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How much money Southwest expects to lose from holiday travel chaos

Southwest expects a net loss in the fourth quarter driven primarily by the operational disruption.

DALLAS — From Dec. 21 to Dec. 31, Southwest Airlines canceled more than 16,700 flights due to operation disruptions, stranding thousands of travelers nationwide for days.

And now we have an idea of how much it will cost the Dallas-based company.

In a Form 8-K filing to the U.S. Securities and Exchange Commission (SEC) on Friday, the Dallas-based airline said it expects a net loss of $725 million to $825 million in fourth quarter 2022 as a result of the late-December cancellation debacle.

Form 8-K filings are required for companies to file to "announce major events that shareholders should know about," according to the SEC.

The massive disruptions began Dec. 22 with a winter storm, and snowballed when Southwest’s ancient crew-scheduling technology was overwhelmed, leaving crews and planes out of position to operate flights. The Dallas Business Journal broke down the "perfect storm" of problems that took out the wings of Southwest for more than a week.

Southwest in its filing Friday said the revenue loss from the canceled flights was in the range of $400 million to $425 million, with the remaining impact related to travel expense reimbursement to customers (Rapid Rewards points offered to customers) and "premium pay and additional compensation for employees."

Southwest CEO Robert Jordan said Thursday that the company had processed about 75% of the refund requests it has received. Southwest is giving 25,000 frequent-flyer points to customers whose flights were canceled or significantly delayed between Dec. 24 and Jan. 2.

Southwest's preliminary estimate of fourth quarter 2022 available seat miles (capacity) is a decline of approximately 6%, as compared with fourth quarter 2019, which is roughly 4 points lower than previous guidance, the SEC filing reads.

Editor's note: The Associated Press contributed to this article.

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