Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 129

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 129
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 recognized as supplemental rent.

Under the lease terms of each agreement, we assess
whether major maintenance of the leased aircraft and engines is expected to be performed. If major maintenance is not expected to be carried
out at our own account, the deposit is recognized as a variable lease payment, as it represents a portion of the cost associated with
the use of the leased aircraft or engine, determined based on time or flight cycles. For the years ended December 31, 2022, 2023 and 2024,
we recorded supplemental lease payments of U. S.$48.2 million, U. S.$83.5 million and U. S.$114.3 million respectively.

When modifications are made to the lease agreements
that entail an extension of the lease term, the maintenance deposits which had been recorded previously as variable lease payments can
be converted into recoverable deposits and presented as recoverable assets, at the modification date.

Certain other aircraft lease agreements do not require the
obligation to pay maintenance deposits in advance to lessors to guarantee major maintenance activities; therefore, we do not record or
make payments for guarantee deposits with respect to these aircraft. However, some of these lease agreements include the obligation to
make maintenance adjustment payments to lessors at the end of the lease period. These maintenance adjustments cover maintenance events
that are not expected to be performed before the termination of the lease. For such agreements, we accumulate a liability related to
the amount of the costs that will be incurred at the end of the lease, since no maintenance deposits have been made.

As of December 31, 2022, 2023, and 2024, we had prepaid maintenance
deposits of U. S. $441.1 million, U. S. $417.1 million, and U. S. $382.8 million, respectively, recorded in our consolidated statements of
financial position. We currently expect that these prepaid maintenance deposits are likely to be recovered primarily because there is
no rate differential between the maintenance deposit payments and the expected cost for the related next maintenance event that the deposits
serve to collateralize.

During the year ended December 31, 2022, we extended the lease
period for aircraft and engines, through lease agreements for five aircraft and two engines. During the year ended December 31, 2023,
we extended the lease period for aircraft and engines, through lease agreements for nine aircraft and six engines. During the year ended
December 31, 2024