Shareholders Sue Southwest Airlines Over Flight Meltdown
Shareholders filed a lawsuit against Southwest Airlines Co. on Thursday, accusing the carrier of fraudulently concealing problems that led last month to an operational meltdown and more than 15,000 flight cancellations.
The lawsuit said Southwest also did not discuss how its “point-to-point” route structure, which differs from the “hub-and-spoke” structure at other large U.S. airlines, could leave it vulnerable to unexpected bad weather.
Shareholders led by Arthur Teroganesian said the inadequate disclosures made Southwest’s statements about its operations in regulatory filings and in a media appearance by former Chief Executive Gary Kelly “materially false and misleading.”
Teroganesian said that as the truth came out, Southwest’s share price fell about 10% between Dec. 23, 2022, and Jan. 3, 2023, wiping out more than $2 billion of shareholder value.
Southwest did not immediately respond to requests for comment. Kelly, his successor Bob Jordan and Chief Financial Officer Tammy Romo are all named as defendants, in addition to the airline.
Flight operations at Dallas-based Southwest buckled shortly before Christmas as a fierce winter storm swept across the United States.
The carrier largely restored normal operations by Dec. 30, several days after other airlines had recovered.
Thursday’s complaint seeks unspecified damages on behalf of Southwest investors from June 13, 2020, when the Baltimore Sun wrote about computer problems at the carrier, to Dec. 31, 2022.
Southwest has also been sued over its alleged failure to provide refunds to passengers affected by December’s weather. The carrier has pledged to process refunds and provide expense reimbursements.
Southwest Airlines Is Sued for Not Providing Refunds After Meltdown
In an interview on Thursday, Jordan said Southwest was looking at all operations to avoid a repeat of the meltdown. “It just can’t happen again,” he said.
The case is Teroganesian v Southwest Airlines Co, U.S. District Court, Southern District of Texas, No. 23-00115.
- Changes at American Coastal Insurance After Florida OIR Action on ‘No-Fly List’
- Jury Awards $68.5M to Family of Worker Who Fell to Death at Philly Construction Site
- US P/C Underwriting Results: Two Years in a Row Over $20 Billion in the Red
- State Farm Seeking Large Rate Increases in Wildfire-Prone California