WASHINGTON (Reuters) – Southwest Airlines (LUV.N) has canceled thousands of flights due to massive winter storms, in addition to reimbursing air tickets, covering costs such as hotels and car rentals. promised to refund the passengers. The impact on earnings is yet to be determined.
“There will certainly be an impact in the fourth quarter,” chief commercial officer Ryan Green told reporters in a phone call on Thursday. “We’re working on … all the financial elements of this. We’ll share that information when it’s all put together and ready.”
Some analysts estimate that the meltdown could reduce Southwest’s fourth-quarter earnings by up to 9%.
Company executives by phone declined to estimate the number of travelers affected by the disruptions since Friday.
Other U.S. airlines got back to business relatively quickly, but Dallas-based Southwest Airlines is still getting back to normal. Airlines canceled at least 16,000 flights last week, including about 60% of all flights scheduled for Thursday, according to data from flight tracker FlightAware.
“If we had to make alternative travel arrangements such as hotels, meals, rental cars, or gas for rental cars, those would be eligible for reimbursement,” Green said, adding that repayment would take several weeks.
Cancellations on Friday are expected to drop significantly, with Southwest Airlines saying it is “enthusiastic to get back to normal” ahead of the New Year weekend.
Just two months ago, Southwest was forecasting “strong” fourth quarter earnings, with operating revenues up 13% to 17%.
Bad weather was only part of the problem for the Southwest. Its outdated technology failed to map crews to flights, and its point-to-point operational structure caused schedule disruptions, the company admitted, union members said.
[1/2] Southwest Airlines passengers said the US carrier, led by Southwest Airlines, canceled thousands of flights due to the massive winter storms that hit much of the country before and during the Christmas holiday weekend. Queue at the luggage service office after check-in at Dallas Love Field Airport. December 28, 2022 in Dallas, Texas, USA. REUTERS/Shelby Tauber
The US government called the airline meltdown a system failure and vowed to take action.
Transportation Secretary Pete Buttigieg said in a letter to Southwest chief Bob Jordan on Thursday that companies will be held accountable if they fail to deliver on promises to customers about “controllable delays and cancellations.” I warned you.
The company has eagerly shown it’s turning the pages of the debacle that has sent its stock price plummeting. Southwest stocks closed 3.7% higher on Thursday, their first gain since last Friday, as Wall Street rose broadly.
Jordan apologized for the confusion, saying the process of redeploying crews and aircraft after the storm was a “manual process” that took time and was assisted by a “volunteer army” of office workers at its headquarters. .
“I can’t imagine this not causing a change in plans” for modernizing the airline’s operations, Jordan said, adding that while improvements to the technology are underway, it will be a “massive and complex process.” He added that there was
The union says it has repeatedly warned Southwest Airlines management that the airline’s technical systems need an upgrade.
For years, flight attendants have complained about the airline’s technical failures, according to Lynn Montgomery, president of the Southwest Airlines Flight Attendants Union, a Local 556 of the Transportation Workers’ Union.
Montgomery told CNN on Thursday that it may have included a commitment by Southwest executives to ensure that the IT infrastructure was ready for the carrier’s growth, adding: “There are many ways it could have been avoided. ‘ said.
This comment echoes that of the Southwest Air Pilots Association, which said that despite years of demands by the union for improvements, management had been unable to adapt operations to deal with repeated system failures.
Improvements the company sought included changes to the crew scheduling software and communication tools, which allowed departed crew members to stay in touch with the company.
Reported by Doina Chiacu and David Shepardson in Washington. Additional reporting by Ismail Shakil, Alexandra Alper, Koh Gui Qing Editing by Mark Porter, Frances Kerry, Sayatani Ghosh, and Leslie Adler
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