Southwest Airlines (LUV) has agreed to a record $140 million U.S. settlement related to its December 2022 systemwide meltdown that led to thousands of flights being canceled and more than two million people being stranded during the holidays.
Most of the settlement that’s been reached with the U.S. Department of Transportation will go toward compensating future passengers, providing an incentive for Southwest to avoid a repeat of last December’s travel chaos.
The Department of Transportation said the assessment was the largest it has ever imposed on an airline for violating consumer protection laws.
In a statement, Southwest Airlines said it has “learned from the event, and now can shift its entire focus to the future.”
The penalty was imposed after nearly 17,000 flights were canceled by the carrier during the busy holiday travel season of December 2022.
The chaos escalated after a winter storm paralyzed Southwest’s operations in Denver and Chicago and then a crew rescheduling system malfunctioned.
Southwest, which is the fourth largest airline by revenue in America, said the meltdown cost it more than $1.1 billion U.S.
The settlement reached with the government includes a $35 million U.S. fine.
The stock of Southwest Airlines has decreased 11% in 2023 and currently trades at $29.01 U.S. per share.
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