The Trump administration has decided to waive an $11 million fine that was levied on Southwest Airlines Co (NYSE:LUV) in connection with a holiday travel crisis in 2022.
USDOT Rewards Southwest Upgrades
The fine was part of a $140 million settlement following a major operational disruption at Southwest Airlines in December 2022 under the Biden administration.
The airline had agreed to pay a $35 million cash penalty to the U.S. Treasury in three installments: two payments of $12 million each and a final payment of $11 million, and issuing $90 million in travel vouchers over three years to passengers affected by major delays or cancellations caused by the airline.
The U.S. Transportation Department (USDOT), on Friday, has opted to cancel the remaining $11 million of Southwest's fine, originally due by the end of January 2026.
This decision was attributed to Southwest's significant investment of more than $1 billion in its operations since the 2022 service meltdown. The USDOT noted that this measure promotes the public interest by incentivizing airlines to improve their operations and resilience, ultimately benefiting consumers.
The Department also stated that Southwest has invested over $112.4 million solely in its NOC, concentrating on gate optimization, advanced flight planning tools, a modernized movement control system, and optimizers designed to enhance aircraft and crew network recovery.
Trump Action Comes Amid Southwest’s Profit Shift
This move by the Trump administration comes at a crucial time for Southwest Airlines. The carrier recently revised its 2025 profit outlook, citing a decline in demand and an increase in fuel costs due to the U.S. government shutdown. This led to a downward revision of the full-year earnings before interest and taxes, excluding special items, to approximately $500 million.
However, the airline had surprised the market with a profit in the third quarter of 2025, reporting adjusted earnings of 11 cents per share, which exceeded the Street consensus estimate of a loss of 3 cents per share. The company had also expected this momentum to continue into the fourth quarter.
Benzinga's Edge Rankings place Southwest Airlines in the 50th percentile for quality and the 53rd percentile for value, reflecting its strong performance in both areas. Check the detailed report here.
Price Target: On a year-to-date basis, Southwest Airlines stock climbed 13.43% as per data from Benzinga Pro. On Friday, it rose 5.70% to close at $37.85.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
