Mexican's Leading Low Fare Airline Now Owned by the Richest Man in the World
Usually you don't hear about an airline and rich people in the same sentence (unless you're talking about the bonus plans of execs), but now, the richest man in the world owns an airline. It's not that he just recently acquired the airline, but rather, he just recently became the richest man in the world.
We're not talking about Bill Gates here. If you haven't heard the news, Carlos Slim is now the richest man in the world with a mere $53.5 billion to his name. He made his money in telecom, but he's been branching out. In fact, he was one of the men behind the founding of Volaris, the Mexican low cost carrier.
The number three man on the list, Warren Buffett, has long hated airlines. In fact, in his 1996 letter to shareholders, he said about his investment in USAir:
In another context, a friend once asked me: "If you're so rich, why aren't you smart?" After reviewing my sorry performance with USAir, you may conclude he had a point.So what does Carlos Slim see? Back in 2006 when Volaris launched, low cost carriers were all the rage in Mexico. There was Interjet, VivaAerobus, Mexicana's Click low cost airline, and Avolar fighting it out. Of those, Volaris has been the one to soar.
Part of this is certainly due to deep pockets. Slim's Inbursa insurance company owned a quarter of the airline and Grupo Televisa, a large media conglomerate owned another quarter. Possibly the most important move, however, was thanks to another 25 percent owner, Grupo TACA, the successful grouping of Central American airlines. Former TACA executive Enrique Beltranena was picked to head up Volaris, and he has led the airline quite capably.
Possibly the biggest recognition of Volaris' achievement was the decision by Southwest Airlines to make Volaris its second codeshare partner after WestJet in Canada. Southwest's faith says a great deal.
Has Carlos Slim done what Warren Buffett hasn't . . . made a good airline investment? So far, so good, but things started off well for Buffett too. Things in this industry change quickly.