Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 256

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 11
Chunk 256
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ITEM 
11 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are subject to certain market risks, including commodity
prices, specifically fuel. The adverse effects of changes in these markets could pose a potential loss as discussed below. The sensitivity
analysis provided below does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider
additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Fuel.
Our results of operations can vary materially due to changes in the price and availability of fuel. Fuel expense for the years ended December
31, 2022, 2023, and 2024, represented 46%, 38%, and 33%, respectively, of our operating expenses. Increases in fuel prices or a shortage
of supply could have a material adverse effect on our operations and operating results. We source a significant portion of our fuel from
refining resources located in Mexico. Gulf Coast fuel is subject to volatility and supply disruptions, particularly during hurricane season
when refinery shutdowns have occurred, or when the threat of weather-related disruptions has caused Gulf Coast fuel prices to spike above
other regional sources. For the years ended December 31, 2024, 2023 and 2022, the Aircraft jet fuel consumption recognized as operating
expense in the consolidated statements of operations was US$893.9 million US$1,165.1 million and US$1,299.3 million, respectively.

Our fuel cost is referenced to US Gulf Coast Jet Fuel 54 and
US West Coast Jet Fuel, which are the references utilized to determine the cost of the fuel provided by our suppliers. Based on our 2024
annual fuel consumption, a 5% increase in the average price per gallon of those reference prices would have increased our fuel expense
for 2024 by U. S. $38.1 million.

To attempt to manage fuel price risk, from time to time we
use derivative financial instruments to mitigate the risk in cash flows attributable to changes in the fuel price.

We measure our derivative financial instruments at fair value.
We measure the fair value of the derivative instruments based on quoted market prices. Outstanding derivative financial instruments expose
us to credit loss in the event of nonperformance by the counterparties to the agreements. However, we do not expect the counterparties
to fail to meet their obligations.

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Our fuel hedging practices are dependent upon many factors