Investor Alert

Oct. 13, 2021, 12:54 p.m. EDT

No, it wasn’t a pilot ‘sickout’: Here’s what was really behind Southwest’s flight disruptions over the weekend

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Claudia Assis

Southwest Airlines Co.’s weekend of canceled fights was made worse by the deep cuts the airline and others had to make to their flight schedules, and the snags are likely to add to the airline’s labor strains and costs.

Southwest /zigman2/quotes/201071949/composite LUV +6.56% canceled more than 2,000 flights over the weekend and into the week, with hundreds more delayed, leaving passengers stranded. The stock is down more than 5% for the week so far, compared with losses of 1.1% for the U.S. Global Jets ETF /zigman2/quotes/207744796/composite JETS +6.14% and 1% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.42% in the same period.

Wall Street seemed to view the weekend snags as having limited impacts on the stock and the company’s bottom line, but with bigger implications for Southwest’s image.

The cancellations “bring into question whether [Southwest] is operating too stretched a schedule, relative to its limited staffing levels,” Stephen Trent at Citi said in a note Monday.

Southwest pilots told The Wall Street Journal earlier this week that without change in the way the company’s scheduling similar problems could happen again.

Savanthi Syth at Raymond James said it would also add to Southwest’s unit cost pressure, and “may exacerbate strained labor union relations.”

The airline blamed the widespread cancellations on weather “challenges” in some of its Florida airports, compounded by “unexpected” air-traffic-control issues in the same areas.

The FAA said Sunday on Twitter that no air-traffic staffing shortages had been reported since Friday. Flight delays and cancellations did occur “for a few hours” on Friday afternoon and evening due “to widespread severe weather, military training, [and] limited staffing” in the Jacksonville, Fla., area, it said.

“Some airlines continue to experience scheduling challenges due to aircraft and crews being out of place,” the FAA said.

Other airlines, however, did not report problems as acute as Southwest’s, even those with several Florida hubs. The pilots union said over the weekend that the cancellations were not the result of any labor-related protest.

The situation was made worse because there were fewer flights available for rebooking.

Southwest in August said it would run fewer flights through the end of the year, apart from holiday windows, in a bid to match flights to demand and to its ability to operate and staff flights.

“Southwest’s high volume of cancellations this past weekend is a reminder of how precariously balanced all the moving parts in an airline must be to operate smoothly,” said Sooho Choi, a travel and hospitality consultant at Publicis Sapient.

Southwest has the unique advantage of having built a very homogeneous fleet, he said.

Their point-to-point network, however, means there is “less contingency for operations to run smoothly if the right equipment and crew are not in the right place at the right time.”

Not only do fewer flights mean fewer options for rebooking, but “it also adds to the risk of a domino effect to the overall network which in turn results in greater havoc in operations and for the customer,” Choi said.

Southwest has made a push to hire more workers, offering referral bonuses for its employees and other incentives, with an eye on November and December holiday travel.

$ 45.34
+2.79 +6.56%
Volume: 12.91M
Dec. 2, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$25.19 billion
Rev. per Employee
US : U.S.: NYSE Arca
$ 20.57
+1.19 +6.14%
Volume: 16.24M
Dec. 2, 2021 4:00p
+64.06 +1.42%
Volume: 2.80B
Dec. 2, 2021 5:08p
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