Southwest Airlines to Suffer Quarterly Loss Due to December Meltdown

Southwest Airlines Co. has announced that it is expecting to book a loss for the fourth quarter of 2022, after cancelling more than 16,700 flights during the final 10 days of the year. This is due to the winter storm that caused havoc on operations during the crucial holiday-travel period.

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The company on Friday estimated that the cancellations will result in a negative impact of $725 million to $825 million on a pretax basis for the fourth quarter. That includes between $400 million and $425 million in lost revenue, as well as an additional hit from reimbursements to affected travelers, premium pay for employees and other related costs.

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For the fourth quarter, Southwest estimates that it flew about 6% less than it did in the same period in 2019. This is roughly 4 percentage points lower than the airline had previously expected.

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The stock price fell by about 2% in premarket trading, to $32.86. This is a continuation of the trend over the past month, where the stock has fallen by around 16%.
A severe winter storm last month caused major disruptions for various airlines around the busy travel period during the Christmas and New Year’s holidays. However, Southwest continued to cancel thousands of flights days after its peers had mostly restored operations. According to The Wall Street Journal, Southwest’s issues were exacerbated by what industry executives and labor leaders have described as inadequate technology systems.

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The winter storm that hit cities from Denver to Chicago created various challenges for the entire airline industry. Ground equipment and jet bridges froze, fuel congealed due to the subfreezing temperatures, and staff needed to rotate inside more frequently.

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However, as other airlines began to recover, the internal software that Southwest used to pair available pilots and flight attendants with planes was not up to the task.
The recent problems at Southwest have drawn the attention of federal officials and criticism from union officials. Chief Executive Bob Jordan, who has been in the job for less than a year, has publicly apologized.

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On Thursday, Mr. Jordan said in a video posted on Southwest's website that the company is processing "tens of thousands of refunds and reimbursements a day." The company has also issued 25,000 frequent-flier points to affected travelers as a "gesture of goodwill."