Spirit Airlines: uptick in demand was short lived
Airline business models across the board are experiencing a level of volatility ushered in by the COVID-19 crisis that they’ve never faced before.
The US ultra low cost operator Spirit Airlines embarked on 2Q2020 with some level of optimism that demand trends were solidly moving off the bottom, and the airline’s load factors in May-2020 and Jun-2020 improved markedly compared with Apr-2020.
But now demand is frozen as US COVID-19 cases climb, and Spirit faces unique challenges – given that a substantial proportion of its network touches Florida, which is one of the current hotspots for the virus, with approximately 442,000 cases.
Spirit is now reining in some capacity, deferring aircraft and working to get its cash burn at favourable levels. However, current demand patterns and uncertainty over when any stabilisation will occur are creating headwinds for Spirit and most of its US counterparts attempting to reach a break-even cash burn by YE2020.
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