Volaris posts US$63 million net loss as revenues and margins decline

Volaris has posted a net loss of US$63 million for the latest quarter, equivalent to a loss of US$0.55 per American Depositary Share (ADS). Total operating revenues declined by 5% to US$693 million, driven by weaker unit revenues. Revenue per available seat mile (TRASM) dropped by 12% to US$7.80, despite a 9% increase in capacity, with available seat miles (ASMs) rising to 8.9 billion.

Operating expenses climbed to US$715 million, up from US$660 million in the same quarter last year. Despite this, total operating expenses per available seat mile (CASM) held steady at US$8.05. When excluding fuel, CASM rose by 7% to US5.69, indicating rising non-fuel cost pressures. On the positive side, the airline benefited from a 14% decline in average economic fuel costs, which fell to US$2.46 per gallon.

Earnings before interest, taxes, depreciation, amortisation, and rent (EBITDAR) declined by 26% to US$194 million, while the EBITDAR margin fell by eight percentage points to 27.9%, reflecting a significant drop in operational profitability.

The airline reported total cash, cash equivalents, and short-term investments of US$788 million, representing 26% of its total operating revenue over the last twelve months. Its net debt-to-LTM EBITDAR ratio increased modestly to 2.9x from 2.7x in the previous quarter, pointing to a slight rise in leverage as the company navigates cost challenges and revenue pressures.

Enrique Beltranena, President and Chief Executive Officer, said: “With improved visibility into second-half demand drivers and ongoing capacity discipline, we are reinstating our full-year guidance for EBITDAR margin, which we now expect in the range of 32% to 33%. Despite external geopolitical headwinds, our flexible business model and resilient cost structure enable us to moderate growth, remaining prudent and aligned with market trends. Going forward, our capacity decisions will remain anchored in two guiding priorities – customer demand and sustained profitability, and we continue to see meaningful opportunities in our business model and our markets to generate long-term value.”