Spirit Airlines (SAVE) is planning to announce massive layoffs in a few days, Reuters reported on Tuesday citing an internal memo. The low-cost carrier is poised to inform unions this Friday that 20%-30% of the total staff could be furloughed in October.
“It’s now clear that the demand increase we saw in June was an outlier, and the downward trend will continue,” Spirit’s CEO Ted Christie said in the memo. He stated that the company’s expected daily cash burn of over $100 million “is not sustainable.”
According to the memo seen by Reuters, the company’s pilots and flight attendants are at risk of being furloughed.
Travel restrictions amid the coronavirus outbreak have weighed heavily on passenger airlines. On July 22, the low-cost airline reported an 86.3% slump in its 2Q revenues and recorded an adjusted loss of $3.59 per share.
On July 25, JPMorgan analyst Jamie Baker reiterated his sell rating on the stock, as he sees “more risk than reward in shares of Spirit Airlines.”
Currently, the Street has a cautious outlook on SAVE. The Hold analyst consensus is based on 5 Buy, 3 Holds, and 5 Sells. The average price target of $20.33 implies an upside potential of 23%. (See SAVE stock analysis on TipRanks)
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