It's been a slow road to profitability for low-cost carrier Breeze Airways since launching service in May 2021. But after announcing on Jan. 23 that the fourth quarter of 2024 brought its first quarterly operating profit, CEO David Neeleman is confident that the airline has turned a corner.
David Neeleman
"There's a lot of momentum going on," he said, before predicting that Breeze will be profitable for full-year 2025.
The airline said it compiled more than $200 million in revenue in the fourth quarter, driving an operating margin of over 4%, though it didn't give a specific profit figure (it will eventually report that number to the Department of Transportation).
In an interview, Neeleman described its operating profit as "pretty significant."
Even the barest of profits would be a major stride for Breeze, which reported a negative operating margin of 20.9% in the third quarter of last year and a loss of $33.6 million. In the fourth quarter of 2023, Breeze had an operating margin of minus-25.9%.
Breeze's improved performance, Neeleman said, has been aided by a strong industry backdrop in recent months, including rising airfares.
Breeze is also well positioned to capitalize on the trending consumer preference toward high-end fare products. On each of its 33 Airbus A220s, which now do a majority of its flying, Breeze has 12 first-class seats and 45 extra-legroom seats to go along with 80 standard economy seats.
Staying power is also beginning to benefit the airline.
The carrier grew fast last year, adding 29 destinations, bringing its total to 66. Breeze also boosted its capacity, measured by the number of total seat miles flown, by 52% in 2024.
Still, said Neeleman, the airline has finally come to a point in which it has been operating 75% of its routes for at least six months, a state of affairs that has improved consumer awareness and the bottom line.
Breeze, whose operating model is centered around connecting city pairs that otherwise have no direct service, is especially robust in Charleston, S.C.; Providence, R.I.; Hartford, Conn; and Orlando, among other locations. Because it focuses heavily on small airports with little service from larger competitors, Breeze is now the No. 1 carrier by destinations served in 24 of its 66 markets, the airline said, and is also the sole carrier on 87% of its more than 200 routes.
Breeze will still grow fast this year, increasing capacity by an estimated 25%, Neeleman said, but will add less than half as many new destinations as it did in 2024, placing more emphasis on bolstering connections and frequencies from existing stations.
Will the Breeze's climb continue?
Breeze has trailed fellow newbie Avelo Airlines, which also launched service in spring 2021, in terms of reaching profitability. Avelo reported profits the first two quarters of 2024 before taking a loss in the third quarter.
Aviation analyst Brett Snyder, who pens the Cranky Flier blog, noted that Neeleman has a strong history of founding airlines, including JetBlue, and has been successful at raising funds, but investors will lose patience if losses continue.
Neeleman has pointed to regulatory impediments related to pilot training on its A220 planes as well as delivery delays of the A220 fleet as reasons for early economic challenges.
"This game is all about cash, and you never know when the spigot gets cut off if you can't make it work," Snyder said.
At the end of last year's third quarter, Breeze had $110.7 million of cash or short-term investments on hand, but Neeleman said it has since amassed additional cash, leaving it in a strong position.
Fiona Kiesel
Two key areas Breeze will work on this year are achieving authority from the FAA to fly commercial international routes and improving its on-time performance. The carrier hopes to fly internationally from midsize markets to Mexico, Central America and the Caribbean and potentially Ireland and the British Isles. Hawaii service could also be in the offing, though not in 2025, Neeleman said.
Last year, Breeze had an on-time performance of 69.6%, according to its internal numbers. Chief guest officer Fiona Kiesel said the carrier has implemented various initiatives in the past six months to improve that number, with an emphasis on turn times.
Neeleman said Breeze's march toward profitability has taken at least 18 months longer than he had expected. But he's optimistic.
"I'm happy where we are today," he said.