Southwest Airlines Estimates Nearly $825 Million In Losses From Holiday Disaster

Southwest Airlines said in a filing on Friday that the cancellation of 16,700 flights between Dec. 21 and 29 will cost the company nearly $825 million in net losses in the fourth quarter.

According to the filing, half of the costs, between $400 and $425 million, will be refunded to customers who had their flights cancelled over the hectic holiday travel season. Other costs involve reimbursing customers for any expenses incurred from booking last-minute flights with other airlines.

In a press release, Southwest CEO Bob Jordan said it would also credit 25,000 miles to frequent flier accounts to the customers directly affected by the flight cancellations. Southwest also will compensate employees with overtime pay and address increased operating costs.

Southwest remains the largest airline carrier in the U.S., but the other costs of the holiday disaster have yet to be realized. The airline did not give a firm estimate for the full fourth quarter losses. Southwest will report its complete financial results for the fourth quarter on Jan. 26.

According to CNN, Southwest earned $316 million in the third quarter, excluding special items, and $950 million in the first nine months of 2022. It was predicted to return to profitability after $4.8 billion in combined losses in 2020 and 2021 caused by the pandemic, ending a streak of 47 straight years of annual profits.

According to FlightAware data analyzed by the New York Times, Southwest canceled about as many flights between Dec. 21 and 29 as it did in the entire 10 months prior It also declined to disclose how many passengers were affected by the cancellations, though estimates are predicted to run into the hundreds of thousands.