Southwest Airlines has revealed that its executives received smaller bonuses last year due to the meltdowns that occurred in December. The news first came from the airline's Chief Operating Officer, Andrew Watterson, during a recent hearing before a Senate committee. The cuts have since been elaborated on and confirmed by another representative for the airline.

Bonus cuts

During the recent scheduling meltdown, the airline lost over $800 million. This significant loss has affected the executives' bonuses because their dividends are based on excess profits from the year. After Watterson told the Senate Committee during a hearing this past Thursday that bonuses would be cut, the airline had another representative share more details concerning the cuts and how bonuses are calculated.

The Southwest representative told USA TODAY the following,

"Each year, the Compensation Committee of the Board of Directors approves an annual company scorecard upon which a year-end assessment is taken to determine short-term bonus pay, which is awarded in cash to qualifying Employees. The scorecard looks at operational excellence metrics, progress on major initiatives, financial performance and customer experience metrics.

"Based on the 2022 scorecard results, which were impacted by the events in December, qualifying employees will see payout reductions in the short-term incentive pay cash bonuses soon to be awarded based on company performance."

No details concerning the size of the cuts have been released. It is also unclear which employees will receive the largest pay cuts and if any are exempt from them. Simple Flying has reached out to Southwest concerning the bonus cuts; this article will be updated once a response has been received.

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Recent hearing

Southwest's recent appearance before the US Senate was a part of the "Strengthening Airline Operations and Consumer Protections" hearing. During the hearing, Watterson testified that Southwest has and will continue to do all that is necessary to prevent any further scheduling issues such as those that occurred this past holiday season. He also stated that the meltdown was primarily caused due to poor wintertime planning.

While acknowledging that a technological error occurred, Watterson said it was not the core problem but that it would be fixed with a new software update. He stated that the airline is working to replace the existing system by the end of 2025.

Despite his testimony, committee members continuously questioned Watterson and other airline representatives concerning the December meltdown. While much of the questioning focused on technological failures, select committee members questioned airline management.

The airline also took heat from its pilot union. The President of the Southwest Airlines Pilots Association (SWAPA), Casey Murray, shared during the hearing that the blame for the meltdown should be placed on upper management as pilots had repeatedly informed the airline for years that the scheduling system was antiquated and unreliable. However, these reports and complaints from pilots were disregarded until the entire system collapsed. Thankfully, the airline managed to rebuild its schedule, and things are running smoothly now. Hopefully, the system can hold out until the airline replaces it in a couple of years.

What do you think of Southwest executives getting their bonuses cut? Let us know in the comments below.

Source: USA TODAY

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  Southwest Airlines

  IATA/ICAO Code:

  WN/SWA

  Airline Type:

  Low-Cost Carrier

  Hub(s):

  Baltimore/Washington International Thurgood Marshall Airport, Dallas Love Field, Denver International Airport, Harry Reid International Airport, Hartsfield-Jackson Atlanta International Airport, Houston Hobby Airport, Los Angeles International Airport, Midway International Airport, Oakland International Airport, Orlando International Airport, Phoenix Sky Harbor International Airport

  Year Founded:

  1967

  CEO:

  Robert Jordan

  Country:

  United States