Strategic Performance Drivers
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Achieved record quarterly revenue of $1.62 billion, driven by a 17.4% increase in international markets and a successful peak season extending through September.
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Successfully offset $170 million in year-over-year fuel cost increases through disciplined revenue management and fuel recapture initiatives.
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Premium revenue reached 42% of total revenue, reflecting a strategic shift toward high-yield segments and enhanced product differentiation.
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Loyalty program penetration grew to 40%, an 8-point year-over-year increase, providing a stable high-margin revenue stream and deeper customer engagement.
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Operational excellence was highlighted by Cirium recognizing Aeromexico as the most on-time airline globally for the third consecutive quarter.
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Domestic performance normalized following the temporary negative impact of the World Cup, with load factors reaching 90% in August and 87% in September.
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Maintained a strong cash position of $965 million while continuing to reduce financial debt and funding the investment program without new borrowing.
Strategic Outlook and Guidance Assumptions
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Q4 capacity growth of 7% to 8% will be primarily driven by widebody aircraft expansion in Europe and Asia, utilizing existing fleet leverage.
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Revenue growth for Q4 is projected at 14% to 16%, supported by strong forward bookings and a 45% year-over-year increase in fall sales campaign revenue.
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Guidance assumes a historically high all-in fuel price of $4.05 per gallon and an exchange rate of approximately 18 pesos per dollar.
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CASM ex-fuel is expected to remain flat in Q4, signaling an improvement in cost trajectory as operating leverage from the existing fleet yields efficiency.
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Network expansion for 2027 includes new routes from Mexico City to Milan and Guadalajara to Paris; additionally, a positive U.S. DOT decision has lifted restrictions on adding services between Mexico City and the United States.
Structural Adjustments and Market Risks
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Recognized $49 million in revenue following a loyalty program breakage rate alignment, the first such update since 2018 to reflect current member activity.
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The U.S. Department of Transportation revoked its prior disapproval of scheduled services, granting Aeromexico greater flexibility to expand its transborder network starting in 2027.
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Management flagged inflationary pressures and the appreciation of the Mexican peso as significant contributors to a 10% increase in non-fuel operating expenses.
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Upsized the revolving credit facility from $200 million to $250 million, bringing total liquidity to $1.2 billion to preserve financial flexibility.
Q&A Session Summary
Impact of Mexican Peso fluctuations on revenue and costs
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Management explained that a weaker peso results in lower dollar-denominated costs and revenues, creating a natural hedge that limits P&L impact.
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The current exchange rate environment (18-19 pesos per dollar) still supports solid demand for Mexicans traveling abroad, though it represents a 2% headwind to revenue growth compared to previous guidance.
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Fuel recapture strategy amidst record high jet fuel prices
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Management noted they are paying historically high jet fuel prices and have implemented regional initiatives to pass these costs to consumers.
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Current Q4 guidance assumes a 92-93% fuel recapture rate, but management expressed confidence in reaching 100% offset if demand remains resilient.
Competitive capacity trends and Mexico City slot increases
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Aeromexico expects a rational domestic market as competitors revise capacity downward, while Aeromexico grows selectively via increased Mexico City slots (44 to 46 per hour).
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70% of the company's Q4 growth is driven by widebody long-haul flying rather than domestic narrowbody competition.
FAA Category 1 status and U.S. network expansion
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Management expressed optimism regarding the FAA audit, noting the Mexican government's 60% budget increase for civil aviation authorities in 2022 to address regulatory observations.
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New U.S. service expansion is being planned for early 2027, taking advantage of the lifted DOT restrictions while monitoring the FAA review timeline.
Corporate vs. Leisure demand trends post-World Cup
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Corporate demand has rebounded following the World Cup and is currently stable or slightly up according to internal surveys.
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High-end leisure and corporate segments are currently behaving at a similar year-over-year growth clip, showing no signs of 'cracking' despite higher fares.
