Southwest Airlines had a December not to remember. Literally, the airline’s meltdown made them a laughingstock, crushed consumer confidence in them as a brand, stranded thousands of people over the holidays, and ultimately, it will pound its bottom line in a way that will leave a mark.
The airline had no response to the bad weather that hit the country, and their lack of crisis management was shocking. Over 16,000 flights were canceled, and the financial impact could cost the airline as much as $825 million, according to a story in the New York Times.
Factored into that small fortune are ticket refunds and the compensation they had to pay for added expenses incurred by the customers they left in a lurch.
On top of the hard costs, the market value of Southwest has plummeted, with a stock price down 8% since its debacle. The Department of Transportation is considering fines as well.
The airline admitted these realities in a regulatory filing, and it will take much longer to garner the trust of the flying public than it will recoup these costs.
Here’s a quote from Transportation Secretary Pete Buttigieg regarding his department’s intent to punish Southwest.
“We’re going to expect them to go beyond the letter of the law in terms of how they treat passengers, making sure they pay for things like hotels, ground travel expenses, meals, and, of course, refunds.”
The head of Southwest’s pilot union described the problems they faced this way.
“Employees were left to their own devices. […] They weren’t given the tools to do their jobs, nor were they given the leadership to answer questions and be able to provide solutions. But these passengers have to be taken care of,” Murray said. “They have lost not only time and money, but memories with their families.”
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