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Breeze secures $200 million in new funding as Neeleman's startup airline navigates growing pains

Aug. 18, 2021
4 min read
Breeze secures $200 million in new funding as Neeleman's startup airline navigates growing pains
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Breeze Airways secured $200 million in Series B funding on Wednesday, the first sign of investor confidence in the startup's business model since it began flying in late-May.

Notably, the new investor endorsements come as the airline navigates what could best be described as a turbulent operating environment — particularly for a startup.

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Breeze launched service on May 27, and announced an initial network with 39 routes between 16 U.S. cities, with two routes launching on day one, and the rest starting through the rest of May, June, and July. However, by late July, the airline was already cutting back some service.

But David Neeleman, Breeze's founder and CEO, told TPG in an interview Wednesday that those cuts were not a sign of a problem with the business model. Instead, they were part of normal startup growing pains.

"Really it was just that we bit off a little bit more than we could chew," said Neeleman, perhaps still best known in the U.S. for founding New York-based JetBlue in 2000. "I wanted more spare coverage in the system and wanted to be able to run the operation better."

"It caused a little bit of discomfort, but we compensated our passengers really well. I just want to run a perfect operation," he added.

The Breeze launch came just as the COVID-19 pandemic appeared to be in recession in the United States. The new funding round, however, comes as cases, hospitalizations and deaths are surging, driven largely by the delta variant.

Although Breeze saw a 10% decrease in bookings attributable to concerns over the variant, according to Neeleman, he said that customer confidence remains fairly resilient. For instance, a fare sale launched in response to that decrease saw bookings increase 20%, more than making up for the delta-induced drop.

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"I think in the next week, or two, or three, we're going to see the same thing here as in London," Neeleman said, where a surge driven by the delta variant is on a downward trajectory, leading to continued reopenings.

Some epidemiological models predict a peak by sometime in September before the latest wave begins to fall.

That should coincide with solid demand that Breeze is seeing anyway for the fall months, Neeleman said.

"We're seeing decent bookings in the fall, too, because when we started selling, people wanted to go in the summer but hotel rooms were either gone or expensive, and rental cars were hard to come by," he said. "But now in the fall, things are more reasonable, and people are saying 'let's do it.'"

Read more: Neeleman’s new airline Breeze will use a ‘see how it goes’ approach to succeed. And business class — eventually

Demand for the flights — which Neeleman says Breeze stimulates by bringing nonstops to unserviced routes — should be high enough for the airline to succeed, based on the load factors it's currently seeing.

"It depends on the routes, they're in the 60s and 70s," Neeleman said, referring to load factors. "Considering we started out late, we're really happy with it."

Neeleman previously said that Breeze's low operating and capital cost structure means that the airline could break even with just 50 or 60 passengers aboard each flight. The Embraer 195 aircraft the airline is currently flying can seat 118 passengers, so load factors in the 60s and 70s means about 70 to 95 passengers per flight — far above that metric.

The airline will use the new funding to expand its fleet and network, Neeleman said, including purchasing more used Embraer jets, and taking delivery of the first of 60 new Airbus A220 planes on order. That first delivery is scheduled for October.

Featured image by Photo by David Slotnick/The Points Guy
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023