Spirit Airlines calls June rebound an ‘outlier,’ could furlough nearly a third of staff

Jul 29, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Discount carrier Spirit Airlines seemed immune from the worst ravages of the coronavirus pandemic: the holiday flyers that make up the bulk of its flyers were returning to skies at a steady clip and it was on track to resume most of its flights by year end.

That recovery, however, has proved to be what Spirit CEO Ted Christie called an “outlier” in a Tuesday (July 28)  letter to staff that was viewed by TPG.

“For a short time in June, travel slightly rebounded during our traditional busy season, and our July capacity was increased to match,” he said. “Unfortunately, however, the increase in demand reversed as we saw increases in COVID cases and state-imposed quarantines.”

Sign up for the free daily TPG newsletter for more airline news!

Data from trade group Airlines for America (A4A) shows net passenger bookings — or new reservations minus cancellations — fell at the end of June when COVID infections were spreading and has held steady at down around 80% compared to last year since the beginning of July.

But A4A’s numbers are national and a large portion of Spirit’s flights touch destinations like Florida that have been hit hard by the recent coronavirus surge. As a result, the airline will cut its August schedule by 35% year-over-year and September by 45% year-over-year. And Spirit’s end-of-the-year prognosis is uncertain.

Spirit travelers whose flights are cancelled will receive a credit for the full value of their ticket, or can request a refund from the airline.

Related: Spirit Airlines cuts August schedule, eyes possible furloughs as recovery stalls

As a result of the schedule cuts, Spirit will send federally-mandated notices warning of possible furloughs to between 20% and 30% of its frontline staff on Friday, July 31, said Christie. Notifications will go to pilots, flight attendants, dispatchers, guest service agents and ramp agents.

Employment protections under the federal coronavirus aid package, or CARES Act, expire on Sept. 30. As a result, airlines must send possible furlough or layoff notices by around Aug. 1 to meet federal requirements of at least 60 days notice.

Labor unions, including the Air Line Pilots Association (ALPA) and Association of Flight Attendants-CWA (AFA) that both represent staff at Spirit, are pushing Congress to extend the CARES Act employment protections through March 2021.

Related: Global air travel unlikely to recover until 2024 as COVID remains ‘issue’ in US, elsewhere

“The autumn of our discontent… appears to have arrived with greater voracity than feared,” J.P. Morgan Jamie Baker wrote in a Tuesday report on the outlook for airlines this fall. He first warned of an autumn slowdown in June.

Spirit’s outlook comes after a relatively strong second quarter. The airline nearly broke even in May and June, and lost only $144 million during the three months ending in June. However, during an earnings call on July 23 executives acknowledged a worsening outlook.

Christie told TPG in June that he was not willing to “put a stake in the sand” in terms of when Spirit would recover from the crisis — a now appropriately conservative position considering the twists and turns of the pandemic.

Related: Spirit CEO hopes to see recovery taking a ‘big move in the right direction’ in July

Featured image courtesy of Spirit Airlines.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.