CEO: $1.3B slated for upgrades
While Southwest’s cancellation problems have settled since December, Southwest is still outpacing other carriers, said Cowen analyst Helane Becker.
“We are surprised to see that capacity growth expectations have not changed significantly for FY23 or the March quarter,” Becker wrote in a note to investors. “This could be a cause for future concern given the severe operational issues previously experienced in their network.”
Southwest has been under pressure to deliver solutions to the problems behind December’s cancellation event in which its crew rescheduling software was unable to keep up with a large number of flight cancellations caused by a winter storm that hit airports in Denver and Chicago.
“We were very adequately staffed to operate our fourth quarter flight schedule, feel very confident in our aircraft network, and we have a sophisticated technology product that we call ‘the Baker’ that produces new aircraft solutions during irregular operations,” Southwest chief operating officer Andrew Watterson said. “At no time during the disruption did the point-to-point journeys of
the aircraft present us with an unsolvable problem.”
Even while defending the technology shortfalls, Jordan said the company is on track to spend $1.3 billion this year on technology and infrastructure upgrades, not including money to upgrade Wi-fi and add power outlets to flights. That includes existing plans to upgrade technology for its ground operations team, flight planning and operations.
Southwest has hired consulting firm Oliver Wyman to dissect the meltdown and figure out what is needed to prevent another.
Company leaders initially blamed the company’s crew rescheduling software.
During the crisis between Dec. 21 and 29, Southwest Airlines
was unable to keep up with the need to reassign pilots and flight attendants to new flights after their old flights were delayed or canceled.
Those problems grew after bad weather cleared on Dec. 23 until Dec. 26, when the crew scheduling fiasco became so unmanageable that the company had to shut down two-thirds of its flights for the next three days to “reset” the network.
Union pilots and flight attendants at Southwest have called for technology upgrades for years.
Even after committing $1.3 billion to technology infrastructure spending, Third Bridge analyst Chris Raite said Southwest likely needs to spend another 5 to 10 percent on technology to keep up.