Topline
The disruptions and mass flight cancellations that plagued Southwest Airlines earlier this month ended up costing it $75 million in revenue, the company said Thursday while also announcing a reduction in its flying schedule due to ongoing operational problems.
Gary Kelly, Chairman of the Board, President and Chief Executive Officer, Southwest Airlines, speaks ... [+]
Key Facts
The Dallas-based airline reported its third-quarter profit early Thursday and revealed the revenue dent stemming from the cancellation of over 2,000 flights earlier this month.
Southwest said it lost some $75 million from the cancellations, subsequent customer refunds and “gestures of goodwill.”
This was an even bigger loss in revenue than the $40 million attributed by the company to the lingering impacts of the Covid-19 delta variant.
Both recovery from this month’s disruptions and ongoing struggles to hire enough workers have led the airline to reduce its fourth quarter flight schedule by 8% from pre-pandemic levels, the airline announced Thursday.
This marks the second time since August it has reduced the schedule, which is now about 12% lower than two years ago, according to Bloomberg.
Crucial Quote
“We have reined in our capacity plans to adjust to the current staffing environment,” CEO Gary Kelly said in a statement. “Our 2022 capacity planning reflects more conservative staffing assumptions as well, all compared to our historical norm.”
Key Background
Southwest took a turn in the national spotlight earlier this month with its flight meltdown. The timing of the disruptions, which came in the runup to the company’s coronavirus vaccine mandate deadline, prompted speculation that the cancellations were caused by an employee strike. The company’s pilots union had only days prior asked a court to block Southwest from implementing the vaccine mandate. However, the company and the union both asserted that disruptions were instead caused by bad weather and an air traffic management program imposed by the Federal Aviation Association.
Tangent
Following the controversy, Southwest earlier this week confirmed it would scrap a plan to put unvaccinated employees seeking medical exemptions on unpaid leave if their requests were still pending after the December federal deadline. The airline had previously planned to put workers seeking either religious or medical exemptions on unpaid leave if their requests were still pending on December 8, the deadline President Biden has set for federal contractors to get workers vaccinated.
Further Reading
“Southwest Airlines Scraps Plan To Put Employees Seeking Vaccine Exemptions On Unpaid Leave” (Forbes)
“Southwest, American Airlines Say They Will Defy Texas Gov.’s Order Banning Covid Vaccine Mandates” (Forbes)
“Southwest Airlines CEO Insists Flight Cancellations Not Linked To Covid Vaccine Protest” (Forbes)
“United Airlines Firing 232 Employees Who Refused Covid Vaccine, CEO Says” (Forbes)
