Southwest Airlines reports $800 million loss over holiday season disaster

Brady Knox

January 26, 08:24 PM January 26, 08:24 PM

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Southwest Airlines reported an $800 million loss in revenue due to a system failure that caused chaos for travelers over the holidays.

The December meltdown dealt a major blow to the airline’s reputation as well, drawing national headlines and the ire of the Department of Transportation. The airline was made to compensate all the customers affected by the winter delays, which included paying for hotel rooms of customers stranded at airports, transportation to and from the hotel, meals, and numerous other expenses resulting from the delay.

The airline released the true total of the damages Thursday, totaling $800 million, or $620 million on an after-tax basis.

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“Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss,” Bob Jordan, CEO and president of the company, said.

“Despite the negative financial impacts in first quarter 2022 due to the Omicron variant and in fourth quarter 2022 due to the operational disruptions, we generated full year 2022 net income, excluding special items, of $723 million,” he added.

“With regard to the operational disruptions,” he continued, “I am deeply sorry for the impact to our Employees and Customers. We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events. In addition, our Board of Directors has established an Operations Review Committee that is working with the Company’s Management to help oversee the Company’s response. As part of our efforts, we are also conducting a third-party review of the December events and are reexamining the priority of technology and other investments planned in 2023.”

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The fallout from the chaos is projected to continue into 2023; Jordan said the company was expecting a first-quarter 2023 net loss. However, he ended on an optimistic note, saying the company was “encouraged” by booking trends starting in March.