- A + | Share :

UPDATE 1-Shares of Mexican airline Volaris soar in market debut

09/18/2013 | Reuters

(Adds details from CEO interview)

By Veronica Gomez and Elinor Comlay

MEXICO CITY, Sept 18 (Reuters) - Shares of Mexican airline
Volaris surged more than 15 percent on
their debut in Mexico and New York on Wednesday, as investors
bet the low-cost carrier would profit from Mexico's expanding
middle class.

The successful Volaris launch - its offer was three times
over-subscribed - comes amid a record year for Mexico's equity
capital market.

Volaris' U.S.-listed shares, which priced at $12 on Tuesday,
were up 15.8 percent at $13.90 in early afternoon trading. The
Mexican-listed shares were up 15.4 percent at 17.90 pesos.

Take-up of the initial public offering was mainly from
institutional investors attracted to the idea of exposure to an
expanding market, said Chief Executive Enrique Beltranena, in an
interview with Reuters.

Volaris' low-cost policy helps protect the company from
economic weakness in Mexico, since even if it loses low-end
customers, it can attract business travelers on a budget,
Beltranena said.

The company has big expansion plans.

"We think we can add 90 cities in Mexico and about 140
internationally" over the next five years, said Beltranena.

The international expansion would focus on the United
States, but the company could also add destinations in Canada,
the Caribbean and Central America, he said.

Volaris in 2011 signed a deal with Airbus for 44
A320 planes through 2020.

Mexico's economy contracted for the first time in four years
in the second quarter, hurt by lower government spending and
sluggish consumption.

Volaris, which launched in 2006 backed by private equity,
listed 28 percent of its capital in the IPO.

Not including an overallotment option, Volaris raised $345
million through a sale of American Depositary Shares listed on
the New York Stock Exchange and local stock certificates listed
in Mexico.

Mexico's airlines have been recovering from the tough times
of the 2009 global recession and the outbreak of H1N1 swine flu
virus, and they were buoyed when national carrier Mexicana
stopped flying in 2010, buried under a pile of debt.

Volaris' successful stock offering follows the IPO of
Mexico's largest carrier, Aeromexico, in early

Volaris rival Interjet, Mexico's No. 2 airline, pulled the
plug on its own plans to sell shares later in 2011 because of
complicated financial conditions. Interjet had been considering
reviving its IPO plans.

Deutsche Bank, Morgan Stanley and UBS were international
joint bookrunners, joined by Santander Investment Securities for
the local offering, the company said.

Mexican companies have been raising equity capital at a
record rate this year. Through July, companies and real estate
investment trusts have raised more than $9.1 billion in equity,
greater than any full year on record, according to Thomson
Reuters data.

(Additional reporting by Michael O'Boyle; Editing by Simon
Gardner and Steve Orlofsky)

© Thomson Reuters 2021 - All rights reserved.

Register With AviationWorldNews : Free e-newsletters

Follow Us