Shareholders sue Southwest Airlines over holiday meltdown
Ryan King
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Shareholders of Southwest Airlines hit the company with a lawsuit blasting it for downplaying its troubles with outdated technology that jump-started mass cancellations over the holidays.
Noting that the holiday meltdown prompted the Texas-based airline’s stocks to plummet over 12%, the lawsuit accused Southwest of withholding critical information about the deteriorating state of its infrastructure.
Rosen Law Firm filed the suit Thursday on behalf of shareholders in the U.S. District Court for the Southern District of Texas.
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“Southwest Airlines continuously downplayed or ignored the serious issues with the technology it used to schedule flights and crews, and how it stood to be affected worse than other airlines in the event of inclement weather,” the suit alleged.
Winter weather caused significant cancellations for multiple airlines ahead of Christmas, but the problems were more prominent for Southwest, which accounted for nearly 90% of cancellations three days after Christmas.
Outdated scheduling software and a poor phone system reportedly exacerbated the company’s woes and created barriers for the company in regaining its footing after the cold snap.
Plaintiffs referenced prior statements from Southwest executives characterizing prior scheduling mishaps as “human error” instead of technological blunders and contended that the company was therefore peddling “materially false and misleading” information to shareholders. They are in pursuit of damages from June 13, 2020, when a Baltimore Sun report discussed the tech problems, and Dec. 31, 2022.
“[Southwest] acted with reckless disregard for the truth when they failed to ascertain and disclose the true facts in the statements made by them or other Southwest Airlines personnel to members of the investing public,” the suit alleged.
Multiple former employees attributed the troubles to a failure to invest in its internal infrastructure in the long term. The company has tapped consultancy firm Oliver Wyman to examine the chaos that unfolded during the holidays. It has pledged to permit affected customers to attain flight credits or full refunds for significant delays and cancellations between Dec. 24 and Jan. 2.
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CEO Bob Jordan is keeping “everything on the table here because it just can’t happen again,” according to Reuters.
“There are a lot of reasons that this happened, but it’s on me at the end of the day,” Jordan told the outlet. “It’s on me to not let this happen again and to rebuild trust with our employees and rebuild trust with our customers, and we will do exactly that.”
Southwest is currently staring down multiple lawsuits — including from customers. Both the Senate Commerce Committee and the Federal Aviation Administration are poised to evaluate the matter.
The Washington Examiner contacted a Southwest representative for comment.