Southwest took a big hit last quarter

Yesterday, Southwest revealed that its December meltdown will cost the airline more than $1 billion. Which is a three-comma club they probably Wanna Get Away from.

Around $800 million of that cost (pre-tax) was directly tied to the ten-day stretch between December 21 and December 31, when the airline scrubbed 16,700 flights – or about one-third of its entire schedule – due to a winter storm that ultimately caused its technological system to break down. Southwest expects to take an additional ~$350 million revenue hit this quarter because of the situation’s “lingering effects.”

• While the airline hasn’t revealed how many customers were ultimately affected, it granted awards of 25,000 frequent-flier points to nearly two million people.

🤔 Is anything changing moving forward?... Potentially. The airline has commissioned GE, the creator of its operations software, to modify its tech to remove what Southwest calls “an unforeseen gap.” That update should be ready in a couple of weeks, the airline said yesterday.

✈️😬 Zoom out: While travel demand has rebounded following its pandemic slump, so have delays, cancelations, and other incidents. More than 1 in 5 domestic flights were either canceled or delayed in 2022 – and 2023 hasn’t gotten off to a much better start.

Over the first few weeks of the year, there’s been an FAA system outage that caused a brief nationwide grounding of all planes, as well as two minor plane collision incidents at JFK Airport.