Volaris confirmed (18-Sep-2013) it raised USD346 million in its IPO on the New York Stock Exchange (NYSE) and the Mexican Stock Exchange (BMV). The carrier priced 61.9 million Series A shares at MXN15.51 (USD1.23) per share in the Mexican offering, and priced 226 million Ordinary Participation Certificates (CPO) in the form of American Depository Shares (ADS) at USD12 per ADS in the international offering. Each ADS represents 10 CPOs and each CPO represents one Series A share of common stock in the carrier. The offering was reportedly three times over-subscribed, while shares jumped 15% in their first day of trading on 18-Sep-2013. CEO Enrique Beltranena rang The Opening Bell at the NYSE and commented, "We are thankful for the support of our very well chosen bank syndicate and the NYSE which together with our shareholders have supported the company to achieve a successful public offering." Mr Beltrenana further stated, "Our revenue strategy is based on incentivising demand by offering low fares and a diversified set of optional products and services for our clients. And by maximising the utilisation of our assets and with labour contracts that include productivity and other variables, we have been able to achieve the lowest unit cost position of any publicly traded airline in Latin America." [more - original PR - Volaris - Spanish] [more - original PR - NYSE]
Volaris confirms USD346m raised in US and Mexico in IPO; shares up 15% in first day of trading
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Mexican ULCC Volaris makes a pivot in its transborder strategy – into more contested markets
The US has been a key market for the Mexican low cost airline Volaris since the company launched transborder service in 2009, reflected in the more than 23 US markets the airline presently serves. For many years Volaris’ transborder push originated in other bases outside Mexico City, given slots constraints at Juarez International airport and previous caps on the number of airlines serving transborder routes from Mexico City.
But in 2017 Volaris is entering more contested markets, taking advantage of a new US-Mexico bilateral that lifts restrictions on the number of airlines operating on some routes between the two countries. It is upping competition with its Mexican rivals Aeromexico and Interjet on services from Mexico City, as well as with the large US global network airlines.
It is not clear if the routes will absorb the additional capacity added by Volaris, but the airline will be the only ULCC operating on those routes, betting it can stimulate traffic with its ultra-low cost model in the already crowded markets.
LCCs in Latin America: Peru’s rise as an economic star could draw attention from potential operators
As Latin America attempts to climb out of a two year long recession, Peru has emerged as a bright spot in the region – based on air passenger growth and the country’s economic performance. For the seven months ending Jul-2016 Peru recorded 9% passenger growth to 11.2 million, driven by growth of 10.2% in the country’s domestic market.
Peru’s air passenger growth continues to remain promising, as the country’s largest airline – LATAM Airlines Peru – calculates that the country’s trips per capita are slightly below the still-emerging markets of Mexico, Colombia and Brazil, whose passenger growth potential should remain robust once the country’s economy begins to fully recover.
Periodically speculation arises over the potential opportunity for a low cost airline to break into Peru’s market. The country’s growth prospects certainly warrant examination of stimulative opportunities in Peru, but so far the country lacks a true low cost airline.