A class-action lawsuit has been filed on behalf of Southwest Airlines shareholders based on allegations that the company underestimated the potential of its aging programs to disrupt its operations nationwide.
Filed by the Klein Law Firm in the US District Court for the Southern District of Texas on January 12, the lawsuit alleges that Southwest violated federal safety regulations by continuing to ignore or ignore “significant problems with the technology used to process flights and its employees and how the company It would have suffered more damage than other planes in bad weather.”
Southwest’s decades-old program hit a snag from December 21-31, 2022, when the Dallas-based carrier was forced to cancel more than 16,700 flights because the system lost a crew and aircraft amid a severe thunderstorm. USA. Restarting computer systems and resuming normal operations took days, disrupting the vacation plans of thousands of air travelers.
In addition to reducing the risk of its personnel policy, Southwest “did not discuss how its special operations to find a place and aggressive flight plan would be different from it if the weather improves”, Klein argues in his case. “As a result, the defendant’s claims about Southwest’s business, operations and prospects were false and misleading and/or lacked a reasonable basis at all times.”
Klein specializes in cases involving financial fraud. The company names Southwest Airlines, former CEO Gary Kelly, vice president Tammy Romo and current CEO Bob Jordan as defendants and wants them to face trial.
The class of the suit includes plaintiffs who bought Southwest securities from June 13, 2020 to December 31, 2022 – during which, the lawsuit says, quarterly earnings reports and year-end statements “did not ignore the significant risk that outdated technology poses to the company’s business” and “did not disclose about the internal management of the company”.
Michael Santoro, vice president of the Southwest Airlines Pilot Association (SWAPA), told FlightGlobal in an interview on December 27 that the union has been urging senior executives to change the airline’s policies.
“We want them to spend more on IT and software because our network is complex; we’re not a system, we’re a focus,” he said. “But they’ve known this for years and we’ve struggled every year for the last five or six years.” . They need to invest in software that can track pilots, pilots and aircraft at all times. Until they do that, we’re going to have this problem.”
Southwest has hired consulting firm Oliver Wyman to review its performance over the past year, the airline said in a Jan. 16 letter to customers signed by Jordan. “We currently plan to spend more than $1 billion of our annual budget on financing, upgrading and maintaining our IT systems,” the letter says. “The recent disruption has fueled our plans to improve our processes and technology.”
The destruction of the plane’s vacation has been a big problem for Jordan, who took the main position in February 2022. Southwest is under intense scrutiny from the administration and lawmakers, where 15 Democratic senators signed a letter on January 13 demanding Jordan to explain about the carrier. it is in effect through the 2022 holiday season. The letter shows that West has canceled more than 7,500 flights from December 27-29 while other major US airlines canceled 1,077.
The Dallas-based carrier is said to have lost between $725 million and $825 million due to operational losses, and is now expecting a full loss in the fourth quarter of 2022.