Very High And Rising LeverageExtremely elevated debt-to-equity materially limits financial flexibility and increases refinancing and covenant risk. In a cyclical airline sector, high leverage amplifies exposure to fuel, demand slumps, and interest rates, reducing the company’s ability to invest or withstand prolonged downturns.
Profitability Deterioration And Compressed MarginsA sustained drop to single-digit gross margins and recurring losses weaken internal capital generation and shareholder equity. Persistently thin margins make it difficult to cover fixed costs, increase dependency on capacity tactics, and leave limited room for adverse cost shocks like fuel.
Merger Execution, Regulatory And Dilution RisksThe proposed Viva Aerobus merger is a structural change that creates integration, regulatory clearance and governance execution risk. Issuing shares that halve existing ownership raises dilution concerns and could distract management while regulatory hurdles or integration missteps impair expected synergies.