Controladora Vuela Compania de Aviacion (NYSE:VLRS), the parent company of Volaris, reported stronger revenue and liquidity in the second quarter of 2026 as management said it responded to sharply higher fuel costs with capacity cuts, fare adjustments and a heavier emphasis on U.S.-Mexico routes.
President and CEO Enrique Beltranena said the airline faced “the most challenging fuel environment in our history” during the quarter but acted to preserve liquidity and keep routes cash positive. Volaris ended the quarter with $824 million in cash, up $58 million from the end of the first quarter.
Revenue Rises Despite Limited Capacity Growth
Total operating revenue reached $859 million in the second quarter, up 24% year over year, while capacity measured in available seat miles increased 2%, CFO Jaime Pous said. Total revenue per available seat mile, or TRASM, rose 22% to $0.0950, in line with management’s guidance.
Executive Vice President Holger Blankenstein said Volaris implemented phased fare increases during the quarter to partially offset higher fuel costs. The effect was limited in April because of existing bookings tied to Semana Santa and spring break, but pricing absorption improved in May and June.
Average base fares increased 25% year over year, driven primarily by the U.S.-Mexico cross-border market. Ancillary revenue per passenger rose 9% to $59, and ancillary sales accounted for 56% of total quarterly revenue. Blankenstein said the company’s Altitude loyalty program has more than 2.1 million active members and has been integrated with its co-branded INVEX credit card, which has more than 1 million cardholders.
U.S.-Mexico Routes Lead Performance
Management highlighted the international network as a key driver of the quarter’s performance. International capacity reached 43% of total ASMs, compared with roughly 30% three years ago. In the second quarter, international ASMs rose 8%, while domestic capacity declined 2%.
In the U.S.-Mexico transborder market, ASMs increased 12%, average base fares rose 25%, and traffic increased 21%, according to Blankenstein. Revenue in that market grew more than 30%, and international load factor reached 79.6%.
By contrast, management said the Mexican domestic market remains more price-sensitive. Domestic load factor was 88.6%, and Volaris kept domestic capacity broadly flat while selectively adjusting fares. Beltranena said maintaining affordability is important in Mexico, where air travel penetration remains low and many consumers still use ground transportation.
Blankenstein said Volaris recaptured about 86% of year-over-year fuel cost increases in the U.S.-Mexico market during the quarter, but overall fuel recapture was 28% under the company’s calculation. He said domestic fuel recapture was lower because of Volaris’ ultra-low-cost model and competition with subsidized ground transportation alternatives.
Fuel Costs Pressure Earnings
CASM, or cost per available seat mile, rose 31% to $0.1058, primarily because economic fuel cost per gallon increased 70% year over year. CASM excluding fuel was $0.0675, slightly better than guidance, though up 19% year over year due to temporary and non-recurring items such as maintenance, redelivery expenses, merger-related costs and capacity reductions.
Pous said the second quarter likely marked the peak CASM ex-fuel level for the year. He noted that maintenance and redelivery expenses were tied to four aircraft redeliveries and increased maintenance events as Volaris accelerated Pratt & Whitney engine inductions to reduce grounded aircraft.
The company reported EBITDA of $141 million, representing a 16.3% margin and exceeding guidance of about 13%. Management said the variance was helped by U.S. Gulf Coast jet fuel prices averaging $3.70 per gallon, below the $4.00 per gallon assumed in guidance. EBIT was negative $99 million, and Volaris reported a net loss of $127 million, including a $137 million year-over-year impact from higher fuel expense.
For the first half of 2026, total operating revenue was $1.6 billion, up 19% year over year, while capacity grew 2.1%. EBITDAR totaled $318 million, representing a 19.5% margin. The company recorded a first-half net loss of $199 million, reflecting a $175 million impact from higher fuel costs.
Fleet Recovery and Liquidity Remain Priorities
Volaris said aircraft on ground declined from 41 at the beginning of the year to 24 at the end of the second quarter. Average aircraft on ground fell from 36 in the first quarter to 28 in the second quarter. Management expects grounded aircraft to remain in the low- to mid-20s during the second half as engines rotate through maintenance.
The company ended June with 155 aircraft and an average fleet age of 6.8 years. Fuel-efficient NEO aircraft represented 68% of the fleet and 66.5% of the productive fleet during the quarter, up from an average of 56.6% in 2025.
Beltranena said fleet recovery remains a major structural value driver, with normalization expected by the end of 2027. Scheduled lease returns are expected to reduce the contractual fleet to about 137 aircraft by year-end 2027. Management said that would generate roughly $50 million in annual lease savings and reduce lease liabilities by about $360 million.
Pous said Volaris generated $272 million in cash flow from operating activities during the quarter. The company’s liquidity position of $824 million represented 25% of last-12-month operating revenue. Net debt to EBITDAR was 3.3 times, compared with 3.2 times at the end of the first quarter. Volaris also executed an engine financing facility that generated $78 million in net proceeds.
Guidance Reinstated for Full-Year EBITDAR Margin
Volaris reinstated full-year EBITDAR margin guidance, saying it now expects a margin of about 23% for 2026. For the third quarter, management expects:
- ASM growth of approximately 10% year over year, concentrated in July and August;
- RASM of about $0.0990;
- CASM excluding fuel of approximately $0.0635;
- EBITDAR margin of about 22%;
- Average foreign exchange rate of about 17.6 Mexican pesos per U.S. dollar;
- Average U.S. Gulf Coast jet fuel price of about $3.50 per gallon.
For the full year, Volaris expects ASM growth of about 5%, capital expenditures of around $350 million and average U.S. Gulf Coast jet fuel of about $3.20 per gallon. Pous said more than 90% of planned capital expenditures are tied to maintenance events and aircraft redeliveries.
Beltranena also said the proposed transaction with Viva continues to progress through regulatory review. Volaris received final regulatory approval from Colombia in late April and is working with the U.S. Department of Justice and Mexico’s National Antitrust Commission. He said the company continues to hope to receive the remaining approvals and complete the transaction by the end of the year.
Management said Volaris will continue adjusting capacity based on fuel prices, demand and aircraft availability, with a focus on liquidity, margins and free cash flow rather than growth for its own sake.
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.
