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Spirit Drops $157 Million in 2020 Fourth Quarter, But Stands Strong on Low-Cost Brand

Spirit Drops $157 Million in 2020 Fourth Quarter, But Stands Strong on Low-Cost Brand
Joe Cortez

Like other airlines, the end of 2020 was not kind for Spirit Airlines. The Florida-based low-cost carrier reported a net loss of $157 million, but still says their low-cost structure is a “key advantage” that will help them compete in a soft environment caused by COVID-19.

Even though Spirit Airlines lost money in the fourth quarter of 2020, leaders say there’s still reason to be optimistic based on their low-cost carrier structure. The Miami-based carrier reported a net loss of $157 million for the final three months of 2020, but still reported high performance numbers based on completion and on-time rates.

Execs Say Low-Cost Structure “Remains a key advantage and positions us well to compete”

In total, Spirit Airlines pulled in $498 million in operating revenues. However, weak demand due to the continued COVID-19 pandemic resulted in the negative numbers to end the quarter. Leaders still stand behind previous statements that they expect to be the first profitable airline once the novel Coronavirus outbreak is controlled.

“Soft demand driven by pandemic-related concerns continues to have a significant impact on our operating results,” Ted Christie, president and CEO of Spirit, said in a press release. “However, our leading low-cost structure remains a key advantage and positions us well to compete in this environment and beyond. Our load factor and Adjusted EBITDA margin for the fourth quarter 2020 are among the best in the industry, illustrating the strength of our business model.”

The losses come after what was a significant season of change for the airline. In addition to re-launching the Free Spirit loyalty program with two elite tiers, the airline also announced a new suite of credit cards with Bank of America. In previous filings, Spirit pointed to their loyalty products, including the Spirit Saver$ Club, as revenue centers.

Spirit also pointed to their analytics as evidence of strong performance moving forward. While load factor was only 71.5 percent in the fourth quarter, the airline reported a 97.9 percent completion factor and 86.7 percent on-time performance. The carrier expects to rank third among airlines in on-time performance for the full year of 2020.

Spirit Losses Continue Downward Trend for Airlines

With their report, Spirit is the fifth straight airline to report losses to close out 2020. American Airlines, JetBlue and Southwest Airlines collectively reported a $12 billion loss, while United Airlines posted a $7.7 billion loss. Delta Air Lines had the worst losses, with a reported $15.6 billion dropped due to COVID-19.

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