The computer system failure that caused the airline’s holiday travel meltdown cost Southwest Airlines $800 million in pretax losses, causing the company to report a fourth-quarter loss.
Southwest Airlines Reports Loss
Southwest CEO Bob Jordan said in a statement, “More than 16,700 flights were canceled in late December due to operational disruptions, costing us an estimated $800 million before taxes (or about $620 million after taxes) in the fourth quarter of 2022.”
Southwest lost $220 million for the quarter, resulting in an adjusted loss of $0.38 per share.
Southwest was forced to cancel nearly all of its scheduled flights between December 21 and December 31 — approximately 16,700 flights. Wednesday, the US Transportation Department announced it was conducting an investigation into allegations that Southwest misled customers by scheduling more flights than it could handle.
In spite of customer cancellations and a slow booking rate in January and February, an airline spokesperson said March bookings are strong.
Southwest hoped that by giving away free frequent flyer points, it could make up for its dismal December performance. Even though the company made a $723 million profit last year, it expects the meltdown’s aftereffects to cost an additional $300 million to $350 million in the first quarter.
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Freebies For Those Affected
- Southwest Airlines provided 25,000 Rapid Rewards points to customers impacted by its holiday disruption.
- The airline sent points to approximately 2 million people, valuing them at approximately $750 million.
- It is possible that not every customer will redeem the bonus points.
Some customers may be willing to forgive the airline for its holiday service mishaps if they are compensated with reward points. Southwest reported to Insider on Thursday that point redemption has been strong this month, calling it a positive sign that customers are sticking with Southwest.
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