As one might expect, canceling most flights for several days is not exactly good for business. Following Southwest Airlines' Christmas nightmare, it has released select financial information concerning the fourth quarter of 2022 in an SEC filing. The airline expects to have taken a considerable loss during this quarter. The losses from the quarter will likely have effects that reach well into the new year as the company saw a loss in not only profits last quarter but also a loss in customer trust, which may lead to a significant decline in future ticket sales.

Holiday losses

As a whole, 2022 was a positive year for most US airlines. Travel restrictions across the country and in most foreign nations were lifted following the widespread decline in COVID-19 numbers. Following these restriction removals, demand for air traffic exploded, causing numerous problems for the industry. During the summer months, many passengers learned to accept that delays and cancelations were now a regular part of air travel and should be expected when booking a trip.

However, when these cancelations occurred, airlines were always prompt to rebook passengers as soon as possible, making the flight disruptions bearable. Then came winter storm Elliot and its band of rogue storms set on disrupting flight schedules across the US. In the days leading up to Christmas, these storms collectively canceled thousands of flights across the country. The sudden rise in cancelations and delays left airlines scrambling as staff and systems were overwhelmed. In the subsequent days, the storms cleared, and most airlines could get back on schedule and reroute the thousands of displaced passengers.

While these few days were hard on every airline, following Christmas, they were able to get their passengers rerouted to their destinations. Most airlines, that is, except Southwest. When Southwest's systems got bogged down during the holiday chaos, they buckled under pressure and failed. This left the company in disarray as airline staff worked vigorously to schedule things by hand. The company eventually decided to shut down its whole scheduling system and restart.

These winter storms and subsequent scheduling fiasco led to the airline canceling 16,700 flights between December 21st and December 31st. With thousands of flights canceled and no alternative booking options, tens of thousands of passengers and crew members were left stranded at airports across the country.

The airline will have lost millions of dollars in passenger reimbursement alone during this period. This disastrous holiday season will likely follow the airline throughout 2023 as it is still working to refund and reimburse all passengers who needed to book hotels and other transportation methods on their own. The DOT has also launched an investigation into the company, meaning that the holiday pain will drag long into the new year.

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Estimated losses

Southwest Airlines has yet to file any official reports concerning its 2022 Q4 finances. However, in a recent unofficial report, the airline did offer guidance concerning the quarter's finances following the flight disruptions of December. The airline expects to report a net loss of $725 million to $825 million during the period.

Some $400 million to $425 million of this loss is estimated to come from the impact of the holiday cancelations. The remaining losses are estimated to come from operating expenses, including what it has taken to reimburse passengers for other means of transportation along with hotel accommodations. These operating expenses also include the estimated loss from the airline extending an offer of 25,000 frequent flyer points to many affected passengers.

What do you think of Southwest's estimated losses? Let us know in the comments below.

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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