BlackRock Joins $200 Million in Funding for Startup Breeze Air

(Bloomberg) -- BlackRock Inc. and Knighthead Capital Management are investing in a $200 million second round of capital to support the expansion of startup low-cost carrier Breeze Airways. 

The funding also includes additional investments by Peterson Partners Inc. and Sandlot Partners, which helped provide an initial $100 million in capital that backed the May start of flights by the Salt Lake City-based carrier, Breeze Aviation Group Inc. said Wednesday.

Breeze, which offers nonstop flights from relatively small, secondary airports, primarily to leisure destinations, has taken advantage of a rebound in domestic travel as consumers switched gears after a year of staying close to home during the spread of the coronavirus pandemic. The number of travelers passing through U.S. airport security checks is averaging about 79% of 2019 levels, according to the Transportation Security Administration.

“Breeze’s use of right-sized and efficient aircraft to offer new nonstop service between smaller U.S. cities constitutes a true competitive advantage, and delivers a better experience for travelers whose only current options are connecting flights,” said Adam Zirkin, a partner at Knighthead, a distressed debt hedge fund that oversees $4.1 billion.

Breeze, founded by aviation entrepreneur David Neeleman, operates 39 routes to 16 U.S. cities from the Midwest to the East Coast. The carrier uses Embraer SA regional jets for its flights, which average less than two hours long. It will begin receiving the first of 60 Airbus SE A220 aircraft in October. Those will be used on longer routes starting late in the first quarter, Neeleman said in an interview. The carrier won’t add to its network until the A220 begins flying, he said.

Breeze doesn’t expect to raise additional funds until an eventual initial public offering of shares, Neeleman said. The company’s $300 million in early funding surpassed the $135 million he had when starting JetBlue Airways Corp. and the $235 million he used to launch Brazil’s Azul SA. 

“This sets us up for years,” he said. “We have learned and have more efficient operations than we’ve ever had before.” 

BlackRock, the world’s largest money manager, is an investor in Azul, and Knightbridge is a former investor, Neeleman said.

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