MIRAMAR (CBSMiami) – Spirit Airlines expects to receive about $335 million in federal assistance and is taking other steps such as cutting spending as it grapples with a massive downturn in the airline industry because of the COVID-19 pandemic, the company said in a quarterly earnings report Wednesday.
“The health crisis, loss of demand, and corresponding economic impact caused by COVID-19 is unprecedented,” Ted Christie, Spirit’s president and chief executive officer, said in a prepared statement. “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.”
The company is slated to receive $335 million from the federal government’s “Payroll Support Program,” which is funneling money to numerous hard-hit airlines.
Spirit said the money will be used to pay salaries and benefits for employees.
The airline also has applied for a loan of as much as $741 million under a federal stimulus program known as the CARES Act.
Spirit also said it has taken steps such as reducing discretionary capital spending this year by about $50 million, suspending hiring except to fill “essential roles” and entering discussions with manufacturer Airbus to defer some 2020 and 2021 aircraft deliveries.
Scott Haralson, Spirit’s chief financial officer, said in a statement that the “rapid change in the economic environment and the substantial reduction in passenger demand led us to take quick and decisive actions to cut costs, preserve capital, and raise additional liquidity.”
He added that the company’s “average daily cash burn rate is about $4 million and we are evaluating initiatives to further reduce that amount should demand not begin to rebound in the coming months.”
The company said its total operating revenue during the first quarter was $771.1 million, a decrease of 9.9 percent during the same period in 2019. COVID-19 began causing most of its economic damage in March.
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