Supply chain disruptions, inflation and expensive jet fuel affect Viva Aerobus profit

The persistent effects of disruptions in the global supply chain, the rise in inflation and the high prices of jet fuel have posed an unprecedented challenge for the aeronautical industry, said Juan Carlos Zuazua, CEO of Long live Aerobus.

During the third quarter from 2022, the airline Long live Aerobus with key on the stock market board VIVArecorded a net loss of 83.2%, going from a net profit of 887 million pesos in the third quarter of 2021 to a net profit of only 149 million pesos.

The manager mentioned that in the third quarter, the company suffered significant damages as a result of delays in the delivery of spare aircraft and engines by the main original equipment manufacturers, Airbus and P&W. “Specifically, in our ability to efficiently operate and execute our flight program, forcing us to reduce more than 16% of our capacity in the summer season.

“And although jet fuel prices began to decline from their record levels, they remained 80% above pre-pandemic levels in the third quarter of 2019. In response to the current environment, we have adjusted capacity in certain markets, and continued with our cost efficiency programs.”

As for the total operating income rose 34.4%, to 7,991 million pesos, a figure that shows higher unit revenues, due to the recovery of the load factor and the growth in capacity.

During the quarter, booked passengers increased 29.7% to 5.5 million, reflecting higher demand in domestic and international markets, despite an unfavorable comparison basis, given the vaccination traffic recorded in the third quarter of 2021. Revenues Complementary products increased 30.5% compared to the same period last year, reaching 3,559 million pesos, which represents 44.5% of total revenues.

The total operating expenses of the low-cost Mexican airline increased 69.7%, to 7,259 million pesos, mainly driven by a 25.5% increase in capacity in ASMs and higher fuel consumption, impacted by an average increase of 75.8% in the price of jet fuel.

Also, the operating profit of Long live Aerobus registered 732 million pesos, with an operating margin of 9.2%, compared to 28.0% in the third quarter of 2021. This was driven by an increase in jet fuel prices, which represented 51% of total operating expenses in the third quarter of 2022, compared to 40% in the third quarter of 2021, and due to inflationary pressures.

In the third quarter of 2022, flight demand remained favorable, with a healthy pricing environment in all of our markets. As a result, we were able to expand our business and unit revenue,” said Juan Carlos Zuazua.

He explained that in an effort to capture opportunities with high growth potential, they announced the opening of our sixth operating base in Mérida, Yucatán, an important tourist and economic region in southeastern Mexico, for December 2022.

“Our unit revenues (TRASM) increased 7.1% compared to the third quarter of 2021, despite an unfavorable comparison base effect, due to vaccine tourism in international markets and a faster recovery of the Mexican market in 2021; Compared to the pre-Covid period of the third quarter of 2019, our unit revenue grew 12.7 percent.

“Unit revenue growth was driven by a 17.4% increase in the domestic market, compared to 2021. Consequently, our total revenues increased 34.4% and 101.6% compared to 2021 and 2019, respectively, reflecting our solid growth record and post-covid recovery”, concluded Zuazua.

patricia.ortega@eleconomista.mx

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