By Kylie Madry and Aida Pelaez-Fernandez
MEXICO CITY (Reuters) -Mexican low-cost carrier Volaris is "optimistic" the country will recover the Category 1 safety rating, which allows airlines to open new U.S. routes, in the next six months, its chief executive said on Wednesday.
The U.S. Federal Aviation Administration downgraded Mexico in May 2021, arguing that the country fell short of regulating airlines in accordance with international safety standards.
"We're prepared to shift capacity to northbound routes upon Mexico's return to Category 1 status, which we remain optimistic will happen in the next six months," CEO Enrique Beltranena said in a call with analysts.
The airline also sees strong demand in Central and South America, Executive Vice President Holger Blankenstein added, and expects to add new aircraft deliveries to routes in Central America.
Volaris shares jumped more than 7% before the call early Wednesday, but pared gains to around 2% by midday.
Since May 2021, the FAA has made several visits to Mexico and established an office there in December.
Of the sticking points that need to be resolved for Mexico to recover the Category 1 rating, about half involve legislation and the other half are "systems that need to be put in place," Beltranena said.
Mexico has proposed aviation law reform, although the most significant changes have yet to pass Congress. One proposal would allow "cabotage," a rare practice allowing foreign carriers to open domestic routes in the country.
"Two weeks ago, industry leaders met with the (transportation ministry) and Congress members to explain how well the Mexico domestic market operates and why we don't consider the opening of cabotage to be needed," Beltranena said.
Another FAA assessment may come at the end of March, by when legislation is expected to have been passed, Beltranena added.
Mexico implemented sweeping changes in its transportation ministry and aviation authority last year to speed up the process of recovering the rating. Beltranena told Reuters in December he felt "positive" about the prospect.