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CAPA TV: Volaris CEO - airline forced to reduce capacity in May

Analysis

While Mexico is yet to face its most critical period in the spread of COVID-19, Volaris is preparing to meet the challenge head on. 

At the end of March Volaris underwent a huge decline in passenger demand to key markets such as the US, Mexico and Central America, however it is believed that the biggest impact of the virus is yet to come.

The total number of cases in Mexico is much lower than in other countries around the world; however to minimise the spread Volaris has reduced its capacity by approximately 80% for Apr-2020. 

Volaris CEO Enrique Beltranena believes the peak of COVID-19 for Mexico will come about in May-2020, and as a result, the airline plans to slash its capacity to as little as 12-15% of its total for that month. 

The below interview is exclusive to CAPA TV. Follow this link for more interviews and access to CAPA's previous event footage.

Mr Beltranena concluded that with more than 60% of Volaris’ fleet grounded, and its revenues down by approximately 80%, “we strongly think the government should support airlines with significant and fast economic help”. 

He stated that the Mexican government had not offered support for the airlines, but had pledged help to small and medium sized companies.

For airlines, the most pressing challenge is cash flow, Mr Beltranena concluded. That problem, he stressed, “requires a significant, airline specific package…”. 

Volaris’ CEO believes government loans would help Mexico’s airlines, but also stressed: “…something that is important is that we are not envisioning the government coming to restructure or do a sabotage to our airlines. We are just requiring specific aid packages related to credit that can support the process of not having revenues in the following months”.

Volaris being in a similar position to other airlines worldwide, Mr Beltranena sees the potential for a decline in the airline's 2020 ASM growth, compared to prior estimates of a 10% expansion. 

However, he envisages a bounce-back of Volaris’ growth in 2021, “due to our superior ULCC business model. As economic activity returns, we think the ULCCs will recover much faster than traditional carriers”. 

Hear more from Mr Beltranena in our exclusive CAPA TV interview.

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