Investing.com -- S&P Global Ratings raised its issuer credit rating on Grupo Aeromexico (NYSE:AERO) to 'BB-' from 'B+' on Wednesday, citing the Mexican carrier's resilient operating profitability and disciplined balance-sheet management amid broad industry cost pressures. The agency also lifted its issue ratings on the airline's senior secured notes due 2029 and 2031 to 'BB' from 'BB-', assigning a stable outlook.
The rating action underscores Aeromexico's ability to shield margins through pricing power and disciplined capacity controls, contrasting with the sharper margin erosion observed across regional low-cost peers. By leveraging its premium customer base, the airline implemented incremental fare hikes that ultimately recouped 123% of higher jet fuel expenses through a $517 million top-line increase over the first nine months of 2026.
That pricing flexibility lifted revenue per available seat kilometer by 12% to 10.12 cents, helping offset escalating non-fuel expenses, labor outlays, and foreign-exchange pressures tied to a stronger Mexican peso. While higher expenses trimmed nine-month annualized EBITDA by 15% to $1.304 billion and compressed margins to 22.0%, S&P noted that the airline's earnings profile demonstrated superior resilience against wider market volatility.
Balance-sheet metrics also showed steady underlying progress, with gross debt declining 7% year over year to $1.153 billion as of Sept. 30 through scheduled lease repayments without new debt issuance. Although softer earnings lifted gross debt to EBITDA to 2.9x from 2.6x and moderated funds from operations to gross debt to 25.2%, credit protection measures remained well within S&P's rating thresholds.
Operationally, Aeromexico supported unit economics by deploying wide-body aircraft on high-density international routes, raising the international share of its network capacity to 71.4% while maintaining healthy load factors near 86%. Ongoing fleet renewal around fuel-efficient Boeing 737 MAX aircraft is expected to drive further maintenance and fuel savings as total aircraft count nears 170 by year-end.
The carrier's liquidity profile remains anchored by roughly $1 billion in cash reserves alongside an undrawn $250 million credit line, providing substantial headroom to fund capital expenditures without tapping debt markets. S&P indicated it could consider further positive rating momentum if sustained operational efficiencies and pricing strength drive FFO to gross debt toward 45% over the next 12 to 18 months.
Original Article
S&P upgrades Aeromexico to 'BB-' on resilient margins and debt reduction
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