Highlights
Vueling made a net profit of 28.3 million euros in 2012, an improvement of 173% on 2011. The operating profit (EBIT) in 2012 totalled 33.2 million euros, a rise of 192% on 2011.

The company increased the number of passengers carried by 20.1% compared with the previous year, to 14.8 million passengers in 2012. Furthermore, Vueling improved the load factor of its flights to 77.7%, 2.1 percentage points higher than in 2011. This increase in traffic was partly the result of the increase in connecting passengers at Barcelona El Prat airport, which doubled compared with the previous year, to a total of 1.6 million passengers in 2012.

Vueling’s total revenue rose by 27.7% to 1,103 million euros. This rise in revenue was the result both of the improvement in unit revenue and the increase in passenger traffic (+20.1%). Revenue per passenger rose by 5.9% on 2011, to €74.2.

With regard to costs, Vueling cut its ex-fuel unit cost by 1% in 2012. The unit cost per available seat kilometre (ASK) excluding fuel stood at 4.14 euro cents. Fuel costs rose by 34.1% on 2011 as a result of the greater volume of activity (+23.1% of ASK) and the greater unit fuel cost per available seat kilometre (ASK). The unit fuel cost per ASK rose by 7.5% on 2011 as a result of the depreciation of the euro against the dollar (-8%). This increase in the unit cost of fuel led to the total unit cost per available seat kilometre (ASK) rising by 1.5%.

Vueling continues to strengthen its financial structure and increased its net cash balance to 339.3 million euros at 31 December 2012.

Market situation
The macroeconomic environment was not favourable in 2012. Spanish GDP recorded a year-on-year fall of 1.4% in 2012. This fall was greater than the 0.4% drop recorded in the Eurozone. Despite the weak macroeconomic scenario, Vueling has continued growing, increasing passenger traffic by 20%.

Traffic at AENA airports saw a 3% reduction in passenger numbers in 2012. This fall was the result of the sharp drop (-13%) in the Spain-Spain market. However, traffic rose at Barcelona airport by 2% in 2012 thanks to the positive performance of the Barcelona- Europe market (+10%), which offset the fall in the Barcelona-Spain market (-9%).

Vueling has increased its market share at Barcelona airport to 30%. In addition, Vueling has continued to consolidate its presence in European markets, positioning itself as the third largest airline in terms of volume at Paris Orly and Rome Fiumicino airports.

The price of oil rose slightly in 2012 by 0.3% compared with 2011. The price of a barrel of Brent oil reached an average price of 112.5 dollars per barrel, while the price stood at 112.2 dollars per barrel in the same period of 2011. In the same period, the euro depreciated by 7.7% against the dollar, from an average exchange rate of 1.39 dollars per euro in 2011 to 1.28 dollars per euro in 2012. This depreciation of the euro led to the price of a barrel of oil in euros rising by 9% on the previous year.

Traffic
Vueling significantly increased its traffic figures in 2012, making the most of the consolidation of the markets in which it operates.
The company carried 14,794,857 passengers, 20.1% up on the previous year.

This growth was possible as a result of the increase in the load factor and the increase in activity. The load factor rose by 2.1 percentage points on 2011, to 77.7%. The increase in activity is reflected in the 17.6% increase in the number of flights and the 23.1% rise in the number of available seat kilometres (ASK).

In addition, Vueling increased the number of connecting flights which it offers at Barcelona airport. Vueling carried over 1.6 million connecting passengers at Barcelona airport in 2012.

Revenue
Vueling achieved total revenue of 1,103 million euros in 2012. This figure represents an increase of 27.7% on 2011, in which total revenue amounted to 863 million euros. Vueling managed to increase its revenue in the year as a result of both the improvement in unit revenue and the increase in activity in 2012.

Unit revenue per passenger rose by 5.9% in 2012. Vueling obtained unit revenue per passenger of €74.2. This improvement in revenue per passenger was the result both of the increase in the fare per passenger (6.9%) and an improvement in ancillary and other revenue per passenger (1.4%).

