Volaris Flies High While Aeromexico Crashes

Aeromexico’s shares lost a historic 50% of value last week and ended up trading at one Mexican peso per share. The reason behind the drop is the airline’s announcement of a restructuring plan: An outside entity will purchase up to 49% of its shares at 1 Mexican cent each (5/100 of a US cent) in exchange for injecting some much-needed capital.

Last year, the company filed for bankruptcy amidst an astronomical $2B loss during the pandemic. First founded in 1934, the company has a long list of dramas: nationalization in the 70s by the Mexican government, re-privatization in the 80s, and an auction won by Citibank’s Banamex amidst debts that it could no longer pay in the 2000s.

Volaris, founded in 2005 by Carlos Mendoza Valencia, has been on a much smoother flight. Under CEO Enrique Beltranena’s leadership, the company has been willing to try ideas and innovate in a very tough industry. From positioning itself as the “ultra-low-cost” airline that competes with Mexico’s bus lines, to being the first in “disaggregating” the cost of tickets —— allowing passengers to choose their price based on added services, to our favorite: serving Krispy Kreme doughnuts aboard their planes in the early days.

This year, they’ve surged from the pandemic as Mexico’s new leader in the skies, beating Aeromexico on any metric imaginable: fleet size, profitability, routes, and revenues.