Southwest Braces for Potential Fines Over Winter Meltdown

Southwest Airlines
Southwest Airlines | Image by Angel DiBilio/Shutterstock

Southwest Airlines revealed that it could be subject to fines following widespread flight cancellations during last year’s peak holiday travel season that disrupted travel for 2 million people.

“Based on the wide-scale operational disruption for the Company, which led to the cancelation of a significant number of flights between December 21 and December 29, 2022, the Company could be subject to fines and/or penalties resulting from investigations by the Department of Transportation or other government agencies,” a Southwest filing with the Securities and Exchange Commission showed.

On Friday, the DOT informed Southwest “that it has determined the Company failed to provide adequate customer service assistance, prompt flight status notifications, and proper and prompt refunds and that the assessment of a civil penalty is warranted,” the carrier said in the filing.

Southwest is headquartered in Dallas.

A DOT report published in March revealed that, industry wide, that of the 5.4% cancellation rate in December 2022, 54.41% was attributable to Southwest. More than 72% of total flights cancelled between Dec. 24 and Dec. 31 were cancelled by Southwest, the report stated.

“The Company experienced a wide-scale operational disruption as historically extreme winter weather across a significant portion of the United States impacted its operational plan and flight schedules,” according to the SEC filing. “Subsequent to Winter Storm Elliott, the Company was challenged to realign flight crews, flight schedules, and aircraft for a period of several days during this peak demand travel period.”

Southwest claims in the filing that “disruption and subsequent recovery efforts” resulted in the cancellation of more than 16,700 flights from Dec. 21 to Dec. 31.

“These events also created a deceleration in bookings, primarily isolated to January and February 2023, as well as increased first quarter 2023 expenses by approximately $55 million,” according to the filing.

Southwest stated there could be monetary damages or other costs resulting from litigation by customers or shareholders. In the filing, it said company officials are “not able to estimate a range of possible loss for such items.”

The Associated Press reported on Monday that Southwest lost more than $1 billion in sales and because of other costs, including refunds. Company profits dropped 30% in the third quarter, prompting Southwest to “scale back” growth plans early next year, according to the AP.

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