Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 120

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 120
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 industry in 2022. However, according
to IATA, as of 2023, the war in Ukraine has not yet significantly impacted the profitability of most airlines. Nonetheless, if the conflict
- escalates, it holds the potential for adverse effects on the global aviation industry. Political conflicts are already impacting global
trade and could potentially lead to a downturn in aviation.

Moreover, the escalation of conflict in the Middle East, triggered
by attacks between Israel and Iran in April 2024, has heightened geopolitical tensions in the region. This direct confrontation between
Iran and Israel marks a significant escalation in their long-standing political and religious tensions. The uncertainty surrounding the
conflict and the potential responses of each country has reverberated throughout the financial markets. Notably, the price of Brent crude
oil surged to over U. S. $90 per barrel reaching its highest level since the Gaza Strip conflict in October 2023. This uptick in oil prices
poses a significant risk to the aviation industry.

The Iran-Israel conflict has broader implications beyond the
immediate region, and the tensions between these two nations have the potential to impact other countries in the Middle East and beyond,
with the possibility of the conflict further exacerbating geopolitical instability and economic uncertainty globally.

The airline industry is impacted by the price and availability
of fuel. Fuel is our largest cost, representing 33% of our total operating expense in 2024, and continuous volatility in fuel costs or
significant disruptions in the supply of fuel could have a material adverse effect on our business, statements of operations and financial
position.

Since the contractual agreements with jet fuel suppliers
include reference to jet fuel index, we are exposed to fuel price risk which might have an impact on the forecasted consumption volumes.
Our jet fuel risk management policy aims to provide the Company with protection against increases in jet fuel prices. In an effort to
mitigate fuel price risk, 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.

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We cannot assure that this macroeconomic disruption would
not adversely affect our financial performance since we can neither control nor accurately predict the performance of fuel prices in
the global markets or its availability in the airports in which we operate. Due to the large proportion of fuel costs in our total operating
cost base, even a relatively small increase in the price of fuel can have a significant negative impact on our operating expenses and