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REFILE-Mexican airline Volaris exploring sustainable fuel options

(Removes detail about flight in paragraph 2)

By Kylie Madry

MEXICO CITY, Dec 9 (Reuters) - Mexican low-cost carrier Volaris is exploring options to obtain sustainable aviation fuel (SAF), including a potential deal in the United States, the airline's top executive said in an interview following the company's investor day.

"We have to work on developing supply in Mexico," Chief Executive Enrique Beltranena told Reuters, adding that the airline had flown with sustainable fuel just once due to the lack of local availability.

"Really, SAF is an ethanol. And what we don't have in Mexico is a way of converting that ethanol, of mixing it to become jet fuel," he said.

SAF can be made from feedstocks such as used cooking oils, crop residues and other waste products, and is expected to have the largest impact in lowering airlines' carbon emissions. It remains in scarce supply, however, and is costlier than traditional fuels.

Volaris has been working to finalize a deal to obtain SAF in the United States, which would fuel U.S. flights to Mexico, Beltranena said. More details would be available "within the next three months," he said.

Last week, Volaris, rival airline VivaAerobus and other industry leaders said they were seeking proposals to accelerate and scale SAF production in Mexico.

Volaris is also eying route expansions, shooting for up to 300 domestic routes and 145 U.S. routes, along with more than 100 other routes in the medium-term, executives said in a presentation on Tuesday.

The U.S. route expansions depend on Mexico recovering its Category 1 safety rating from the U.S. Federal Aviation Administration (FAA), which downgraded Mexico in 2021 for what it said was noncompliance with safety standards. Beltranena said the FAA's acting administrator, Billy Nolen, will visit Mexico in January.

While Mexican authorities aim to recover the rating in April next year, Volaris has pegged the rating to return by the last quarter of 2023.

Mexico has replaced officials overseeing the industry in recent months, and Beltranena said the transportation ministry has outlined a series of proposals aimed at recovering the rating that require changes to regulations, budgets and international compliance in personnel licensing, aircraft operations and airworthiness of aircraft.

"I feel really positive about it," he said. (Reporting by Kylie Madry; Editing by Tom Hogue)