Mexico’s Volaris spurs leisure rebound to lead airline recovery

Mexico’s biggest airline is forging a rebound from the travel collapse by using discount fares to tap demand for leisure trips. After the pandemic hit, Volaris lowered fares 30% to coax people back onto routes that primarily serve the friends-and-family market, said CEO Enrique Beltranena. While a drag on revenue, the move helped the company boost passenger totals to more than 70% of last year’s levels, outpacing domestic rivals and counterparts in the US. The carrier is currently reviewing options to raise as much as 3.5b pesos ($170m) after getting a green light from investors last month. Volaris is exploring alternatives such as offering shares, debt or convertible bonds, and hasn’t set a deadline for a decision. Unlike US carriers, Mexican airlines haven’t received government aid. “We need to find the correct timing,” Beltranena said. “But there’s no rush. We’re going to take our time to do the right thing for our investors." “Few airlines in the world are reporting this level of recovery,” Helane Becker, an analyst at Cowen & Co., said in a note to clients last week. In Mexico last month, Volaris carried 71% of last year’s passengers, compared with 44% for Grupo Aeromexico SAB and just 5.5% for Interjet, according to data compiled by the Mexican government. Volaris has negotiated to push back payments for almost $400m by rescheduling jet deliveries from Airbus, Beltranena said. In addition, the airline negotiated delays in more than $100m in aircraft lease payments. Volaris plans to end the year with 86 Airbus planes. The fleet will only expand by one jetliner by the end of 2021, although the company is looking to replace some of its A320 aircraft with the more fuel-efficient A320neo.<br/>