Avelo’s First Profitable Quarter is a Milestone


It has actually happened. Avelo made money. Well, at least, it made a pre-tax profit in the fourth quarter of 2023. We don’t have the DOT data yet for Q4, but Avelo pushed out a news release to announce the big milestone for the airline. With the breadcrumbs the airline provided, we can calculate a full picture of how the airline did it.

Here’s what we know. In 2023, Avelo says it generated $265 million in revenue. From DOT data, we know that the airline had $185.8 million in the first three quarters. That means in Q4 pulled in somewhere around $80 million.

From there, we can start looking at year-over-year comparisons to fill in the Q4 blanks. Unfortunately, that’s harder to do than it should be.

In 2022, Avelo was small enough that it only had to file half-yearly results, so we can’t get down to the quarterly level. If we take the DOT Q3 numbers and add that to our estimated Q4 revenue, we get around $142 million in revenue for the second half of 2023, give or take. In the second half of 2022, it had just shy of $100 million in revenue so revenues climbed 42 percent. This came on an scheduled seat increase of 65 percent.

The cost side of the equation is where things get more confusing, because we don’t have any real guidance on that, but we do have enough information to build a model. Here’s what it spit out.

Avelo Financial Metrics by Half Year

Data via DOT Form 41 and Internal Models

How did I get here?

Avelo did tell us in its release that full year 2023 pre-tax margin was 15 points better than 2022. In 2022, the airline’s operating margin as filed was -22.2 percent. A 15 point increase would bring us to a -7.2 percent margin for the whole year.

Now it’s just math. (Thank you, Excel, for one of my favorite tools ever built… Goal Seek.)

We already know roughly what revenue was from the previous math, and we know the full year operating margin. That means we can just tweak the Q4 expenses — our only unknown number — to get to a -7.2 percent margin on the year. This won’t be exact, because I assume Avelo is rounding to whole numbers in its press release, but it’s going to be pretty close.

In this model, Q4 cost would come in around $77 million, creating a positive 3 percent margin for the quarter. That would mean that vs Q3, revenues soared by 25 percent while costs went up only 5 percent on a 2 percent increase in seats.

Think about that. Q3 includes the busy months of July and the first half of August. Q4 has the Thanksgiving and winter holidays, but that’s really the extent of it. That kind of revenue increase is pretty solid work. I wonder if it’s more in fare or ancillary.

Can we go any deeper? Without DOT data for Q4, we can’t go that deep, but we can pull some information for at least part of the quarter. First, we can look at T-100 data which is now out through Nov 2023. This doesn’t have fare data, but it does have passenger and load factor information.

In Oct/Nov 2023, load factor was 76.9 percent, down from 82.1 percent in Q3. Even if December came in with solid loads that brought the full quarter total up a few points, revenue growth had to be really impressive. Barring insanely strong loads in December — which is unlikely since the first half of the month is pretty quiet — this means that it’s the revenue growth that really shined.

Now let’s break load factor out by base. (I included Santa Rosa even though it wasn’t a base during these times, but it will be soon.)

Avelo Load Factor By Base

T100 Data via Cirium

As always, New Haven is the star. It continues to be the engine driving this airline, not only having the highest loads but also being worth more than a third of the seats for the entire airline.

I should note that Burbank appears to be doing much better for itself these days as well. That is not a bad result, especially for that time of year. Santa Rosa is also trending in a good direction.

Everything else is, well, it’s not great. Las Vegas is the lowest at all, and those numbers are not good, especially for a ULCC that makes its money by getting butts in seats, so they can buy other stuff. But Raleigh/Durham had the biggest decline vs last year’s October/November schedule.

Again, we don’t know fare data yet, but it does look like Avelo made good progress with fares in the quarter in general. Based on loads, it would seem that Burbank may actually have turned a corner in 2023 while New Haven continues to hum. The rest of the east coast looks like it needs some work. Then again, I imagine a fair number of those Orlando markets from small town USA are getting good subsidy behind them, so it’s hard to know.

Regardless of these specifics, it does look like Q4 was a very promising quarter for Avelo indeed. Congratulations are due to the team over there.

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

29 comments on “Avelo’s First Profitable Quarter is a Milestone

  1. Congratulations to Avelo, always nice to see a smaller airline show profitability and hang in there.

    I love how the airline has a section entitled “Avelo’s Reliability Performance” in an EXTREMELY prominent section of its web site (just below its fare booking engine, or “above the fold”, to use a phrase that will date myself), showing Avelo’s on-time performance and cancellation rates for the prior month and prior year in both absolute terms and rank compared to other airlines. Reliability is usually a major concern for pax when booking a relatively unknown/small/ULCC airline (as it very much should be), and while the data for Avelo is obviously self-serving, it’s great to see an airline put that front & center. Let’s hope that section stays there when the reliability numbers aren’t as good as they are now.

    On a personal note, Avelo & Breeze (especially the latter, as I haven’t flown a A220, and love me some 5-across jets; I miss the old Mad Dogs) are two airlines I’ve been wanting to fly for some time, and I’m hoping I get to check at least one of those airlines off my list later this year.

