Viva Aerobus posts $59 million Q2 loss on fuel costs, operating expenses rise 25.7%

Viva Aerobus experienced a significant net loss of $59 million in the second quarter, primarily attributed to soaring jet fuel prices. This financial setback occurred despite a 10.9% increase in operating revenue, which reached $609 million. The revenue growth was bolstered by the Mexican peso's 11% appreciation and the airline's disciplined revenue management strategies, including capacity adjustments and ancillary revenue initiatives aimed at offsetting fuel cost impacts.

However, operating expenses surged by 25.7% to $647 million. This substantial increase was driven by higher fuel prices, the strong peso, and costs associated with fleet expansion. The airline is also navigating challenges related to the inspection of Pratt & Whitney engines, which are crucial for maintaining operations. Viva Aerobus's CEO, Juan Carlos Zuazua, noted that the quarter was marked by "extraordinarily elevated" fuel prices, a consequence of geopolitical conflicts. Consumer behavior remained cautious, with demand responding to promotional activities amid a weaker macroeconomic environment and influenced by the FIFA World Cup.

In response to these pressures, Viva Aerobus reduced capacity by 7.7% while maintaining strict cost discipline and adhering to its ultra-low-cost model. This approach led to sequential improvements in profitability, as detailed in the quarterly report. Looking ahead to the second half of the year, which typically sees stronger seasonal demand, the airline plans to continue adjusting capacity and managing costs diligently in the face of elevated prices. During the second quarter, passenger numbers decreased by 3.7% to 7.2 million, but ancillary revenues grew by 19.4% to $327 million, representing 53.8% of total revenue. The airline also reported an average of 27.9 A320neo aircraft grounded due to Pratt & Whitney engine reliability issues. Viva Aerobus utilizes hedging instruments for jet fuel and exchange rates, covering 6.6% of its projected jet fuel consumption for 2026.