On Thursday, Southwest Airlines Co (NYSE: LUV) plunges over 2.36% to $36 in pre trading on Thursday after In the wake of a computer meltdown that led the carrier to cancel thousands of flights between Christmas and New Year’s Eve, it issued a loss warning for the current quarter.
The largest domestic U.S. carrier, which is already under regulatory scrutiny for its handling of over 16,700 cancellations that interfered with thousands of passengers’ holiday plans, may suffer much more as a result of the prediction.
Southwest, which also disclosed a loss for the fourth quarter, stated it anticipates a $300 million to $350 million revenue hit in the first quarter.
Southwest Airlines reported an increase in flight cancellations and a slowdown in bookings so far in January 2023, primarily for January and February 2023. However, it noted, the existing booking patterns for March were optimistic.
Operating revenue is anticipated to increase 20% to 24% year over year for the March quarter, when travel demand tends to drop.
Bob Jordan, the company’s under-fire CEO, apologized once more on Thursday for the widespread cancellations, which were blamed on Southwest’s antiquated crew scheduling system.
After a major winter storm left the carrier’s personnel stranded across the nation, the software gave way under the weight of the reassignments that needed to be made.
According to Jordan, the corporation is “reexamining the importance of technology and other investments scheduled in 2023.”
While other major U.S. airlines including United Airlines Holdings Inc and Delta Air Lines Inc announced higher-than-expected quarterly profitability on strong travel demand, Southwest posted an adjusted loss of $226 million for the quarter ending in December.
Southwest’s adjusted loss was 38 cents per share. Operating income was $6.17 billion, an increase of 7.7% from 2019. On the other hand, costs increased by over 30% to $6.56 billion, partly as a result of cancellations.
Southwest has predicted “strong profitability” with margin expansion for 2023.
Compared to what was first anticipated, capacity is predicted to increase by 16% to 17% annually in 2023, while prices outside of fuel are predicted to decrease by 6% to 8%.
