Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 333

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 19
Chunk 333
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’s global risk management program is focused
on uncertainty in the financial markets and tries to minimize the potential adverse effects on net earnings and working capital requirements.
The Company uses derivative financial instruments to hedge part of such risks. The Company does not enter into derivatives for trading
or speculative purposes. The sources of these financial risk exposures are included in both “on-balance sheet” exposures,
such as recognized financial assets and liabilities, as well as in “off-balance sheet” contractual agreements and on highly
expected forecasted transactions.

These on- and off-balance sheet exposures, depending on their
profiles, do represent potential cash flow variability exposure, in terms of receiving less inflows or facing the need to meet outflows
that are higher than expected, therefore increasing the working capital requirements.

Since adverse movements erode the value of recognized financial
assets and liabilities, as well some other off-balance sheet financial exposures, there is a need for value preservation, by transforming
the profiles of these fair value exposures. The Company has a Finance and Risk Management department, which identifies and measures financial
risk exposures, in order to design strategies to mitigate or transform the profile of certain risk exposures, which are taken up to the
corporate governance level for approval.

Market risk

a) Jet fuel price risk

Since the contractual agreements with jet fuel suppliers include
reference to jet fuel index, the Company is exposed to fuel price risk, which might have an impact on the forecasted consumption volumes.
The Company’s jet fuel risk management policy aims to provide the Company with protection against increases in jet fuel prices.
In an effort to achieve the aforesaid, the risk management policy allows the use of derivative financial instruments available on over-the-counter
(“ OTC”) markets with approved counterparties and within approved limits. Aircraft jet fuel consumed in the years ended December
31, 2024, 2023 and 2022 represented33%,38% and46% of the Company’s operating expenses, respectively. 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$893,987, US$1,165,078and US$1,299,254, respectively.

In September 2024, the Company contracted Asian Call Options
on U. S. Gulf Coast Jet Fuel 54 designated to hedge25,832thousand gallons. These hedges represented a portion of the projected consumption
for the