Mexican airline Volaris dips on turbulent year ahead

Controladora Vuela Compania de Aviacion SAB de CV

12/01/2024 18:41

** Shares in Mexican airline Volaris slip 3.5% after releasing
Q1 and full-year 2024 guidance 
    ** Volaris sees available seat-miles (ASM), a metric of
carrying capacity, falling from 16% to 18% in 2024 as the
airline awaits Pratt & Whitney motor inspections 
    ** "Capacity figures seem better than previously expected,"
write analysts at J.P. Morgan, while a Banorte team says the
estimates "remove part of the uncertainty"
    ** Volaris also forecasts an EBITDAR margin of 31% to 33%
for the year 
    ** The margin will see a boost "from the agreement reached
with Pratt & Whitney, which accounts for compensation for each
GTF motor taken out of the fleet, which will help to cover fixed
costs associated with the motors during inspections," analysts
at Banorte write
    ** Volaris did not disclose exact compensation amount
    ** The airline's expected higher profitability, measured by
TRASM, and improved margin should be able to offset the lower
capacity, the J.P. Morgan analysts led by Guilherme Mendes say
    ** Volaris also sees capital expenditures of around $300
million, flat from 2023
    ** "Still, some other challenges remain," Banorte's team
argues, including volatility in petroleum prices and the reduced
slots at the Mexico City International Airport

 (Reporting by Kylie Madry)
 ((Kylie.Madry@thomsonreuters.com))