Mexican Airlines Volaris And Viva Aerobus Agree To Merger

Mexico's two busiest airlines, Volaris and Viva, said on Thursday they have agreed to merge, creating a new low-cost airline group that would become the country's largest domestic carrier. The carriers will continue operating under their existing brands, preserving independent commercial operations while combining ownership at the holding-company level.

The companies expect the deal to close in 2026. The deal will need the blessing of antitrust regulators, and will likely attract opposition from Aeromexico, which is currently the largest Mexican carrier for international travel and takes about a third of domestic business, as do Volaris and Viva.

Under the terms of the agreement, the companies will combine their holding entities in a merger of equals. Viva shareholders will receive newly issued shares in Volaris' holding company, while existing Volaris investors will retain their stakes, leaving each side with 50% ownership.

The deal comes amid recent years of turbulence for Mexico's aviation market, including disputes with U.S. regulators. In October, the U.S. Department of Transportation rejected more than a dozen flight routes proposed by Mexican airlines to the U.S., citing disagreements over Mexico's handling of flight slots at the country's main capital airport and its decision to move cargo flights to a more distant facility.

In November, Mexican President Claudia Sheinbaum said Mexican airlines would cede some of their slots at the capital airport to their U.S. competitors. U.S. operators hold more than half of Mexico's international market share by passengers carried in the year through October, while Mexican airlines account for just under 30%. ($1 = 17.9913 Mexican pesos)