Controladora Vuela Compañía de Aviación, S.A.B. de C.V.
Q3 2021 Earnings Call Transcript

Published: 22 Oct 2021

[Operator:]

Good morning, everyone. Thank you for standing by. Welcome to Volaris Third Quarter 2021 Financial Results Conference Call. . Please note that this event is being recorded. This event is also being broadcast live via webcast and may be accessed through the Volaris website. Those following the presentation via the webcast may post their questions on the platform, and they will be either answered by the management during this call or by the Volaris Investor Relations team after the conference is finished. . At this point, I would like to turn the call over to Ms. Maria Elena Rodriguez, Volaris' Investor Relations Officer. Please go ahead, Maria Elena.

[Maria Elena Rodriguez:]

Good morning, everyone, and thank you for joining the call. With us today is our President and CEO, Enrique Beltranena; our Airline Executive Vice President, Holger Blankenstein; and our Chief Financial Officer, Jaime Pous, who will be discussing the company's third quarter 2021 results. Afterwards, we will move on to your questions. Please note that this call is for investors and analysts only. Any questions from the media will be taken on an individual basis. Before we begin, please let me remind everyone that this call may include forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to several factors that could cause the company's actual results to differ materially from expectations, for reasons described in the company's filings with the U.S. Securities and Exchange Commission and the Comisión Nacional Bancaria y de Valores. Furthermore, Volaris undertakes no obligation to publicly update or revise any forward-looking statements. Similar to the earnings press release, we are comparing our results to the third quarter of 2019 instead of the third quarter of 2020. We believe this will provide a better comparison to the financial and operating performance of the company. It is now my pleasure to turn the call over to Volaris' President and CEO, Mr. Enrique Beltranena.

[Enrique Beltranena:]

Thank you very much, Maria Elena, and welcome, everybody, for joining us today. I would like to begin by expressing my appreciation to our family of Ambassadors for their continuous efforts, passion and commitment to keep Volaris ahead of the Airline industry's recovery. Going into this quarter, we have budgeted ambitious key operational and financial performance metrics for the period. Despite the negative impact of the delta variant, here we are again demonstrating not only the strength of the business model, but the resilience and experience of a solid, loyal and effective management team who achieved results within the stated targets over performing the industry. I'm very proud of the Volaris team and of what we have accomplished together. Volaris has a proven executive management team with an average of more than 20 years of experience in the global aviation industry. We are all committed to maintaining our market leadership and first year results to shareholders over the long term, just like I have been since the day we founded this company. We are here to stay for the long run. Together, we are prepared to take off to many routes and reach an ambitious growth plan, keeping unit costs low and delivering sustained profitability. Now I would like to highlight the most important accomplishments in the third quarter on Slide #4. First, we, again, demonstrated the company's agility and ability to adapt to a changing environment by rapidly deploying capacity to appropriate markets and stimulating last-minute demand. Second, Volaris continues to record one of the strongest recoveries among Airlines worldwide during the variant waves of the pandemic. Volaris ultra-low-cost carrier model continues to demonstrate resilience even more in downturns. Third, we provided guidance on EBIT margin between 40% and 43%. And despite the third wave, here we are today delivering consistency at 41% of EBITDAR margin for the third quarter, 6 percentage points higher than the third quarter of 2019. We managed to post the third quarter with disciplined growth while improving our balance sheet and we are also one of the few airlines in North America that did not revise guidance down for the third quarter. Fourth, Volaris uniquely distinguishes itself in the global aviation industry by its results. For the third quarter, Volaris' capacity expansion was 21% in terms of ASMs compared to the third quarter of 2019 with a solid load factor of 85.4%. Volaris achieved strong cash generation of $1 million per day, closing the third quarter with $624 million in cash and cash equivalents, which represents 33% of last 12-month revenues. Volaris' TRASM improved by 12% to MXN 68 compared to 2019. Volaris' ancillary revenues ramped up to 42% of operating revenues. Volaris CASM ex fuel closed at $0.0409 for the third quarter, one of the lowest unit costs in the global airline industry. Finally, a very important number. Volaris leverage measured by net debt to EBITDAR improved by 2.8x, the lowest in the company's history. Fifth, we remain focused on strengthening the foundation of our long-term growth with profitability. We are the leaders in the Mexican domestic market, and we continue to see opportunities with tremendous potential to grow in our core markets and to expand our international network. I'd now like to turn the call over to our Airline Vice President, Holger Blankenstein to discuss our operations and how we accomplished our solid positioning in the market. Holger, please go ahead.