    Best wishes to Avelo’s continued success, and thank you Brett for covering these smaller airlines.

  2. Cranky – Typo on first graphic? “H2 2022 (est)” – should be H2 2023 (set)

    Sidenote – I haven’t seen a report on Vegas room rates lately – but I wonder if higher “post” covid hotel rates were pricing out the typical some ULCC flyers last year.

    1. Yes, LV room rates have been climbing as service quality has been a real issue as of late according to “Miles to Memories,” a YouTube channel on LV news & happenings.

  3. Silly hypothetical question: could B6 operate in NHV? Can you get a A320, E190 or A220 in there? Hypothetical because I assume NHV is tapped out, B6 missed the chance. (Didn’t see any prior articles or comments addressing this question.)

    1. Avelo flies 737-700s and 737-800s, so JetBlue would have no problem landing there.

      I suspect the biggest reason B6 never looked at HVN is that they were afraid of cannibalizing some of their own passengers from Westchester, where they have a dominant position, at least on the Florida routes.

      1. True, but HVN is quite the trip from HPN as I-95 has become so traffic clogged that the market could be sort of split depending how far east you are

        It’s become so bad in fact that Metro-North has seen a rapid increase in ridership of intrastate travel over the past several years including post Covid.

    2. emac – Assuming you mean HVN (New Haven). Once the new terminal is built and the slight runway extension is done, there would be room for others to come in and fly reasonable distances. But Avelo has the monopoly until that happens, because it basically controls the terminal and there isn’t any more room.

      1. aaaahhh that’s embarrassing. NHV is the train station. Thanks.

        To the cannibalization points: do you want to be the cannibal or the main course? Plus, cannibalizing a hub is a big no-no, you want all your capacity and traffic in the hub to support connections (see: UA/AA don’t fly to MDW, UA doesn’t fly to HOU/OAK/JFK, AA doesn’t fly to DAL). Cannibalizing a city without much flow (which for B6 is most of their network) — that’s fine. And there’s so much demand in that Long Island Sound corridor, B6 only becomes more relevant.

      2. Folks in southern (and even Central) Connecticut are happy now that Avelo will start flying to Atlanta in a few months. Frontier gave it a go last year from Hartford-Bradley, but gave up last summer. Delta is the only other airline flying from Connecticut (Bradley) to Atlanta. The Delta flights are plentiful, but cost $250 one way. Avelo came in and saved them.

      3. HVN’s popularity has skyrocketed, however the terminal is small and cramped. There are available time slots for another airline like JetBlue, but most are not ideal teams and they would need space for ticket counters like Avelo did with a trailer. HVN’s numbers significantly increased to almost 500,000 enplanements this past year, but it will likely not see an additional airline until the new terminal is built, hopefully in 3 years.

    3. B6 would be cannibalizing BDL and HPN which are among their most profitable operations in the entire network. The same argument against B6 entering ISP.

    4. So, from a performance perspective, HVN is definitely a challenging airport. But it’s doable. Early-build A220s might struggle; newer ones have better performance numbers as the airframe has been refined. E190s should be fine; they make it in and out of LCY which is a shorter runway with a very high climb gradient. A320s I don’t really know about, but from my understanding their short-runway performance is a bit better than 737s. There is also a short runway kit for the A320 series, like the SFP kit that Avelo uses on its -800s; though I don’t know if B6 has any planes with it equipped. If anything, the 737 is probably the worst plane Avelo could have picked for HVN. At least it’s not the -900…

      For B6 specifically, it’s probably safer to stay at BDL and HPN. Especially at HPN, they have a good thing going there, and they’d be competing with themselves by flying to HVN. In general, while Avelo’s HVN operation has taken some passengers away from other airports in the area – you can see that decline in the numbers, especially at BDL – that decline is not even close to equalling the number of passengers using HVN now. Avelo has induced a LOT of their demand, and I actually am not convinced that other airlines should view that base as a huge threat right now. And just because one airline is achieving good numbers does not mean another airline should view that as a ‘gimme’, especially given the operational challenges Avelo has faced there.

      Besides… with the MAX issues, airlines are trying to hold on to their reliable NGs, so Avelo is probably not going to grow fast enough in the coming years to even match, much less outpace, other airlines. If the HVN runway extension and new terminal are ready before carriers are willing to give up their NGs, then Avelo will likely see other airlines starting to take market share off them in HVN while they are unable to respond – or they’ll have to cut flying elsewhere to respond; either way, a much easier situation for competitors to take advantage of. But even then, Avelo’s experience and name recognition in the market will probably pay off, so it’s going to be challenging for other airlines to try and steal a march on them at any point, even after competition becomes easier.

