Volaris: Circumstances
Beyond its Control  — December 2023

As the aviation industry emerged from pandemic in 2022 one of likely winners seemed to be Volaris, which had developed a very effective operating model, was in a strong competitive position, and was highly rated by the US equity analysts. Its fundamentals remain the same, but circumstances have conspired against the Mexican ULCC.

Volaris’s share price has consistently underperformed the North American average since 2021 — see graph — and at the end of 2023 the airline was valued in the equity markets at $1.04bn, which seems rather modest compared to Wizz which is valued at $3.0bn on the London stock exchange. Both ULCCs use the same basic operating model, having been incubated by Indigo Partners, and it could be argued that growth prospects for Volaris in Central and North America are better than those for Wizz in Eastern and Western Europe.