WASHINGTON, Dec 28 (Reuters) – U.S. Transportation Secretary Pete Buttigieg stepped up pressure on Southwest Airlines ( LUV.N ) on Wednesday, saying thousands more canceled flights indicated a system failure at the carrier low cost
“We’re past the point where they could say this is a climate issue,” Buttigieg said in an interview published by ABC News on its website. “Don’t get me wrong, it all started with that severe storm. We saw winter weather hitting the country and severely disrupting all airlines.”
Across the country, at least 60 people died in weather-related incidents in recent days, NBC News reported.
The rest of the aviation system and other airlines appeared to have returned from weather disruptions, Buttigieg said.
“What this indicates is a system failure (at Southwest), and they need to make sure that these stranded passengers get where they need to go and that they are provided with adequate compensation, not just for the flights on yes … but also things like hotels, like ground transportation, like meals because that’s the responsibility of the airlines,” he said, adding that he had spoken to the company’s management.
US airlines had canceled thousands of flights as a major winter storm ravaged much of the country before and over the Christmas holiday weekend, but Southwest’s problems have deepened while other carriers airlines have largely recovered.
Southwest has canceled a total of more than 14,500 flights since Friday. It canceled 2,500 flights on Wednesday, according to flight-tracking website FlightAware.
[1/3] Travelers at Baltimore Washington International Airport are dealing with the impact of the cancellation of more than 12,000 Southwest Airlines flights over the Christmas holiday weekend across the country and in Baltimore, Maryland, US, on December 27, 2022. REUTERS/Michael A. McCoy
Southwest told Reuters it would reimburse customers for travel-related costs and had already processed thousands of requests.
He also said airline employees were assisting crews in many capacities.
Delta Air Lines ( DAL.N ) said in an email that it had capped fares in all domestic and international markets in which Southwest operates. The program includes more than 700 non-stop markets and is valid until December 31. United and American announced similar programs.
U.S. Rep. Rick Larsen, the top Democrat on the House Transportation and Infrastructure Committee, said in a tweet that the airline was treating the flight cancellations as “manageable” as of Dec. 24, which results in reimbursement of incidentals and full fee refunds.
Southwest CEO Bob Jordan said the low-cost carrier needed to upgrade its legacy systems and apologized to customers and employees in a video message.
Shares of Southwest fell more than 5% on Wednesday after falling 6% on Tuesday. Some analysts said the cancellations would put pressure on fourth-quarter profits.
“The total revenue impact could be in the range of 9% of our expected fourth-quarter revenue, which compares to our current estimate of revenue 15% ahead of 2019 levels in 2022,” he said Jefferies analyst Sheila Kahyaoglu.
Kahyaoglu estimated that the total EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent) impact of the cancellations could be about $700 million.
Reporting by Kanishka Singh in Washington; Additional reporting by David Shepardson in Grand Rapids, Michigan and Abhijith Ganapavaram in Bangalore; Editing by Mark Porter, Howard Goller, Alexandra Alper and David Gregorio
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