Mexican low-cost carrier Volaris saw a 23% increase in 2019 Q4 earnings, compared to the same period the previous year, with ancillary takings rising even higher to 25.8%.
The airline also reporting lower operating costs of 5.3%, with lower fuel costs a major driver of this reduction. Added together this saw Volaris’s operating margins for Q4 almost double to 20.2%, from 10.4% for the final period of 2018.
The carrier’s figures were boosted by a 4% appreciation of the Mexican peso against the dollar, compared to Q3. with respect to the exchange rate at the close of the previous quarter.
In a statement accompanying the results Volaris said that a stable domestic macroeconomic outlook had helped to support domestic demand, along with the global positive macro headwinds of lower fuel prices and currency appreciation.
The Volaris figures are part of a strengthening air passenger market in the North American country with the Mexican Federal Civil Aviation Agency reported an overall passenger volume growth for Mexican carriers during the fourth quarter of 2019 of 7.6% year over year.
The domestic overall passenger volume increased 8.1%, while the international overall passenger volume increased 4.2%.
During the fourth quarter of 2019, Volaris began operations in four new domestic routes and five international ones, the latter all Mexico-to-US. Volaris also added two new aircraft to its roster during Q4 - one A320 neo and one A321 neo, bringing to its total fleet to 82 aircraft – comprising 8 A319s, 58 A320s and 16 A321s), with an average age of 5.0 years
According to analysts Cowen these figures warrant an outperform on the company’s shares and noted that while broadly the airline market is being negatively impacted by the coronavirus outbreak the Mexican carrier has not yet seen any impact to its forward bookings.
“ We continue to believe Volaris will see market share gains in 2020 given their ability to stimulate demand with low base fares and weak competitors in their market,” said Cowen in an analyst note. “Ancillary Initiatives Volaris's low cost structure enables their strategy of entering markets with low base fares, stimulating demand, and upselling customers with ancillary products and service,” it added.
Volaris reports 23% increase in Q4 revenue
