Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 130

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4A
Chunk 130
---
, we extended the lease period for aircraft and engines, through lease agreements for ten aircraft and two engines.

During the years ended December 31, 2022, 2023 and 2024, we
added 18, 13 and 14 net new aircraft to our fleet, respectively. The lease agreements of these aircraft do not require the obligation
to pay maintenance deposits to lessors in advance in order to ensure major maintenance activities, so we do not record guarantee deposits
regarding these aircraft. However, some of these agreements provide the obligation to make a maintenance adjustment payment to the lessors
at the end of the contract period. This adjustment covers maintenance events that are not expected to be made before the termination of
the contract. We recognize this cost as supplemental rent during the lease term of the related aircraft, in the consolidated statements
of operations.

Aircraft
and Engine Maintenance. We account for major maintenance under the deferral method, whereby the cost of major maintenance,
major overhaul and repair is capitalized (leasehold improvements to flight equipment) and amortized over the shorter of the period to
the next major maintenance event or the remaining contractual lease term. The next major maintenance event is estimated based on assumptions
including estimated usage maintenance intervals mandated by the FAA in the United States and the AFAC in Mexico and average removal times
suggested by the manufacturer. These assumptions may change based on changes in the utilization of aircraft, changes in government regulations
and changes in suggested manufacturer maintenance intervals. In addition, these assumptions can be affected by unplanned incidents that
could damage an airframe, engine, or major component to a level that would require a major maintenance event prior to a scheduled maintenance
event. To the extent the planned usage increases, the estimated useful life would decrease before the next maintenance event,
resulting in additional amortization expense over a shorter period.

  86  

  Table of Contents  

In 2022, 2023, and 2024, we capitalized costs of major maintenance
events of U. S. $138.8 million, U. S. $139.8 million, and U. S. $129.4 million, respectively and we recognized amortization expenses of U. S.
$83.1 million, U. S. $114.9 million, and U. S. $150.6 million, respectively. The amortization of deferred maintenance expenses is included
under the caption depreciation and amortization expense in our consolidated statements of operations.

In August 201