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Spirit Airlines Says They Will Be the First Profitable Airline After COVID-19

Spirit Airlines Says They Will Be the First Profitable Airline After COVID-19
Joe Cortez

Ultra low-cost carrier Spirit Airlines says they will be the first airline back to profitability when the COVID-19 pandemic comes to an end. Even with an adjusted loss of $364.4 million in the second quarter, airline leadership says they were “break-even for the month of June.”

Despite reporting a loss of over $364 million, Spirit Airlines says they are positioned to be the first profitable American airline after the COVID-19 pandemic. The airline made the statements during their second quarter financial report, released July 22, 2020.

Airline Sees Improved Load Factors Through Alignment and Fully-Booked Aircraft

Although the carrier lost $364 million based on their pre-tax adjusted (non-GAAP) numbers, leaders for the airline say they are optimistic about their performance. Through adjusting their network and booking flights to capacity, the airline says their load factor increased from 17.9 percent in April, to an astounding 79.1 percent by June 2020 – on a quarterly total capacity cut of 83.2 percent when compared to the second quarter of 2019.

“The COVID-19 pandemic negatively impacted our second quarter results,” Spirit president and CEO Ted Christie said in a press release. “However, we were encouraged by our June results and believe they illustrate that when leisure travel demand rebounds and stabilizes, our leading low-cost structure positions us well to be among the first to return to profitability.”

To mitigate losses and drive future success, the carrier says they are actively monitoring demand and adjusting capacity as a result. To those ends, Spirit says their anticipated capacity for the next three months compared to the same month last year will be down 18 percent in July 2020, 35 percent in August 2020, and 45 percent in September 2020.

But through the changes, the airline says proof of their success is in the performance. The airline says they had a U.S. Department of Transportation completion factor of 100 percent, and on-time performance was between 94.2 percent and 96.8 percent. Combined with an increase in passengers in June 2020, the airline is bullish on their future outlook.

“The favorable dynamics of our low-cost structure, a slight rebound in demand for June, and an uptick in forward bookings for July resulted in favorable cash dynamics for the month of June,” said Christie. “In fact, if you exclude an early principal payment of nearly $50 million related to our aircraft deferral agreement and extension of our pre-delivery deposit facility, on an average daily cash basis, we were break-even for the month of June.”

Spirit Accepts $334.7 Million in CARES Act Support, Ending the Quarter on $1.2 Billion in Liquidity

While Spirit is quick to celebrate their wins, the airline’s reported success wasn’t done alone. The airline accepted $334.7 million in support from the CARES Act Payroll Support Program. The airline is also hoping to take $741 million in additional loans from the government. A final decision is expected to take place before Sept. 30, 2020.

The airline also says they have $1.2 billion in liquidity to end the quarter, in the form of unrestricted cash, cash equivalents, and short-term investments. The liquidity comes from increasing their senior secured revolving credit facility, completed a public offering of $175 million in senior notes, and offered over 20 million shares through a primary public offering.

View Comments (3)

3 Comments

  1. rylan

    July 27, 2020 at 5:27 pm

    I’m sure they’re doing everything they can do make money, and its apparent they only see their pax as dollar signs.
    Friends don’t let friends fly Spirit.

  2. OZFLYER86

    July 28, 2020 at 3:02 am

    many LCCs will make a profit long before legacy airlines, unless they compete with other LCCs on same routes. Where they compete with legacy airlines, they will do well, as many people looking for cheaper options & legacy airlines will have major fights with unions when reducing their workforce numbers & pay.

  3. Scorpio506

    July 29, 2020 at 6:44 pm

    @rylan

    Even with all the luggage fees nobody comes close to Spirit price-wise on certain routes. I don’t need anything but the best price for me and my luggage for a 3-hour flight. Spirit delivers that.

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