Spirit Airlines cuts August schedule, eyes possible furloughs as recovery stalls
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."
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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
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4X | Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S. |
4X | Earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X). |
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Why We Chose It
There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.Pros
- 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
- 3x on flights booked directly with the airline or with Amex Travel
- Welcome bonus of 60,000 points after spending $4,000 in the first six months
Cons
- Weak on travel outside of flights and everyday spending bonus categories
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber/food credits
- Few travel perks and protections
- Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
- Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
- Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
- $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
- Choose the color that suits your style. Gold or Rose Gold.
- No Foreign Transaction Fees.
- Annual Fee is $250.
- Terms Apply.
- See Rates & Fees