January 28, 2023

Brighton Journal

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US says weather turbulence in the Southwest is a ‘system failure’

WASHINGTON (Reuters) – U.S. Transportation Secretary Pete Buttigieg on Wednesday ratcheted up pressure on Southwest Airlines. (LUV.N)saying thousands more canceled flights indicated a system failure at the low-cost carrier.

“We’re past the point where they can say it’s a weather-driven issue,” Buttigieg said. interview It was posted by ABC News on their website. “Don’t get me wrong, it all started with that severe storm. We saw winter weather affecting the country and severely disrupting all airlines.”

nationally , At least 60 people died On weather-related incidents in recent days, NBC News reported.

Buttigieg said it appears that the rest of the flight system and other airlines have bounced back from the weather disruptions.

“So what this indicates is a system failure (in Southwest), and they have to make sure that those stranded passengers get to where they need to go and that they get adequate compensation, not just for the flights themselves…but also things like hotels.” Like ground transportation, like meals because that’s the responsibility of the airlines,” he said, adding that he had spoken to the company’s leadership.

US airlines canceled thousands of flights as a massive winter storm swept much of the country before and during the Christmas holidays, but Southwest The woes deepened While other airlines have largely recovered.

Southwest has canceled a total of more than 14,500 flights since Friday. On Wednesday, it canceled 2,500 flights, according to flight-tracking website FlightAware.

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Southwest told Reuters it will reimburse customers for travel-related costs and has already processed thousands of applications.

She also said that employees across the company assist crews with many jobs.

Delta Airlines (DAL.N) It said in an email that it capped prices in all of the domestic and international markets in which Southwest operates. The program includes more than 700 non-stop markets and is valid until December 31st. Both the United States and America have announced similar programmes.

Rep. Rick Larsen, the top Democrat on the House Transportation and Infrastructure Committee, said in a tweet that the company is treating flight cancellations as “manageable” starting Dec. 24, resulting in reimbursements for incidentals and full price refunds.

Southwest CEO Bob Jordan said the low-cost carrier needs to upgrade its aging systems and apologized to customers and employees in a video message.

Shares of Southwest fell more than 5% on Wednesday after diving 6% on Tuesday. Some analysts said the cancellation would put pressure on earnings in the fourth quarter.

“The overall impact on revenue could be in the range of 9% of our expected revenue for the fourth quarter, which compares to our current estimate of revenue of 15% prior to 2019 levels in 2022,” said Sheila Cahyaoglu, an analyst at Jefferies.

Kahyaoglu estimated the total EBITDAR (earnings before interest, tax, depreciation, amortization, restructuring or lease costs) from the cancellation to be in the order of $700 million.

Coverage by Kanishka Singh in Washington. Additional reporting by David Shepardson in Grand Rapids, Michigan and Abhijith Janappavaram in Bengaluru. Editing by Mark Porter, Howard Goller, Alexandra Alper and David Gregorio

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