Startup Avelo Airlines just turned a profit for the first time

Startup carrier Avelo Airlines said Thursday that it was profitable in the fourth quarter of 2023 — a significant milestone as the new airline continues to grow and begins to look toward its next phase.

Avelo managed to eke the pre-tax profit for the quarter despite higher-than-expected fuel prices, the airline said. It credits its low-cost business model and cost structures.

Although the airline still operated at a loss for the full year — typical for new companies as they launch and grow scale — the carrier said it brought in $265 million in revenue for the year. This is up by 74% compared to 2022.

The airline is on track to be profitable for the full year in 2024, CEO Andrew Levy said.

"Achieving our first profitable quarter is an exciting and significant milestone in Avelo's journey," Levy said in a statement. "As we approach Avelo's third anniversary, I am very bullish about our future and the substantial opportunities ahead of us."

Avelo, one of two startup airlines to launch in 2021 ahead of the pandemic-era resurgence of travel demand, has expanded rapidly since it began flying.

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The airline operates more than 60 routes between more than 40 destinations out of six bases: Orlando International Airport (MCO), Raleigh-Durham International Airport (RDU) in North Carolina, Hollywood Burbank Airport (BUR) in California, Wilmington Airport (ILG) in Delaware, Tweed New Haven Airport (HVN) in Connecticut and Harry Reid International Airport (LAS) in Las Vegas. However, the airline will shift that Las Vegas base to Santa Rosa's Charles M. Schulz Sonoma County Airport (STS) in California.

The airline operates 16 Boeing 737 jets and expects to take delivery of five more this year. All of the aircraft are previously owned, and with about 1,000 employees, the airline maintains a ratio of roughly 63 employees per aircraft. This is significantly lower than mainline airlines (although higher than Frontier and Allegiant, which have roughly 53 and 48 employees per airplane, respectively, according to public information).

The quarterly profit contrasts with Breeze, the other ultra-low-cost startup airline that began flying in 2021.

Breeze appears to have lost hundreds of millions of dollars, according to filings with the U.S. Department of Transportation. It has rapidly expanded to more than 145 routes and purchased a fleet of brand-new Airbus A220-300 jets.

On Tuesday, Breeze founder David Neeleman — who also founded JetBlue — said he expects the airline to turn profitable this year.

"The transition line happened later than we anticipated," Neeleman added. "We didn't get as efficient as we could have, soon enough, but we're getting to that point now and so we're really pleased with the business."

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