Avelo turns to Embraer to build first U.S. E2 fleet

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Avelo Airlines has placed an order with Embraer for 50 firm E195-E2 aircraft, with purchase rights for an additional 50, giving the Brazilian plane maker its first U.S. E2 operator. In recalibrating its strategy, the four and a half year old low-fare start-up has also secured a major new investor in Embraer, three people briefed on the deal tell The Air Current.

Avelo on Sept. 8 announced it had completed “a new round of significant growth capital to support its continued expansion across the United States and the Caribbean.” The carrier called the financing round “the single largest investment in Avelo Airlines since the company’s initial Series A funding” when it raised $125 million in January 2020.

As part of the investment, Avelo said Monday it had secured funds from “a new partner,” though it did not disclose the investor’s identity or the size or scope of the investment. TAC understands  that the Brazilian airframer Embraer is providing debt financing to the carrier for its pre-delivery payments — not uncommon as part of aircraft transactions.

In announcing its deal during a Sept. 10 press conference in Washington, D.C., Avelo and Embraer leadership provided TAC an advance look into its strategy and, in turn, deeper insight into the state of the struggling low-fare business model in the United States. The parties declined to comment on details surrounding the investment from Embraer.

“I’m calling it Avelo 2.0,” airline CEO Andrew Levy told TAC of the decision to augment its existing Boeing 737 fleet with E2s. “We think that we have the right strategy. We just have the wrong airplane for the strategy in this marketplace as it’s evolved around us.”

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