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Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR (AERO)
NYSE:AERO
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Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR
(NYSE:AERO)
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Rating:58Neutral
Price Target:
$20.50
▲(8.41% Upside)
Action:ReiteratedDate:02/18/26
The score is held back most by balance-sheet risk (negative equity and meaningful/volatile debt) despite improved profitability and operating cash flow. The latest earnings call supports the outlook with constructive 2026 guidance, strong liquidity and better leverage, while technicals are currently weak. Valuation is a notable positive due to the very low P/E.
Positive Factors
Record Profitability
Record adjusted EBITDAR and historically high margins indicate structurally improved unit economics and better cost/revenue mix. High-margin operations create more durable cash flow cushions through cycles, enabling reinvestment and debt paydown even if top-line growth slows.
Improved Cash & Leverage
Sustained positive operating cash flow and a materially lower adjusted net leverage (~1.8x) enhance financial resilience. Strong liquidity supports capex, fleet renewal and shareholder returns while reducing refinancing risk in a cyclical industry over the medium term.
Premium Mix & Loyalty
A high premium revenue share and rising loyalty participation point to structural revenue quality and pricing power. This mix improves yield resilience across cycles, supports higher unit revenues, and strengthens customer retention as fleet and product investments scale.
Negative Factors
Weak Balance Sheet
Persistently negative equity and sizable, volatile debt limit financial flexibility and increase vulnerability to demand shocks. Even with better operating results, negative equity complicates covenant negotiations and raises refinancing risk in downturns, constraining strategic options.
Rising Unit Costs
Structural upward pressure on CASM ex-fuel from labor contracts and higher depreciation reduces margin upside and narrows the buffer from revenue gains. Over time, persistent cost inflation can limit free cash flow growth and slow deleveraging absent sustained revenue outperformance.
Regulatory Route Constraints
Regulatory limits on U.S. route rights from Mexico City constrain network expansion and long-haul revenue potential. If prolonged, these constraints impair growth from the airline's primary hub, reducing scale benefits and limiting the long-term returns from fleet and product investments.
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR (AERO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.76B
Dividend YieldN/A
Average Volume (3M)364.13K
Price to Earnings (P/E)2.8
Beta (1Y)2.55
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees17,143
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)0.68
Shares Outstanding145,903,410
10 Day Avg. Volume440,093
30 Day Avg. Volume364,132
Financial Highlights & Ratios
PEG Ratio-0.19
Price to Book (P/B)-5.06
Price to Sales (P/S)0.56
P/FCF Ratio0.00
Enterprise Value/Market Cap2.10
Enterprise Value/Revenue1.08
Enterprise Value/Gross Profit4.34
Enterprise Value/Ebitda3.70
Forecast
1Y Price Target
$30.50Price Target Upside61.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)2.24
Revenue Forecast (FY)$5.67B
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR Business Overview & Revenue Model
Company DescriptionGrupo Aeroméxico, S.A.B. de C.V., through its subsidiaries, provide public air carrier services for passengers and goods. It offers scheduled passenger air carrier services, cargo air carrier services, and other services. The company also offers loyalty programs. Its network of destinations includes Mexico, the United States, South America, Central America, the Caribbean, Canada, Europe, and Asia. The company was founded in 1934 and is based in Mexico City, Mexico.
How the Company Makes Money
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call presented a broadly positive operational and financial picture: record and historic margin achievements, strong cash generation, improved leverage, fleet investments and robust guidance for 2026. These positives offset earlier-year demand softness, a modest rise in CASM ex-fuel (1.8%), and regulatory/FX-related risks. Management emphasized disciplined capacity deployment, premium-led revenue momentum and significant liquidity, while acknowledging one-time items and operational constraints that temper near-term margin expansion.Q4-2025 Updates
Positive Updates
Record Adjusted EBITDAR and Margins
Full year 2025 adjusted EBITDAR reached $1.7 billion with a 31% margin (highest in company history). Fourth quarter adjusted EBITDAR was $502 million with a 35% margin (highest quarterly EBITDAR on record). Excluding TechOps sale and IPO expenses, full year adjusted EBITDAR was $1.6 billion with a 30% margin and Q4 was $435 million with a 30% margin.
