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Southwest Meltdown Prompts New Questioning

Business

A fleet of Southwest planes stay on the ground | Image by ArtisticOperations/Pixabay

Southwest Airlines has drawn the ire of the New York State pension fund –- one of the carrier’s largest investors -– over the company’s end-of-the-year meltdown that resulted in thousands of flight cancellations and delays.

In a January 6 letter to Southwest, New York State Comptroller Thomas DiNapoli, who oversees the state’s pension system, grilled the Dallas-based carrier about what it was doing to ensure similar operations failures were prevented in the future.

Southwest’s systems failures occurred between December 24 and January 2, during which the company suffered from one of the largest airline meltdowns in years. Over this period, more than 20,000 scheduled flights were canceled or delayed, according to the flight tracking website FlightAware.

“Clearly, this crisis has resulted in profound customer dissatisfaction and is expected to generate significant costs to the company,” said DiNapoli in his letter to Southwest CEO Bob Jordan.

The New York State pension fund in September reported that it owned $17.6 million in Southwest stock, representing a 0.10% ownership stake in the company’s outstanding shares, according to FactSet.

It is not out of the ordinary for larger investors to demand accountability from a company’s C-suite executives or board members. That is especially the case with Southwest, considering the plunge that its stock price experienced due to the meltdown.

A similar situation occurred in October when Meta investors issued an open letter to CEO Mark Zuckerberg, urging him to trim the company’s fat and reduce spending. Zuckerberg laid off 11,000 Meta employees shortly after receiving the letter.

A Southwest spokesperson on Monday confirmed that the company received DiNapoli’s letter, stating that it was currently in the process of responding to the comptroller’s office.

An official response to the comptroller has not been issued as of publication, but the Southwest spokesperson indicated that the carrier had taken unprecedented steps to mitigate the risk of another disruption.

“While we will have disruptions in the future, all airlines do. We can never, never have an event of this magnitude again,” Jordan said in a message to Southwest employees on Monday.

Given the extent of Southwest’s holiday upset, Secretary of Transportation Pete Buttigieg chimed in with his own official response to the meltdown.

“The level of disruption Southwest customers have experienced over the Christmas holiday and into the New Year is unacceptable. I want to reiterate … Americans expect when they purchase an airline ticket that they will arrive at their destination safely, reliably, and affordably,” Buttigieg wrote.

“We are going to be putting Southwest Airlines under a microscope in terms of their delivering these kinds of reimbursements and refunds to passengers,” Buttigieg said on the Today Show.

The New York State Comptroller’s Office has no immediate plans beyond waiting for Southwest’s response, a spokesman for DiNapoli said.

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