In 2021, we saw two new low cost carriers launch service in the United States — I’m talking about Breeze Airways and Avelo Airlines. Breeze Airlines was founded by serial airline entrepreneur David Neeleman (the same guy behind JetBlue), while Avelo Airlines was founded by Andrew Levy, a former Allegiant and United executive.
While neither airline is publicly traded, even privately owned airlines have to submit a Form 41 Financial Schedule with the US Department of Transportation (DOT), which has all kinds of fascinating details. Among those details are operating revenue and expenses, so you can get a sense of how an airline is doing.
I recently wrote about how Breeze has been hemorrhaging money since it launched, with no signs of things improving considerably. In the seven reported quarters since launch, the airline has lost $250 million, with only $400 million in revenue.
Several readers were curious how Avelo’s financial performance has compared, so I figured it would be interesting to look at that in this post.
In this post:
Avelo Airlines is losing modest(ish) amounts of money
While Avelo Airlines isn’t profitable yet, the airline appears to be doing much better than Breeze Airways. The website enilria.com has a detailed look at Avelo’s financials over the past six reported quarters, from Q2 2022 through Q3 2023:
Quarter | Revenue | Expenses | Profit (Loss) | Margin |
Q2 2022 | $51,432,000 | $73,352,310 | ($24,920,310) | -48% |
Q3 2022 | $87,132,470 | $110,231,540 | ($23,099,070) | -27% |
Q4 2022 | $99,924,640 | $110,231,500 | ($10,306,860) | -10% |
Q1 2023 | $58,486,710 | $68,251,970 | ($9,765,260) | -17% |
Q2 2023 | $64,197,940 | $66,275,380 | ($2,077,440) | -3% |
Q3 2023 | $63,152,630 | $72,788,290 | ($9,635,660) | -15% |
Admittedly it takes some time for an airline to establish itself, and it’s expected that an airline will lose money for some amount of time after launch. Is Avelo Airlines profitable, and a smashing success? No, not quite yet. However, there’s a night and day difference between Avelo and Breeze when it comes to financials. And frankly if it weren’t for the big increase in labor costs between the time the airline launched and now, Avelo might just be profitable (or at least very close to it).
Breeze has lost around $250 million on $400 million in revenue, while Avelo has lost around $80 million on around $420 million in revenue. Most importantly, Avelo is generally trending in the right direction, with a negative operating margin in line with the established low cost carriers in the market.
Honestly, it’s not a great time to be an low cost carrier, as we’ve heard from executives at established carriers, like Frontier, Spirit, etc. The challenge for low cost carriers is that they don’t have the same loyalty program revenue potential as the major global airlines, and they also can’t capitalize on the huge demand for long haul travel, which is where we’ve seen the most increase in demand.
Why is Avelo doing so much better than Breeze?
I think many people are surprised by how poorly Breeze is doing, given that David Neeleman is behind the airline. However, as I recently discussed, I think the airline is making a lot of mistakes, and I’m not sure the carrier has a terribly cohesive strategy.
What is Avelo Airlines doing right that Breeze isn’t? Well, Avelo’s founder was an executive at Allegiant, and I think he’s done a much better job adopting that business model than Breeze has. Allegiant has been the most consistently profitable low cost carrier, and the airline really does sort of operate in its own world, with no direction competition.
With that in mind, I think there are a couple of things that are contributing to Avelo doing reasonably well in comparison to Breeze.
For one, Breeze picked up new, fuel efficient Airbus A220s. Meanwhile Avelo acquired used Boeing 737s. While the A220 is a lovely plane to fly as a passenger, I imagine Avelo acquired planes for much less, and therefore has a huge cost advantage. Furthermore, the 737 has a significantly higher capacity than the A220, so also has a lot more revenue potential.
I think the other thing that Avelo has done well is carving out its own niche. Breeze has primarily tried to operate in underserved markets at major airports, but there’s still quite a bit of competition there. Meanwhile Avelo has done a better job of serving markets other airlines didn’t bother with, and then adding lots of service there.
