Southwest CEO plans recovery from holiday season meltdown

Baltimore Washington International Airport travelers are dealing with the impact of Southwest Airlines canceling more than 12,000 flights over the Christmas holiday weekend in Baltimore, MD December 27, 2022.

Michael McCoy | Reuters

southwest CEO Bob Jordan’s post-holiday message meltdown Clearly it has derailed the travel plans of millions.

Jordan’s focus now, he told CNBC in an interview, is to ensure a similar crisis never happens again. Interviewed, explained what went wrong and determined how to avoid it in the future. general electric Improve software functionality to help Southwest resolve crew redeployments. Also, the airline’s board of directors has created an operational review committee to assist managers in handling such events.

The event was offensive to many travelers accustomed to Southwest customer service, including policies like free checked bags, which are rare for domestic travel.Rep. and Transportation Secretary Pete Buttigieg said they want to see more into confusion.

The Department of Transportation is in the early stages of an investigation into the airline’s holiday disruptions, saying it “implicated Southwest Airlines executives in unrealistic flight scheduling, which is considered unfair and deceptive practices under federal law. We are also investigating whether it is,” a spokeswoman said Wednesday.

less than 1 year With a job at the top of the airline, and in the aftermath of unseen travel turmoil in the Southwest in over 30 years, Jordan is now tasked with getting things right with passengers. employee.

“We’ve pulled goodwill out of the bank, and we know it,” Jordan told CNBC. “We have work to do to restore trust, but our customers is very loyal and we see that loyalty.”

Southwest Airlines said it paid premium wages to flight attendants because of the meltdown and offered $45 million in “thank you payments” to pilots. I have warned you about the schedule.

The airline also handed out 25,000 Rapid Rewards points each to nearly 2 million people who booked flights during the chaotic holiday period.

He said recent fare sales have been successful, with many customers redeeming frequent flyer points for Southwest flights.

Southwest said disruption was likely means hit Pre-tax results between $725 million and $825 million, a rare Quarterly lossManagement will face questions from analysts and reporters in the results of its career report due Thursday morning.

A Southwest Airlines spokesperson told CNBC on Wednesday about the airline’s planned return to service. quarterly dividend Held as scheduled on January 31

Cascade cancel

Southwest said it canceled about 16,700 flights between Dec. 21 and Dec. 31. Having recovered from the harsh winter weather that hampered travel across the country, Stabilization days after.Airlines executives expected it to be the busiest travel period since Covid-19 Pandemic Started.

The blistering cold had made the hydraulic oil so thick that the jet bridge was stuck. Snow and strong winds disrupted operations at airports across the country. The plane’s engine froze.

Most airlines had largely recovered from the bad weather by Christmas, but Southwest Airlines’ problems were exacerbated when crew had to make phone calls to get new assignments or hotel rooms, and backups has occurred.

The carrier’s aircraft and crew were left behind, at the mercy of a crew scheduling system designed to handle current or future flight disruptions, rather than past heaps of flight changes.

“We needed a bigger answer to reset the network,” Jordan said. “It was basically pulling the schedule down.”

southwest flew In the days after Christmas, we got the crew and planes where they needed to be, about a third of the planned schedule.

“The GE digital tools integrated into Southwest’s system worked as designed throughout the event. ,” a GE spokesperson said on Tuesday.

That said, chaotic schedules after bad weather are nothing new to the aviation industry. jet blueA meltdown in February 2007 cost JetBlue founder and CEO David Neeleman his job. (He has since new career In the US it is called Breeze Airways. )

The Southwest itself suffered a series of minor flight disruptions in October 2021, costing it about $75 million. A few months ago, spirit airlines It took $50 million hit From massive chaos.

“All airlines have a decline, from which they rise with a new perspective,” said Samuel Engel, senior vice president of consulting firm ICF. They have to look deep inside because they have an event.”

Both Spirit and Southwest do not rely on hubs like the larger airlines, but instead operate so-called point-to-point networks with planes flying around the country. While this model generally works and helps keep costs down, it can exacerbate disruptions during extreme events.

Jordan defended this model, saying the network is usually easier to restore because travelers don’t have to rely on connectivity to reach their destination.

“It wasn’t the network that was the issue here, it was the number of locations that were hit by the weather and the number of cancellations that basically happened in a row,” he said.

make amends

Even travelers hit by airlines in events like this have few options when it comes to booking flights, often focusing on price and schedule, says ICF’s Engel.

southwest, United, delta When American It controls more than three-quarters of the US market.

“Customers consistently choose flights based on fare and schedule,” he said. “They will say ‘never again’ because they have had a turbulent journey — and they will.”

Mark Ahasic, an aviation consultant who worked with JetBlue during the 2007 meltdown, said the airline’s reputation “has taken a hit, but it hasn’t destroyed its brand.”

Southwest Airlines must fix the issues that caused trouble during the holiday season and make amends to its customers, but many travelers, especially at the airports where Southwest has a strong foothold, Travelers typically have few airline options, Ahasic said.

Southwest is almost done processing customer refunds and is working on more complex refunds. This includes everything from meals to dog care fees. Some travelers who paid high fares on other airlines due to low seat availability are still waiting for their refunds.

Cody Smith, a 28-year-old Los Angeles artist, paid $578.60 for a Delta flight back to Los Angeles from his mother’s home in St. Louis after Southwest Airlines canceled part of his return trip after Christmas. Southwest Airlines offered Smith an alternative flight on New Year’s Eve, but Smith has multiple sclerosis and he said he needed to return to Los Angeles sooner to pick up his medication.

“I didn’t know what was going to happen,” Smith said.

Southwest has refunded some of Smith’s travel on the airline, but as of last week has not refunded the amount he spent on Delta flights. I have been sent 4.

“You owe me $600, so why am I using a drink ticket?” he said. “I really just want this money back.”

He said he paid more than $1,000 to travel from Nashville to New York, including a rental car from Louisville, Kentucky.Southwest offered him $540.02, which Brainard shared with CNBC on Jan. In the email he pointed out that he had not yet claimed a refund.

The email from July said, “Claim this payment before it expires.” “This payment constitutes the complete and final settlement of your claim against Southwest Airlines.”

Brainerd said he frequents Southwest Airlines and has no intention of leaving the airline after the cancellation, but will “speculate” depending on what the refund will be.

“I hope it makes them a better airline,” he said. Southwest CEO plans recovery from holiday season meltdown

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