JetBlue Founder Bucks Airline Slump With Startup Planning October Debut
JetBlue Founder Bucks Airline Slump With Startup Planning October Debut
(Bloomberg) -- Breeze Aviation Group Inc., a startup airline planned by JetBlue founder David Neeleman, is seeking to buy a defunct carrier’s operating certificate with an aim toward starting service in October.
Breeze plans to start charter flights Oct. 15, according to a regulatory filing. If regulators approve, Breeze plans to begin scheduled service next May. It will base charter operations in Minneapolis-St. Paul, which is where the failed Compass Airlines had its headquarters.
Purchase of the Compass certificate is subject to approval by the U.S. Transportation Department. Breeze had sought approval as a new carrier, but acquiring an existing license is typically a faster way to begin service. The filing Thursday didn’t disclose the certificate’s price.
Breeze has deferred the first deliveries of Airbus SE A220-300 jets by six months until August 2021. The carrier also is leasing 15 Embraer SA E190 jets from Nordic Aviation Capital, abandoning a previous plan to fly E190s acquired from Azul SA, a low-cost Brazilian airline founded by Neeleman. Breeze cited the dramatic drop in air travel because of the coronavirus pandemic as a reason for canceling the Azul deal.
Neeleman declined to comment on the Compass agreement.
Compass, which flew regional flights for Delta Air Lines Inc. and American Airlines Group Inc., shut down April 5 as the two major airlines slashed capacity because of the pandemic. Compass is owned by Trans States Holdings.
Breeze’s initial scheduled routes will focus on 15 cities in Texas, the South, the Midwest and the Atlantic Coast. It previously said it would primarily serve midsize cities that lost nonstop service as larger airlines combined and focused on building strategic hubs. With the A220s, Breeze plans to fly between the East Coast and California.
“Breeze’s mission of providing nonstop service to underserved markets across the country remains unchanged,” the company said in the filing.
Breeze, which is based in Salt Lake City, is attempting to raise another $45 million by selling stakes to four U.S. investors, the filing said. Neeleman holds 82% of Breeze’s shares.
Separately, Breeze settled a lawsuit filed in November for hiring Lukas Johnson as chief operating officer. He had been chief executive of Canada Jetlines Ltd., which had planned to start low-cost service. The Canadian company was acquired by Global Crossing Airlines last month as part of a charter venture. No funds were exchanged in the settlement, Breeze said in the filing.
A second U.S. airline startup, formed by Allegiant Travel Co. co-founder Andrew Levy, also plans to begin commercial service in the first half of next year. The carrier expects to purchase several Boeing Co. 737-800 jets, capitalizing on the drop in prices during the air travel slump, he said in an interview this week. The airline previously planned to lease only.
He said he expects to lease a 737-800 for no more than $150,000 a month, down from $200,000 before the travel downturn.
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