Volaris showed a significant increase of 86.7% y/y in total passenger traffic during February, transporting a total of 2.1 million, moving further away from pre-pandemic levels with an increase of 41.4% vs. February 2019. The annual growth in international passengers was 150.6%, followed by domestic passengers rise of 77.1%. The capacity, measured in terms of Available Seats Miles (ASMs), showed an increase of 62.0% y/y (+40.0% vs February 2019), while demand, measured in Revenue Passengers Miles (RPMs), registered a greater advance of 80.8% y/y (+42.2% vs. same month of 2019) . Thus, the load factor rose 8.6pp to 82.7%.
Positive implication: Despite the challenges in the environment, February indicators reflected demand strengthening, that, according to the company, led to higher unit revenues, which will help mitigate some cost pressures, especially fuel’s (main expense). In our view, its leading position in Mexico’s aviation sector has allowed it to leverage its recovery, which going forward should continue to support Volaris’ growth; however, we believe that the significant rise in oil prices will continue to generate stock volatility.