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Southwest to Lose $1B over Holiday Disruption

Business

Southwest plane on tarmac | Image by Jonathan Weiss/Shutterstock

During the holiday season, many travel plans were interrupted when thousands of flights were canceled, and the airline responsible for most of those cancellations may lose several hundred million dollars due to the debacle.

Southwest canceled over 16,700 flights during a service meltdown after a massive snowstorm that affected most of the country between Christmas and New Year’s, according to Reuters.

Canceling the wave of flights will cost the company somewhere between $725 million and $825 million, the company reported. Southwest’s shares have lost 10% of their value since December 21, 2022.

Members of Congress have called on the Department of Transportation (DOT) to take action after millions of people were stranded. Further action may result in additional fines for which the airline might be responsible, per CNN.

A letter from the incoming House Committee on Transportation and Infrastructure to Transportation Secretary Pete Buttigieg was shared with CNN.

In part, it said that the DOT should require that “airlines are able to maintain a reasonable level of operational capabilities in the event of extreme weather or other types of potential disruption.”

This is not the first time the company has had a service meltdown. In 2021, the airline lost $75 million due to issues during Columbus Day weekend.

Many of the most recent cancellations have been blamed on the airline’s crew scheduling system.

While customers are being refunded for out-of-pocket costs, The Dallas Express previously reported that Southwest was offering 25,000 rewards points to frequent fliers who were affected.

Since so many customers could not board their intended flights, the airline also faced the challenge of misplaced luggage. Southwest CEO Bob Jordan released a statement on Thursday saying that the vast majority of the bags and lost luggage had been returned or would be soon.

Collectively, the holiday travel nightmare will cost Southwest almost $1 billion, not including the costs of upgrading technology and computer systems and other fines.

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