Southwest Meltdown Will Cost More Than $1 Billion
Southwest’s holiday meltdown will be costly. The airline revealed Thursday that it will take a $1 billion hit due to lost revenue from the canceled flights, and refunds and reimbursements for passengers.
The airline canceled more than 16,000 flights during the a 10 day period at the end of the year, from Dec. 21 through Dec. 31. The failure was first triggered by weather cancellations in the first days, but then it turned to massive disruptions. Southwest was canceling more than 60% of its flights for several days in a row.
The issue was caused by crew scheduling systems and software, which the airline had failed to update. Southwest said that it spent about $1 billion annually on technology and that its systems had functioned as designed. But they had been overwhelmed by the massive number of last-minute changes. As a result, Southwest had to manually adjust crew schedules.
Southwest has been issuing refunds to customers but not fast enough. Some customers who have received their refunds have complained that they received only a small fraction of claimed expenses.
Southwest has also sent out 25,000 points to most travelers who were flying during the holiday season.
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