this agreement Ps.136,070 and Ps.186,997, respectively for this concept.

 	47   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

e) Human Capital International
 
The Company entered into a professional services agreement with Human Capital International HCI, S.A. de C.V., or Human Capital International, on February 25, 2015, for the selection and hiring of executives. Rodolfo Montemayor Garza, member of the Company’s board of directors until April 19, 2018, is a founder and chairman of the board of directors of Human Capital International.
 
As of June 30, 2019, and December 31, 2018, the balances due under the agreement with HCI were Ps.325 and Ps.0, respectively.
 
During the three months period ended June 30, 2019 and 2018, the Company expensed Ps.280 and Ps.528, respectively, for this concept.
 
During the six months period ended June 30, 2019 and 2018, the Company expensed Ps.280 and Ps.588, respectively, for this concept.
 
f) Frontier
 
Frontier is a related party because Mr. William A. Franke and Brian H. Franke are members of the board of the Company and Frontier as well as Indigo Partners have significant investments in both Companies.
 
As of June 30, 2019, and December 31, 2018, the net balance under this agreement was Ps.65,544 and Ps.5,515, respectively.
 
During the three months ended June 30, 2019 and 2018, the Company have been revenue transactions with related parties Ps.25,843 and Ps.0, respectively.
 
During the six months ended June 30, 2019 and 2018, the Company have been revenue transactions with related parties Ps.95,980 and Ps.0, respectively.
 
g) Mijares, Angoitia, Cortés y Fuentes
 
Mijares, Angoitia, Cortés y Fuentes is a related party because Ricardo Maldonado Yañez and Eugenio Macouzet de León, member and alternate member, respectively, of the board of the Company since April 2018, are partners of Mijares, Angoitia, Cortés y Fuentes.
 
As of June 30, 2019, and December 31, 2018, Mijares, Angoitia, Cortés y Fuentes did not have net balance under this agreement.
 
During the three months period ended June 30, 2019 and 2018, the Company expensed Ps.0 and Ps.523, respectively, for this concept.
 
During the six months period ended June 30, 2019 and 2018, the Company expensed Ps.0 and Ps.523, respectively, for this concept.
 
h) Onelink, S.A. De C.V.
 
One Link was a related party until December 31, 2017, because Marco Baldocchi, an alternate member of the board, was a director of the Company. Pursuant to this agreement, One Link received calls from the customers to book flights and provides customers with information about fares, schedules and availability.
 
As of June 30, 2019, and December 31, 2018, One Link did not have net balance under this agreement.

 	48   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

During the three months period ended June 30, 2019 and 2018, the Company expensed Ps.0 and Ps.42,162, respectively, for this concept.
 
During the six months period ended June 30, 2019 and 2018, the Company expensed Ps.0 and Ps.86,178, respectively, for this concept.
 
i) Directors and officers
 
During the three months ended June 30, 2019 and 2018, all the Company’s senior managers received an aggregate compensation of short and long-term benefits of Ps.30,550 and Ps. 26,479, respectively.
 
During the six months ended June 30, 2019 and 2018, all the Company’s senior managers received an aggregate compensation of short and long-term benefits of Ps.77,801 and Ps. 51,654, respectively.
 
10. Rotable spare parts, furniture and equipment, net
 
a) Acquisitions and disposals
 
For six months period ended June 30, 2019 and 2018, the Company acquired rotable spare parts, furniture and equipment by an amount of Ps.779,978 and Ps.1,162,278, respectively.
 
Rotable spare parts, furniture and equipment by Ps.597,013 and Ps.524,160 were disposed for six months period ended June 30, 2019 and 2018 respectively. These amounts included reimbursements of pre-delivery payments for aircraft acquisition of Ps.471,114 and Ps.0 respectively.
 
b) Depreciation expense
 
Depreciation expense for the three months ended June 30, 2019 and 2018 was Ps.133,333 and Ps.105,414, respectively. Depreciation expense for the six months ended June 30, 2019 and 2018 was Ps.257,554 and Ps.219,215, respectively. Depreciation charges for the period are recognized as a component of operating expenses in the unaudited interim condensed consolidated statements of operations.
 
11. Intangible assets, net
 
a) Acquisitions
 
For six months period ended June 30, 2019 and 2018, the Company acquired intangible assets by an amount of Ps. 24,779 and Ps.23,364 respectively.
 
b) Amortization expense
 
Software amortization expense for the three months ended June 30, 2019 and 2018 was Ps.21,484 and Ps. 18,215, respectively.. Software amortization expense for the six months ended June 30, 2019 and 2018 was Ps.33,634 and Ps. 36,721, respectively These amounts were recognized in depreciation and amortization in the unaudited interim condensed consolidated statements of operations.
 
12. Operating leases
 
The Company adopted IFRS 16 retrospectively to each prior reporting period presented, through the full retrospective method as of January 1, 2017, as a transition date. The Company applied the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4.

 	49   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The most significant operating leases are as follows:
 
Aircraft and engine rent. At June 30, 2019, the Company leases 78 aircraft (77 as of December 31, 2018) and 10 spare engines under operating leases (10 as of December 31, 2018) that have maximum terms through 2033. Rents are guaranteed by deposits in cash or letters of credit. The aircraft lease agreements contain certain covenants to which the Company is bound. The most significant covenants include the following:
 
 	(i)	Maintain the records, licenses and authorizations required by the competent aviation authorities and make the corresponding payments.	
 
 	(ii)	Provide maintenance services to the equipment based on the approved maintenance program.	
 
 	(iii)	Maintain insurance policies on the equipment for the amounts and risks stipulated in each agreement.	
 
 	(iv)	Periodic submission of financial and operating information to the lessors.	
 
 	(v)	Comply with the technical conditions relative to the return of aircraft.	
 
As of June 30, 2019, and December 31, 2018, the Company was in compliance with the covenants under the above-mentioned aircraft lease agreements.
 
Composition of the fleet and spare engines, operating leases*:
 
Aircraft
Type	 	Model	 	 	At June
30, 2019	 	 	At December
31, 2018	 	
A319	 	 	132	 	 	 	4	 	 	 	4	 	
A319	 	 	133	 	 	 	4	 	 	 	4	 	
A320	 	 	233	 	 	 	39	 	 	 	39	 	
A320	 	 	232	 	 	 	2	 	 	 	4	 	
A320NEO	 	 	271N	 	 	 	14	 	 	 	12	 	
A321	 	 	231	 	 	 	10	 	 	 	10	 	
A321NEO	 	 	271N	 	 	 	5	 	 	 	4	 	
 	 	 	 	 	 	 	78	 	 	 	77	 	
 
Engine
Type	 	Model	 	 	At June
30, 2019	 	 	At December
31, 2018	 	
V2500	 	 	V2527M-A5	 	 	 	3	 	 	 	3	 	
V2500	 	 	V2527E-A5	 	 	 	3	 	 	 	3	 	
V2500	 	 	V2527-A5	 	 	 	2	 	 	 	2	 	
PW1100	 	 	PW1127G-JM	 	 	 	2	 	 	 	2	 	
 	 	 	 	 	 	 	10	 	 	 	10	 	
 
* Certain of the Company’s aircraft and engine lease agreements include an option to extend the lease term period. Terms and conditions are subject to market conditions at the time of renewal.
 
During the six months period ended June 30, 2019, the Company incorporate three new aircraft to its fleet, two A320NEO and one A321NEO.
 
During the three months period ended June 30, 2019, the Company incorporate two new aircraft to its fleet, two A320NEO.
 
During the year ended December 31, 2018, the Company incorporate 10 aircraft to its fleet (three of them based on the terms of the Airbus purchase agreement and seven from a lessor´s order book). These new aircraft lease agreements were accounted for as operating leases. Also, the Company returned three aircraft to their respective lessors. All the aircraft incorporated through the lessor´s aircraft order book was not subject to sale and leaseback transactions.

 	50   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

During the year ended December 31, 2018, the Company also incorporate two NEO spare engines to its fleet based on the terms of the Pratt and Whitney purchase agreement (FMP). These two engines incorporated were subject to sale and leaseback transactions and their respective lease agreements were accounted as operating leases.
 
Additionally, during 2018 the Company extended the lease term of two aircraft (effective from 2019) and two spare engines (effective from February and April 2018), also the Company returned four aircraft to their respective lessors. Such leases were accounted as operating leases and were not subject to sale and leaseback transactions.
 
During the three months ended June 30, 2019 and 2018, the Company enter into sale and leaseback transactions of two new aircraft A320 NEO.
 
Also, during the period of six months ending June 30, 2019, the Company returned two aircraft to their respective lessors.
 
During the year ended December 31, 2011, the Company entered into aircraft and spare engines sale and leaseback transactions, which resulted in a loss of Ps. 30,706. This loss was deferred on the unaudited interim condensed consolidated statements of financial position and is being amortized over the contractual lease term.
 
As of June 30, 2019 and December 31, 2018, the current portion of the loss on sale amounts to Ps. .3,047 and Ps.3,047, respectively, which is recorded in the caption of prepaid expenses and other current assets, and the non-current portion amounts to Ps.6,843 and Ps.8,367, respectively, which is recorded in the caption of other assets.
 
For the three months ended June 30, 2019 and 2018, the Company amortized a loss of Ps.762, and Ps. 762, respectively, as additional aircraft rental expense.
 
For the six months ended June 30, 2019 and 2018, the Company amortized a loss of Ps.1,524, and Ps.1,524, respectively, as additional aircraft rental expense.
 
13. Equity
 
As of June 30, 2019, the total number of authorized shares was 1,011,876,677; represented by common registered shares, issued and with no par value, fully subscribed and paid, comprised as follows:
 
 	 	Shares	 	 	 	 	
 	 	Fixed
Class I	 	 	Variable
Class II	 	 	Total shares	 	
Series A shares	 	 	10,478	 	 	 	923,814,326	 	 	 	923,824,804	 	
Series B shares	 	 	13,702	 	 	 	88,038,171	 	 	 	88,051,873	 	
 	 	 	24,180	 	 	 	1,011,852,497	 	 	 	1,011,876,677	 	
Treasury shares	 	 	-	 	 	 	(15,119,851	)	 	 	(15,119,851	)*	
 	 	 	24,180	 	 	 	996,732,646	 	 	 	996,756,826	 	
 
*The number of forfeited shares as of June 30, 2019 were 92,514, which are include in treasury shares.
 
As of December 31, 2018, the total number of authorized shares was 1,011,876,677; represented by common registered shares, issued and with no par value, fully subscribed and paid, comprised as follows:

 	 	Shares	 	 	 	 	
 	 	Fixed
Class I	 	 	Variable
Class II	 	 	Total shares	 	
Series A shares (1)	 	 	10,478	 	 	 	923,814,326	 	 	 	923,824,804	 	
Series B shares (1)	 	 	13,702	 	 	 	88,038,171	 	 	 	88,051,873	 	
 	 	 	24,180	 	 	 	1,011,852,497	 	 	 	1,011,876,677	 	
Treasury shares (Note 17)	 	 	-	 	 	 	(15,212,365	)	 	 	(15,212,365	)*	
 	 	 	24,180	 	 	 	996,640,132	 	 	 	996,664,312	 	

*The number of forfeited shares as of December 31, 2018 were 121,451, which are include in treasury shares.

 	51   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

(1) On February 16, 2018, one of the Company´s shareholders converted 45,968,598 Series B Shares for the equivalent number of Series A Shares. This conversion has no impact either on the total number of outstanding shares nor on the earnings-per-share calculation.
 
All shares representing the Company’s capital stock, either Series A shares or Series B shares, grant the holders the same economic rights and there are no preferences and/or restrictions attaching to any class of shares on the distribution of dividends and the repayment of capital. Holders of the Company’s Series A common stock and Series B common stock are entitled to dividends when, and if, declared by a shareholders’ resolution. The Company’s revolving line of credit with Santander and Bancomext limits the Company’s ability to declare and pay dividends in the event that the Company fails to comply with the payment terms thereunder. Only Series A shares from the Company are listed.
 
During the six months period ended June 30, 2019 and for the year ended December 31, 2018, the Company did not declare any dividends. 
 
 	a)	Earnings (Loss) per share	
 
Basic earnings (loss) per share (“EPS” “LPS”) amounts are calculated by dividing the net loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
 
Diluted EPS and LPS amounts are calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
 
The following table shows the calculations of the basic and diluted earnings (loss) per share for the three months ended June 30, 2019 and 2018:

 	 	Three months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Net income (loss) for the period	 	Ps.	119,403	 	 	Ps.	(1,766,494	)	
Weighted average number of shares outstanding (in thousands):	 	 	 	 	 	 	 	 	
Basic	 	 	1,011,877	 	 	 	1,011,877	 	
Diluted	 	 	1,011,877	 	 	 	1,011,877	 	
EPS/LPS:	 	 	 	 	 	 	 	 	
Basic	 	 	0.118	 	 	 	(1.746	)	
Diluted	 	 	0.118	 	 	 	(1.746	)	

The following table shows the calculations of the basic and diluted earnings (loss) per share for the six months ended June 30, 2019 and 2018:
 
 	 	Six months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Net income (loss) for the period	 	Ps.	638,660	 	 	Ps.	(1,305,093	)	
 	 	 	 	 	 	 	 	 	
Weighted average number of shares outstanding (in thousands):	 	 	 	 	 	 	 	 	
Basic	 	 	1,011,877	 	 	 	1,011,877	 	
Diluted	 	 	1,011,877	 	 	 	1,011,877	 	
EPS/LPS:	 	 	 	 	 	 	 	 	
Basic	 	 	0.631	 	 	 	(1.290	)	
Diluted	 	 	0.631	 	 	 	(1.290	)	

 	52   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

14. Income tax
 
The Company calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the unaudited interim condensed statement of operations are:
 
Consolidated statement of operations
 
 	 	Three months ended	 	
 	 	June 30,	 	
 	 	2019	 	 	2018	 	
 	 	 	 	 	 	 	
Deferred income tax (expense) benefit	 	Ps.	(77,750	)	 	Ps.	728,190	 	
Total income tax (expense) benefit on profits	 	Ps.	(77,750	)	 	Ps.	728,190	 	
 
The Company’s effective tax rate during the three months period ended June 30, 2019 and 2018 was 39.43% and 29.18% respectively.
 
