Volaris Posts $1,038 Million in Revenue as Fuel Weighs on Operating Profit
Key Facts
Volaris reported unaudited third-quarter financial results on October 26, 2026, posting operating revenue of $1,038 million, up 32.4% from $784 million in the same period of 2025. But operating expenses rose 40.2% to $1,004 million from $716 million, sending operating income down 50% to $34 million from $68 million. The company swung to a net loss of $26 million, or 23 cents per American depositary share, after reporting net income of $6 million a year earlier. The chief executive said quarterly revenue topped $1 billion and that the company achieved "double-digit TRASM for the first time in its history." The results highlight a gap between revenue growth and profitability, as costs expanded faster than sales.
Revenue growth came alongside capacity expansion and improved yield per seat. Capacity rose to 10,071 million available seat miles, up 11.1% from 9,067 million a year earlier, while the load factor increased to 85.7% from 84.4%, a rise of 1.3 percentage points. TRASM, which measures revenue per available seat mile, rose 19.2% to 10.31 cents. The company attributed the improvement mainly to a 25.5% increase in average base fare to $55 and an 8.4% rise in ancillary revenue per passenger to $61. The chief executive said strong demand absorbed the additional capacity, while cross-border network expansion and improved aircraft productivity supported commercial performance.
Ancillary revenue contributed a larger share of sales during the quarter, accounting for 52.8% of total operating revenue. Total operating revenue per passenger was $116, up 15.8% from a year earlier. These figures complete the picture of improving yield: the company combined higher base fares with increased revenue from additional services per passenger. The chief executive cited growth in ancillary revenue and strong fares when discussing the quarterly revenue milestone above $1 billion. Still, yield growth did not keep pace with rising costs, as reflected in lower operating income and a contraction in earnings before interest, taxes, depreciation, amortization and rent margin.
Fuel was the main cost pressure cited by the company. Its economic cost rose 57.4% year over year to $4.10 per gallon, and fuel expenses increased to $377 million from $219 million. Operating cost per available seat mile rose to 9.97 cents, up 26.2%, while cost excluding fuel increased 13.7% to 6.23 cents. Total financing expense also rose to $75 million from $59 million. The pressures were reflected in earnings before interest, taxes, depreciation, amortization and rent, which came to $263 million compared with $264 million a year earlier, while the margin fell to 25.3% from 33.6%, a decline of 8.3 percentage points.
For the nine months ended September 30, 2026, operating revenue rose 23.7% to $2,668 million from $2,156 million. But operating income of $35 million in the same period a year earlier turned into an operating loss of $86 million. The longer comparison offers a view of the impact of cost pressures on the company's results during the year, alongside the quarterly decline in operating income. At the end of September, cash, cash equivalents and short-term investments totaled $823 million. Net debt to last-twelve-month earnings before interest, taxes, depreciation, amortization and rent remained at 3.3 times, unchanged from the previous quarter.
Volaris expects capacity growth of about 5% and an earnings before interest, taxes, depreciation, amortization and rent margin of about 21%, with capital expenditures of about $350 million in 2026. By comparison, the company recorded actual capacity growth of 6.3% and a margin of 32.5% in 2025, and spent $251 million on capital expenditures. For the fourth quarter of 2026, it is targeting a margin of about 20%, compared with 37.2% in the same period a year earlier. The quarterly outlook includes compensation the company expects to receive from Pratt & Whitney for aircraft expected to be grounded for GTF engine inspections. The third-quarter results conference call is scheduled for October 27, 2026.