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Southwest Airlines loses $800 million over holiday travel meltdown

Southwest Airlines announced it lost $800 million in pretax earnings for the fourth quarter due to the computer system failure that led to a meltdown during holiday travel. The company is currently under federal investigation.

Southwest Airlines lost $800 million due to holiday travel meltdown

Southwest Airlines said the computer system failure that led to a massive cancellation of its flights during the December holidays caused the company to lose $800 million in pretax earnings for the fourth quarter, as its stocks lost $0.38 per share.

“Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss,” Southwest CEO Bob Jordan said in a statement, Yahoo Finance reported.

“We really made a mess for our customers and employees,” Southwest President and CEO Bob Jordan told investors on an earnings call. “At the end of the day, that kind of disruption cannot happen again.”

The Department of Transportation also feels it was a mess. Although many airlines experienced disruptions ahead of Christmas due to an arctic air mass and an influx of winter storms to the central and eastern US – cancellations by Southwest stretched well past the weekend, with interruptions and repercussions well beyond other airlines.

Southwest Airlines under federal investigation

A month after the December travel debacle, the Department of Transportation (DOT) announced that it is investigating Southwest Airlines for its cancellation of more than 16,000 flights that stranded millions of travelers over the holidays.

Despite the losses by Southwest Airlines during its holiday travel fiasco, the Department of Transportation (DOT) says the company must provide reimbursements and refunds and will hold the company accountable for doing so, CBS reported

A spokesperson for the Department of Transportation said Southwest has completed 95 percent of the reimbursements that are related to cancellations during holiday travel and plans to complete the remaining due by next week.

“DOT is also probing whether Southwest executives engaged in unrealistic scheduling of flights which under federal law is considered an unfair and deceptive practice,” said the spokesperson.

Southwest Airlines denies any deceptive practices

“Our holiday flight schedule was thoughtfully designed and offered to our customers with the backing of a solid plan to operate it, and with ample staffing,” Southwest Airlines said in a statement. “Our systems and processes became stressed while working to recover from multiple days of flight cancelations across 50 airports in the wake of an unprecedented storm.”