How Southwest Airlines melted down

Re:How Southwest Airlines melted down by flandish on Wednesday December 28, 2022 @06:34PM (#34167489)

Here is where we should take note of how things were resolved (or are in the process of) and note where “throw more money at it” (fly inefficient routes, farm out fares, etc) would have also helped.

Then next earnings release - when they post shareholders profits - that’s exactly how much they were willing to hold back to fix this, trading profit for people stuck for days.

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Re:How Southwest Airlines melted down by smugma on Wednesday December 28, 2022 @08:24PM (#34168367)

Good point. I think it will be smart for them to post a record loss for this quarter.

Accrue a few billion for refunds, depreciate your software to zero, and start to set aside a few billion for new cloud whatever.

Basically, take this as a huge loss and communicate that you’ve lost a lot of goodwill and trying to make passengers whole is #1 priority (after safety, of course).

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Re:How Southwest Airlines melted down by philwelch on Thursday December 29, 2022 @02:47AM (#34170471)

Airlines are extremely low-margin businesses, discount airlines like SWA doubly so. “Posting a record loss” of this magnitude isn’t something that can be afforded. What you’re talking about is likely to turn into some form of bankruptcy. Maybe it’s a relatively minor Chapter 11 where all those refunds get written down by the bankruptcy court, or maybe SWA goes the way of TWA and Pan-Am.

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Re:How Southwest Airlines melted down by scarface74 on Thursday December 29, 2022 @06:40AM (#34171669)

Airlines make a lot of their money from loyalty programs

https://www.forbes.com/sites/advisor/2020/07/15/how-airlines...

And loyalty programs are bigger business for the higher end airlines that cater to business travels and the more affluent.

On top of that, the top 3 airlines make a lot of money off a first class and business travelers who are using other people’s money.

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Re:How Southwest Airlines melted down by philwelch on Thursday December 29, 2022 @10:02AM (#34173265)

You just listed a bunch of revenue sources SWA doesn’t have.

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Re:How Southwest Airlines melted down by scarface74 on Thursday December 29, 2022 @10:15AM (#34173434)

That’s the point…

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Re:How Southwest Airlines melted down by philwelch on Thursday December 29, 2022 @10:19AM (#34173475)

Gotcha.

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Re:How Southwest Airlines melted down by cmmeur01 on Thursday December 29, 2022 @08:26AM (#34172367)

Or maybe their lobbyists get on the phones and secure them a nice bailout, since they’re so “essential” as we’ve just seen.

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Re:How Southwest Airlines melted down by chasd00 on Thursday December 29, 2022 @08:52AM (#34172582)

Replying to a sibling comment. There will never be a bailout for SWA. Too small, too many competitors and based in a red state with a blue administration in power.

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Re:How Southwest Airlines melted down by smugma on Thursday December 29, 2022 @02:52PM (#34177080)

They lost $300M in Q1 and made $800M in Q2. They can take another $300M loss (1B?) in the short term to mitigate reputational damage and legislation.

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Re:How Southwest Airlines melted down by panarky on Sunday January 01, 2023 @06:24PM (#34212240)

In the last fiscal quarter pre-pandemic, they had operating income of $3 billion on revenue of $22 billion, or 13%. This is not a low-margin business.

If they have operating income of eight to ten billion a year, spending a third of a billion to upgrade systems seems like it would have been a reasonable investment instead of buying back shares and increasing the dividend.

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