Southwest Airlines posts $220M loss after holiday meltdown, when more than 17,000 flights were canceled – while American Airlines posts better-than-expected earnings of $803M
- Southwest Airlines became public enemy number one over Christmas holiday, when it canceled nearly 17,000 flights during a system meltdown
- Earlier this week the Transportation Department announced preliminary stages of an investigation into Southwest following the holiday disaster
- Southwest’s quarterly loss comes as competitors like American Airlines, Delta Air Lines and United Airlines post earnings exceeding $800million
Southwest Airlines reported a loss of $220 million during its fourth quarter due to its infamous holiday meltdown several weeks ago that saw close to 17,000 flights canceled.
American Airlines, on the other hand, toured a better-than-anticipated profit quarter with a profit of $803million, a number it says bolsters its ongoing claim that travel is back in full swing following the height of the pandemic years.
The struggling budget airline, which has since returned to normal operations, says it is anticipating another loss during the year’s first quarter, but is encouraged by booking trends for March.
While Southwest posted a loss, American Airlines posted an $803million profit during its fourth quarter, a better-than-expected figure
Southwest Airlines experienced a meltdown during the final days of 2022, stranding thousands of holiday travelers and causing the cancelations of close to 17,000 flights
‘Thus far in January 2023, the Company has experienced an increase in flight cancellations and a deceleration in bookings, primarily for January and February 2023 travel, which are assumed to be associated with the operational disruptions in December 2022,’ wrote the company in its quarterly report.
The airline’s catastrophic late December meltdown cost the company a reported $800million loss after passengers were left stranded all over the country during the last 10 days of 2022 and even into the new year, in some cases.
News broke on Wednesday, that the US Department of Transportation is in the early stages of an investigation into the airline following the travel disaster of epic proportions.
A spokesperson for the departments shared, ‘DOT is in the initial phase of a rigorous and comprehensive investigation into Southwest Airlines’ holiday debacle that stranded millions.’
DOT Secretary Pete Buttigieg previously said his department will ‘use the fullest extent of its investigative and enforcement powers,’ if the airline fails to reimburse travelers for not only their plane tickets, but the extra expenses they incurred during travel delays.
The investigation will include examining whether Southwest – the US’s largest domestic carrier – is scheduling more flights than its staff and internal booking system can handle.
If the answer is yes, that would constitute a violation of federal laws against deceptive trade practices.
The company has repeatedly argued its schedule was ‘thoughtfully designed’ and that the company has enough staff to go around.
The investigation compounds the worse-than-expected financial hit the company took following the late December chaos, which it blamed on the ‘unprecedented storm’ that walloped the country in the days leading up to Christmas.
While market predictors anticipated the company would shed about seven-to-twelve cents off its per share stock price, the adjusted loss wound up being nearer to 38 cents per share.
Shares of the company continued to fall at market open on Thursday.
Despite its disappointing close to the year, Southwest ended 2022 with a $539million profit – down 45 percent from a year earlier.
Southwest posted a $220million profit loss last quarter following a late December system meltdown that left tens of thousands stranded
One of the many baggage graveyards that sprung up across the country during the late December period when Southwest Airlines canceled nearly 17,000 flights
Also on Thursday, Southwest CEO Rob Jordan issued yet another apology for the mid-winter meltdown.
He said: ‘We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events.’
The Dallas-based company has hired outside consultants to investigate its technology, and created an internal committee of its board to review the events of last month.
In stark contrast to Southwest’s woes, were American’s profits, as well as the quarterly profit reports from United and Delta Airlines, which respectively came in at $843million and $828million.
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