4q= fourth quarter - interjetabc aerolíneas, sa de cv * blvd. puerto aéreo s/n zona federal del...

ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”

(AICM) C.P. 15620 México, D.F.

FOURTH QUARTER RESULTS 2016

KEY RESULTS

In the 4Q16 Interjet total revenues added $5,242.6 million pesos that

represented an increase of 21.6% over the income generated in the 4Q15.

During the 2016 the revenues totaled $17,990.0 million pesos, representing

an increase of 19.1% over the income generated in 2015.

In the 4Q16, operating income was $ 68.1 million, with a margin of 1.3%. In

2016, net income totaled $ 599.0 million pesos with a margin of 3.3%.

In 4Q16, EBITDAR decreased $ 225.4 million pesos compared to the same

period of 2015, reaching $ 1,016.2 million pesos with a margin of 19.4%, in

relation to total revenue. In 2016, EBITDAR increased $ 239.4 million pesos

compared to 2015, reaching $ 4,108.1 million pesos, with a margin of 22.8%

over total revenue.

INTERJET recorded a net loss of $ 299.6 million pesos in 4Q16, compared to a net income of $ 203.8 million pesos in the same period of 2015. In 2016 a net profit of $ 20.0 million pesos was recorded, compared to a net income of $ 411.9 obtained in 2015.

4Q= Fourth quarter



Below is a summary of the selected consolidated and operating information, which is derived from the comparison of Interjet´s unaudited internal consolidated financial information for the fourth quarter of 2016 vs. 2015.



2016 2015 % CHANGE

ASK'S (millon) 4,685 3,543 32.2%

RPK'S (millon) 3,650 2,830 29.0%

LOAD FACTOR 77.9% 79.9% (2.0)pp

PASSENGERS (thousand) 3,099 2,793 10.9%

TOTAL REVENUE (million) 5,243 4,311 21.6%

REVENUE PAX (million) 4,707 3,742 25.8%

YIELD (pesos) 1.29 1.32 -2.3%

RASK (pesos) 1.12 1.22 -8.0%

CASK (pesos) 1.10 1.10 0.0%

CASK EXCLUDING FUEL (pesos) 0.81 0.85 -4.7%

EBITDAR (millon) 1,016 1,242 -18.2%

EBITDAR MARGIN (as % of total revenue) 19.4% 28.8% (9.4)pp

OPERATING INCOME (millon) 68 399 -83.0%

OPERATING MARGIN (as % of total revenue) 1.3% 9.3% (8.0)pp

NET INCOME (million) 300- 204 NM

NET MARGIN (as % of total revenue) -5.7% 4.7% (10.4)pp

bp: porcentual po ints

NM : Non meaningful

SELECTED FINANCIAL AND OPERATING INFORMATION

FOURTH QUARTER

ITEM



2016 2015 % CHANGE

ASK'S (millon) 16,083 13,596 18.3%

RPK'S (millon) 12,371 10,643 16.2%

LOAD FACTOR 76.9% 78.3% (1.4)pp

PASSENGERS (thousand) 11,122 10,483 6.1%

TOTAL REVENUE (million) 17,990 15,101 19.1%

REVENUE PAX (million) 16,369 13,686 19.6%

YIELD (pesos) 1.20 1.29 -7.0%

RASK (pesos) 1.12 1.11 0.9%

CASK (pesos) 1.08 1.03 4.9%

CASK EXCLUDING FUEL (pesos) 0.82 0.76 7.9%

EBITDAR (millon) 4,108 3,869 6.2%

EBITDAR MARGIN (as % of total revenue) 22.8% 25.6% (2.8)pp

OPERATING INCOME (millon) 599 1,107 -45.9%

OPERATING MARGIN (as % of total revenue) 3.3% 7.3% (4.0)pp

NET INCOME (million) 20.0 411.9 NM

NET MARGIN (as % of total revenue) 0.11% 2.73% (2.6)pp

bp: porcentual po ints

NM : Non meaningful

SELECTED FINANCIAL AND OPERATING INFORMATION

TWELVE MONTHS

ITEM



Market environment INTERJET operated during the 4Q16 in an environment defined by the following factors:

Depreciation of the average exchange rate. The closing exchange rate

for the quarter recorded a depreciation of the peso against the US dollar of

19.2% compared to the end of 2015, going from $ 17.3398 pesos per US

dollar at the end of 2015 to $ 20.6640 pesos per US dollar at the end of

4Q16.

