United states securities and exchange commission

 

		2016				2015				2014
Derivative financial instruments:
Reclassification during the year to profit or loss		Ps.	353,943			Ps.	287,550			Ps.	125,339
Extrinsic value of changes on jet fuel Asian call options			277,899				(450,768	)			(26,934	)
Loss of the not-yet matured fuel swap contracts			—				(11,828	)			(210,957	)
Loss of the not-yet matured interest rate swap contracts			(7,148	)			(18,823	)			(16,954	)
		Ps.	624,694			Ps.	(193,869	)		Ps.	(129,506	)

 

F-73

Table of Contents

23.	Commitments and contingencies

Aircraft related commitments and financing arrangements

Committed expenditures for aircraft purchase and related flight equipment related to the Airbus purchase agreement, including estimated amounts for contractual prices escalations and pre-delivery payments, will be as follows:

 

		Commitment expenditures in U.S. dollars				Commitment expenditures equivalent in Mexican pesos (1)
2017		US$	78,195			Ps.	1,615,828
2018			119,883				2,477,269
2019			91,556				1,891,906
2020			25,692				530,890
		US$	315,326			Ps.	6,515,893

 

(1)	Using the exchange rate as of December 31, 2016 of Ps.20.6640.

All aircraft acquired by the Company through the Airbus purchase agreement at December 31, 2016 and 2015 have been executed through sale and leaseback transactions.

Litigation

a) The Company and its CEO, CFO, certain of its current directors and certain of its former directors, as well as certain underwriters were among the defendants in a putative class action commenced on February 24, 2015 in the United States District Court for the Southern District of New York brought on behalf of purchasers of ADSs in and/or traceable to the September 2013 IPO. The complaint, which also named as defendants the underwriters of the IPO, generally alleged that the registration statement and prospectus for the ADSs contained misstatements and omissions with respect to the recognition of non-ticket revenue in violation of the federal securities laws, and sought unspecified damages and rescission. The motion to dismiss requested by the Company and all defendants was granted with prejudice in their favor on July 6, 2016. The plaintiff has not appealed the judge’s decision and the time to appeal has expired. Accordingly, any right of the plaintiff to pursue the litigation has ended.

b) The Company is a party to legal proceedings and claims that arise during the ordinary course of business. The Company believes the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

 

F-74

Table of Contents

24.	Operating segments

The Company is managed as a single business unit that provides air transportation services. The Company has two geographic segments identified below:

 

		2016				2015				2014
Operating revenues:
Domestic (Mexico)		Ps.	15,720,807			Ps.	12,579,806			Ps.	10,218,973
International:
United States of America and Central America			7,791,644				5,599,898				3,817,769
Total operating revenues		Ps.	23,512,451			Ps.	18,179,704			Ps.	14,036,742

Revenues are allocated by geographic segments based upon the origin of each flight.

The Company does not have material non-current assets located in foreign countries.

 

25.	Subsequent events

Subsequent to December 31, 2016 and through April 26, 2017:

 

	a)	On February 22, 2017 the Company increased its short-term working capital facility with Citibanamex by an amount of Ps.207,100.
	b)	On March 22, 2017 the Company repaid in full its short-term working capital facility with Bank of America in the amount of US$15,000 in accordance with the terms of the agreement.

 

F-75

Exhibit 8.1

Subsidiaries of Controladora Vuela Compañía de Aviación, S.A.B. de C.V.

The following chart lists each of our subsidiaries which we owned, directly or indirectly, as of December 31, 2016, and April 26, 2017:

1. Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V., a variable capital investment promotion stock corporation organized under the laws of Mexico

2. Comercializadora Volaris, S.A. de C.V., a variable capital stock corporation organized under the laws of Mexico

3. Servicios Administrativos Volaris, S.A. de C.V. a variable capital stock corporation organized under the laws of Mexico

4. Servicios Corporativos Volaris, S.A. de C.V., a variable capital stock corporation organized under the laws of Mexico

5. Operaciones Volaris, S.A. de C.V., a variable capital stock corporation organized under the laws of Mexico

6. Vuela, S.A., a corporation organized under the laws of Guatemala

7. Servicios Earhart, S.A., a corporation organized under the laws of Guatemala.

8. Vuela Aviación, S.A., a corporation organized under the laws of Costa Rica.

Exhibit 12.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Enrique Beltranena, certify that:

1. I have reviewed this annual report on Form 20-F of Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

a.

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

 

Date: April 27, 2017
				By:		/s/ Enrique Beltranena
						Enrique Beltranena
						Chief Executive Officer

Exhibit 12.2