Southwest Airlines predicts that the holiday meltdown would “definitely” affect the fourth-quarter performance
Thousands of customers were stranded due to system-wide chaos drawing scrutiny from Washington over the holiday week.
In a last-ditch effort to stabilize its business and get planes and employees where they needed to go, the low-cost airline reduced schedules during the last several days, operating just about one-third of its planned flights.
Normal scheduled flights are expected to operate as per Southwest.
Canceling its 39 flights scheduled for Friday as per the FlightAware reduced from Thursday’s total of almost 2,300.
“We have all hands on deck and tested solutions in place to support the restored operation. I’m confident, but I’m also cautious,” as per the staff memo from CEO Bob Jordan said on Thursday.
After a pause was implemented, the airline resumed its ticket sales for Friday, as stated by Jordan has a more than three-decade Southwest veteran who became the CEO in February.
After the U.S. was hit by severe winter weather over the holiday week, Southwest’s business came apart. Then, after last week, when most airlines recovered, Southwest’s issues worsened. Overloaded internal scheduling tools, essential for matching crews with flights, were among the difficulties mentioned by executives.
On Thursday, executives promised to upgrade worker scheduling software and stated that modernization efforts were already underway, but they also acknowledged the lengthy nature of such initiatives.
Chief Commercial Officer Ryan Green stated that the fourth quarter “will definitely have an impact” on a call with reporters on Thursday.
The executive refrained from indulging an estimate regarding the total disruption cost of the airline. In a similar incident that occurred in October 2021, the disruption cost then was roughly $75 million as per the carrier last year. This year, however, the event lasted for an extended period due to many travelers commuting for a holiday and with shapely costlier fares.
Per the carrier, the estimated quarterly revenue was expected to be 17% more than in 2019, bringing it closer to $6 billion.
‘A lack of love.’
Reimbursing travelers related to canceled flights is a daunting task for Southwest.
Southwest faces the daunting task of reimbursing significant customer service for costs related to canceled flights. Beyond lodging and meals, some passengers also had to pay for new toiletries and other necessities.
After many flight modifications that would have cut his holiday in half, Jack Leon, a 34-year-old teacher who had intended to go to Boston on Christmas Day with Southwest, canceled his trip. Unfortunately, Leon needed to get in touch with customer support via phone, email, or an online form, so he had to return to the airport on Thursday, four days after his holiday was cut short, to get reimbursed for his return flight.
“For a company that talks about love and has a heart as their graphic, there was not much love on Christmas Day,” Leon stated.
To appease its most devoted customers, Southwest announced Thursday that it would extend the qualification time for elite statuses with benefits like free Wi-Fi, early boarding, and occasionally a companion pass.
Recording singer Suzie Chism, 33, of Nashville, Tennessee, told CNBC that she missed a week of work and her final performance of the year because her Southwest trip from Las Vegas on December 26 was canceled.
“My two-night trip is suddenly a week-long,” Chism stated. “The loss of income is crushing,” Chism said; she was able to book a new flight with Frontier for Friday night.
“I simply do not trust Southwest to get me there,” she continued.
To help delayed Southwest travelers reach their destinations without paying exorbitant costs, several rival airlines said they would restrict fares for specific cities on Thursday. However, some one-way flights still cost $600 or more.
After urging airlines to set fare caps, Transportation Secretary Pete Buttigieg ordered the actions.
Buttigieg threatened to hold Southwest accountable in a letter to its CEO on Thursday if the company didn’t swiftly refund passengers for delayed flights, pay them back for expenditures, and bring back misplaced luggage.
“No financial compensation can fully make up for passengers who missed moments with their families that they can never get back — Christmas, birthdays, weddings, and other special events,” Buttigieg stated in writing. “That’s why it is so critical for Southwest to begin by reimbursing passengers for those costs that can be measured in dollars and cents.”
Buttigieg said the Transportation Department would examine Southwest “under a microscope” and issue fines if required to ensure the airline treats passengers fairly.
In addition, several legislators stated they would investigate Southwest’s unusual difficulties over the previous week.
Even though Southwest’s stock, trading at roughly $33 per share, increased by about 4% on Thursday, it is still down more than 7% this week. Earlier on Thursday, CFRA Research lowered their $41 price objective for Southwest from $47 but kept a strong buy recommendation on the company.
“History shows customers tend not to permanently ditch an airline even after an awful experience due to the commodity-like nature of the product,” CFRA analyst Colin Scarola in a statement wrote.
Only some clients concur.
On Christmas Eve, Alex Kain, 37, was scheduled to depart Denver, one of the airports worst impacted by the delays, for Seattle. Kain and his fiancée instead spent 18 hours in a rental vehicle traveling to an airport in Redmond, Oregon, where they boarded an Alaska Airlines aircraft back to their native country after their 2 a.m. departure was canceled.
The pair intends to argue for at least some payment for the hotels, rental vehicle, petrol, and Alaska Airlines ticket. Kain calculated that the costs might reach $3,000 in total.
“There’s no amount of money they could give us to make us fly Southwest again,” Kain said to CNBC.
- Published By Team Nation Press News
