Breeze To Launch Scheduled Service in May 2021

 - July 10, 2020, 4:00 PM

David Neeleman’s new Breeze Aviation low-fare venture has changed course and entered into an agreement to lease 15 Embraer E190s from Nordic Aviation Capital (NAC) for a planned scheduled service launch in the U.S. next May.

Originally planning to lease E195s from fellow Neeleman-established Brazilian airline Azul and start flying by the end of this year, Breeze instead took advantage of falling lease rates due to the Covid-19 pandemic by signing a new term sheet with NAC. Breeze recently said it would delay its launch from the end of this year to sometime in 2021, but a July 10 filing with the U.S. Department of Transportation (DOT) detailing plans to take over the operating certificate of defunct U.S. regional airline Compass Aviation indicates Breeze expects to finalize lease documentation with NAC on July 31 this year, ahead of first delivery in August. The company expects to take the remaining 14 airplanes over the course of the ensuing eight months.

Separately, Breeze and Airbus have agreed to defer delivery of the first of 60 A220-300 narrowbodies by six months until August 2021. Plans call for Airbus to deliver the second in September and then another one per month starting in January 2022. Breeze plans to start operating charter flights this November out of Minneapolis-St. Paul International Airport.

The airline expects its initial scheduled operations to connect the Atlantic Coast, the southern U.S., Texas, and the Midwest. Plans call for Breeze to begin flying an A220 from the Atlantic Coast to California in October 2021.

Breeze estimates its capital requirements under the DOT’s financial fitness test will total $61.6 million, representing three months of regular operations at an estimated cost of $21.3 million and pre-operating costs of $40.3 million. So far capital contributions from Neeleman total $15.6 million, while other executives and associates of Neeleman have contributed $4.2 million. Further capital will come from loans and expected equity contributions from a lead investor in the U.S., who has expressed a willingness to commit $25 million, and another three investors who Breeze believes will commit another $20 million.