Grupo Aeromexico (NYSE:AERO) reported first-quarter 2026 results that management said were broadly consistent with expectations despite fuel price volatility and temporary demand disruptions in parts of Mexico, while also outlining a more pressured second-quarter outlook tied to elevated jet fuel costs.
First-quarter performance shaped by fuel prices and temporary disruptions
Chief Executive Officer Andrés Conesa said the company faced “several external headwinds,” including “temporary demand disruptions in certain regions of Mexico and a significant surge in fuel prices,” but still delivered results “generally in line with our original guidance.” Conesa added that Aeroméxico’s ability to generate higher premium revenue has supported performance amid volatility.
From an operational standpoint, Conesa said Aeroméxico was recognized by Cirium as “the most on-time airline in the world in the first quarter of 2026,” building on prior global rankings in 2024 and 2025.
Revenue mix supported by international demand, loyalty growth, and premium mix
Murray said strength was “particularly” evident internationally. International revenue rose 13.6% year-over-year, led by long-haul markets in Europe, Asia, and South America. Domestic revenue increased 12.7% year-over-year, which Murray attributed to improved comparisons versus last year’s “immigration-related impact on border markets” and better performance in beach markets.
Management also highlighted progress in loyalty and direct distribution. Murray said Aeroméxico Rewards hit a new record, with 38% of passengers participating in the program, “up 10 points year-over-year and 15 points since the program’s reacquisition in 2023.” He added redemption revenue grew 22% year-over-year.
Digital and merchandising initiatives also contributed to mix and channel performance, according to Murray. Direct online share reached 48%, up three points year-over-year and 23 points versus 2019, while premium revenue mix reached 42%, up one point year-over-year and 18 points versus 2019.
Margins, cash generation, and balance sheet position
Conesa said unit revenues rose 15% year-over-year and the airline delivered an operating margin of 11%, within the previously communicated guidance range. Chief Financial Officer Ricardo Sánchez Baker similarly reported total unit revenue (TRASM) grew 15% compared to 2025.
Sánchez Baker said adjusted EBITDA totaled $336 million, representing a 25% margin and a 5% increase versus the first quarter of 2025, despite what he estimated as a $36 million adverse effect from higher fuel prices and demand disruptions in specific Mexican regions. Operating income was $142 million, also equating to an 11% margin and consistent with the prior-year period.
On costs, Sánchez Baker said operating expenses increased 16% year-over-year, driven primarily by fuel and compounded by currency effects, citing a 14% appreciation of the peso that pressured the cost base.
Management emphasized liquidity and leverage as key advantages entering a volatile environment. Conesa said liquidity exceeded $1.2 billion, while Sánchez Baker detailed that the quarter ended with “over $1 billion in cash” plus a $200 million undrawn revolver, totaling $1.2 billion, or 23% of last-12-months revenue. He said liquidity was $178 million higher than the same quarter last year and $21 million higher than year-end 2025, despite first-quarter seasonality.
Sánchez Baker said the company generated more than $200 million in net operating cash flow and reduced financial debt by close to $10 million. Adjusted net debt to EBITDA ended the quarter at 1.7x, improving versus year-end.
Fuel recapture strategy and network flexibility
Fuel volatility was a central topic, with management focusing on pricing actions and capacity adjustments. Conesa said Aeroméxico’s fuel exposure is structurally lower than many peers, noting fuel represented about 21% of total revenue in 2025, and said the company would continue “fuel recovery initiatives, including targeted fare adjustments.” He also reiterated that approximately 70% of revenue is generated in international markets, which management views as more responsive for fuel pass-through.
In Q&A, Conesa said translating fuel increases into fares has been “much more efficient” internationally than domestically. Murray added the airline achieved “great recapture across the board” internationally, particularly in the long-haul widebody network, which he said represents about 40% of capacity. He said the company had not seen “any cracks in demand” in international markets where fuel-related fare increases have been implemented.
On transborder U.S. flying, Murray said disruptions earlier in the quarter were concentrated in U.S. point of sale, but demand has held up and the company has seen “quite strong recapture.” He estimated the U.S. transborder market represents about 22% of capacity, adding that any softness in U.S. point of sale has been offset by Mexico point of sale.
Conesa also noted timing challenges in the first quarter: when the Middle East conflict began in late February/early March, he said 80% of remaining first-quarter tickets were already sold, limiting near-term pass-through. He referenced an average advance purchase period of about 35 days, saying pricing adjustments become more visible “once you get to the new cycle.”
On capacity actions, Murray said the company removed roughly half a percentage point of second-quarter capacity as it reduced “non-core lower margin flying.” In response to a question about where cuts are easiest, Murray said point-to-point flying outside Mexico City was “the easiest to pare down,” while Conesa emphasized protecting the airline’s slot portfolio at Mexico City International Airport (AICM). As an example, Conesa said Aeroméxico will not operate Atlanta–San Luis Potosí, describing it as not covering cash costs and outside Mexico City.
Second-quarter guidance and cash flow expectations
Management characterized the second quarter as a period of peak pressure from fuel costs. Conesa said the company expects to recover about 50% of incremental fuel costs in the second quarter, with recapture rising to around 70% in the third quarter and 100% in the fourth quarter as pricing and network actions flow through.
Sánchez Baker provided second-quarter guidance, calling for capacity growth of about 1.5% to 2.5% year-over-year and revenue growth of 12.5% to 15.5% year-over-year. The company expects an adjusted EBITDA margin of 17% to 20% and an operating margin of 4% to 7%.
Asked about the fuel price underlying guidance, Conesa said the company is using a range “roughly around $4 per gallon,” with a midpoint around $4.
On cash flow, Sánchez Baker said the airline expects the second quarter’s seasonal strength (with customers buying summer travel in May and June) to offset fuel-related pressure, resulting in “no material variation” in cash balances by quarter-end. He added that if conditions normalize in line with the forward curve, the third quarter should be “flattish” and the fourth quarter positive for cash generation.
For the full year, management said it was too early to revise guidance amid volatility. Conesa said the company intends to update full-year guidance when visibility improves and indicated it may provide an update before the next earnings release.
About Grupo Aeromexico (NYSE:AERO)
Grupo Aeroméxico is the parent company of Aeroméxico, Mexico’s long-established flag carrier and commercial airline group. The company operates scheduled passenger and cargo services, with a network that connects domestic destinations across Mexico and international markets in the Americas, Europe and Asia. Grupo Aeroméxico’s operations include mainline services as well as regional flying through its regional affiliates, airport ground-handling and cargo divisions that support its commercial network.
The carrier deploys a mix of narrow-body and wide-body aircraft to serve short-, medium- and long-haul routes, using single-aisle jets for domestic and regional markets and wide-body equipment for transcontinental services.
