Southwest puts a price tag on its holiday meltdown: $725M to $825M

Southwest’s holiday season operational collapse will cost the carrier between $725 million and $825 million, the airline estimates. As a result, Southwest now expects to record a net loss for the fourth quarter.

• Related: Looking ahead following Southwest’s holiday meltdown

In a Friday morning Securities and Exchange Commission filing, Southwest reported that the 16,700 flights it canceled between Dec. 21 and 31 cost it between $400 million and $425 million in revenue. The remaining impact is due to a net increase in expenses. While the cancellations saved the airline money on fuel and profit-sharing, those savings will fall well short of the costs the carrier is incurring in reimbursements to customers for items such as hotels, transportation, and meals, as well as costs incurred for misplaced bags.

Extra costs also include the value of the 25,000 Rapid Rewards points Southwest has chosen to provide to customers who were scheduled to fly between Dec. 24 and Jan. 2 but whose flights were either canceled or delayed by more than three hours.

• Related: Southwest meltdown prompts Senate hearings

In a video message release Thursday evening, Southwest CEO Bob Jordan said the carrier is processing tens of thousands of refunds and reimbursements per day. The vast majority of misplaced bags, he said, have also been returned or are on their way to customers.

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