Southwest sees ‘millions’ in lost revenue from cancelled flights

Aviation

Southwest Airlines estimates that it is losing “millions of dollars” in revenue weekly as it struggles with flight cancellations and delays amid contentious contract negotiations with its mechanics union.

In addition to the lost revenue, the Dallas-based carrier is incurring millions of dollars in costs caused by flight delays and cancellations, says chief executive Gary Kelly at the JP Morgan aviation, transportation and industrials conference in New York.

Southwest cancelled more than 1,000 flights and delayed an additional 5,480 flights last week, Cirium data and analytics show. It has cancelled 83 flights and delayed 152 flights today as of about 10:40 EST.

The airline last week sued the union representing its 2,400 mechanics, the Aircraft Mechanics Fraternal Association (AMFA), accusing the group of promoting an “illegal job action” among the mechanics. The airline says the union has encouraged mechanics to write up aircraft for minor maintenance work not related to flight safety, resulting in excessive aircraft being out of service.

The union on 3 March called the lawsuit filed by Southwest a “legal attack on its own employees”. AMFA has been in negotiations with Southwest for more than six years. The union’s members rejected a tentative agreement with the airline in September 2018.

Kelly says the airline filed the suit against AMFA to prevent more damages from occurring. “All efforts should be focused on good faith negotiations that will allow us to reward our superb mechanics,” he says.

Despite the flight delays and cancellations, Kelly says the airline is maintaining its revenue guidance for the first quarter, with unit revenue expected to grow 3-4%. The airline had earlier guided to a 6% increase in unit cost for the first quarter.