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UPDATE 1-Mexican airline Volaris sees consolidation of market gains made in pandemic

(New throughout, adds details)

MEXICO CITY, Oct 16 (Reuters) - Mexican low-cost airline Volaris expects to consolidate much of the market it has gained during the coronavirus pandemic, though annual revenues are unlikely to return to pre-pandemic levels before 2022, the company’s chief executive said.

Volaris, Mexico’s biggest airline by passenger traffic, in January boasted a 32.5% share of the domestic market and 7.7% of international numbers, according to government data.

But it has fared better in the pandemic than major rivals, and by August, Volaris’ share of domestic business was nearly 44%. Its international passenger share had leapt to 18.8%.

Several airlines in Latin America, including Volaris’ biggest Mexican competitor Aeromexico, filed for bankruptcy protection during the crisis, shaking up the industry.

Volaris President and Chief Executive Officer, Enrique Beltranena, said he expected the company’s rivals to gradually make up some of the ground they lost during the months ahead. But he believed much of the new business would stay.

“By the end of 2021 (Volaris) will have roughly 40% of the domestic market, and I’d say about 17 or 16% of the international market,” Beltranena said in an interview.

Capacity as measured by available seat miles should reach around 95% of 2019 levels by the end of this year and get back to 100% during the first half of 2021, Beltranena forecast. Volaris’ capacity figure stood just above 84% in September.

Volaris says it has weathered the pandemic with the aid of significant pre-existing cash holdings, a flexible cost structure, as well as by renegotiating its aircraft leasing costs and pushing back payments due on new aircraft.

The company last month secured shareholder approval for a capital increase of up to 3.5 billion pesos ($165.57 million). How it will carry that out is yet to be determined, and Beltranena said there was no rush.

“The company’s priority remains ramping up operations as fast as possible,” he said, noting that Volaris did not intend to raise the new capital during the next two months.

Beltranena is paying close attention to the pandemic, and said he did not anticipate Mexico facing the kinds of renewed lockdowns parts of Europe are now experiencing.

He felt coronavirus infections in Mexico would probably remain fairly stable through to next February or March. Given the ongoing impact of the pandemic, Volaris’ revenues did not look likely to recover to 2019 levels next year, the CEO added.

“Provided nothing happens, and all other things being equal, they could be there in 2022,” Beltranena said. ($1 = 21.1390 Mexican pesos) (Reporting by Dave Graham, Editing by Rosalba O’Brien and David Gregorio)

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