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Spirit Airlines Reports First Quarter Net Loss of $27.8 Million on Revenues of $771 Million

Spirit Airlines reported on Wednesday a first quarter net loss of $27.8 million or ($0.41) per diluted share on a 9.9 percent decline in revenues to $771.1 million. The carrier ended the quarter with liquidity of $894.4 million and an undrawn revolving credit facility of $110 million.

Spirit Airlines Airbus A319 - Courtesy Spirit Airlines

On Wednesday afternoon (May 6, 2020), Spirit Airlines, Inc. (NYSE: SAVE) reported a first quarter net loss of $27.8 million or ($0.41) per diluted share on a 9.9 percent revenue decline to $771.1 million. The carrier has taken decisive measures to reduce capacity, manage expenses and preserve liquidity. Spirit reduced capacity in April by 75 percent and will cut capacity in May and June by around 95 percent. The company has secured an initial senior secured revolving credit facility (RCF) for $110 million which may be increased to $350 million with the consent of the lenders. Additionally, Spirit has reduced 2020 discretionary CAPEX by $50 million and is in discussions with Airbus to defer some 2020/2021 aircraft deliveries. If negotiations are successful, the carrier expects to reduce aircraft-related capital expenditures by approximately $185 million over the next two years. In Wednesday’s announcement, Spirit Airlines’ President and Chief Executive officer, Ted Christie said,

“The health crisis, loss of demand, and corresponding economic impact caused by COVID-19 is unprecedented. I want to thank all of our Team Members for their dedication to the safety and well-being of our Guests and each other, and for pulling together to help the Company meet the financial challenges we are facing. I am very proud of the Spirit Team and I am confident that given our quick action to adjust, our industry-leading low-cost structure, our strong balance sheet, and the resiliency and commitment of our Team members, we will emerge from this crisis ready to deliver on our promise of high quality and low fares.”

Spirit has reduced planned non-fuel operating expenses by $20-$30 million, suspended non-essential hiring company-wide and is engaged with stakeholders and vendors regarding contract and payment term adjustments. The company is also working with their unionized and non-unionized Team Members to create voluntary leave programs. Spirit also expects to receive a total of approximately $335 million through the U.S. CARES ACT Payroll Support Program (PSP) over the second and third quarters. As part of the agreement, Spirit has issued warrants to the U.S. Treasury for the right to purchase up to 500,150 shares of the airline's common stock at a strike price of $14.08 per share. Under the loan provision of the CARES Act, Spirit may have access to up to $741 million in additional funding. Spirit Airlines estimates their average daily cash burn is approximately $4 million/day and they are evaluating further expense reductions if demand doesn’t rebound in the coming months.

In trading Thursday morning, Shares in Spirit Airlines, Inc. (NYSE: SAVE) were 13.8% lower at $9.96/share (11:21 AM EDT).

Source: Spirit Airlines


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