Aeromexico’s revenue has recovered to 79% pre-pandemic levels
The Mexican carrier Aeromexico has recovered 79% of its pre-pandemic total revenue, the airline reported in the first quarter’s financial results. Aeromexico’s revenue totaled 12.9 billion pesos (around US$630 million) between January and March.
Aeromexico’s results
The Mexican carrier, headquartered in Mexico City Benito Juárez International (MEX), carried 4.1 million passengers, still 18% below 2019 levels, impacted by the COVID-19 pandemic, the decrease in international demand, and the rise of low-cost airlines in the domestic market.
During the quarter, Aeromexico’s revenue reached 12.9 billion pesos, and EBITDAR amounted to 2.9 billion pesos (US$142 million). Nonetheless, the carrier’s operating profit reached negative 763.4 million pesos and a net loss of three billion pesos (US$37 million and US$146 million, respectively).
Aeromexico stated,
“The industry continues recovering, getting steadily closer to pre-pandemic levels. During the quarter, Aeromexico ASKs (Available Seat-Kilometer) represented 80% of the same period of 2019, mainly driven by the full recovery of the domestic market and the sequential recovery in international markets.”
Aeromexico’s domestic capacity recovered at 99% of 2019 levels, and international finished the quarter at 72%.
The challenges
Nonetheless, Aeromexico’s first quarter was also impacted by Omicron, the latest COVID-19 variant, which caused cancellations and delays in early January and February. During January, a wave of COVID infections among Aeromexico’s staff led to chaos.
Fuel was another challenger for Aeromexico during the period. The average fuel cost per liter in pesos increased by 66.6%, from an average of 9.70 pesos per liter during the first quarter of 2021 to an average of 16.17 pesos per liter this year.
Inflation and depreciation of the Mexican peso also increased pressure on the domestic airlines.
According to the airline, to offset the higher fuel costs, Aeromexico implemented network adjustments and revenue initiatives. Moreover, Aeromexico increased ancillary revenue by 38.2% year over year. Ancillary products are essential for airlines as they allow them to obtain higher revenues through the sale of seats, additional luggage, and more.
Aeromexico closed the quarter with liquidity worth 28 billion pesos (around US$1.37 billion).
Aeromexico’s fleet and Chapter 11
During the quarter, Aeromexico emerged from Chapter 11 proceedings after more than one year and a half.
As set forth in the airline’s Plan of Reorganization, the equity value of the reorganized Aeromexico is approximately US$2.564 billion. Aeromexico capitalized and obtained over US$3.7 billion in unsecured loans, DIP financing, and new capital contributions.
The Mexican carrier announced it would invest US$5 billion in the next five years in fleet and other items. In March, Aeromexico and Air Lease Corporation announced the lease of nine new Boeing 737 MAX aircraft, including two new Boeing 737 MAX 8 and seven Boeing 737 MAX 9.
These jetliners will be delivered between July 2022 and August 2023 from Air Lease Corporation’s order book with Boeing.
During 2022’s first quarter, Aeromexico received ten Boeing 737 MAX aircraft. The average age of the airline’s fleet is 7.8 years old.
As of March 31, Aeromexico’s fleet is composed of 18 Boeing 787 Dreamliners, one B737-700 (down from five last quarter), 36 B737-800, 27 B737 MAX 8 (up from 21), ten B737 MAX 9 (up from six) and 42 Embraer E190 (down from 47 in December). The airline’s operating fleet is comprised of 134 aircraft.
