Everything ‘on the table’ as Southwest Airlines CEO tries to prevent another crash

Southwest Airlines has hired a third-party firm to figure out what it needs to prevent another cancellation crash like the one that happened over the holidays, and “everything we need to do to mitigate the risk is on the table,” said in a statement. Thursday CEO Bob Jordan.

Jordan and Southwest management are under pressure to reassure weary passengers and skeptical investors that it won’t break down again due to bad weather or other operational issues, as it did last month when 16,700 flights were cancelled.

But Jordan, who has been CEO for just under a year after more than 30 years with the company, denied accusations that the company ignored technological flaws after years of neglect.

“There was a bit of a misconception that we have unique or archaic instruments or whatever, and we don’t have them,” Jordan told The Dallas Moring News Thursday. “Now we’re going to find out what we need to do to improve the technology, to improve the processes.”

Jordan said he has no immediate plans to reverse and replace the maligned crew rescheduling system, which one company spokesperson called “outclassed” by winter storms that hit two key airports in Denver and Chicago. He said the company had already made updates to prevent the biggest problems that hampered recovery efforts over the Christmas weekend, when it lost the ability to keep up with the reassignment of pilots and flight attendants.

“We’re actually working with them on a release right now,” Jordan said of the GE Crew Optimization program, sometimes called SkySolver, which Southwest uses to schedule pilots and flight attendants. “It will automatically quickly solve these old problems.”

Jordan said the company is running a “current release” of Crew Optimization software after eight updates in the past year.

Analysts and aviation experts have questioned the very Southwest philosophies that helped it become the world’s largest domestic carrier, including whether its low-cost philosophy has made it skimp on technology upgrades and whether its point-to-point network ”, which she exploits, profitable. too difficult to recover from breakdowns.

Jordan said the company spends $1 billion a year on technology and has made major upgrades to booking and service systems since 2017.

Flight attendant and pilot unions have for years been heavily critical of Southwest’s crew planning systems, saying they add stress and uncertainty to travel and can break even small and isolated events. During the worst of the recent wave of cancellations, Southwest lost sight of many of its flight attendants and pilots while crew members waited for hours trying to get a new assignment and start flying again.

In October 2021, due to storms and air traffic control restrictions in Florida, Southwest had to cancel about 2,000 flights in four days when its crew planning system was overwhelmed. This failure cost the company about $75 million in lost profits.

Southwest estimates that the debacle will cost it $725 million to $825 million, including lost profits, reimbursements, refunds, and goodwill gestures of frequent flyer points for affected customers and branded store points for employees. The holiday crunch is also likely to send the company into a loss in the fourth quarter after expecting a profit over the last three months of the year.

The company hired consulting firm Oliver Wyman to conduct a “top-down” analysis of the circumstances of the December crisis, Jordan said, and the company’s board of directors formed an “operations review committee” to look into what happened.

“It will be done very quickly here,” Jordan said. “It won’t take us months to get this job done.”

“I am sure that we will find out what we need to invest more in and what needs to be changed,” he said. “Maybe we need to reprioritize.”

Southwest COO Andrew Watterson spent 12 years as an aviation consultant with New York-based Oliver Wyman.

While other airlines recovered within a day or two after winter weather eased in places like Chicago and Denver, where Southwest has crew bases, Southwest continued to cancel more flights around Christmas Eve and Christmas Day. By December 26, company executives decided they needed to shut down as many airlines as possible in order to “reboot” its crews and planes and start over.

According to FlightAware.com, Southwest canceled more than 2,900 flights that day, almost 75% of what it had planned. Chicago-based United Airlines, which also has hubs in Chicago and Denver, canceled only 147 flights, or 6.1% of its flights, that day.

Again, Jordan said the severity of the winter storm and its impact on key Chicago and Denver airports were the main culprits in canceling Southwest flights from December 21 to 23.

Jordan said discussions were underway about the structure of Southwest’s flight network, with point-to-point flights between its 120 destinations, rather than round-trip flights between smaller cities and hub airports and then taking passengers to their final destination on connecting flights. The star network can help airlines isolate the impact of cancellations due to regional obstacles such as weather.

Unlike most other major US airlines, Southwest’s planes fly between four or five cities across the country before returning, if ever, to the airport of departure. The same goes for pilots and flight attendants.

“Do I think there will be big changes in our network? No, I doubt it,” Jordan said. “But if there are things that come out of the study, which are the settings? Absolutely.”

Less than two weeks after recovering from the holiday crisis, Southwest faced another operational challenge when a key FAA safety notification system failed Tuesday evening, causing ground services to shut down nationwide for about 90 minutes on Wednesday morning.

Southwest decided to delay most of its flights by about two hours and catch up during the day, while using a team of 100 headquarters staff to help manually reschedule crew members, as they did in late December. The carrier delayed 50% of its flights on Wednesday and canceled 429 flights, about 10% of its schedule, according to Flightaware. The same thing happened with other airlines, including Fort Worth-based American.

But by Thursday, Southwest had recovered, with only 13% of flights delayed and less than 1% cancelled, well below Southwest and industry standards.

“We deal with irregular operations all the time, but we don’t deal with events like a two-hour ground stop,” Jordan said. “So yeah, it was a real test. We have put in place a lot of short-term things due to the disruption of Christmas. It worked very well.”

But while Jordan said the late-December storms were a unique event targeting key points in the Southwest network, he remains focused on preventing a repeat of the new operational struggle.

“I guarantee there will be changes to our plan to further focus on operations because I can’t say enough, it just can’t happen again,” Jordan said. “We have a lot of good relationships with our clients, but we’re not going to use them.”

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