Southwest promises thorough review of operations meltdown

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By Rajesh Kumar Singh

CHICAGO (Reuters) -Southwest Airlines on Thursday said it would carry out a thorough review of the disruption from a winter storm that forced it to cancel nearly 16,000 flights.

In a video message, posted on the company's website, Chief Executive Bob Jordan said the review is expected to be completed "swiftly". The airline has asked its union to participate in this review effort as well, he said.

"Restoring the trust of our customers and employees is everything to us," Jordan said.

His comments came hours after a top pilots union official said the Dallas-based carrier has yet to work out how to avoid a meltdown like the one it had last week.

Tom Nekouei, a vice president at the Southwest Airlines (NYSE:LUV) Pilots Association, told Reuters that he and other union leaders had a conference call with Jordan on Monday to discuss the issue.

On the call, details of which have not been reported before, Nekouei said the company offered no immediate solutions.

"They don't know what it is that they're going do in terms of corrective action because they haven't sat down and run the post-mortem on it," Tom Nekouei, a vice president at the Southwest Airlines Pilots Association, told Reuters.

Nekouei said the union's calculations suggest the latest debacle could result in an up to $1 billion revenue hit for the carrier. Some analysts have estimated the meltdown could shave as much as 9% off Southwest's fourth-quarter profits.

The pilots union, which is in heated contract negotiations with Southwest, on Dec. 31 published a letter signed by Nekouei, denouncing company leadership as a "cult" that has spent the last 15 years destroying the airline's legacy. Before the recent crisis, Southwest had cultivated a reputation for reliable customer service, humorous flight crews and low-cost flights.

Southwest canceled the flights in the week ended Dec. 29 due to bad weather and meltdown of its crew scheduling system, leaving thousands of passengers stranded.

Jordan said Southwest is taking immediate steps to address the issues that contributed to the disruption.

He said the airline has made "great progress" in processing tens of thousands of refunds and reimbursements a day. It had also delivered the vast majority of bags, which went missing, to customers.

DATED TECHNOLOGY

The White House has said Southwest "failed its customers". Citing the carrier's meltdown, lawmakers have been pressing the Biden administration to hold airlines accountable for mass flight cancellations.

Southwest unions have blamed the company's "outdated" technology and processes for the biggest operational meltdown in its five-decade history.

Nekouei said the company's failure to revamp its dated scheduling system that sends crews around the country as passengers for their flying assignments left it vulnerable to "more frequent and more severe" meltdowns. The pilots union has called that so-called "deadheading" practice fatiguing and inefficient.

Nekouei said the same issues led to a major meltdown at Southwest after a thunderstorm in Florida in October 2021 that cost it $75 million.

To be sure, the airline has been upgrading its technology in phases.

In 2017, it replaced its entire reservations system, and four years later it enhanced technology at its maintenance department. Recently, it has made investments in digital scanners to make its baggage handling system more efficient.

Jordan said the company spends about $1 billion a year on technology and will continue to upgrade the tools and processes its employees use to deliver "reliable and low-cost air travel."

Union officials, however, have called the pace of investment too slow.

"Every meltdown that we've had, it's gotten more severe," Nekouei said. "It's become more frequent now and it takes longer and longer to recover from them."