Increase in fuel prices in pesos. During the period October-December

2016 the average price of fuel per liter paid by INTERJET increased by

20.9% compared to the same period in 2015, reaching an average price

per liter of $ 8.6 compared to $ 7.17 average per liter in 4Q15.

Slight economic growth. During the 2016 the Mexican economy showed a

slight recovery in the pace of economic growth. The General Indicator of

Economic Activity (IGAE) in 2016 grew 0.4% compared to the same period

of 2015.

Growth of passenger traffic in the domestic industry. According to

figures published by the DGAC, the passenger market for Mexican airlines

increased by 13.8% in the fourth quarter of 2016 over the previous year.

The volume of passengers in the domestic market increased 12.5%, while

the international market grew 15.3%.



Revenue

In the 4Q16 INTERJET total revenue increased 21.6% from $ 4,311.3 million

pesos in the 4Q15 to $ 5,243.0 million pesos in the 4Q16. This increase was

mainly due to an increase in passenger revenue.

Passenger revenue increased 25.8% from $3,742.3 million pesos in the 4Q15 to

$4,707.1 million pesos in the 4Q16, mainly due to a 16.5% increase in the average

rate. The international passenger revenue increased 55.5% in relation to the same

period of 2014. The Company is constantly reviewing fares and itineraries to

maximize its revenue.

Passenger revenue increased 25.8% from $ 3,742.3 million in 4Q15 to $ 4,707.1

million in 4Q16, mainly due to a 16.5% increase in the average rate and a higher

volume of passengers, mainly due to the international expansion of the airline. This

increase was partially offset by the negative effect on sales, caused by the safety

precautionary measure requested through the directive issued by the Russian

Aeronautical Authority in December 2016, in relation to the aircraft line SSJET100

worldwide.

The seats supply (ASK's) increased by 32.2% in the 4Q16 compared to the same

period of 2015, mainly due to the opening of new routes and an increase of

operations by the planned expansion of the Company through incorporating new

fleet.

Other income decreased 5.9%, from $ 569.0 million pesos in the 4Q15 to $ 535.5

million pesos in the 4Q16, mainly due to lower revenue from maintenance services

to third parties.



Operating expenses

Operating expenses increased 32.3%, from $3,912.3 million pesos in the 4Q15 to

$5,174.5 million pesos in the 4Q16. This increase was mainly due to: i) growth in

operations by incorporating 2 A321 and 1 A320 aircrafts that originated higher

costs, such as: maintenance, wages, salaries and benefits for crews, airport

operating and landing fees, aircraft and engine rents, depreciation for the

acquisition of aircraft and inherent expenses to the expansion of operations; ii) and

to the impact of the devaluation of the peso against the dollar. At the closing of

4Q16 the Company operated 22 SSJ100, 45 A320's and 3 A321's.

The unit cost per ASK in pesos (CASK) remained unchanged in relation to 4Q15,

as a result of higher expenses for additional operations, a larger fleet and

international expansion, which were partially offset by the income generated

through the new routes. On the other hand, the CASK excluding fuel decreased

5.2% over the same period of the previous year, as a result of the implementation

of the control of expenses program, mentioned in the 3Q16 results report, and a

greater supply of ASK's.

Fuel expenses on the 4Q16 increased by 55.7% from $889.4 million pesos in

4Q15 to $1,384.8 million pesos in the same period of 2016, mainly due to the

increase of 20.9% in the price per liter of fuel paid by the Company reaching an

average price per liter from $8.67 compared to $7.17 of 4Q15, the increase of

operations by approximately 12.9% from 26,050 operations in the 4Q15 to 29,398

operations in the same period of 2016, and by the impact of the devaluation of the

peso against the dollar in 2016.

Maintenance expenses increased 34.6% from $424.2 million in 4Q15 to $571.2

million in 4Q16 as a result of higher services to our fleet due to the increase in

operations generated by new routes, and to the increase in the fleet; as well as to

the impact on the devaluation of the peso against the dollar in 2016. These



expenses were also partially impacted by the event related to the directive issued

by the Russian Aeronautical Authority last December, mentioned above.

