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Over the last few months, airlines and other travel-oriented companies (hotels, rental cars, cruise) have seen their stocks hammered by the pandemic and the uncertainty surrounding the time needed for customers to return. Volaris (NYSE:VLRS) gets grouped into the same bucket and as a result has been tarred, often incorrectly, with the same brush. My intent is to make the case for how Volaris is different than other airlines and why, from my analysis, the future is bright for this Mexican carrier.
A Brief History
The business plan for Volaris was developed from 2003-2005 with the inaugural flight taking place on March 13th, 2006. For the next seven years, the company continued to grow and weather the recessionary and fuel-price storms. In September 2013, the company went public on both the NYSE and Mexico Bolsa. Since then, the company's size and overall competitive position have improved, but the stock performance has been volatile and inconsistent. It's worth exploring what caused this performance and why I believe these issues are largely behind the company.
Source: CNBC stock graph, independent analysis
The decline in share price from March 2016 ($22 per share) until it reached a low in June of 2018 ($5.35 per share) can be attributed to two broad categories:
1. Politics. During the 2016 U.S. Presidential election cycle, Donald Trump became the nominee, and a meaningful part of his platform impacted Mexico. The first key issue was border security and his intent to build a wall across the U.S./Mexico border, and the second was a complete rewrite of the North
