U.S. Transportation Secretary Pete Buttigieg said that large-scale flight schedule disruptions at Southwest Airlines (LUV.N) were no longer a weather-driven issue and represented a system failure within the company.
“We are past the point where they could say this is a weather-driven issue,” Buttigieg said in an interview posted by ABC News on its website on Wednesday. “Don’t get me wrong, all of this began with that severe storm. We saw winter weather affecting the country and severely disrupting all airlines.”
Nationwide, at least 60 people died in weather-related incidents in recent days, NBC News reported.
The rest of the aviation system and other airlines seemed to be back from the weather disruptions, Buttigieg said.
“So what this indicates is a system failure (at Southwest), and they need to make sure that these stranded passengers get to where they need to go and that they are provided adequate compensation, not just for the flights itself … but also things like hotels, like ground transportation, like meals because this is the airlines’ responsibility,” he said, adding that he had spoken to the company’s leadership.
More than 2,500 Southwest Airlines flights were canceled as of Wednesday morning, according to the flight tracking website FlightAware.
Delta Air Lines (DAL.N) said in an email it had capped fares in all markets where Southwest operates, including domestic and international markets. The program includes over 700 nonstop markets and are valid through Dec 31.
U.S. airlines had canceled thousands of flights as a massive winter storm swept over much of the country before and during the Christmas holiday weekend, but Southwest’s woes have deepened while other airlines have largely recovered.
Southwest told Reuters that it would reimburse customers for travel-related costs and that it had already processed thousands of requests by Tuesday.
The airline’s CEO, Bob Jordan, said the low-cost carrier needed to upgrade its legacy airline systems and apologized to customers and employees in a video message.
Shares of Southwest were down about 1.5% in morning trading on Wednesday, and some analysts said the cancellations will pressure profits in the fourth quarter.
“The total impact to revenue could be in the 9% range of our expected Q4 revenue, which compares to our current estimate with revenues 15% ahead of 2019 levels in 2022” Jefferies analyst Sheila Kahyaoglu said.
Kahyaoglu estimated total EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent costs) impact from the cancellations could be in the range of $700 million.
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