Avelo Airlines Achieves Profitability Milestone in Fourth Quarter of 2023
Startup carrier Avelo Airlines announced on Thursday that it had achieved profitability in the fourth quarter of 2023, marking a significant milestone for the new airline as it continues to expand and look towards the future. Despite facing challenges such as higher-than-expected fuel prices, Avelo managed to turn a pre-tax profit for the quarter, attributing its success to its low-cost business model and efficient cost structures.
While the airline still operated at a loss for the full year, which is common for new companies in the early stages of growth, Avelo reported a revenue of $265 million for the year, a 74% increase compared to 2022. CEO Andrew Levy expressed confidence that the airline is on track to achieve profitability for the full year in 2024.
Levy stated, “Achieving our first profitable quarter is an exciting and significant milestone in Avelo’s journey. As we approach Avelo’s third anniversary, I am very bullish about our future and the substantial opportunities ahead of us.” The airline’s success comes at a time when the aviation industry is recovering from the impact of the COVID-19 pandemic, with travel demand starting to rebound.
Avelo Airlines, along with another startup carrier, launched in 2021 just before the resurgence of travel demand in the pandemic era. Since its inception, Avelo has rapidly expanded its operations, offering more than 60 routes to over 40 destinations from six bases across the United States. These bases include Orlando International Airport, Raleigh-Durham International Airport, Hollywood Burbank Airport, Wilmington Airport, Tweed New Haven Airport, and Harry Reid International Airport in Las Vegas. The airline recently announced plans to shift its Las Vegas base to Santa Rosa’s Charles M. Schultz Sonoma County Airport in California.
Avelo currently operates a fleet of 16 Boeing 737 jets and expects to receive five more aircraft this year. All of the jets in its fleet are previously owned, and with approximately 1,000 employees, the airline maintains a ratio of around 63 employees per aircraft, which is lower than that of traditional mainline carriers. However, it is higher than the ratios of other ultra-low-cost carriers like Frontier and Allegiant.
In comparison, another startup airline, Breeze, has faced financial challenges as it expanded rapidly to over 145 routes and acquired a fleet of new Airbus A220-300 jets. According to filings with the Department of Transportation, Breeze has reportedly incurred significant losses since its inception. However, Breeze founder David Neeleman, who also founded JetBlue, expressed optimism that the airline would become profitable this year.
Neeleman stated, “The transition line happened later than we anticipated. 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.” The contrasting financial performances of Avelo and Breeze highlight the challenges and opportunities facing new entrants in the competitive airline industry.
As Avelo Airlines continues to expand its network and strengthen its operations, the airline’s achievement of profitability in the fourth quarter of 2023 signals a promising future ahead. With a focus on low-cost operations and efficient business practices, Avelo is poised to capitalize on the growing demand for air travel and carve out its niche in the market. As the aviation industry evolves post-pandemic, Avelo’s success story serves as a testament to the resilience and innovation of startup carriers in the face of adversity.