Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 133

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 133
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 April 2018, the Board of Directors authorized a Board of
Directors Incentive Plan “ BoDIP”, for the benefit of certain board members. The BoDIP grants options to acquire shares of
the Company or CPOs during a five-year period, which was determined on the grant date. Under this plan, no service or performance conditions
are required to the board members for exercise the option to acquire shares, and therefore, they have the right to request the delivery
of those shares at the time they pay for them. In April 2023, the Company’s Annual General Shareholders’ Meeting modified
the terms of the BoDIP so that starting in 2023 certain members of the Board of Directors receive additional benefits through a stock-based
plan.

Additional details of these plans can be consulted in note
18 to the Consolidated Financial Statements, included in this document. (Exhibit 17 and 18)

Derivative and Non-Derivative Financial Instruments and Hedge
Accounting

We mitigate certain financial risks, such as volatility in
the price of jet fuel, adverse changes in interest rates and exchange rate fluctuations, through a controlled risk management policy that
includes the use of derivative financial instruments. The derivative financial instruments are recognized in the consolidated statement
of financial position at fair value. The effective portion of a cash flow hedge’s unrecognized gain or loss is recognized in “ Accumulated
other comprehensive income (loss) items,” while the ineffective portion is recognized in current year earnings. The realized gain
or loss of derivative financial instruments that qualify as hedging is recorded in the same statements of operations as the realized gain
or loss of the hedged item. Derivative financial instruments that are not designated as or not effective as a hedge are recognized at
fair value with changes in fair value recorded in current year´s earnings. Outstanding derivative financial instruments may require
collateral to guarantee a portion of the unsettled loss prior to maturity. The amount of collateral delivered in guarantee, which is presented
as part of “ Guarantee deposits,” is reviewed and adjusted daily, based on the fair value of the derivative position. As of
December 31, 2024, we did not have any collateral recorded as guarantee deposits associated with jet fuel hedges.

  (i)      Aircraft Fuel Price Risk. We account for derivative financial instruments at fair value and recognize them in the consolidated           
           statements of financial position as an asset or liability. The cost of aircraft fuel consumed in 2022, 2023