Southwest Airlines says the winter storm that affected much of the country cost the airline $620 million. The airline laid out its fourth quarter financial results Thursday.
Southwest says it turned a profit of $539 million for the full year but reported a loss of $220 million in the fourth quarter as a result of the expenses connected to the storm.
"These results are clearly disappointing and not where we expected to be," says Chief Financial Officer Tammy Romo. "Our quarterly performance leading up to December 21 was strong and trending in line with our previous guidance expectations."
From December 21 through 31, Chief Executive Officer Bob Jordan says Southwest cancelled 16,700 flights.
"First and foremost, I want to apologize again to our customers and employees for the impact the operational disruption had on them and had on their holiday plans," Jordan says.
Jordan says the weather led to cancellations at first, but they continued because crews and equipment were left out of place.
"We were hit by an overwhelming volume of close-in cancellations which put us behind in creating crew solutions," he says.
Jordan says Southwest's scheduling software worked as designed, but he says it was designed to establish future routing plans not fix past problems. He says Southwest's technology department is working with GE Digital to develop an upgrade, and he says new software is in testing now.
"They moved very quickly," he says. "We will attack this head-on. We will attack it with a sense of urgency. We will boost our spending on that technology if we need to, but we will do everything to double down to make sure this does not happen again. It's critical."
Southwest says it outperformed competitors for on-time percentage when winter weather hit parts of the country this week, and Jordan says the carrier had no cancellations at Hobby Airport in Houston during thunderstorms Tuesday.
Southwest's report predicts a net loss in the first quarter of 2023. Chief Commercial Officer Ryan Green says Southwest will carry a "$300 to $350 million headwind" into 2023.
But Green says trends in leisure travel remain strong, and he says Southwest is already 40% booked around spring break travel periods in March.
"Booking trends have improved sequentially this month, and we believe the vast majority of the first quarter impact is isolated to January and February travel," he says. "For March 2023, leisure bookings and yield trends appear strong and in line with what we would expect from a high demand travel month."
Green says he expects revenue in March to reach near pre-pandemic levels.
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