Southwest projects more losses ahead due to operational meltdown
Southwest CEO Bob Jordan said the airline is still encouraged by March 2023 booking trends
Buttigieg: We will be holding Southwest Airlines accountable
Rep. Nancy Mace discusses the Southwest Airlines meltdown and how Pete Buttigieg responded to the matter on ‘Maria Bartiromo’s Wall Street.’
Southwest Airlines warned Thursday that it expects to report another loss in the first quarter as costs add up from the operational meltdown that canceled nearly 17,000 flights during the holiday and left millions of passengers stranded.
"Based on current revenue and cost trends, we currently expect a first quarter 2023 net loss. However, we are encouraged by current booking trends in March 2023," said CEO Bob Jordan in a statement.
Operating revenue for the first quarter is expected to grow by 20% to 24% with available seat miles up approximately 10%.
In its fourth quarter earnings report, the discount airline reported a net loss of $220 million due to the operational disruption which cost the airline approximately $800 million. However, the air carrier still reported an adjusted annual profit of $723 million for the full 2022 fiscal year.
Operating revenue rose 7.7% to a record $6.2 billion.
Southwest Airlines
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LUV | SOUTHWEST AIRLINES CO. | 31.79 | +0.03 | +0.08% |
The largest domestic carrier warned earlier this month that it expected the disruption that occurred between Dec. 21 and Dec. 31 to result in a pre-tax negative impact in the range of $725 million to $825 million.
AIRLINE EARNINGS COMING IN STRONG, DESPITE RISING FARES AND ECONOMIC SLOWDOWN
Canceled Southwest Airlines flights appear on the monitors at LAX on Thursday, Dec. 29, 2022. (Christina House / Los Angeles Times via Getty Images / Getty Images)
But this problem, which is now being investigated by federal officials, is still costing the airline.
On Thursday, Jordan also reiterated how "deeply sorry" he was to employees and customers for the meltdown, adding that the carrier has taken steps to "bolster our operational resilience and are undergoing a detailed review of the events."
SOUTHWEST AIRLINES SUED BY SHAREHOLDERS FOLLOWING OPERATIONAL MELTDOWN
Hundreds of Southwest Airlines checked bags are piled at baggage claim at Midway International Airport as Southwest continues to cancel thousands of flights across the country Wednesday, Dec. 28, 2022, in Chicago. (AP Photo/Erin Hooley / AP Newsroom)
The comments come just a day after the U.S. Transportation Department announced that it was investigating whether Southwest Airlines deceived customers by knowingly scheduling more flights in late December than it realistically could handle.
"DOT is in the initial phase of a rigorous and comprehensive investigation into Southwest Airlines’ holiday debacle that stranded millions," the department said in a statement.
SOUTHWEST AIRLINES TO SPEND OVER $1B TO INVEST IN IT SYSTEMS FOLLOWING HOLIDAY MELTDOWN
A traveler waits outside the Southwest Airlines baggage office at Oakland International Airport (OAK) in Oakland, Calif., Wed., Dec. 28, 2022. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Southwest said its holiday schedule "was thoughtfully designed" with "a solid plan to operate it, and with ample staffing."
However, it pledged to cooperate with any government inquiries and is "focused on learning from this event" and reducing the risk of a repeat.
The Associated Press contributed to this report.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Airline travelers will feel 'huge' impact from FAA outage: Southwest Cpt. Michael Santoro
Southwest Airlines Pilots Association Vice President Cpt. Michael Santoro reacts to the FAA's nationwide technical system outage.