For example, the carrier has become a known airline in Burbank, and has even brought commercial service back to New Haven. This is very similar to the strategy that you’ll see at Allegiant (okay, Allegiant takes it a step further, with routes like Flint to Punta Gorda).
While I think Breeze is more or less toast (unless something radically changes), I think Avelo is on the right track as far as low cost carriers go. The challenge, though, is that it’s hard to be an independent low cost carrier, and other low cost carriers are realizing they have to adjust their business model. So we’ll see how that plays out for Avelo.
Bottom line
Avelo Airlines launched service in the spring of 2021, around the same time as Breeze Airways. While Breeze has had a roughly $250 million operating loss on $400 million of revenue, Avelo has had a roughly $80 million operating loss on $420 million of revenue.
As you can tell, Avelo is doing much better than Breeze. And frankly, given the huge increase in labor costs since launch, plus the way that budget leisure demand has shifted, Avelo is almost doing better than you’d expect. I’m curious to see how these two airlines continue to evolve…
What do you make of Avelo’s financials, and the carrier’s prospects of becoming profitable? Why do you think Avelo is doing so much better than Breeze?
Both Avelo and Breeze target the "underserved" markets as their targets, ostensibly going where the other airlines DON'T go.
That said, why is Breeze in Connecticut's Bradley International Airport? Low-cost carriers Frontier, JetBlue, Southwest and Spirit are already there, in addition to the "legacies." Hardly "underserved."
Perhaps that state "assist" of $1 million to establish a base there may give us a clue. Compare and contrast that to Avelo spending their OWN money...
Both Avelo and Breeze target the "underserved" markets as their targets, ostensibly going where the other airlines DON'T go.
That said, why is Breeze in Connecticut's Bradley International Airport? Low-cost carriers Frontier, JetBlue, Southwest and Spirit are already there, in addition to the "legacies." Hardly "underserved."
Perhaps that state "assist" of $1 million to establish a base there may give us a clue. Compare and contrast that to Avelo spending their OWN money to establish a base at New Haven.
Too, Breeze's business model seems to cater to the business centers while Avelo has concentrated more on the "VFRs" (visiting friends and relatives).
One can also assume that Avelo's charter operations are also lucrative, mostly in carrying school sports teams. I don't know if Breeze's operations include charters, and if so, to what extent.
Lastly, Breeze's may be a case of "too much too fast" in their drive to acquire additional aircraft and expand their network.
Avelo, on the other hand, is in no rush to unify their East Coast and West Coast operations, choosing instead to grow at a more deliberate pace.
Both are fledgling carriers started by industry veterans.
It should be interesting to see how both do.
RSW is a destination for Avelo but they don't service the midwest towns where most of the SWFL crowd originates. Add Milwaukee and the like for a big draw.
I think if they can stick it out, Breeze probably has greater upside to it than Avelo simply because they have a better network established. I do question some of their routes and whether they are just chasing incentives from locations that have lost service over the past few years, but I have flown them several times and found them fine. I haven't had a chance to try Avelo simply because of where I am located and where they fly.
Network establishment leans heavily towards avelo than it does breeze. The new haven base alone is better than anything breeze has going in their network
"it’s hard to be an independent low cost carrier".
Is that a USA-specific problem? Our big three here - RYR, Wizz, EZY - seem to be performing okay.
I live close to the Daytona Beach airport and grew up and still have family just outside of the New Haven area so using Avelo is great for me. A low cost direct flight is great today in an industry that doesn’t have many direct flights. Hopefully they can make it and start turning a profit because I know a lot of people that also use them.
I now live in CT, so I have a number of airports to consider (Westchester, New Haven) in addition LGA and JFK. When Breeze operated HPN to LAX, I considered it. But they dropped the route, and I like having lounge access at either end of that trip, so Delta (or AA) were still the best choices for me. Breeze continues to be in an out of HPN. I hadn’t seriously considered Avelo at Tweed,...
