Aero,exico remain Mexico’s flagship carrier, but faces competition from low-cost carriers. File Photo by Jose Mendez/EPA
Dec. 19 (UPI) — Mexican low-cost airlines Volaris and Viva Aerobus announced an agreement to create a new holding company through a merger of equals — a deal aimed at expanding low-fare air travel and strengthening Mexico’s air connectivity with the United States and Latin America.
The transaction will combine the parent companies of Volaris and Viva into a single entity, while each airline will continue to operate independently under its own brand, air operator certificate, leadership structure and route network.
Once the deal closes, shareholders of each company will hold 50% of the new group on a fully diluted basis. Viva shareholders will receive newly issued shares of Volaris’ holding company, while Volaris shareholders will retain their existing shares, according to DF SUD.
The boards of both airlines unanimously approved the transaction. The deal is subject to regulatory and shareholder approvals and is expected to close in 2026. Shares of the holding company will continue to trade on the Mexican Stock Exchange and the New York Stock Exchange.
The new group would become Mexico’s largest low-cost airline platform and a regional player with growing relevance for travelers seeking cheaper options across North America and Latin America.
Volaris shares jumped more than 20% after the announcement, driven by expectations of operational efficiencies and cost reductions.
Volaris is a publicly traded company backed by U.S.-based Indigo Partners, which also controls Frontier Airlines in the United States and JetSmart in Chile.
Viva Aerobus is privately held and controlled by Mexican transportation group IAMSA, led by businessman Roberto Alcantara Rojas, who will serve as chairman of the new holding company
Both airlines operate all-Airbus fleets and focus on a low-cost, point-to-point business model. Their main competitor in Mexico’s domestic market is Aeromexico, the country’s flag carrier.
The agreement comes amid a complex period for Mexican aviation and air relations with the United States. In October, the U.S. Department of Transportation rejected more than a dozen routes proposed by Mexican airlines, citing disputes over slot management at Mexico City’s main airport and the relocation of cargo operations to a more distant terminal.
In November, President Claudia Sheinbaum said Mexican airlines would give up some airport slots to U.S. competitors. U.S. airlines currently account for more than half of international passenger traffic between the two countries, while Mexican carriers represent less than 30%.
Industry analysts say the creation of the new holding could strengthen Mexico’s position in the regional market without, for now, triggering a full operational merger that could face stronger regulatory opposition.