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Southwest Airlines says it lost $220M in 4Q due to holiday cancelations

Southwest Airlines reported a $220 million fourth-quarter loss on Thursday, citing crippling cancelations at the end of 2022 from a winter storm followed by "operational issues" that left passengers stranded for days. File Photo by Bill Greenblatt/UPI
1 of 3 | Southwest Airlines reported a $220 million fourth-quarter loss on Thursday, citing crippling cancelations at the end of 2022 from a winter storm followed by "operational issues" that left passengers stranded for days. File Photo by Bill Greenblatt/UPI | License Photo

Jan. 26 (UPI) -- Southwest Airlines reported on Thursday a loss of $220 million in the fourth quarter due mainly to crippling cancelations at the end of 2022 from a winter storm followed by "operational issues" that left passengers stranded for days and the carrier under federal investigation.

Southwest canceled more than 16,000 flights, representing roughly two-thirds of its schedule over that time as frustrations bubbled over at its airport counters around the country,

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"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 President and CEO Bob Jordan said in a statement.

"Despite the negative financial impacts in the first quarter of 2022 due to the Omicron variant and in the fourth quarter of 2022 due to the operational disruptions, we generated full-year 2022 net income, excluding special items, of $723 million."

News of the fourth quarter financial hit comes a day after the Transportation Department said it was investigating the carrier to determine whether it illegally overbooked passengers without the flights to accommodate.

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"The DOT is in the initial phase of a rigorous and comprehensive investigation into Southwest Airlines' holiday debacle that stranded millions," a spokesperson told CNN and NBC News. "DOT has made clear to Southwest that it must provide timely refunds and reimbursements and will hold Southwest accountable if it fails to do so.

"DOT is also probing whether Southwest executives engaged in unrealistic scheduling of flights which under federal law is considered an unfair and deceptive practice."

Southwest in a statement Wednesday said it would cooperate with the investigation while noting the storm hampered its operations.

"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," the airline said. "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."

Jordan said Southwest is continuing its own investigation into the problems that caused the massive cancelations that left thousands stranded at airports.

"We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events," Jordan said. "In addition, our board of directors has established an operations review committee that is working with the company's management to help oversee the company's response.

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"As part of our efforts, we are also conducting a third-party review of the December events and are reexamining the priority of technology and other investments planned in 2023."

On Jan. 18, Casey Murray, president of the Southwest Airlines Pilots Association, called for a strike authorization vote citing a lack of progress in contract negotiations for pilots. The union set a strike authorization vote for May 1, to give proper warnings to customers and allow members to prepare of negotiations remain stalled.

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