Strong Operating Income and Margins
Full year operating income was $928 million with a 17% margin (second strongest annual result). Fourth quarter operating income was $303 million with a 21% margin. Excluding one-time items, full year operating income was $861 million (16% margin) and Q4 was $236 million (16% margin).
Revenue Growth and Q4 Revenue Records
Total revenue for 2025 was $5.4 billion, a 2% increase vs. 2024 when excluding extraordinary nonrecurring items. Fourth quarter revenue reached $1.4 billion, up 3% YoY excluding nonrecurring items. Q4 passenger revenue and passenger unit revenue were record-breaking, up 4.3% and 6.2% YoY, respectively.
Robust Cash Generation and Improved Leverage
Full year operating cash flow was $913 million. Financial debt was reduced $156 million over the year; adjusted net debt-to-EBITDA ended at 1.8x. Cash and equivalents totaled $1.0 billion and, including an undrawn $200 million revolver, total liquidity was ~$1.2 billion (≈23% of L12M revenues).
Fleet Renewal and Passenger Growth
Aeromexico transported ~25 million passengers in 2025 and ended the year with 165 operating aircraft, a net increase of 17 aircraft vs prior year, supporting improved reliability and future operating leverage.
Commercial Momentum — Premium and Loyalty
Premium revenue represented ~42% of total revenues (≈17 percentage points above pre-pandemic). Loyalty participation reached a record 37% in Q4 (up 7 points YoY and 13 points since 2023 rebrand), and premium unit revenue growth outpaced main cabin by ~6 points in Q4.
Industry Recognition and Operational Reliability
Aeromexico was named the world's most on-time airline by Cirium for 2025, received APEX 5-star Global Airline for the seventh consecutive year and APEX North America's Best Global Airline (first time), and achieved top-level IATA safety management assessment — first in Latin America and second in the Western Hemisphere.
Positive 2026 Guidance
Management guided 2026 ASM growth of ~3%–5% (company commentary also cited ~4%), revenue growth of 7.5%–9.5%, adjusted EBITDAR margin of 28.5%–30.5% and operating margin of 15%–17%. First quarter 2026 revenue growth was guided at 10%–12% YoY with adj. EBITDAR margin 26%–28%.
Strategic Capital Allocation and Shareholder Returns
Returned over $200 million to shareholders in 2025, bringing total distributions since December 2023 to ~$1.3 billion. Continued investments in fleet modernization, app rollout, customer experience and targeted CapEx (~$500 million program referenced).
Clear FX and Fuel Assumptions in Guidance
Guidance assumptions include an average FX of MXN 18.3/USD and Brent ~$69/barrel (with a crack spread ~ $25/bbl), providing transparency around planning assumptions.
Negative Updates
CASM Ex-Fuel Increase
Cost per ASM excluding fuel (CASM ex-fuel) rose 1.8% YoY, driven by higher labor costs from collective bargaining renegotiations, increased depreciation from fleet additions, IPO-related expenses and peso appreciation affecting peso-denominated costs.
Regulatory Constraints on U.S. Operations
Ongoing regulatory restrictions related to U.S. route rights from the Mexico City metropolitan area (open skies / cargo/airport disputes) currently limit the ability to add new U.S. routes from Mexico City. Management noted this could be a problem if it extends beyond 2026 and may constrain growth from that airport.
Peso Appreciation Impact on Costs and Margins
Stronger Mexican peso raised peso-denominated costs and created a mathematical effect that can depress dollar-denominated margins even as absolute EBITDAR and EBIT grow. Management noted FX moves can create short-term margin headwinds.
One-Time Items and Related Volatility
Fourth quarter included extraordinary income from the TechOps sale (~$71 million profit), and there were IPO-related expenses; excluding these items, adjusted results are lower — signaling some volatility from nonrecurring transactions.
