Southwest's maintenance problems costing it millions a week, CEO says

Canceled flights and out-of-service jets amid a feud with its mechanics’ union is costing Southwest Airlines millions of dollars a week, the airline’s CEO Gary Kelly said Tuesday.

Last week, Dallas-based airline sued its mechanics’ union alleging the union is encouraging the workers to purposefully write up minor maintenance issues in order keep jets out of service to gain leverage in contract talks. The mechanics union denies those allegations. Southwest have been locked in contract talks for more than six years. The mechanics rejected a new contract in September after the proposed pay increase came up short of what they had sought.

The airline declared an “operational emergency” at several maintenance bases last month, telling scheduled mechanics to show up at work or risk termination.

More Southwest flights have been canceled since mid-February compared with competitors and the airline has said that it usually plans to have about 20 planes out of service for unexpected maintenance issues but that number has doubled.

On Tuesday, 89 Southwest flights were canceled, about 2 percent of its schedule, according to flight-tracking site FlightAware. In comparison, JetBlue had 12 canceled flights and eight United flights were cancelled.

“Customers are harmed. Our employees suffer through reduced profit sharing,” Gary Kelly said at a transportation conference hosted by J.P. Morgan Chase. A spokesman for the airline declined to provide a more specific estimate of how much Southwest is losing from the issue. Analysts expect Southwest to post revenue of about $5.3 billion this quarter.

Article Courtesy of CNBC