What happened
JetBlue Airways (JBLU -2.37%) reported a first-quarter loss that was less than what Wall Street had expected, but the airline warned pilot shortages will crimp growth plans for the year. Investors reacted by heading for the emergency exits, sending shares down as much as 9% on Tuesday morning.
So what
JetBlue lost $0.80 per share in the quarter, better than the $0.87-per-share loss analysts had expected, on revenue that met consensus at $1.74 billion. The airline, like most of its peers, reported a weak start to the quarter but improvements in March, and it forecast record June-quarter revenue as tourists return to the skies this summer.
Image source: JetBlue Airways.
The airlines struggled through much of the last two years due to the pandemic, but heading into 2022, investors had hoped strong pent-up demand would boost revenues and help to rebuild industry balance sheets. The demand appears to be as strong as hoped, but a lack of pilots is preventing airlines from fully taking advantage of that strong demand.
JetBlue lowered its growth forecast for all of 2022 to between flat and up 5% compared to 2019, the last full year before the pandemic. JetBlue had previously said it intends to grow capacity this year at a low-double-digit rate.
"The access to pilots is becoming the governing factor for growth in the industry over the next few years," JetBlue CEO Robin Hayes said during a post-earnings call with investors.
Now what
JetBlue is attempting to ramp up hiring to address the issue. One of its goals is to add 5,000 new crewmembers in New York this summer. But with the entire industry short on flight professionals, it is a difficult time to recruit new pilots, and JetBlue's forecast would seem to indicate that the airline is having a more difficult time bringing in new aviators than some of its larger rivals.
The airline kicked off the month of April with a bid to acquire Spirit Airlines (SAVE -2.88%), attempting to break up a planned merger between Spirit and Frontier Group Holdings (ULCC -3.62%). JetBlue's bold bid, which is still being considered by Spirit, is in large part an effort to address the pilot shortage: A larger airline should have the wherewithal to pay better and offer more scheduling flexibility. But it also speaks to JetBlue's desperation as it scrambles to find a way to grow.
JetBlue has a well-loved brand and legions of loyal fliers, but it is tough to see how the turbulence it is currently facing will clear soon. Investors would be wise to think twice about hopping aboard after this sell-off.
