Mexican carrier Volaris sees Pratt & Whitney engine agreement soon

Reuters

Published Oct 25, 2023 11:56AM ET

Updated Oct 25, 2023 04:07PM ET

By Kylie Madry and Aida Pelaez-Fernandez

MEXICO CITY (Reuters) -Mexican airline Volaris expects to reach an agreement with engine maker Pratt & Whitney in the next month on an initial round of mandatory motor inspections, the company's chief executive said on Wednesday.

The inspections, required after RTX Corp-owned Pratt & Whitney discovered a rare powder metal defect, could continue into 2024 and 2025, Volaris Chief Executive Enrique Beltranena said in a call with analysts.

Of Volaris' 126-aircraft fleet, 73 "may be temporarily affected," Beltranena said, representing a major hit to the company.

Pratt & Whitney is expected to shell out billions of dollars to fix the defect, with the vast majority going to airlines.

Volaris will not have clarity on the long-term impact of the inspections until at least the first quarter of 2024, Beltranena added.

However in September alone, Volaris' available seat miles, a measure representing passenger carrying capacity, shrank 8% to represent a revenue hit worth $18 million, he said.

The airline currently has 16 aircraft grounded, Beltranena added.

Volaris trimmed its full-year estimates to reflect the change, with fourth quarter capacity expected to remain "virtually flat" compared to the year-ago period.

The airline had been expecting to boost flights to the United States after Mexico regained a U.S.-given aviation safety rating, which allowed Mexican carriers to expand routes to its northern neighbor.

However, the engine inspections "have affected our ability to relocate aircraft for U.S.-bound routes more than anticipated," Chief Financial Officer Jaime Pous said.

Despite the hit from the engine inspections, Volaris expects to increase international capacity by 19% in the fourth quarter, Executive Vice President Holger Blankenstein said, though some less-profitable routes while be scaled back.