Southwest Promises to Refund Airline Sees “Certain” Financial Impact

WASHINGTON—Southwest Airlines promised to reimburse passengers for expenses such as hotels and car rentals in addition to refunding tickets after it canceled thousands of flights due to a massive winter storm and said there would be a still-undetermined hit to its earnings.

“There’ll certainly be an impact to the fourth quarter,” Ryan Green, Chief Commercial Officer, told reporters on a Thursday call. “We’re … working through all the financial elements of this. We’ll share that information when we have all that compiled and are ready to do that.”

Some analysts estimate the meltdown could shave as much as 9 percent off Southwest’s fourth-quarter earnings.

On the call, company executives declined to estimate how many travelers were affected by disruptions since Dec. 23, 2009.

“If you had to make alternative travel arrangements like hotels, meals, rental cars, gas for rental car, those will qualify for reimbursements,” Green stated that the repayments would take several weeks.

According to FlightAware data, the carrier cancelled at least 16,000 flights over the last week. This includes roughly 60% of all scheduled flights on Thursday. Southwest claimed Friday cancellations fell dramatically. “eager to return to a state of normalcy” Before the New Year holiday weekend.

Southwest forecasted just two months ago “strong” Earnings for the fourth quarter were expected to increase by 13 percent to 17%.

Southwest was not the only problem. According to union members, it was due to its outdated technology that failed to map crew to flights. Its point-to–point operational structure also created chaos for schedules.

The departures board is overflowing with cancelled and delayed flights following the cancellations by thousands of flights in the United States, led by Southwest. These flights were affected by a major winter storm that struck the country just before Christmas and during Christmas weekend. Southwest was at Dallas Love Field Airport in Dallas, Dec. 28, 2022. (Shelby Tauber/Reuters)

The U.S. government has called the airline’s meltdown a system failure and vowed action.

On Thursday, Transportation Secretary Pete Buttigieg wrote to Southwest chief Bob Jordan to warn that the company would face consequences if it failed to fulfill its commitments to customers. “controllable delays and cancellations.”

The company is eager to prove that it is changing the course of the disaster.

Jordan apologized for any disruption caused by the storms. He stated that the process of repositioning crew and aircraft was completed. “manual process” It has been slow and it is now possible to do so. “volunteer army” made up of salaried employees at the company’s headquarters was helping.

“I cannot imagine that this doesn’t drive changes to the plan” to modernize the airline’s operations, Jordan said, adding that technology improvements were under way but it was a “large and complicated process.”

Employee unions say they have repeatedly warned Southwest management that the airline’s technology systems badly needed upgrades.

According to Lyn Montgomery of Southwest Airlines Flight Attendants Union (a local 556 of Transport Workers Union), flight attendants have complained about technological problems at the airline for many years.

“There’s many ways it could have been avoided,” Montgomery said on Thursday on CNN, saying that could have included commitments by Southwest executives to ensure that IT infrastructure would be able to meet the carrier’s growth.

These comments echo those made by Southwest Airlines Pilots Association. They said that despite many years of union calls for improvement, leadership failed to adjust operations to correct repeated system failures.

The company requested improvements to crew scheduling software and communication tools to allow displaced crews to keep in touch with the company.