[Holger Blankenstein:]

Thank you, Enrique. Moving on to Slide 5. You can see that Volaris was effective in navigating a difficult and uncertain quarter. The delta variant emerged during the summer months in the latter part of the third quarter, and caused a reduction in confidence among travelers in our markets. In the third quarter, our capacity recovery and growth led us to operate 21% more ASMs in the same quarter of 2019. International capacity increased by 17%. The U.S. market was mainly supported by the VFR segment while northbound vaccine-related travel slowed down. On the domestic front, capacity in Mexico remains solid, especially within VFR and leisure destinations, where ASMs were 19% higher compared to the same quarter of 2019. Capacity in Central America increased 9% compared to the third quarter of 2019, still behind the recovery compared to other regions. TRASM for the period reached a new record for the third quarter at MXN 168, a 12% increase over the same period of 2019. mostly driven by an improvement in ancillaries. TRASM improved while maintaining high load factors, rebuilding the network and solidifying our presence in our primary Mexican and U.S. VFR markets. For the fourth quarter of the year, we continue to forecast healthy fares and strong ancillary revenues. That said, as market capacity increases beyond 2019 levels and demand recovers, fares might experience some pressure in the most competitive markets. Ancillaries reached a new record of MXN 805 per passenger. This represents the growth of 49% versus the same quarter of 2019. The percentage of ancillary revenues reached 42%, 10 percentage points above 2019 levels. The increase was largely due to continued growth of traditional products such as baggage, seat selection and bundles like the flexibility combo. We continue to be excited about dynamic pricing of ancillary products. We will continue to pursue an aggressive growth strategy and deliver strong operational performance. On Page 6, we highlight our operating infrastructure. At the end of the third quarter, we had a fleet of 94 aircraft with an average age of 5.6 years compared to 80 aircraft at the end of the same period of 2019. In addition, the company achieved high utilization with 891,000 total ASMs per aircraft per day, which maintains Volaris as one of the highest utilization airlines of similar size and aircraft type in the world. During the third quarter, Volaris flew more than 41,000 segments to over 70 different stations in Mexico, the United States, Costa Rica, Guatemala and El Salvador. This was done with an on-time performance of 82% despite noncontrollable factors like weather and air traffic control delays. Volaris El Salvador was certified on August 23 and started operations on September 15. We also initiated operations to Colombia following our expansion strategy to South America. Going forward, capacity increases will be focused on Mexico City and domestic routes, while also solidifying our presence in the core markets of Tijuana and Guadalajara. We plan to launch flights to Honduras by the end of October and has started selling those itineraries. On the sales side, third quarter '21 performance can be summarized in 2 distinct halves as shown on Page 7. In the first half, we saw strong daily sales performances and very high demand and load factors. In the second half of the third quarter, the beginning of the low season which this year was exacerbated by the third wave of COVID infections in both Mexico and the U.S., daily sales were down by 12% and load factors declined due to waning consumer confidence caused by the delta variant. Despite this impact, we started to see a recovery at the end of the third quarter and are now observing solid bookings into the fourth quarter, very much in line with the end of the second wave earlier in the year. Market recovery in