Will Feuer
Southwest Airlines revealed Thursday that
the debacle that led to thousands of canceled flights earlier this month cost the
company $75 million.Photo: Phil Velasquez/Chicago Tribune
The cancellations as well as customer
refunds and
“gestures of goodwill” all contributed to the estimated cost, Southwest said in a release announcing
better-than-expected third-quarter earnings.
The Dallas-based company posted quarterly
revenue of $4.68 billion, topping analysts expectations of $4.58 billion, and a
loss of 23 cents per share, on an adjusted basis, beating expectations of a 27
cents-per-share loss.
Despite the $75 million charge, the company
reiterated its forecast for October “as the recent improvement in travel demand
trends offsets the aforementioned headwinds.”
“Our active (versus inactive) and available staffing fell below plan and, along with other factors, caused us to miss our operational on-time performance targets, and that created additional cost headwinds,” CEO Gary Kelly said Thursday in a statement.
Staffing challenges along with a surge in
COVID-19 cases that dented demand for air travel resulted in a revenue hit of
$300 million, he added.
Earlier this month, Southwest cancelled
thousands of flights over a four-day stretch, leaving passengers stranded
around the country and sparking speculation that the mess was caused by a
worker shortage related to the company’s vaccine mandate, which was announced
just a week earlier.
The Federal Aviation Administration, the
company and the airline that represents Southwest pilots all denied allegations
that the cancellations were the result of a protest by unvaccinated workers.
“There’s just no evidence of that,” Kelly said
at the time. “Our people are working very hard. I’m very proud of them,
especially when we get into a difficult situation like this.”
In various media appearances, Kelly said the
nationwide cancellations and delays were sparked by weather issues in Florida and compounded by
air traffic control issues in the surrounding area, triggering a chain reaction
of cancellations.
Aviation industry analysts agreed that the cancellations were not likely caused by a so-called sick-out or protest by pilots over the company’s recently announced COVID-19 vaccine mandate – despite speculation by politicians and others.
CEO Gary Kelly said the nationwide
cancellations and delays were sparked by weather issues in Florida and
compounded by air traffic control issues.Jacek Boczarski/Anadolu Agency via
Getty Images
Still, analysts were skeptical of Southwest’s explanation, saying that the company is not
being transparent about management’s own role in the debacle that left
thousands of people stranded across the country.
“Gary Kelly was trying to pull the wool over
the viewers’ eyes,” Henry Harteveldt, president of the Atmosphere Research
Group, said at the time of Kelly’s appearances on TV.
“For Southwest, to say ‘the dog ate my homework
is ridiculous,” he told The Post, referring to the airline’s efforts to blame
air traffic control problems in Jacksonville.
The debacle was the result of cost-cutting
during the pandemic that went too far, argued Arthur Wheaton, an expert in
airline industries.Photo: Luke Sharrett/Bloomberg
Southwest should have been flexible enough to
see the bad weather in Florida coming and adjust around it as well as to fix
its schedule to deal with the alleged staffing problems at the air traffic
control towers.
“Gary Kelly can’t blame others for the faults
of Southwest Airlines. This clearly reflects a failure to anticipate and plan
for operational disruptions, and clearly illustrates the airline’s lack of
adequate strategies and programs to recover from these disruptions,” Harteveldt
said.
The debacle was the result of cost-cutting
during the pandemic that went too far, argued Arthur Wheaton, an expert in
airline industries at Cornell University’s School of Industrial and Labor
Relations.
“They don’t have enough wiggle room to handle a
small hiccup in the system,” he said in a phone interview, adding that the
airline has embraced just-in-time delivery and so-called Lean production, two
increasingly popular industrial business practices focused on cutting excess.
The cost-cutting has weighed on pilots and
flight attendants, who have been burned out by excessive scheduling in recent
months as demand for flying snapped back from the pandemic.
Southwest’s efforts to blame the disruptions on
the weather was likely an attempt to avoid having to refund customers for
flights and pay for accommodations, he speculated.
If a missed flight is the airline’s fault, they
must pay for all accommodations, but if it’s an “act of God,” no one is
responsible, he noted, adding that he expects thousands of lawsuits to come.
Will Feuer, New York Post, October 21, 2021 9:45am
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