DALLAS (WBAP/KLIF News) – Southwest Airlines said the mass cancellations earlier this month hit their bottom line hard.
The Dallas-based carrier said it spent almost $75 million on “customer refunds and other good will gestures.”
That’s more money than the $40 million the airline said it lost from the COVID-19 Delta variant.
The drama started out of Florida on October 8th and extended into early the next week resulting in more than 2,200 flights being cancelled.
Southwest blamed the problems on bad weather and issues with air traffic control. Yet, air traffic control promptly disputed those claims.
The news about the losses comes as Southwest released it’s third-quarter earnings report on Thursday.
The company reported a $446 million profit, with a quarterly revenue of $4.68 billion which topped analysts expectations of $4.58 billion.
Chief Financial Officer Tammy Romo said gains were only made possible by COVID-19 relief funds.
“Excluding this temporary TFC benefit and other smaller special items, our net loss was $135 million,” she said.
The quarterly revenue figure was down 17% from the same period in 2019 months before the COVID-19 pandemic hit.
CEO Gary Kelley said in a statement, the third quarter proved difficult operationally amid the industry’s ongoing struggle amid the COVID-19 pandemic.
“Despite the deceleration of traffic in August and September due to surging COVID-19 cases, the third quarter 2021 demand and revenue performance was quite strong and a dramatic improvement from a year ago. That was a bright and encouraging sign of recovery, and I was especially pleased with July’s revenue and profit performance. We were aggressive with our capacity plans for third quarter 2021,” he said. “Our active (versus inactive) and available staffing fell below plan and, along with other factors, cause us to miss our operational onetime performance targets, and that created additional coast headwinds. The net effect, including a revenue penalty of $300 million due to the COVID-19 surge was a loss of $135 million, excluding special items.”
In addition to travel fluctuations amid the pandemic, Southwest has dealt with internal employment issues as well.
It’s a situation Kelly hinted may continue into next year and the airline will have to adapt to.
“We have reined in our capacity plans to adjust to the current staffing environment,” said Kelly. “Our 2022 capacity planning reflect more conservative staffing assumptions as well, all compared to our historical norm.
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