Airlines Face Pilot Shortages

Demand for Travel Is Back

Demand for travel is roaring back after it ground to a halt during the pandemic. Domestic leisure travel has returned to 2019 levels for most airlines. Business travel is still slightly behind, but is also beginning to rebound.

Last week, Delta Air Lines (DAL) posted a profit of $652 million after five quarters of losses. This was thanks to federal aid which offset some of its costs, but the company predicts that it will be profitable during the second half of the year without government funds. Other airlines are also seeing their balance sheets recover. But as airlines rush to respond to increasing demand, many are facing a shortage of pilots.

Pilot Training Takes Time

Training pilots to fly new types of planes can take a few weeks, and annual retraining takes several days. Additionally, there is a general labor shortage across industries. For these reasons, airlines are having trouble ramping up offerings quickly enough to meet demand.

Since March 2020, airlines received $54 billion in federal aid for not laying off employees. With that said, airlines were working to conserve cash during the pandemic. Many encouraged pilots to take early retirement or leaves of absence. Now they are having trouble bringing these employees back.

Looking Ahead

Airlines are struggling with the combination of surging demand and a limited workforce. They have also been hit with technology difficulties and bad weather in June and July.

A shortage of pilots means that when something goes wrong, like a plane needs to be fixed or a storm hits, airlines are less nimble. To deal with this, some carriers, like American Airlines (AAL), are reducing their flight offerings until they have sufficient staff. The company would rather bring in less revenue from ticket sales than deal with logistical difficulties caused by labor shortages.

It was a challenging year and a half for the airline industry. Though consumers are flocking to airports to travel again, airlines are now up against another challenge. Investors will be closely watching to see how various companies deal with pilot shortages in the coming months.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21071903