Southwest Airlines (LUV) reported a loss for the fourth quarter, as the company took an $800 million pretax hit to earnings due to the computer system failure that led to the airline’s holiday travel meltdown.
For the quarter, Southwest reported:
- Revenue: $6.17 billion vs $6.12 billion (est.)
- Adjusted earnings per share (EPS) loss: $0.38 vs. $0.07 (est.)
“Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss,” Southwest CEO Bob Jordan said in a statement.
Overall for the quarter, Southwest lost $220 million resulting in an adjusted EPS loss of $0.38. Southwest had to cancel around 16,700 flights between December 21 through December 31, nearly all the flights scheduled for that time period. The U.S. Transportation Department said on Wednesday it was investigating Southwest over claims it had deceived customers by scheduling more flights that it could handle.
Southwest says it has offered 25,000 Rapid Rewards points to the approximately 2 million travelers who had booked flights on Southwest during the holiday period disruption.
On the positive front, Southwest reported record quarterly revenue that jumped nearly 8% compared to 2019. However, revenue took a $410 million hit due to those flight cancellations in Q4.
Looking ahead to Q1 2023, Southwest CEO Bob Jordan said the airline is expecting another quarterly loss, though the company is encouraged by current booking trends for March 2023.
“We remain intent on achieving the long-term financial goals outlined at our December 2022 Investor Day. We also intend to regain our 51-year reputation for operational excellence,” Jordan said.
Southwest shares are trading lower today in the pre-market.
