Southwest Airlines says holiday meltdown will hit Q4 results

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Travelers at Baltimore Washington International airport deal with the impact of Southwest Airlines canceling more than 12,000 flights around the Christmas holiday weekend across the country and in Baltimore, Maryland, December 27, 2022.

Michael McCoy | Reuters

Southwest Airlines‘ holiday meltdown will hit “certainly” hit its fourth-quarter results, an executive said Thursday, adding that it will take “several weeks” to work through affected travelers’ reimbursement requests.

The systemwide chaos stranded hundreds of thousands of customers over the holiday week and drew scrutiny from Washington. The low-cost airline slashed schedules over the last several days, flying just about one-third of its planned flights, in an desperate effort to stabilize its operation, getting planes and crews where they needed to go.

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Southwest said it expects to operate a normal schedule on Friday. It’s cancelled 39 flights scheduled for Friday, according to FlightAware, down from more than 2,300 Thursday.

“There will certainly be an impact to the to the fourth quarter here,” Chief Commercial Officer Ryan Green said on a call with reporters Thursday.

Executives declined to provide an estimate of how much the disruptions will cost the airline in total. A similar incident in October 2021 cost the airline about $75 million, the carrier said last year, but this event lasted longer, with more travelers flying because of the holidays and sharply higher fares.

Southwest’s operation unraveled over the holiday week after brutal winter weather swept across the U.S. When most airlines had recovered at the end of last week, Southwest’s problems worsened. Executives cited challenges including overloaded internal scheduling platforms crucial to getting crews matched with flights.

“We have all hands on deck and tested solutions in place to support the restored operation. I’m confident, but I’m also cautious,” CEO Bob Jordan said in a staff memo Thursday.

The airline resumed selling tickets for Friday, after a pause it implemented before it stabilized its schedule, Jordan said.

“With another holiday weekend full of important connections for our valued Customers and Employees, we are eager to return to a state of normalcy,” the airline said in a statement on its website. “We have much work ahead of us, including investing in new solutions to manage wide-scale disruptions.”

Suzie Chism, a 33-year-old recording artist from Nashville, told CNBC her Dec. 26 Southwest flight home from Las Vegas was canceled, causing her to miss a week of work and her final musical performance of the year.

“My two night trip is suddenly a week long,” Chism said. “The loss of income is crushing.”

Chism said she was able to book a new flight with Frontier for Friday night.

“I simply do not trust Southwest to get me there,” she said.

Some competitors said they would cap fares for certain cities to help stranded Southwest passengers reach their destinations without surging prices, but fare searches on Thursday still returned some flights for $600 or more.

The moves came after Transportation Secretary Pete Buttigieg urged carriers to cap fares.

Southwest shares gained nearly 4% Thursday, as CFRA Research said the stock is still a buy, helping the stock pare its losses this week to 7.5%.

This story is developing. Please check back for updates.


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