Aeroméxico Files for Initial Public Offering in the U.S.

Yesterday, Grupo Aeroméxico filed a Form F-1 with the U.S. Securities and Exchange Commission (SEC), seeking to conduct an initial public offering of shares on the New York Stock Exchange (NYSE), moving away from its previous listing on the Mexican Stock Exchange, which it left in December 2022.

The listing will be under the symbol «AERO» and includes Barclays Capital, Morgan Stanley, J.P. Morgan Securities, and Evercore Group as the main underwriters of the operation. The price of the ADS (American Depository Shares) has not yet been revealed, although it was determined «through negotiations between us and the underwriters’ representatives» and «among the factors considered to determine the offering price were our historical operating results, our current financial condition, our future prospects, our markets, economic conditions and future prospects for the industry in which we operate, our management, and the prevailing general conditions in the equity securities markets in Mexico and the United States, including current market valuations of publicly traded companies considered comparable to our company, and the multiples used to value companies in our industry».

After facing losses close to USD 2 billion during the peak of the pandemic in 2020, Aeroméxico emerged from reorganization under the Chapter 11 of the United States Bankruptcy Law with significant changes that have paved its path towards recovery and growth.

The company estimates it achieved savings of USD 450 million in 2023 compared to 2019, mainly related to the renegotiation of aircraft and engine leases, new labor, commercial, and administrative agreements, as well as other cost efficiencies to shift many of them from fixed to variable costs.

During the first quarter of 2024, the CASK (excluding fuel) was 5.6 cents per dollar, compared to 8.4 cents for legacy U.S. airlines and 8.1 cents for European ones.

In 2023, revenues reached USD 4.916 billion, 37.6% more than in 2019, with an operating profit of USD 715.8 million, 379.4% more. In the first quarter of 2024, the operating profit was 192.2% higher than in the same period of 2023, reaching USD 202.4 million.

In its presentation to the SEC, Grupo Aeroméxico highlights its positioning as the only full-service airline based in Mexico, which allows it to capture the premium segment of the second largest commercial aviation market in Latin America and the Caribbean. This places its RASK at values 80% higher than those of Volaris and Viva Aerobus, its low-cost competitors.

In 2023, Aeroméxico transported 24.7 million passengers, 13% more than in 2022 and almost 20% more than in 2019, which marks the resilience of the Mexican commercial aviation market, one of the few in the world where no air travel restrictions were imposed during the pandemic.

The capacity (in ASK) grew by 10.03%, while demand (RPK) increased by 17.3%, pushing the occupancy factor up by 5.3 percentage points to 85.4%.

The company flies to 49 cities in Mexico and 43 cities in 22 countries. It employs 16,404 people, and its fleet consists of 8 Boeing 787-8s, 12 787-9s, 34 737-800s, 34 737 MAX 8s, and 19 737 MAX 9s. Aeroméxico Connect has 37 E190s. The average age is 8.3 years.

Its main shareholders include Apollo fund (22.4%); Delta Air Lines (20%), also a partner in the cross-border agreement of the massive Mexico-United States market awaiting renewal by the Department of Transportation; funds managed by Silver Point Capital (9.7%); SVP Funds (7.7%); and funds from Banco Actinver (5.9%), with the rest held by other smaller investors.

See document: Grupo Aeroméxico’s F-1 presentation to the U.S. SEC