DALLAS -- Southwest Airlines’ operational challenges earlier this month cost the company $75 million in revenue, the result of canceling more than 2,000 flights over Columbus Day weekend.
The Dallas-based carrier said its spending on “customer refunds and gestures of goodwill” resulted in a bigger loss in revenue than it logged for the lingering effects of the COVID-19 delta variant in the month, which was $40 million.
“Third quarter 2021 was a challenge for us, operationally,” CEO Gary Kelly said in a statement Thursday. “We have reined in our capacity plans to adjust to the current staffing environment, and our on-time performance has improved accordingly.”
Kelly said the company is more than halfway to its goal of hiring 5,000 new employees by the end of this year. It plans to hire 8,000 more workers next year.
Southwest Airlines did not disclose how much it gave in vouchers to distressed passengers, but passengers have reported credits of $100 to $250.
“I would be the first to admit that things are messy,” Kelly said in a call with investors. “We’ve gone from not enough to do to too much to do in a very short period of time.”
The revenue loss came as Southwest Airlines reported a $446 million profit for the third quarter of 2021. But that was only possible due to $763 million in government aid to cover salaries, wages and employee benefits from the American Rescue Act, expected to be the final round of bailouts for airlines.
While there was strong demand from passengers during the summer, the quarter was marred by the severe meltdown that seemed to happen exclusively to Southwest. The company blamed the problems on bad weather and air traffic control issues that originated in Florida on Oct. 8.
Those incidents caused a shortage of pilots and flight attendants over the subsequent four days, resulting in more than 2,200 cancellations.
Southwest also had to deal with unsubstantiated but widespread reports that a pilot walkout over vaccine mandates was responsible for staff shortages, even though the company and the Southwest Airlines Pilots Union have adamantly denied that.
Southwest still blames most of the problems on issues in Florida, which disproportionately impacted the airline because of its “point-to-point” network and the high percentage of airplane routes that go through Florida. Southwest has also said it was harder for it to recover because of 20 new destinations it added during the pandemic and having fewer airplanes in key markets.
But Kelly and incoming CEO Bob Jordan, who will be taking over the top spot in February, acknowledged that the company’s staffing numbers are insufficient to handle problems.
In response, Southwest said it cut flights scheduled for the final three months of this year by about 5%, including a December schedule that’s 12% smaller than what it flew in December 2019.
“I am very proud of our people,” Kelly said “They worked especially hard in challenging circumstances. We made good progress in our pandemic recovery.”
Southwest’s third-quarter revenue was $4.7 billion, down 17% compared to the same period in 2019. With the profit, Southwest was able to add $77 million to its profit-sharing pool, bringing the total for the year to $186 million.
Southwest, which lost $3.1 billion last year even with government aid, didn’t share any profits with employees in 2020.
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