Book equity is a thin residual, only about a quarter of the roughly USD 3.8bn enterprise value against roughly USD 3.0bn of IFRS-16-lease-heavy net debt, so small changes in EBITDA or the exit multiple swing the equity by multiples of that move.
Fuel is unhedged and decisive: at the company's own 3Q26 guide of USD 3.50 per gallon the same valuation multiple that supports the base case erases the equity, while a durable easing toward USD 2.90 is the precondition for it, so the stock is best read as a levered option on fuel normalization.
The recovery is real but still loss-making: aircraft-on-ground fell from 41 in January 2026 to 24 by 2Q26 and the contractual fleet shrinks from 155 toward 137 by 2027, generating roughly USD 50mm a year of lease savings, yet full IFRS-16 lease accretion keeps net income negative across the forecast horizon.
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Not investment advice. For informational purposes only.
Published September 2026. Research reflects data available through September 2026.
Download Free ExcerptMexico's largest ultra-low-cost carrier, holding roughly 34% of the domestic market on its own and about 73.5% together with merger counterparty VivaAerobus. It operates 155 Airbus A320-family aircraft across 244 routes and 75 airports through three air-operator certificates, serving Mexico, the United States and Central America at a full-fleet cost per available seat mile of 8.04 cents, among the lowest of any listed airline.
Investment thesis, bull and bear case and key risks, the financial snapshot and three dated catalysts, framed as a levered option on fuel and a merger
The ultra-low-cost business model, fleet and network, revenue composition, ownership and Indigo-Partners governance, management and strategic milestones
Transaction structure and the combined entity, the six-approval regulatory path led by the CNA and Hart-Scott-Rodino, synergy assumptions, combined-company governance and antitrust risk
The Mexican aviation market and ULCC positioning, the Pratt & Whitney GTF industry-wide grounding, the competitive landscape and peers, demand drivers, and the AICM, AIFA and FAA-Category-1 regulatory framework
Revenue, unit economics (TRASM and CASM), profitability by quarter, peer profitability comparison, the balance sheet and IFRS-16 lease leverage, cash flow and liquidity, and the key metrics
EV/EBITDA and EV/EBITDAR on the own-history multiple anchor, the discounted-cash-flow cross-check, the fuel-price sensitivity grid, relative valuation versus peers, and the reconciliation to Street consensus
The GTF aircraft-on-ground normalization path, fuel-price normalization, the VivaAerobus merger timeline and the CNA decision, and the monthly-traffic watch
The risk matrix, unhedged fuel, antitrust and merger risk, GTF normalization slippage, thin and eroding book equity with refinancing risk, and Mexican demand and FX
The thesis stated plainly and what would change our view, plus the full financials, the DCF and multiple assumptions, the event calendar, methodology and data sources
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