Breeze To Buy Compass Certificate, Abandons Azul Aircraft

Credit: Breeze Airways

Breeze Aviation, modifying its start-up plans in part because of the novel coronavirus pandemic, now plans to launch with six months of charter operations starting in October and has cut a deal with defunct operator Compass Airlines to obtain its operating certificate. 

The startup also has abandoned plans to obtain Embraer E-Jets from Azul Brazilian Airlines after striking a better deal with Nordic Aviation Capital. 

Breeze, the latest startup formed by David Neeleman, filed initial paperwork for an aircraft operating certificate in February. But in April, Compass, a U.S. regional airline, ceased operations after the COVID-19 pandemic wiped out demand. 

Now Compass and Breeze have forged an asset purchase agreement that includes the former regional operator’s operating certificate. The deal is subject to U.S. Transportation Department (DOT) approval.

The two companies are requesting “expedited consideration in order that air transportation services under the certificate can resume as quickly as possible,” according to the filing submitted by Breeze and Compass. 

If the transaction is approved, Breeze plans to launch charter service on Oct. 15 from Compass’ former base of operations in Minneapolis-St Paul. The airline would operate charter services for roughly six months—three months longer than originally envisioned—before starting scheduled commercial flights in May 2021.

Breeze, which established its corporate headquarters in Salt Lake City, Utah, has not changed its long-term strategy, the startup said. Its original DOT filing outlined a plan to build its network around north-south leisure routes east of the Mississippi River and expand as its fleet size ramps up. “Breeze’s initial markets will be underserved city-pairs that are currently without nonstop service,” the earlier filing said.

Breeze aims to launch operations with Embraer E190/195 jets, but not the 28 E-Jets it originally planned to lease from Azul, of which Neeleman is the founder and chairman of the board. 

“The reduction of aircraft used in air transportation due to the COVID-19 pandemic has resulted in a favorable aircraft leasing market,” Breeze concluded. As a result, Breeze is leasing 15 E-Jets from Nordic on “significantly better terms that the original term sheet signed with Azul for ERJ-195 aircraft.” 

Breeze and Nordic signed the term sheet June 19 and aim to finalize the lease documentation July 31. 

Acquiring the Compass certificate should streamline Breeze’s effort to win regulatory approval. Launching operations from the former airline’s base means oversight can be conducted by the same FAA regional personnel Compass used. Breeze believes it will “be able to deliver on its plan to restore service to underserved markets more rapidly,” the company stated in its application.

Additionally, Breeze has pushed back initial deliveries of its Airbus A220 jets by roughly six months. The revised delivery schedule sees the first two A220s arriving in August and September 2021, respectively, and then one per month starting in 2022. The company has 60 of the narrowbodies on order. 

As most airlines work to shore up their liquidity during the COVID-19 pandemic, Breeze is in the midst of raising $45 million in equity and expects to close a financing transaction in July. 

The company estimates its total start-up capital requirements will $61.6 million, which represents roughly three months of regular operations. Neeleman holds 82% of Breeze’s shares, valued at $19.6 million. Since February the company has raised $4.2 million, which includes investments from other Breeze executives. Breeze has estimated it has roughly $25.4 million left to fund of its estimated start-up capital.


Lori Ranson

Lori covers North American and Latin airlines for Aviation Week and is also a Senior Analyst for CAPA - Centre for Aviation.

Sean Broderick

Senior Air Transport & Safety Editor Sean Broderick covers aviation safety, MRO, and the airline business from Aviation Week Network's Washington, D.C. office.