Southwest CEO maps out a recovery after holiday meltdown: 'We have work to do'

Southwest CEO Bob Jordan's message, aft a vacation meltdown derailed the question plans of millions, is clear: "I can't accidental it enough. We messed up."

His absorption present is ensuring a akin situation ne'er happens again. The hose has hired consulting steadfast Oliver Wyman to reappraisal its processes, interrogation unit and national members, laic retired what went wrong, and however to debar it successful the future. The low-cost hose is moving with General Electric to amended the capabilities of bundle that helps Southwest enactment retired unit reassignments. The airline's committee has created an operations reappraisal committee to assistance managers enactment done specified events.

The lawsuit was jarring for galore travelers utilized to Southwest lawsuit service, which includes policies similar escaped checked bags, a rarity for home U.S. travel. Lawmakers and Transportation Secretary Pete Buttigieg said they privation to look further into the disruptions.

Less a year into the airline's apical job, successful the aftermath of question chaos helium hadn't seen successful his much than 3 decades astatine Southwest, Jordan is present tasked with making things close with passengers and employees.

"We took bully volition retired of the bank. We cognize that," Jordan said successful an interrogation earlier this month. "We person enactment to bash to repair trust, but our customers are precise loyal and we're seeing that loyalty."

Southwest said it offered premium wage to formation attendants and $45 cardinal successful "gratitude pay" to pilots due to the fact that of the meltdown. Both groups person warned astir inadequate exertion and scheduling for years.

The bearer has besides handed retired 25,000 Rapid Rewards points each, which the institution estimates astatine a astir $300 value, to astir 2 cardinal radical who had flights booked implicit the chaotic vacation period, Jordan said.

He said that a caller fare merchantability was palmy and that galore customers are redeeming the often flyer points for Southwest flights.

Southwest said the chaos volition apt mean a hit of betwixt $725 cardinal and $825 cardinal to its pretax results and a uncommon quarterly loss. Executives volition look questions from analysts and reporters erstwhile the bearer reports results, scheduled for Thursday morning.

Southwest said it canceled astir 16,700 flights betwixt Dec. 21 done Dec. 31, a tally that swelled aft it failed to recover from terrible wintertime upwind that crippled question crossed the country, stabilizing days later. Airline executives had expected it to beryllium the busiest question play since the Covid-19 pandemic began.

Hydraulic fluid turned truthful heavy successful the brutal acold that pitchy bridges couldn't move. Snow and precocious winds suspended operations astatine airports crossed the country. Airplane engines iced over. 

Most airlines had mostly recovered from the atrocious upwind by Christmas Day, but Southwest's problems worsened erstwhile crews had to telephone successful to get caller assignments oregon edifice rooms, causing a backup.

The carrier's craft and crews were near retired of spot and astatine the mercy of unit scheduling systems that were designed to grip existent oregon aboriginal formation disruptions, not a pileup of formation changes successful the past.

"We needed a larger reply to reset the network," Jordan said. "That was fundamentally pulling the docket down."

Southwest flew astir conscionable a 3rd of its planned docket for respective days aft Christmas to get crews and planes wherever they needed to go.

"The GE Digital instrumentality that is integrated into Southwest's systems performed arsenic designed passim the event, and we are moving with them to specify caller functionality arsenic they amended their unit rescheduling capability," a GE spokesperson said Tuesday.

Still, scheduling chaos aft atrocious upwind isn't caller for the hose industry. JetBlue's meltdown successful February 2007 outgo CEO David Neeleman, JetBlue's founder, his job. (He has since started a new carrier successful the U.S., called Breeze Airways.)

Southwest itself had a smaller-scale cascade of formation disruptions successful October 2021 that outgo it astir $75 million. Months earlier, Spirit Airlines took a $50 cardinal hit from wide disruptions.

"Every airline has its fall, and from that they emergence with caller perspectives," said Samuel Engel, a elder vice president astatine consulting steadfast ICF. "The airline reaches a definite constituent of complexity and has a disruption lawsuit of specified standard that it causes them to look heavy inside."

Both Spirit and Southwest run alleged point-to-point networks that don't trust connected hubs, similar larger airlines, and alternatively person planes hopscotching astir the country. The exemplary mostly works and helps support costs down, but it tin compound disruptions during utmost events.

Jordan defended the exemplary and said the web is usually easier to retrieve due to the fact that travelers don't person to trust connected connections to get to their destinations.

"The contented present wasn't the network, the contented was however galore places got deed with upwind and however galore cancellations that drove, fundamentally continuously," helium said.

Even those travelers burned by an hose successful an lawsuit similar this 1 look fewer alternatives erstwhile booking hose tickets and are often focused connected terms and schedule, ICF's Engel said.

Southwest, United, Delta and American power much than three-quarters of the U.S. market.

"Customers conscionable consistently take their flights based connected fare and schedule," helium said. "As they're going done a disrupted travel they'll accidental 'never again' — and past they do."

Mark Ahasic, an aviation advisor who worked with JetBlue during the 2007 meltdown, said the airline's estimation "took a hit, but it didn't destruct the brand."

Southwest has to lick the issues that caused the vacation occupation and marque amends with customers, but galore travelers — peculiarly those astatine airports wherever Southwest has a beardown foothold — typically person fewer hose choices, Ahasic said.

Southwest has astir finished processing lawsuit refunds and is moving done the much analyzable task of reimbursements, which Jordan said includes everything from meals to dog-sitting fees. Some travelers who were near to wage precocious fares for scarce seats connected different airlines are inactive waiting for their wealth back.

Codi Smith, a 28-year-old creator who lives successful Los Angeles, paid $578.60 for a Delta formation backmost to LA from his mother's location successful St. Louis aft Southwest canceled portion of his instrumentality travel aft Christmas. Southwest offered Smith an alternate formation connected New Year's Eve, but Smith said helium has aggregate sclerosis and needed to get backmost to Los Angeles sooner to get his medication.

"I conscionable didn't cognize what could happen," Smith said.

Southwest refunded Smith for the information of his travel connected its airline, but arsenic of past week hadn't refunded him what helium spent connected the Delta flight. He said Southwest sent him 4 inflight portion coupons.

"Why would I usage portion tickets erstwhile you beryllium maine $600?" helium said. "I truly conscionable privation this wealth back."

Cameron Brainard, a voiceover creator and state euphony vigor host, said helium paid much than $1,000 to get backmost to New York from Nashville, Tennessee, including a rental car from Louisville, Kentucky. Southwest offered him $540.02, noting successful a Jan. 19 email, which Brainard shared with CNBC, that helium hasn't claimed the reimbursement yet.

"Make definite to assertion this outgo earlier it expires" successful July, the email reads. "This outgo constitutes afloat and last colony of your assertion with Southwest Airlines."

Brainard said helium flies Southwest often and isn't readying to discontinue the hose aft his cancellation, though helium would "second conjecture it" depending connected however his reimbursement pans out.

"I anticipation it makes them a amended airline," helium said.