Southwest Air executives lose pay after December meltdown

Southwest Airlines Co.’s leaders will take a pay cut following the December breakdown that resulted in thousands of flight cancellations and more than $1 billion in added costs.

“Executive bonuses for 2022 will be reduced because of this,” said Andrew Watterson, the carrier’s chief operating officer. The payouts will be awarded next month, though the amount of the cut hasn’t yet been determined, he said.

The executive spoke with reporters Thursday during a break in a US Senate hearing over the airline’s December crisis. Southwest has come under intense scrutiny in recent weeks from lawmakers, regulators and passengers over the meltdown, which led to more than 16,700 flight cancellations when its systems became overwhelmed during a winter storm.

“What happened over Christmas was appalling,” said Senator Tammy Duckworth of Illinois, joining other panel members during the hearing in telling stories of constituents affected by the cancellations.

Texas Senator Ted Cruz, who referred to himself as a big fan of Southwest, called the December crisis “an epic screwup.”

The carrier on Friday will begin using an upgraded version of part of its crew scheduling system, Watterson told lawmakers during the hearing. Prior to the crisis, it had been evaluating whether to upgrade or replace a separate scheduling system that was developed in-house.

The airline expects to receive an independent assessment of what went wrong and suggestions for fixes next month, he said. Southwest is also upgrading its technology and has additional reviews underway.

“We will invest what’s needed to execute that plan in a timely and efficient manner,” Watterson told senators, including amounts above the $1.3 billion the airline already had committed for technology spending this year.

While executive bonuses will be reduced, separate stock awards are based on long-term performance and haven’t been changed, he said.

Reimbursement Policy

Southwest has awarded loyalty points to affected travelers and has been reimbursing for hotel, food, and other expenses passengers and providing refunds for canceled flights. The company won’t provide cash in lieu of points in its loyalty program that have already been awarded, Watterson said.

He defended the company’s reimbursement policy, saying it paid per diem expenses that were higher than government recommendations. 

“We reimbursed tire chains, strollers, car seats, pet sitters, and stuff like that,” he said. “But things we didn’t reimburse were like $7,000 shopping sprees at luxury stores or chartering a private jet.”