After a tumultuous holiday week, Southwest Airlines looks to find its way back to a steady course

By Douglas Price

January 4, 2023 – As 2022 began, Southwest Airlines was still emerging from the global pandemic, trying to return to a sense of economic normalcy. On December 7, the company presented an Investor Day event at the New York Stock Exchange and via webcast. It posted a slide deck of the presentation with the Form 8-K Current Report delivered to the Securities and Exchange Commission (SEC). The Southwest story of 2022 was a year of solid financial progress, with a bright outlook for 2023.  Statements of progress embedded within geometric shapes of its trademark blue, red and yellow colors included a declaration that “Southwest is restoring its route network and preparing for growth”. Another pledge to “modernize the operation” was matched in red to its vision statement “to be the world’s most loved, most efficient, and most profitable airline. Among the top focus areas for 2022: get properly staffed with expectations to “hire (greater than) 10,000 net employees” in the calendar year, and to “get back to our historic operational reliability and efficiency.”

While reporting fourth quarter operating revenues for 2022 higher than the fourth quarter of 2019, the stock price closed lower that day at $37.81, a 6.4% dip from its high for the year of $40.38 just six days earlier. Barely two weeks later, in the aftermath of a wave of operations failures during and after Winter Storm Elliott, Southwest will need to chart a new path and piece together a better narrative for this new year.

The corporate slide deck declares the “business has stabilized” and will “aim to thrive in 2023…be consistently reliable and operate with excellence,” and “provide modern tools and procedures that enable an energetic pace.” Southwest’s strategic initiatives and focus areas frame corporate success with the language of financial results and performance goals. However, in hindsight the glowing statements to influence prospective institutional investors seem to ring hollow, given recent operational performance.  According to an article by CNBC.com on yesterday, Southwest CEO Bob Jordan said in a statement to employees, “we have plans to invest in tools and technology and processes, but there will be immediate work to understand what lessons are learned here and how we keep this from ever happening again, because it cannot happen again.”

Even after the storm system passed and extremely cold air temperatures moderated on December 26, Southwest canceled up to 75 % of its flight schedule for the remainder of the week, according to flightglobal.com. Their next scheduled presentation for shareholders and the public will be a 4^th Quarter Financial Results conference call on Thursday, January 26.  Its formal 2022 annual report and 10-K to the SEC will likely follow shortly thereafter.