Southwest airlines expect a huge loss in Q4 after cancelling 16,700 flights. The Dallas-based low-cost carrier released an unofficial report estimating it will incur losses amounting to nearly $1 billion in the last quarter of 2022.
Southwest Airlines has released financial data regarding Q4 of 2022 in an SEC filing following their Christmas nightmare. The low-cost carrier expects to have taken a massive loss during this quarter. The losses will impact 2023 as the airline saw a loss in customer trust, which might contribute to a vast decline in future ticket sales.
Losses Forecast
In the United States, most carriers had a good 2022 due to the lifting of travel restrictions across the nation and most foreign countries following the decline of the pandemic adverse effects. For this reason, air traffic demand skyrocketed, contributing to several problems for the aviation industry. In the summer, passengers got used to accepting that delays and cancellations were a common occurrence of air travel and should be expected when booking a flight.
Other carriers quickly rebooked stranded travellers when cancellations increased to make flight disruptions bearable. Then came more disruptions of flights across America due to winter storm Elliot and other rogue storms. The storms contributed to flight cancellations across the US.
The storms affected many airlines flying in US airspace, with carriers rerouting passengers around the problem areas. Southwestern had a tough time as their systems aren’t based on real-time data and couldn’t handle the delays or staff changes, leaving their schedule in disarray as their employees worked to remedy the situation. The carrier decided to shut down its flight schedule systems and restart.
The winter storms and the scheduling shutdown caused the carrier to cancel 16,700 flights between December 21st and 31st. This fiasco led passengers and crew members to be stranded at airports across the US.
Southwest Airlines is estimated to have lost considerable money in passenger reimbursement alone in this period. The bad luck-filled season will likely follow Southwest throughout this year as the carrier is working to refund all passengers who need to book accommodation and other transportation means on their own.
Southwest Airlines estimates losses
The low-cost carrier is yet to release its financial report for its last quarter of 2022. The airline has, however, offered guidance regarding its financial performance during this period. Southwest expects to report a net loss of $725 million to $825 million during Q4 of 2022. The carrier also expects around $400 million to $425 million to come from the effects of the massive flight cancellations. Other losses are expected to come from operating expenses such as reimbursing passengers for other means of transportation and accommodation and offering 25,000 frequent flyer points to the impacted passengers.
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