Aeromexico Earns a BB- Upgrade as Pricing Offsets a Fuel Shock

S&P Global Ratings upgraded Aeromexico's issuer credit rating to BB- from B+ and assigned a stable outlook, recognizing the airline's ability to stay profitable while fuel and other operating costs rose sharply. The agency also raised ratings on senior secured notes due in 2029 and 2031 to BB from BB-. The upgrade improves the credit story, but Aeromexico remains below investment grade.

The company's third-quarter results show why the decision was not simply a vote of confidence in growth. Revenue rose 13.6% from a year earlier to a record $1.62 billion, while capacity increased only 1.3% and passenger traffic fell 3.2%. Revenue per available seat mile increased 12.2% to 17.2 cents, evidence that pricing and mix offset lower passenger volume and much of the fuel shock.

Fuel expense jumped 57.6% to $469 million, an increase of $171.5 million. Adjusted EBITDAR fell 11.9% to $389.2 million, and its margin declined to 24.0% from 31.0%. Operating income dropped 25% to $189.6 million, with the operating margin narrowing to 11.7% from 17.7%. Those figures support S&P's view that the business remained resilient, but they also show that higher revenue did not fully protect profit.

For the first nine months of 2026, revenue increased 13.2% to $4.44 billion while adjusted EBITDAR fell 15.5% to $989 million. The adjusted EBITDAR margin was 22.3%, down 7.6 percentage points. S&P's analysis cited pricing that recovered 123% of higher fuel expense through a $517 million revenue increase, but investors should read that figure as a comparison with fuel costs, not as proof that all higher labor, maintenance and foreign-exchange expenses were recovered.

The balance sheet helped support the upgrade. Aeromexico reported $965.1 million of cash and cash equivalents and total liquidity of $1.2 billion, including an upsized $250 million revolving credit facility. It generated $541.7 million of operating cash flow during the first nine months and ended the quarter with total adjusted net debt to EBITDAR of 2.1 times. S&P also cited gross debt of about $1.15 billion, down 7% year over year.

Aeromexico now has stronger credit recognition and substantial liquidity, but the margin compression remains material. The stable outlook depends on disciplined capacity, continued pricing power and cost control as fuel and peso-related pressures change. A rating upgrade can lower financing risk over time, but sustained free cash flow and operating margins will determine whether another upgrade becomes realistic.