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Southwest Airlines says its Q4 result will slip to a $-725 to $-825 million pre-tax loss, the result of the meltdown of the carrier’s operations between December 21 and December 31. “A significant portion of this impact is from an estimated revenue loss in the range of $400 million to $425 million”, the airline said on January 6 in an SEC filing. Meltdown pushes Southwest into deep Q4 loss.
In the filing, Southwest says: “The remaining impact relates to an estimated net increase in operating expenses, primarily due to estimated travel expense reimbursements to customers, the estimated value of Rapid Rewards points offered as a gesture of goodwill to customers that are expected to be redeemed, and premium pay and additional compensation for Employees, which was partially offset by lower fuel and oil and profit sharing expenses.”
The airline says that it was forced to cancel 16.700 flights during the eleven-day period, affecting capacity or available seat miles (ASM) during the quarter by six percent. Southwest’s operations collapsed on the day that storm Elliot swept large parts of the US with super-low temperatures and snow. While this affected all airlines, Southwest went into a meltdown as its internal scheduling system was unable to keep up with where aircraft and crew were positioned. This forced the carrier to cancel up to eighty percent of its flights during the busy Christmas period.
This week, Southwest’s operations were back to normal, only to be hit by another IT issue again that resulted in new cancelations. Reuters reported on Thursday that the airline’s top management has discussed the recent problems with unions but came up with no immediate solution because it still has to do a full investigation. Southwest Airlines Pilots Association (SWAPA) has been invited by CEO Robert Jordan to join the investigation team.
In an email to affected customers this week, Southwest apologized for the bad experience they had during the crisis. It has offered loyal customers 25.000 Rapid Reward points. All requests for refunds, reimbursements, and returns of lost baggage are being handled “with great urgency and we appreciate your patience.”
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