Spirit Airlines warns workers that in October, when federal payroll assistance money dries out, it could furlough up to 30 percent of its approximately 9,000 staff.
In a memo to staff, Spirit Air chief executive officer Ted Christie disclosed that furloughs may be required because the airline is burning through so much cash as the coronavirus pandemic continues to cut deeply into air travel.
Employees at risk of losing their jobs include pilots and flight attendants, the memo obtained by Reuters showed. Spirit Airlines, the seventh biggest U.S. carrier as of January, confirmed the memo was issued to personnel Tuesday but stated it has no further comment.
Spirit is now working to get its cash burn at favorable levels. However, current demand uncertainty over when any normalization will take place is causing setbacks for the company and most of its American counterparts that try to reach a break-even cash burn by the end of the year.
Key members of the House of Representatives said they were looking into airline contractors that received federal payroll boost and then terminated thousands of employees. They urged the U.S. Department of Treasury to recover any money that was given to the companies.
Airlines and their contractors, who were granted cash from a $32 billion package of government payroll assistance, agreed not to terminate staff until Oct. 1. Airline labor unions are lobbying the U.S. Congress for six more months of government financial support.
Spirit Airlines is among the U.S. carriers that took a federal stimulus to keep staff employed through September as they deal with a sharp downturn in demand because of coronavirus-related lockdowns and travel restrictions. Now many are warning of job cuts once the aid program expires because demand has not yet normalized.
Analysts see sales dropping 89.3 percent year on year for Spirit to $108.3 million in the second quarter. Revenue estimates look better going forward, analysts noted, with the hope that demand might pick up. Analysts estimate the airline to post $420.3 million and $603.9 million in sales in the third and fourth quarters, respectively. For the full year, they expect the company's sales to drop 51 percent to $1.8 billion.
Meanwhile, United Airlines warned 36,000 staff that they could lose their jobs, American Airlines notified 25,000 of its own workers, and Delta Air notified over 2,500 pilots. Southwest Airlines disclosed it does not expect to furlough any employees this year.
