A top contributor to performance for the one-year period was Volaris (VLRS, Financial), the leading low-cost airline carrier in Mexico. Rebounding from Covid-19 lows, air traffic accelerated sharply in capacity as well as demand over the past year, and, as Volaris’ management team noted, the rebound was broad-based and likely to continue, given pent-up demand. The company’s low-cost position and strong balance sheet enabled it to quickly fill capacity vacated by its main competitors, Interjet and AeroMexico, both of which declared bankruptcy in 2020. Amid these conditions, Volaris has taken significant market share from its peers during the past year. We believe that the company is still well positioned to be the long-term winner in Mexican air travel. However, since its share price has appreciated over 200% in the past 12 months and approached our estimate of intrinsic value, we exited our position.
From David Herro (Trades, Portfolio)'s Oakmark Intl Small Cap (Trades, Portfolio) Fund third-quarter 2021 commentary.
