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Viva Aerobus - Strategic Analysis and Outlook Report (2026)
AviationOutlook
December 20, 2025 • Estimated Reading Time: 13 minutes
Mexico’s ultra-low-cost carrier Viva (formerly Viva Aerobus) stands at a transformative moment in its history.
On December 19, 2025, the carrier announced a landmark merger with Volaris to form a new Mexican airline holding group, reshaping the competitive dynamics of Latin American aviation.
This merger of equals, expected to close in 2026, signals a strategic response to industry-wide challenges while positioning both carriers for sustainable growth in the democratization of air travel across Mexico.
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Table of Contents
The Merger: A Strategic Response to Industry Headwinds
The proposed transaction creates a 50-50 holding company structure that will maintain both Volaris and Viva as separate operational entities under independent operating certificates. This approach preserves existing consumer choice while unlocking significant economies of scale that have become essential for ULCC survival.
According to the merger announcement, Viva shareholders will receive newly issued shares of the Volaris Holding Company, with each shareholder group owning 50% of the combined entity on a fully diluted basis.
The shares will remain publicly listed on both the Bolsa Mexicana de Valores (BMV) and the New York Stock Exchange (NYSE).
Strategic Benefits of the Merger
Stakeholder Group | Key Benefits |
|---|---|
Passengers | Preservation of both brands; Expanded route networks; More ultra-low-fare options; Potential codeshare agreements; Enhanced frequent flier program collaboration (Doters and Altitude) |
Employees | Continued operations under existing certificates; Job security and stability; New growth opportunities; Investment in training facilities |
Shareholders | Lower aircraft ownership costs; Optimized unit costs; Better access to capital; Significant synergy potential from compatible operations |
Communities | Increased operations at AIFA; New operating bases nationwide; Support for tourism and related industries; Enhanced connectivity across Latin America |
Juan Carlos Zuazua, CEO of Viva Aerobus, emphasized the strategic alignment: “We intend this transaction to enable both Viva and Volaris to provide ultra-low-cost fares and more point-to-point travel to even more cities across Mexico and internationally, benefiting not only passengers, but also local economies and communities.”
Viva Aerobus demonstrated operational resilience throughout 2025 despite facing multiple headwinds. The carrier’s third quarter 2025 results revealed both challenges and the carrier’s ability to maintain profitability in a complex operating environment.
Q3 2025 Financial Highlights
Total Operating Revenue: $656 million (down 1.4% YoY)
Operating Profit (EBIT): $68 million (down 57.9% YoY)
EBIT Margin: 10.4%
Net Income: $30 million
Net Income Margin: 4.6%
EBITDAR: $261 million
EBITDAR Margin: 39.8%
Total Passengers: 7.8 million (up 6.6% YoY)
Load Factor: 88.2%
The revenue decline primarily reflected the normalization of fares from an elevated 2024 comparison base and a softer macroeconomic backdrop. Total revenue per available seat mile (TRASM) decreased 6.4% to 10.35 cents, while cost per available seat mile (CASM) increased 10.8% to 9.28 cents.
Nine-Month 2025 Performance
For the first nine months of 2025, Viva transported 22.1 million passengers, representing 9.3% growth compared to the same period in 2024.
However, revenue declined 10.6% to $1.696 billion, reflecting the continued fare normalization and challenging macroeconomic conditions. The carrier reported a net loss of $4.2 million for the nine-month period, compared to a net income of $159.8 million in the prior year.
Despite the profitability pressure, Viva maintained ancillary revenue strength. In Q3 2025, ancillary revenues increased8.1% to $313 million, representing 47.7% of total revenues, demonstrating the carrier’s pricing discipline and ability to extract value beyond base fares.
The Pratt & Whitney Challenge: Operational Disruption
A significant factor impacting Viva’s 2025 performance has been the ongoing Pratt & Whitney GTF engine reliability issues. The carrier faced substantial operational disruption due to the engine manufacturer’s recall affecting its A320neo family aircraft.
Engine Grounding Impact
According to Mexico Business News, Viva averaged 21.3 grounded aircraft per month between September 2023 and October 2025. In the third quarter of 2025 alone, the carrier had an average of 28.7 A320neo family aircraft on ground related to Pratt & Whitney GTF engine reliability issues.