I now live in CT, so I have a number of airports to consider (Westchester, New Haven) in addition LGA and JFK. When Breeze operated HPN to LAX, I considered it. But they dropped the route, and I like having lounge access at either end of that trip, so Delta (or AA) were still the best choices for me. Breeze continues to be in an out of HPN. I hadn’t seriously considered Avelo at Tweed, but the airport is 40-45 minutes away from me, which is competitive to LGA (I can still get to LGA in 40 minutes occasionally if traffic is right). I do have some flights to some of their markets (Nashville, Fort Myers) coming up… Maybe I will give them a spin? But again - with Delta and JetBlue status, why would I switch…
I truly hope that both Avelo and Breeze eventually succeed. They both have direct service to smaller undeserved markets. Both have extremely nice, friendly and professional people working for them. But, there is no comparison when it comes to their planes. The A220 much more comfortable, quiet and fuel efficient than those old, noisy fuel burning 737 planes. I'm a solo traveler and love the 2/3 seating configuration. Free water, ice, coffee and tea is...
I truly hope that both Avelo and Breeze eventually succeed. They both have direct service to smaller undeserved markets. Both have extremely nice, friendly and professional people working for them. But, there is no comparison when it comes to their planes. The A220 much more comfortable, quiet and fuel efficient than those old, noisy fuel burning 737 planes. I'm a solo traveler and love the 2/3 seating configuration. Free water, ice, coffee and tea is a really nice touch on Breeze, too. Compared to American Airlines, which is beyond horrible (ever had the misfortune of connecting through Charlotte?) these airlines really need to succeed. I agree that they are doing a horrible job of advertising. I've lived in markets both of these Airlines fly and have NEVER EVER seen a TV or streaming commercial. Which ever ones fails to advertise will be the failure!!
"Free water, ice, coffee and tea" Hardly a necessity for 2-3 hour flight. Avelo at HVN is easy to use and minutes from many on the shoreline. When HVN gets its new terminal, things will get better and more airlines will join Avelo much to the bitterness of BDL. HVN has its own large market and was proved by the number of Avelo flights and HVN is Avelo's largest base.
Unfortunately for those of us near the airport Avelo is a terrible neighbor. Loud planes, air pollution, traffic congestion, all in a social justice neighborhood where many kids live with asthma. Not to mention it’s on a marsh and will impact the migratory bird path,
So a nice affordable neighborhood being ruined by those who want cheap flights abandoned don’t want to drive to Bradley.
LOL!
hahaha
You live next to an airport and don’t understand why it’s noisy? Did they build the airport AFTER you moved in? If not….
Move near an airport, all airports make noise, those who bought homes near Tweed did so because of price alone. Small homes ring the airport and jet flights at HVN go back to the late 1960's, so its not a new facet of the airports service. Move next to a public school, noise from recess, gym classes, evening games, buses and cars coming and going, would you complain about that?
You get get you pay for.
As a New Haven resident, I love flying from New Haven but don’t enjoy the Avelo experience. No loyalty program, no water or soft drinks offered on a 2 hour flight to Charleston, lousy app and IT, etc. If other airlines come to New Haven, I’ll eagerly abandon Avelo.
They just updated the new app. They offer water on request. Their model is to keep it simple and most people don't care about water and snacks on 90 minute to 2 hour flight. Sorry to let you down but you'll never see another carrier come in and fly new haven to Charleston
I am in a smaller city that is served by Avelo to multiple locations. People here know about them since they do a lot of advertising and outreach in the city.
In your piece about Breeze you mention that they are not doing a lot of advertising and people in the cities they serve do not know much about them.
Obviously to be successful a new airline needs to massively get the public in the...
I am in a smaller city that is served by Avelo to multiple locations. People here know about them since they do a lot of advertising and outreach in the city.
In your piece about Breeze you mention that they are not doing a lot of advertising and people in the cities they serve do not know much about them.
Obviously to be successful a new airline needs to massively get the public in the market they serve know about them and keep pushing that message.
It is not a of you build it they will come situation.
Avelo has definitely been a boon for Tweed New Haven Airport. Hopefully they will continue to grow their potential and expand to many more under severed airports.
