Southwest flight upheaval a ‘system failure,’ U.S. says

WASHINGTON (Reuters) – U.S. Transportation Secretary Pete Buttigieg stepped up pressure on Southwest Airlines (LUV.N) on Thursday, with thousands of canceled flights pointing to a system failure at low-cost airlines. said.

“It’s past the time they can say this is a weather issue,” Buttigieg said in an interview published on the ABC News website. “Don’t get me wrong, it all started with that heavy storm. We saw winter weather affecting the country and causing serious disruption to all airlines.”

Nationwide, at least 60 people have died in recent weather-related incidents, according to NBC News.

The rest of the air system and other airlines appear to have recovered from the weather disruption, Buttigieg said.

“So this represents a system failure[in the Southwest]and we need to ensure that stranded passengers reach their destination and are provided with adequate compensation, not just the flight itself. It’s a company responsibility, so it’s like hotels, ground transportation, and meals,” he said, speaking with the company’s management.

U.S. airlines have canceled thousands of flights as massive winter storms hit much of the country around the Christmas holiday weekend, while other airlines have made a significant recovery. The Southwest’s predicament is deepening.

Southwest Airlines has canceled more than 14,500 flights in total since Friday. According to flight tracking website FlightAware, 2,500 of his flights were canceled on Wednesday.

Southwest told Reuters it would reimburse customers for travel-related expenses and said it had already processed thousands of requests.

He also said employees across the airline assist crews in many functions.

Delta Air Lines (DAL.N) said in an email that it has capped fares in all domestic and international markets served by Southwest Airlines. The program includes over 700 non-stop markets and is valid until December 31st. United and American have announced similar programs.

Rep. Rick Larsen, the top Democrat on the House Transportation Infrastructure Committee, tweeted that the company is treating flight cancellations as “controllable” starting Dec. 24, which will result in refunds for incidentals and full fare refunds. said to be done.

Southwest CEO Bob Jordan apologized to customers and employees in a video message, saying the low-cost airline needed to upgrade its legacy system.

Southwest stocks fell more than 5% on Wednesday after plummeting 6% on Tuesday. Some analysts say the cancellations will weigh on earnings in the fourth quarter.

“The overall impact on earnings could be in the range of 9% of expected fourth quarter earnings,” said Jefferies analyst Sheila Kahyaoglu.

Kahyaoglu estimates the total EBITDAR (excluding interest, tax, depreciation, amortization, restructuring or rent costs) impact of cancellations in the range of $700 million.

Reported by Kanishka Singh, Washington. Additional reporting by David Shepardson of Grand Rapids, Michigan and his Abhijith Ganapavaram of Bangalore.Edited by Mark Porter, Howard Goller, Alexandra Alper, David Gregorio

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