Spirit Airlines cuts August schedule, eyes possible furloughs as recovery stalls
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.
Discounter Spirit Airlines is not immune from the surging coronavirus that has stalled the recovery in air travel among U.S. carriers.
The South Florida-based carrier will operate an average of 380 daily flights in August, Spirit CEO Ted Christie told staff in a July 15 internal memo viewed by TPG. This is down from previous plans that Cirium schedule data shows was around an average of 403 flights a day.
“The leisure market we serve has been more resilient than the international and business markets [but] the changing headlines have impacted demand,” he said. “It will be up to our leadership team to continue to assess the future operations, staffing and size of the airline.”
Sign up for the free daily TPG newsletter for more airline news!
Spirit is the just the latest in a growing queue of airlines to say the recovery has stalled. On July 14, Delta Air Lines CEO Ed Bastian called the return of travelers “choppy” and said the airline would likely hold its schedule relatively steady through the end of the year.
Allegiant Air, Southwest Airlines and United Airlines have also acknowledged weaker demand citing the rise in COVID-19 infections in the South and West, as well as domestic travel restrictions.
Data from trade organization Airlines for America (A4A) shows net bookings — new reservations minus cancellations — falling slightly for U.S. domestic flights at the end of June and then holding steady at around 20% of 2019 levels during the first week of July.
Related: State-by-state guide to coronavirus reopening
Under its previous August schedule, Spirit planned to fly roughly 64% of what it flew in August 2019, according to Cirium. This does not include the reductions unveiled to staff.
“If demand doesn’t recover, we may need to right-size our operation for a smaller overall market which could lead to workforce reductions,” Christie told staff in a warning of possible involuntary furloughs or layoffs to come. “We’re working hard to exhaust all other options before we get to that point.”
Every U.S. carrier is weighing the size of their workforce this fall. Once employment protections under the federal coronavirus aid package, or CARES Act, expire at the end of September, Wall Street analysts expect something of a “terrible Thursday” on Oct. 1. Cowen analyst Helane Becker forecasts more than 120,000 airline industry staff could lose their jobs as a result of the crisis.
Related: Delta says air travel recovery has stalled, hopes more flyers return by end of summer
American Airlines has sent notices of possible furloughs to roughly 25,000 staff and United notices to around 36,000 staff. Even Southwest, which has never involuntarily furloughed staff in its nearly 50-year history, has told staff it may forced to do so.
On Thursday, Bastian told Delta employees that the carrier was still “overstaffed in some areas of the business” despite 17,000 people taking voluntary departure packages. The airline had already warned more than 2,500 pilots with additional notices pending an evaluation of alternative options.
In Spirit memo, Christie emphasized that more cost cuts are needed at the already ultra low-cost Spirit to survive the pandemic.
Related: Spirit geared to ‘win the recovery,’ eyes return to growth
Featured image courtesy of Spirit Airlines.
Sign-up Successful!
Welcome to The Points Guy!
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
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.
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.