Q2 2025: 26.4 aircraft on ground (average)
Q3 2025: 28.7 aircraft on ground (average)
Peak: 68% of A320neo subfleet grounded (May 2025)
This disruption forced Viva to implement several mitigation strategies, including extending existing leases, accepting contracted new deliveries ahead of schedule, and sourcing short-term and medium-term capacity through wet leases.
The carrier received compensation from Pratt & Whitney for these disruptions, although delays in compensation timing impacted Q3 financial results, with recovery expected in Q4 2025.
Fleet Expansion and Modernization Strategy
Despite the engine challenges, Viva continued its fleet growth trajectory throughout 2025. The carrier ended Q3 2025 with 99 aircraft, compared to 86 aircraft in Q3 2024, representing a 15% fleet expansion.
Fleet Composition (September 2025)
Aircraft Type | Quantity | Percentage of Fleet |
|---|---|---|
Airbus A320ceo | 31 | 31.3% |
Airbus A320neo | 25 | 25.3% |
Airbus A321ceo | 10 | 10.1% |
Airbus A321neo | 33 | 33.3% |
Total Fleet | 99 | 100% |
A321 Family % | 43 | 43.4% |
Neo Family % | 58 | 58.6% |
Viva operates one of the youngest fleets in Latin America, with an average aircraft age of 7.3 years as of September 2025. The carrier’s commitment to modern, fuel-efficient aircraft positions it well for future environmental regulations and cost competitiveness.
According to the carrier’s Q2 2025 earnings report, the fleet expansion included adding 12 net aircraft compared to June 2024, consisting of 5 Airbus A320ceo, 3 Airbus A320neo, and 4 Airbus A321neo aircraft.
Image source: community.infiniteflight.com
Network Strategy and Route Expansion
Viva’s network strategy focuses on maximizing connectivity across Mexico’s major economic regions while expanding international reach. The carrier operated more than 130 routes as of late 2025, serving both underserved city pairs and high-frequency corridors.
Key Operating Hubs
Viva maintains six strategic operating hubs across Mexico:
Monterrey (Original hub since 2006)
Guadalajara
Mexico City International Airport
Cancún
Tijuana (Opened 2018)
Mérida (Opened 2023)
A significant component of Viva’s expansion strategy involves Felipe Ángeles International Airport (AIFA). In April 2025, the carrier announced plans to operate 38 routes from AIFA by the end of 2025, up from 29 in 2024, representing a 31% increase.
Traffic Performance Metrics (Q3 2025)
Available Seat Miles (ASMs): 6.334 billion (up 5.3% YoY)
- Domestic: 5.167 billion
- International: 1.167 billion
Revenue Passenger Miles (RPMs): 5.563 billion (up 3.5% YoY)
- Domestic: 4.626 billion
- International: 936 million
Load Factor (Scheduled): 88.2%
- Domestic: 89.5%
- International: 81.8%
Financial Position and Liquidity Management
Viva maintained a solid financial position despite operational challenges. As of September 30, 2025, the carrier’s balance sheet showed disciplined debt management with strategic flexibility.
Balance Sheet Highlights (September 2025)
Metric | Amount | vs. December 2024 |
|---|---|---|
Cash and Cash Equivalents | $568 million | Down 30.8% |
Total Adjusted Debt | $2.451 billion | Up 2.6% |
Financial Debt | $931 million | Up 26.9% |
Lease Liabilities | $1.520 billion | Down 8.2% |
Net Adjusted Debt | $1.883 billion | Up 20.1% |
Net Leverage Ratio | 2.2x | vs. 1.5x in Dec 2024 |
Cash as % of LTM Revenue | 24.0% | vs. 32.0% in Dec 2024 |
The increase in net leverage reflects both the operational challenges faced during 2025 and strategic fleet investments. CEO Juan Carlos Zuazua emphasized that “our disciplined financial management continues to support a solid balance sheet… This strong position enables us to navigate challenging environments with flexibility while continuing to advance our strategic priorities.”
Risk Management: Hedging Strategy
Viva employs sophisticated hedging strategies to mitigate volatility in fuel costs and foreign exchange exposure. As of September 30, 2025, the carrier had hedged 51.2% of expected jet fuel consumption for 2025 and 42.1% of projected foreign exchange exposure.
