In Depth February 4, 2010, 5:00PM EST

Azul's Fast Takeoff in Brazil

JetBlue founder David Neeleman is taking his dirt-cheap airline model to South America. Will it fly?

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David Neeleman is in a good mood. Fresh off a flight from São Paulo and gearing up for a round of TV interviews, Neeleman, 50, agrees to meet over lunch at a Così sandwich outlet in Greenwich, Conn., near his home in New Canaan. The lunch tab for two: $26—fitting for a man building his fourth discount airline and his first in an emerging market. Neeleman has a happy story to tell: Investment firm TPG has just bought a $30 million stake in his Brazilian airline Azul Linhas Aéreas Brasileiras, and Azul has set an industry record, carrying 2.2 million customers in its first year.

Azul's early success is all the more sweet for Neeleman given the bitterness he felt after his ouster from JetBlue Airways (JBLU). The company had captured consumers' imaginations, and Neeleman, hailed as the model of a passionate leader, could often be spotted passing out snacks on planes or helping passengers check in bags. JetBlue became such a phenomenon that its stock jumped 67%, to 45, on its first day of trading in April 2002. Then a Valentine's Day 2007 ice storm left thousands of passengers stranded and led to Neeleman's ouster by the board. "My reaction was shock and disbelief," says Neeleman. "I got sucker-punched." JetBlue, which declined to comment on the firing, hasn't enjoyed much of a rebound; its stock has since fallen by more than half, to about 5.

After dabbling with the idea of starting an ethanol company in California, Neeleman went to check out a Brazilian airline called BRA Transportes Aéreos as a favor to some investor friends. "It was the furthest thing from an airline I've ever seen," says Neeleman. "I thought, 'If these guys will invest $150 million in this, it must be worth looking around.' " (BRA suspended operations in late 2007.) Neeleman quickly raised $150 million to launch his own startup airline. Then, just as he was finalizing route plans and securing government clearance to fly, the global economy crashed. With his financing and plane orders locked in, he pushed ahead with his launch in December 2008. Remarkably, Azul—"blue" in Portuguese—is on track to make a profit in 2010. Neeleman, the chairman, owns about 15% and controls the voting shares.

Azul's long-term success will depend in part on how well Neeleman has learned from his mistakes. One challenge, says Vaughn Cordle, managing partner of Washington-based research firm AirlineForecasts, will be curbing his ambition. "The greatest threat is if they let Azul grow above a sustainable rate," says Cordle. "That's what happened at JetBlue." Neeleman acknowledges the Brazilian market's many challenges, from taxes to infrastructure, and insists he's keeping his expectations in check. But in the same breath he talks about the opportunity. He wants to revolutionize the Brazilian market by bringing air travel to the masses. And he wants redemption.

LOCAL ROOTS

Brazil was a logical place for Neeleman to go. He spent his first five years there, the son of a reporter for United Press International who had first visited the country as a Mormon missionary. At 19, Neeleman returned to the country of his birth to do his own two-year missionary stint. In 1984 the college dropout helped create Morris Air, a Salt Lake City airline modeled on Southwest Airlines (LUV), which purchased Morris Air a decade later. Neeleman then helped launch Canada's WestJet and developed an airline reservation system called OpenSkies, now used by Ryanair (RYAAY) and a dozen other carriers, before starting JetBlue in 2000. He wasn't just the CEO of JetBlue—he was the creative force, an energetic father of nine children (now aged 10 to 28), proudly characterizing his attention deficit disorder as an asset he wouldn't trade for the world.