Spirit Airlines seemed poised to bounce back faster than its US domestic competitors. However, the optimism following an uptick in demand through the month of June has quickly faltered as numbers in July failed to live up to expectations. As a result, Spirit is reducing its schedule for the following months and will issue warnings of furloughs to 20%-30% of frontline staff.
Ultra-low-cost-carrier Spirit Airlines seemed set to, if not sail through the crisis then at least navigate it fairly well. Its business model, focused on the budget leisure and the visiting friends and family segments, has been predicted to rebound quicker than other, more premium products. The airline itself believed it would be one of the first to return to profitability.
July capacity matched June demand
While that may still be so, it might not happen as quickly as Spirit had initially hoped when travel demand showed significant signs of recovery in June. Coronavirus cases have spiked across the country following an uptake in travel during a busy US domestic season. States have imposed new quarantine rules and reintroduced lockdown measures, dampening customers’ willingness to travel.
“For a short time in June, travel slightly rebounded during our traditional busy season, and our July capacity was increased to match,” Spirit’s CEO Ted Christie said in a letter to staff seen by The Points Guy.
“Unfortunately, however, the increase in demand reversed as we saw increases in COVID cases and state-imposed quarantines,” he continued.
Travel restrictions hitting Spirit hard
While passenger demand is down nationwide as a result of the resurgence of the pandemic, some of Spirit’s focus states, such as Florida, have been hit particularly hard. No less than 17 states now impose travel restrictions on visitors from “the Sunshine State.” Furthermore, anyone wishing to travel to the tri-state area of Connecticut, New York, and New Jersey must self-isolate for 14 days upon arrival.
As a result, Spirit will cut its August schedule by 35% compared to the same month last year, operating only 380 daily flights on average as opposed to 408. The carrier had previously planned for 403. September operations will be down by 45% year-on-year.
Schedule cuts equal job losses
Because of these schedule cuts, the airline will send out WARN notices to between 20% and 30% of staff by Friday, July 31st.
“If demand doesn’t recover, we may need to right-size our operation for a smaller overall market which could lead to workforce reductions,” Mr Christie told his employees.
Notices will go out to frontline workers, including pilots, cabin crew, dispatchers, and some ground staff.
This is a massive blow for Spirit and its crew members. In June, the airline managed to break even, meaning it had, as probably the only carrier operating at this time, a cash-burn rate of $0. Unfortunately, with the disappearing rebound-trend, it seems even Spirit staff will not be safe from layoffs when the CARES Act payroll protection runs out October 1st.
Simple Flying has reached out to Spirit Airlines for a comment but was yet to receive a reply at the time of publication.
