Southwest warns of more flight cancellations as meltdown draws federal scrutiny

Southwest Airlines canceled nearly two-thirds of its flights Tuesday and warned that mass disruptions will continue throughout the week, drawing scrutiny from the Transportation Department as other airlines recovered from severe winter weather.

Airlines have canceled thousands of U.S. flights over the last week as winter storms brought snow, ice, high winds and bitter cold around the country, derailing travel from coast to coast. But Southwest stood out for its persisting disruptions, even as weather started improving on Christmas Day and other carriers were stabilizing.

The carrier's cancellations on Tuesday amounted to more than 2,500 flights. On Monday, Southwest had cut 70% of its schedule and said it plans to fly about only a third of its schedule "for the next several days" in an effort to recover its operations. By comparison, Delta had canceled 9% of its mainline flights on Monday while United canceled 5%. American cut less than 1% of its flights, mostly tied to an airport closure in Buffalo after a winter storm.

Southwest is slashing its schedule in hopes that it can reset its operation and get planes and crews to where they need to be, a strategy that left passengers with more uncertainty during one of the busiest travel periods of the year.

"Obviously that will have even more impact on our Customers," Southwest CEO Bob Jordan said in a message to employees Monday. "But we've got to get out of this. We've got to get to the point where we're reliable and we get our Customers, our Crews, our aircraft, everything on track."

Southwest executives pointed to unexpected fog in San Diego, staffing shortages at its fuel vendor in Denver and internal technology failures that stymied crew reassignments and hotels, among the additional challenges. The Dallas-based carrier apologized to passengers and employees.

The airline said travelers affected by disruptions could "submit receipts for consideration" by email or on Southwest's website. "We will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation," it said on an FAQ section on its site.

Southwest didn't immediately elaborate on what would be considered "reasonable."

Its shares were down sharply Tuesday while the stocks of large competitors were little changed.

Southwest and other carriers are likely to detail the costs of the disruptions when they report results next month, if not earlier. 

A four-day meltdown in the fall of 2021 resulted in a $75 million revenue hit, Southwest said at the time. But this holiday period's disruptions are likely to have a bigger impact because it's taking the carrier so long to stabilize, and more people were traveling over this year's holiday period.

Irate passengers and crew members alike posted on social media about the chaos, which included long lines at airports. 

Carriers are required to provide travelers with refunds when they cancel flights. Some travelers told CNBC that they scrapped Southwest trips altogether because the disruptions were too extensive.

The airline's problems also drew criticism and scrutiny from lawmakers and the Biden administration.

On Tuesday, the Senate Committee on Commerce, Science and Transportation said it would look into the disruptions.

"The problems at Southwest Airlines over the last several days go beyond weather. The Committee will be looking into the causes of these disruptions and its impact to consumers. Many airlines fail to adequately communicate with consumers during flight cancellations. Consumers deserve strong protections, including an updated consumer refund rule," said Sen. Maria Cantwell, D-Wash., in a statement.

Sens. Ed Markey, D-Mass., and Richard Blumenthal, D-Conn., also called on the carrier to compensate travelers and noted that Southwest executives have acknowledged the mass cancellations were largely due to the failure of the airline's own internal systems. 

"For those travelers whose holidays have been ruined, there is no real way for Southwest to make this right. But the company can start by fairly compensating passengers whose flights were canceled, including not only rebooked tickets, ticket refunds, and hotel, meal, and transportation reimbursement, but significant monetary compensation for the disruption to their holiday plans," they said in a statement.

Late Monday, the U.S. Department of Transportation had also said it is "concerned by Southwest Airlines' disproportionate and unacceptable rate of cancellations and delays as well as the failure to properly support customers experiencing a cancellation or delay."

The agency said it will examine whether cancellations were controllable and whether Southwest is complying with its customer service plan and other federal regulations.

Delta Air Lines, American Airlines, United Airlines, JetBlue Airways and Alaska Airlines were also affected by the weather, but had a smaller share of cancellations.

Some pilots and flight attendants were forced to sleep at airports because they were unable to find hotel rooms, their unions said. Crews complained about being stranded and having to wait on hold with scheduling services.

"Our customers struggled with it just as our thousands of flight attendants did. These are issues that you can't solve with holiday pay; this is time and quality of life that we will never get back," Lyn Montgomery, president of the Transport Workers Union of America Local 556, said in a statement.

Southwest offered flight attendants working over the holiday extra pay. Both the pilots and flight attendant unions are in contract talks with the company.

In a message to staff Sunday, Southwest's CEO Jordan said internal systems were partially to blame, and addressed the need to modernize and invest in crew scheduling.

"We need to be able to produce solutions faster," he wrote.

Airlines often cancel flights proactively during bad weather to avoid having planes, crews and customers out of place, problems that can make recovery from a storm more difficult.

But carriers also planned smaller schedules for Christmas Eve and Christmas Day compared with the days leading up to the holidays, making it harder for them to rebook travelers.

An American Airlines spokeswoman said the "vast majority of our customers affected by cancellations were able to be reaccommodated."

Delta said Monday it is "seeing steady recovery in our operations, and expect the improvements to continue over the next several hours."

From Thursday through Sunday, about half of U.S.-based airlines' flights arrived late, with delays averaging 81 minutes, according to FlightAware.

"Temperatures have fallen so low that our equipment and infrastructure have been impacted, from frozen lav systems and fuel hoses to broken tow bars," said United Airlines message to pilots on Saturday. "Pilots have encountered frozen locks when trying to re-enter the jet bridge after conducting walk arounds."

The Federal Aviation Authority said it had to evacuate its tower at United hub Newark Liberty International Airport in New Jersey because of a leak on Saturday.