Southwest Airlines is forecasting a loss-making quarter after a holiday rout led to the cancellation of nearly 17,000 flights and the embarrassment of thousands of people traveling to see family and friends.
This is a devastating financial and reputational turnaround for the Dallas-based carrier, which has brought profit to all U.S. airlines during the first nine months of 2022, the year of the aviation industry’s recovery.
Southwest has canceled over 16,700 flights between December 21 and 31. This would result in negative pre-tax impacts of between $725 million and $825 million, a fourth-quarter net loss, the airline said Friday. with the US Securities and Exchange Commission.
The massive disruption began with a winter storm and snowballed when Southwest’s outdated crew scheduling technology was overwhelmed, leaving crews and aircraft unable to fly. It took the airline eight days to recover, while other major airlines were up and running almost immediately after the storm passed.
Southwest Airlines Co. expects a quarterly loss of between $400 million and $425 million, the company said on Friday. In early December, ahead of the holiday crunch, Southwest forecast fourth-quarter revenue to rise 17% year-over-year in 2019, before the pandemic.
He also said he expected higher operating costs related to customer travel reimbursements, the estimated value of frequent flyer points that are expected to be redeemed, and bonus payments and additional employee benefits.
Just last month, Southwest announced a shareholder dividend return, which it suspended after the pandemic devastated the aviation industry. U.S. airlines were barred from paying dividends or buying back their own shares until October as a condition of receiving $54 billion in federal pandemic relief.
Southwest flights are now operating on a roughly regular schedule, and the airline is working to repair its damaged reputation.
Shares fell slightly before the opening of trading on Friday.