 	 	Six months ended	 	
 	 	June 30,	 	
 	 	2019	 	 	2018	 	
 	 	 	 	 	 	 	
Deferred income tax (expense) benefit	 	Ps.	(273,712	)	 	Ps.	531,879	 	
Total income tax (expense) benefit on profits	 	Ps.	(273,712	)	 	Ps.	531,879	 	
 
The Company’s effective tax rate during the six months period ended June 30, 2019 and 2018 was 30% and 28.95% respectively.
 
15. Commitments and contingencies
 
Committed expenditures for aircraft purchase and related flight equipment related to the Airbus purchase agreement, including estimated amounts for contractual prices escalations and pre-delivery payments, will be as follows:
 
 	 	Commitment
expenditures
in
U.S. dollars	 	 	Commitment
expenditures
equivalent in
Mexican pesos
(1)	 	
 	 	 	 	 	 	 	
2019	 	$	71,942	 	 	Ps.	1,379,020	 	
2020	 	 	136,936	 	 	 	2,624,858	 	
2021	 	 	164,856	 	 	 	3,160,042	 	
2022 and thereafter	 	 	691,836	 	 	 	13,261,458	 	
 	 	$	1,065,570	 	 	Ps.	20,425,378	 	
 
	(1)	Using the exchange rate as of June 30, 2019 of Ps.19.1685.	

 	53   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

All aircraft acquired by the Company through the Airbus purchase agreement at June 30, 2019 and December 31, 2018 have been executed through sale and leaseback transactions.
 
Litigation
 
	a)	The Company is a party to legal proceedings and claims that arise during the ordinary course of business. The Company believes the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.	
 
	b)	On March 28, 2019, COFECE served the Company the final ruling dated March 19, 2019 issued by the Board of Commissioners in its meeting held March 14, 2019 that resolved that no liability is to be imposed against the Company.	
 
16. Operating segments
 
The Company is managed as a single business unit that provides air transportation services. The Company has two geographic segments identified below:
 
 	 	Three months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Operating revenues:	 	 	 	 	 	 	 	 	
 Domestic (Mexico)	 	Ps.	5,781,451	 	 	Ps.	4,201,087	 	
 International:	 	 	 	 	 	 	 	 	
United States of America and Central America (1)	 	 	2,547,798	*	 	 	2,029,155	 	
Total operating revenues	 	Ps.	8,329,249	 	 	Ps.	6,230,242	 	
 
* Non-derivative financial instruments.
(1) United States of America and Central America represents approximately 31%, and 33% of total revenues from external customers in the three months ended June 30, 2019 and 2018, respectively.
 
 	 	Six months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Operating revenues:	 	 	 	 	 	 	 	 	
Domestic (Mexico)	 	Ps.	10,888,758	 	 	Ps.	8,048,689	 	
International:	 	 	 	 	 	 	 	 	
United States of America and Central America	 	 	4,632,896	*	 	 	4,031,727	 	
Total operating revenues	 	Ps.	15,521,654	 	 	Ps.	12,080,416	 	
 
*Non-derivative financial instruments.
(1) United States of America and Central America represents approximately 30%, and 33% of total revenues from external customers in the six months ended June 30, 2019 and 2018, respectively.
 
Revenues are allocated by geographic segments based upon the origin of each flight. The Company does not have material non-current assets located in foreign countries.
 
The breakdown of our non-passenger revenues for the three months ended June 30, 2019 and 2018 is as follows:
 
 	 	Three months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Non-ticket revenues	 	 	 	 	 	 	 	 	
Other non-passenger revenues	 	Ps.	250183	 	 	Ps.	187,407	 	
Cargo	 	 	51,516	 	 	 	52,837	 	
Total non-passenger revenues	 	Ps.	301,699	 	 	Ps.	240,244	 	

 	54   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The breakdown of our non-passenger revenues for the six months ended June 30, 2019 and 2018 is as follows:
 
 	 	Six months ended
June 30,	 	
 	 	2019	 	 	2018	 	
Non-ticket revenues	 	 	 	 	 	 	 	 	
Other non-passenger revenues	 	Ps.	404,269	 	 	Ps.	379,195	 	
Cargo	 	 	113,671	 	 	 	101,394	 	
Total non-passenger revenues	 	Ps.	517,940	 	 	Ps.	480,589	 	
 
17. Subsequent events
 
Subsequent to June 30, 2019 and through July 25, 2019 are as follows:
 
	1.	On July 24, 2019 Mr. Roberto José Kriete Ávila, director of the board of Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (“Volaris”) and Messrs. John R. Wilson and Rodrigo Salcedo, alternate directors submitted their resignation as director and alternate directors, respectively. Additionally, Mr. Marco Baldocchi Kriete who to the date hereof had served as an alternate director has been appointed as interim director of the board of Volaris and Mr. Rodrigo Antonio Escobar Nottebohm as his interim alternate director.	

 	55   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Notes - List of accounting policies
 
Basis of preparation
 
Statement of compliance
 
The unaudited interim condensed consolidated financial statements, which include the consolidated statements of financial position as of June 30, 2019 (unaudited) and December 31, 2018 (audited), and the related consolidated statements of operations, comprehensive income, for each of the three and six months period ended June 30, 2019 and 2018 (unaudited), changes in equity and cash flows for each of the six months period ended June 30, 2019 and 2018 (unaudited), have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting and using the same accounting policies applied in preparing the annual financial statements, except as explained below.
 
The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2018, 2017 and 2016 (audited), and for the three years period ended December 31, 2018, which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
 
Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The presentation currency of the Company’s consolidated financial statements is the Mexican peso, which is used also for compliance with its legal and tax obligations. All values in the consolidated financial statements are rounded to the nearest thousand (Ps.000), except when otherwise indicated.
 
The Company has consistently applied its accounting policies to all periods presented in these annual financial statements and provide comparative information in respect of the previous period.
 
Basis of measurement and presentation
 
The accompanying consolidated financial statements have been prepared under the historical-cost convention, except for derivative financial instruments that are measured at fair value and investments in marketable securities measured at fair value through profit and loss (“FVTPL”). The preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates.

 	56   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
a) Basis of consolidation
 
The accompanying unaudited interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries. At June 30, 2019 and December 31, 2018, for accounting purposes the companies included in the unaudited interim condensed consolidated financial statements are as follows:

 	 		 	 	 	 	% Equity interest	 	
Name	 	Principal
Activities	 	Country	 	 	June
2019	 	 	 	December
2018	 	
Concesionaria	 	Air transportation services for passengers, cargo and mail throughout Mexico and abroad	 	Mexico	 	 	100	%	 	 	100	%	
Volaris Costa Rica	 	Air transportation services for passengers, cargo and mail in Costa Rica and abroad	 	Costa Rica	 	 	100	%	 	 	100	%	
Vuela, S.A. (“Vuela”)*	 	Air transportation services for passengers, cargo and mail in Guatemala and abroad	 	Guatemala	 	 	100	%	 	 	100	%	
Vuela El Salvador, S.A. de C.V.*	 	Air transportation services for passengers, cargo and mail in El Salvador and abroad	 	El Salvador	 	 	100	%	 	 	100	%	
Comercializadora Volaris, S.A. de C.V.	 	Merchandising of services	 	Mexico	 	 	100	%	 	 	100	%	
Servicios Earhart, S.A.*	 	Recruitment and payroll	 	Guatemala	 	 	100	%	 	 	100	%	
Servicios Corporativos Volaris, S.A. de C.V.
  (“Servicios Corporativos”)	 	Recruitment and payroll	 	Mexico	 	 	100	%	 	 	100	%	
Servicios Administrativos Volaris, S.A. de C.V.
  (“Servicios Administrativos”)	 	Recruitment and payroll	 	Mexico	 	 	100	%	 	 	100	%	
Comercializadora V Frecuenta, S.A. de C.V.
  (“Loyalty Program”)**	 	Loyalty Program	 	México	 	 	100	%	 	 	100	%	
Viajes Vuela, S.A. de C.V. (“Viajes Vuela”) (1)	 	Travel agency	 	Mexico	 	 	100	%	 	 	100	%	
Deutsche Bank México, S.A., Trust 1710	 	Pre-delivery payments financing	 	Mexico	 	 	100	%	 	 	100	%	
Deutsche Bank México, S.A., Trust 1711	 	Pre-delivery payments financing	 	Mexico	 	 	100	%	 	 	100	%	
Irrevocable Administrative Trust number
  F/307750 “Administrative Trust”	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
Irrevocable Administrative Trust number
  F/745291	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
Irrevocable Administrative Trust number CIB/3081 “Administrative Trust”	 	Share administration trust	 	Mexico	 	 	100	%	 	 	100	%	
Irrevocable Administrative Trust number CIB/3249 “Administrative Trust”	 	Asset backed securities trustor & administrator	 	Mexico	 	 	100	%	 	 	-	 	

*The Companies have not started operations yet in Guatemala and El Salvador.
 
**The Company has not started operations yet.
 
(1) With effect from July 16, 2018, the name of the Company was changed from Operaciones Volaris, S.A. de C.V. to Viajes Vuela, S.A. de C.V.

 	57   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.
 
Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has:
 
	(i)	Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee).	
  
	(ii)	Exposure, or rights, to variable returns from its involvement with the investee.	
  
	(iii)	The ability to use its power over the investee to affect its returns.	
 
When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
 
	(i)	The contractual arrangement with the other vote holders of the investee.	
  
	(ii)	Rights arising from other contractual arrangements.	
  
	(iii)	The Company’s voting rights and potential voting rights.	
  
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.
 
All intercompany balances, transactions, unrealized gains and losses resulting from intercompany transactions are eliminated in full.
 
On consolidation, the assets and liabilities of foreign operations are translated into Mexican pesos at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income (“OCI”). On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognized in profit or loss.
 
b) Revenue recognition
 
As of January 1, 2018, the Company adopted IFRS 15 Revenue from Contracts with Customers using the full retrospective method of adoption, in order to provide comparative results in all periods presented, recognizing the effect in retained earnings as of January 1, 2016 . 
 
The main impact of IFRS 15 is the timing of recognition of certain air travel-related services (“ancillaries”). Under the new standard, certain ancillaries are recognized when the Company satisfice its performance obligations which is typically when the air transportation service is rendered (at the time of the flight). This change arises primarily because those ancillaries do not constitute separate performance obligations or represent administrative tasks that do not represent a promised service and therefore should be accounted for together with the air fare as a single performance obligation of providing passenger transportation. Also, certain services provided to the Company’s customers that under the new standard qualify as variable considerations that will be recorded as reduction to revenues.
 
The classification of certain ancillary fees in the statement of operations, such as advanced seat selection, fees charges for excess baggage, itinerary changes and other air travel-related services, changed upon adoption of IFRS 15 since they are part of the single performance obligation of providing passenger transportation, See Note 1 x of our annual financial statements.

 	58   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
 
Passenger revenues:
 
Revenues from the air transportation of passengers are recognized at the earlier of when the service is provided or when the non-refundable ticket expires at the date of the scheduled travel.
 
Ticket sales for future flights are initially recognized as liabilities under the caption unearned transportation revenue and, once the transportation service is provided by the Company or when the non-refundable ticket expires at the date of the scheduled travel, the earned revenue is recognized as passenger ticket revenues and the unearned transportation revenue is reduced by the same amount. All of the Company’s tickets are non-refundable and are subject to change upon a payment of a fee. Additionally, the Company does not operate a frequent flier program.
 
The most significant passenger revenue includes revenues generated from: (i) fare revenue and (ii) other passenger revenues. Other passenger revenues include but are not limited to fees charged for excess baggage, bookings through the call center or third-party agencies, advanced seat selection, itinerary changes, charters and airport passenger facility charges for no-show tickets. They are recognized as revenue when the obligation of passenger transportation service is provided by the Company or when the non-refundable ticket expires at the date of the scheduled travel.
 
The Company also classify as other passenger revenue “V Club” and other similar services, which are recognized as revenue over time when the service is provided, since customer simultaneously receives and consumes the benefits provided by the Company.
 
Non-passenger revenues:
 
The most significant non-passenger revenues include revenues generated from: (i) revenues from other no passenger services described below and (ii) cargo services.
 
Revenues from other no passenger services include commissions charged to third parties for the sale of hotel rooms, trip insurance and rental cars and advertising spaces to third parties. They are recognized as revenue at the time the service is provided.
 
The Company concluded that the timing of satisfaction of revenue from advertising spaces is to be recognized over time because the customer simultaneously receives and consumes the benefits provided by the Company.
 
The Company also evaluated the principal versus agent considerations as it relates to certain non-air travel services arrangements with third party providers. No changes were identified under this analysis as the Company is agent for those services provided by third parties. 
 
Other considerations analyzed as part of revenue from contracts with customers
 
All revenues offered by the Company including sales of tickets for future flights, other passenger related services and non-passenger revenue must be paid through a full cash settlement. The payment of the transaction price is equal to the cash settlement from the client at the sales time (using different payment options like credit or debit cards, paying through a third party or directly at the counter in cash). There is little or no judgment to determine the point in time of the revenue recognition, and the amount of it. Even if mainly all of the sales of services are initially recognized as contract liabilities, there is no financing component in these transactions.
 
The cost to obtain a contract is represented by the commissions paid to the travel agencies and the bank commissions charged by the financial institutions for processing electronical transactions (See Note 10 of our annual financial statements). The Company does not incur any additional costs to obtain and fulfil a contract that are eligible for capitalization.
 
Trade receivables are mainly with financial institutions due to transactions with credit and debit cards, and therefore they are non-interest bearing and are mainly on terms of 24 to 48 hours.
 
The Company has the right of collection at the beginning of the contracts and there are no discounts, payment incentives, bonuses or other variable considerations subsequent to the purchase that could modify the amount of the transaction price.
 
