As Hurricane Dorian has moved slowly through the Bahamas over the past few days -- hovering just off the shore of Florida -- flight cancellations have started to pile up in the Sunshine State. Lots of airlines have felt some level of impact from the destructive hurricane, but JetBlue Airways (NASDAQ:JBLU) and Spirit Airlines (NYSE:SAVE) have been the worst hit, due to their big footprints in the state.
This hurricane is hitting at a particularly inopportune time for Spirit Airlines. The budget carrier had already experienced a big jump in flight cancellations during the spring and summer, due to an unfortunate combination of overly aggressive flight schedules (leaving little margin for error), runway construction in Fort Lauderdale, and bad weather. As a result, management expects the carrier's profit margin to sink this quarter. A hurricane-related surge in flight cancellations to end the Labor Day long weekend will only add to its woes.
Why JetBlue and Spirit Airlines are feeling the biggest impacts
High winds forced numerous airports in Florida to close while Hurricane Dorian paused offshore. This included two of the three busiest airports in the state: Orlando International Airport and Fort Lauderdale-Hollywood International Airport. (Miami International Airport, despite its proximity to Fort Lauderdale, was able to remain open.)
Both airports are low-cost carrier meccas. Fort Lauderdale and Orlando are JetBlue focus cities, although they are smaller than the carrier's main bases in New York and Boston. Meanwhile, Spirit Airlines is headquartered near Fort Lauderdale, where it maintains its largest focus city. (Indeed, JetBlue and Spirit -- in that order -- are the two largest airlines in Fort Lauderdale.) And in recent years, Spirit Airlines has built up a sizable operation in Orlando.
Nearly 150 flights into and out of Orlando were canceled on Sunday, according to FlightAware. This may have been due to airlines trying to get their planes out of the path of the storm ahead of the airport's planned closure at 2 a.m. on Monday. Ultimately, Orlando International Airport stayed open on Monday due to a change in the storm's path, closing at 2 a.m. on Tuesday instead. Nevertheless, about a third of the airport's scheduled flights were canceled on Monday. The airport didn't reopen until around noon on Wednesday.
The airport in Fort Lauderdale closed at noon on Monday and reopened 24 hours later, at noon on Tuesday. Consequently, nearly three-quarters of its scheduled flights were canceled on Monday, followed by the cancellation of about 40% of its flights on Tuesday.
Assessing the damage
The net result of all these airport closures and other disruption was that Spirit Airlines canceled 150 flights on Sunday, 272 flights on Monday, and 192 flights on Tuesday. That accounted for approximately 20%, 37%, and 26% of its scheduled flights on each day. Due to this high volume of flight cancellations -- and its lack of interline agreements with other carriers -- Spirit could be forced to spend huge sums of money to buy full-price tickets on other airlines to get its customers where they need to be.
JetBlue is in slightly better shape, so far. It canceled 16 flights on Sunday, 247 flights on Monday, and 274 flights on Tuesday. However, due to its larger size (compared to Spirit), this represented less than 2% of its scheduled flights on Sunday, 20% of its flights on Monday, and roughly a quarter of its flights on Tuesday.
Hurricane Dorian is expected to move up the East Coast over the next few days, potentially impacting air travel in other coastal cities. That could potentially turn the tables: Depending on the exact storm trajectory, JetBlue's heavy focus on the Northeast raises the risk of another significant wave of flight cancellations, particularly in Boston
Recovering quickly is the key
One of the biggest challenges for airlines following a weather disruption is returning to normal operations quickly. After a major storm, airplanes and crews are typically out of position, and getting them back to where they need to be can take days.
As of noon EDT on Wednesday, Spirit Airlines had canceled 96 flights for Wednesday (13% of its schedule) and JetBlue had canceled 72 (about 7% of its schedule). Both carriers had also canceled about 2% of their schedules for Thursday. These totals could continue to rise, but it appears that JetBlue and Spirit -- especially the former -- are bouncing back from the storm relatively well. Even so, both carriers' profitability will take a hit this quarter due to the substantial number of flights they have canceled over the past few days.
Spirit Airlines and JetBlue Airways will always be vulnerable to hurricanes or other major storm systems impacting Florida, due to their having lots of flights there. However, Spirit Airlines has made matters worse for itself by overscheduling its aircraft this summer. The good news is that management seems determined to avoid making the same mistake next year. That should pave the way for better financial results in 2020.