Mexican ultra low-cost carrier Volaris reported a full-year profit of $8 million as the company resized operations and capitalised on strong demand.
The Mexico City-based carrier said on 26 February that full-year revenue was $3.26 billion, up 14% from 2022. Expenses for the 2023 rose 8.3% year on year to $3.01 billion.
For the fourth quarter, the company posted a $112 million profit on $899 million of revenue, up 9.6% from the same period in 2022.
“Throughout 2023, we gained valuable lessons…and turned a very complex situation into a solid financial result for the fourth quarter,” says chief executive Enrique Beltranena. “Our performance demonstrated resilience in the face of the challenges encountered throughout the year, such as the extended FAA downgrade of Mexico to Cat 2 [safety status], Pratt & Whitney’s engine preventive accelerated inspections, and slot reductions at the Mexico City International airport.”
The Mexican government has been reducing capacity at the older airport in that nation’s capital, in favour of the newer but more distant Felipe Angeles International airport.
In addition, the US Federal Aviation Administration only in September returned Mexico’s safety status to Category 1 from Category 2, after more than two years. That change allowed airlines to add flights between the USA and Mexico.
“Looking ahead, 2024 holds promise, as our booking curves and total unit revenues indicate continuing favourable trends aligned with our guidance,” Beltranena adds. “We expect that our focus on operational efficiency, customer satisfaction and prudent capacity management will continue to drive profitability.”
On 31 December, the carrier had 129 aircraft in its fleet, up from 117 at the end of 2022. It had added four Airbus A321neos during the fourth quarter.
The airline’s capacity, as measured in available seat miles, rose 10.2% year on year in 2023 but declined about 1% year on year in the fourth quarter.
For the first quarter of 2024, the company expects its capacity will decline 16% to 18% year on year, primarily owing to Pratt & Whitney engine recalls and required inspections.
Last October, Volaris said as many as 73 of its aircraft – 51 Airbus A320neos and 22 A321neos – could be be affected by the recall over the coming years. Volaris at that time had 16 of the Airbus narrowbodies grounded due to the problem.
Volaris is just one of more than 20 carriers that will have to deal with the engine issue in the coming months. Last week, JetBlue Airways predicted an average of 11 of its aircraft will to grounded at any give time during 2024 for the inspections, and that each inspection can require an aircraft be out of service for 360-365 days.
Volaris will hold a call later in the day to discuss its fourth-quarter and full-year earnings.