This disciplined approach to risk management becomes increasingly important given Mexico’s macroeconomic volatility and global fuel price fluctuations. The carrier’s functional and reporting currency is the U.S. Dollar, which provides natural hedging for dollar-denominated expenses but creates exposure to Mexican peso-denominated revenues.
Industry Context: Mexican Aviation Market Dynamics
The Mexican aviation sector transported 51.3 million passengers from January to May 2025, according to Mexico Business News, representing 3.7% growth year-over-year. Domestic demand has driven the majority of this growth, with Viva capturing significant market share through its ultra-low-cost model.
Viva’s growth trajectory since inception has been remarkable. From 2006 to 2024, passengers grew at a compound annual growth rate (CAGR) of 39.4%, while revenue increased at a CAGR of 49.4%. The carrier reached 27.7 million passengers in 2024, establishing itself as a major force in Mexican domestic aviation.
Regulatory Considerations and Merger Timeline
The Volaris-Viva merger remains subject to regulatory approvals in Mexico and other jurisdictions where both carriers operate. The transaction requires approval from the Mexican Federal Economic Competition Commission (COFECE) and potentially other international regulators, given the carriers’ operations in the United States, Central America, and South America.
Some industry observers, including Upgraded Points, note that the merger could face scrutiny if deemed anti-competitive or if Aeromexico, Mexico’s flag carrier, appeals against it. The combined entity would create Mexico’s largest airline group by passenger volume, which may trigger detailed competitive analysis.
The companies expect the transaction to close in 2026, subject to shareholder approvals from both Volaris and Viva shareholders, as well as customary closing conditions.
Operational Excellence and Corporate Culture
Despite financial headwinds, Viva maintained strong operational metrics throughout 2025. The carrier’s average operating aircraft utilization reached 12.3 block hours per aircraft per day for the nine months ended September 2025, demonstrating efficient asset deployment despite the GTF engine groundings.
Viva has established itself as an employer of choice in Mexico’s aviation sector. In 2024, the carrier achieved the number one workplace culture ranking in Mexico, reflecting its commitment to employee development and satisfaction. This cultural strength becomes particularly valuable during periods of industry consolidation and operational stress.
Outlook for 2026 and Beyond
The merger with Volaris positions Viva for a transformative 2026. The combined airline group will benefit from several strategic advantages:
Enhanced Scale and Efficiency
The merger will create significant economies of scale at the holding company level, reducing fleet ownership costs through improved access to capital markets and strengthened bargaining position with aircraft lessors and manufacturers.
Network Optimization
While maintaining separate brands and operations, the carriers can explore codeshare agreements, frequent flier program integration, and complementary route development to maximize network efficiency.
Financial Resilience
The combined financial strength will provide greater flexibility to weather industry downturns, invest in fleet modernization, and pursue growth opportunities.
Competitive Positioning
The merger strengthens the ultra-low-cost segment in Mexico against full-service carriers and international competitors, supporting the long-term democratization of air travel.
According to IATA’s Global Outlook, the global airline industry expects operating margins of 6.9% and net margins of 3.9% in 2026, providing a favorable backdrop for well-positioned carriers like Viva to execute their strategic plans.
Strategic Priorities for 2026
Viva’s management has articulated clear priorities for the coming year:
Merger Integration Planning: Develop detailed integration plans while maintaining operational independence
GTF Engine Resolution: Continue working with Pratt & Whitney to resolve engine reliability issues and maximize fleet availability
Network Expansion: Capitalize on AIFA growth opportunities and expand international routes
Cost Management: Maintain cost discipline while investing in growth
Financial Strength: Preserve balance sheet flexibility and reduce leverage ratios
Operational Excellence: Sustain high load factors and operational reliability
CEO Juan Carlos Zuazua’s strategic vision emphasizes sustainable profitability: “By focusing on factors within our control, we aim to sustain profitability, preserve financial strength, and deliver a reliable and efficient operation.”
My Final Thoughts
The merger between Viva Aerobus and Volaris represents a defining moment for Mexican aviation. By combining operational strengths while preserving competitive choice, the new airline group positions itself to accelerate the democratization of air travel across Mexico and beyond.
As the industry anticipates the 2026 merger closing, Viva continues demonstrating the operational resilience and strategic flexibility that have characterized its 19-year history, setting the stage for sustainable growth in the years ahead.
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