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Southwest Airlines expects Q4 loss after storm chaos

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A Southwest Airlines ground crew member, photographed on December 28, 2022, is shown organizing unclaimed luggage at Los Angeles International Airport./AFP
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Jan 09, 2023 - 03:53 AM

NEW YORK — Southwest Airlines said Friday it expects a fourth-quarter loss following last month’s system breakdown that led to thousands of flight cancelations during the peak holiday travel season.

The domestic-focused US carrier will incur one-time costs of between $725 million and $825 million because of the debacle, resulting in a net loss for the final quarter of 2022, Southwest said in a securities filing.

That figure includes a revenue loss of $400 to $425 million from canceled flights, with the remaining sum “primarily due to estimated travel expense reimbursements to customers,” as well as additional employee pay, the filing said.

Southwest’s problems surfaced during last month’s severe winter storm, which brought blizzard conditions in some markets and ultra-cold weather across much of the United States.

But while other carriers were also affected briefly, Southwest’s travails extended for days beyond the storm, raising the ire of officials in Washington responding to horror stories of missed holiday celebrations and lost luggage.

A US Senate panel is expected to hold hearings investigating the problem.

Southwest’s breakdowns partly stemmed from the use of obsolete computer scheduling systems that became overwhelmed during the storm. The company has said it will upgrade the system, investments that Southwest’s labor unions had been warning were needed.

In all, Southwest canceled more than 16,700 flights over a 10-day stretch beginning on December 21. The carrier has returned to normal operations in recent days.

In a video posted Thursday, Southwest Chief Executive Bob Jordan reiterated an apology to customers and announced a “goodwill gesture” of 25,000 reward points to customers who experienced significant disruption.

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