by Donald Wood
Last updated: 8:25 AM ET, Fri January 6, 2023
Southwest Airlines announced it would revise its fourth-quarter financial forecast to "net loss" from "strong profit" after a computer meltdown and bad weather resulted in thousands of delays and cancellations during the busy winter holiday travel period.
According to Reuters.com, the travel chaos caused by Southwest was forecast to cost the carrier a pre-tax impact between $725 million to $825 million and revenue loss between $400 million and $425 million.
In addition, the airline revealed cancelations cut capacity by six percent in the fourth quarter compared to 2019, roughly four points lower than the previous forecast. In total, Southwest canceled more than 16,700 flights between December 21-31.
The carrier said it would reach out to every "significantly impacted" and "offer a tailored gesture of goodwill and another heartfelt apology." Southwest CEO Bob Jordan sent another letter to customers on Tuesday to apologize and gift 25,000 Rapid Rewards points for the inconvenience.
In addition to honoring reasonable requests for reimbursement for meals, hotel accommodations, and alternate transportation, the airline said it planned to improve the processes and systems that caused the travel disruptions during the holidays.
U.S. Senator Maria Cantwell and the Commerce Committee spoke with Jordan and Transportation Secretary Pete Buttigieg about the issue and "will be holding hearings for Federal Aviation Administration reauthorization to examine how to strengthen consumer protections and airline operations."
On Thursday, Jordan shared the following update on the airline's recovery progress and what the company is doing to take care of impacted customers:
Hello, everyone. Bob Jordan here, with an update from Southwest Airlines.
Restoring the trust of our Customers and Employees is everything to us.
We disrupted holiday travel for millions when some of our systems and processes became stressed by Winter Storm Elliott, bringing disruptions that were far reaching. We are taking immediate steps to address the massive inconvenience as well as the issues that contributed to it.
I've said it before, but I can't say it enough how sorry I am for the impact these challenges have had on our Employees and our Customers. We have a long and proud record of delivering on expectations, and when we fall short, we aim to do the right thing.
In addition to our heartfelt apologies, we immediately began an all hands on deck effort to take care of our Customers. We are making great progress by processing tens of thousands of refunds and reimbursements a day and will not let up until we have responded to every impacted Customer. We also sent a goodwill gesture of 25,000 Rapid Rewards Points this week to all Customers significantly disrupted. That goodwill gesture is above and beyond the refunds and reimbursements work that continues around the clock.
Since the moment our recovery started, we've had large teams of Employees reuniting disrupted passengers with their belongings. I'm pleased to share that as of today, we have the vast majority of these bags either reunited or on their way to our Customers.
Our Employees came together as they always do. It's humbling to see the Southwest spirit at work under such adverse conditions.
Our Leadership team is focused on a thorough review of the disruption with all the needed resources involved, and I expect that work to be completed swiftly. We've already taken immediate actions to mitigate the risk of this ever happening again, and the review work will inform additional actions and investment as well. We've asked our unions to participate in this review effort as well, and likewise we are in regular communication with our Board of Directors.
As a company we spend about $1B a year on technology. And we'll will continue to upgrade the tools and processes our Employees use to serve you, our valued Customers, and make sure those items deliver on our mission: to connect People to what's important in their lives through friendly, reliable, and low-cost air travel. We have a proud 51-year history of doing just that, and I'm confident we'll continue to deliver on this all-important Promise.
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