Southwest’s December Meltdown to Cause Quarterly Loss
Southwest canceled more than 16,700 flights after a winter storm disrupted its operations.
Photo:
KAMIL KRZACZYNSKI/REUTERS
Southwest Airlines Co.
LUV -0.27%
said it expects to book a fourth-quarter loss after it canceled more than 16,700 flights in the final 10 days of 2022 as a winter storm wreaked havoc on operations during the crucial holiday-travel period.
The company estimates that the cancellations will result in a negative impact of $725 million to $825 million on a pretax basis for the fourth quarter. That includes between $400 million and $425 million in lost revenue, as well as an additional hit from reimbursements to affected travelers, premium pay for employees and other related costs.
For the fourth quarter, Southwest estimates it flew about 6% less than it did in the same period in 2019, which is roughly 4 percentage points lower than it had previously expected.
Shares fell about 1% to $33.20 in premarket trading. Over the past month, the stock has fallen about 16%.
A brutal winter storm last month disrupted various airlines’ operations around the critical travel period during the Christmas and New Year’s holidays, but Southwest continued to cancel thousands of flights days after its peers had mostly restored operations. Southwest’s issues were exacerbated by what industry executives and labor leaders have described as inadequate technology systems, The Wall Street Journal reported.
The meltdown at Southwest has drawn scrutiny from the Biden administration and criticism from union officials.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Southwest canceled more than 16,700 flights after a winter storm disrupted its operations.
Photo:
KAMIL KRZACZYNSKI/REUTERS
Southwest Airlines Co.
LUV -0.27%
said it expects to book a fourth-quarter loss after it canceled more than 16,700 flights in the final 10 days of 2022 as a winter storm wreaked havoc on operations during the crucial holiday-travel period.
The company estimates that the cancellations will result in a negative impact of $725 million to $825 million on a pretax basis for the fourth quarter. That includes between $400 million and $425 million in lost revenue, as well as an additional hit from reimbursements to affected travelers, premium pay for employees and other related costs.
For the fourth quarter, Southwest estimates it flew about 6% less than it did in the same period in 2019, which is roughly 4 percentage points lower than it had previously expected.
Shares fell about 1% to $33.20 in premarket trading. Over the past month, the stock has fallen about 16%.
A brutal winter storm last month disrupted various airlines’ operations around the critical travel period during the Christmas and New Year’s holidays, but Southwest continued to cancel thousands of flights days after its peers had mostly restored operations. Southwest’s issues were exacerbated by what industry executives and labor leaders have described as inadequate technology systems, The Wall Street Journal reported.
The meltdown at Southwest has drawn scrutiny from the Biden administration and criticism from union officials.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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