Covering the Mexican Economy, Actinver Research

Actinver

Covering the Mexican Economy

Actinver Research

Actinver is a mexican leading financial group, that generates well being for individuals and companies through advisory services that provides investment management to maintain and grow their wealth.

Equity Bottom-Up

Controladora Vuela Cia De-A / Equity Bottom-Up

<ul><li>Operating revenues of US$813 m decreased by 4% YoY.</li><li>Top-line results were negatively impacted by a 14% YoY contraction in the ASMs (due to mandatory engine inspections, which resulted in the landing on average of 34 airplanes) and a 13% YoY drop in RPMs. Yields in the quarter ended at US$53.0, implying a 9% YoY gain and 7% above our estimate.</li><li>The load factor in 3Q24 was 87.4%, with a +1.0 pp YoY expansion.</li></ul>

Operating revenues of US$813 m decreased by 4% YoY.Top-line results were negatively impacted by a 14% YoY contraction in the ASMs (due to mandatory engine inspections, which resulted in the landing on average of 34 airplanes) and a 13% YoY drop in RPMs. Yields in the quarter ended at US$53.0, implying a 9% YoY gain and 7% above our estimate.The load factor in 3Q24 was 87.4%, with a +1.0 pp YoY expansion.

Actinver Research - VOLAR 3Q24: Positive Quarterly Results, Beating Our Estimates (Quick View)

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

<ul>
<li>Mexico's Volaris has announced its 1Q24 and FY24 capacity is likely to be down 16-18% yoy due to GTF engine inspections grounding aircraft.</li>
<li>However, on this reduced capacity, management anticipates a 31-33% EBITDAR margin, up from 26% in 2023, helped by fuel costs down c.9%. We model $1bn EBITDAR in 2024 (2023 $840m).</li>
<li>This dynamic has read across for many short/medium haul markets around the world has capacity constraints are likely to drive up pricing/earnings for affected carriers and also competitors.</li>
</ul>


Mexico's Volaris has announced its 1Q24 and FY24 capacity is likely to be down 16-18% yoy due to GTF engine inspections grounding aircraft.
However, on this reduced capacity, management anticipates a 31-33% EBITDAR margin, up from 26% in 2023, helped by fuel costs down c.9%. We model $1bn EBITDAR in 2024 (2023 $840m).
This dynamic has read across for many short/medium haul markets around the world has capacity constraints are likely to drive up pricing/earnings for affected carriers and also competitors.


Global Airlines: Mexico's Volaris Shows GTF Groundings Can Drive Higher Pricing

Grupo Aeroportuario del Pacifi / Equity Bottom-Up

<ul><li>Mexican Air transport sector posted positive quarterly results.</li><li>The company’s efforts to contain costs and a better tariff environment compared to 3Q23 resulted in margin expansions.</li><li> VOLAR reported the most robust results at the operating level, beating our estimates, with EBITDAR growing double-digit.</li></ul>

Mexican Air transport sector posted positive quarterly results.The company’s efforts to contain costs and a better tariff environment compared to 3Q23 resulted in margin expansions. VOLAR reported the most robust results at the operating level, beating our estimates, with EBITDAR growing double-digit.

Actinver Research - Air Transport post 3Q24: Positive Results. The Margin Expansion Continues

<ul><li>During the last decades, the airport industry has proven to be resilient, having a traffic recovery from previous local or global crises such as September 11, in the EE.UU., SARS, and the financial crisis.</li><li>The COVID-19 pandemic was not the exception, and now the traffic recovery is within its traffic recovery corridor worldwide, reaching the pre-pandemic levels.</li><li> Although we expect 3Q24 quarterly results to be negatively impacted by total traffic contraction, overall total EBITDA will rise 15% YoY, mainly explained by a positive performance on VOLAR, ASUR, and GAP’s results.</li></ul>

During the last decades, the airport industry has proven to be resilient, having a traffic recovery from previous local or global crises such as September 11, in the EE.UU., SARS, and the financial crisis.The COVID-19 pandemic was not the exception, and now the traffic recovery is within its traffic recovery corridor worldwide, reaching the pre-pandemic levels. Although we expect 3Q24 quarterly results to be negatively impacted by total traffic contraction, overall total EBITDA will rise 15% YoY, mainly explained by a positive performance on VOLAR, ASUR, and GAP’s results.

Actinver Research - Air Transport: Attractive Valuations Supported Solid Potential Returns (Sector Initiation)

Equity Capital Markets

Grupo Aeromexico / Equity Capital Markets

<ul>
<li>Aeromexico reported record profitability in 2023 and we expect another record in 2024.</li>
<li>Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.</li>
<li>The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.</li>
</ul>


Aeromexico reported record profitability in 2023 and we expect another record in 2024.
Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.


Aeromexico – Another Record Year in Prospect in 2024

Mexico

Controladora Vuela Compania de Aviacion, S.A.B. de C.V. is a low-cost airline carrier based in Mexico.  The Company offers an unbundled pricing strategy which allows them to provide low base fares and enables its passengers to select and pay for a range of optional products and services for additional fees.

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Controladora Vuela Cia De-A (VOLARA MM)

Actinver Research - VOLAR 3Q24: Positive Quarterly Results, Beating Our Estimates (Quick View)

Operating revenues of US$813 m decreased by 4% YoY. Top-line results were negatively impacted by a 14% YoY contraction in the ASMs (due to...

Actinver

Global Airlines: Mexico's Volaris Shows GTF Groundings Can Drive Higher Pricing

Valuable read across from Mexico's Volaris for all airlines impacted by GTF engine inspections - as well as their closest competitors - as capacity...

Neil Glynn

Actinver Research - Air Transport post 3Q24: Positive Results. The Margin Expansion Continues

Mexican Air transport sector posted positive quarterly results. The company’s efforts to contain costs and a better tariff environment compared to...

Actinver

Actinver Research - Air Transport: Attractive Valuations Supported Solid Potential Returns (Sector Initiation)

During the last decades, the airport industry has proven to be resilient, having a traffic recovery from previous local or global crises such as...

Actinver

Aeromexico – Another Record Year in Prospect in 2024

Detailed forecasts for Aeromexico suggest another record year in prospect in 2024 as our deep dive on competitive capacity suggests a benign...

Neil Glynn

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