  4. This is the difference between running a disciplined network and throwing spaghetti at the map to see what sticks (Breeze). I expected Breeze would be more successful than Avelo when both airlines first launched, but Avelo quickly proved me wrong. They’ve taken a disciplined approach to build out relevance in a handful of markets which reduces unit cost and grows consumer confidence. Breeze on the other hand enters and leaves markets as the wind blows, constantly chases RASM, regardless of the impact to cost, complexity and reliability. Avelo serves markets their passenger profile actually wants to fly from an economically-advantaged region in an airport with no competition. Breeze adds (and subsequently cancels) service to any market it sees with 50+ PDEW, claiming it’s underserved. Who is BDL-CMH, PVD-PIT or SFO-SDF 2x weekly for?
    It’s the reason Avelo has a chance to succeed into a new G4 type airline and Breeze will probably be defunct by next year.

    1. Lol this was going to be my other point but decided to focus on STS instead. I even had the Breeze “spaghetti against the wall” analogy ready to go. Well done.

    2. Just realized Breeze already failed with transcon at HPN so it would be hilarious if Avelo did HVN to BUR and even STS since Breeze has multiple West Coast destinations from BDL and PVD. For now, anyway!

      1. I was honestly shocked that HPN-LAX did so poorly. I thought that could be Breeze’s flagship route. The issue remains the complexity of their route map/crew bases. I’m confident B6 could make that route work, although they could not fly Mint on it due to HPN’s short runway.

        1. Had the same thoughts. Very strange. Yet we’re supposed to believe BDL to San Bernardino works? I don’t get it!

      2. Bill – I don’t think there’s any way they could get an airplane from HVN to the west coast with a meaningful load of passengers. That runway is just too short.

        1. Ahhh, I didn’t know if the runway was growing as part of the renos. Guess not!

      3. Can’t do it, not even after the runway extension at HVN, because BUR is still limiting (only Runway 15 can actually support transcons on a 737, which is not operationally reliable) and STS is even worse (6,000 foot runway with obstacles to clear in both directions).

        It’s also not actually certain whether HVN would have the performance for a transcon even after the runway extension, as the runway will still be fairly short, shorter than 15/33 at BUR that has restrictions in one direction due to obstacles. There is a bit of a hill at the departure end of 02 at HVN; my understanding is at present that is the largest limitation to takeoff performance at the airport, more so than just the runway length. I don’t believe that’s planned to be touched with the extension.

  5. Glad to see Avelo doing well. Also glad to see STS becoming a base especially at the expense of the suicide mission that was LAS.

    STS could be a smaller, west coast version of HVN as it is also a barely utilized airport at the affluent edge of a huge metro area that is an hour or more from the major airports in the area.

    STS also has the benefit of being in the heart of a major tourist area, Sonoma and Napa valley wine country, so they could also get incoming tourist traffic whereas the vast majority of HVN roundtrips are likely to originate in HVN, except for a tiny amount of inbound VFR traffic.

    1. You can think of HVN as being an aviation extension of I-95 for southeast Fairfield, New Haven, Middlesex & New London Counties. If you live in say Westbrook CT & there is a flight that meets your needs, you aren’t going to drive to LGA or JFK if you can help it. Know a family who has done exactly this to reach Fort Lauderdale as they live in Orange.

      1. Exactly what I think could happen with the wealthy suburbs of Marin county and STS.

      2. Exactly. As others have noted, New Haven isn’t a bad market. There are a LOT of people (think analysts at hedge funds & white collar workers at the many corporate HQ) between New Haven & White Plains who have enough disposable income for leisure trips but not nearly enough money for private jets. The panhandle of CT is called the Gold Coast for a reason.

        HPN (White Plains) is on the NY/CT border, and traffic in SW CT is awful, which is all the more reason to try to avoid going to the NYC-area airports. HPN is also constrained in terms of what’s allowed there for flights (lots of rich people living around it), has $$$$$ parking, and is the first airport to be shut down in bad weather. BDL (Hartford/Springfield) is also a hike (only 5 miles south of the Mass border) and not a fun drive either, and PVD airport is 90 miles from New Haven.

      3. The New Haven and Bridgeport areas have been terribly underserved with regard to air service. Getting to New Haven from, let’s say, Chicago has been awful. In the past, I’ve looked at the NYC area airports (too far, horrible traffic), HPN (too expensive, also somewhat distant and bad traffic) and BDL (quite far, can involve bad traffic at times). Ultimately, I chose the latter (BDL) and it was a good hour to get to the New Haven area from there. I have friends who have since taken Avelo from HVN to PBI and they loved it. Yes, Avelo is basic but it’s convenient for them (in spite of living nearly as far from HVN as from BDL) and the seats were comfortable enough to make the 3 hour flight.

        Not only are the New Haven and Bridgeport areas more populated than most people realize, but it’s a fairly high income region as well. Basically, Avelo saw a sweet spot with potential here and they’re really making bank on it. Good for them!

        1. I really think they could make a strong play possibly even connecting HVN to BUR and STS.

  6. The New Haven data shows why Avelo had to change things. I always wondered why they randomly cut the Las Vegas routes in 2021, after they stated them in the fall of 2021. Makes me wonder that New Haven exploded so quickly that they had to move more planes there, and shift the fleet around. Notice how Burbank has 737-700s now and not the 737-800s they started with. I think Burbank started performing better when they moved the 737-700s there and effectively reduced some labor costs and reduced the availability of seats thus improving margins.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier