After a large number of flight cancellations, Southwest Airlines has made sure to reimburse its passengers for their tickets. The company has said it will face the financial impact of the situation in the next quarter
Southwest Airlines promised to reimburse expenses such as hotel and car rentals in addition to refunding tickets after canceling thousands of flights due to a massive winter storm that said it would have an as-yet undetermined impact on its earnings.
"There will definitely be an impact on the fourth quarter," Chief Commercial Officer Ryan Green told reporters on a call Thursday. "We're ... working through all the financial elements of it. We'll share that information when we have all that compiled and are ready to do that."
Some analysts estimate the meltdown could be as low as 9% of Southwest's fourth-quarter earnings.
Company officials on the call declined to estimate the number of passengers affected by the disruptions since Friday.
While other US airlines got back on their feet relatively quickly, Dallas-based Southwest is still limping back to normal. Carriers have canceled at least 16,000 flights over the past week, including about 60% of all scheduled flights on Thursday, according to data from flight tracker FlightAware.
“If you have to make alternate travel arrangements like hotel, meals, rental car, gas for the rental car, they will qualify for reimbursement,” Green said, adding that repayment will take several weeks.
A huge drop in cancellations is expected on Friday, with South West saying it was "keen to return to normalcy" ahead of the New Year holiday weekend.
Just two months ago, Southwest forecast "strong" fourth-quarter earnings and operating revenue growth of 13% to 17%.
Bitter weather was just part of the problem for Southwest. The company has acknowledged and union members have said that its dated technology failed to map crews to flights and that its point-to-point operating structure created chaos for schedules.
The US government called the airline's meltdown a system failure and pledged action.
In a letter to Southwest chief Bob Jordan on Thursday, Transportation Secretary Pete Buttigieg warned the company would be held accountable if it does not meet commitments to customers for "controllable delays and cancellations."
The company has been eager to show that it is turning the page on the debacle that sent its share price plummeting. Southwest shares closed up 3.7% on Thursday as Wall Street broadly edged up, its first day of gains since last Friday.
Jordan apologized for the disruption and said that the process of replacing crews and aircraft after the storm was a "manual process" that took time, and that a "volunteer army" made up of salaried employees at the company's headquarters was helping.
"I can't imagine that this doesn't alter the plan to modernize the airline's operations", Jordan said, adding that technology improvements were underway but that it was a "large and complex process".
Staff unions say they have repeatedly warned Southwest management that the airline's technology systems are in dire need of an upgrade.
Flight attendants have been complaining about technical failures at the airline for years, according to Lynn Montgomery, president of the Southwest Airlines Flight Attendants Union, a local 556 of the transport workers union.
"There are a number of ways this could have been avoided," Montgomery said on CNN on Thursday, adding that it could have included commitments by Southwest executives to ensure that the IT infrastructure would meet the carrier's growth. Will be able to.
The comments echoed those of the Southwest Airlines Pilots Association, which said leadership had failed to optimize operations to address repeated system failures, despite years of calls for reform by the union.
The improvements required included changes to crew scheduling software and communications equipment that would have allowed displaced employees to remain in contact with the company.
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