Southwest Airlines said that they will lose $1 billion as a result of their mismanagement and subsequent cancellation of flights last month.
In a new regulatory filing, the airline reported to the Security and Exchange Commission that they cancelled more than 16,700 flights between December 21st and 31st, which caused a loss of over $400 million in revenue alone.
As passengers became stranded all across the country during the Christmas and the holiday season of all times, Southwest began getting absolutely destroyed on social media. Longtime customers were fed up with the lack of information while waiting days to get to their destinations. To make things even worse – thousands upon thousands of pieces of luggage were piling up in airports all across the country.
NOT ALL PASSENGERS WERE REFUNDED
Eventually Southwest tried to save face by refunding passengers whose flights were cancelled, as well as paying for some additional expenses like covering hotel rooms, meals and alternate transportations.
The airline says the combination of not only the cancelled flights, but also the reimbursements and frequent-flyer points it offered to some affected customers, will bring losses to the $1 billion mark.
Prior to the December debacle, the airline projected an increase in revenue by 17% over the same period in 2019, before the pandemic. They now find themselves $1 billion in the whole. Yikes.
PILOTS BLAME SOUTHWEST’S ANTIQUATED TECHNOLOGY
Southwest hasn’t fully explained what the main cause that led to thousands of flights being cancelled was. In press releases and interviews, Southwest officials have cited the ‘historic storm,’ being the main factor, as well as an outdated crew-scheduling system.
The Southwest pilots union has claimed that the airline actually knew about their outdated technology and IT problems long before the December disaster and they chose not to do anything about it. Then when the storm hit, they weren’t prepared to adapt like the other airlines did.
Regardless who or what is to blame, Southwest will now try and do damage control as they try to move forward. That may prove difficult though. Congress and the Department of Transportation have said that they are pursuing investigations into just how SWA could have messed up so badly.
The airline is also facing class-action lawsuits for the cancellations, with many more expected.
What made people even more frustrated was that Southwest received $7 billion in COVID relief packages. It now appears that money didn’t go where it was supposed to.
As bad as the financial hit was for Southwest however, the public relations hit may be even worst. They have now become the laughingstock of the airline industry with no reliability whatsoever. It’s bad when Spirit Airlines of all things is doing better than they are.
The post Southwest Airlines Says They Will Lose $1 Billion From Their Travel Screwup appeared first on OutKick.
