Southwest Airlines operation failures during blizzard to cost up to $825m
Southwest, one of the biggest carriers in the US, expects a profit wipeout in Q4 after a December blizzard triggered an operational meltdown. The Dallas-based carrier, a pioneer in low-cost aviation, was unable to recover operations, and expects a net loss for the period after taking a hit of up to $825m. The losses are a result of the airline’s inability to recover from the severe winter storms that swept across the US just before Christmas, stranding thousands of passengers and drawing a rebuke of the carrier from the White House. The fourth-largest airline in the US cancelled more than 16,700 flights between December 21 and December 31. The company on Friday said it anticipated a “negative impact in the range of $725mn to $825mn” in Q4 from the disruptions. Between $400mn and $425mn of that figure is an estimated revenue loss, while the rest is related to reimbursing affected customers, giving them airline miles as a “gesture of goodwill” and extra compensation for employees. The loss is at the high end of what investors expected, said Savanthi Syth, an analyst at Raymond James. The figure implies the company lost between $43,000 and $50,000 for each cancelled flight — still less than the high-water mark seven years ago at Delta Air Lines when a systemwide outage cost the airline $65,000 per cancelled flight. “We believe sentiment and, in turn, shares will continue to be weighed down by the longer term implications of the operations meltdown,” she said. While all US airlines were affected by the “bomb cyclone”, a term given to an explosive storm that intensifies rapidly, most recovered fairly quickly.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-01-09/unaligned/southwest-airlines-operation-failures-during-blizzard-to-cost-up-to-825m
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Southwest Airlines operation failures during blizzard to cost up to $825m
Southwest, one of the biggest carriers in the US, expects a profit wipeout in Q4 after a December blizzard triggered an operational meltdown. The Dallas-based carrier, a pioneer in low-cost aviation, was unable to recover operations, and expects a net loss for the period after taking a hit of up to $825m. The losses are a result of the airline’s inability to recover from the severe winter storms that swept across the US just before Christmas, stranding thousands of passengers and drawing a rebuke of the carrier from the White House. The fourth-largest airline in the US cancelled more than 16,700 flights between December 21 and December 31. The company on Friday said it anticipated a “negative impact in the range of $725mn to $825mn” in Q4 from the disruptions. Between $400mn and $425mn of that figure is an estimated revenue loss, while the rest is related to reimbursing affected customers, giving them airline miles as a “gesture of goodwill” and extra compensation for employees. The loss is at the high end of what investors expected, said Savanthi Syth, an analyst at Raymond James. The figure implies the company lost between $43,000 and $50,000 for each cancelled flight — still less than the high-water mark seven years ago at Delta Air Lines when a systemwide outage cost the airline $65,000 per cancelled flight. “We believe sentiment and, in turn, shares will continue to be weighed down by the longer term implications of the operations meltdown,” she said. While all US airlines were affected by the “bomb cyclone”, a term given to an explosive storm that intensifies rapidly, most recovered fairly quickly.<br/>
