Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 124

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 124
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 primary markets we serve.

Fuel.
Fuel costs represent the single largest operating expense for most airlines, including ours, and accounted for 46%, 38%, and 33% of our
total operating expenses for 2022, 2023, and 2024, respectively. Fuel availability and pricing are subject to refining capacity, periods
of market surplus and shortage, and demand for heating oil, gasoline and other petroleum products, as well as economic, social and political
factors and other events occurring throughout the world, which we can neither control nor predict. For 2025, we expect the fuel prices
to remain volatile due to uncertainties regarding the political and macroeconomic environment.

Since the contractual agreements with jet fuel suppliers include
reference to jet fuel index, we are exposed to fuel price risk which might have an impact on the forecasted consumption volumes. Our jet
fuel risk management policy aims to provide the Company with protection against increases in jet fuel prices. In an effort to mitigate
fuel price risk, the risk management policy allows the use of derivative financial instruments available on OTC markets with approved
counterparties and within approved limits.

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The sensitivity analysis provided below presents the impact
of a change of U. S. $0.01 per gallon in fuel market spot price in our financial performance. Considering these figures, an increase of
U. S. $0.01 per gallon in the fuel prices during 2023 and 2024 would have impacted our operating expenses by U. S. $3,719 thousand and U. S.
$3,227 thousand, respectively.

                                For the years ended December 31,                       
                                2023                                             2024  
 ───────────────────────────────────────────────────────────────────────────────────────
                                Operating costs                       Operating costs  
                                (In thousands of U. S. dollars)                        
  + U. S. $0.01 per gallon      3,719                                           3,227  
  - U. S. $0.01 per gallon      (3,719)                                       (3,227)  

We have been proactively trying to mitigate this impact
over our business through revenue yielding and a continued effort towards reducing fuel consumption. Nonetheless, our ability to pass
on any significant increases in fuel costs through fare increases is also limited by our ultra-low-cost business model and market high
elasticity to price.

In September 2024,
we entered into Asian call options on US Gulf Coast