Southwest CEO maps out a recovery after holiday meltdown: ‘We have work to do’

A Southwest Airlines passenger searches for her belongings in a pile of lost suitcases at Chicago Midway International Airport in Chicago after an Arctic blaze and a massive winter storm named Elliot destroyed the United States just before the Christmas holidays. Moved to the weekend. , Illinois, December 27, 2022.

Kamil Kraszynski | reuters

Southwest Message from CEO Bob Jordan, post-holiday recession The travel plans of millions derailed, Clarified: “I can’t say it enough. We messed up.”

His focus now is to ensure that such a crisis never occurs again. The airline hired consulting firm Oliver Wyman to review its procedures, interview employees and union members, what went wrong, and how it might be avoided in the future. dealing with a low cost airline general Electric To improve the capabilities of the software that helps Southwest with crew reevaluation. The airline’s board has created an operations review committee to help managers work through such events.

The incident was shocking to many passengers used to Southwest customer service, which includes policies such as free checked bags, which is a rarity for domestic US travel. lawmakers and Transportation Secretary Pete Buttigieg said they want look forward in disruptions.

less than a year After travel chaos in his more than three decades at Southwest in the airline’s top job, Jordan is now tasked with getting things right with passengers and employees,

“We took goodwill out of the bank. We know that,” Jordan said in an interview earlier this month. “We have work to do to improve trust, but our customers are very loyal and we are seeing that loyalty.”

Southwest said it offered premium pay to flight attendants and $45 million in “gratitude pay” to pilots because of the meltdown. Both groups have warned about inadequate technology and scheduling for years.

Jordan said the carrier also gave 25,000 Rapid Rewards points each, which the company estimates to be worth about $300, to the roughly 2 million people who booked flights during the chaotic holiday period.

He added that a recent fare sale was successful and that many customers are redeeming frequent flyer points for Southwest flights.

Southwest said there would likely be chaos mean hit its pretax results between $725 million and $825 million and a rare quarterly loss, The executives will face questions from analysts and reporters when the results of the career report, scheduled for Thursday morning, are announced.

cascading cancellation

Southwest said it canceled about 16,700 flights between December 21 and December 31, a figure that grew after the failure. Recovering from severe winter weather that has crippled travel across the country, steady days later. Airline officials expected it to be the busiest travel period since covid-19 pandemic started.

In severe cold the hydraulic fluid became so thick that the jet bridge could not move. Snowfall and strong winds suspended operations at airports across the country. Airplane engines are covered with snow.

Most airlines had largely recovered from the bad weather by Christmas Day, but Southwest’s problems were exacerbated when crews had to call in for new assignments or pick up hotel rooms, leading to backups.

The carrier’s aircraft and crews were left out of place and at the mercy of crew scheduling systems that were designed to handle current or future flight constraints, not the plethora of flight changes in the past.

“We needed a big answer to reset the network,” Jordan said. “He was basically pulling the schedule down.”

flew southwest About a third of its planned schedule for several days after Christmas to get crews and planes where they needed to go.

“The GE digital tools that are integrated into Southwest’s systems are as designed throughout the program, and we are working with them to define new functionality,” a GE spokeswoman said Tuesday.

Still, scheduling chaos following inclement weather is nothing new to the airline industry. jetblueIn February 2007, JetBlue founder, CEO David Neelman lost his job due to the recession. (He has since started a new carrier In the US, called Breeze Airways.)

Southwest itself had a smaller scale of flight disruption in October 2021, which cost about $75 million. months ago, Spirit Airlines took a $50 million hit massive disruptions.

“Every airline has a downfall, and they rise from it with a new outlook,” said Samuel Engel, a senior vice president at the consulting firm ICF. “Airlines reach a certain point of complexity and a disruption event of such a scale that it causes them to look deep inside.”

Spirit and Southwest both operate so-called point-to-point networks, which are not dependent on hubs like the larger airlines, and instead involve aircraft movement across the country. The model generally works and helps keep costs down, but it can reduce disruption during extreme events.

Jordan defended the model, saying that it is generally easier to recover networks because passengers do not have to rely on connections to reach their destinations.

“The issue here wasn’t the network, the issue was how many places were hit by the weather and how many cancellations there were, basically nonstop,” he said.

to feel guilty

ICF’s Engel said that even travelers burned by an airline in such an event are faced with few choices when booking airline tickets and are often focused on price and time.

Southwest, United, Delta And American Control over three-quarters of the US market.

“Customers continue to choose their flights based on fares and timings,” he added. “As they are going through an interrupted journey, they will say ‘never again’ – and then they do.”

Mark Ahasik, an aviation consultant who worked with JetBlue during the 2007 recession, said the airline’s reputation “took a hit, but it didn’t destroy the brand.”

Southwest has to resolve the issues that caused vacationers discomfort and make amends with customers, but many travelers — especially at airports where Southwest has a strong foothold — usually have few airline options. There are, Ahshik said.

Southwest has nearly completed processing customer refunds and is working through the more complex task of reimbursing, which Jordan said includes everything from meals to dog-sitting fees. Some passengers who were left paying higher fares for scarce seats on other airlines are still waiting to get their money back.

Cody Smith, a 28-year-old artist living in Los Angeles, paid $578.60 for a Delta flight back to LA from his mother’s home in St. Louis after Southwest canceled part of his return trip after Christmas. Southwest offered Smith an alternate flight on New Year’s Eve, but Smith said he had multiple sclerosis and needed to get back to Los Angeles soon to take his medication.

Smith said, ‘I didn’t know what could happen.

Southwest reimbursed Smith for part of his trip on his airline, but as of last week had not refunded the money he spent on the Delta flight. He said Southwest sent him four inflight drink coupons.

“Why would I use a drink ticket when you owe me $600?” They said. “I really want this money back.”

Voiceover artist and country music radio host Cameron Brainard said he paid more than $1,000 to get back to New York from Nashville, Tennessee, including a rental car from Louisville, Kentucky. Southwest offered him $540.02, in a January 19 email that Brainard shared with CNBC, adding that he has not yet claimed reimbursement.

“Be sure to claim this payment before it expires,” the email reads. “This payment is the full and final settlement of your claim with Southwest Airlines.”

Brainard said he flies Southwest frequently and does not plan to leave the airline after the cancellation, although he will “second guess” based on his reimbursement.

“I hope it makes them a better airline,” he said.