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Southwest says flight cancelations triggered by recent winter storm will cost $825 million

The reimbursements will result in the airline losing $425 million in revenue

Published: January 6, 2023 10:11am

Updated: January 6, 2023 12:21pm

Southwest Airlines said Friday the tens of thousands of delayed and cancel flights trigged by a recent winter storm will cost the company $725 million to $825 million.

The company made the disclosure in a federal regulatory filing.

Southwest cancelled nearly 17,000 flights during the storm, which has occurred from about Dec. 21 to Dec. 24, and the company has promised to reimburse passengers whose flights were cancelled.

This storm and the related problems left thousands of passengers stranded at airports, with many of them having lost their luggage, at least temporarily.

The reimbursements will result in the airline losing an estimated $425 million in revenue. 

In the filing, Southwest cited increased operating expenses as a result of reimbursements to customers, premium pay and additional compensation for employees and the estimated value of rewards points offered "as a gesture of goodwill" to impacted customers as major contributors to the millions in additional costs.

The discount airline has also acknowledged that outdated technology and its business model, which features flights between regional airports, contributed to the cascade of cancellations while competitors recovered more quickly.

Transportation Secretary Pete Buttigieg has said he would investigate the cause of the cancellations and how they could have been prevented. 

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