During the holidays, Southwest Airlines lost $800 million due to a system failure that caused chaos for travelers.
In addition to damaging the airline’s reputation, the December meltdown drew national attention and the ire of the Department of Transportation, the Washington Examiner reports.
During the winter delays, the airline was required to reimburse all customers affected, including hotel rooms for stranded customers, transportation to and from hotels, meals, and numerous other expenses.
According to the airline, the true damages amount to $800 million, or $620 million after taxes.
Southwest CEO and President Bob Jordan said in a statement, “Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss.”
Jordan also spoke with CNBC about the earnings, issuing an apology to both Southwest customers and employees.
Jordan said the company expects a first-quarter 2023 net loss due to the chaos. He ended on an optimistic note, noting that booking trends in March were “encouraging.”
It’s not a surprise that the unacceptable situation that Southwest Airlines created over the holiday season led to extreme financial losses . We expect the airline to take steps to ensure that such a situation never occurs again, especially during peak travel periods. Southwest Airlines has said it will do everything in its power to minimize traveler disruptions in the future, but only time will tell if they can deliver on their promise. What is certain is that they have no choice but to accept responsibility for the massive financial loss and address the issue head-on.
