Southwest Airlines (NYSE:LUV) said on Friday it expects to post a loss in the fourth quarter after it canceled over 16,700 flights between Christmas and New Year’s Eve due to a tech meltdown.
The mass cancellations during the peak season for U.S. airlines will result in a pre-tax hit of $725 million to $825 million to quarterly earnings, said Southwest, which had earlier forecast a strong profit. Shares fell 2.8% before the bell.
On Thursday, the largest U.S. domestic airline promised a thorough review of the operational collapse after a union leader blamed its outdated scheduling system and said the carrier had not identified how to avoid a repeat.
But the impact from the cancellations will spill over in the current quarter as the company scrapped many flights in a bid to reset its system, Cowen analyst Helane Becker said.
Southwest, which typically has an aggressive schedule that connects vast swathes of the country, relies on a point-to-point service instead of operating out of large hubs.
Southwest, which led cancellations among U.S. carriers for much of the last two weeks of December, has invited scrutiny from the U.S. government and a lawsuit.
It said on Friday that cancellations were likely to have cut its capacity by about 6% in the fourth quarter compared with 2019, roughly four points lower than its previous forecast.
Revenue loss from the disruptions is expected to be between $400 million and $425 million, it said.
LUV shares stepped back 16 cents to $33.37.
