Operational meltdown costs Southwest Airlines $75 million

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With Southwest still struggling with inadequate staffing, the airline has reined in its Q4 flying plans. Photo Credit: Southwest Airlines

The October operational collapse that forced Southwest to cancel more than 2,400 flights and delay nearly 5,000 others over four days cost the airline an estimated $75 million.

The figure includes expenses related to customer refunds and "gestures of goodwill."

Meanwhile, with Southwest still struggling with inadequate staffing, the airline has reined in its flying plans for the fourth quarter. 

After flying just 2% less capacity than 2019 in the third quarter, Southwest now plans to fly 8% fewer seat miles in the fourth quarter. In previous guidance, the carrier had pointed toward flying just 5% less capacity compared to 2019. 

Federal support boosts Southwest to Q3 profit

Southwest reported Q3 net income of $446 million, but an adjusted loss of $135 million when excluding federal payroll support proceeds and other special items.

Subpar operational results played a role in the adjusted loss, CEO Gary Kelly said. The carrier cancelled 2.5% of its flights over that time and arrived at least 15 minutes late 27.5% of the time, according to Flight Aware.  

Kelly said Southwest is working to hire more staff. The carrier has hired more than half of the 5,000 employees it wants to bring on by the end of the year, he added. 

Still, the airline's flying plans for 2022 currently factor in conservative staffing expectations. Southwest estimates it will fly 6% less capacity in the first quarter of next year than it did in Q1 2019. 

For this year's third quarter, Southwest reported $4.68 billion in operating revenue, down 17% from 2019 but $100 million more than analyst expectations, according to investment website Seeking Alpha.

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