Controladora Vuela Compania de Aviacion (NYSE:VLRS) executives used the company’s fourth-quarter and full-year 2025 earnings call to emphasize disciplined capacity management, a recovering cross-border environment, and efforts to restore aircraft availability amid ongoing Pratt & Whitney engine-related groundings.
Management highlights: capacity discipline and revenue mix
President and CEO Enrique Beltranena said 2025 was a “busy and historic” year for Volaris, citing a challenging backdrop that included engine constraints, foreign exchange volatility, and geopolitical developments that temporarily affected cross-border travel sentiment. He said the carrier responded with “disciplined network management, focused pricing strategy, and operational flexibility.”
For the full year, management said it adjusted ASM growth down to 6.3% from an originally planned mid-teens increase to keep supply aligned with demand while prioritizing profitability. The company finished 2025 with a full-year EBITDA margin of 32.5%, which management said was in line with guidance.
Operational performance: load factors, weather disruption, and segmentation
Airline Executive Vice President Holger Blankenstein said fourth-quarter operations reflected disciplined planning and execution, with improving performance in international markets. International load factor reached 79% in Q4, up from 77.5% in the first nine months of the year, which he said brought results closer to historical norms for that market. Domestic load factor was 89.8%, which management attributed to supply adjustments in a balanced demand environment.
Blankenstein said severe fog in Tijuana and other stations during December caused cancellations and reduced quarterly capacity growth to 5.6%, below the company’s approximately 8% guidance. Management estimated the P&L impact of the “extraordinary weather-related operational disruption” at about $7 million. Rebookings deep into the holiday season also pressured the take-up of higher-yielding close-in demand, according to Blankenstein.
Despite the disruption, Volaris posted Q4 TRASM of $0.0935, which management said was in line with guidance and consistent with Q4 2024. The carrier also reported ancillary revenue per passenger increased 6% versus 2024, and management pointed to ongoing segmentation efforts. Blankenstein cited the performance of Premium Plus, introduced in October, describing it as a blocked middle seat offering in the first two rows that exceeded expectations during its ramp-up phase.
On loyalty, Blankenstein said the Altitude program reached about 800,000 enrollments in seven months. He added that the company expects to integrate Altitude with its co-branded credit card by the end of the second quarter so card transactions can earn loyalty points.
Network plans: new routes and codeshare growth
Blankenstein said Volaris announced 33 new routes expected to begin in the summer, including a mix of domestic and international services from Guadalajara, with new U.S. destinations Detroit and Salt Lake City. He said the expansion also includes new operations from Puebla, Querétaro, and San Luis Potosí, which management described as attractive secondary cities with solid demand growth supported by rising income levels and local investment.
The company also discussed expanding connectivity through partnerships. Blankenstein said Volaris recently activated codeshares with Copa Airlines and Hainan Airlines, complementing existing agreements with Frontier Airlines and Iberia. Revenues from codeshare partners increased more than 30% in 2025, with some partnerships still in the ramp-up stage, management said.
Financial results: Q4 profitability, full-year decline, and tax-rate discussion
CFO Jaime Pous reported fourth-quarter total operating revenues of $882 million, up 5.6% year-over-year. He said results reflected a cross-border recovery in the second half of the year, early segmentation benefits, and an 8.7% appreciation of the peso versus the U.S. dollar, which helped revenue but created a cost headwind. Pous said the company has sought to reduce FX volatility impact by increasing cross-border flying and U.S. dollar-denominated sales.
On costs, Pous said Q4 CASM was $0.0829, up 3.2%, while average economic fuel costs rose 5.5% to $2.65 per gallon. CASM ex-fuel was $0.0576, aligned with guidance and up 1.4% year-over-year. Volaris posted Q4 EBITDA of $328 million for a 37.2% margin, EBIT of $100 million for an 11.3% margin, and net profit of $4 million, or $0.04 per ADS.
For full-year 2025, Volaris reported total operating revenues of $3 billion, down 3% versus 2024. CASM was $0.0804, up 0.1%, with average economic fuel cost of $2.59 per gallon, 6% lower year-over-year. CASM ex-fuel was $0.0558, up 3.5%. Full-year EBITDA was $988 million, down 13%, with a 32.5% margin; EBIT was $135 million with a 4.4% margin. The company posted a net loss of $104 million, or a loss of $0.91 per ADS.
During Q&A, management addressed an 89% quarterly tax rate. Pous said Volaris applies the 30% statutory tax rate during the first three quarters and then applies the actual full-year effective tax rate in Q4. He said the full-year effective tax rate for 2025 was 11.8%, but recommended analysts continue modeling a 30% effective rate.
Fleet, engine groundings, and 2026 guidance
Pous said Volaris ended 2025 with 155 aircraft and an average fleet age of 6.6 years, with 66% being newer, fuel-efficient models. In Q4, the airline averaged 36 aircraft on the ground due to engine-related issues, and AOGs peaked at 41 aircraft in January. Management expects steady improvement, with more meaningful reductions in the second half of 2026, and anticipates ending 2026 with about 25 AOGs. The company expects a full-year average of roughly 33 AOGs, which would represent three additional aircraft returning to service versus 2025.
Pous attributed expected improvements to manufacturer actions such as durability upgrades and expanded MRO throughput, which he said should increase time on wing and reduce shop turnaround times. Beltranena said the company is advancing certain maintenance events and plans to induct roughly twice as many engines as in 2025, accepting higher near-term costs and some additional CapEx to accelerate fleet recovery.
On fleet actions, Pous said Volaris expects to return 14 aircraft in 2026. He also said the company has financed all pre-delivery payments for aircraft deliveries through mid-2028 and has no material near-term debt maturities.
For 2026, management guided to:
- ASM growth of around 7% year-over-year (with about two-thirds of growth planned for cross-border flying, and domestic growth expected in the low- to mid-single digits)
- EBITA margin of around 33%
- CapEx (net of financed pre-delivery payments) of approximately $350 million
For Q1 2026, the company guided to ASM growth of about 3%, TRASM of around $0.085, CASM ex-fuel of approximately $0.06, and an EBITDA margin of around 25%. Pous said Q1 CASM ex-fuel guidance includes the translation impact of a stronger peso (with about 40% of the cost base peso-denominated) and non-recurring items tied to accelerated engine shop inductions and one-time expenses related to the proposed Viva transaction.
Management also reiterated expectations for improving leverage. Pous said net debt to EBITDA stood at 3.1x at year-end and the company expects it to decline to about 2.6x by the end of 2026, supported by improving earnings and fleet productivity as AOG levels fall.
Separately, Beltranena reiterated that the regulatory process is moving forward for the proposed airline group with Viva, including filings with Mexico’s competition authority and a planned publication of a transaction prospectus ahead of a March 25 extraordinary shareholders meeting. He said the company still expects the overall regulatory review to take up to 12 months from the merger announcement date.
About Controladora Vuela Compania de Aviacion (NYSE:VLRS)
Controladora Vuela Compañia de Aviacion, SAB de CV (NYSE: VLRS) is a Mexico-based airline holding company whose primary business is the operation of low-cost scheduled air transportation services. Through its principal operating subsidiary, Volaris, the company provides passenger and cargo flights on domestic and international routes. Its business model emphasizes unbundled ancillary services and point-to-point operations designed to offer competitive fares across its network.
Volaris serves more than 120 routes linking major metropolitan areas and secondary cities in Mexico, the United States and Central America.
