Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 331

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 19
Chunk 331
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 against which the losses can be utilized. Management’s judgment
is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future
taxable profits together with future tax planning opportunities to advance taxable profit before expiration of available tax losses.

Tax losses relate to operations of the Company on a stand-alone
basis, in conformity with current Tax Law and may be carried forward against taxable income generated in the succeeding years at each
country and may not be used to offset taxable income elsewhere in the Company’s consolidated group (Note 20).

iii) Fair value measurement of financial instruments

Where the fair value of financial assets and financial liabilities
recorded in the consolidated statements of financial position cannot be derived from active markets, they are determined using valuation
techniques, including the discounted cash flows model. The inputs to these models are taken from observable markets where possible, but
where this is not feasible, a degree of judgment is required in establishing fair values.

The judgments include considerations of inputs such as liquidity
risk, credit risk and expected volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments (Note 4).

iv) Impairment of long-lived assets

At each reporting date,
the Company assesses whether there are indicators of impairment of its long-lived assets and right-of-use assets. Impairment exists when
the carrying amount of a long-lived asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value
less cost to sell and its value-in-use.

In making these determinations,
the Company uses certain assumptions, including, but not limited to, estimated, undiscounted future cash flows expected to be generated
by these assets, which are based on additional assumptions, such as asset utilization and length of service the asset will be used in
the Company’s operations, excluding additions and extensions.

The Company’s assumptions
about future conditions are important to its assessment of potential impairment of its long-lived assets, are subject to uncertainty,
and the Company will continue to monitor these conditions in future periods as new information becomes available and will update its analyses
accordingly.

For the year ended December
31, 2024, the Company performed an impairment test on its only Cash Generating Unit (CGU), comprising the long-lived assets and the entire
aircraft fleet, including right-of-use assets and flight equipment. The recoverable amount of the CGU was determined using a discounted
cash flow model based on projections covering