Financial Data and Key Metrics Changes - Total revenue for Q3 2025 reached $1,400,000,000, with an adjusted EBITDAR margin of 31% and an operating margin of 18%, marking the second best third quarter in the company's history [10][26] - Adjusted EBITDA totaled $442,000,000, reflecting a margin of 31%, which is the second highest third quarter adjusted EBITDA on record [25][26] - Net income was $97,000,000 in Q3, representing a 7% net margin [26] - Total operating expenses increased by 2.5% year over year, primarily due to higher depreciation and amortization from fleet additions [24][25] Business Line Data and Key Metrics Changes - Passenger revenue decreased by 4.9% year over year, but showed a 1.7% improvement compared to Q2 2025 [15] - Domestic passenger unit revenue was flat, while international results were strong with profitability across all regions [16][17] - Premium unit revenue outperformed main cabin by five points year over year, indicating growing demand for premium products and services [19] Market Data and Key Metrics Changes - Domestic performance was impacted by currency, economic, and geopolitical headwinds, particularly in border cities due to changes in U.S. immigration policy [16] - U.S. capacity increased by 15% during the first half of 2025 but was flat for Q3, with expectations of continued improvement in passenger unit revenue [18][22] Company Strategy and Development Direction - The company remains focused on delivering high-quality, sustainable results, strengthening its competitive position, and creating lasting value for shareholders, customers, and employees [14][30] - Investment plans include modernization of the fleet and enhancing customer experience, with the addition of four Boeing 737 MAX aircraft during the quarter [13][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute effectively in a challenging environment, with expectations for sequential improvement in passenger revenue and unit revenue performance in Q4 [22][30] - The company anticipates passenger revenue to increase by 3% to 5% year over year in Q4, supported by favorable industry capacity trends [21][29] Other Important Information - The company reported $934,000,000 in cash on hand, complemented by a $200,000,000 undrawn revolving credit facility, resulting in total liquidity of $1,100,000,000, which accounts for 21% of revenue over the past twelve months [27] - The company is committed to maintaining strong financial flexibility and evaluating opportunities for capital distribution to shareholders in the future [47][30] Q&A Session Summary Question: Guidance on RASM and regional performance - Management expects positive unit revenue on both domestic and international fronts, with strong performance anticipated in the domestic beach portfolio and the U.S. region [33][34] Question: Confidence in U.S.-Mexico resolution - Management is hopeful for a resolution regarding bilateral issues and is in close contact with government officials [36][38] Question: Capacity growth expectations for next year - Management indicated potential for growth in capacity, particularly in the summer IATA season, while not providing specific guidance for 2026 [42][44] Question: Capital allocation and shareholder distribution - Management mentioned strong free cash flow generation and the potential for evaluating additional opportunities for capital distribution to shareholders in the future [46][47] Question: Details on 2024 normalized results - Management clarified that 2024 included nonrecurring items, particularly related to unused tickets and Boeing compensation, which should be considered when comparing results [50][54]
Grupo Aeromexico(AERO) - 2025 Q3 - Earnings Call Transcript