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Holiday Crisis Costs Southwest More Than Expected As Toll Stretches Into 2023

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Holiday Crisis Costs Southwest More Than Expected As Toll Stretches Into 2023

(CTN News) – As Southwest Airlines’ holiday meltdown continues into 2023, the airline lost $159 million in the first quarter.

The airline had canceled more than 16,000 flights in the final days of December as a result of scheduling software that couldn’t keep up with the changes that occurred during coast-to-coast storms.

During the first quarter of this year, Southwest Airlines said it had a revenue impact of $325 million as a result of the incident.

There was a warning by the company in January that it would lose money for the quarter, in addition to an increase in customer cancellations in the first quarter of 2016.

During the premarket trading session, Southwest’s shares fell by more than 4%.

The following is a summary of Southwest’s performance in the first quarter compared with Wall Street expectations according to Refinitiv’s consensus estimates:

  • As compared to an expected loss of 23 cents per share, the adjusted loss per share is 27 cents.

  • There was a $5.71 billion total revenue compared to a $5.73 billion forecast.

As a result of a 21.6% increase in revenue from the previous year, revenue for the quarter reached $5.71 billion. Southwest’s net loss for the period of $159 million represents a significant improvement over the $278 million loss that it suffered during the same period last year.

However, the Dallas-based carrier said it expects revenue headwinds in the second quarter, as well. In spite of that, the company forecasts that it will be able to make a profit for the three months ending June 30.

During the second quarter of this year, Southwest Airlines stated that revenue per available seat mile, a measure of how much revenue an airline generates for the number of seats it flies, would be down 8% to as much as 10% compared to last year with capacity up 14%.

There was a $300 million “breakage revenue” impact on Southwest’s sales outlook as the carrier said there was a “higher-than-normal amount of flight credits issued during the pandemic that were set to expire unused” as part of its breakage revenue. Southwest announced last summer that expiration dates for flight credits had been eliminated.

In the second quarter of this year, the airline expects costs to increase by 5% to 8%, including wage accruals for the pilots and flight attendants who are currently negotiating labor contracts that are in the process of being negotiated.

Southwest will hold a call with analysts to discuss its results and outlook for the remainder of the year at 12:30 p.m. Eastern Time on Thursday to discuss its results and outlook.

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Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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