The Company does not have any obligations for returns, refunds and other similar obligations. All revenues from the Company related to future services, or services are rendered through a period of time less than twelve months.

 	59   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

c) Cash and cash equivalents
 
Cash and cash equivalents are represented by bank deposits and highly liquid investments with maturities of 90 days or less at the original purchase date. For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash and short-term investments as defined above.
 
d) Financial instruments
 
A financial instrument is any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.

 	60   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

i) Financial assets
 
Initial recognition
 
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and FVTPL. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs.
 
Financial assets include those carried at FVTPL, whose objective to hold them is for trading purposes (short-term investments), or at amortized cost, for accounts receivables held to collect the contractual cash flows, which are characterized by solely payments of principal and interest (“SPPI”). Derivative financial instruments are also considered financial assets when these represent contractual rights to receive cash or another financial asset. This assessment is referred to as the SPPI test and is performed at an instrument level.
 
Subsequent measurement
 
The subsequent measurement of financial assets depends on their initial classification, as is described below:
 
1.	Financial assets at FVTPL which include financial assets held for trading.	
 
2.	Financial assets at amortized cost, whose characteristics meet the SPPI criterion and were originated to be held to collect principal and interest in accordance with the Company’s business model.	
 
3.	Derivative financial instruments are designated for hedging purposes under the cash flow hedge (“CFH”) accounting model and are measured at fair value.	
 
Derecognition
 
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:
 
a)	The rights to receive cash flows from the asset have expired;	
 
b)	The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (i) the Company has transferred substantially all the risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset; or	
 
c)	When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.	

 	61   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

ii) Impairment of financial assets
 
The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired in the Cash Generating Units (CGU). An impairment exists if one or more events has occurred since the initial recognition of an asset (an incurred ‘loss event’), that has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in receivable, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated cash flows, such as changes in arrears or economic conditions that correlate with defaults.
 
For trade receivables, the Company records allowance for credit losses in accordance with the objective evidence of the incurred losses. Based on this evaluation, allowances are taken into account for the expected losses of these receivables.
 
As of June 30, 2019, and for the year ended December 31, 2018, the Company recorded expected credit losses on accounts receivable of Ps. 3,914 and Ps. 10,621, respectively.
 
iii) Financial liabilities
 
Classification of financial liabilities
 
Financial liabilities at initial recognition, as financial liabilities at FVTPL, loans and borrowings, accounts payables to suppliers, unearned transportation revenue, other accounts payable and financial instruments.
 
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
 
Subsequent measurement
 
The measurement of financial liabilities depends on their classification as described below:
 
Financial liabilities at amortized cost
 
Accounts payable, are subsequently measured at amortized cost and do not bear interest or result in gains and losses due to their short-term nature.
 
Loans and borrowings are the category most relevant to the Company. After initial recognition at fair value (consideration received), interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
 
Amortized cost is calculated by taking into account any discount or premium on issuance and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the consolidated statements of operations. This amortized cost category generally applies to interest-bearing loans and borrowings.
 
Financial liabilities at FVTPL
 
Financial liabilities at FVTPL include financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities under the fair value option, which are classified as held for trading, if they are acquired for the purpose of selling them in the near future. This category includes derivative financial instruments that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. During the years ended December 31, 2018, 2017 and 2016 the Company has not designated any financial liability as at FVTPL.
 
Derecognition
 
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
 
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statements of operations.

 	62   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Offsetting of financial instruments
 
Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position if there is:
 
(i)	A currently enforceable legal right to offset the recognized amounts, and	
 
(ii)	An intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.	
 
Non-derivative financial instruments
 
Since all of the aircraft and engine lease contracts are denominated in USDs, starting on March 25, 2019, the Company established a natural hedge on its USD denominated revenues using the lease debt in USD as a hedge instrument. This hedging relationship is designated as a cash flow hedge to offset the volatility of the foreign exchange variation arising from the revaluation of its lease debt. Additionally, on the same date, the Company established a natural hedge on a portion of its fuel expense using as a hedge instrument a portion of its USD monetary assets. This hedging relationship is designated as a cash flow hedge to offset the volatility of the foreign exchange variation arising from the revaluation of this fuel expense.
 
e) Other accounts receivable
 
Other accounts receivables are due primarily from major credit card processors associated with the sales of tickets and are stated at cost less allowances made for credit losses, which approximates fair value given their short-term nature.
 
f) Inventories
 
Inventories consist primarily of flight equipment expendable parts, materials and supplies, and are initially recorded at acquisition cost. Inventories are carried at the lower of cost and their net realization value. The cost is determined on the basis of the method of specific identification, and expensed when used in operations.
 
g) Intangible assets
 
Cost related to the purchase or development of computer software that is separable from an item of related hardware is capitalized separately and amortized over the period in which it will generate benefits not exceeding five years on a straight-line basis. The Company annually reviews the estimated useful lives and salvage values of intangible assets and any changes are accounted for prospectively.
 
The Company records impairment charges on intangible assets used in operations when events and circumstances indicate that the assets or related cash generating unit may be impaired and the carrying amount of a long-lived asset or cash generating unit exceeds its recoverable amount, which is the higher of (i) its fair value less cost to sell, and (ii) its value in use.
 
The value in use calculation is based on a discounted cash flow model, using our projections of operating results for the near future. The recoverable amount of long-lived assets is sensitive to the uncertainties inherent in the preparation of projections and the discount rate used in the calculation.
 
h) Guarantee deposits
 
Guarantee deposits consist primarily of aircraft maintenance deposits paid to lessors, deposits for rent of flight equipment and other guarantee deposits. Aircraft and engine deposits are held by lessors in U.S. dollars and are presented as current assets and non-current assets, based on the recovery dates of each deposit established in the related agreements.

 	63   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Aircraft maintenance deposits paid to lessors
 
Most of the Company’s lease agreements require the Company to pay maintenance deposits to aircraft lessors to be held as collateral in advance of the Company’s performance of major maintenance activities. These lease agreements provide that maintenance deposits are reimbursable to the Company upon completion of the maintenance event in an amount equal to the lesser of (i) the amount of the maintenance deposits held by the lessor associated with the specific maintenance event, or (ii) the qualifying costs related to the specific maintenance event.
 
Substantially all of these maintenance deposits are calculated based on a utilization measure of the leased aircrafts and engines, such as flight hours or cycles, and are used solely to collateralize the lessor for maintenance time run off the aircraft and engines until the completion of the maintenance of the aircraft and engines.
 
Maintenance deposits expected to be recovered from lessors are reflected as guarantee deposits in the accompanying consolidated statement of financial position. The portion of prepaid maintenance deposits that is deemed unlikely to be recovered, primarily relating to the rate differential between the maintenance deposits and the expected cost for the next related maintenance event that the deposits serve to collateralize, is recognized as supplemental rent in the consolidated statements of operations. Thus, any excess of the required deposit over the expected cost of the major maintenance event is recognized as supplemental rent in the consolidated statements of operations starting from the period the determination is made.
 
Any usage-based maintenance deposits to be paid to the lessor, related with a major maintenance event that (i) is not expected to be performed before the expiration of the lease agreement, (ii) is nonrefundable to the Company and (iii) is not substantively related to the maintenance of the leased asset, is accounted for as contingent rent in the consolidated statements of operations. The Company records lease payment as contingent rent when it becomes probable and reasonably estimable that the maintenance deposits payments will not be refunded. The Company makes certain assumptions at the inception of the lease and at each consolidated statement of financial position date to determine the recoverability of maintenance deposits. These assumptions are based on various factors such as the estimated time between the maintenance events, the date the aircraft is due to be returned to the lessor, and the number of flight hours the aircraft and engines is estimated to be utilized before it is returned to the lessor.
 
In the event that lease extensions are negotiated, any extension benefit is recognized as a deferred lease incentive. The aggregate benefit of extension is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
 
Because the lease extension benefits are considered lease incentives, the benefits are deferred in the statement of financial position and are being recognized on a straight-line basis over the remaining revised lease terms.
 
i) Aircraft and engine maintenance
 
The Company is required to conduct diverse levels of aircraft maintenance. Maintenance requirements depend on the type of aircraft, age and the route network over which it operates.
 
Fleet maintenance requirements may involve short cycle engineering checks, for example, component checks, monthly checks, annual airframe checks and periodic major maintenance and engine checks.
 
Aircraft maintenance and repair consists of routine and non-routine works, divided into three general categories: (i) routine maintenance, (ii) major maintenance and (iii) component service.
 
(i) Routine maintenance requirements consists of scheduled maintenance checks on the Company’s aircraft, including pre-flight, daily, weekly and overnight checks, any diagnostics and routine repairs and any unscheduled tasks performed as required. This type of maintenance events is currently serviced by the Company mechanics and are primarily completed at the main airports that the Company currently serves. All other maintenance activities are sub-contracted to qualified maintenance business partner, repair and overhaul organizations. Routine maintenance also includes scheduled tasks that can take from seven to 14 days to accomplish and typically are required approximately every 22 months. All routine maintenance costs are expensed as incurred.
 
(ii) Major maintenance consist of a series of more complex tasks that can take up to six weeks to accomplish and typically are required approximately every five to six years.
 
Major maintenance is accounted for under the deferral method, whereby the cost of major maintenance and major overhaul and repair is capitalized (leasehold improvements to flight equipment) and amortized over the shorter of the period to the next major maintenance event or the remaining contractual lease term. The next major maintenance event is estimated based on assumptions including estimated usage. The United States Federal Aviation Administration (“ FAA ”) and the Mexican Civil Aeronautic Authority (Dirección General de Aeronáutica Civil, or “ DGAC ”) mandate maintenance intervals and average removal times as suggested by the manufacturer.

 	64   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

These assumptions may change based on changes in the utilization of aircraft, changes in government regulations and suggested manufacturer maintenance intervals. In addition, these assumptions can be affected by unplanned incidents that could damage an airframe, engine, or major component to a level that would require a heavy maintenance event prior to a scheduled maintenance event. To the extent the planned usage increases, the estimated life would decrease before the next maintenance event, resulting in additional expense over a shorter period.
 
(iii) The Company has an engine flight hour agreement (component repair agreement), that guarantees a cost per overhaul, provides miscellaneous engines coverage, caps the cost of foreign objects damage events, ensures there is protection from annual escalations, and grants an annual credit for scrapped components. The cost associated with the miscellaneous engine coverage is recorded monthly as incurred in the consolidated statements of operations.
 
j) Rotable spare parts, furniture and equipment, net
 
Rotable spare parts, furniture and equipment, are recorded at cost and are depreciated to estimated residual values over their estimated useful lives using the straight-line method.
 
Aircraft spare engines have significant parts with different useful lives; therefore, they are accounted for as separate items (major components) of rotable spare parts.
 
Pre-delivery payments refer to prepayments made to aircraft and engine manufacturers during the manufacturing stage of the aircraft.
 
The borrowing costs related to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset.
 
Depreciation rates are as follows:
 
 	 	Annual
depreciation rate	
Aircraft parts and rotable spare parts	 	8.3-16.7%	
Aircraft spare engines	 	4.0-8.3%	
Standardization	 	Remaining contractual lease term	
Computer equipment	 	25%	
Communications equipment	 	10%	
Office furniture and equipment	 	10%	
Electric power equipment	 	10%	
Workshop machinery and equipment	 	10%	
Service carts on board	 	20%	
Leasehold improvements to flight equipment	 	The shorter of: (i) remaining contractual lease
term, or (ii) the next major maintenance event	
 
The Company reviews annually the useful lives and salvage values of these assets and any changes are accounted for prospectively.

 	65   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The Company assesses, at each reporting date, whether there is an objective evidence that rotable spare parts, furniture and equipment is impaired in the Cash Generating Unit (CGU). The Company identified only one CGU’s is the fleet. The Company records impairment charges on rotable spare parts, furniture and equipment used in operations when events and circumstances indicate that the assets may be impaired or when the carrying amount of a long-lived asset or related cash generating unit exceeds its recoverable amount, which is the higher of (i) its fair value less cost to sell and (ii) its value in use.
 
The value in use calculation is based on a discounted cash flow model, using our projections of operating results for the near future. The recoverable amount of long-lived assets is sensitive to the uncertainties inherent in the preparation of projections and the discount rate used in the calculation.
 
For the period ended June 30, 2019 and for the year ended December 31, 2018, there were no impairment charges recorded in respect of the Company’s value of intangible assets.
 
k) Foreign currency transactions and exchange differences
 
The Company’s consolidated financial statements are presented in Mexican peso, which is the reporting and functional currency of the parent company. For each subsidiary, the Company determines the functional currency and items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).
 
The financial statements of foreign subsidiaries prepared under IFRS and denominated in their respective local currencies, are translated into the functional currency as follows:
 
	·	Transactions in foreign currencies are translated into the respective functional currencies at the exchange rates at the dates of the transactions.	
 
	·	All monetary assets and liabilities were translated at the exchange rate at the consolidated statement of financial position date.	
 
	·	All non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.	
 
	·	Equity accounts are translated at the prevailing exchange rate at the time the capital contributions were made and the profits were generated.	
 
	·	Revenues, costs and expenses are translated at the average exchange rate during the applicable period.	
 
Any differences resulting from the currency translation are recognized in the consolidated statements of operations.
 
Foreign currency differences arising on translation into the presentation currency are recognized in OCI.
 
l) Liabilities and provisions
 
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
 
For the operating leases, the Company is contractually obligated to return the leased aircraft in a specific condition. The Company accrues for restitution costs related to aircraft held under operating leases throughout the term of the lease, based upon the estimated cost of satisfying the return condition criteria for each aircraft. These return obligations are related to the costs to be incurred in the reconfiguration of aircraft (interior and exterior), painting, carpeting and other costs, which are estimated based on current cost adjusted for inflation. The return obligation is estimated at the inception of each leasing arrangement and recognized over the term of the lease.

 	66   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

The Company records aircraft lease return obligation reserves based on the best estimate of the return obligation costs under each aircraft lease agreement.
 
