Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 59

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 59
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 As of December 31, 2024 and 2023, all our US dollar financing facilities at floating
rate are referenced to SOFR.

A portion of our long-term indebtedness/derivative instruments
bear interest at fluctuating interest rates, which may be based on the Secured Overnight Financing Rate, SOFR, and theTasa de Interés
Interbanciaria de Equilibrio, TIIE. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
TIIE is determined by the Mexican Central Bank (Banco de México) based on quotes presented by credit institutions. We have
not hedged our interest rate exposure with respect to our floating rate debt, except for TIIE. Accordingly, our interest expense for any
period will fluctuate based on SOFR and TIIE. To the extent the interest rates applicable to our floating rate debt increase, our expenses
may increase accordingly. As a result, our available cash flow for general corporate purposes may be impacted. As of December 31, 2024,
a portion of our U. S. dollar-denominated credit facilities bear interest based on SOFR. See Item 11: “ Quantitative and Qualitative
Disclosure about Market Risk - Interest Rates.”

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If we are classified as a “passive foreign investment company”
(“ PFIC”), holders of our ADSs subject to U. S. federal income taxation may realize adverse tax consequences.

We would be classified as a PFIC for any taxable year if,
after the application of certain look-through rules with respect to the income and assets of our subsidiaries, either: (1) 75% or more
of our gross income for such taxable year is “passive income” (as defined in the relevant provisions of the U. S. Internal
Revenue Code of 1986, as amended (the “ Code”)), or (2) 50% or more of the average quarterly value of our assets (which may
be determined in part by our market capitalization, which is subject to change) is attributable to assets that produce or are held for
the production of passive income. For this purpose, passive income includes, subject to certain exceptions, dividends, interest, royalties,
rents, annuities, gains from commodities and securities transactions, net gains from the sale or exchange of property producing such passive
income, net foreign currency gains and amounts derived by reason of the temporary investment of funds.