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Spirit Airlines to cut capacity, jobs
Posted on Thu, Jul. 03, 2008
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By INA PAIVA CORDLE
[email protected]
Spirit Airlines will cut 6 percent of its capacity this fall, eliminate about 250 jobs and curtail its growth plans for the year, as it tries to cope with record-high fuel prices.
The Miramar-based low-cost carrier also plans to slash 15 percent of its non-fuel costs, retire five of its 35 aircraft and raise non-ticket revenue, selling more items onboard flights like People Magazine.
''Fuel is our largest single expense,'' said Spirit Chief Executive Ben Baldanza. ``And as oil prices get higher and higher, the hurdle we will have to reach to make a route economically feasible to fly gets higher and higher.''
As part of its cutbacks, during the next two months Spirit will reduce its staff by 250, or 11 percent, including 200 pilots and flight attendants and 50 non-crew employees, Baldanza said.
A majority of the non-crew layoffs will be in South Florida. But it's too early to know exactly where the furloughed pilots and flight attendants will be based, Baldanza said. Spirit has five crew bases: its largest is in Fort Lauderdale, in addition to bases in New York; San Juan, P.R.; Detroit and Atlantic City. No decision has yet been made to close any bases, he said.
Spirit, which has 2,300 employees, flies more than 200 daily flights to 43 destinations.
But with the elimination of 6 percent of its capacity this fall compared to last, Spirit expects to have the same capacity in 2008 as in 2007. Its growth plan had originally called for an increase of 10 percent.
Still, the airline is keeping its focus on Latin America and the Caribbean. And capacity cuts at Fort Lauderdale-Hollywood International Airport -- where Spirit has ranked as the largest carrier since May 2007 -- will be negligible due to new flights recently added and those that will begin soon, Baldanza said.
''Fort Lauderdale will remain our strong point of flying, and our volumes of flights at Fort Lauderdale are going to stay pretty constant,'' he said.
For example, on July 24 the airline will launch a flight from Fort Lauderdale to Bogota. New service to Trinidad began in June, and to Cartagena, Colombia, in May. And Thursday, Spirit said it filed an application with the U.S. Department of Transportation to begin serving Manaus, Brazil.
Yet the airline will cancel several flights, all from Fort Lauderdale:
• On Aug. 1, Spirit will eliminate flights to Islip, N.Y., and Providenciales, Turks & Caicos. Spirit said it will resume service to Islip when the market improves. In Providenciales, high airport costs have made service non-economically viable, Baldanza said.
• On Sept. 2, Spirit will offer only seasonal -- rather than year-round -- service to Grand Cayman, Cayman Islands, and Punta Cana, Dominican Republic, to better match capacity with demand.
Additionally, other cuts will be made in select markets ''in any period of weaker demand -- a season of the year, a day of the week, or a time within the day,'' Baldanza said.
Spirit will also retire five Airbus A319 aircraft by September. The airline currently has 33 Airbus A319s and two Airbus A321s.
Meanwhile, Spirit hopes to shed 15 percent of its non-fuel expenses, including distribution costs, credit card fees and other expenses related to its cutbacks in flying, such as landing fees, terminal rents and maintenance costs, Baldanza said.
''Everywhere we spend money we will look at how can we spend less,'' he said.
At the same time, the airline will try to boost non-ticket revenue by partnering with hotels and rental cars to sell more services on its website. It will also sell more items onboard, such as People Magazine, snacks, disposable cameras and over-the-counter medications.
''We will expand the portfolio of what we sell and the numbers of places you can buy from us,'' Baldanza said. ``We are adapting the idea of taking a retail store in the airplane and shrinking it onto a cart and putting it on an airplane.''
Spirit is the latest carrier to announce its capacity cuts for the fall as the industry struggles to cope with spiraling fuel costs. American Airlines is cutting 12 percent of its domestic capacity in the fourth quarter; United is slashing 14 percent of its mainline domestic capacity during the same period.
Baldanza said Spirit is not betting on a return to lower fuel prices.
''We are making the changes to continue to be successful at high oil prices,'' he said. ``So if oil prices go down, we'll do even better, and if oil prices stay where they are, we will be OK.''
