Southwest Airlines (NYSE:LUV) Company expects to book a fourth-quarter loss after the beleaguered airlines experienced a complete operational meltdown in December, which led to widespread flight cancellations.
The Dallas-headquartered company canceled over 16,700 flights in the final 10 days of 2022 as a winter storm threw its operations completely out of gear during the crucial holiday-travel period.
The company 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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“We disrupted holiday travel for millions when some of our systems and processes became stressed by Winter Storm Elliott, bringing disruptions that were far-reaching,” Southwest CEO Bob Jordan said in a video posted on Southwest’s website.
“We are taking immediate steps to address the massive inconvenience as well as the issues that contributed to it,” he added.
Jordan said in the video that Southwest is processing “tens of thousands of refunds and reimbursements a day.”
Southwest has also issued 25,000 frequent-flier points to affected travelers, describing the offer as a “gesture of goodwill.”
For the fourth quarter, Southwest estimates it flew about 6% less than it did in the same period in 2019, which is roughly 4 percentage points lower than it had previously expected.
The winter storm last month disrupted various airlines’ operations around the critical travel period during the Christmas and New Year’s holidays, but Southwest continued to cancel thousands of flights days after other airlines like United Airlines and Alaska Airlines had mostly restored operations.
Southwest blamed the December travel disaster on a combination of factors, including winter storm delays, aggressive flight scheduling and outdated infrastructure.
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