The aircraft lease agreements of the Company also require that the aircraft and engines be returned to lessors under specific conditions of maintenance. The costs of return, which in no case are related to scheduled major maintenance, are estimated and recognized ratably as a provision from the time it becomes likely such costs will be incurred and can be estimated reliably. These return costs are recognized on a straight-line basis as a component of supplemental rent and the provision is included as part of other liabilities, through the remaining lease term. The Company estimates the provision related to airframe, engine overhaul and limited life parts using certain assumptions including the projected usage of the aircraft and the expected costs of maintenance tasks to be performed.
 
m) Employee benefits
 
i) Personnel vacations
 
The Company and its subsidiaries in Mexico and Central America recognize a reserve for the costs of paid absences, such as vacation time, based on the accrual method.
 
ii) Termination benefits
 
The Company recognizes a liability and expense for termination benefits at the earlier of the following dates:
 
a) When it can no longer withdraw the offer of those benefits; and
 
b) When it recognizes costs for a restructuring that is within the scope of IAS 37, Provisions, Contingent Liabilities and Contingent Assets, and involves the payment of termination benefits.
 
For the period ended June 30, 2019 and for the year ended December 31, 2018, no termination benefits provision has been recognized. 
 
iii) Seniority premiums
 
In accordance with Mexican Labor Law, the Company provides seniority premium benefits to the employees which rendered services to its Mexican subsidiaries under certain circumstances. These benefits consist of a one-time payment equivalent to 12 days’ wages for each year of service (at the employee’s most recent salary, but not to exceed twice the legal minimum wage), payable to all employees with 15 or more years of service, as well as to certain employees terminated involuntarily prior to the vesting of their seniority premium benefit.
 
Obligations relating to seniority premiums other than those arising from restructurings, are recognized based upon actuarial calculations and are determined using the projected unit credit method.
 
The latest actuarial computation was prepared as of December 31, 2018.Remeasurement gains and losses are recognized in full in the period in which they occur in OCI. Such remeasurement gains and losses are not reclassified to profit or loss in subsequent periods.
 
The defined benefit asset or liability comprises the present value of the defined benefit obligation using a discount rate based on government bonds ( Certificados de la Tesorería de la Federación , or “ CETES ” in Mexico), less the fair value of plan assets out of which the obligations are to be settled.
 
For entities in Costa Rica and Guatemala; there is no obligation to pay seniority premium or other retirement benefits.
 
iv) Incentives
 
The Company has a quarterly incentive plan for certain personnel whereby cash bonuses are awarded for meeting certain performance targets. These incentives are payable shortly after the end of each quarter and are accounted for as a short-term benefit under IAS 19, Employee Benefits. A provision is recognized based on the estimated amount of the incentive payment. During the year ended December 31, 2015, the Company adopted a new short-term benefit plan for certain key personnel whereby cash bonuses are awarded when certain Company’s performance targets are met. These incentives are payable shortly after the end of each year and also are accounted for as a short-term benefit under IAS 19. A provision is recognized based on the estimated amount of the incentive payment.

 	67   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

v) Long-term incentive plan (“LTIP”) and long term retention plan (LTRP)
 
The Company has adopted a Long-term incentive plan (“LTIP”). This plan consists of a share purchase plan (equity-settled) and a share appreciation rights “SARs” plan (cash settled), and therefore accounted under IFRS 2 “Shared based payments”. This incentive plan has been granting annual extensions in the same terms from the original granted in 2014.
 
During 2018, the Company approved a new long-term retention plan (“LTRP”), which consisted in a purchase plan (equity-settled). This plan does not include cash compensations granted through appreciation rights on the Company's shares. The retention plans granted in previous periods will continue in full force and effect until their respective due dates and the cash compensation derived from them will be settled according to the conditions established in each plan. 
 
vi) Share-based payments
 
a) LTIP
 
- Share purchase plan (equity-settled)
 
Certain key employees of the Company receive additional benefits through a share purchase plan denominated in Restricted Stock Units (“RSUs”), which has been classified as an equity-settled share-based payment. The cost of the equity-settled share purchase plan is measured at the grant date, taking into account the terms and conditions on which the share options were granted. The equity-settled compensation cost is recognized in the consolidated statement of operations under the caption of salaries and benefits, over the requisite service period.
 
- SARs plan (cash settled)
 
The Company granted SARs to key employees, which entitle them to a cash payment after a service period. The amount of the cash payment is determined based on the increase in the share price of the Company between the grant date and the time of exercise. The liability for the SARs is measured, initially and at the end of each reporting period until settled, at the fair value of the SARs, taking into account the terms and conditions on which the SARs were granted. The compensation cost is recognized in the consolidated statement of operations under the caption of salaries and benefits, over the requisite service period.
 
b) Management incentive plan (“MIP”)
 
- MIP I
 
Certain key employees of the Company receive additional benefits through a share purchase plan, which has been classified as an equity-settled share-based payment. The equity-settled compensation cost is recognized in the consolidated statement of operations under the caption of salaries and benefits, over the requisite service period.
 
- MIP II
 
On February 19, 2016, the Board of Directors of the Company authorized an extension to the MIP for certain key employees, this plan was named MIP II. In accordance with this plan, the Company granted SARs to key employees, which entitle them to a cash payment after a service period. The amount of the cash payment is determined based on the increase in the share price of the Company between the grant date and the time of exercise. The liability for the SARs is measured initially and at the end of each reporting period until settled at the fair value of the SARs, taking into account the terms and conditions on which the SARs were granted. The compensation cost is recognized in the consolidated statement of operations under the caption of salaries and benefits, over the requisite service period.
 
c) Board of Directors Incentive Plan (BODIP)
 
Certain members of the Board of Directors of the Company receive additional benefits through a sharebased plan, which has been classified as an equity-settled share-based payment and therefore accounted under IFRS 2 “Shared based payments”.

 	68   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

 
In April 2018, the Board of Directors of the Company authorized a Board of Directors Incentive Plan “BoDIP”, for the benefit of certain board members. The BoDIP grants options to acquire shares of the Company or CPOs during a four years period with an exercise price share at Ps.16.12, which was determined on the grant date. Under this plan, no service or performance conditions are required to the board members for exercise the option to acquire shares, and therefore, they have the right to request the delivery of those shares at the time they pay for them.
 
vii) Employee profit sharing
 
The Mexican Income Tax Law (“MITL”), establishes that the base for computing current year employee profit sharing shall be the taxpayer’s taxable income of the year for income tax purposes, including certain adjustments established in the Income Tax Law, at the rate of 10%. The employee profit sharing is presented as an expense in the consolidated statements of operations. Subsidiaries in Central America do not have such profit sharing benefit, as it is not required by local regulation.
 
n) Leases
 
The determination of whether an arrangement is, or contains a lease, is based on the substance of the arrangement at inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
 
Property and equipment lease agreements are recognized as finance leases if the risks and benefits incidental to ownership of the leased assets have been transferred to the Company when (i) the ownership of the leased asset is transferred to the Company upon termination of the lease; (ii) the agreement includes an option to purchase the asset at a reduced price; (iii) the term of the lease is for the major part of the economic life of the leased asset; (iv) the present value of minimum lease payments is at least substantially all of the fair value of the leased asset; or (v) the leased asset is of a specialized nature for the Company.
 
When the risks and benefits incidental to the ownership of the leased asset remain mostly with the lessor, they are classified as operating leases and rental payments are charged to results of operations on a straight-line over the term of the lease. The Company’s lease contracts for aircraft, engines and components parts are classified as operating leases.
 
Sale and leaseback
 
The Company enters into sale and leaseback agreements whereby an aircraft or engine is sold to a lessor upon delivery and the lessor agrees to lease such aircraft or engine back to the Company. The Company applies the requirements in IFRS 15 to determine that in accounting matter a sale has occurred in the sale and leaseback transaction.
 
Accounting of gains from sale and leaseback transactions.
 
The Company measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right-of use retained by the Company and recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer lessor.
 
o) Other taxes and fees payable
 
The Company is required to collect certain taxes and fees from customers on behalf of government agencies and airports and to remit these to the applicable governmental entity or airport on a periodic basis. These taxes and fees include federal transportation taxes, federal security charges, airport passenger facility charges, and foreign arrival and departure fees. These charges are collected from customers at the time they purchase their tickets, but are not included in passenger revenue. The Company records a liability upon collection from the customer and discharges the liability when payments are remitted to the applicable governmental entity or airport.

 	69   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

p) Income taxes
 
Current income tax
 
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
 
Current income tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
 
Deferred tax
 
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
 
Deferred tax liabilities are recognized for all taxable temporary differences, except, in respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
 
Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused tax credits and any available tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and available tax losses can be utilized, except, in respect of deductible temporary differences associated with investments in subsidiaries deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profits will be available against which the temporary differences can be utilized.
 
The Company considers the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses or unused tax credits can be utilized: (a) whether the entity has sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity, which will result in taxable amounts against which the unused tax losses or unused tax credits can be utilized before they expire; (b) whether it is probable that the Company will have taxable profits before the unused tax losses or unused tax credits expire; (c) whether the unused tax losses result from identifiable causes which are unlikely to recur; and (d) whether tax planning opportunities are available to the Company that will create taxable profit in the period in which the unused tax losses or unused tax credits can be utilized.
 
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
 
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
 
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction in OCI.
 
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
 
The charge for income taxes incurred is computed based on tax laws approved in Mexico, Costa Rica and Guatemala at the date of the consolidated statement of financial position.
 
q) Derivative financial instruments and hedge accounting
 
The Company mitigates certain financial risks, such as volatility in the price of jet fuel, adverse changes in interest rates and exchange rate fluctuations, through a risk management program that includes the use of derivative financial instruments.
 
In accordance with IFRS 9 (2013), derivative financial instruments are recognized in the consolidated statement of financial position at fair value. At inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which it wishes to apply hedge accounting; as well as, the risk management objective and strategy for undertaking the hedge. The documentation includes the hedging strategy and objective, identification of the hedging instrument, the hedged item or transaction, the nature of the risks being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk(s).

 	70   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

Only if such hedges are expected to be effective in achieving offsetting changes in fair value or cash flows of the hedge item(s) and are assessed on an ongoing basis to determine that they actually have been effective throughout the financial reporting periods for which they were designated, hedge accounting treatment can be used.
 
Under the CFH accounting model, the effective portion of the hedging instrument’s changes in fair value is recognized in OCI, while the ineffective portion is recognized in current year earnings. During the period ended June 30, 2019 and December 31, 2018, there was no ineffectiveness with respect to derivative financial instruments. The amounts recognized in OCI are transferred to earnings in the period in which the hedged transaction affects earnings.
 
The realized gain or loss of derivative financial instruments that qualify as CFH is recorded in the same caption of the hedged item in the consolidated statement of operations.
 
Accounting for the time value of options
 
The Company accounts for the time value of options in accordance with IFRS 9, which requires all derivative financial instruments to be initially recognized at fair value. Subsequent measurement for options purchased and designated as CFH requires that the option’s changes in fair value be segregated into its intrinsic value (which will be considered the hedging instrument’s effective portion in OCI) and its correspondent changes in extrinsic value (time value and volatility). The extrinsic value changes will be considered as a cost of hedging (recognized in OCI in a separate component of equity) and accounted for in income when the hedged items also are recognized in income.
 
r) Financial instruments – Disclosures
 
IFRS 7 requires a three-level hierarchy for fair value measurement disclosures and requires entities to provide additional disclosures about the relative reliability of fair value measurements.
 
s) Treasury shares
 
The Company’s equity instruments that are reacquired (treasury shares), are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Any difference between the carrying amount and the consideration received, if reissued, is recognized in additional paid in capital.
 
Share-based payment options exercised during the reporting period are settled with treasury shares.
 
t) Operating segments
 
The Executive Vice President Airline Commercial and Operations, is the Chief Operating Decision Maker (CODM) and monitors the Company as a single business unit that provides air transportation and related services, accordingly it has only one operating segment.
 
The Company has two geographic areas identified as domestic (Mexico) and international (United States of America and Central America).
 
v) Current versus non-current classification
 
The Company presents assets and liabilities in the consolidated statement of financial position based on current/non-current classification. An asset is current when it is: (i) expected to be realized or intended to be sold or consumed in normal operating cycle, (ii) expected to be realized within twelve months after the reporting period, or, (iii) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

 	71   of 72	

VLRS	Consolidated	
Ticker:       VLRS	Quarter:     2     Year:    2019	

A liability is current when: (i) it is expected to be settled in normal operating cycle, (ii) it is due to be settled within twelve months after the reporting period, or, (iii) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
 
w) Convenience translation
 
U.S. dollar amounts at June 30, 2019 shown in the unaudited interim condensed consolidated financial statements have been included solely for the convenience of the reader and are translated from Mexican pesos, using an exchange rate of Ps. 19.1685 per U.S. dollar, as reported by the Mexican Central Bank (Banco de México) as the rate for the payment of obligations denominated in foreign currency payable in Mexico in effect on June 30, 2019. Such translation should not be construed as a representation that the peso amounts have been or could be converted into U.S. dollars at this or any other rate. The referred information in U.S. dollars is solely for information purposes and does not represent the amounts are in accordance with IFRS or the equivalent in U.S. dollars in which the transactions were conducted or in which the amounts presented in Mexican pesos can be translated or realized.

 	72   of 72	

 

Volaris Reports Second Quarter 2019 Results: 10.1% TRASM Increase and 4.6% Reduction of Unit Cost Excluding Fuel
 
Mexico City, Mexico, July 25, 2019 – 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 second quarter 2019.
 
The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS).

Second Quarter 2019 Highlights
 
	<	Total operating revenues were Ps.8,329 million for the second quarter, an increase of 33.7% year over year.	
 
	<	Total ancillary revenues were Ps.2,909 million for the second quarter, an increase of 38.9% year over year. Total ancillary revenues per passenger for the second quarter reached Ps.514, an increase of 10.3% year over year. Total ancillary revenues represented 34.9% of the total operating revenues for the second quarter 2019, increasing 1.3 percentage points with respect to the same period of last year.	
 
