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Southwest, after strong 2022 rebound, expects losses in Q4

Southwest says it now anticipates a loss in its fourth quarter after the airline canceled more than 16,000 flights around Christmas and left holiday travelers stranded

Michelle Chapman
Friday 06 January 2023 12:32 GMT

Southwest Airlines anticipates a money losing fourth quarter after a holiday debacle ended with nearly 17,000 canceled flights, stranding thousands of people who were traveling to see family and friends.

It is a devastating turn financially and reputationally for the Dallas carrier, which led all U.S. airlines in profit during the first nine months of this year,

The airline said in a regulatory filing Friday that it canceled more than 16,700 flights from Dec. 21 through Dec. 31.

The massive disruptions started with a winter storm, and snowballed when Southwest’s outdated crew-scheduling technology was overwhelmed, leaving crews and planes out of position to operate flights. It took the airline eight days to recover when other major airlines were up and running almost immediately after the storm passed.

Southwest Airlines Co. expects a quarterly revenue loss of $400 million to $425 million, it said Friday. In early December, before the holiday meltdown, Southwest projected fourth-quarter revenue would rise by up to 17% over the same period in 2019, before the pandemic.

It also said that it expects higher operating expenses related to travel expense reimbursements to customers, the estimated value of frequent-flyer points that were offered to customers that are expected to be redeemed, and premium pay and additional compensation for employees.

Just last month, Southwest announced the return of a dividend for shareholders, which it suspended after the pandemic devastated the airline industry. U.S. airlines were barred from paying dividends or buying back their own stock until October as a condition of taking $54 billion in federal pandemic aid.

Southwest's flights are now running on a roughly normal schedule, and the airline is working on repairing its damaged reputation.

Shares dipped slightly before the opening bell Friday.

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