Volaris: Oil Shock And A Volatile Path To Recovery

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. remains a high-risk Buy, with 35% upside potential to a $10.43 price target, despite elevated fuel costs and macro headwinds. The upcoming VLRS merger with Viva Aerobus will create a 50/50 ownership structure and aims to strengthen competitive positioning and lease negotiations. High oil prices and inflation are expected to reduce EBITDAR by 10% and free cash flow by 19.1%, with only partial offsets from fee and ticket increases.