Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 128

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 128
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 matters that are both inherently uncertain and material to our consolidated financial
position or consolidated results of operations.

Return
obligations.

Our aircraft and engine lease agreements require specific return conditions,
which are described as follows:

  Modifications to the underlying asset to meet the return conditions stipulated in the lease agreement,                                 

  Aircraft components (airframe, APU and landing gears) and engines (overhaul and limited                                                      

As a result of the aircraft and engine lease extension
agreements entered into during the year ended December 31, 2024, we reassessed our return liabilities. The effects of this remeasurement
were presented as part of the variable lease expenses for aircraft and engines in our consolidated statements of operations. For the years
ended December 31, 2022, 2023, and 2024, we recorded net redelivery expenses of U. S. $124.5 million, U. S. $103.8 million, and U. S. $135.2
million, respectively.

Other Accounting Policies and Estimates

Other accounting policies and estimates used in the preparation
of our Consolidated Statement Financial Position and Consolidated Statement of Operations are presented as follows:

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Maintenance Deposits Paid to Lessors.

Certain of the Company´s lease agreements
include the obligation to pay maintenance deposits to lessors to guarantee major maintenance events.

These lease agreements provide that maintenance
deposits are reimbursable to us upon completion of the maintenance event in an amount equal to the lesser of (i) the amount of the maintenance
deposits held by the lessor associated with the specific maintenance event or (ii) the qualifying costs related to the specific maintenance
event.

Substantially all these maintenance deposits are calculated
based on a utilization measure, such as flight hours or operating cycles. We paid U. S. $63.8 million, U. S. $52.6 million, and U. S. $16.8
million, in maintenance deposits, net of reimbursements, to our lessors for the years ended December 31, 2022, 2023, and 2024, respectively.

Maintenance deposits that the Company expects to recover
from lessors are presented as security deposits in the consolidated statement of financial position. The portion of prepaid maintenance
deposits deemed unlikely to be recovered - primarily due to the difference between the deposit payments and the expected cost
of the next related maintenance event they collateralize - is