AERO — Grupo Aeroméxico, S.A.B. de C.V.

Summary of Aeromexico Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenue: $5.4 billion for 2025, a 2% increase excluding nonrecurring items from 2024.
• Q4 Revenue: $1.4 billion, up 3% year-over-year, excluding extraordinary items.
• Adjusted EBITDAR: $1.7 billion for the full year, with a record margin of 31%. Q4 adjusted EBITDAR reached $502 million (35% margin).
• Operating Income: $928 million for the year (17% margin), with Q4 operating income at $303 million (21% margin).
• Passenger Revenue: Declined 4.4% year-over-year for 2025 but increased 4.3% in Q4.
• Load Factor: Improved in Q4, contributing to higher unit revenues, particularly in premium segments.

2. Strategic Updates and Business Highlights:

• Aeromexico achieved the highest adjusted EBITDAR margin in its history, reflecting strong operational performance and demand recovery.
• The airline maintained its position as the world's most on-time airline for the second consecutive year.
• Fleet modernization continued with the addition of 17 new aircraft, enhancing operational efficiency.
• A new app was deployed to improve customer experience, with further enhancements planned for 2026.
• The company is selectively expanding its long-haul network, including new routes to Barcelona and Paris.

3. Forward Guidance and Outlook:

• For 2026, Aeromexico expects revenue growth of 7.5% to 9.5% and adjusted EBITDAR margins between 28.5% and 30.5%.
• Capacity is projected to grow by 3% to 5% throughout the year, with a focus on profitability.
• The first quarter of 2026 is anticipated to see revenue growth of 10% to 12% year-over-year, driven by strong demand and effective commercial strategies.

4. Bad News, Challenges, or Points of Concern:

• Passenger revenue for the full year declined due to currency fluctuations and geopolitical headwinds, particularly affecting domestic border cities and the U.S. market.
• Regulatory constraints continue to impact U.S. operations, limiting the ability to add new routes from Mexico City.
• Increased labor costs from collective bargaining and depreciation from fleet growth are expected to pressure margins, despite overall revenue growth.
• The potential merger of competitors Viva and Volaris may lead to capacity rationalization, which could impact Aeromexico's market dynamics.

5. Notable Q&A Insights:

• Management acknowledged that a stronger peso could positively influence demand for travel, with a quick response in bookings historically observed.
• The sale of the TechOps maintenance joint venture generated a one-time profit but will not significantly alter ongoing maintenance costs due to existing agreements with third-party providers.
• The company is exploring opportunities to increase aircraft utilization, particularly in its narrow-body fleet, which could enhance operational leverage in the coming years.
• Discussions on regulatory restrictions regarding U.S. routes highlighted that while growth has been limited, the company has successfully expanded capacity in recent years.

Overall, Aeromexico's performance in 2025 reflects resilience and strategic execution, despite facing regulatory and economic challenges. The outlook for 2026 appears positive, supported by strong demand trends and operational enhancements.