James Dennin, Kapitall: A pilot shortage is causing difficulties for some airline stocks, especially regional providers.
Airlines have done incredibly well in the early weeks of 2014, led in part by American Airlines (AAL), now the world's largest carrier after its merger with US Airways. However, while the big conglomerates have prospered, regional airlines are facing a major problem in the form of pilot shortages.
After a Continental Airlines (UAL) regional partner crashed in 2009, Congress initiated an investigation and mandated industry changes. The resulting regulations increased the amount of flight hours first officers need to earn an Airline Transport Pilot certificate by a factor of 6.
That made becoming a pilot more expensive. In some cases getting the flight-time you need can cost as much as $100,000. That's not too big a deal for the pilots working for giants like American whose starting salaries are around $60,000 a year, b ut for pilots at regional airlines like Republic Airways (RJET) the new regulations present a substantial financial burden. Starting salaries at the smaller shops start around $21,000 – hardly enough to pay off such a large amount of debt. As a result, far fewer aspiring pilots are completing training. It's just not worth it.At the moment there are thousands of furloughed and expat pilots who've chased better salaries overseas. If you work for Emirates Airlines, as opposed to a regional company, the salaries are as much as 4 times larger – not counting benefits. Will regional airlines find the money to pay their pilots better, solve the problem of expensive training, or face continued pressure from larger competitors? We built a list of the 7 regional airlines that are also publicly traded. Click on the interactive chart below to view data over time. <p>Your browser does not support iframes.</p>
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV