Flight cancellations in the Southwest could cost the company $800 million
#Flight #cancellations #Southwest #cost #company #million Welcome to Alaska Green Light Blog, here is the new story we have for you today:
Southwest’s cancellation problems were likely the result of outdated software and phone systems that pilots, flight attendants, and passengers couldn’t keep track of. Image: Kevin Dietsch (Getty Images)
The holiday travel hell only got worse this year as reports of horror stories from Southwest Airlines passengers and workers ranged from frostbite to thousands of flight cancellations to outdated software. Well, those problems, coupled with the busy vacation travel season, could cost the company hundreds of millions of dollars.
the New York Times reported that this fiasco could cost the company a whopping $800 million, according to investment bank Jefferies. Freezing weather played a part in the disastrous travel season, but so did the company’s incredibly antiquated digital infrastructure, according to Southwest Airlines Pilots Association vice president Mike Santoro. Southwest’s phone system and software were reportedly struggling to keep up with mounting flight cancellations, and the company struggled to get pilots, flight attendants and travelers on the right flights.
“Although we had a crew available, [scheduling] had no idea those flight attendants were in the back of the plane,” Santoro said in one Interview with Insiders. “The problem is that the software just isn’t keeping track of us.”
“Some of their employees, flight attendants and pilots have been warning for years – that they were underinvesting and one storm away from disaster,” Helane Becker said, as quoted in the New York Times. Becker is a managing director and senior analyst at Cowen, an investment bank.
The $800 million price tag consists mostly of lost revenue and customer refunds, but the company could likely lose more if lawsuits are filed against the airline. Jefferies estimates that $550 million in losses stem directly from flight cancellations, while another $250 million comes from customer reimbursements for hotel, rental car, and other examples. That $800 million figure is more than the amount the airline made in the first nine months of 2022 — $759 million.
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This latest series of unfortunate events could be the start of a curb on airlines that often oversell, underinvest and leave passengers dissatisfied. Transportation Secretary Pete Buttigieg called the recent Southwest cancellations “unacceptable” in a letter to Southwest CEO Robert Jordan, further announcing that the U.S. Department of Transportation would hold the company accountable to “the fullest extent of its investigative and enforcement powers.” Buttigieg previously led the charge last November Fine six airlines for failing to refund customers promptly.