	<	Total operating revenues per available seat mile (TRASM) were Ps.135.5 cents for the second quarter, an increase of 10.1% year over year.	
  
	<	Operating expenses per available seat mile (CASM) were Ps.124.9 cents for the second quarter, a decrease of 1.2% year over year; with an average economic fuel cost per gallon of Ps.48.9 for the second quarter, an increase of 8.0% year over year.	
 
	<	Operating expenses excluding fuel, per available seat mile (CASM ex-fuel) reached Ps.74.5 cents for the second quarter, a decrease of 4.6% year over year.	
  
	<	Operating income was Ps.659 million for the second quarter, an improvement compared with the operating loss of Ps.163 million for the same period of last year. Operating margin for the second quarter was 7.9%, an improvement in margin of 10.5 percentage points year over year.	
  
	<	Net income was Ps.119 million (Ps.0.12 per share / US$0.06 per ADS), with a net margin of 1.4% for the second quarter.	
 
	<	At the close of the second quarter, the Mexican peso appreciated 1.1% against the U.S. dollar with respect to the exchange rate at the close of the previous quarter (Ps.19.38 per US dollar). The Company booked a foreign exchange gain of Ps.3 million as a consequence of our U.S. dollar net monetary liability position, as result of the adoption of IFRS16.	

 
   1 

	<	Net cash flows provided by operating activities and investing activities were Ps.1,527 million and Ps.171 million, respectively. The cash flow used in financing activities was Ps.571 million, which included Ps.1,582 million of aircraft rental payments, and inflows of Ps.1,500 million, related to the issuance of asset backed trust notes (certificados bursátiles fiduciarios). The negative net foreign exchange difference was Ps.74 million, with net cash generation in the second quarter of Ps.1,053 million. As of June 30, 2019, cash and cash equivalents were Ps.8,124 million.	

Resilient Macroeconomics and Domestic Consumer Demand, Peso Appreciation and Fuel Price Pressures
 
	<	Resilient macroeconomics and domestic consumer demand: The macroeconomic indicators in Mexico during the second quarter were stable, with same store sales 1 increasing 4.8% year over year; remittances 2 increasing 2.5% year over year during April and May 2019; and the Mexican Consumer Confidence Balance Indicator (BCC) 3 increased 22% in the second quarter year over year.	
 
	<	Air traffic volume increase: The Mexican General Aviation of Civil Aviation reported an overall passenger volume growth for Mexican carriers of 11.2% year over year during April and May of 2019; domestic overall passenger volume increased 10.7%, while the international overall passenger volume increased 3.0%.	
 
	<	Exchange rate volatility: The Mexican peso appreciated 1.3% year over year against the US dollar, from an average exchange rate of Ps.19.37 pesos per US dollar in the second quarter 2018 to Ps.19.12 pesos per US dollar during the second quarter 2019. At the end of the second quarter 2019, the Mexican peso appreciated 1.1% with respect to the exchange rate of the end of the previous quarter. The Company booked a foreign exchange gain of Ps.3 million as a consequence of our US dollar net monetary liability position, resulting from the adoption of IFRS16.	
 
	<	Higher fuel prices: The average economic fuel cost per gallon increased 8.0% in the second quarter of 2019, year over year, reaching Ps.48.9 per gallon (US$2.6).	

Passenger Traffic Stimulation, Further Ancillary Revenue Expansion, and Positive TRASM Growth
 
	<	Passenger traffic stimulation: Volaris booked 5.7 million passengers in the second quarter 2019, an increase of 25.9% year over year. Volaris traffic (measured in terms of revenue passenger miles, or RPMs) increased 23.8% year over year. System load factor during the second quarter increased 1.5 percentage points year over year, reaching 87.3%.	
 
	<	Positive TRASM growth: For the second quarter 2019, TRASM increased 10.1% year over year. During the second quarter 2019, the total capacity, in terms of ASMs, increased 21.6% year over year.	
 
	<	Total ancillary revenue growth: For the second quarter 2019, total ancillary revenue increased 38.9% year over year. Total ancillary revenue per passenger for the second quarter 2019 increased 10.3% year over year. The total ancillary revenue generation continues to grow with new and mature products, appealing to customers’ needs, representing 34.9% of total operating revenue of the second quarter, an increase of 1.3 percentage points year over year.	

 

1 Source: Asociación Nacional de Tiendas de Autoservicio y Departamentales, A. C. (ANTAD)
2 Source: Banco de México (BANXICO)
3 Source: Instituto Nacional de Estadística y Geografía (INEGI)  

 
   2 

	<	New routes: Volaris began operations in five new domestic routes from Chihuahua, Durango and Queretaro and four new international routes from Chicago, Dallas and Phoenix.	

The Cost Control Discipline and peso appreciation Offset Fuel Price Pressure

	<	CASM and CASM ex fuel for the second quarter 2019 reached Ps.124.9 (US$6.5 cents) and Ps.74.5 cents (US$3.9 cents), respectively. This represented decreases of 1.2% and 4.6%, respectively; mainly driven by a tighter cost control discipline and the average exchange rate appreciation of 1.3%; despite the average economic fuel cost per gallon rising 8.0%.	

Young and Fuel-efficient Fleet
 
	<	During the second quarter 2019, the Company incorporated two aircraft (A320 neo) to its fleet; also during this quarter two redeliveries were registered (A320 ceo). As of June 30, 2019, Volaris’ fleet was composed of 78 aircraft (8 A319s, 55 A320s and 15 A321s), with an average age of 4.8 years. At the end of the second quarter 2019, Volaris’ fleet had an average of 186 seats, 76% of which were in sharklet-equipped aircraft, and 24% were NEO.	

Solid Balance Sheet and Good Liquidity
 
	<	Net cash flows provided by operating activities and investing activities were Ps.1,527 million and Ps.171 million, respectively. The cash flow used in financing activities was Ps.571 million, which included Ps.1,582 million of aircraft rental payments, and inflows of Ps.1,500 million, related to the issuance of asset backed trust notes (certificados bursátiles fiduciarios).The negative net foreign exchange difference was Ps.74 million, while the net cash generation in the second quarter was Ps.1,053 million. As of June 30, 2019, cash and cash equivalents were Ps.8,124 million, representing 29.8% of last twelve months of the operating revenue. Volaris registered a negative net debt (or a positive net cash position) of Ps.4,050 million (excluding lease liability recognized under the IFRS16 adoption) and total equity of Ps.4,095 million.	
   
Transition to IFRS 16

	<	The Company adopted IFRS 16 as of January 1st, 2019, using the full retrospective method. The cumulative effect of adopting IFRS 16 has been recognized as an adjustment to the opening balance as of January 1st, 2017 as an increase in assets and liabilities and an adjustment in the retained earnings. The full disclosure and the unaudited and estimated figures of this initial adoption are included in the Company´s 2018 annual report.	

 
   3 

	<	This quarterly earnings release includes supplemental information for comparable purposes, with recast, estimated and unaudited 2018 figures with the IFRS 16 adoption effects. These figures were derived from unaudited financial statements included in the quarterly reports on Form 6-K reported during the year ended as of December 31, 2018.	
 
	<	Starting on March 25, 2019, the Company established a hedge on its USD denominated revenues, through a non-derivative financial instrument, using the lease liabilities denominated in USD as a hedge instrument. This hedging relationship is designated as a cash flow hedge of forecasted revenues to mitigate the volatility of the foreign exchange variation arising from the revaluation of its lease liabilities. The non-material impact of this hedge resulting from the second quarter 2019, has been presented as part of the total operating revenue.	
 
	<	Additionally, on the same date, the Company established a hedge on a portion of its forecasted fuel expense, through a non-derivative financial instrument, using as hedge instrument a portion of its USD denominated monetary assets. This hedging relationship is designated as a cash flow hedge of forecasted fuel expense to mitigate the volatility of the foreign exchange variation arising from the revaluation of this portion of USD denominated monetary asset. The non-material impact of this hedge, resulting from the second quarter 2019, has been presented as part of the total fuel expense.	
   
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:
 
Presenters for the Company:

	Mr. Enrique Beltranena, President & CEO
Mr. Holger Blankenstein, Airline EVP
Ms. Sonia Jerez Burdeus, VP & CFO
	
Date:	Friday, July 26, 2019	
Time:	10:00 am U.S. EDT (9:00 am Mexico City Time)	
United States dial in (toll free):	1-877-830-2576	
Mexico dial in (toll free):	001-800-514-6145	
Brazil dial in (toll free):	0-800-891-6744	
International dial in:	+ 1-785-424-1726	
Participant passcode:	VOLARIS (8652747)	
Webcast will be available at:	https://services.choruscall.com/links/vlrs190726gZNCIqT5.html

 
   4 

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 194 and its fleet from four to 78 aircraft. Volaris offers more than 403 daily flight segments on routes that connect 40 cities in Mexico and 25 cities in the United States and Central America with the youngest 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 ten 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, beliefs or projections concerning future events and financial trends affecting the financial condition of our business. When used in this release, the words "expects," “intends,” "estimates," “predicts,” "plans," "anticipates," "indicates," "believes," "forecast," "guidance," “potential,” "outlook," "may," “continue,” "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. Forward-looking statements should not be read as a guarantee or assurance of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.  Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. 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. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above.  Forward-looking statements speak only as of the date of this release.  You should not put undue reliance on any forward-looking statements.  We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable law.  If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Investor Relations Contact:
Maria Elena Rodríguez & Andrea González / Investor Relations / ir@volaris.com / +52 55 5261 6444
Media Contact:
Gabriela Fernández / volaris@gcya.net / +52 55 5246 0100 

 
   5 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators

Unaudited
(In Mexican pesos, except otherwise indicated)	 	Three months
ended June 30,
2019
(US Dollars)*	 	 	Three months
ended June 30,
2019	 	 	 
Three months
ended June 30,
2018	 	 	Variance
(%)	 	
Total operating revenues (millions)	 	 	435	 	 	 	8,329	 	 	 	6,230	 	 	 	33.7%		
Total operating expenses (millions)	 	 	400	 	 	 	7,670	 	 	 	6,393	 	 	 	20.0%		
EBIT (millions)	 	 	34	 	 	 	659	 	 	 	(163	)	 	 	NA	 	
EBIT margin	 	 	7.9%		 	 	7.9%		 	 	(2.6%	)	 	 	10.5 pp	 	
Depreciation and amortization	 	 	70	 	 	 	1,335	 	 	 	1,135	 	 	 	17.6%		
Aircraft and engine rent expense	 	 	16	 	 	 	316	 	 	 	105	 	 	 	>100%	 	
Net income (loss) (millions)	 	 	6	 	 	 	119	 	 	 	(1,766	)	 	 	NA	 	
Net income (loss) margin	 	 	1.4%		 	 	1.4%		 	 	(28.4%	)	 	 	29.8 pp	 	
Income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	0.01	 	 	 	0.12	 	 	 	(1.75	)	 	 	NA	 	
Diluted (pesos)	 	 	0.01	 	 	 	0.12	 	 	 	(1.75	)	 	 	NA	 	
Income (loss) per ADS:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	0.06	 	 	 	1.18	 	 	 	(17.46	)	 	 	NA	 	
Diluted (pesos)	 	 	0.06	 	 	 	1.18	 	 	 	(17.46	)	 	 	NA	 	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	-	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	 	 	0.0%		
Diluted	 	 	-	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	 	 	0.0%		
Available seat miles (ASMs) (millions) (1)	 	 	-	 	 	 	6,154	 	 	 	5,060	 	 	 	21.6%		
     Domestic	 	 	-	 	 	 	4,250	 	 	 	3,488	 	 	 	21.8%		
     International	 	 	-	 	 	 	1,904	 	 	 	1,572	 	 	 	21.1%		
Revenue passenger miles (RPMs) (millions) (1)	 	 	-	 	 	 	5,370	 	 	 	4,337	 	 	 	23.8%		
     Domestic	 	 	-	 	 	 	3,812	 	 	 	3,095	 	 	 	23.2%		
     International	 	 	-	 	 	 	1,558	 	 	 	1,242	 	 	 	25.4%		
Load factor (2)	 	 	-	 	 	 	87.3%		 	 	85.8%		 	 	1.5 pp	 	
     Domestic	 	 	-	 	 	 	89.7%		 	 	88.7%		 	 	1.0 pp	 	
     International	 	 	-	 	 	 	81.9%		 	 	79.1%		 	 	2.8 pp	 	
Total operating revenue per ASM (TRASM) (cents) (1) (5)	 	 	7.1	 	 	 	135.5	 	 	 	123.1	 	 	 	10.1%		
Total ancillary revenue per passenger (4) (5)	 	 	26.8	 	 	 	514	 	 	 	466	 	 	 	10.3%		
Total operating revenue per passenger (5)	 	 	76.9	 	 	 	1,475	 	 	 	1,387	 	 	 	6.3%		
Operating expenses per ASM (CASM) (cents) (1) (5)	 	 	6.5	 	 	 	124.9	 	 	 	126.3	 	 	 	(1.2%	)	
Operating expenses per ASM (CASM) (US cents) (3) (5)	 	 	-	 	 	 	6.5	 	 	 	6.5	 	 	 	(0.1%	)	
CASM ex fuel (cents) (1) (5)	 	 	3.9	 	 	 	74.5	 	 	 	78.0	 	 	 	(4.6%	)	
CASM ex fuel (US cents) (3) (5)	 	 	-	 	 	 	3.9	 	 	 	4.0	 	 	 	(3.3%	)	
Booked passengers (thousands) (1)	 	 	-	 	 	 	5,654	 	 	 	4,491	 	 	 	25.9%		
Departures (1)	 	 	-	 	 	 	34,848	 	 	 	28,497	 	 	 	22.3%		
Block hours (1)	 	 	-	 	 	 	87,686	 	 	 	77,263	 	 	 	13.5%		
Fuel gallons consumed (millions)	 	 	-	 	 	 	63.4	 	 	 	54.0	 	 	 	17.4%		
Average economic fuel cost per gallon	 	 	2.6	 	 	 	48.9	 	 	 	45.3	 	 	 	8.0%		
Aircraft at end of period	 	 	-	 	 	 	78	 	 	 	70	 	 	 	11.4%		
Average aircraft utilization (block hours)	 	 	-	 	 	 	13.1	 	 	 	13.2	 	 	 	(0.9%	)	
Average exchange rate	 	 	-	 	 	 	19.12	 	 	 	19.37	 	 	 	(1.3%	)	
End of period exchange rate	 	 	-	 	 	 	19.17	 	 	 	19.86	 	 	 	(3.5%	)	