August 2021 was at 91%, while capacity recovery reached 101% compared to the same period of 2019. Volaris' August 2021 domestic market share was 42.2%, an increase of 3.1 percentage points versus July of 2021. International market share remained at the same level of 11.5% compared to July 2021. Looking forward, we are encouraged by the current booking curve and the fare levels. Although vaccination progress in our markets is on track, we continue to observe COVID-19 cases in Mexico and the region. The uncertainty around the COVID different variants continue to pose a risk for demand in the remainder of 2021. However, Volaris has demonstrated the flexibility to quickly react and ramp down or shift capacity if required. Looking forward, as detailed on Slide 8, we are seeing interesting growth opportunities along several avenues. Our growth will not solely come from expansion into new markets. We continue to see growth opportunities domestically and the ability to further cement domestic market leadership. Organic GDP growth, population growth and an emerging middle class with a young population will give us an opportunity to further drive bus to air conversion. The total domestic air market is expected to increase at the same rates as pre-COVID growth in our estimates. The long-distance bus market has been shrinking since 2018, even prior to the pandemic, a testament to the ULCC penetration in Mexico. We believe more bus passengers can be switched in the next years. To give you an order of magnitude, we believe that approximately 80 million Mexican citizens are willing and have the ability to choose air travel over bus if given comparable prices. In a recent third-party survey, 16% of people surveyed are first-time flyers, while 47% of survey respondents in a representative survey, claimed to have never flown before. COVID-related health concerns have further accelerated the switching from bus to air during the pandemic. This trend was also confirmed with that third-party survey. The opportunity for demand growth from these statistics allow us to increase route frequencies, add new routes and connect the dots simply looking at the domestic Mexican market. Additionally, we see opportunities to continue the expansion in VFR routes among the U.S., Mexican and Central American markets. El Salvador and Guatemala, among the Central American countries have the highest heritage population in the U.S. Demographically speaking, the increase of Central Americans in the U.S. is reminiscent of the 1980s and 1990s migration of Mexicans to the U.S. We believe there are multiple expansion opportunities given these population and demand trends. We continue to look at adding routes in the South American market as well. Low-cost carriers represent approximately 10% penetration between Mexico and South America as well as between Central America and South America. Also, legacy competitors in Central and South America are having to adjust capacity due to Chapter 11 processes. This provides a backdrop for Volaris to expand its unique business model into these markets where we believe demand will be strong. Looking ahead into the fourth quarter, we continue to observe strong sales in the short term. Further out bookings into early 2022 are still somewhat lower, relatively speaking, than in 2019. However, we have seen a positive recovery lately as we emerge from the third COVID wave and helped by our promotions that we launched to incentivize demand in those periods. As for capacity growth guidance for 2022. For the full year, we are currently budgeting ASM growth in the mid-20% range versus 2021. And this growth will be front-loaded into the first quarter given the weak comps of the first quarter of 2021. Now I would like to turn the call over to our Chief Financial Officer, Jaime Pous, to discuss the financial performance for the quarter.

