Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 134

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 134
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, and 2024, represented 46%,  
           38%, and 33%, of our operating expenses, respectively.                                                                                   
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During the years ended December 31, 2022 and 2023, we did not enter into derivative
financial instruments to hedge our jet fuel exposure.

In September 2024, the Company entered into Asian Call Options on US Gulf
Coast Jet Fuel 54 to hedge 25,832 thousand gallons, covering a portion of the projected fuel consumption for the fourth quarter of 2024
and the first quarter of 2025.

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In October 2024, the Company executed additional Asian Call Options on US
Gulf Coast Jet Fuel 54 to hedge 14,457 thousand gallons, also corresponding to a portion of the anticipated consumption for the same periods.

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.

We apply IFRS 9, which comprises aspects related to classifications and measurement
of financial assets and financial liabilities, as well as hedge accounting treatment. Paragraph 6.2.4 (a) of IFRS 9 allows us to separate
the intrinsic value and time value of a derivatives contract and to designate as the hedging instrument only the change in the intrinsic
value of the contract. As further required in paragraph 6.5.15 therein, because the external value (time value) of the Jet fuel derivatives
contracts 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.

Since monthly forecasted jet fuel consumption is considered the hedged item
of the “related to a transaction” type, then the time value included as accrued changes on external value in capital is considered
as a “cost of hedging” under IFRS 9. The hedged item (jet fuel consumption) contracted by us represents a non-financial asset
(energy commodity), which is not in our inventory. Instead, it is directly consumed by our aircraft at different airport terminals. Therefore,
although a non-financial asset is involved