The Spirit Airlines operational meltdown earlier this month led to $50 million in lost revenue the airline has told investors.
Spirit Airlines Lost $50 Million During Meltdown, Will Pare Back Third Quarter Schedules
Between July 30th and August 9th, Spirit cancelled more than 2,800 flights. A number of factors contributed to these flight cancellations (not to mention delays), including:
- poor weather
- staffing shortages
- system outages
In a regulatory filing, Spirit CEO Ted Christie said:
“On behalf of our entire leadership team, we offer an apology to everyone impacted throughout the course of this event. We believe the interruption was a singular event driven by an unprecedented confluence of factors and does not reflect systemic issues.”
Nevertheless, up to 60% of flights were cancelled during the worst of the meltdown, stranding thousands of passengers and leading to staff purportedly running for cover in San Juan, Puerto Rico.
The cancellations cost Spirit Airlines $50 million on revenue, a reflection of the widespread scale of the delays and cancellations.
To reduce the likelihood of a repeat event, Spirit said it would reduce its schedule through September. These s0-called “tactical schedule reductions” will reduce frequencies rather than cut service between cities. Such proactive cuts, along with a slowdown in demand due to the delta variant of COVID-19, will cost the airline an additional $80-100 million in revenue.
Investors seems to brush off the meltdown, with shares down only 1% after the lost revenue announcement. Over the last week, shares have dropped about 6%, but broadly reflected the ups and downs of the larger stock market.
Spirit Airlines hopes that by trimming schedules for the third quarter, it can avoid an operational meltdown if it runs into additional crew or weather issues. While that is a smart approach, it isn’t clear whether a repeat performance can actually be avoided next time a “perfect storm” hits.
image: @SpiritAirlines / Twitter