[Jaime Pous:]

Thanks, Holger. Now I would like to point out our strong performance throughout our financial metrics, as shown on Page 9. Total operating revenues for the third quarter were MXN 12.8 billion, a 35% increase compared to the third quarter of 2019, mostly driven by higher ancillaries. CASM ex fuel for the third quarter increased 2% compared to the same period of 2019, closing at USD 0.0409 mainly due to a higher maintenance cost and delivery expenses. Total CASM for the quarter was similar to the third quarter of 2019, closing at USD 0.0633. The company continues its disciplined commitment to maintaining one of the lowest unit costs in the global aviation industry. Net income was MXN 1.5 billion and net margin was 11.8%. Earnings per share totaled MXN 1.30 and earnings per ADS were USD 64 EBITDAR in the third quarter was MXN 5.2 billion, representing an EBITDAR margin of 40.9%, the highest margin for a third quarter in the company's history. EBITDAR margin was 6 percentage points higher from the 30.6% EBITDAR margin reported in the third quarter of 2019, mainly driven by higher operating revenues. For the third quarter, Volaris delivered cash generation of $1 million per day, closing the quarter with MXN 12.7 billion or $624 million in cash and cash equivalents, representing 33% of trailing 12 months operating revenue. For the fourth quarter, we are budgeting around $125 million in aircraft and engine rent expenses and $2 million in sale and leaseback gain to be accounted as other operating income. The net cash flow generated by operating activities was MXN 4.2 billion due to an increase in total operating revenues and improved TRASM during the third quarter. Cash flow used in investing and financing activities were MXN 379 million and MXN 1.9 billion, respectively. By the end of the third quarter, our accounts payable and accrued liabilities were equivalent to 64 days of operating expenses back to prepandemic levels. During the third quarter, the company incorporated 2 new A320neo aircraft to its fleet as of September 30, 2021, Volaris' fleet was composed of 94 aircraft with an average age of 5.6 years. Volaris' fleet had an average of 188 seats per aircraft. 81% of its aircraft are sharklet equipped and 40% are new engine option models. We reaffirm our expectations to end this year with 101 aircraft and closing 2022 with 113 aircraft. Volaris has one of the strongest balance sheets among the Latin American carriers. At the end of the third quarter, the adjusted net debt-to-EBITDAR ratio was 2.8x compared to 4.0x in the same period of 2019, posting the lowest level in the company's history. As guidance for the fourth quarter 2021, we are budgeting 26% to 29% growth in terms of ASMs compared to the same period of 2019. EBITDAR margin in the range of 31% to 34%, cash and cash equivalents position as a percentage of last 12 months revenues at approximately 30%, maintaining a net debt-to-EBITDAR ratio below 3x. Please note that this guidance assumes an average economic fuel cost of USD 2.45 to USD 2.70 per gallon for the fourth quarter compared to an average of USD 25 per gallon during the third quarter and no pandemic related or other material disruptions. Moving now to Slide 10. Volaris is committed to delivering growth during the next years through a sustainable corporate business model. Volaris has set its 2030 target to reduce its carbon emissions by 35% compared to 2015 to 56.6 CO2 grams per revenue passenger kilometers. On October 13, 2021, the company issued MXN 1.5 billion of bonds linked to our sustainability performance goals, one of the first of its kind for the industry in Latin America. The resources will be used to finance the company's growth. Moreover, Volaris sustainability-linked-bond framework received a second opinion from Sustainalytics considering an ambitious sustainability performance target with a very strong key performance indicator. Now I will pass it back to Enrique for closing remarks.

[Enrique Beltranena:]

Thank you very much, Jaime. As you can see on Page 11, we're excited to share our results as well as the opportunities we continue to see. We believe that Volaris' outstanding performance demonstrates resilience with a stronger position than before the pandemic began. While other airlines are focusing on recovery, Volaris is looking for additional avenues of growth and continuing opportunities for our business model are far from being exhausted. We have a resilient and a true ultra-low-cost business model, a strong balance sheet with a healthy leverage, a solid recovery with ample opportunities to increase our presence in our markets and most importantly, the commitment of an experienced management team to maintain consistent and sequential levels of profitability. Operator, I would like to thank you everybody for listening. Please open the line for questions.

[Operator:]

. Our first question comes from Stephen Trent with Citibank.

[Stephen Trent:]

Yes, I just wanted to take your temperature on some of the growth opportunities. I mean, you guys operationally are really kind of -- seem like you're way ahead of anybody else in the region. And when you think about M&A, for example, is this anything that ever crosses your radar screen even in a small way. I mean I note that your Indigo partner counterparts in Chile are doing something with American Airlines. So with any kind of partnership down the road or even smallest M&A opportunity ever interest you? Or that's not something that you're really interested in?

[Enrique Beltranena:]

Thank you, Stephen, for your question. The answer is clearly no. There's nothing in the sky.

[Stephen Trent:]

Okay. Very helpful, Enrique. I guess one super quick follow-up. Any update on your side with respect to Mexico kind of getting reinstated back to CAT 1 by the FAA?

