What: Shares of regional airline Republic Airways Holdings (NASDAQ: RJET) dropped 19% after reporting third quarter results.
So what: Available seat miles fell 5.7% to 3.6 billion miles in the quarter, revenue fell 2.6% to $340.5 million, and net income fell 84.3% to $2.9 million, or $0.06 per share. The results fell short of the $0.08 per share estimate from Wall Street.
This was the quarter that was affected by a pilot shortage and there's no way analysts could have guessed earnings, so the miss should be taken with a big grain of salt.
Now what: There were a number of costs from items like idled aircraft that affected earnings and a lot of those will be one-time items given the new pilot agreement that was reached late in the quarter. But that agreement included a 74% pay increase for pilots and when combined with disputes with Delta and Bombardier the company still isn't out of the woods.
Republic Airways is a less risky company than it was a few months ago, but it's uncertain what long-term profitability will look like and how litigation currently in court will work out. With that uncertainty I am staying out of the stock today, but keep an eye out for stabilizing trends in coming quarter that will bring the company, and stock, to a more stable place.
