Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 138

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 138
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 recognized.

According to El Salvador corporate income tax law, under
the regime on profits from business activities, net operating losses cannot offset taxable income in prior or future years. For the years
ended December 31, 2022, 2023 and 2024, we generated a net operating gain for an amount of U. S. $17.1 million, U. S. $3.2 million and U. S.
$35.8 million, respectively.

Impairment
of Long-Lived Assets. The carrying value of flight equipment, furniture, and equipment and right of use assets is reviewed
for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

We have identified one Cash Generating Unit (CGU), which includes
the long-lived assets and the entire fleet, including right-of-use assets and flight equipment. We assess at each reporting date, whether
there is objective evidence that long-lived assets and the entire fleet, including right-of-use assets and flight equipment are impaired
in the CGU. We record impairment charges in operations when events and circumstances indicate that the assets may be impaired or when
the carrying amount of a long-lived asset or related cash generating unit exceeds its recoverable amount, which is the higher of (i) its
fair value less cost to sell and (ii) its value in use.

The value in use calculation is based on a discounted cash
flow model, using our projections of operating results for the near future, typically extending no more than five years. The recoverable
amount of long-lived assets is sensitive to the uncertainties inherent in the preparation of projections and the discount rate used in
the calculation.

For the year ended December 31, 2024, we performed an impairment
test on our 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
a five-year period. The determination of the recoverable amount considered a post-tax discount rate of 12.75% (pre-tax of 17.98%) and
a long-term growth rate of 2.14%. We concluded that the carrying amount of the CGU did not exceed its recoverable amount, based on the
applied methodologies and assumptions, and therefore, no impairment charges were recorded.

For the years ended December 31, 2024 and 2023, we