SCHEDULE: Volaris, Viva Aerobus Merger Gains Key Shareholder Support

Indigo Partners and affiliates commit their significant stake in Volaris to support the proposed merger with Grupo Viva Aerobus.

Summary

• Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (Volaris) and Grupo Viva Aerobus, S.A. de C.V. ("PrivateCo") entered into a Business Combination Agreement on December 18, 2025, for a merger where PrivateCo will merge into Volaris, with Volaris as the surviving entity.
• Key shareholders, including Long Bar LatAM LLC, Indigo Mexico Cooperatief U.A., Indigo LatAm LP, Long Bar LatAM II LP, Indigo Mexico LLC, and William A. Franke (collectively, "Reporting Persons"), have signed a Voting and Support Agreement.
• The Reporting Persons, who collectively hold approximately 18.2% of Volaris's Series A Common Stock (212,575,660 shares), have irrevocably agreed to vote their shares in favor of the merger and against any competing acquisition proposals.
• The agreement also restricts the Reporting Persons from transferring their shares, tendering them, or taking actions inconsistent with the merger's approval until the agreement's termination.
• Series A Common Stock can only be owned directly by Mexican individuals or entities; therefore, the Reporting Persons hold their shares through Ordinary Participation Certificates (CPOs) or American Depositary Shares (ADSs) and do not have direct voting rights for these.

Sentiment

Score: 7

Explanation: The filing indicates strong shareholder support for a strategic merger, which is generally positive for the company's long-term growth and market position. However, it's a procedural update on an existing plan, not new financial performance data, hence not extremely high. The potential for integration challenges and regulatory hurdles keeps it from being a perfect 10.

Positives

• Significant shareholder support from Indigo Partners and affiliates, representing 18.2% of Series A Common Stock, increases the likelihood of the proposed merger with Grupo Viva Aerobus successfully closing.
• The merger could lead to increased market share, operational efficiencies, and reduced competition in the Mexican airline market for the combined entity.
• The commitment from a major investor group like Indigo Partners signals confidence in the strategic rationale of the business combination.

Negatives

• The Voting and Support Agreement restricts the Reporting Persons' ability to sell or transfer their shares, potentially limiting their liquidity or ability to react to alternative, potentially more favorable, proposals.
• The merger process itself can be complex and may involve integration challenges, regulatory hurdles, and potential disruption to operations.
• The agreement includes conditions under which the Reporting Persons can terminate it, such as detrimental amendments to the Business Combination Agreement or adverse changes to their ownership/governance rights, indicating potential points of contention.

Risks

• The merger is subject to various conditions and approvals, and there is no guarantee it will be consummated.
• Integration risks are associated with combining two airline operations, including systems, cultures, and route networks.
• Potential for regulatory challenges or delays in obtaining necessary approvals for the business combination.
• Risk of dilution or adverse changes to governance rights for the Reporting Persons if the merger terms are amended detrimentally without their consent.
• The Series A Common Stock's restriction to Mexican individuals/entities and the Reporting Persons' indirect ownership via CPOs/ADSs could introduce complexities in governance and control.

Future Outlook

The filing indicates a clear path towards the merger of Volaris and Grupo Viva Aerobus, with significant shareholder backing from Indigo Partners. The future outlook is focused on the successful completion and integration of this business combination, aiming to create a stronger, combined airline entity.

Management Comments

• William A. Franke disclaims any such beneficial ownership [referring to voting and dispositive power over securities].

Industry Context

This announcement signifies a major consolidation event within the highly competitive Mexican airline industry. The merger of Volaris and Grupo Viva Aerobus, two prominent low-cost carriers, would significantly reshape the market landscape, potentially leading to reduced competition and increased pricing power for the combined entity. This move aligns with a broader trend of consolidation seen in various global airline markets as companies seek economies of scale and operational efficiencies.

Comparison to Industry Standards

• Consolidation through mergers is a common strategy in the global airline industry to achieve economies of scale, optimize route networks, and reduce competitive pressures, similar to past mergers like American Airlines and US Airways, or Delta and Northwest Airlines.
• The involvement of a major private equity firm like Indigo Partners, known for its investments in ultra-low-cost carriers globally (e.g., Frontier Airlines, Wizz Air), suggests a strategic alignment with industry best practices for maximizing value through operational efficiency and market dominance.
• Shareholder voting and support agreements are standard practice in significant M&A transactions, ensuring key investors are aligned with the deal's progression, comparable to agreements seen in major corporate takeovers across various sectors.

Corporate Governance

Stakeholder Impact

• Shareholders: Increased certainty regarding the merger's approval due to major shareholder support. Potential for long-term value creation from the combined entity, but also potential for short-term volatility during the merger process.
• Employees: Potential for workforce integration challenges or redundancies post-merger, as well as opportunities for growth within a larger organization.
• Customers: Potential for expanded route networks, improved services, or changes in pricing strategies from the combined airline.
• Competitors: Increased competitive pressure from a larger, more dominant airline in the Mexican market.

Next Steps

• Shareholders' meeting to vote on the adoption, approval, and authorization of the Business Combination Agreement, the Merger, and other contemplated transactions.
• Completion of the merger, subject to regulatory approvals and fulfillment of conditions outlined in the Business Combination Agreement.
• Integration of Grupo Viva Aerobus into Controladora Vuela Compania de Aviacion.

Key Dates

Recommendation

The filing confirms a significant step towards the merger of Volaris and Viva Aerobus with strong shareholder support from Indigo Partners. While the merger itself is a strategic positive, this filing is a procedural update rather than new financial performance data. Investors should hold to observe the successful completion of the merger and the subsequent integration process, which will determine the long-term value creation. The current information does not warrant an immediate 'buy' or 'sell' as the strategic direction is already known, and the execution risks remain.

Keywords

Volaris, Controladora Vuela Compania de Aviacion, Grupo Viva Aerobus, Merger, Business Combination Agreement, Voting and Support Agreement, Indigo Partners, Airline Industry, SEC Filing, Schedule 13D, Shareholder Agreement, Mexico Airlines