Very odd piece. Avelo has no product differentiation from other ULCC's, which even the author mentions are struggling. Avelo has slashed their network considerably, much like Breeze. Avelo's ceiling is likely already or almost reached, as there are only so many underserved markets that can sustain 180+ seats that isn't already crowded. We see right now with with Spirit and Frontier, costs may appear lower per seat, but that only works if you can fill...
Very odd piece. Avelo has no product differentiation from other ULCC's, which even the author mentions are struggling. Avelo has slashed their network considerably, much like Breeze. Avelo's ceiling is likely already or almost reached, as there are only so many underserved markets that can sustain 180+ seats that isn't already crowded. We see right now with with Spirit and Frontier, costs may appear lower per seat, but that only works if you can fill the seats. Financials look like they are "doing better", but ceiling is much higher for Breeze in filling small markets with lower gauge, product differentiation, and potential international on the horizon for them. How many more months of reporters on here saying "Breeze is toast", yet "Avelo can do no wrong". All this piece shows is Avelo is also not succeeding and doing nothing different.
you sound like a breeze fan. The numbers say alot. Spirit is done and avelo is going to serve plenty of markets that jetblue pulls out of. i want breeze to succeed but it does look good
Why is the author so enthusiastic about Avelo? They’re still losing money and nobody has heard of them unless you’re in New Haven or the outstations that serve Burbank. Breeze is already bigger than Avelo and will become even bigger next year. They’ve chosen the expensive route of starting an airline for bigger rewards, of course it will take time to make money.
HAHA you couldn't be more wrong. You completely ignore the financials as if they mean nothing.
Avelo marketing team is moles ahead of breeze
You sound like an Avelo employee...
Take a look at what's going on with Bonza/Flair. Avelo is basically the same thing. Not going to be a success!
Not even close to the same. The new max 8s that flair has puts them in a completely different financial status than avelo
Avelo seems to be quick to discontinue routes that are not producing the passenger #s, so this hopefully bodes well for their long term success. They hit the jackpot with New Haven flights and sometimes have 13-14 daily departures from there. Someone said Avelo will face competition once New Haven builds a new terminal, but Avelo should be more established by then and less dependent on the New Haven monopoly.
With the FAA's FONSI and ROD about the New Haven (Tweed) airport expanion, Avelo will have more options (further out destinations, more capacity) but also may face some competition. American could definitely come back with regionals to PHL or CLT. Would kill for them to fly HVN-BUR and think there may be a market for it. Exciting times
I believe delta and/or united would pair well with Avelo for tweed. Delta to atl and united to ohare would be great for that region. American should say away
I'm confused. Isn't Breeze a Low Cost carrier (like JetBlue and Southwest) and Avelo is a ULCC (like Spirit, Frontier, Allegiant and Sun Country)?
Yes, but the new articles love to compare the 2 even though the products arent even the same breeze is closer to jetblue then it is to spirit
I do not see Avelo or BREEZE sustainable in the future. Avelo could be acquired by Sun Country with similar fleet types but outside of that I do not see anyone else coming forward. BREEZE would be better served operating as a feeder/affiliate of one of the larger carriers such as AA/DL/UAL with aircraft that fill a niche between the Regional Jets and the larger Mainline aircraft. Neither airline can continue with route development based...
I do not see Avelo or BREEZE sustainable in the future. Avelo could be acquired by Sun Country with similar fleet types but outside of that I do not see anyone else coming forward. BREEZE would be better served operating as a feeder/affiliate of one of the larger carriers such as AA/DL/UAL with aircraft that fill a niche between the Regional Jets and the larger Mainline aircraft. Neither airline can continue with route development based on 'throwing spaghetti at the wall to see what sticks'. the super low fares offered are nothing that pays the bills to keep them afloat.
Mr. A. Levy: Please consider these routes. BUR to Laughlin/Bullheadhead City AZ and San Louis Obisbo (CA) to Las Vegas. Las Vegan's would like a quick flight to the Ocean when it's 110 F in the summer! It's far to drive despite being close in Air miles.