Southwest Airlines said Thursday that recent flight cancelations will cost the company $75 million as it confronts an ongoing labor crunch that has forced it to scale back capacity.
The domestic-focused US carrier canceled more than 2,000 flights earlier this month due to problems with bad weather exacerbated by staffing shortages.
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Staffing levels “fell below plan” after Southwest was “aggressive” in ramping up capacity, Chief Executive Gary Kelly said in a statement.
“We have reined in our capacity plans to adjust to the current staffing environment,” Kelly said. “We are aggressively hiring to a goal of approximately 5,000 new employees by the end of this year, and we are currently more than halfway toward that goal.”
The carrier said it expects $75 million in costs for “customer refunds and gestures of goodwill” after the difficulties earlier this month.
Southwest now expects seat capacity in December to be down eight percent from the 2019 level after previously forecasting a drop of five percent.
The airline said it expects flight loads to be at 80 to 85 percent of their 2019 levels, comparable to other carriers that are escalating service as more economic activity returns.
Southwest reported profits of $446 million in the third quarter, attaining profitability with $763 million in US funds authorized by Congress to support airline jobs enabling the company to avoid a loss.
Shares fell 1.6 percent to $48.68 in late-morning trading.