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Southwest Airlines’ mass cancellations costed $75m

written by Isabella Richards | October 22, 2021

Southwest Airlines has faced a slew of roadblocks over the past few months, and now has announced the recent mass cancellations cost the company US$75 million.

In its third quarter earnings release on Thursday, the low-cost carrier also said its low level of available staffing led to the company missing numerous operational targets.

“Third quarter 2021 was a challenge for us, operationally,” said Gary C. Kelly, chairman of the board and chief executive officer of Southwest.

In early October, the Dallas-based company cancelled over 2,000 flights across several days, plagued by weather and limited staffing.

Despite this, other competing US airlines only suffered few cancellations over those days while Southwest was in the midst of severe weather conditions across Texas.

Its third quarter earnings reported operating revenues of US$4.7 billion, down 17 per cent compared to pre-pandemic levels – an improvement from quarter two.


Southwest also saw a net loss of US$135 million, down from the US$206 million loss in the second quarter.

“Despite the deceleration of traffic in August and September due to surging COVID-19 cases, the third quarter 2021 demand and revenue performance was quite strong,” Kelly said.

He said he was impressed with July’s revenue and profit, which reigned the strongest month, only down 12 per cent in operating revenue compared to 2019 and boasting an 87 per cent load factor.

While cancellations remained a heavy roadblock in the company’s improvements, Southwest’s lack of staffing plagued the carrier’s efforts in meeting the growth in demand.

“We are aggressively hiring to a goal of approximately 5,000 new employees by the end of this year, and we are currently more than halfway toward that goal,” Kelly said.

“We have reined in our capacity plans to adjust to the current staffing environment, and our on-time performance has improved, accordingly.”

In July, where Southwest also cancelled thousands of flights, the airline offered incentives for staff to work longer hours to mitigate the demand.

In an attempt to avoid further flight cancellations due to staff shortages, Southwest pledged double pay for staff willing to pick up open shifts over the early July period.

Staff shortages have remained a common issue for airlines across the globe, and many were struck with enforcing mass employment cuts to stay afloat.

“While there are lingering effects from the summer COVID-19 surge and recent operational challenges, we are encouraged with renewed momentum in leisure and business traffic, revenues and bookings,” Southwest said.



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