It is bad news for Spirit Airlines (SAVEQ) employees, many of which are no longer employees as of today. Spirit Airlines filing for bankruptcy back in November got the ball rolling, and now, jobs have been lost. Investors were pleased, though, and gave Spirit a nearly 5.5% boost in its share price after doing the difficult thing and dropping employees.
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CNBC brought word of the job cuts, losing about 200 jobs total out of the roughly 13,000 it had at the time it filed bankruptcy. The move was part of a larger effort to “…rightsize our organization to align with our current fleet size and level of flying and ultimately optimize our airline.” The move was likely difficult, as the report noted that about 84% of Spirit’s workforce has union representation.
Thus, the report noted, all the cuts appeared in nonunion positions. But the move also comes on top of previous furloughs to pilots, as well as offers to flight attendants for “leaves of absence.” It dialed back on its overall reach, and set up deals to sell some of the Airbus craft in its fleet in order to reduce costs and raise cash. So far, the report noted, Spirit has cut about $80 million in “annualized cost reductions.”
Treating Passengers…Oddly
But saving money alone will not be much help to Spirit, especially in light of some recent developments with passengers. For instance, a report from CBS affiliate KENS 5 noted that a passenger, who apparently committed the crime of wearing a hooded sweatshirt, was removed from a Spirit Airlines flight. The sweatshirt in question did have a…questionable…saying across the front and back, which may have contributed to the removal. But the affected passenger, John Garcia Jr., noted he would be filing an official complaint.
Meanwhile, News10NBC in New York revealed that, for a Spirit flight from Florida to Rochester, the wait time was unusually long. In fact, the wait time at the airport and on the plane itself was actually longer than the flight time, after a series of issues delayed the flight’s departure. Spirit did apologize, though, and offered water, snacks, and discounts for future travel.
Is Spirit a Buy or Sell?
Turning to Wall Street, analysts have a Strong Sell consensus rating on SAVEQ stock based on one Hold and four Sells assigned in the past three months, as indicated by the graphic below. After a 92.04% loss in its share price over the past year, the average SAVEQ price target of $0.88 per share implies 90.27% upside potential.
