Controladora Vuela Compania de Aviacion (NYSE:VLRS), the parent of Mexican ultra-low-cost carrier Volaris, said its third-quarter 2026 results exceeded its prior profitability outlook as stronger fares, international network expansion and operational efficiency helped offset higher fuel costs.
President and CEO Enrique Beltranena said the company generated positive EBIT during the quarter, an outcome that had not been included in its original outlook. Volaris reported EBITDAR of $263 million, representing a 25.3% margin, and EBIT of $34 million, or a 3.3% margin. Net loss narrowed nearly 80% from the preceding quarter to $26 million.
Revenue Surpasses $1 Billion
Chief Financial Officer Jaime Pous said quarterly operating revenue exceeded $1 billion for the first time, rising 32% year over year. Capacity, measured in available seat miles, increased 11%, while total revenue per available seat mile, or TRASM, rose 19% to 10.31 cents.
Average base fares increased 26%, according to Executive Vice President Holger Blankenstein. Consolidated load factor reached 85.7%, including 88.2% in domestic operations and 82.2% internationally.
Beltranena said commercial initiatives offset about 49% of the year-over-year increase in fuel costs through higher revenue. The company’s U.S.-Mexico transborder business was a major contributor, with revenue in that market rising more than 50% year over year. Blankenstein said the cross-border business fully recovered its year-over-year increase in fuel costs through pricing and network growth.
Volaris said it was the largest carrier in the U.S.-Mexico transborder market by seats based on published fourth-quarter schedules from OAG. International capacity represented about 42% of total capacity in the third quarter and is expected to account for roughly 49% in the fourth quarter.
By contrast, management said fuel-cost recovery was weaker in the domestic market. Blankenstein cited a diesel subsidy for buses in Mexico as a factor limiting the airline’s ability to pass higher fuel costs through to domestic fares.
Fuel Costs Rise, but Unit Costs Beat Guidance
U.S. Gulf Coast jet fuel averaged $3.67 per gallon in the third quarter, above Volaris’ $3.50 guidance assumption. Pous said the higher price added roughly $16 million in fuel costs. Economic fuel cost per gallon increased 57% year over year, contributing to a 26% rise in total cost per available seat mile, or CASM, to 9.97 cents.
CASM excluding fuel was 6.23 cents, better than the company’s guidance of 6.35 cents. Management attributed the result to cost controls, operational efficiencies and better fixed-cost absorption as more aircraft returned to service.
The company said it produced about $13 million in fuel-cost savings during the quarter, equivalent to 3.3 million gallons, through fleet deployment, route assignments and flight-planning initiatives. Fuel efficiency reached 110 available seat miles per gallon, which Beltranena described as a company record.
Volaris also said it is targeting more than $100 million in savings during 2026 through its cost-control program. Pous said the current cost base includes temporary expenses related to aircraft redeliveries, accelerated engine maintenance and merger-related costs.
Liquidity Holds Steady as Fleet Recovery Continues
Volaris ended September with $823 million of liquidity, broadly unchanged from the second quarter and equal to 23% of last-12-month operating revenue. The company generated $234 million in operating cash flow during the quarter and reduced financial debt by 14% sequentially after amortizing $95 million without adding new financial debt.
The company also secured a $300 million revolving credit facility from a syndicate of eight Mexican and international banks. The facility was fully undrawn at quarter end.
Aircraft on ground averaged 21 during the third quarter, down from 36 in the first quarter and 41 at the beginning of the year, as Pratt & Whitney GTF engine inspections progressed. Volaris expects aircraft on ground to remain in the low-to-mid-20s until next summer, before declining further in the second half of 2027.
As of Sept. 30, Volaris had 154 aircraft with an average age of 6.7 years, and 71% of the fleet consisted of newer fuel-efficient models. The airline expects to end 2026 with 149 aircraft and reduce its contractual fleet to about 137 by the end of 2027.
- Lease liabilities are expected to decline from about $3.2 billion to $2.8 billion by year-end 2027.
- Lease payments are expected to be about $50 million lower in 2027 than in 2026.
- Volaris rescheduled seven Airbus deliveries planned for 2027 and deferred 11 deliveries scheduled for 2028 to 2032.
Fourth-Quarter and 2027 Plans
For the fourth quarter, Volaris expects available seat miles to increase about 4% year over year, TRASM of approximately 10.90 cents, CASM excluding fuel of about 6.50 cents and an EBITDAR margin near 20%. Its outlook assumes a U.S. Gulf Coast jet fuel price of roughly $4.40 per gallon and an exchange rate of about 18.70 Mexican pesos per U.S. dollar.
The airline now expects full-year 2026 capacity growth of about 5%, an EBITDAR margin near 21% and capital expenditures of about $350 million.
For 2027, management expects low-single-digit overall capacity growth, with domestic capacity declining by low-to-mid-single digits and international operations providing the growth. Blankenstein said Volaris intends to adjust its network as fuel prices, foreign exchange rates and route profitability change, rather than commit to a static plan.
Volaris also plans to expand its U.S. network, having advanced the launch of routes to Atlanta, Boston, Nashville, Raleigh and Washington, D.C. The company said its Altitude loyalty platform had reached 2.3 million active members and that it expects to introduce Starlink high-speed Wi-Fi next year.
Viva Combination Remains Under Review
Beltranena said Volaris continues to work with Mexico’s National Antitrust Commission on its proposed combination with Viva. The company has received approvals from the U.S. Department of Justice and Colombia’s competition authority, he said, but Mexico’s review remains ongoing.
Beltranena said the companies aim to complete the transaction “over the coming months,” subject to regulatory approvals and customary closing conditions. He said the proposed combination would maintain separate brands and independent operations while potentially creating scale benefits, improving fleet ownership economics and expanding access to capital.
About Controladora Vuela Compania de Aviacion (NYSE:VLRS)
Controladora Vuela Compañía de Aviación, SAB. de C.V., operating under the Volaris brand, is a Mexican ultra-low-cost airline. The company provides scheduled passenger air transportation, along with ancillary services such as baggage, seat selection and other travel-related offerings.
Volaris began operations in 2006 and serves a broad network of destinations in Mexico, the United States, and Central America. Its business model emphasizes affordable base fares, high aircraft utilization and the separate sale of optional services.
Controladora Vuela is headquartered in Mexico City and is listed on the New York Stock Exchange under the symbol VLRS.