Posted on Thu, Jul. 03, 2008
reprint print email
Facebook Digg del.icio.us AIM
By INA PAIVA CORDLE
[email protected]
Spirit Airlines will cut 6 percent of its capacity this fall, eliminate about 250 jobs and curtail its growth plans for the year, as it tries to cope with record-high fuel prices.
The Miramar-based low-cost carrier also plans to slash 15 percent of its non-fuel costs, retire five of its 35 aircraft and raise non-ticket revenue, selling more items onboard flights like People Magazine.
''Fuel is our largest single expense,'' said Spirit Chief Executive Ben Baldanza. ``And as oil prices get higher and higher, the hurdle we will have to reach to make a route economically feasible to fly gets higher and higher.''
As part of its cutbacks, during the next two months Spirit will reduce its staff by 250, or 11 percent, including 200 pilots and flight attendants and 50 non-crew employees, Baldanza said.
A majority of the non-crew layoffs will be in South Florida. But it's too early to know exactly where the furloughed pilots and flight attendants will be based, Baldanza said. Spirit has five crew bases: its largest is in Fort Lauderdale, in addition to bases in New York; San Juan, P.R.; Detroit and Atlantic City. No decision has yet been made to close any bases, he said.
Spirit, which has 2,300 employees, flies more than 200 daily flights to 43 destinations.
But with the elimination of 6 percent of its capacity this fall compared to last, Spirit expects to have the same capacity in 2008 as in 2007. Its growth plan had originally called for an increase of 10 percent.
Still, the airline is keeping its focus on Latin America and the Caribbean. And capacity cuts at Fort Lauderdale-Hollywood International Airport -- where Spirit has ranked as the largest carrier since May 2007 -- will be negligible due to new flights recently added and those that will begin soon, Baldanza said.
''Fort Lauderdale will remain our strong point of flying, and our volumes of flights at Fort Lauderdale are going to stay pretty constant,'' he said.
For example, on July 24 the airline will launch a flight from Fort Lauderdale to Bogota. New service to Trinidad began in June, and to Cartagena, Colombia, in May. And Thursday, Spirit said it filed an application with the U.S. Department of Transportation to begin serving Manaus, Brazil.
Yet the airline will cancel several flights, all from Fort Lauderdale:
• On Aug. 1, Spirit will eliminate flights to Islip, N.Y., and Providenciales, Turks & Caicos. Spirit said it will resume service to Islip when the market improves. In Providenciales, high airport costs have made service non-economically viable, Baldanza said.
• On Sept. 2, Spirit will offer only seasonal -- rather than year-round -- service to Grand Cayman, Cayman Islands, and Punta Cana, Dominican Republic, to better match capacity with demand.
Additionally, other cuts will be made in select markets ''in any period of weaker demand -- a season of the year, a day of the week, or a time within the day,'' Baldanza said.
Spirit will also retire five Airbus A319 aircraft by September. The airline currently has 33 Airbus A319s and two Airbus A321s.
Meanwhile, Spirit hopes to shed 15 percent of its non-fuel expenses, including distribution costs, credit card fees and other expenses related to its cutbacks in flying, such as landing fees, terminal rents and maintenance costs, Baldanza said.
''Everywhere we spend money we will look at how can we spend less,'' he said.
At the same time, the airline will try to boost non-ticket revenue by partnering with hotels and rental cars to sell more services on its website. It will also sell more items onboard, such as People Magazine, snacks, disposable cameras and over-the-counter medications.
''We will expand the portfolio of what we sell and the numbers of places you can buy from us,'' Baldanza said. ``We are adapting the idea of taking a retail store in the airplane and shrinking it onto a cart and putting it on an airplane.''
Spirit is the latest carrier to announce its capacity cuts for the fall as the industry struggles to cope with spiraling fuel costs. American Airlines is cutting 12 percent of its domestic capacity in the fourth quarter; United is slashing 14 percent of its mainline domestic capacity during the same period.
Baldanza said Spirit is not betting on a return to lower fuel prices.
''We are making the changes to continue to be successful at high oil prices,'' he said. ``So if oil prices go down, we'll do even better, and if oil prices stay where they are, we will be OK.''
