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UPDATE 3-Mexican carrier Volaris budgets for Mexico Category 1 rating by 2023

(Adds FAA comment, more details)

By Kylie Madry

MEXICO CITY, Oct 25 (Reuters) - Volaris airlines is planning its budget on the expectation that Mexico will regain its Category 1 aviation safety rating by the second half of 2023, the Mexican airline's finance chief said on Tuesday.

"We are budgeting for the second half of next year, and we are closely monitoring that," Volaris Chief Financial Officer Jaime Pou said in an investor call.

Mexico President Andres Manuel Lopez Obrador said at a regular news conference Tuesday that authorities from his country will travel to the United States this weekend to discuss regaining the rating.

In May 2021, the Federal Aviation Administration (FAA) downgraded Mexico's aviation safety rating, an action barring Mexican carriers from adding new U.S. flights and limits the ability of airlines to carry out marketing agreements with one another.

Over the objections of the Mexican government, the FAA downgraded Mexico - one of the most common international destinations for U.S. air travelers - from a level called Category 1, which signifies compliance with international standards, to Category 2, the lowest level.

"Things are really advancing," Lopez Obrador said, explaining that the head of the transportation ministry, the deputy minister and the head of the aviation authority would make the trip to Washington.

An FAA spokesman said Tuesday the agency continues "to provide assistance to Mexico’s civil aviation authority." About 90% of countries rated achieved Category 1 and meet international air safety standards.

Volaris Chief Executive Enrique Beltranena said Mexican authorities were "working on required changes to the aviation regulations (and) mechanisms for financing the expenses that they need to spend for getting the category back."

Beltranena said things were now "moving along much better" than in previous months following recent shake-ups in Mexico's transportation ministry, which included replacing the head of the country's aviation authority.

The head of Mexico's aviation authority took office last week with the prime objective of recovering the rating, the transportation ministry said in a statement.

Last month, the chief executive of Mexican carrier Aeromexico said "the damage done by (the downgrade) is significant."

In June, Mexico said it hoped to return to Category 1 soon after seven meetings with FAA officials including a review in June. (Reporting by Kylie Madry; Additional reporting by Raul Cortes; Editing by Sarah Morland, Mark Porter and David Shepardson in Washington; Editing by Aurora Ellis)