unaligned

Southwest COO Andrew Watterson apologized before a Senate panel Thursday for the carrier’s December meltdown that stranded thousands of passengers over the holidays. Watterson said the carrier will have a key software upgrade in place on Friday to avoid a similar event. “Let me be clear: we messed up. In hindsight, we did not have enough winter operational resilience,” Watterson said in prepared testimony. Southwest CEO Bob Jordan had a scheduling conflict and couldn’t attend, according to the company. Southwest has said it canceled more than 16,700 flights between Dec. 21 and Dec. 31. The issues started with severe winter weather around the US, but the carrier lacked the technology to keep pace with the numerous flight changes, prompting the airline to scrap most of its schedule for several days to reset its operation. The chaos pushed Southwest to a loss in the last quarter, costing it $800m in pretax earnings. Watterson told reporters outside of the hearing on Thursday that executive bonuses would be reduced this year because of the meltdown. Southwest has been refunding passengers and reimbursing additional expenses like flights on other airlines and hotel stays, costing the airline hundreds of millions of dollars. The airline has paid out more than 96% of the reimbursement requests, and the remaining ones have been recently submitted, Watterson said. “Anything that was well documented and under $4,000 our representative approved on the spot” while anything above was elevated to supervisors, Watterson told reporters. “We reimbursed tire chains, strollers, car seats, pet sitting but things we didn’t reimburse were things like $7,000 shopping sprees at luxury stores or chartering a private jet.” The incident capped a year of chaotic travel for many passengers as airlines struggled to ramp up to meet a rebound in demand. Pressure on the industry has grown over the last year while some lawmakers and the Biden administration seek stronger consumer protection. Some lawmakers outlined Thursday the hundreds, if not thousands, of dollars their constituents were forced to pay to get home during the holiday travel chaos.<br/>

Southwest COO Andrew Watterson said on Thursday the company will cut executive bonuses following the carrier's high-profile operational meltdown in late December that left thousands of passengers stranded and fuming. Watterson did not provide more details about the cuts, but said the bonuses will be announced in March.<br/>

Southwest and its pilot union will offer sharply contrasting reasons for the low-cost carrier’s meltdown in December that disrupted travel plans for 2m customers, ahead of a US Senate committee hearing on Thursday. While Southwest has cited weather impacts, the union will single out poor preparation and a failure to modernize technology, according to written testimonies for the hearing, seen by Reuters. The meltdown canceled almost 17,000 flights and is estimated to have cost more than $1b. It has also prompted a lawsuit from shareholders and a US Department of Transportation investigation. The Dallas-based airline attributed the breakdown in service to a “historic” winter storm, both in size and scale, which caused frozen jet bridges and icy aircraft engines. It has also defended its computer system, saying the technology “worked as designed,” while adding the airline has tapped General Electric Co to improve crew rescheduling capability and hired consultant Oliver Wyman, a unit of Marsh McLennan, to recommend operational changes. Southwest’s COO Andrew Watterson repeated that message in his testimony, saying the airline experienced a “historic event” with a combination of challenges it had not confronted before. But Southwest’s pilot union, which is in contract negotiations with Southwest, blames the company and its leadership for a “failure” to modernize crew management processes and technology and to prepare for the storm. Casey Murray, president of the Southwest Airlines Pilots Association (SWAPA) said the union has been sounding the alarm about the carrier’s crew scheduling technology and “outdated” operational processes for years. “Unfortunately, those warnings were summarily ignored,” he said.<br/>

Mesa Airlines Group, parent of US regional carrier Mesa Airlines, reports a modest loss in the first quarter of its fiscal year as it prepares to separate from longtime partner American Airlines in favour of a new deal with United Airlines. The Phoenix-based company, which operates regional routes for United and American and flies cargo for DHL Express, says on 9 February that it lost $9m during the three months ended 31 December, its fiscal Q1 2022, compared to $14m loss in the same quarter a year ago. The company’s revenues also stagnated during the final three months of 2022 as it generated $147m, down slightly from the previous year when it reported revenue of $148m. “It’s fair to say we’ve clearly gone through a rough patch,” Jonathan Ornstein, Mesa’s CE, said during the company’s quarterly earnings call on 9 February. “I believe that over time we’ll start to see the benefit of all this, and it will all come together in terms of a much more stable operating platform and renewed profitability.” Mesa’s 50,940 block hours in the last three months of 2022 represented a 44% decrease from the 86,097 block hours it flew during the same period of 2021. Looking ahead, Mesa anticipates that its block hours will remain flat in its fiscal second quarter. “Mesa, like many regional airlines, continues to contend with the challenges of the industry-wide pilot shortage on our block hour production,” says Brad Rich, Mesa’s COO. “However, we finally have a line of sight to relief.” Mesa’s pilot-attrition rate has “come down materially” in recent months to a rate close to pre-pandemic 2019, Rich says, adding that its classes are “filled with a combination of new hires and captain upgrades”. The regional is also positioning itself as a pilot pathway to United. After severing its contract in December, Mesa will cease operating on behalf of American on 3 April 2023. It will operate its current schedule with American through 28 February, then reduce flights by half. <br/>

Mango Airlines’ administrator is launching a legal bid to secure a decision from the South African public enterprises minister to unblock a planned potential rescue deal for the airline. Sipho Sono, who has been acting as the business rescue practitioner since Mango was placed into formal financial restructuring in the summer of 2021, is taking the step amid frustration that the government has not yet reached a decision on South African Airways' application to sell its shares in Mango. This is part of the process for a prospective bidder to complete a potential rescue of the grounded carrier. The ministry has been seeking more information from SAA over concerns, initially raised but subsequently dropped by Mango’s parent airline, over the planned transaction. Sono says the delay risks completing a deal, as a preferred bidder for Mango had said it will withdraw from the process if a decision is not made by the end of February. He also says the International Air Services Council (IASC) has resolved to cancel Mango’s operating licence – which is currently suspended as it has not flown for over a year – in part because no decision on the application has been taken. Further communication between Sono and the ministry has failed to bring about a decision. As a result, in an 8 February update, Sono says that, faced with the alternatives of either hoping a decision is made in time or of initiating a wind-down process, it is beginning legal proceedings against the minister to ”compel him” to take a decision on the application. <br/>

Virgin Australia Airlines Pty Ltd is considering taking on new debt in order to hand cash to owner Bain Capital just months ahead of the airline’s prospective initial public offering, according to people familiar with the matter. The nation’s second-largest carrier has asked investment banks to outline a potential so-called dividend recapitalization during interviews for prospective advisers on the listing, said the people, who asked not to be identified as the discussions were still confidential. The move would see Virgin issue debt ahead of the possible IPO and the proceeds would be used to pay dividends to Bain, they said. The company interviewed about eight investment banks in recent weeks for the first-time share sale, the people said. They plan to select three to four underwriters as soon as in the coming weeks, to manage a possible listing this year, the people added. The airline plans to canvas investor interest based on projections of about A$400m ($277mi) in net profit after tax for the 2023 financial year, the people said. It may seek to be valued at an earnings multiple close to that of Qantas, Australia’s largest airline. Discussions are ongoing and there is no guarantee that Virgin and Bain push ahead with either the recapitalization or the public offering, the people said. A spokesman for Bain Capital said that, as it has previously flagged, Bain Capital is currently considering its options regarding Virgin Australia’s capital structure, and no final decision has been made. The spokesman declined to comment on the company’s financial position or timing of a possible IPO. A spokeswoman for Virgin Australia deferred questions about any debt-financing plan to Bain and declined to comment. <br/>