The costs for Airport operating and landing fees increased 57.6% from $ 563.0

million pesos in the 4Q15 to $ 887.1 million pesos in the 4Q16 as a result of an

increase of 12.9% in the number of operations during the 4Q16 mainly in the

international market compared to the same period of 2015. Likewise, this item was

negatively impacted by the effect of the event of the directive issued by the

Russian Aeronautical Authority last December, as well as by the impact of the

devaluation of the peso against the dollar.

Expenses for wages, salaries and crew benefits increased 13.0%, from $345.7

million pesos in 4Q15 to $390.5 million in 4Q16, mainly due to the 26.2% increase

in the number of crew employees, going from 1,305 in 4Q15 to 1,647 in the same

period of 2016, and to an increase in training and travel expenses, as a result of

the additional aircraft that were added in this period.

Selling expenses and advertising increased 41.4% from $387.7 million pesos in

the 4Q15 to $548.3 million pesos in the 4Q16 as a result of an increase in

advertising to promote new routes and of higher bank fees due to the increase in

sales.

The technology and administrative expenses decreased 14.4% to $410.0 million

pesos in the 4Q15 to $351.0 million pesos in the 4Q16 as a result of a decrease in

technology expenses and advisory services.

Aircraft and engine rents increased 18.2% from $504.6 million pesos in the 4Q15

to $596.4 million pesos in the 4Q16 reflecting both the effect of the depreciation of

the peso against the dollar, considering that the aggregate of our rents is in dollars,

and the increase in the fleet.

Depreciation expenses increased 4.0% from $ 338.0 million pesos in the 4Q15 to $

351.6 million pesos in the 4Q16 as a result of additional fleet by the acquisition of 2

A321 and 1 A320.



EBITAR

EBITDAR decreased 18.2% from $ 1,241.6 million pesos in the 4Q15 to $ 1,016.2

million pesos in the 4Q16. The EBITDAR margin reached 19.4% in the 4Q16

compared to the 28.8% regarding the same period of 2015.

Operating Income

Operating income in 4Q16 was $ 68.1 million pesos, compared to $ 399.0 million

pesos in 4Q15, with margins of 1.3% and 9.3% respectively. In 2016, operating

income decreased 45.9% from a net income of $ 1,107.4 million pesos in 2015 to

$ 599.0 million pesos in 2016. This was mainly due to the increase in revenues of

the Company, which was exceeded by an increase in operating expenses.

Comprehensive financing cost

Comprehensive financing cost increased 94.1%, from a cost of $ 185.2 million in

4Q15 to a cost of $ 359.5 million in 4Q16, as a result of the depreciation of the

peso against the US dollar, and of higher interest paid due to an increase of dollar

bank debts for the acquisition of flight equipment.

Net result

INTERJET reflected a net loss of $ 300.0 million pesos in 4Q16 and a net profit of

$ 20.0 million pesos in 2016 compared to net profits of $ 203.8 and $ 411.9 million

pesos generated in 4Q15 and 2015 respectively.

Comments to the statement of financial position and liquidity

As of December 31 2016, the Company had $ 1,395.7 million pesos in cash and

cash equivalents.

The net cash generated by operating activities in 2016 amounted $ 3,368.0 million

pesos.



Net cash used in investing activities mainly reflects payments for maintenance and

aircraft investments in accordance with the Company's business plan.

The net cash used in financing activities reflects higher bank loans for the

acquisition of aircraft and for working capital.

Relevant Event

As of January 6, 2017, the Shareholders' Meeting approved a capital increase in

the amount of $ 4,000.00 million pesos, which will be subscribed during the first

quarter of 2017. Giving effect to this subscription in stockholders' equity as of

December 31 2016, the amount of stockholders' equity after the aforementioned

subscription will be $ 8,445.5 million pesos. The sources of this subscription will be

mainly applied to the reduction of financial borrowings. Below is a Proforma

summarized balance sheet, giving effect to this capital contribution:

2016 CAPITALIZATION2016

PROFORMA

CURRENT ASSETS 3,727,825 3,727,825

LONG-TERM ASSETS 31,921,187 31,921,187

35,649,012 35,649,012

CURRENT LIABILITIES 12,936,930 -4,000,000 8,936,930

LONG-TERM LIABILITIES 18,266,618 18,266,618

31,203,548 27,203,548

STOCKHOLDER'S EQUITY 4,445,464 4,000,000 8,445,464

35,649,012 35,649,012

TOTAL ASSETS

Unaudited Summarized Condensed Consolidated Interim Statements of Financial Position as of

December 31 2016 , giving effect to the increase in capital described above would be as follows:

TOTAL LIABILITIES

Investor Relations Contact: Raul Lopez/CFO/+52 (55) 91785512



December 31, 2016 December 31, 2015

Assets

Current assets:

Cash and cash equivalents $1,395.7 $2,014.4

Accounts receivable 1,184.5 894.2

Recoverable taxes, mainly income tax and value-added tax 29.5 35.7

Inventories 159.2 252.1

Prepaid expenses 693.8 484.0

Total current assets 3,727.8 3,680.4

Advance payments to purchase flight equipment 1,636.1 1,476.6

Flight equipment, leasehold improvements, and furniture and equipment -

Net21,847.6 17,103.7

Prepaid maintenance 6,967.3 5,134.7

Deferred tax assets 24.7 45.9

Other assets - Net 181.0 85.2

Concession 43.8 43.8

Deposits on aircraft leases 1,220.6 674.0

Total $35,649.0 $28,244.3

Liabilities and stockholders’ equity

Current liabilities:

Notes payable to financial institutions $6,534.0 $7,836.4

Accounts payable 3,614.9 1,717.9

Other accounts payable and accrued expenses 1,259.5 819.9

Payable taxes other than income taxes 250.9 128.2

Air traffic liability 1,277.6 858.9

Total current liabilities 12,936.9 11,361.3

Long-term debt 12,227.5 10,104.2

Employee benefits and other deferred liabilities 1,675.4 9.4

Provision of maintenance and retirement conditions 4,349.3 3,034.8

Total liabilities 31,203.5 24,509.7

Stockholders’ equity:

Capital stock 900.0 900.0

Contributions for future capital increases 5.0 0.0

Translation effects of foreign operation 966.0 275.3

Retained earnings 2,541.3 2,528.4

Controlling interest 4,407.3 3,703.7

Noncontrolling interest 38.2 30.9

Total stockholders’ equity 4,445.5 3,734.6

Total $35,649.0 $28,244.3

ABC Aerolíneas, S.A. de C.V. and Subsidiaries

Unaudited Condensed Consolidated Interim Statements of Financial Position

(In millions of Mexican pesos)

As of December 31, 2016 and December 31, 2015



2,016.0 2,015.0 2,016.0 2,015.0

Operating revenues:

Passengers 4,707.1 3,742.3 16,369.0 13,686.2

Other 535.5 569.0 1,621.0 1,414.8

5,242.6 4,311.3 17,989.9 15,101.0

Operating expenses:

Aircraft fuel 1,384.8 889.4 4,268.1 3,702.7

Maintenance and return conditions 571.2 424.2 2,331.2 1,675.8

Airport operating and landing fees 887.1 563.0 2,747.6 2,029.0

Wages, salaries and benefits 390.5 345.7 1,422.4 1,121.5

Insurance and passenger service 93.8 49.7 247.9 191.2

Selling 548.3 387.7 1,678.6 1,337.5

Administrative and other 350.9 410.0 1,186.1 1,174.5

Flight equipment rentals 596.4 504.6 2,172.4 1,723.5

Depreciation and amortization 351.6 338.0 1,336.7 1,037.8

5,174.5 3,912.3 17,391.0 13,993.6

Operating income 68.1 399.0 598.9 1,107.4

Comprehensive financing cost:

Interest income 12.9 12.9 39.7 45.3

Interest expense -296.2 -297.6 -922.6 -739.6

Exchange loss – Net -76.2 99.5 309.4 3.8

-359.5 -185.2 -573.4 -690.6

Income before income taxes -291.3 213.8 25.5 416.8

Income taxes 8.3 10.0 5.4 4.9

Net income -299.6 203.8 20.0 411.9

ABC Aerolineas, S.A. de C.V. and Subsidiaries

Unaudited Condensed Consolidated Interim Statements of Profit

Three months ended December

31

Twelve months ended December

31

For the three and twelve months ended December 31, 2016 and 2015, respectively

(In millons of Mexican pesos)