[Enrique Beltranena:]

Well, to our knowledge, the Mexican aviation authorities continue implementing the corrective actions to recover the Category 1. And we know that the implementation is progressing well. We had a visit from the FAA at the beginning of this month, and we are having another visit at the beginning of the following month. During the visit that we had during the last couple of weeks, they did a verification on the linguistic capabilities of the DGAC. And they also did some checks on the training and the organization set up for training at the AFAC. The FAA visits have been, as I say, executed, and I'm really looking forward to November 5. We expect more or less about 7 topics to be closed by that moment.

[Operator:]

The next question is from Helane Becker with Cowen.

[Helane Becker:]

Just a question on the sustainability bonds. That's pretty -- I was kind of impressed with that, right? Because, to your point, no one else has done it. As you think about this issue going forward, what's your thought about EV TAR, does that make sense in the Mexican market? There's so many hybrid, hydrogen-powered electric power to aircraft. But does it make sense to look into that as an opportunity at some point?

[Enrique Beltranena:]

Not currently, Helane. We're really focusing on the transition to have a fully neo fleet. I think that we're going to be improving that ESG planet care program that we have. It's really ambitious what we are doing, and we will keep focusing on that. The other options in Mexico and the countries that we operate and ULCC, they are not right now appealing to the company.

[Helane Becker:]

Got you. That makes sense. And most of those right now, anyway, are ground replacement, not really aircraft replacement. So it makes sense. And then just on the...

[Enrique Beltranena:]

Helane, I think something which is really important. I think it's -- I like that you made the point. I think the CO2 emission goals from the company are really aggressive and very important. If you compare those goals with the rest of the industry, they are very ambitious goals. And I think we are in the right traction and in the right direction to really take care of our plan.

[Helane Becker:]

Yes. I don't disagree with you. And obviously, you have huge opportunity. And then Holger, actually, you said something about growth opportunities. And I'm thinking about like what -- a lot of countries in like Northern South America have either not a lot of capacity -- not a lot of air service or no one have the road development, right, that -- and so people have to fly. I mean are there markets that you would think going into first versus markets that make no sense. And then if you think about Deep South America, would you have to look into another aircraft type?

[Holger Blankenstein:]

Helane, so let me reiterate the ASM guidance for next year. We've said that we're going to be in the 25% range with the front load for the first quarter due to the lower terms. And as we look at regional and geographical expansion, clearly, Central America is on our mind with our AOC in Costa Rica and our new AOC in El Salvador. We're also very much focused on our core markets, which is Mexico domestic and the U.S. VFR. We have launched operations to Colombia in this quarter. And as we look at opportunities in South America, clearly, we are limited by the range of our aircraft from Costa Rica, El Salvador and Mexico. We are not thinking about the different aircraft type.

[Operator:]

The next question is from Mike Linenberg with Deutsche Bank.

[Michael Linenberg:]

Yes. A couple of questions here. First off, maybe to Jaime, I know that you had a hedge position in place for some time. I think it rolled off at the end of the June quarter. And it does not look like that you have a fuel hedge in place going forward. Can you just update us on where you are on hedging and maybe you're thinking about hedging just given everybody is now focused on the movement in fuel prices?

[Jaime Pous:]

Michael, we don't have anything hedged right now, and we are not thinking about hedging.

[Michael Linenberg:]

Okay. So you're not thinking about hedging. So then, Jaime, is that -- did you just inherit those hedging, that hedge book? And I think maybe your philosophy is to not have a fuel hedge? Or has there been a change in how you think about fuel hedging?

[Jaime Pous:]

It's basically, we are looking at the history -- past history of what we did on hedging and the current price and cords going forward. And for us, if it's an opportunistic decision, we will do it. Currently, our evaluation is that we are not going to proceed with hedging. We have a strong balance sheet. We have the advantage of the neos in our fleet which consume less fleet. And we have also the size in the market and the other ones that are hedging. So if possible, we may pass through something to the passengers, keeping in mind that we will be maximizing the revenue per departure through a right mix of load factor unfair.

