Southwest sees fourth-quarter loss after flights cancellations

Southwest Airlines Co. said it expects a fourth-quarter loss as it grapples with costs associated with an operations meltdown that forced it to cancel more than 16,700 flights in late December.

The chaos over the holiday period will result in a negative fourth-quarter impact in the range of $725 million to $825 million, leading to a net loss for the period, the company said Friday in a filing. Flying capacity in the quarter was likely down about 6% compared with late 2019, four points below previous guidance.

A significant portion of the impact is from an estimated revenue loss of $400 million to $425 million, while the remaining hit relates to an increase in operating expenses, primarily tied to reimbursements to customers. The Dallas-based company is scheduled to report results on Jan. 26.

Southwest has been wading through thousands of claims for ticket refunds and reimbursements for things like meals and hotel rooms. The wave of cancellations was triggered by a winter storm that tore across the northern half of the US and overwhelmed Southwest’s outmoded crew scheduling system. It scrambled to get planes, pilots, and flight attendants in the right locations.

The carrier has been working to return delayed baggage along with an “around-the-clock effort” to process refunds and reimbursement requests. Southwest hasn’t disclosed how many customers were affected. Chief Executive Officer Bob Jordan has promised a full review of the meltdown.

Shares of Southwest fell 2% to $32.86 as of 7:23 a.m. before regular trading in New York.