Neeleman Startup Breeze Focuses on Operations After Less-Than-Perfect Launch

Photo credit: Breeze Airways founder David Neeleman in front of one of the airlines' Embraer jets.  Cean One Studio / Cean Orrett

Breeze Airways has had a memorable first three months. David Neeleman’s latest airline startup has gone from zero to 16 destinations since May, riding the wave of the U.S. summer travel recovery along with many of its competitors.

But those first months have not been entirely uneventful. Operational issues in June and July forced it to cull some frequencies from its schedule. The number of daily flights peaked at 66 a day on July 25 before falling to 60 a day the next Sunday, August 1, and remain there through at least the end of August, according to Cirium schedule data. And other flights were rescheduled to ensure that Breeze had two spare Embraer E-Jets from its fleet of 13 E190s and E195s for future disruptions.

“We probably bit off a bit more than we could chew at the beginning,” Neeleman told Airline Weekly. “We got it done, [but] it wasn’t perfect.”

Asked why the airline lacked spares at its start and he said it was simply a desire to maximize revenues. This is an understandable situation: Every startup burns through cash in its early days, paying for everything from aircraft to staff and training out of pocket until it can carry its first revenue passengers.

“No one really cares about revenue right now, we just need to run an airline,” said Neeleman, adding that he “cares more” for operational integrity now. It was an operational meltdown over Valentines Day weekend in 2007 at his best known venture, JetBlue Airways, that forced his exit as CEO of the carrier.

And as for the Covid-19 Delta variant that several competitors have warned has dampened demand, Breeze sees some softness but has been able to stimulate bookings with fare sales, said Neeleman.

That’s where Breeze sits going into the autumn. The airline is focused on running its current schedule reliably and inducting the Airbus A220 into its fleet, the first of which is due in October. It closed $200 million in additional Series B equity funding on August 18, bringing its total startup capital to more than $300 million. That’s plenty of cash to weather additional losses — something Neeleman expects in 2021 before Breeze becomes “solidly profitable” in 2022 — and fund future growth, for example opportunistically buying used E-Jets as they come on the market.

When JetBlue — the most successful U.S. airline startup in recent history — launched in 2000, it had $130 million in startup capital. That’s equal to roughly $206 million in 2021 dollars.

Most of Breeze’s 16 startup markets are still developing and slowing growth during this period will allow them to mature, said Neeleman. Asked if any destinations were outperforming others, he declined to comment except to say that some were maturing faster than others. The airline has no plans to drop any markets, he added.

That’s more than can be said for fellow pandemic startup Avelo Airlines. The carrier launched with service to 11 destinations from a Burbank base in April but will pare three cities — Bozeman, Mont., Grand Junction, Colo., and Phoenix-Mesa — from its map in October. But Avelo is simply pivoting with plans to add four new cities from Burbank in September: Fort Collins, Colo., Monterey, Calif., and Provo and St. George, Utah. And the airline plans to open a new base at Tweed Airport in New Haven, Conn., in the coming months.

Breeze is unlikely to add any new destinations until its A220s come online next year, said Neeleman. That introduction is delayed to early in the second quarter from around the beginning of the year, as he told Airline Weekly in May. Asked about the delay, Neeleman said it is a result of the FAA’s multi-step process to add an aircraft type to its operating certificate. “It’s frustratingly long but it is what it is,” he said.

When Breeze does begin flying the A220, it plans to operate four aircraft and launch multiple markets at once. The aircraft will be laid out in a dual-class configuration — the specifics of which Neeleman is mum on — with additional inflight amenities, including pre-flight meal ordering through its app and Wi-Fi connectivity. Breeze has firm orders for 60 A220-300s.