*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
(1) Includes schedule + charter	(3) Dollar amounts were converted at average exchange rate of each period	
(2) Includes schedule	(4) Includes “other passenger revenues” and “non-passenger revenues”	
(5) Excludes non-derivatives financial instruments

 

   6 

  
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Financial and Operating Indicators

Unaudited
(In Mexican pesos, except otherwise indicated)	 	Six months ended
June 30, 2019
(US Dollars)*	 	 	Six months
ended June 30,
2019	 	 	 
Six months
ended June 30,
2018	 	 	Variance
(%)	 	
Total operating revenues (millions)	 	 	810	 	 	 	15,522	 	 	 	12,080	 	 	 	28.5%		
Total operating expenses (millions)	 	 	774	 	 	 	14,836	 	 	 	12,788	 	 	 	16.0%		
EBIT (millions)	 	 	36	 	 	 	685	 	 	 	(708	)	 	 	NA	 	
EBIT margin	 	 	4.4%		 	 	4.4%		 	 	(5.9%	)	 	 	10.3 pp	 	
Depreciation and amortization	 	 	137	 	 	 	2,627	 	 	 	2,207	 	 	 	19.1%		
Aircraft and engine rent expense	 	 	28	 	 	 	543	 	 	 	422	 	 	 	28.6%		
Net income (loss) (millions)	 	 	33	 	 	 	639	 	 	 	(1,305	)	 	 	NA	 	
Net income margin	 	 	4.1%		 	 	4.1%		 	 	(10.8%	)	 	 	14.9 pp	 	
Income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	0.03	 	 	 	0.63	 	 	 	(1.29	)	 	 	NA	 	
Diluted (pesos)	 	 	0.03	 	 	 	0.63	 	 	 	(1.29	)	 	 	NA	 	
Income (loss) per ADS:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	0.33	 	 	 	6.31	 	 	 	(12.90	)	 	 	NA	 	
Diluted (pesos)	 	 	0.33	 	 	 	6.31	 	 	 	(12.90	)	 	 	NA	 	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	-	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	 	 	0.0%		
Diluted	 	 	-	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	 	 	0.0%		
Available seat miles (ASMs) (millions) (1)	 	 	-	 	 	 	11,858	 	 	 	10,115	 	 	 	17.2%		
     Domestic	 	 	-	 	 	 	8,221	 	 	 	6,935	 	 	 	18.6%		
     International	 	 	-	 	 	 	3,637	 	 	 	3,180	 	 	 	14.3%		
Revenue passenger miles (RPMs) (millions) (1)	 	 	-	 	 	 	10,114	 	 	 	8,491	 	 	 	19.1%		
     Domestic	 	 	-	 	 	 	7,198	 	 	 	5,996	 	 	 	20.0%		
     International	 	 	-	 	 	 	2,916	 	 	 	2,495	 	 	 	16.9%		
Load factor (2)	 	 	-	 	 	 	85.3%		 	 	84.0%		 	 	1.3 pp	 	
     Domestic	 	 	-	 	 	 	87.6%		 	 	86.5%		 	 	1.1 pp	 	
     International	 	 	-	 	 	 	80.3%		 	 	78.5%		 	 	1.8 pp	 	
Total operating revenue per ASM (TRASM) (cents) (1) (5)	 	 	6.8	 	 	 	131.0	 	 	 	119.4	 	 	 	9.7%		
Total ancillary revenue per passenger (4) (5)	 	 	26.9	 	 	 	515.4	 	 	 	463.6	 	 	 	11.2%		
Total operating revenue per passenger (5)	 	 	76.3	 	 	 	1,463	 	 	 	1,380	 	 	 	6.0%		
Operating expenses per ASM (CASM) (cents) (1) (5)	 	 	6.5	 	 	 	125.2	 	 	 	126.4	 	 	 	(0.9%	)	
Operating expenses per ASM (CASM) (US cents) (3) (5)	 	 	-	 	 	 	6.5	 	 	 	6.6	 	 	 	(1.5%	)	
CASM ex fuel (cents) (1) (5)	 	 	4.0	 	 	 	76.5	 	 	 	80.8	 	 	 	(5.3%	)	
CASM ex fuel (US cents) (3) (5)	 	 	-	 	 	 	4.0	 	 	 	4.2	 	 	 	(5.8%	)	
Booked passengers (thousands) (1)	 	 	-	 	 	 	10,617	 	 	 	8,754	 	 	 	21.3%		
Departures (1)	 	 	-	 	 	 	67,046	 	 	 	56,685	 	 	 	18.3%		
Block hours (1)	 	 	-	 	 	 	170,534	 	 	 	154,507	 	 	 	10.4%		
Fuel gallons consumed (millions)	 	 	-	 	 	 	121.7	 	 	 	108.2	 	 	 	12.4%		
Average economic fuel cost per gallon	 	 	2.5	 	 	 	47.5	 	 	 	42.7	 	 	 	11.4%		
Aircraft at end of period	 	 	-	 	 	 	78	 	 	 	70	 	 	 	11.4%		
Average aircraft utilization (block hours)	 	 	-	 	 	 	12.9	 	 	 	13.2	 	 	 	(2.3%	)	
Average exchange rate	 	 	-	 	 	 	19.17	 	 	 	19.07	 	 	 	0.5%		
End of period exchange rate	 	 	-	 	 	 	19.17	 	 	 	19.86	 	 	 	(3.5%	)	
 
*Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
(1) Includes schedule + charter	(3) Dollar amounts were converted at average exchange rate of each period	
(2) Includes schedule	(4) Includes “other passenger revenues” and “non-passenger revenues”	
(5) Excludes non-derivatives financial instruments

 
   7 

 
 
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations

 	 	Three months	 	 	 	 	 	 	 	 	 	 	
 	 	ended June 30,	 	 		 	 		 	 	 	 	
Unaudited	 	2019	 	 	Three months	 	 	Three months  	 	 	Variance  	 	
(In millions of Mexican pesos)	 	(US Dollars) *	 	 	ended June 30, 2019	 	 	ended June 30, 2018  	 	 	(%)	 	
Operating revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Passenger revenues	 	 	419	 	 	 	8,038	 	 	 	5,990	 	 	 	34.2%		
Fare revenues	 	 	283	 	 	 	5,431	 	 	 	4,137	 	 	 	31.3%		
Other passenger revenues (1)	 	 	136	 	 	 	2,607	 	 	 	1,853	 	 	 	40.6%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-passenger revenues	 	 	16	 	 	 	302	 	 	 	240	 	 	 	25.6%		
Other non-passenger revenues (1)	 	 	13	 	 	 	250	 	 	 	187	 	 	 	33.5%		
Cargo	 	 	3	 	 	 	52	 	 	 	53	 	 	 	(2.5%	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-derivatives financial instruments	 	 	(1	)	 	 	(11	)	 	 	-	 	 	 	NA	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	 	435	 	 	 	8,329	 	 	 	6,230	 	 	 	33.7%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other operating income	 	 	(6	)	 	 	(123	)	 	 	(231	)	 	 	(46.7%	)	
Total fuel expense, net (2)	 	 	161	 	 	 	3,087	 	 	 	2,445	 	 	 	26.3%		
Depreciation and amortization	 	 	70	 	 	 	1,335	 	 	 	1,135	 	 	 	17.6%		
Landing, take-off and navigation expenses	 	 	62	 	 	 	1,188	 	 	 	1,149	 	 	 	3.4%		
Salaries and benefits	 	 	46	 	 	 	887	 	 	 	750	 	 	 	18.4%		
Maintenance expenses	 	 	19	 	 	 	369	 	 	 	376	 	 	 	(1.7%	)	
Sales, marketing and distribution expenses	 	 	18	 	 	 	350	 	 	 	382	 	 	 	(8.3%	)	
Aircraft and engine rent expense	 	 	16	 	 	 	316	 	 	 	105	 	 	 	>100%	 	
Other operating expenses	 	 	14	 	 	 	260	 	 	 	283	 	 	 	(8.1%	)	
Operating expenses	 	 	400	 	 	 	7,670	 	 	 	6,393	 	 	 	20.0%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income (loss)	 	 	34	 	 	 	659	 	 	 	(163	)	 	 	NA	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	3	 	 	 	54	 	 	 	37	 	 	 	45.9%		
Finance cost	 	 	(27	)	 	 	(520	)	 	 	(443	)	 	 	17.4%		
Exchange gain (loss), net	 	 	-	 	 	 	3	 	 	 	(1,926	)	 	 	NA	 	
Comprehensive financing result	 	 	(24	)	 	 	(462	)	 	 	(2,332	)	 	 	(80.2%	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income tax	 	 	10	 	 	 	197	 	 	 	(2,495	)	 	 	NA	 	
Income tax (expense) benefit	 	 	(4	)	 	 	(78	)	 	 	728	 	 	 	NA	 	
Net income (loss)	 	 	6	 	 	 	119	 	 	 	(1,766	)	 	 	NA	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
(1) 2Q 2018 figures include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.61 million, as result of the IFRS 15 adoption.
(2) 2Q 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.14 million.

 
   8 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Operations

 	 	Six months	 	 	 	 	 	 	 	 	 	 	
 	 	ended June 30,	 	 		 	 		 	 	 	 	
Unaudited	 	2019	 	 	Six months  	 	 	Six months	 	 	Variance	 	
(In millions of Mexican pesos)	 	(US Dollars) *	 	 	 ended June 30, 2019	 	 	ended June 30, 2018	 	 	(%)	 	
Operating revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Passenger revenues	 	 	783	 	 	 	15,015	 	 	 	11,600	 	 	 	29.4%		
Fare revenues	 	 	525	 	 	 	10,061	 	 	 	8,022	 	 	 	25.4%		
Other passenger revenues (1)	 	 	258	 	 	 	4,954	 	 	 	3,578	 	 	 	38.5%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-passenger revenues	 	 	27	 	 	 	518	 	 	 	481	 	 	 	7.8%		
Other non-passenger revenues (1)	 	 	21	 	 	 	404	 	 	 	379	 	 	 	6.6%		
Cargo	 	 	6	 	 	 	114	 	 	 	101	 	 	 	12.1%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-derivatives financial instruments	 	 	(1	)	 	 	(11	)	 	 	-	 	 	 	NA	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	 	810	 	 	 	15,522	 	 	 	12,080	 	 	 	28.5%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other operating income	 	 	(6	)	 	 	(123	)	 	 	(232	)	 	 	(46.8%	)	
Total fuel expense, net (2)	 	 	301	 	 	 	5,770	 	 	 	4,620	 	 	 	24.9%		
Depreciation and amortization	 	 	137	 	 	 	2,627	 	 	 	2,207	 	 	 	19.1%		
Landing, take-off and navigation expenses	 	 	126	 	 	 	2,420	 	 	 	2,273	 	 	 	6.5%		
Salaries and benefits	 	 	91	 	 	 	1,739	 	 	 	1,496	 	 	 	16.2%		
Maintenance expenses	 	 	38	 	 	 	723	 	 	 	722	 	 	 	0.1%		
Sales, marketing and distribution expenses	 	 	32	 	 	 	621	 	 	 	739	 	 	 	(15.9%	)	
Aircraft and engine rent expense	 	 	28	 	 	 	543	 	 	 	422	 	 	 	28.6%		
Other operating expenses	 	 	27	 	 	 	516	 	 	 	541	 	 	 	(4.6%	)	
Operating expenses	 	 	774	 	 	 	14,836	 	 	 	12,788	 	 	 	16.0%		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income (loss)	 	 	36	 	 	 	685	 	 	 	(708	)	 	 	NA	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	5	 	 	 	92	 	 	 	71	 	 	 	29.9%		
Finance cost	 	 	(53	)	 	 	(1,023	)	 	 	(838	)	 	 	22.0%		
Exchange gain (loss), net	 	 	60	 	 	 	1,157	 	 	 	(362	)	 	 	NA	 	
Comprehensive financing result	 	 	12	 	 	 	227	 	 	 	(1,129	)	 	 	NA	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income tax	 	 	48	 	 	 	912	 	 	 	(1,837	)	 	 	NA	 	
Income tax (expense) benefit	 	 	(14	)	 	 	(274	)	 	 	532	 	 	 	NA	 	
Net income (loss)	 	 	33	 	 	 	639	 	 	 	(1,305	)	 	 	NA	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
(1) June YTD 2018 figures include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.138 million, as result of the IFRS 15 adoption.
(2) June YTD 2019 figures include a benefit from non-derivatives financial instruments by an amount of Ps.14 million.

 
   9 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Reconciliation of total ancillary revenue per passenger
 
The following table shows quarterly additional detail about the components of total ancillary revenue:

 	 	Three months	 	 	 	 	 	 	 	 	 	 	
 	 	ended June 30,	 	 	Three months	 	 	Three months	 	 	 	 	
Unaudited	 	2019	 	 	ended June 30,	 	 	ended June 30,	 	 	Variance	 	
(In millions of Mexican pesos)	 	(US Dollars)*	 	 	2019	 	 	2018	 	 	(%)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other passenger revenues (1)	 	 	136	 	 	 	2,607	 	 	 	1,853	 	 	 	40.6%	 	
Non-passenger revenues (1)	 	 	16	 	 	 	302	 	 	 	240	 	 	 	25.6%	 	
Total ancillary revenues	 	 	152	 	 	 	2,909	 	 	 	2,093	 	 	 	38.9%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Booked passengers (thousands)	 	 	-	 	 	 	5,654	 	 	 	4,491	 	 	 	25.9%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total ancillary revenue per passenger	 	 	26.8	 	 	 	514	 	 	 	466	 	 	 	10.3%	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
(1) 2Q 2018 figures include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.61 million, as result of the IFRS 15 adoption.
 
