Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

Controladora Vuela Cia De-A / Equity Bottom-Up

<ul>
<li>Mexico's Volaris has announced its 1Q24 and FY24 capacity is likely to be down 16-18% yoy due to GTF engine inspections grounding aircraft.</li>
<li>However, on this reduced capacity, management anticipates a 31-33% EBITDAR margin, up from 26% in 2023, helped by fuel costs down c.9%. We model $1bn EBITDAR in 2024 (2023 $840m).</li>
<li>This dynamic has read across for many short/medium haul markets around the world has capacity constraints are likely to drive up pricing/earnings for affected carriers and also competitors.</li>
</ul>


Mexico's Volaris has announced its 1Q24 and FY24 capacity is likely to be down 16-18% yoy due to GTF engine inspections grounding aircraft.
However, on this reduced capacity, management anticipates a 31-33% EBITDAR margin, up from 26% in 2023, helped by fuel costs down c.9%. We model $1bn EBITDAR in 2024 (2023 $840m).
This dynamic has read across for many short/medium haul markets around the world has capacity constraints are likely to drive up pricing/earnings for affected carriers and also competitors.


Global Airlines: Mexico's Volaris Shows GTF Groundings Can Drive Higher Pricing

Equity Capital Markets

Grupo Aeromexico / Equity Capital Markets

<ul>
<li>Aeromexico reported record profitability in 2023 and we expect another record in 2024.</li>
<li>Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.</li>
<li>The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.</li>
</ul>


Aeromexico reported record profitability in 2023 and we expect another record in 2024.
Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.


Aeromexico – Another Record Year in Prospect in 2024

<ul>
<li>We raise our forecasts to reflect the strength of International revenue at Aeromexico - we expect it to beat 2023 EBITDAR targets by 26%</li>
<li>Aeromexico has been outperforming domestic competitors Volaris, Viva Aerobus due to international unit revenue gains - their forced capacity cuts due to GTF issues should help Aeromexico manage 2024 margins</li>
<li>Fitting with the global theme of consolidation difficulties, the US has ruled the Delta/Aeromexico JV must terminate - this could be a double digit % risk to PBT</li>
</ul>


We raise our forecasts to reflect the strength of International revenue at Aeromexico - we expect it to beat 2023 EBITDAR targets by 26%
Aeromexico has been outperforming domestic competitors Volaris, Viva Aerobus due to international unit revenue gains - their forced capacity cuts due to GTF issues should help Aeromexico manage 2024 margins
Fitting with the global theme of consolidation difficulties, the US has ruled the Delta/Aeromexico JV must terminate - this could be a double digit % risk to PBT


Aeromexico - International Strength Accelerating Progress but Delta JCA Termination a Speed Bump

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Our bullish outlook remains intact and is supported by the absence of breakdowns across major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) and ongoing positive market dynamics. Until this changes, we believe global equities are headed higher in the coming weeks and months.</p>

Our bullish outlook remains intact and is supported by the absence of breakdowns across major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) and ongoing positive market dynamics. Until this changes, we believe global equities are headed higher in the coming weeks and months.

Global Equity Strategy: Stick With Reflation & Reopening Theme

Mexico

Controladora Vuela Compania de Aviacion, S.A.B. de C.V. is a low-cost airline carrier based in Mexico.  The Company offers an unbundled pricing strategy which allows them to provide low base fares and enables its passengers to select and pay for a range of optional products and services for additional fees.

Controladora Vuela Cia De-A (VOLARA MM)

Global Airlines: Mexico's Volaris Shows GTF Groundings Can Drive Higher Pricing

Valuable read across from Mexico's Volaris for all airlines impacted by GTF engine inspections - as well as their closest competitors - as capacity...

Neil Glynn

Aeromexico – Another Record Year in Prospect in 2024

Detailed forecasts for Aeromexico suggest another record year in prospect in 2024 as our deep dive on competitive capacity suggests a benign...

Neil Glynn

Aeromexico - International Strength Accelerating Progress but Delta JCA Termination a Speed Bump

Highlighting the upside to targets from Aeromexico's international revenue momentum, and providing insight into the risk to profitability from the...

Neil Glynn

Global Equity Strategy: Stick With Reflation & Reopening Theme

Our bullish outlook remains intact supported by the absence of breakdowns across major global indexes. Until this changes, we believe global...

Vermilion Research