Spirit Airlines expects to cut its capacity by 25% this November, and is likely to reduce staffing levels further as the troubled budget carrier seeks to return to profitability during a second visit to bankruptcy court, according to a systemwide email sent to employees.
As part of the airline’s efforts to slash costs, management is taking direct aim at labor expenses, and is asking its 3,000 unionized pilots to find $100 million in savings from their contract by Oct. 1, the Air Line Pilots Association confirmed Thursday.
The forthcoming jolt to the workforce and major makeover of Spirit’s route profile is hardly unexpected as management has made it clear it intends to undertake drastic actions to fix cost and related issues that executives said were not resolved during the airline’s first tour through the Chapter 11 bankruptcy process, which concluded in March. For the second time in less than a year, South Florida-based Spirit in late August again filed for Chapter 11 protection from creditors amid stiff competition from rival carriers and a softening in leisure travel demand. At the end of the second quarter in June, the company posted a net loss of nearly $257 million.
“As I mentioned in my note to you a couple of weeks ago, a key pillar of our restructuring is redesigning and strengthening our network,” CEO and President Dave Davis wrote in an email distributed among employees Wednesday. “With that in mind … our operational leaders will receive our preliminary November schedule. As planning begins, you will see a reduction of about 25% in capacity, year over year, as we optimize our network to focus on our strongest markets.”
He said the schedule won’t be final until next week.
More staffing cuts appear likely
Davis also signaled that there is likely to be more pain in store for a workforce that has already experienced furloughs, demotions and voluntary leaves of absence, and that labor contracts will be under review with an eye toward change. Earlier this year, the airline announced the furloughs of 270 pilots and the demotions of 140 captains to first officer. Spirit’s cockpit crews are represented by the Air Line Pilots Association.
Davis said management will be meeting with the airline’s labor unions “and leaders in all areas of our airline to find additional ways to become a more efficient competitor in the industry.
“These evaluations will inevitably affect the size of our teams as we become a more efficient airline,” Davis added. “Unfortunately, these are the tough calls we must make to emerge stronger. We know this adds uncertainty, and we are committed to keeping you informed as these decisions are made.”
Davis made no mention of the reported $100 million in cuts sought from the pilots.
But a Spirit spokesperson, without confirming the figure, acknowledged Thursday to the South Florida Sun Sentinel that the company is taking a look at the pilots’ labor contract and that the company intends to meet with leaders of ALPA, which represents 3,000 Spirit pilots.
“As part of our efforts to restructure and transform our airline, we requested to meet with Air Line Pilots Association (ALPA) leadership to identify cost savings within our collective bargaining agreement,” the spokesperson said in a statement. “We appreciate the dedication and professionalism of our Pilots, and we are committed to working with ALPA to reach an agreement that positions Spirit and our Pilots for success.”
A member of ALPA’s communications office in Washington confirmed the cost savings figure but said the Spirit pilots would not comment further.
In his note, Davis also said management is “continuing to evaluate the size of our fleet to ensure we have the right number of aircraft for our future network.” In the meantime. he said, discussions with Spirit’s aircraft lessors “are ongoing” and “efforts to reduce costs with our suppliers and vendors continue.”
A Spirit Airlines airplane takes off at Fort Lauderdale-Hollywood International Airport. The company is reportedly seeking $100 million in savings from its pilots contract. (Amy Beth Bennett / South Florida Sun Sentinel)
Since the second bankruptcy filing, union leaders have been preparing their members for more sacrifices.
On Sept. 5, the Association of Flight Attendants-CWA warned its members that Spirit’s latest trip into bankruptcy court would be a more difficult process than the earlier one.
“This bankruptcy will be harder and look different than last year, but we will keep Flight Attendants closely informed and stick together as we move forward,” the union said in a note that appears on its website. “Our union immediately retained bankruptcy counsel to secure the best standing in the court proceedings.”
The note said the union anticipates management will offer a variety of leave options.
But it added that Spirit “must offer voluntary furloughs before they could move forward with involuntary furloughs. We urge Spirit Flight Attendants to take an honest look at your personal situation, examine all your options, and prepare for all possible scenarios.”
