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Southwest Airlines says travel disruptions could cost $800 million

The Dallas-based carrier estimated pretax losses of $725 million to $825 million for the final quarter of 2022

Southwest customers visit a Dallas Love Field Airport help desk last month after the carrier canceled thousands of flights. (Shelby Tauber/Reuters)
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A holiday travel meltdown that left tens of thousands of its customers stranded at airports across the country will prove costly for Southwest Airlines, which said Friday it no longer expects to post a net profit for the final quarter of 2022.

In a new filing with the Securities and Exchange Commission, the Dallas-based carrier estimated pretax losses from the disruption of $725 million to $825 million for the quarter. Of that, it expects to lose $400 million to $425 million in revenue directly from the flight cancellations.

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Other costs include reimbursements to customers for expenses they incurred because of the cancellations, the company’s decision to give 25,000 bonus miles to affected travelers and additional pay to employees stemming from the disruptions.

The carrier said it canceled more than 16,700 flights between Dec. 21 and Dec. 31. The cancellations, initially driven by fierce winter storms, were compounded by an unprecedented internal breakdown of the company’s scheduling technology, which hobbled the carrier’s ability to recover, even as other airlines resumed service.

The breakdown, during one of the busiest travel periods of the year, has drawn scrutiny from lawmakers and regulators. Transportation Secretary Pete Buttigieg has said he is closely monitoring Southwest’s efforts to compensate customers.

On Thursday, Rep. Rick Larsen, (D-Wash.) and 25 members of the House Transportation and Infrastructure Committee sent a letter to Buttigieg urging him to “use the full weight of your agency to hold Southwest Airlines accountable, provide stronger consumer protections for passengers and help prevent these types of mass cancellations from occurring in the future.”

Southwest meltdown will be focus of hearings as it works to make amends

The day before, Sen. Maria Cantwell (D-Wash.), chair of the Commerce, Science and Transportation Committee, announced her committee will hold hearings to examine Southwest’s problems.

Southwest has tried to make amends, announcing this week it would give those affected by the breakdown 25,000 frequent flier miles, valued at more than $300. On Thursday, Southwest Chief Executive Bob Jordan said 75 percent of ticket refunds have been processed and 95 percent of bags have been returned or are on their way to customers.