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News Article

Viva Aerobus Reports US$49.7 Million Loss in Net Income in 2Q20

Mon, 07/27/2020 - 12:00

Mexico’s low-cost airline Viva Aerobus released today its second quarter report showcasing significant losses in traffic and revenue caused by the COVID-19 crisis. Airlines across the globe have faced trouble as passenger traffic plummeted due to containment measures and Mexico was no exception. Domestic traffic went down as the country’s federal government declared a state of emergency and while Mexico did not close its borders, its international traffic was hit by the border closures of main destinations in the region. These circumstances created the largest challenge Mexican aviation has faced in decades. “Amid a complex and unprecedented environment, the second quarter of 2020 has emerged as one of the most challenging periods for commercial aviation and tourism worldwide,” said Juan Carlos Zuazua, CEO of Viva Aerobus.

Viva Aerobus reported it had seen an 83.6 percent drop in traffic year-on-year during 2Q20, which led to a reduction of 83.9 percent in operating revenue for the period. The company saw MX$478 million (US$21.7 million) in revenue, of which MX$168 (US$7.6 million) came from fares, representing an 89 percent drop, and MX$310 million (US$14.1 million) in ancillary revenue, a 78.6 percent drop. The sharp decrease in demand led the low-cost airline to greatly reduce its offering in April to 20 flights, while it gradually increased its offering to 52 routes in June and later to 90 routes in July as demand gradually increased. Viva Aerobus also implemented several measures aimed at reducing the impact of the outbreak in its operations, including optimizing its capacity, increasing its cargo and charter operations, pausing non-essential expenses and negotiating discounts from suppliers. The airline also implemented intensive sanitary protocols and continues to develop strategies to gain back flier’s confidence. “As a result, we have implemented additional sanitization processes in both aircraft and common areas, using state-of-the-art technology, protocols to maintain healthy distance and procedures to minimize interaction at contact points such as counters and boarding gates, just to mention a few measures,” said Zuazua.

However, the outbreak hurt Viva Aerobus’ EBITDAR and Net Income for the quarter. The airline’s EBITDAR was a negative MX$464 million (US$21.1 million), while its net income was also a negative MX$1.1 billion (US$49.7 million). The airline is facing a complex situation due to the pandemic but appears optimistic in its report. “Our business model, grounded on operating efficiency and the lowest cost structure in the continent has provided us with the strength to face the challenges of the pandemic.”