The following table shows the first one half of the year additional detail about the components of total ancillary revenue:

 	 	Six months	 	 	 	 	 	 	 	 	 	 	
 	 	ended June 30,	 	 	Six months	 	 	Six months	 	 	 	 	
Unaudited	 	2019	 	 	ended June 30,	 	 	ended June 30,	 	 	Variance	 	
(In millions of Mexican pesos)	 	(US Dollars)*	 	 	2019	 	 	2018	 	 	(%)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other passenger revenues (1)	 	 	258	 	 	 	4,954	 	 	 	3,578	 	 	 	38.5%	 	
Non-passenger revenues (1)	 	 	27	 	 	 	518	 	 	 	481	 	 	 	7.8%	 	
Total ancillary revenues	 	 	285	 	 	 	5,472	 	 	 	4,059	 	 	 	34.8%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Booked passengers (thousands)	 	 	-	 	 	 	10,617	 	 	 	8,754	 	 	 	21.3%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total ancillary revenue per passenger	 	 	26.9	 	 	 	515	 	 	 	464	 	 	 	11.2%	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only.
(1) June YTD 2018 figures include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.138 million, as result of the IFRS 15 adoption.

 
   10 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position

 	 	June 30, 2019
Unaudited 	 	 	June 30, 2019	 	 	December 31,  	 	
(In millions of Mexican pesos)	 	(US Dollars)*	 	 	Unaudited 	 	 	2018	 	
Assets	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	424	 	 	 	8,124	 	 	 	5,863	 	
Accounts receivable	 	 	111	 	 	 	2,123	 	 	 	1,467	 	
Inventories	 	 	15	 	 	 	294	 	 	 	297	 	
Prepaid expenses and other current assets	 	 	49	 	 	 	939	 	 	 	443	 	
Financial instruments	 	 	5	 	 	 	92	 	 	 	62	 	
Guarantee deposits	 	 	39	 	 	 	743	 	 	 	791	 	
Total current assets	 	 	642	 	 	 	12,314	 	 	 	8,923	 	
Rotable spare parts, furniture and equipment, net	 	 	305	 	 	 	5,840	 	 	 	5,782	 	
Right of use assets	 	 	1,691	 	 	 	32,416	 	 	 	31,986	 	
Intangible assets, net	 	 	9	 	 	 	170	 	 	 	179	 	
Deferred income taxes	 	 	141	 	 	 	2,709	 	 	 	2,864	 	
Guarantee deposits	 	 	344	 	 	 	6,598	 	 	 	6,337	 	
Other assets	 	 	7	 	 	 	142	 	 	 	155	 	
Other accounts receivable	 	 	6	 	 	 	120	 	 	 	74	 	
Total non-current assets	 	 	2,504	 	 	 	47,995	 	 	 	47,378	 	
Total assets	 	 	3,146	 	 	 	60,309	 	 	 	56,301	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Unearned transportation revenue	 	 	220	 	 	 	4,226	 	 	 	2,439	 	
Accounts payable	 	 	79	 	 	 	1,506	 	 	 	1,103	 	
Accrued liabilities	 	 	138	 	 	 	2,644	 	 	 	2,318	 	
Lease liabilities	 	 	236	 	 	 	4,517	 	 	 	4,970	 	
Other taxes and fees payable	 	 	138	 	 	 	2,647	 	 	 	1,932	 	
Income taxes payable	 	 	-	 	 	 	1	 	 	 	4	 	
Financial instruments	 	 	-	 	 	 	-	 	 	 	123	 	
Financial debt	 	 	86	 	 	 	1,648	 	 	 	1,212	 	
Other liabilities	 	 	10	 	 	 	200	 	 	 	26	 	
Total short-term liabilities	 	 	907	 	 	 	17,389	 	 	 	14,127	 	
Financial debt	 	 	127	 	 	 	2,426	 	 	 	2,311	 	
Accrued liabilities	 	 	6	 	 	 	123	 	 	 	137	 	
Lease liabilities	 	 	1,806	 	 	 	34,625	 	 	 	34,586	 	
Other liabilities	 	 	20	 	 	 	386	 	 	 	328	 	
Employee benefits	 	 	1	 	 	 	21	 	 	 	18	 	
Deferred income taxes	 	 	65	 	 	 	1,244	 	 	 	1,096	 	
Total long-term liabilities	 	 	2,025	 	 	 	38,825	 	 	 	38,476	 	
Total liabilities	 	 	2,933	 	 	 	56,214	 	 	 	52,603	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	
Capital stock	 	 	155	 	 	 	2,974	 	 	 	2,974	 	
Treasury shares	 	 	(6	)	 	 	(122	)	 	 	(123	)	
Contributions for future capital increases	 	 	-	 	 	 	-	 	 	 	-	 	
Legal reserve	 	 	15	 	 	 	291	 	 	 	291	 	
Additional paid-in capital	 	 	95	 	 	 	1,822	 	 	 	1,837	 	
Retained earnings	 	 	(30	)	 	 	(570	)	 	 	(1,208	)	
Accumulated other comprehensive losses (1)	 	 	(16	)	 	 	(300	)	 	 	(73	)	
Total equity	 	 	214	 	 	 	4,095	 	 	 	3,698	 	
Total liabilities and equity	 	 	3,146	 	 	 	60,309	 	 	 	56,301	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total shares outstanding fully diluted	 	 	 	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
(1) As of June 30, 2019, the figures include a benefit of Ps.345 million from non-derivatives financial instruments

 
   11 

 
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary

	 	Three months  	 	 	Three months	 	 	Three months	 	
Unaudited  
(In millions of Mexican pesos)	 	Ended June 30, 2019 
(US Dollars)*	 	 	ended June 30,
2019	 	 	ended June 30,
2018	 	
 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	 	80	 	 	 	1,527	 	 	 	913	 	
Net cash flow provided by (used in) investing activities	 	 	9	 	 	 	171	 	 	 	(348	)	
Net cash flow used in financing activities**	 	 	(30	)	 	 	(571	) (1)	 	 	(1,610	)	
Increase (decrease) in cash and cash equivalents	 	 	59	 	 	 	1,127	 	 	 	(1,045	)	
Net foreign exchange differences	 	 	(4	)	 	 	(74	)	 	 	499	 	
Cash and cash equivalents at beginning of period	 	 	369	 	 	 	7,071	 	 	 	7,317	 	
Cash and cash equivalents at end of period	 	 	424	 	 	 	8,124	 	 	 	6,771	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
**Includes aircraft rental payments of Ps.1,582 million and Ps.1,406 million for the three months ended period June 30, 2019 and, 2018, respectively
1) Includes inflows of Ps.1,500 million related to the issuance of 15,000,000 asset backed trust notes (certificados bursátiles fiduciaries)  
 
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary

 	 	Six months	 	 	 	 	 	 	 	
Unaudited	 	ended June 30, 2019	 	 	Six months ended  	 	 	Six months ended 	 	
(In millions of Mexican pesos)	 	(US Dollars)*	 	 	June 30, 2019	 	 	June 30, 2018	 	
 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	 	274	 	 	 	5,257	 	 	 	3,317	 	
Net cash flow used in investing activities	 	 	(11	)	 	 	(208	)	 	 	(661	)	
Net cash flow used in financing activities**	 	 	(138	)	 	 	(2,633	) (1)	 	 	(2,856	)	
Increase (decrease) in cash and cash equivalents	 	 	126	 	 	 	2,416	 	 	 	(201	)	
Net foreign exchange differences	 	 	(8	)	 	 	(155	)	 	 	21	 	
Cash and cash equivalents at beginning of period	 	 	306	 	 	 	5,863	 	 	 	6,951	 	
Cash and cash equivalents at end of period	 	 	424	 	 	 	8,124	 	 	 	6,771	 	

* Peso amounts were converted to U.S. dollars at end of period exchange rate for convenience purposes only
**Includes aircraft rental payments of Ps.3,130 million and Ps.2,717 million for the six months ended period June 30, 2019 and, 2018, respectively
(1) Includes inflows of Ps.1,500 million related to the issuance of 15,000,000 asset backed trust notes (certificados bursátiles fiduciaries)  

 
   12 

 
 
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
 
The following table shows estimated and adjusted balances after the adoption of IFRS 16 " Leases ", on the quarterly statements of operations for each quarter of 2018. These recast amounts were derived from unaudited financial statements included in the quarterly reports on Form 6-K during the year ended December 31, 2018.
 
Unaudited
 (In millions of Mexican pesos)	 	Three months
ended March
31, 2018	 	 	Three months
ended June
30, 2018
	 	 	Three months
ended
September 30,
2018
	 	 	Three months
ended
December 31,
2018	 	 	Full Year 2018	 	
Operating revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Passenger revenues	 	 	5,610	 	 	 	5,990	 	 	 	7,138	 	 	 	7,643	 	 	 	26,381	 	
Fare revenues	 	 	3,886	 	 	 	4,137	 	 	 	5,096	 	 	 	5,370	 	 	 	18,488	 	
Other passenger revenues (1)	 	 	1,724	 	 	 	1,853	 	 	 	2,042	 	 	 	2,273	 	 	 	7,892	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-passenger revenues	 	 	240	 	 	 	240	 	 	 	179	 	 	 	265	 	 	 	924	 	
Other non-passenger revenues (1)	 	 	192	 	 	 	187	 	 	 	124	 	 	 	194	 	 	 	697	 	
Cargo	 	 	49	 	 	 	53	 	 	 	55	 	 	 	71	 	 	 	227	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	 	5,850	 	 	 	6,230	 	 	 	7,317	 	 	 	7,908	 	 	 	27,305	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other operating income	 	 	(1	)	 	 	(231	)	 	 	(243	)	 	 	(147	)	 	 	(622	)	
Fuel	 	 	2,175	 	 	 	2,445	 	 	 	2,631	 	 	 	2,885	 	 	 	10,135	 	
Landing, take-off and navigation expenses	 	 	1,124	 	 	 	1,149	 	 	 	1,149	 	 	 	1,157	 	 	 	4,579	 	
Depreciation and amortization	 	 	1,071	 	 	 	1,136	 	 	 	1,162	 	 	 	1,256	 	 	 	4,625	 	
Salaries and benefits	 	 	746	 	 	 	750	 	 	 	834	 	 	 	795	 	 	 	3,125	 	
Sales, marketing and distribution expenses	 	 	357	 	 	 	382	 	 	 	340	 	 	 	422	 	 	 	1,501	 	
Maintenance expenses	 	 	346	 	 	 	376	 	 	 	388	 	 	 	387	 	 	 	1,499	 	
Aircraft and engine rent expense	 	 	317	 	 	 	105	 	 	 	215	 	 	 	55	 	 	 	692	 	
Other operating expenses	 	 	258	 	 	 	283	 	 	 	239	 	 	 	277	 	 	 	1,058	 	
Operating expenses	 	 	6,395	 	 	 	6,395	 	 	 	6,715	 	 	 	7,087	 	 	 	26,592	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(545	)	 	 	(165	)	 	 	602	 	 	 	821	 	 	 	713	 	
Operating margin	 	 	(9.3%	)	 	 	(2.6%	)	 	 	8.2%	 	 	 	10.4%	 	 	 	2.6%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	34	 	 	 	37	 	 	 	37	 	 	 	45	 	 	 	153	 	
Finance cost	 	 	(395	)	 	 	(439	)	 	 	(487	)	 	 	(478	)	 	 	(1,798	)	
Exchange gain (loss), net	 	 	1,564	 	 	 	(1,926	)	 	 	1,395	 	 	 	(1,137	)	 	 	(106	)	
Comprehensive financing result	 	 	1,202	 	 	 	(2,328	)	 	 	945	 	 	 	(1,570	)	 	 	(1,751	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income tax	 	 	658	 	 	 	(2,493	)	 	 	1,547	 	 	 	(749	)	 	 	1,038	 	
Income tax (expense) benefit	 	 	(196	)	 	 	728	 	 	 	(442	)	 	 	187	 	 	 	277	 	
Net income (loss)	 	 	461	 	 	 	(1,765	)	 	 	1,105	 	 	 	(562	)	 	 	(761	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	0.46	 	 	 	(1.74	)	 	 	1.09	 	 	 	(0.56	)	 	 	(0.75	)	
Diluted (pesos)	 	 	0.46	 	 	 	(1.74	)	 	 	1.09	 	 	 	(0.56	)	 	 	(0.75	)	
Earnings (loss) per ADS:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	4.56	 	 	 	(17.44	)	 	 	10.92	 	 	 	(5.55	)	 	 	(7.52	)	
Diluted (pesos)	 	 	4.56	 	 	 	(17.44	)	 	 	10.92	 	 	 	(5.55	)	 	 	(7.52	)	

(1) The annual figures of 2018 include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption.

 
   13 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
 
The following table shows quarterly estimated adjustments made due to the adoption of IFRS 16 " Leases ", on the statements of operations for 2018.

