The New Year has not started off well for Southwest Airlines (SUV). It reported a $220 million loss in the fourth quarter of the year 2022. The loss comes as a result of the holiday meltdown in December. Although other carriers managed to recover more quickly, Southwest canceled 16,700 flights between December 21 through December 31. The U.S. Department of Transportation (DOT) has said that it would investigate the holiday debacle of Southwest Airlines.
On Thursday, the carrier reported that its pretax results were hit by $800 million due to mass cancelations. Earlier this month, Southwest had estimated that it would lose somewhere between $725 million and $825 million.
According to Refinitiv consensus estimates the adjusted loss per share was 38 cents while the Wall Street estimate was 12 cents. The total revenue reported was $6.17 billion while the expected revenue was $6.16 billion.
Southwest Airlines faced larger losses due to inclement weather when compared with other airlines in the nation because it had to process tens of thousands of refunds. It also faced complex reimbursements as travelers had to book their flights on other airlines due to the mass cancelations by Southwest,
After it reported its last quarter results, the airline saw a dip in its stock price by almost 3 percent in premarket trading.
The airline is also under investigation by the DOT. A transport department spokesperson said that it was looking to see whether Southwest had made unrealistic flight schedules. This is considered to be “an unfair and deceptive practice” according to federal law.
The department spokesperson also said that the DOT had ordered the airlines to provide “timely refunds and reimbursements” failing which the carrier will be held accountable by the transport department.
After the December disaster, the airlines saw a fall in bookings. This has led to a forecast of a loss of revenue up to $300 million in the first quarter of this year. However, recent reports have also shown an improvement in booking trends that might decrease the revenue loss by Southwest Airlines in the first quarter of 2023.
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