Pristine Floyd searches for a friend’s suitcase in the baggage hold area for Southwest Airlines at Denver International Airport on December 28, 2022 in Denver, Colorado.
Michael Ciaglo | Getty Images
Southwest Airlines stabilized its schedule over the weekend after nearly 16,000 cancellations since late last month, but its systematic holiday meltdown could cost it hundreds of millions of dollars.
Southwest had canceled 304 flights since Friday, 2% of its schedule, most of them on Monday when the US airline encountered bad weather and a ground stop in Florida tied to a Federal Aviation Administration equipment outage. For comparison, Southwest had cleared about 45% of its operations from December 21 to December 29, according to FlightAware, a far larger share than other major airlines.
Now comes two more difficult tasks for Southwest: sifting through thousands of passenger reimbursement receipts and improving internal technology that may have contributed to the slowdown.
“We have plans to invest in equipment and technology and processes, but there will be immediate work to understand what lessons have been learned here and how we avoid this happening again, because it cannot happen again,” Southwest CEO Bob Jordan took over. Helm in February, told employees on Friday.
Jordan said employees from other departments have volunteered to help customers and process refunds. working with carrier fedex To help customers get their goods.
“We’ve cut the number of bags in half since Thursday and we’re on track to get the majority if not all of the bags shipped to our customers by the end of this week,” Jordan told employees Monday.
On Tuesday, Southwest began offering travelers whose flights were canceled or significantly delayed between Dec. 24 and Jan. 2, and who traveled or rebooked 25,000 Rapid Rewards points, about $300 worth of travel, according to the airline. Didn’t
The miles required to redeem for a ticket vary based on demand and capacity. For example, over the Easter weekend, it currently costs more than 25,000 Rapid Rewards points to travel roundtrip between Baltimore and Los Angeles, but that will exceed a ticket a week later.
Bad weather set off issues last month that affected flights across the US, but Southwest workers struggled to automatically reassign after all the changes and waited hours with crew scheduling services was forced to do. Hundreds of thousands of passengers were affected, and Southwest is still working through the backlog of lost luggage.
The carrier had canceled about two-thirds of its flights over the past week in an effort to get crews and planes where they needed to go, before returning to operations as normal on Friday.
The chaos could cost Southwest between $600 million and $700 million, according to estimates by Bank of America airline stock analyst Andrew Didora on Tuesday. This includes both lost revenue from refunds and reimbursement to affected passengers, which may include expenses such as hotels and rental cars.
Didora cut its fourth-quarter adjusted earnings forecast for Southwest to 37 cents per share from 85 cents.
a southwest executive said last week The cancellation will “certainly” impact its fourth-quarter results but it will take weeks to work through customer reimbursement requests.
Transportation Secretary Pete Buttigieg has vowed to hold Southwest accountable for not providing refunds and reimbursements to customers, though such fines associated with failure to pay customers could take months, if not years.
Southwest shares fell 3.2% to $32.60 on Tuesday, a bigger decline than rivals. The Dallas-based airline is scheduled to report results on January 26, but is likely to preview the cost of the meltdown before then.