Southwest Airlines Struggles after Holiday Cancellations
Extremely harsh weather conditions from winter storm Elliot resulted in thousands of flight cancellations last weekend. Notching 12,000 cancellations since last Friday, Southwest Airlines (LUV) was responsible for nearly 75% of flight cancellations in the U.S. over that period. Other airlines relied more heavily on delays than outright cancellations, but they still had a lower proportion of delays than Southwest Airlines. The U.S. Department of Transportation has announced it is launching a probe into the matter, which sparked selling of Southwest’s stock:
“The U.S. Department of Transportation is concerned by Southwest Airlines’ disproportionate and unacceptable rate of cancellations and delays as well as the failure to properly support customers experiencing a cancellation or delay,” according to a press statement. “USDOT will closely examine whether cancellations were controllable and whether Southwest is complying with its customer service plan as well as all other pertinent DOT rules.”
As shown below, Southwest cancelled 62% of its scheduled flights yesterday morning. The cancellation rate is nearly twice those being seen in China as they deal with the ongoing Covid outbreak. Southwest Airlines’ (LUV) stock fell nearly 6.5% on Tuesday following the USDOT’s announcement.
What To Watch Today
- 10:00 a.m. ET: Richmond Fed Manufacturing Index, December (-10 expected, -9 prior)
- 10:00 a.m. ET: Pending Home Sales, MoM, November (-1.0% expected, -4.6% prior)
- 10:00 a.m. ET: Pending Home Sales NSA, YoY, November (-36.7% prior)
- No notable earnings reports today.