[Michael Linenberg:]

Okay. No, that's helpful and that makes sense. Holger, you mentioned when you talked about the EBITDAR margin being a little bit lower in the fourth quarter, you did talk about some additional capacity coming on, and you talked about anticipating that yields would be under pressure in what you refer to as your most competitive markets. What are your most competitive markets? Are you referring to U.S. transborder? Is it the trunk routes like Mexico City to Guadalajara, Cancun, the triangle, what -- can you give us just a sense or a flavor on what right now are the most competitive markets in Mexico or internationally?

[Holger Blankenstein:]

So clearly, the trunk routes, the capacity on those routes is the most competed. We have three carriers in Mexico, domestic operating on those on most of those trunk routes. We've added -- all of the players have added capacity into Mexico City International Airport. So we are clearly seeing some ramp-up pricing pressure in those markets. However, we have a solid portfolio of routes that face only competitions from the buses where we don't see any pricing pressure right now going into the fourth quarter. We have 41% of our network that only competes against the buses, especially in our core markets of Guadalajara and Tijuana.

[Michael Linenberg:]

That's great color. And then my last question, and this is probably for you and/or Enrique, come November 8, the U.S., obviously, is changing the border restrictions for many countries. It's a relaxation. But for Mexico, which, for the most part, has been very open. The border between the U.S. and Mexico and not the land border, I'm talking about the air border where basically it was nothing more than a 72-hour within departure, a rapid antigen test showing negative COVID result. And now we're going to have an additional level -- layer where a vaccine is going to be required to come to the U.S. So when the news came out, one, did people actually appreciate the distinction?; And two, what is it due to your bookings? And are people aware of the fact that in order to come to the U.S., they're going to have to be vaccinated. Is that going to impact some of your originating VFR travel? It sounds like from what you've told us about bookings and trends that things seem actually quite strong. So I'm just curious what you're seeing and what's going on in that front?

[Enrique Beltranena:]

Yes, Michael, we've been observing our booking curves to the U.S. and from the U.S. very closely. Currently, we believe that we will not have any impact on our U.S. bookings, given this change. Vaccination rates in Mexico and in the U.S. are quite high already. So we currently don't foresee any impact of this new requirement for bookings in the winter seasons.

[Michael Linenberg:]

Okay. Okay. And could one say, Holger, is that maybe -- that you have found through surveys and passenger behavior that maybe there is a high correlation between someone in Mexico who holds a passport that there's a high correlation between a passport holder and someone who's also -- one who's going to get vaccinated that there's a high quality.

[Holger Blankenstein:]

Yes. We don't have any specific studies on that, but that is a fair assumption, Michael, absolutely.

[Operator:]

The next question is from Pablo Monsivais with Barclays.

[Pablo Monsivais:]

I have two on my side. The first one is, if you can provide a little bit more color on the EBITDAR guidance for the fourth quarter. I know you're expecting a higher jet fuel. But is that the only reason why we might see construction in margin in the fourth quarter relative to the third quarter? And my second question is, what are your overall thoughts on the Santa Lucia airport right now because perhaps in 6 or 8 months, that airport will be ready. And the government is really willing to have airlines operating there. So are we going to see Volaris operating in both airports? Or what's your strategy right now?

[Holger Blankenstein:]

Thank you for your question, Pablo. On your first question, the answer is yes.

[Enrique Beltranena:]

And on the second question -- on our second question, Pablo, the position of the company is -- We are in the process of doing market studies around Santa Lucia and the market itself. We think that Santa Lucia itself has a market, which is around the airport from Santa Lucia, which is pretty much the size of a market if market is similar than Aguascalientes or, for example, . So we see some virtuous itself in the population, which is around the airport and probabilities of doing business with that population. And having said that, it's a lower-income population. So again, we need to adapt our pricing for something like that. Our position with the government has been that provided that safety is guaranteed. And the cost of the airport is a viable cost. We can perfectly do business in that airport if possible.

