What Grupo Aeromexico (AERO) Said on Its Q3 Earnings Call

Key Points

• Record Q3 performance: Grupo Aeroméxico generated $1.62 billion in revenue, up 13.6% year over year, and achieved a 12% operating margin despite fuel costs rising 58%. Strong international demand, premium sales and higher loyalty-program participation supported results.
• Balance sheet strengthened: The airline generated $542 million in operating cash flow, reduced debt by $7 million and ended the quarter with $965 million in cash. Its expanded revolving credit facility lifted total liquidity to $1.2 billion.
• Growth outlook remains positive: Aeroméxico expects fourth-quarter capacity to rise 7%–8% and revenue to grow 14%–16%, driven largely by wide-body expansion to Europe and Asia. Management maintained strong full-year projections and said demand remains healthy across leisure and corporate travel.

Grupo Aeromexico NYSE: AERO reported record third-quarter revenue and a 12% operating margin as strong international demand, premium-product sales and loyalty-program growth helped the airline absorb much of a sharp increase in fuel costs.

Chief Executive Officer Andrés Conesa said the company generated an EBIT margin of 12% during a quarter marked by volatile and higher-than-expected jet fuel prices. Revenue exceeded the midpoint of the company’s June guidance range, while capacity rose about 1% from a year earlier.

“Demand remained healthy, supported by a successful peak season that extended through September and delivered outstanding load factors,” Conesa said. August load factor reached 90%, while September load factor was 87%, which Conesa described as strong for a shoulder-season month.

Record revenue supported by international markets

Chief Commercial Officer Aaron Murray said total third-quarter revenue reached a record $1.62 billion, up 13.6% year over year. International revenue increased 17.4%, led by long-haul markets in the United States region, while domestic revenue rose 6.7% as the company moved beyond what executives described as a temporary negative impact from the World Cup during June and July.

Premium revenue represented 42% of total revenue, up 1 percentage point from the prior year. Participation in the Aeroméxico Rewards loyalty program reached 40%, an increase of 8 percentage points year over year and 19 points since the program was reacquired and rebranded in 2023. Redemption revenue climbed 27%.

The company also cited progress in direct online sales and its branded-fare strategy. Direct online share remained at an all-time high of 48%, up 2 percentage points from a year earlier and 23 points from 2019, according to Murray.

“These initiatives are giving us greater control over how we present, differentiate, and monetize our products,” Murray said, adding that the carrier’s fare structure allows it to support premium sales while competing for more price-sensitive customers.

Fuel and foreign exchange pressures weighed on costs

Chief Financial Officer Ricardo Sánchez Baker said revenue rose by $194 million year over year, more than offsetting a $171 million increase in fuel costs. Fuel expense increased 58% as fuel prices averaged nearly $4 per gallon, compared with $2.50 in the third quarter of 2025. Fuel costs were about $93 million higher than the level contemplated in Aeroméxico’s prior guidance.

However, the revenue increase did not fully offset the combined effect of fuel, inflation-related non-fuel expenses and foreign-exchange movements. Total operating expenses rose 22%, while operating expenses excluding fuel increased 10%, driven primarily by the stronger Mexican peso, inflationary pressures and fleet-growth costs.

The airline said its fleet efficiency helped limit the impact: fuel consumption declined 2%, and fuel burned per available seat mile improved 3%.

Aeroméxico updated its loyalty-program breakage assumptions during the quarter, its first such alignment since 2018. The update resulted in the recognition of $49 million of revenue and an adjustment to deferred liabilities. Sánchez Baker said the change reflected current member activity and long-term program trends.

Adjusted EBITDAR totaled $389 million, for a 24% margin. Operating income was $190 million, producing the 12% operating margin.

Liquidity strengthened as debt continued to decline

Through Sept. 30, Aeroméxico generated $542 million in net cash from operating activities. The company repaid another $7 million in debt during the third quarter and ended the period with $965 million in cash and cash equivalents, up $31 million from a year earlier.

The carrier also renewed and increased its revolving credit facility to $250 million from $200 million, bringing total liquidity to $1.2 billion, or 21% of trailing 12-month revenue. Conesa said financial debt, including leases, remained on a downward trajectory as the company continued its investment program without raising additional debt.

Sánchez Baker said the company expects to continue funding capital expenditures, reducing financial debt and maintaining stable cash balances through the end of the year.

Fourth-quarter outlook calls for faster capacity and revenue growth

For the fourth quarter, Aeroméxico expects capacity growth of 7% to 8% year over year and revenue growth of approximately 14% to 16%. The company guided for an adjusted EBITDAR margin of 19.5% to 21.5% and an operating margin of 7.5% to 9.5%.

The outlook assumes an average all-in fuel price of about $4.50 per gallon and an exchange rate of approximately 18 Mexican pesos per U.S. dollar. The company expects fuel costs in the fourth quarter to remain broadly flat from a year earlier.

Management said roughly 70% of planned fourth-quarter capacity growth will come from wide-body flying, including long-haul expansion in Europe and Asia enabled by recent Boeing 787 deliveries. Domestic capacity is expected to increase 3% to 4%, supported by an increase in Mexico City airport slots to 46 per hour from 44.

For the full year, Aeroméxico expects capacity growth of roughly 2% to 3%, revenue growth of 13.5% to 14.5%, an adjusted EBITDAR margin of 21.5% to 22.5%, and an operating margin of 8.5% to 9.5%.

Executives said demand remains strong across leisure and corporate travel, with particular strength in Europe, Asia and U.S. markets. Murray said the company has not seen signs that demand is weakening as it pursues fuel-recapture actions through pricing and revenue-management initiatives.

Conesa also said the U.S. Department of Transportation’s decision to revoke its prior order affecting certain Mexican carriers gives Aeroméxico greater flexibility to add Mexico City-U.S. frequencies and services, subject to regulatory requirements. The company is evaluating opportunities, though Conesa said additional U.S. expansion would not occur this year and could begin in 2027.

Aeroméxico announced additional routes planned for 2027, including Mexico City-Milan, Guadalajara-Paris, Nassau and Montego Bay. The company also said Cirium again recognized it as the world’s most on-time airline during the third quarter.

About Grupo Aeromexico (NYSE:AERO)

Grupo Aeroméxico, SAB. de C.V. is a Mexico-based airline holding company and the parent of Aeroméxico, one of Mexico's principal air carriers. The company provides scheduled passenger transportation, air cargo services and related aviation offerings, serving destinations within Mexico and international markets.

Aeroméxico operates a network connecting Mexico with the United States, Canada, Central and South America, Europe and other selected international destinations. Its services are supported by regional operations, including Aeroméxico Connect, and the company is a member of the SkyTeam airline alliance, providing customers with access to a broader global network through partner carriers.

Founded in 1934, Aeroméxico is headquartered in Mexico City and operates its principal hub at Mexico City International Airport, with additional focus cities and operating bases across Mexico.

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