Aeromexico sees more robust growth in Q4 and 2014

Washington DC
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Aeromexico is optimistic in its outlook for the rest of 2013, as it acknowledges that slowing economic growth in Mexico has placed pressure on domestic yields.

"The last three months [of 2013] will be more robust," says Aeromexico chief executive Andres Conesa in an earnings call on 23 October to discuss the carrier's third quarter financial results.

Forward bookings indicate a more positive outlook for the last quarter and for 2014, he adds. "It is an improvement versus what we saw last year," says Conesa. The Mexican economy had decelerated in 2013, with the Mexican government lowering its 2013 economic growth forecast for Mexico to 1.7% from 3.1% during the third quarter.

Domestic passenger traffic grew 7.8% in the first eight months of 2013, down slightly from the 8.8% growth posted in the same period last year, says Conesa, citing Mexican civil aviation authority figures.

The airline's systemwide yields declined by 8.9% during the quarter, while the passenger load factor rose 3.2 percentage points to 80.3%. Revenue per available seat kilometre (RASK) declined 2.2% year-on-year. The airline attributes this result to its ongoing revenue management strategy to optimise RASK, which calls for lowering fares in order to win more passengers.

Conesa says this has helped the airline improve its domestic market share. The carrier also posted record international passenger revenues in the third quarter, which accounted for 50.1% of total passenger revenues. This was the first time that international revenues accounted for more than half of the carrier's total passenger revenues, says Conesa.

Aeromexico plans to grow capacity by 8% in 2014, primary due to the addition of larger sized aircraft. The airline will add seven aircraft to end 2014 with 123 aircraft in its fleet. It will end 2013 with 116 in-service aircraft.