$7.2 Billion In U.S. Subsidies Can’t Keep Southwest In The Air For Christmas
TOPLINE:
Southwest Airlines received $7.2 billion in federal subsidies for payroll and operations since 2020. However, the airline stranded tens of thousands of passengers around the country on the Christmas holiday when it canceled 5,400 flights in less than 48 hours. Our auditors at OpenTheBooks.com verified the federal aid using government disclosures.
WHAT HAPPENED:
Southwest is blaming the failure on a crash of its internal systems that schedule flight crews and pilots. A union for Southwest Airlines flight attendants attributed the meltdown to outdated scheduling systems that should have been upgraded years ago.
FEDS ANNOUNCE INVESTIGATION:
Late yesterday, the U.S. Department of Transportation announced that it opened a federal investigation into the airline. The USDOT cited concern about an “unacceptable rate of cancellations and delays and reports of lack of prompt customer service.”
Indeed. The Southwest mobile app, phone lines, and website were offline for much of yesterday afternoon and evening. In major hubs like Chicago Midway, some in-person customer service personnel walked off the job with hundreds of stranded passengers waiting to reschedule cancelled flights.
Once bags were checked, the bags flew to final destinations even though no flights were available for canceled passengers. Stranded passengers found this baggage policy completely unacceptable – passengers were not able to reclaim checked luggage after flights were cancelled.
It was absolute chaos for thousands and a logistical nightmare for the airline that won’t be solved for weeks.
GOVERNMENT SUBSIDIES SINCE 2020
Where could Southwest have found the money to upgrade their systems?
In September 2020, as part of massive COVID relief packages, Southwest received a $3.3 billion from the federal government. The government received stock agreements as a mechanism to partially recoup taxpayer money, however, those warrants are worth only a small fraction of the overall subsidy payments.
In April 2021, as a part of the American Rescue Plan Act and other subsidies, Southwest received another $3.8 billion, according to data on the federal transparency website and disclosed company 10-K reports to Wall Street…..
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