2024-07-26 06:01:21 ET
Summary
- Good cost control allowed Volaris to report better-than-expected EBITDAR in Q2'24, with EBITDAR up 23% on a 7% revenue decline driven by 17% less capacity.
- Engine repair turnaround times are improving, but capacity is still likely to be down 14% in 2024, and prioritizing higher-profit routes can only offset a portion of that headwind.
- A weaker Mexican economy and weaker domestic travel is a risk for 2024, but over the longer term, Volaris still has an opportunity to benefit from growing air travel in Mexico.
- The market appears to be pricing in a quite pessimistic outlook; there is a lot of risk with emerging market airlines, but Volaris has proven out its low-cost model over time.
Airlines are tricky investments in the best of times, as the industry has an uncanny knack for shooting itself in the foot over and over again with irresponsible capacity, pricing, and service quality decisions. Add in the volatility that comes with operating in emerging economies, and it only gets more challenging for operators like Azul (AZUL), Copa (CPA), and Volaris (VLRS)....
Read the full article on Seeking Alpha
For further details see:
Volaris Hardly Flying High Despite Healthy Margins And Progress On Aircraft Groundings