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

Summary of Grupo Aeroméxico Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $1.34 billion, up 13.3% year-over-year, exceeding guidance.
• Operating Income: $142 million, with an operating margin of 11%, consistent with prior year.
• Adjusted EBITDA: €36 million, representing a 25% margin, a 5% increase from Q1 2025.
• Unit Revenue (PRASM): Increased by 15% year-over-year.
• Liquidity: Exceeded $1.2 billion, including $1 billion in cash and a $200 million undrawn credit facility.
• Net Operating Cash Flow: Over $200 million generated in the quarter.
• Adjusted Net Debt to EBITDA Ratio: Improved to 1.7 times.

2. Strategic Updates and Business Highlights

• Aeroméxico was recognized as the most on-time airline globally for the third consecutive year.
• The company reported strong performance in international markets, which account for approximately 70% of revenue.
• The loyalty program, Aeromexico Rewards, saw participation increase to 38%, driving revenue growth.
• The company is actively managing capacity and implementing fuel recapture initiatives to offset rising fuel costs.
• The airline has a strong focus on cost discipline, including a hiring freeze and prioritizing operational efficiency.

3. Forward Guidance and Outlook

• Second Quarter Expectations: Anticipated revenue growth of low- to mid-double digits, with an operating margin between 4% and 7%.
• Fuel Cost Recovery: Expected to recover approximately 50% of incremental fuel costs in Q2, with targets of 70% in Q3 and 100% in Q4.
• Full-Year Outlook: No revision to full-year guidance at this time due to market volatility; updates will be provided as conditions stabilize.

4. Challenges and Points of Concern

• Fuel Price Surge: Significant increases in fuel prices are impacting operating expenses, which rose 16% year-over-year.
• Domestic Market Weakness: The domestic market has not responded as favorably to fare increases compared to international markets.
• Geopolitical Risks: Ongoing geopolitical tensions, particularly in the Middle East, could affect demand and operational stability.
• Capacity Adjustments: The company is reducing capacity in certain markets, particularly non-hub routes, to maintain profitability.

5. Notable Q&A Insights

• Fuel Recapture: The airline has successfully implemented fare increases in international markets, with strong demand holding up despite recent fuel price hikes. The domestic market is slower to respond.
• Capacity Planning: For 2026, the growth forecast has been adjusted from 3%-5% to 2%-3%, focusing on profitable widebody routes.
• Slot Waivers: Aeroméxico is prioritizing its slot portfolio at Mexico City International Airport (AICM) and is cautious about pursuing waivers that could jeopardize this.
• Fuel Availability: The airline has secured fuel supplies for the next couple of months, mitigating short-term risks related to fuel shortages in Europe and Asia.

Overall, Grupo Aeroméxico demonstrated resilience in Q1 2026, navigating external challenges while maintaining a strong financial position and strategic focus on revenue growth and cost management.