As regards activity, the company increased the number of available seat kilometres (ASK) by 23.1% on 2011. This increase in activity took place both in the domestic market and in the international market.

Costs
Total costs increased by 25.5% on 2011. The main increase was seen in fuel costs, which rose by 34.1%. Other costs (ex-fuel) rose by 21.9%, lower than the increase in the company’s activity (+23.2% of ASK).

The average price of jet fuel in the period from January to December 2012 was $1,017/mT, while in the same period of 2011 the average price was $1,020/mT, a small fall of 0.3%. However, the euro depreciated by 7.7% against the dollar over the period. This depreciation of the euro led to the price of fuel in euros rising by 9% on 2011. The price of fuel in euros rose from €728/tonne in 2011 to €794/tonne in 2012.

This rise led to an increase in Vueling’s cost base. The total unit fuel cost per available seat kilometre (ASK) rose by 1.5% in 2012 on the previous year.

Other costs grew at a lower rate than the increase in the company’s activity. The unit cost per available seat kilometre excluding fuel (CASK ex-fuel) stood at 4.14 euro cents, 1% down on 2011.

The cost reduction programme implemented by the company enabled savings of 21.5 million euros in 2012.

Business review
In 2012, Vueling achieved its growth targets, carrying a total of 14.8 million passengers. This represents a 20.1% increase in passenger traffic on 2011. This growth was the result both of an increase in international traffic (1.6 million passengers) and in domestic traffic (0.8 million passengers). The significant increase in international passengers meant that they accounted for 50% of the total number of passengers carried in 2012.

The growth in connecting passengers also contributed to this increase in traffic figures. The number of connecting passengers in 2012 stood at 1.6 million, 2.5 times higher than in 2011.

In 2012, Vueling continued improving and innovating in its products and services aimed at business passengers. The company has introduced the new Excellence fair, which includes services aimed at passengers who travel for business. It has also renovated the company’s corporate image so as to improve its positioning. Furthermore, it has implemented a new line of revenue through licensing agreements of the Vueling brand.

Vueling offered high levels of service and punctuality in 2012. The level of punctuality in the months between January and December reached a new record of 88%, 2.8 percentage points higher than in 2011.

Vueling successfully implemented its cost savings programme for 2012. The company achieved total savings of 21.5 million euros, 47% up on the initial target of 14.6 million euros.

2013 Objectives
The company’s objectives for 2013 are as follows:
1- International growth. Vueling plans to continue increasing its capacity. The company plans to increase capacity in Available Seat Kilometres (ASK) in 2013 by between 10% and 15%. This growth will have a major international component, where the company expects to increase its capacity in ASK by between 20% and 25%. In order to achieve this increase, Vueling plans to increase its fleet to a maximum of 70 aircraft in the summer season of 2013.

2- Cost savings. Vueling will continue implementing its cost reduction programme. It plans to implement 100 cost-saving initiatives in 2013 which will allow a saving of 17.7 million euros.

3- Product and service innovation. Vueling will continue innovating in its products and services so as to improve the experience of its customers. It will offer new services and products aimed at business passengers: improvements in Excellence class, a new cabin configuration, Wi-Fi on-board etc.

4- Agreements with airlines. In 2013, Vueling plans to enter into new partnership agreements with other airlines. These agreements will make it possible to increase passenger traffic by offering new connections.

Outlook for 2013
In 2013, Vueling plans to increase its capacity in Available Seat Kilometres (ASK) by between 10% and 15%, with greater emphasis on international markets. The company plans to maintain its ex-fuel unit costs per ASK in 2013 at similar levels to those in 2012. The significant international growth planned for 2013 involves a clear commitment towards Vueling becoming an important Europe-wide operator.

With regard to opportunities, Vueling will continue taking advantage of its strengthened leadership in Barcelona so as to reinforce its competitive position. In addition, the consolidation process in the European airline industry may facilitate new market opportunities. In 2013 Vueling will also consolidate its low-cost high-service business model.

On the risk side, the weak macroeconomic environment and sluggish demand in southern Europe may have negative effects. Other risks include an increase in airport fees and high fuel prices.