Feds probing Southwest Airlines over “holiday debacle that stranded millions”

The Transportation Department said Wednesday it is investigating whether Southwest Airlines deceived customers by knowingly scheduling more flights in late December than it realistically could handle.

The department said scheduling too many flights would be considered an unfair and deceptive practice under federal law.

“DOT is in the initial phase of a rigorous and comprehensive investigation into Southwest Airlines’ holiday debacle that stranded millions,” the department said in a statement.

The department added that it will hold Southwest accountable if the airline fails to follow federal rules about refunds and reimbursing customers for expenses when flights are canceled. The agency said it will “leverage the full extent of its investigative and enforcement power” to protect consumers.

Southwest said its holiday schedule “was thoughtfully designed” with “a solid plan to operate it, and with ample staffing.”

“Our systems and processes became stressed while working to recover from multiple days of flight cancellations across 50 airports in the wake of an unprecedented storm,” Southwest said in a statement. The airline pledged to cooperate with any government inquiries and is “focused on learning from this event” and reducing the risk of a repeat.

Southwest canceled about 16,700 flights over the last 10 days of December. The meltdown began with a winter storm, but Southwest continued to struggle long after most other airlines had recovered, in part because its crew-scheduling system became overloaded. Union officials said they had warned the airline for years about the system, especially after similar but less severe flight disruptions in October 2021.

Dallas-based Southwest eventually resorted to cutting its schedule by about two-thirds to reset crews and planes, which it did successfully.

The airline hired consulting firm Oliver Wyman to study what went wrong. CEO Robert Jordan has said the company might speed up spending on some technology upgrades as a result of the crisis, adding he wants to complete the review first.

Southwest said this month the cancellations will cost it up to $825 million in lost revenue and higher expenses including premium pay for employees and reimbursing customers for hotels and alternate flights.

Earnings were impacted. Southwest reported a fourth-quarter loss of $220 million Thursday after reporting a profit in the same period a year earlier.

The airline had signaled it would lose money, but the loss was worse than Wall Street expected.

Southwest CEO Robert Jordan again apologized for the meltdown Thursday, saying, “We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events,” he said. The company has hired outside experts and created a committee of its board to review the events and reexamine Southwest’s technology priorities.”

The airline is also dealing with damage to its reputation for customer service. Analysts believe some customers may avoid Southwest for a short time, although carriers have usually bounced back quickly from other service failures.

The chair of the Senate Commerce, Science and Transportation Committee, Maria Cantwell, D-Wash., has promised to hold hearings on disruptions like the one at Southwest.