WASHINGTON, Dec. 28 (Reuters) – US Secretary of Transportation Pete Buttigieg stepped up pressure on Southwest Airlines on Wednesday (LUV.N)saying that thousands more canceled flights indicated a system failure at the low-cost carrier.
“We’re past the point where they could say this is a weather-induced issue,” Buttigieg said in a statement. interview posted by ABC News on its website. “Don’t get me wrong, this all started with that bad storm. We saw winter weather hit the country and severely disrupted all airlines.”
rural, at least 60 people died in weather-related incidents over the past few days, NBC News reported.
The rest of the aviation system and other airlines appeared to be back from the weather disruptions, Buttigieg said.
“So what this indicates is a system failure (in Southwest), and they need to make sure these stranded passengers get to where they need to go and that they get adequate compensation, not just for the flights themselves… but things like hotels, like ground transportation, such as meals, because this is the responsibility of the airlines,” he said, adding that he had spoken with the company’s leadership.
U.S. airlines had canceled thousands of flights as a massive winter storm swept across much of the country before and during the Christmas holiday weekend, but Southwest’s misery has 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 FlightAware, the flight tracking website.
Southwest told Reuters it would reimburse customers for travel-related expenses and had already processed thousands of requests.
It also said airline employees helped crews in many functions.
Delta Airlines (DAL.N) said in an email that it had capped rates in all domestic and international markets where Southwest operates. The program covers more than 700 non-stop markets and is valid until December 31. United and American have announced similar programs.
U.S. Representative Rick Larsen, top Democrat on the House Transportation and Infrastructure Committee, said in a tweet that the company treats flight cancellations as “accountable” starting Dec. 24, leading to refunds of incidentals and refunds of full fares.
Southwest CEO Bob Jordan said the low-cost carrier needed 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 a 6% plunge on Tuesday. Some analysts said the cancellations will hurt earnings in the fourth quarter.
“The total revenue impact could be in the range of 9% of our projected Q4 revenue, which is similar to our current estimate with revenues up 15% from 2019 through 2022,” said Jefferies analyst Sheila Kahyaoglu. .
Kahyaoglu estimated the total EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rental expenses) that could be impacted by the cancellations in the range of $700 million.
Reporting by Kanishka Singh in Washington; Additional reporting by David Shepardson in Grand Rapids, Michigan and Abhijith Ganapavaram in Bengaluru; Edited by Mark Porter, Howard Goller, Alexandra Alper and David Gregorio
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