Unaudited
(In millions of Mexican pesos)	 	Full Year 2018
(Reported)	 	 	Three months
ended March 31,
2018	 	 	Three months
ended June 30,
2018	 	 	Three months
ended
September 30,
2018	 	 	Three months
ended
December 31,
2018	 	 	Full Year 2018	 	
Operating revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Passenger revenues	 	 	26,381	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	26,381	 	
Fare revenues	 	 	18,488	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	18,488	 	
Other passenger revenues (1)	 	 	7,892	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	7,892	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-passenger revenues	 	 	924	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	924	 	
Other non-passenger revenues (1)	 	 	227	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	227	 	
Cargo	 	 	697	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	697	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	 	27,305	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	27,305	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other operating income	 	 	(622	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(622	)	
Fuel	 	 	10,135	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	10,135	 	
Aircraft and engine rent expense	 	 	6,315	 	 	 	(1,278	)	 	 	(1,400	)	 	 	(1,378	)	 	 	(1,567	)	 	 	692	 	
Landing, take-off and navigation expenses	 	 	4,583	 	 	 	(1	)	 	 	(1	)	 	 	(1	)	 	 	(1	)	 	 	4,579	 	
Salaries and benefits	 	 	3,125	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	3,125	 	
Maintenance expenses	 	 	1,518	 	 	 	(4	)	 	 	(5	)	 	 	(5	)	 	 	(5	)	 	 	1,499	 	
Sales, marketing and distribution expenses	 	 	1,501	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,501	 	
Other operating expenses	 	 	1,130	 	 	 	(17	)	 	 	(18	)	 	 	(18	)	 	 	(19	)	 	 	1,058	 	
Depreciation and amortization	 	 	501	 	 	 	939	 	 	 	1,012	 	 	 	1,047	 	 	 	1,126	 	 	 	4,625	 	
Operating expenses	 	 	28,186	 	 	 	(361	)	 	 	(412	)	 	 	(355	)	 	 	(466	)	 	 	26,592	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(881	)	 	 	361	 	 	 	412	 	 	 	355	 	 	 	466	 	 	 	713	 	
Operating margin	 	 	(3.2%	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.6%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	153	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	153	 	
Finance cost	 	 	(120	)	 	 	(361	)	 	 	(408	)	 	 	(423	)	 	 	(486	)	 	 	(1,798	)	
Exchange (loss) gain, net	 	 	(72	)	 	 	2,255	 	 	 	(2,581	)	 	 	1,814	 	 	 	(1,521	)	 	 	(106	)	
Comprehensive financing result	 	 	(40	)	 	 	1,894	 	 	 	(2,989	)	 	 	1,391	 	 	 	(2,007	)	 	 	(1,751	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before income tax	 	 	(921	)	 	 	2,255	 	 	 	(2,577	)	 	 	1,746	 	 	 	(1,541	)	 	 	(1,038	)	
Income tax benefit (expense)	 	 	238	 	 	 	(676	)	 	 	775	 	 	 	(523	)	 	 	463	 	 	 	277	 	
Net (loss) income	 	 	(683	)	 	 	1,579	 	 	 	(1,802	)	 	 	1,223	 	 	 	(1,078	)	 	 	(761	)	
Basic (loss) earnings per share	 	 	(0.67	)	 	 	1.56	 	 	 	(1.78	)	 	 	1.21	 	 	 	(1.07	)	 	 	(0.75	)	
Diluted (loss) earnings per share	 	 	(0.67	)	 	 	1.56	 	 	 	(1.78	)	 	 	1.21	 	 	 	(1.07	)	 	 	(0.75	)	
 
(1) The annual figures of 2018 include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption.

 
   14 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
 
The following table shows unaudited balances before the adoption of IFRS 16 " Leases ", on the quarterly statements of operations for each quarter of 2018.
 
Unaudited
(In millions of Mexican pesos)	 	Three months
ended March 31,
2018
(Reported)	 	 	Three months
ended June 30,
2018
(Reported)	 	 	Three months
ended
September 30, 2018
(Reported)	 	 	Three months
ended
December 31, 2018
(Reported)	 	 	Full Year 2018
(Reported)	 	
Operating revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Passenger revenues	 	 	5,610	 	 	 	5,990	 	 	 	7,138	 	 	 	7,643	 	 	 	26,381	 	
Fare revenues	 	 	3,886	 	 	 	4,137	 	 	 	5,096	 	 	 	5,370	 	 	 	18,489	 	
Other passenger revenues (1)	 	 	1,724	 	 	 	1,853	 	 	 	2,042	 	 	 	2,273	 	 	 	7,892	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-passenger revenues	 	 	240	 	 	 	240	 	 	 	179	 	 	 	265	 	 	 	924	 	
Other non-passenger revenues (1)	 	 	192	 	 	 	187	 	 	 	124	 	 	 	194	 	 	 	697	 	
Cargo	 	 	49	 	 	 	53	 	 	 	55	 	 	 	71	 	 	 	227	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	 	5,850	 	 	 	6,230	 	 	 	7,316	 	 	 	7,909	 	 	 	27,305	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other operating income	 	 	(1	)	 	 	(231	)	 	 	(243	)	 	 	(147	)	 	 	(622	)	
Fuel	 	 	2,175	 	 	 	2,445	 	 	 	2,631	 	 	 	2,885	 	 	 	10,135	 	
Aircraft and engine rent expense	 	 	1,596	 	 	 	1,504	 	 	 	1,593	 	 	 	1,622	 	 	 	6,315	 	
Landing, take-off and navigation expenses	 	 	1,125	 	 	 	1,150	 	 	 	1,150	 	 	 	1,158	 	 	 	4,583	 	
Salaries and benefits	 	 	746	 	 	 	750	 	 	 	834	 	 	 	795	 	 	 	3,125	 	
Sales, marketing and distribution expenses	 	 	357	 	 	 	382	 	 	 	340	 	 	 	422	 	 	 	1,501	 	
Maintenance expenses	 	 	351	 	 	 	381	 	 	 	393	 	 	 	392	 	 	 	1,518	 	
Other operating expenses	 	 	274	 	 	 	301	 	 	 	257	 	 	 	297	 	 	 	1,130	 	
Depreciation and amortization	 	 	132	 	 	 	124	 	 	 	115	 	 	 	130	 	 	 	501	 	
Operating expenses	 	 	6,757	 	 	 	6,805	 	 	 	7,070	 	 	 	7,554	 	 	 	28,186	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(906	)	 	 	(575	)	 	 	246	 	 	 	355	 	 	 	(881	)	
Operating margin	 	 	(15.5%	)	 	 	(9.2%	)	 	 	3.4%	 	 	 	4.5%	 	 	 	(3.2%	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	34	 	 	 	37	 	 	 	37	 	 	 	45	 	 	 	153	 	
Finance cost	 	 	(34	)	 	 	(31	)	 	 	(64	)	 	 	8	 	 	 	(120	)	
Exchange (loss) gain, net	 	 	(691	)	 	 	653	 	 	 	(419	)	 	 	384	 	 	 	(73	)	
Comprehensive financing result	 	 	(691	)	 	 	660	 	 	 	(446	)	 	 	437	 	 	 	(40	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before income tax	 	 	(1,597	)	 	 	85	 	 	 	(200	)	 	 	792	 	 	 	(921	)	
Income tax benefit (expense)	 	 	479	 	 	 	(47	)	 	 	81	 	 	 	(276	)	 	 	238	 	
Net (loss) income	 	 	(1,118	)	 	 	38	 	 	 	(119	)	 	 	516	 	 	 	(683	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) earnings per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	(1.10	)	 	 	0.04	 	 	 	(0.12	)	 	 	0.51	 	 	 	(0.67	)	
Diluted (pesos)	 	 	(1.10	)	 	 	0.04	 	 	 	(0.12	)	 	 	0.51	 	 	 	(0.67	)	
(Loss) earnings per ADS:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (pesos)	 	 	(11.05	)	 	 	0.38	 	 	 	(1.18	)	 	 	5.10	 	 	 	(6.75	)	
Diluted (pesos)	 	 	(11.05	)	 	 	0.38	 	 	 	(1.18	)	 	 	5.10	 	 	 	(6.75	)	
 
(1) The annual figures of 2018 include a reclassification from “other non-passenger revenues” to “Other passenger revenues” of Ps.271 million, as result of the IFRS 15 adoption

 
   15 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Financial Position
 
The following table shows estimated annual adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Financial Position as of December 31, 2018.
 
Unaudited

(In millions of Mexican pesos)	 	December 31, 2018
(Reported)	 	 	IFRS 16
Adjustments	 	 	December 31, 2018	 	
Assets	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	5,863	 	 	 	-	 	 	 	5,863	 	
Accounts receivable	 	 	1,467	 	 	 	-	 	 	 	1,467	 	
Inventories	 	 	297	 	 	 	-	 	 	 	297	 	
Prepaid expenses and other current assets	 	 	710	 	 	 	(267	)	 	 	443	 	
Financial instruments	 	 	62	 	 	 	-	 	 	 	62	 	
Guarantee deposits	 	 	791	 	 	 	-	 	 	 	791	 	
Total current assets	 	 	9,190	 	 	 	(267	)	 	 	8,923	 	
Rotable spare parts, furniture and equipment, net	 	 	5,782	 	 	 	-	 	 	 	5,782	 	
Right of use assets	 	 	-	 	 	 	31,986	 	 	 	31,986	 	
Intangible assets, net	 	 	179	 	 	 	-	 	 	 	179	 	
Deferred income taxes	 	 	593	 	 	 	2,271	 	 	 	2,864	 	
Guarantee deposits	 	 	6,337	 	 	 	-	 	 	 	6,337	 	
Other assets	 	 	155	 	 	 	-	 	 	 	155	 	
Other accounts receivable	 	 	74	 	 	 	-	 	 	 	74	 	
Total non-current assets	 	 	13,121	 	 	 	34,257	 	 	 	47,378	 	
Total assets	 	 	22,311	 	 	 	33,990	 	 	 	56,301	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Unearned transportation revenue	 	 	2,439	 	 	 	-	 	 	 	2,439	 	
Accounts payable	 	 	1,103	 	 	 	-	 	 	 	1,103	 	
Accrued liabilities	 	 	2,318	 	 	 	-	 	 	 	2,318	 	
Lease liabilities	 	 	-	 	 	 	4,970	 	 	 	4,970	 	
Other taxes and fees payable	 	 	1,932	 	 	 	-	 	 	 	1,932	 	
Income taxes payable	 	 	4	 	 	 	-	 	 	 	4	 	
Financial instruments	 	 	123	 	 	 	-	 	 	 	123	 	
Financial debt	 	 	1,212	 	 	 	-	 	 	 	1,212	 	
Other liabilities	 	 	118	 	 	 	(92	)	 	 	26	 	
Total short-term liabilities	 	 	9,249	 	 	 	4,878	 	 	 	14,127	 	
Financial debt	 	 	2,311	 	 	 	-	 	 	 	2,311	 	
Accrued liabilities	 	 	137	 	 	 	-	 	 	 	137	 	
Lease liabilities	 	 	-	 	 	 	34,586	 	 	 	34,586	 	
Other liabilities	 	 	328	 	 	 	-	 	 	 	328	 	
Employee benefits	 	 	18	 	 	 	-	 	 	 	18	 	
Deferred income taxes	 	 	1,096	 	 	 	-	 	 	 	1,096	 	
Total long-term liabilities	 	 	3,890	 	 	 	34,586	 	 	 	38,476	 	
Total liabilities	 	 	13,139	 	 	 	39,464	 	 	 	52,603	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	
Capital stock	 	 	2,974	 	 	 	-	 	 	 	2,974	 	
Treasury shares	 	 	(123	)	 	 	-	 	 	 	(123	)	
Contributions for future capital increases	 	 	-	 	 	 	-	 	 	 	-	 	
Legal reserve	 	 	291	 	 	 	-	 	 	 	291	 	
Additional paid-in capital	 	 	1,837	 	 	 	-	 	 	 	1,837	 	
Retained earnings	 	 	4,266	 	 	 	(5,474	)	 	 	(1,208	)	
Accumulated other comprehensive losses	 	 	(73	)	 	 	-	 	 	 	(73	)	
Total equity	 	 	9,172	 	 	 	(5,474	)	 	 	3,698	 	
Total liabilities and equity	 	 	22,311	 	 	 	33,990	 	 	 	56,301	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total shares outstanding fully diluted	 	 	 	 	 	 	1,011,876,677	 	 	 	1,011,876,677	 	

 
   16 

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. and Subsidiaries
Consolidated Statement of Cash Flows – Cash Flow Data Summary
 
The following table shows second quarter estimated adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Cash Flow for the three months ended June 30, 2018.

Unaudited
(In millions of Mexican pesos)	 	Three months ended
June 30, 2018
(Reported)	 	 	Adjustments	 	 	Three months
ended June 30,
2018	 	
 	 	 	 	 	 	 	 	 	 	
Net cash flow (used in) provided by operating activities	 	 	(493	)	 	 	1,406	 	 	 	913	 	
Net cash flow used in investing activities	 	 	(348	)	 	 	-	 	 	 	(348	)	
Net cash flow used in financing activities	 	 	(204	)	 	 	(1,406	)	 	 	(1,610	)	
Decrease in cash and cash equivalents	 	 	(1,045	)	 	 	-	 	 	 	(1,045	)	
Net foreign exchange differences	 	 	499	 	 	 	-	 	 	 	499	 	
Cash and cash equivalents at beginning of period	 	 	7,317	 	 	 	-	 	 	 	7,317	 	
Cash and cash equivalents at end of period	 	 	6,771	 	 	 	-	 	 	 	6,771	 	

The following table shows the first one half of the year estimated adjustments made due to the adoption of IFRS 16 “Leases”, on the Consolidated Statement of Cash Flow for the six months ended June 30, 2018.

Unaudited
(In millions of Mexican pesos)	 	Six months
ended
June 30, 2018
(Reported)	 	 	Adjustments	 	 	Six months
ended June 30,
2018	 	
 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	 	599	 	 	 	2,717	 	 	 	3,317	 	
Net cash flow used in investing activities	 	 	(661	)	 	 	-	 	 	 	(661	)	
Net cash flow used in financing activities	 	 	(139	)	 	 	(2,717	)	 	 	(2,856	)	
Decrease in cash and cash equivalents	 	 	(201	)	 	 	-	 	 	 	(201	)	
Net foreign exchange differences	 	 	21	 	 	 	-	 	 	 	21	 	
Cash and cash equivalents at beginning of period	 	 	6,951	 	 	 	-	 	 	 	6,951	 	
Cash and cash equivalents at end of period	 	 	6,771	 	 	 	-	 	 	 	6,771	 	

 

 
   17