VOLARIS and Viva Aerobus Announced an Agreement to Create a New Mexican Airline Group

VOLARIS (Outperform, P$16.0 PT) and Viva Aerobus (Not Rated) announced that they have entered into an agreement to create a new Mexican airline group under a holding company structure, to expand low-fare travel and connectivity within Mexico and abroad.

The new airline group expects to achieve optimized unit costs, lower leverage, and better access to lower-cost capital. Volaris and Viva operate with a high degree of compatibility across their fleets (Airbus), airport infrastructure, technology, reservation systems, suppliers, and technical capabilities, which could result in substantial synergies (no further information was released). At the end of September, Volar operated a fleet of 152 Airbus aircraft, while Viva Aerobus operated a fleet of 99 aircraft. Over the last 12 M, Volaris revenues and EBITDAR totaled US$3.0 Bn and US$992 million, respectively (an implicit EBITDAR margin of 33.2%). Viva Aerobus revenues in the L12M were close to US$2.4 Bn with an EBITDAR generation close to US$873 million (an implicit 36.9% EBITDAR margin).

Under the terms of the agreement, Viva and Volaris shareholders will combine their holding companies through a merger of equals. Upon closing, Viva shareholders will receive newly issued shares of the Volaris Holding Company, and Volaris shareholders will continue to hold their shares, with each shareholder group owning 50% of the Mexican airline group on a fully diluted basis.

Both Volaris and Viva will continue operating as separate entities, with their current existing leadership structures in place (and brands). Upon closing, the airline holding group will be overseen by a Board of Directors comprised of members from both Volaris and Viva. The new airline group will be chaired by Roberto Alcántara Rojas, current chairman of the board of Viva. We expect to have more details on this transaction during today’s conference call. 

The transaction is subject to regulatory approvals, customary closing conditions, and approval by Volaris’ and Viva’s shareholders. The transaction is expected to close in 2026. The shares of the holding company will remain listed publicly on the Bolsa Mexicana de Valores (BMV) and the New York Stock Exchange (NYSE).