Azul Brazilian Airlines Likely to Be Profitable This Year

Brazil’s newest discount airline, Azul Linhas Aereas Brasileiras SA, carried 2.2 million passengers in its first year of operation and is likely to be profitable this year, said David Neeleman, founder and chairman.

Mr. Neeleman, better known for starting JetBlue Airways Corp. a decade ago in the U.S., said in an interview that he believes closely held Azul is the first airline in the world to carry more than two million passengers in its first 12 months.

The carrier, based at the airport in Campinas, a city near Sao Paulo, now operates 14 jetliners serving 16 cities. Four destinations will be added this year, and its fleet will grow to 21 aircraft by the end of 2010 and 33 by 2011, Mr. Neeleman said. Azul flies 118-seat Embraer E-195 jetliners and 106-seat E-190s. Both models are built by Brazil’s Empresa Brasileira de Aeronautica SA.

The new airline flew with nearly 80 percent of its seats full in 2009, the highest load factor among Brazil’s major airlines, according to data from Brazil’s National Civil Aviation Agency. Azul finished the year with 3.8 percent of the domestic passenger market, gaining on five-year-old discounter WebJet Linhas Aereas, which had a 4.5 percent share.

Both airlines pale in comparison with TAM SA and Gol Linhas Aereas Inteligentes SA, which together command 87 percent of the domestic market, government data indicates. Tam and Gol will continue to be stiff competition, and Brazil’s airport and air-traffic control infrastructure is straining to keep up with increased flight operations.

A year ago, as Azul was preparing for its first flights, Mr. Neeleman complained that the frozen credit markets were making it difficult to finance the fleet. But the company, which has attracted $200 million in startup capital from U.S. and Brazilian investors, got through the squeeze and now the financing pipeline is open again, said the 50-year-old airline entrepreneur.