Southwest Airlines faces investigation, $220M loss over holiday travel disaster : NPR
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The US Department of Transportation is investigating the Southwest Airlines holiday travel debacle, which left thousands of travelers stranded for days. The investigation comes as the airline reported $220 million loss last quarter and a further loss in the first quarter.
Southwest canceled more than 16,700 flights over several days in late December. While a massive winter storm caused the initial cancellations, the company’s outdated software systems turned what should have been a normal problem into an ice disaster that dragged on for days after other airlines resumed their usual operation.
The department’s investigation will look into whether Southwest made unrealistic flight schedules, “which under federal law is considered an unfair and deceptive practice,” according to a department spokesman.
“DOT has made it clear to Southwest that it must provide timely refunds and reimbursements and will hold Southwest accountable if it fails to do so,” the department’s spokesperson said.
The flight cancellations cost the company about $800 million, according to Bob Jordan, the airline’s president and chief executive.
About half of those losses come directly from flight cancellations. The rest largely comes from compensating customers who bought tickets from other airlines and handing out extra frequent flier points, which are worth about $300 per passenger.
Passengers and employees alike were frustrated by the company’s lack of communication during and immediately after the cancellations.
In the report announcing the loss, Jordan apologized to customers and employees, saying the company “has taken rapid steps to strengthen our operational resilience and is undergoing a detailed review of the events of December .”
Fewer people are booking with Southwest due to the December 2022 disaster. The company expects to lose more than $300 million in revenue in the first quarter, although it reports that booking trends are improving.