What happened

High costs caused JetBlue Airways (JBLU -3.83%) to report a larger-than-expected loss, and investors are rushing for the exits as a result. Shares of the airline are down more than 6% on Tuesday morning on fears that the problems that plague JetBlue will not be resolved quickly.

So what

JetBlue lost $0.47 per share in the second quarter on revenue of $2.44 billion, falling short of analyst expectations for a $0.11-per-share loss on revenue of $2.46 billion. Revenue was up 16% compared to the same three months of 2019, prior to the pandemic, and higher than the company's initial outlook. But higher spending on fuel and workers soaked up much of that revenue growth.

More of the same is expected in the quarters to come, though JetBlue is taking steps to curtail growth and bring down expenses.

"We reported a record-breaking revenue result for the second quarter, and we're on pace to top it again here in the third quarter and drive our first quarterly profit since the start of the pandemic," CEO Robin Hayes said in a statement. "While high fuel prices and our short-term operational investments are weighing on our margins this summer, we're making steady underlying progress on our long-term initiatives to structurally improve our profitability and enhance our long-term earnings power."

JetBlue expects capacity to be flat to down slightly in the third quarter compared to 2019. With fewer flights relative to expectations a few months ago, per-flight cost metrics are bound to soar. JetBlue expects its cost per available seat mile, a common industry metric, to be up 15% to 17% in the third quarter compared to three years ago.

Now what

The entire airline industry is being squeezed by costs, but JetBlue seems to be feeling it worse than most. Part of the airline's answer is its planned acquisition of Spirit Airlines, which will provide it with a large roster of pilots and a number of new aircraft to fuel expansion. But that deal could take six months to a year to close, assuming regulators approve it at all.

In the meantime, JetBlue will do what it can to keep costs under control. Investors need to watch carefully to make sure management isn't distracted by the Spirit deal, especially in such a volatile environment with uncertainty about oil prices and travel demand. For investors, there is no real compelling reason to buy in right now and wait out the deal deliberations, especially given the headwinds the industry is flying through.