Viva and Volaris Vie for a Near-Monopoly

If regulators approve their merger, the combined company should be very strong.

Dear readers,

As we wait to learn the fate of the largest U.S. ULCC, I am intrigued by what's happening in Mexico, where two airlines with similar strategies and cost structures announced they intend to merge. Just before many of you took holiday breaks, Viva (formerly Viva Aerobus) said it wants to combine with Volaris — each airline will retain its brand, operating certificate, and headquarters, but they would be owned by a holding company that would control the majority of Mexico’s domestic market share.

“The shareholders of Volaris and Viva will combine their respective holding companies through a merger of equals,” Volaris CEO Enrique Beltranena told analysts on a Dec. 19 conference call, promising “seamless continuity” for both airlines.

I’ll talk about why I think this is a good combination in a moment, but first I must poke at one thing. While I know the term is common in the financial community, I know of very few true mergers of equals. Even if the two merging airlines continue to be run independently, someone has to lead the new group — and in this case, that person is Viva chairman Roberto Alcántara, who will be chairman of the merged company. Even if Alcántara doesn’t favor one airline or the other, over time, you would expect one airline’s culture or style to permeate the group, particularly if one carrier fares better than the other. And if conditions warrant it some day, it’s always possible group management will combine brands and certificates. But that’s something we can watch over time, assuming regulators approve this combination.

For now, the two airlines are leaning into the equality thing. Even though Volaris is larger by revenue ($2.991 billion U.S. in the year ending Sept. 30, 2025, versus $2.365 billion for Viva) and fleet size (53 more airplanes than Viva), the two airlines’ current shareholders intend to equally split ownership of the combined company. The umbrella entity (which today is Volaris’ holding company) will be renamed Grupo Más Vuelos and it will trade on the New York Stock Exchange and the Mexican Stock Exchange. Grupo Más Vuelos will have 12 directors, and at first, half will be nominated by Viva’s owners and the other half by Volaris’ shareholders.

Asked why the two companies set it up this way even though Volaris has more aircraft and earns more revenue, Beltranena gave two reasons: one, Volaris has significantly more debt ($3.071 billion U.S. versus $1.883 billion), and two, the real value for shareholders is in what happens after the merger, not about who owns what on Day 1.

“Both shareholder [groups] will share equally in the upside,” Beltranena said. “And that obviously comes from the value unlocked by operating on a larger scale going forward. This is very important for us.”

Let me tell you some other interesting things about this deal.