Capital

Stock

Contributions

for future

capital

increases

Translation

effects of

foreign

operations

Retained

earnings

Non controlling

interests

Total

Stockholder´s

Equity

Balances as of December 31, 2014 $900.0 $5.0 $101.0 $2,127.5 $20.0 $3,148.5

Comprehensive Income:

Translation effects of foreign operations 0.0 0.0 174.2 0 0.0 174.2

Net income for the year 0.0 0.0 0.0 401.0 10.9 411.9

0.0 0.0 174.2 401.0 10.9 586.1


Comprehensive Income:

Translation effects of foreign operations 0.0 0.0 690.8 0.0 0.0 690.8

Net income for the year 0.0 0.0 0.0 12.8 7.2 20.0

0.0 0.0 690.8 12.8 7.2 710.9


ABC Aerolineas, S.A. de C.V. and Subsidiaries

Unaudited Condensed Consolidated Interim Statements of Changes in Stockholder´s Equity

For the years ended December 31, 2016 and 2015, respectively

(Millions of Mexican pesos)



December 31,

2016

December 31,

2015

Operating activities:

Net income (loss) 20.0 411.9

Income taxes recognized in income 5.4 4.9

Depreciation and amortization 1,336.7 1,037.8

Provision of maintenance and retirement conditions 1,314.5 1,675.8

Interest expense 922.6 739.6

Unrealized foreign exchange -1,915.5 -771.4

(Increase) decrease accounts receivable -290.1 -431.4

(Increase) decrease due from related parties 0.0 0.0

(Increase) decrease recoverable taxes, mainly income tax and valueadded tax -259.0 64.2

(Increase) decrease inventories 92.8 156.6

(Increase ) decrease prepaid expenses -209.8 -118.2

(Increase ) decrease deposits on aircraft leases -546.6 -124.3

Increase (decrease) accounts payable 1,897.0 710.3

Increase (decrease) other accounts payable and accrued expenses 453.4 202.1

Increase (decrease) payable taxes 122.8 -49.4

Increase (decrease) air traffic liability 418.6 79.0

Increase (decrease) employee benefits and other deferred liabilities 5.1 3.5

Net cash provided by operating activities 3,368.0 3,590.9

Investing activities:

Flight equipment, leasehold improvements, and furniture and equipment -2,421.7 -5,667.3

Long - term prepaid expenses -159.5 -276.6

Other assets -95.8 66.6

Prepaid maintenance -1,832.6 -1,034.3

Net cash used in investing activities -4,509.7 -6,911.6

Financing activities:

Net Financing 1,445.5 4,432.9

Interest paid -922.6 -739.6

Net cash provided by financing activities 523.0 3,693.2

Effects from exchange rates 0.0 -718.4

Net decrease in cash and cash equivalents -618.7 -345.9

Cash and cash equivalents at beginning of period 2,014.4 2,360.3

Cash and cash equivalents at end of period 1,395.7 2,014.4

ABC Aerolíneas, S.A. de C.V. and Subsidiaries

Unaudited Condensed Consolidated Interim Statements of Cash Flows

(In millions of Mexican pesos)

For the twelve months ended December 31, 2016 and 2015



Glossary

ASK

Means, (available seat kilometer).

Represents the total number of seats flown by an airline multiplied by the number of kilometers

flown.

RPK

Means, (revenue passenger kilometer)

Represents the number of kilometers flown by paying customers.

Load Factor

It means the total seats filled airplane seats average.

It is determined by dividing the total RPK's between ASK's.

YIELD

It means performance indicator of pesos per kilometer.

YIELD POR RPK

It is determined by dividing passenger revenues divided by RPK's.

RASK

Means, (Revenues per Available Seat Kilometer)

It is determined dividing the TOTAL INCOMES between ASK's.

CASK

Means (Cost of Available Seat Kilometer)

Unitary average cost calculated by dividing total operating expenses by ASKs

CASK excluding fuel

It is determined by dividing total expenses, less fuel consumption, including ASK's.

4q= fourth quarter - interjetabc aerolíneas, sa de cv * blvd. puerto aéreo s/n zona federal del...

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