Breeze CEO explains the airlines' secret weapon for turning a profit while some budget airlines struggle
27.01.2025 - 23:45
/ insider.com
Some budget airlines in the US are struggling, but not Breeze Airways.
The startup carrier on Thursday announced its first quarterly profit since launching in May 2021, a feat its CEO attributed to lucrative first-class seats, a flexible Airbus A220 fleet, and a niche route structure nothing like those used by competing Spirit or Frontier Airlines.
The privately held company said it earned more than $200 million in the fourth quarter of 2024, with an operating margin of over 4%. It said the full-year earnings of more than $680 million represent a 78% increase year over year.
Because Breeze is not publicly traded, only some financials — like those self-reported or those published by the government — are available to compare against competitors. This makes the full scope of the reported profit unclear. Some public figures suggest it's a significant improvement over its third-quarter margin of -21%.
"I think, just overall, there's a stronger environment in the industry," Breeze CEO David Neeleman told Business Insider. "You've seen that from the earnings by other airlines, that, for the most part, they are doing better than they did last year."
Breeze's profitability comes as many budget rivals have failed to turn a full-year profit since the COVID-19 pandemic halted travel and sent shockwaves through the industry. That's a 180-degree shift from before, when some low-cost airlines were growing faster than many mainline competitors.
Now, they face significant headwinds as travelers opt for more premium options offered by mainline carriers and grapple with continued high costs.
Neeleman, known for launching five airlines including JetBlue, said Breeze is the sole operator on nearly 90% of its 220 nonstop routes. It avoids major airports to focus on underserved communities, such as Vero Beach, Florida, Mobile, Alabama, and New Haven, Connecticut.
"If you live in Islip [New York] and now you can fly into Vero Beach, you don't have to fly to Orlando and drive two hours, or West Palm and drive two hours," he said. "It makes things easier."
He said Spirit and Frontier can't operate in the same markets as Breeze because they cannot sustain their larger Airbus A320 family airplanes. Breeze's fleet of 33 smaller A220 and 13 regional Embraer aircraft are easier to fill.
Neeleman said the A220 is particularly efficient for short and medium-haul flying, providing Breeze with more flexibility and customers with more route choices.
"I went to our yield management team the other day and asked, what markets do you need more of, and which ones do you need less of," Neeleman said. "They said we just need more planes."
He said that the carrier is phasing out its Embraer fleet, noting that consolidating maintenance and