Topline
Following a chaotic holiday travel weekend, shares of Southwest Airlines plunged Tuesday morning as the carrier faced backlash over thousands of flight cancellations spurred by one of the worst snowstorms in decades, and the company’s chief is warning the troubles aren’t over, with additional cancellations expected in the coming days as Southwest works to return to normal operations.
“This is the largest scale event that I’ve ever seen,” Southwest’s CEO said of the chaotic holiday … [+]
Key Facts
Southwest stock fell nearly 6% to less than $34 on Tuesday morning, pushing shares down to their lowest level in two months after the carrier canceled more than 2,800 flights on Monday and another 2,522 on Tuesday—representing more than 60% of all flights canceled in the U.S., according to flight-tracking website FlightAware.
“We had a tough day today,” Southwest Airlines CEO Bob Jordan said in an interview with the Wall Street Journal on Monday night, predicting the company “in all likelihood” will face “another tough day” on Tuesday as it works to book flights for thousands of stranded customers and return flight schedules to full capacity.
“This is the largest scale event that I’ve ever seen,” Jordan continued, noting Southwest plans to operate roughly one-third of its typical schedule on Tuesday and Wednesday as it works to shore up its staff.
The more than 10,000 cancellations since Thursday—more than any other airline—have already raised eyebrows in Washington: In a Monday night tweet, the Department of Transportation said it is “concerned” by Southwest’s “unacceptable” rate of cancellations, and plans to examine whether they were “controllable.”
Southwest and the Transportation Department did not immediately respond to Forbes’ requests for comment.
Key Background
Several cities across the country faced their most frigid Christmas in years amid a historic winter storm that left dozens of people dead and more than 100,000 homes and businesses without power this weekend, and Southwest wasn’t alone among struggling airlines. According to FlightAware, more than 4,000 flights within, into or out of the U.S. were canceled on Monday—with 2,900 belonging to Southwest, 607 to China Eastern and 276 to Delta, which canceled about 20% of its weekend flights. Shares of American and Delta fell 2% and 1% on Tuesday.
Surprising Fact
Despite tumbling 12% over the past month, Southwest shares have faced steeper losses before. The stock crashed nearly to a six-year low of less than $24 after the pandemic abruptly halted travel in the spring of 2020. The stock has since soared about 50%, but it’s still down 37% from pre-pandemic levels.
Further Reading
Winter Storm Update: 28 Reportedly Dead, More Than 100,000 Homes Without Power On Christmas Day (Forbes)
In Photos: Record Snowfall And 2 Million Without Power As Elliott Batters States (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/12/27/southwest-stock-plunges-flight-cancellations-top-10000-as-feds-examine-airlines-historic-winter-storm-woes/