Earlier Demand Weakness and Need to Rightsize Capacity
Aeromexico had to rightsize capacity in early 2025 in response to weaker demand in certain geographies (domestic border cities and U.S.), contributing to softer first-half performance before recovery in H2 and Q4.
Crew and Utilization Constraints
Management highlighted limited crew availability and below-peak narrow-body utilization (~9 hours/day) versus prior levels (~10 hours/day), constraining the pace at which idle capacity can be activated without stressing operations.
Margin Pressure Despite Revenue Guidance
Although revenue guidance is strong (7.5%–9.5% for 2026), management expects margins to be stable rather than significantly expand, reflecting cost pressures (labor, depreciation, FX) and the mathematical impact of FX on margin percentages.
Uncertainty Around Domestic Market Competitive Dynamics
Potential Viva/Volaris merger and regulatory remedy outcomes create uncertainty; management noted possible domestic capacity rationalization but timing, remedies and net impact remain unclear.
Full Year Passenger Revenue and Unit Revenue Decline
Full year 2025 passenger revenue declined 4.4% YoY and passenger unit revenue declined 4.9% YoY, primarily due to currency, economic and geopolitical headwinds earlier in the year that hit domestic border cities and the U.S. market.
Company Guidance
Aeromexico guided to modest, profitable growth in 2026: ASM/capacity up 3–5% (around 4%), full‑year revenue +7.5% to +9.5%, adjusted EBITDAR margin 28.5%–30.5% and operating income margin 15%–17%. For Q1 2026 they expect revenue +10% to +12%, adjusted EBITDAR margin 26%–28% and operating income margin 11%–13% (EBIT roughly +10%). Guidance assumptions: MXN 18.3/USD, Brent ≈ $69/bbl and a crack spread ≈ $25/bbl. Fleet plans include ~3 MAXs plus a couple of 787s (ending ~170 aircraft); liquidity ~ $1.2B (cash $1.0B + $200M undrawn, ~23% of LTM revenue) and adjusted net debt/EBITDA ~1.8x, with narrow‑body utilization ~9 hrs (room toward ~10 hrs).Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR Financial Statement Overview
Summary
Income statement shows a meaningful post-2022 recovery with sustained profitability (score 72) and operating cash flow is strong but uneven (score 58). The key offset is a very weak balance sheet with persistently negative equity and sizable/volatile debt (score 24), which materially increases financial risk in a cyclical industry.Income Statement
Revenue rebounded strongly from 2022–2024, and profitability improved materially versus the pandemic-era losses (2020–2022), with positive net income in 2023–2025. However, 2025 revenue dipped modestly versus 2024 and net income fell meaningfully, indicating softer momentum and potential volatility in earnings despite still-solid operating profit.72
Positive
Balance Sheet
The balance sheet remains the key weak spot: stockholders’ equity is negative across all reported years, which limits financial flexibility and increases risk in a cyclical industry. Debt levels are sizable and have been volatile (notably higher again in 2025), and negative equity makes leverage hard to underwrite comfortably even with improved operating performance.24
Negative
Cash Flow
Cash generation improved sharply from 2022’s cash burn to strong positive operating cash flow in 2023–2025, supporting the turnaround narrative. That said, free cash flow is inconsistent (positive in 2023–2024 but shown as zero in 2025), and cash flow relative to reported earnings is not consistently strong enough to fully offset balance-sheet risk.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.38B | 5.62B | 4.92B | 3.81B | 2.22B |
| Gross Profit | 1.33B | 1.75B | 1.33B | 498.60M | 31.48M |
| EBITDA | 1.61B | 1.64B | 1.16B | 799.57M | -351.98M |
| Net Income | 353.13M | 617.44M | 273.33M | -64.25M | -917.70M |
Balance Sheet | |||||
| Total Assets | 7.19B | 6.38B | 6.09B | 5.55B | 4.24B |
