Three weeks ago, Southwest Airlines was hit by a massive, days-long outage, disrupting 2,000 flights and spoiling travel plans for countless passengers. CEO Gary “I’m Not Going Anywhere” Kelly later described the debacle as a “once-in-a-thousand-year flood,” and now we have some idea of just how much that flood will cost the airline.
Southwest announced more details about the outage, including some general information about how much the incident will cost the carrier in an investor alert on Thursday, The Dallas Morning News reports.
While the airline didn’t provide a specific dollar figure for how much the glitch, which began on July 20 and was reportedly caused by a faulty network router, would cost, it did provide for a rough estimate.
The airline said in the filing that it expects to cause a 0.5% drop in revenues for the company’s third quarter.
The Dallas Morning News calculated that the issue has already cost the airline $54 million, and could increase before all is said and done.
When it comes to lost revenue, such as refunded tickets, missed bookings, canceled flights, vouchers and more, the airline is poised to lose $25.7 million.
As if that weren’t enough, the increased costs for the carrier, including staff overtime, transportation, hotel and meal accommodations for travelers, The Dallas Morning News estimates the expenses will come to between $28 million and $57 million.
That brings the total cost to between $54 million and $82 million.
Southwest will reportedly attempt to recoup some of those costs. For example, the airline says that its cost per seat mile will rise by 1% to 2%.
While The Dallas Morning News notes that the expense is a drop in the bucket compared to Southwest’s $20 billion annual revenue, employees of the airline — who have called for Kelly’s resignation — said the issue could have been avoided, and money saved, had executives in charge put more emphasis on updating technology than cutting costs.
Cost of Southwest’s tech outage climbs to at least $54 million [The Dallas Morning News]
by Ashlee Kieler via Consumerist
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