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

Earnings Call Summary for Grupo Aeroméxico (Q1 2026)

1. Key Financial Results and Metrics:

• Total revenue for Q1 2026 reached $1.34 billion, a 13.3% increase year-over-year.
• Operating income stood at $142 million, with an operating margin of 11%.
• Adjusted EBITDA was €36 million, reflecting a 25% margin, up 5% from Q1 2025.
• Liquidity improved to over $1.2 billion, including $1 billion in cash and a $200 million undrawn credit facility.
• Total unit revenue (PRASM) increased by 15% year-over-year.
• Total operating expenses rose by 16%, primarily due to higher fuel prices.

2. Strategic Updates and Business Highlights:

• Aeroméxico was recognized as the most on-time airline globally for 2026.
• The company reported strong performance in international markets, with international revenue up 13.6%.
• The Aeromexico Rewards program saw participation increase to 38%, driving revenue growth.
• The airline is focusing on fuel recapture initiatives and capacity management to mitigate rising fuel costs.
• The fleet remains stable with no significant new commitments for the year, allowing for flexibility in operations.

3. Forward Guidance and Outlook:

• For Q2 2026, the company expects revenue growth of 12.5% to 15.5% year-over-year, with an operating margin projected between 4% to 7%.
• Anticipates recovering about 50% of incremental fuel costs in Q2, with expectations to reach 70% in Q3 and 100% in Q4.
• The second quarter is expected to be the weakest of the year due to the full impact of fuel price increases.
• Full-year guidance remains unchanged pending stabilization of market conditions.

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

• The airline faces headwinds from rising fuel prices, which have increased operating costs.
• Domestic market yields have not responded as favorably to fare increases compared to international markets.
• There are concerns regarding potential fare caps being proposed in Mexico, which could impact pricing strategies.
• The geopolitical situation, particularly in the Middle East, poses risks to demand and operational stability.

5. Notable Q&A Insights:

• Management confirmed that approximately 40% of Q2 bookings were made before fuel price increases, limiting immediate recapture ability.
• Capacity adjustments have been made, particularly in non-hub markets, to optimize profitability.
• The company is closely monitoring fuel availability in international markets, with no immediate shortages expected.
• Discussions around potential domestic fare caps were met with skepticism, emphasizing the negative impact such measures could have on consumers and the airline's pricing power.

Overall, Aeroméxico demonstrated resilience in Q1 2026 despite external challenges, with a strong focus on managing costs and optimizing revenue streams while navigating a volatile market environment.