Volaris (VLRS.N): Post-2Q‘26 Model Update

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Volaris (VLRS.N): Post-2Q‘26 Model Update

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22 Jul 2026 18:41:51 ET │ 16 pages

Volaris (VLRS.N)

Post-2Q'26 Model Update

CITI'S TAKE

Neutral / High Risk We are maintaining our Neutral/HR rating on Volaris, reducing our TP to

$8.00/sh (from $8.80) after incorporating 2Q26 results and its underlying Short-Term View: Downside

messages (see Figure 1, more in the note). We're increasing fuel Price (22 Jul 26 16:00) US$7.85

expectations to reflect the highly volatile environment, but accordingly Target price US$8.00↓

adjusting pricing and capacity estimates to reflect the carrier's disciplined from US$8.80

capacity management, focus on profitable international markets, and Expected share price return 1.9%

pricing pass-through despite the challenges in more elastic Mexico Expected dividend yield 0.0%

domestic. On the other hand, our assumptions now incorporate heavier

Expected total return 1.9% ex-fuel costs related to fleet maintenance, redeliveries and asset

Market Cap US$984M utilization, as implied by 3Q and FY26 guidance. As such, margins are

negatively impacted even if we remain materially higher than guidance,

due to our lower fuel estimates. We also foresee a slower recovery in

2027E from the elevated fleet-related ex-fuel costs, which should keep Filipe NielsenAC

pressuring margins and justify our equity value reduction. We see Volaris +55-11-4009-5213

trading at 4.8x EV/EBITDA 2027E. filipe.nielsen@citi.com

2Q26 earnings call comments — On the call, management reiterated its focus on

profitability and FCF generation, adjusting capacity and pricing carefully to

recapture the higher fuel. Capacity management remains fluid, but the company

expects capacity to grow strong during summer months of July and August, but