| Cash, Cash Equivalents and Short-Term Investments | 1.02B | 815.50M | 912.87M | 755.16M | 946.96M |
| Total Debt | 4.06B | 448.30M | 2.71B | 3.45B | 1.91B |
| Total Liabilities | 7.79B | 7.28B | 6.82B | 6.28B | 6.91B |
| Stockholders Equity | -592.01M | -901.96M | -734.93M | -732.80M | -2.66B |
Cash Flow | |||||
| Free Cash Flow | 0.00 | 873.71M | 924.75M | -494.60M | -138.70M |
| Operating Cash Flow | 915.94M | 1.37B | 1.35B | -230.31M | 55.02M |
| Investing Cash Flow | -270.87M | -489.00M | -406.21M | -521.65M | -118.83M |
| Financing Cash Flow | -497.60M | -920.06M | -909.83M | 595.67M | 655.79M |
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.70B | 8.51 | 26.09% | 5.28% | 1.36% | 6.84% | |
77 Outperform | $15.28B | 11.34 | 140.98% | 3.50% | 6.81% | 58.22% | |
70 Outperform | $42.91B | 8.58 | 27.70% | 0.96% | 4.33% | -1.58% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | $2.76B | 2.82 | ― | ― | ― | ― | |
49 Neutral | $1.00B | -9.49 | -33.25% | ― | -6.55% | -133.03% | |
47 Neutral | $8.63B | 78.69 | ― | ― | 1.27% | 118.64% |
* Industrials Sector Average
AERO
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR
18.91
-1.44
-7.08%
CPA
Copa Holdings
138.61
51.82
59.71%
DAL
Delta Air Lines
65.70
7.96
13.78%
AAL
American Airlines
13.07
-0.80
-5.77%
VLRS
Controladora Vuela Compania de Aviacion SAB de CV
8.62
2.23
34.90%
LTM
LATAM Airlines Group SA Sponsored ADR
56.16
25.75
84.68%
Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR Corporate Events
Grupo Aeroméxico posts record 2025 margins and sets bullish 2026 outlook
Feb 17, 2026
Grupo Aeroméxico reported unaudited results on February 16, 2026, showing fourth-quarter 2025 revenue of $1.4 billion and full-year 2025 revenue of $5.4 billion, with premium revenue contributing 42% for both periods. The airline delivered record profitability, including an adjusted EBITDAR margin of 35% in the quarter and 31% for the year, and operating margins of 21% and 17% respectively, despite slightly lower capacity in the quarter and modest full-year capacity growth.
Management highlighted record adjusted EBITDAR and strong operating income performance, supported in part by a one-time $71.1 million gain from the sale of its 50% stake in MRO TechOps, its maintenance joint venture with Delta, while noting that normalized margins also improved. Aeroméxico ended 2025 with adjusted net leverage at 1.8x and, despite a year-on-year revenue decline versus 2024 due to prior extraordinary items, issued 2026 guidance pointing to renewed top-line growth, high-20s to low-30s adjusted EBITDAR margins, and sustained profitability, underscoring its strengthened financial and competitive position.
The most recent analyst rating on (AERO) stock is a Buy with a $28.00 price target. To see the full list of analyst forecasts on Grupo Aeromexico, S.A.B. de C.V. Unsponsored ADR stock, see the AERO Stock Forecast page.
Grupo Aeroméxico Releases Interim Financial Statements for 2025
Dec 5, 2025
On November 12, 2025, Grupo Aeroméxico released its unaudited condensed consolidated interim financial statements for the periods ending September 30, 2025, and December 31, 2024. The financial report highlights the company’s current and non-current assets, liabilities, and overall financial position. This release provides stakeholders with insights into the company’s financial health and operational performance, which is crucial for assessing its market positioning and future prospects.
Grupo Aeroméxico Calls for Shareholders’ Meeting on Governance Changes
Nov 26, 2025
On November 26, 2025, Grupo Aeroméxico announced a call for an ordinary shareholders’ meeting scheduled for January 7, 2026. The meeting will address the appointment or ratification of board members and other key positions, as well as the appointment of special delegates to formalize resolutions. This meeting is significant for stakeholders as it will influence the company’s governance and strategic direction.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.