Southwest Airlines Co said on Friday it expects to post a loss in the fourth quarter after it canceled over 16,700 flights between Christmas and New Year’s Eve due to a tech meltdown.
The mass cancellations during the peak season for U.S. airlines will result in a pre-tax hit of $725 million to $825 million to quarterly earnings, said Southwest, which had earlier forecast a strong profit, reports Reuters.
Shares of the company were up 2.6% at $34.39 in mid-day trade. On Thursday, the Texas-based airline promised a thorough review of the operational collapse after a union leader said the carrier had not identified how to avoid a repeat.
During winter storm Elliott, Southwest’s crew scheduling software failed to bear the load of staffing changes made by the airline and workers had to manually match crew and planes that led to huge waiting times for pilots and cabin crew.
The carrier is a popular option for customers looking for quick travel times as it relies on a point-to-point service to connect vast swathes of the country, instead of operating out of large hubs. But adverse weather made it difficult for it to marshal staff scattered across the nation.
The impact from the cancellations will spill over to the current quarter, Cowen analyst Helane Becker said, after the company scrapped many flights in a bid to reset its system.
Southwest, which led cancellations among U.S. carriers for much of the last two weeks of December, has invited scrutiny from the U.S. government and a lawsuit.
