Spirit Airlines struggles to control costs as it awaits fate of JetBlue merger
Spirit Airlines long succeeded by keeping its costs so low that it could afford to charge flyers essentially pennies per mile — plus lots and lots of extra fees — to fly. The pandemic has changed this equation with cost control a pressing issue for the budget carrier, and the larger industry, even as travelers return in droves. The Florida-based company faced cost and productivity headwinds in the fourth quarter. Unit costs, measured by costs per available seat mile, excluding fuel, increased 14% compared to 2019 during the three-month period; the metric was up 21 percent for the full year. A new pilot contract is one factor elevating Spirit’s cost base. In addition, the airline has felt compelled — and at times forced by circumstance — to operate a suboptimal flight schedule. For one, it’s elected to do more of its flying during offpeak periods, simply to alleviate operational stress during busier times and load factors have accordingly suffered. Put another way, Spirit is flying a schedule with more operational buffers, due to what CFO Scott Haralson called Tuesday “continued industry infrastructure constraints.” One of those constraints is air traffic control congestion, notably at the Federal Aviation Administration’s Jacksonville center, affecting the critical Florida market. Spirit is separately managing through frustrating maintenance delays affecting Pratt & Whitney geared turbofan engines used for its Airbus A320neos. “Pratt & Whitney continues to struggle to support its worldwide fleet of neo aircraft as MRO capacity remains constrained and turnaround times for engines in the shop have been nearly three times longer than the historical averages,” Spirit CEO Ted Christie said Tuesday. On top of all that, Airbus recently informed the carrier that some of its A320-family jets will arrive late. As a result, Spirit will have seven fewer new planes this year than expected, forcing it to reduce its planned capacity for the year.<br/>
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Spirit Airlines struggles to control costs as it awaits fate of JetBlue merger
Spirit Airlines long succeeded by keeping its costs so low that it could afford to charge flyers essentially pennies per mile — plus lots and lots of extra fees — to fly. The pandemic has changed this equation with cost control a pressing issue for the budget carrier, and the larger industry, even as travelers return in droves. The Florida-based company faced cost and productivity headwinds in the fourth quarter. Unit costs, measured by costs per available seat mile, excluding fuel, increased 14% compared to 2019 during the three-month period; the metric was up 21 percent for the full year. A new pilot contract is one factor elevating Spirit’s cost base. In addition, the airline has felt compelled — and at times forced by circumstance — to operate a suboptimal flight schedule. For one, it’s elected to do more of its flying during offpeak periods, simply to alleviate operational stress during busier times and load factors have accordingly suffered. Put another way, Spirit is flying a schedule with more operational buffers, due to what CFO Scott Haralson called Tuesday “continued industry infrastructure constraints.” One of those constraints is air traffic control congestion, notably at the Federal Aviation Administration’s Jacksonville center, affecting the critical Florida market. Spirit is separately managing through frustrating maintenance delays affecting Pratt & Whitney geared turbofan engines used for its Airbus A320neos. “Pratt & Whitney continues to struggle to support its worldwide fleet of neo aircraft as MRO capacity remains constrained and turnaround times for engines in the shop have been nearly three times longer than the historical averages,” Spirit CEO Ted Christie said Tuesday. On top of all that, Airbus recently informed the carrier that some of its A320-family jets will arrive late. As a result, Spirit will have seven fewer new planes this year than expected, forcing it to reduce its planned capacity for the year.<br/>
