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Southwest's December Meltdown to Cause Quarterly Loss -- WSJ

The Wall Street Journal · 01/06/2023 07:12

By Will Feuer

Southwest Airlines Co. said it expects to book a fourth-quarter loss after it canceled more than 16,700 flights in the final 10 days of the year as a winter storm wreaked havoc on operations during the crucial holiday-travel period.

The company estimates that the cancellations will result in a negative impact of $725 million to $825 million on a pretax basis for the fourth quarter. That includes between $400 million and $425 million in lost revenue, as well as an additional hit from reimbursements to affected travelers, premium pay for employees and other related costs.

For the fourth quarter, Southwest estimates it flew about 6% less than it did in the same period in 2019, which is roughly 4 percentage points lower than it had previously expected.

Shares fell about 1% to $33.20 in premarket trading. Over the past month, the stock has fallen about 16%.

A brutal winter storm last month disrupted various airlines' operations around the critical travel period during the Christmas and New Year's holidays, but Southwest continued to cancel thousands of flights days after its peers had mostly restored operations. Southwest's issues were exacerbated by what industry executives and labor leaders have described as inadequate technology systems, The Wall Street Journal reported.

The meltdown at Southwest has drawn scrutiny from the Biden administration and criticism from union officials.

(END) Dow Jones Newswires

January 06, 2023 07:12 ET (12:12 GMT)

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