| Project description |
| IFC is considering an additional investment of up to US$15 million to support the growth and liquidity requirements of Concesionaria Vuela Compañia de Aviación S.A. de C.V., a Mexican low cost carrier branded as Volaris (the “Company” or “Volaris”). In 2006, IFC supported the start-up of Volaris with an unsecured $10 million loan as well as a revolving credit line of $30 million to finance pre-delivery payments for Airbus aircraft. Volaris has taken delivery of aircraft and inaugurated new routes sooner than expected and is now pursuing a revised five-year business plan, which anticipates the establishment of new domestic routes as well as the commencement of routes to the U.S. in mid 2009 under an alliance with Southwest Airlines. |
|
| Project sponsor and major shareholders of project company |
The Company is owned by Controladora Vuela Compañía de Aviación S.A. de C.V. which in turn is owned in equal share by:
- Discovery Air Investments, L.P., an investment vehicle of Discovery Americas I, a Mexico focused private equity fund, and Columbia Equity Partners;
- Blue Sky Investments, LLC, an investment vehicle for the Kriete Family Group which holds several investments, among the largest, Grupo TACA, one of the leading airlines in Latin America with the largest number of itineraries in Central America;
- Sinca Inbursa, S.A. de C.V., an investment vehicle of Grupo Financiero Inbursa; a Mexican financial conglomerate involved in investment funds, general insurance, automobile insurance, mortgages, health insurance, retirement funds, and commercial banking; and
- Corporativa Vasco de Quiroga, S.A. de C.V., an investment vehicle of Grupo Televisa S.A.B., the largest media company in the Spanish-speaking world that produces and broadcasts television program on the domestic and international market, develops and provides direct television along with publishing services and the distribution of publications. |
| Total project cost and amount and nature of IFC's investment |
| IFC’s proposed investment is a $15 million financing of a portion of the company’s immediate liquidity needs under its 2009 to 2013 business plan, including to support the launch of its alliance with Southwest Airlines. |
| Location of project and description of site |
| Volaris’s main operation base is the Aeropuerto Internacional de Toluca, located about 50 km from Mexico City. It currently serves more than 40 domestic routes throughout Mexico. |
|
| Anticipated development impact of the project |
Volaris has had a significant development impact and already become an important part of Mexico’s aviation infrastructure, providing safe, reliable and affordable air transport services within the country, where the topography and the long distances between the cities makes air transportation vital.
Volaris key development impacts include:
- Stimulation of passenger demand: Historically high domestic fares in Mexico had reserved the aviation market for a small segment of the Mexican population. Experience in other countries (Gol in Brazil, AirAsia in Malaysia, Southwest Airlines in the U.S.) has shown that a significant decrease in the cost of air travel leads to a large increase in the number of passengers. This has been the case to-date in Mexico with the introduction of low-cost carriers such as Volaris. Based on the Company’s records, 38% of Volaris 2007 customers represented first time air travel passengers. Furthermore, the start-up of Volaris’s low-cost carrier service has introduced new, efficient and direct transportation choices for owners and employees of small and medium enterprises and people visiting their families and relatives. The number of Volaris clients visiting families and relatives has increased four-fold since 2006 and totaled nearly1.8 million passengers in 2008 (representing 50% of its total passenger base).
- Economic linkages: The increase in affordable passenger air travel within Mexico and between Mexico and the U.S. will further increase economic activity in the country by increasing connectivity, creating jobs, and developing destinations that are underserved by traditional airlines. It will also generate direct employment in the air transport sector, airports and supporting sectors. Furthermore, the GoM will continue to benefit from tax revenues (VAT and income taxes), while the increased use of Toluca as hub should continue relieve congestion at Mexico City airport, which is operating near capacity.
- Stimulation of industry competitiveness: By competing with both incumbent and other low cost carriers, Volaris will further promote consolidation and a competitive, efficient Mexican aviation industry; and
- Modernization of the fleet, safety and efficiency: Volaris has introduced a new, fuel-efficient fleet and set high performance safety standards which is expected to be scaled under its current five-year business plan. Based of the high fuel efficiency and reduced noise emissions of its Airbus fleet, IATA has already recognized Volaris as a “green” airline |
|
| IFC's expected development contribution |
| IFC’s key role in this investment is provide additional risk-capital to help finance the company’s expansion and immediate liquidity needs to support its five-year business plan at a time when market conditions are less favorable due to the global recession and financial market uncertainty. Through the proposed investment, IFC will continue to support Volaris as it further stimulates demand and extends the possibility of air travel to owners and employees of small and medium enterprises and individuals visiting their families and relatives. |
| Environmental and social issues - Category B |
Environmental and Social Issues are essentially the same as those identified for the original investment and include:
- environmental, health and safety management systems;
- aircraft safety and pollution control;
- maintenance/repair yard pollution control and hazardous materials and waste management;
- employee health and safety;
- labor / union related issues; and
- emergency preparedness and response.
IFC’s ongoing review and supervision of the existing category B investment shows the company continues to ensure that its operations and facilities comply with applicable environmental, social, labor, and health and safety (EHS) requirements including:
- U.S. FAA and ICAO,
- Mexican Law of Civil Aviation,
- Mexican Aeronautical Authority
- Applicable Mexican Environmental Laws and regulations,
- Applicable Laws of the Mexican Secretary of Communications and Transport (SCT),
- Applicable Labor and Occupational Health and Safety Mexicans Laws and regulations, and
- Applicable IFC Performance Standards (PS1, PS2, and PS3)
Volaris' land operations are confined to limited areas within Toluca's International Airport, and are not expected to negatively impact nearby community or natural habitats. The project does not involve the physical or economic displacement of any individuals, and it is not expected to directly or indirectly impact any ecologically sensitive areas, indigenous peoples or site of cultural importance.
To view the environmental documents for this project, click here |
|
| For inquiries about the project, contact: |
Concesionaria Vuela Compañia de Aviación, S.A de C.V.
Av. Prolongación Paseo de la Reforma 490, Piso 1
Col. Santa Fe Peña Blanca
01210 Mexico, DF
MEXICO
Attn: Fernando Suarez
Chief Financial Officer
Fernando.Suarez@volaris.com.mx |
|
| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
Environmental documentation will be made available at the following location:
Concesionaria Vuela Compañia de Aviación, S.A de C.V.
Av. Prolongación Paseo de la Reforma 490, Piso 1
Col. Santa Fe Peña Blanca
01210 Mexico, DF
MEXICO |
|
|
|