[Pablo Monsivais:]

Enrique, one follow-up on that. Do you think that the government right now is willing to provide some incentives for you to operate? Or they are not in that position?

[Enrique Beltranena:]

I cannot speculate on that, Pablo.

[Pablo Monsivais:]

Okay. Perfect. And Jaime, you were saying on my first question. It's -- the contraction in the EBITDAR guidance, it's 100% related to jet fuel, right?

[Jaime Pous:]

Correct.

[Operator:]

The next question is from Duane Pfennigwerth with Evercore ISI.

[Duane Pfennigwerth:]

I just wanted to follow-up on a couple of points. Holger, you mentioned you might experience some pressure. I just wanted to clarify, is that something you're seeing in the booking curve today? Or is that just, hey, maybe something will happen at some point in the future?

[Holger Blankenstein:]

Well, what we're observing is that the market is slowly coming back to a demand-supply equilibrium with capacity being added into the main markets in Mexico, especially Mexico City airport. And as that market comes back into equilibrium, we are going to see a normalization of fares and TRASM levels closer to a normal year. And that's what we are saying with what we've been mentioning about the top line. We are well positioned to deal with lower fares in the market. As I remind everybody, we have a lot of routes that have only bus competition with very little air competition. And our business model is all about driving low fares in the market and stimulating demand and offsetting those lower fares through ancillaries. So that's very important to point out. Our ULCC business model makes money at TRASM levels where our competitors do not make money. So we are very comfortable with a normalization of TRASM levels in the market.

[Duane Pfennigwerth:]

Sorry to be a little stubborn. So I think that's all very prudent and sober commentary. I just want to separate going to see something you're going to see versus something you are seeing? Is this something you are seeing now?

[Holger Blankenstein:]

No.

[Duane Pfennigwerth:]

No? Okay. Sorry. Second point. On the vaccine -- just to follow-up to Mike's question. On the sort of vaccine announcement to the U.S. based on the data that we look at, it looks like bookings activity has actually accelerated. And so again, I appreciate your very sober and prudent and appropriate commentary. But can you comment on the bookings response since that announcement, has it actually accelerated?

[Holger Blankenstein:]

Yes, Duane, we are seeing quite healthy booking curves going into the winter season in all of our markets. in the U.S., in the domestic and in Central America. And during the fourth quarter, we expect TRASM levels to be sustained or slightly ahead of the fourth quarter of 2019, which we're using as a comparison. And that's what we're currently seeing. So healthy booking curves, we should have a good winter season with TRASM levels ahead of 2019 levels.

[Operator:]

. The next question is from Veronica Renero with Citibank. It appears Veronica has dropped off the line. . This concludes today's question-and-answer session. I would like to invite Mr. Beltranena to proceed with his closing remarks. Please go ahead, sir.

[Enrique Beltranena:]

Well, thank you very much, again, to everybody. I really want to express my sincere gratitude to our analysts, but most especially to our family of ambassadors, the Board of Directors, the investors, our bankers, lessors, our suppliers, especially Airbus and Pratt & Whitney with whom we worked really hard during this quarter, for their commitment and support that has gotten us to this exciting position with such a unique opportunity in our markets and a fabulous growing process going forward. We have demonstrated yet again that the Volaris business model is as sound and can deliver superior results. Our team has taken the opportunities that presented themselves from the crisis, and we have come out stronger and in a better position to succeed in the market. We are now one of the most profitable airlines in the world with more room to grow geographically and in terms of revenue per passenger. Finally, our Investor Relations team is available to speak with you as needed. Thank you very much for your great support and we are looking forward for the fourth quarter with great results again.

[Operator:]

This concludes the Volaris conference call for today. Thank you very much for your participation, and have a nice day. You may now disconnect.