‘It’s going to be bumpy.’ Spirit Airlines reports $144.4 million second-quarter loss
Florida’s failure to curb the spread of COVID-19 is hurting South Florida’s hometown airline, Spirit.
The Miramar-based company reported a second-quarter loss this week of $144.4 million, or $1.81. per share, a long fall from the profit of $114.5 million reported during the same period last year. CEO Ted Christie warned of a bumpy road to recovery for the company.
“It is our expectation that the company will resume its growth,” he said on a Thursday earnings call. “Leisure travelers are returning to the market already. We expect that will continue. It’s going to be bumpy.”
After a rough April and May brought the airline’s operations down to less than 10% of pre-pandemic capacity, it scaled up flights for June and July amid declining COVID-19 case numbers and a rush to reopen the U.S. economy. Then came a surge in COVID-19 cases and deaths — leading to deflated demand for flying. On Thursday, Florida reported a record number of COVID-19 deaths since the pandemic began more than four months ago.
“The numbers in our home state of Florida are not encouraging,” said Christie. “Even specifically to us, we probably have a little bit more of a challenge right now as Florida navigates its issue.”
The airline industry is divided on how best to keep passengers safe from COVID-19 on flights. Alaska Airlines, Delta Air Lines, Southwest Airlines and JetBlue Airways are blocking middle or adjacent seats through at least Sept. 30 to keep passengers separated. Spirit Airlines, along with United Airlines and American Airlines, is selling every available seat on its flights, though flights are not always full.
Spirit’s air filter systems, hospital-grade disinfectants and mask mandate “create a safe and healthy environment for all,” Christie said.
The U.S. Centers for Disease Control and Prevention advises travelers that, “Most viruses and other germs do not spread easily on flights because of how air circulates and is filtered on airplanes,” but notes that sitting close to others for several hours could “increase your risk for exposure to the virus that causes COVID-19.”
The company estimates its flight capacity in August and September will be down approximately 35% and 45%, respectively, compared to the same periods last year. Third-quarter capacity is estimated to be down 32% compared to the same period last year.
The company has reached an agreement with Airbus to defer delivery of new planes for this year and next. Spirit will add 12 new planes to its fleet this year, compared to a planned 16, and 16 next year, compared to a planned 25. The airline currently has 154 aircraft in its fleet.
Spirit Airlines has received $301.3 million in taxpayer funds under the Payroll Support Program for airlines as part of the federal coronavirus stimulus bill, and expects to receive another $30 million by the end of July. The funds must be used toward payroll through Sept. 30.
The company has about 6,500 employees and contractors in South Florida, including pilots, flight attendants, ground teams and counter agents. In April and May, thousands of employees took voluntary time off, Christie said. Being a smaller, low-cost airline has insulated the company from layoffs or furloughs so far, but “rightsizing” of fixed expenses is on the table, he said.
In January, the company broke ground on a new headquarter office in Dania Beach. On Thursday’s call, Chief Financial Officer Scott Haralson acknowledged that plans related to the headquarter officer are fluid. A spokesperson for the airline said construction is moving forward, but will likely be delayed past the original 2022 deadline.
This story was originally published July 23, 2020 at 1:39 PM.
