LONDON – In an interview with Bloomberg, Southwest Airlines CEO Bob Jordan said he will revise the earnings forecast following its operational nightmare over the festive period.
Jordan: Changes On The Way…
The Southwest Airlines CEO said the following to the media outlet:
“We will be issuing some information before earnings,”
“Obviously, it’s a significant event.”
“We’ve already taken immediate actions to mitigate the risk of this ever happening again,”
It is expected that the airline will post a 4Q22 loss, as the systems meltdown could cost the airline up to $825 million.
ICYMI: The Systems Meltdown…
The Southwest Airlines air travel predicament is perhaps a timely example of a greater problem. Over the so-called ‘post-pandemic’ recovery period, we have witnessed airlines across the world struggling with issues of staff shortages and infrastructure issues.
The surge in travel demand, as air travelers took to the skies with a vengeance after a two-year hiatus of lockdowns and movement restrictions, has effectively exposed weak links in airlines’ operational chains.
Granted, many of the issues relate to problems caused by the pandemic itself – staff layoffs and aircraft put into storage and then hastily restored to line operations.
However, pre-existing shortcomings and weaknesses are also being exposed through the current period of air travel recovery.
In the case of Southwest Airlines, it appears an underlying cause of the operations meltdown can be attributed to antiquated operations software, which could not support the additional crisis of severe weather problems.
The greater concern here is that this scenario is the recipe for a major incident, and all air operators should be taking note.
Accidents typically occur from a string of system breakdowns and failures.
We have seen the airline sector run the gamut of these this year – staff shortages and the loss of experienced personnel; aircraft dormant for a long period and then returned to service; weaknesses exposed in operating culture and infrastructure.
The New Year will certainly be interesting as the industry struggles to regain firmer footing.
The US DOT action
A US Department of Transportation (DOT) statement on Monday, 26 December, characterized the situation, which saw a significant number of Southwest Airline flights canceled over the Christmas period, as “disproportionate and unacceptable”.
NBC News reported that the figures for flight cancellations on Boxing Day alone included around 300 for Delta Air Lines, 130 for United Airlines, and at least 2,893 for Southwest Airlines.
The DOT expressed its concerns with the Southwest Airlines situation: “USDOT is concerned by Southwest’s unacceptable rate of cancellations and delays & reports of lack of prompt customer service.”
“The Department will examine whether cancellations were controllable and if Southwest is complying with its customer service plan.”
Winter Storm Elliott and the associated severe winter weather conditions have caused the cancellation of approximately 17,000 flights into, out, and across the continental United States since last Wednesday.
NBC News has reported that Monday’s (27th December 2022) figures for flight cancellations included around 300 for Delta Air Lines, 130 for United Airlines, and at least 2,893 for Southwest Airlines.
With contributions from Len Varley