Jim Cramer: Zoom's In Charge and Airlines Are Suffering
Spirit is reportedly prepping to furlough as much as 30% of its workforce in October, making it the first low-cost U.S. carrier to implement job cuts due to the coronavirus pandemic and its economic impact on the airline industry.
According to an internal memo seen by Reuters, the carrier will be informing unions of its plans as early as this Friday.
“It’s now clear that the demand increase we saw in June was an outlier, and the downward trend will continue,” CEO Ted Christie said in the memo, adding that the airline’s expected daily cash burn of more than $100 million per month in the coming months “is not sustainable.”
"The health crisis, loss of demand, and corresponding economic impact caused by Covid-19 is unprecedented," Christie said.
Spirit was among the U.S. airlines that received government bailout funds to keep workers employed through September amid the sharp downturn in air travel demand due to virus-related lockdowns and travel bans.
However, the dramatic drop-off in flight demand amid travel restrictions to combat the spread of Covid-19 has left all airlines including Spirit operating at still-limited capacity.
Airlines that have received government aid, cannot lay off or furlough employees until October. The bailout specified that airlines who took the money must keep employees employed through September.
Jim Cramer said until the coronavirus is suppressed, airlines will remain worrying and Zoom will reign as king.
Jim Cramer and Katherine Ross are going live on Street Lightning Thursday, July 30 at 10:30 a.m. ET to discuss all things Apple ahead of a very full slate of tech earnings after the bell Thursday.
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