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MEXICO CITY - Volaris (NASDAQ:VLRS), Mexico’s largest airline with annual revenue of $3.05 billion, has increased customer satisfaction by 30% across five million yearly interactions using Verint’s AI-powered bots, according to a press release issued by Verint (NASDAQ:VRNT). InvestingPro analysis shows the airline maintains a GOOD Financial Health Score despite challenging market conditions.
The airline has shifted its customer service primarily to digital channels, with 85% of digital interactions now handled immediately by automated bots, including complex tasks such as check-in. The remaining queries are managed by agents who can handle multiple conversations simultaneously.
The implementation has enabled Volaris to handle three times the number of customer calls with the same number of agents and has reduced contact center costs by 70% per interaction, the company reported.
"Given our high and growing volume of customer interactions, controlling service costs was critical, and we were also looking to elevate the customer experience," said Daniel Gelemovich, Volaris’s Digital & Marketing Director, in the statement.
Beyond improving service efficiency, Volaris has leveraged the digital transformation to increase sales by helping customers build travel itineraries, find promotions, and purchase ancillary products. According to the company, the customer service unit is now sustained by the extra revenue it generates. The airline maintains a healthy gross profit margin of 33.4%, according to InvestingPro data, though analysts expect some earnings pressure in the coming year.
Volaris operates 500 daily flight segments connecting 44 cities in Mexico and 29 cities in the United States, Central, and South America. The airline has expanded from 5 routes to 222 and increased its fleet from 4 to 148 aircraft since beginning operations in March 2006.
The customer service transformation project is part of Volaris’s broader strategy to maintain its ultra-low-cost carrier model while improving service quality.
In other recent news, Volaris has faced several adjustments in its stock ratings and price targets from major financial institutions. Morgan Stanley downgraded Volaris from Overweight to Equalweight, citing challenges with reduced capacity and lower yields, and slashed the price target from $11.00 to $4.40. Similarly, Barclays also downgraded Volaris to Equalweight, lowering the price target from $12.00 to $4.50 due to weak unit revenue in the first quarter of 2025 and a cautious outlook for the second quarter. BofA Securities, while maintaining a Buy rating, reduced its price target from $11.40 to $9.50, acknowledging macroeconomic uncertainties and a weaker second-quarter revenue guidance.
Volaris’s financial performance in the first quarter of 2025 showed a significant 27% year-over-year decline in yields and a 6% decrease in ancillary revenue per passenger. These declines were partly due to foreign exchange rate fluctuations, resulting in a 17% year-over-year decrease in Total Revenue per Available Seat Mile (TRASM). Despite these challenges, the airline’s EBITDAR for the quarter was $203 million, in line with BofA Securities’ forecast. The revised guidance indicates an expected EBITDAR margin of approximately 31% for 2025, down from the earlier 34-36% range. These developments reflect the cautious sentiment among analysts regarding Volaris’s near-term financial outlook.
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