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Tribune News Service
Tribune News Service
Kyle Arnold

Southwest Airlines’ meltdown loss could run $500 million to $700 million

When Southwest Airlines’ had an operational meltdown in October 2021, it cost the airline $75 million in lost revenue.

The Columbus Day weekend debacle involved the cancellation of some 2,000 flights.

So what kind of hit is the Dallas-based company looking at from its Christmas fiasco that led to more than 17,100 canceled flights in an eight-day period?

Southwest leaders have so far declined to put a price tag on the meltdown while they work to total the damages and process claims for reimbursement.

“We’re still compiling that; it’s just to tell,” CEO Bob Jordan said during a media call last week. “This is a significant event.”

But analysts who follow the airline industry estimate that tab could run anywhere from $500 million to $700 million, according to reports from Airline Weekly and CNBC.

Raymond James analyst Savanthi Syth’s estimate puts the total at around $515 million based on Southwest’s revenue outlook in December, according to Airline Weekly. That doesn’t include reimbursements to stranded travelers who booked rental cars, alternate flights and hotels.

The chaos could put as much as a $600 million to $700 million dent in Southwest’s revenue, according to CNBC, citing estimates from Bank of America airline stock analyst Andrew Didora. His estimate includes both lost revenue from refunds and reimbursements to affected passengers.

Southwest is likely to report a number before its year-end financial results, which are scheduled for release Jan. 26.

Company leaders have blamed the struggles on outdated technology in its crew scheduling systems, saying the software was overwhelmed by the need to delay and cancel hundreds of flights when cold weather and winds hit key Southwest airports in Chicago and Denver on Dec. 22.

But by delaying and canceling a large number of flights, software systems couldn’t keep up with the need to reassign pilots and flight attendants. As with previous operational meltdowns, the problem grew in the following days until the company was forced to give in on Monday, Dec. 26, and cancel two-thirds of its flights for the next three days in an attempt to “reset” and recover.

Southwest said it recovered from its flight disruptions by Friday and got 99.1% of its passengers to their destination over the four-day New Year’s weekend.

The nation’s major airlines canceled more than 53,000 flights during the first half of 2022, led by Fort Worth-based American Airlines, according to U.S. Department of Transportation data.

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