Volaris Raises $346 Million in No. 3 Mexico Airline’s IPO

Volaris, Mexico's third-largest airline, sold at least $346 million of shares in an initial public offering at the low end of its projected range.

The airline sold 28.9 million American Depositary Receipts at $12 each in New York, according to data compiled by Bloomberg. The company had said in a Sept. 16 regulatory filing that it planned to sell the ADRs at a price of $12 to $14 each. The transaction also provides an option for underwriters to increase the size of the sale by 15 percent.

The Mexico City-based airline, officially known as Controladora Vuela Cia. de Aviacion SAB, planned to raise as much as $460 million including the so-called greenshoe option. Volaris, whose shares are set to start trading today, becomes the second publicly-traded airline in Mexico. The other is Grupo Aeromexico SAB (AEROMEX*), the nation's biggest carrier.

A Volaris press official declined to comment on the sale.

The IPO, Mexico's first since July 23, extends a record pace of stock issuance in the country this year. Not including the Volaris offering, Mexican companies had raised a record $9.93 billion in equity markets in 2013, 10 percent more than the $9.02 in stock sold in all of 2012. Grupo Financiero Banorte SAB, Mexico's third-biggest bank, raised $2.53 billion in a follow-on stock offering in July.

Mexico's airlines have expanded into a void left when Cia. Mexicana de Aviacion, then No. 1 based on passenger traffic, sought protection from creditors and ceased operations in 2010. The nation's air traffic expanded 7.4 percent through July, building on last year's growth that was the fastest since 2007.

Evercore Partners

Interjet, Mexico's No. 2 airline, is studying a share sale for 2014 or 2015, Executive President Miguel Aleman Magnani said last month. The country's fourth-largest airline, Aeroenlaces Nacionales SA, known as VivaAerobus, has hired Barclays Plc to help prepare a possible offering, according to three people familiar with the matter.

Deutsche Bank AG, Morgan Stanley and UBS AG led the Volaris share sale, the data compiled by Bloomberg showed.

The company began operations in 2006 and its fleet includes Airbus SAS single-aisle A319 and A320 jets. Owners include Indigo Partners LLC, Evercore Partners Inc. and Evercore Co-Chairman Pedro Aspe, a former Mexico finance minister, according to the pre-IPO filing.

Volaris has said it has some of the lowest operating expenses among publicly-traded carriers in the Americas, with costs per available seat mile, an industry benchmark, at 9.4 cents.

Sales for 2012 totaled $887 million, up from $397 million in 2008 based on average exchange rates during the respective years, according to the airline.

Volaris flew 23 percent of passengers in Mexico this year through July compared with 20 percent a year earlier, according to government data.