Southwest Airlines to spend over $1B to invest in IT systems following holiday meltdown

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Southwest Airlines CEO Bob Jordan announced several steps the carrier is taking to reduce the risk of any future operational meltdowns including allocating more than a $1 billion to upgrade and maintain its IT systems. 

The comments come after more than a dozen senators demanded answers from Southwest after its outdated crew-scheduling technology became overwhelmed during the chaotic holiday season. 

"The recent disruption will accelerate our plans to enhance our processes and technology as we continue to focus on adding capabilities to bring rapid improvements for you, our valued customers," CEO Bob Jordan said in a note to loyalty members.

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This includes budgeting to spend more than $1 billion of its annual operating plan on investments, upgrades and maintenance of its IT systems.

While Southwest has already "mitigated risks in the short-term" to prevent future operation disruptions, it is now taking additional steps to "review the events and make thoughtful recommendations on future actions," Jordan said in the letter, which was also posted on its website Tuesday. 

Canceled Southwest Airlines flights appear on the monitors at LAX on Thursday, December 29, 2022.  (Christina House / Los Angeles Times via Getty Images / Getty Images)

After the Christmas weekend winter storm passed, most carriers were up and running. Southwest's technology, however, left crews and planes out of position for an extended period. It took eight days for the carrier to recover. 

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Jordan said the company is working with Oliver Wyman, a third-party global aviation consulting firm, "to complete an assessment of the event and make recommendations of additional mitigation elements for us to consider." 

The chief executive, who assumed the position less than a year ago, said its board of directors also appointed an operations review committee, which is working with management to understand the situation and help oversee the company's response. 

Rows of luggage wait for their owners in the Southwest Airlines baggage claim at LAX on Thursday, December 29, 2022.  (Christina House / Los Angeles Times via Getty Images / Getty Images)

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Jordan said the company has committed to keeping customers updated as it makes progress on these efforts "as well as additional steps to prevent an event like this from happening again." 

The carrier, which has already been hit with lawsuits from its own shareholders, has been working to repair its damaged reputation since it canceled nearly 17,000 flights during the busy holiday season, leaving passengers stranded around the nation. 

Ticker Security Last Change Change %
LUV SOUTHWEST AIRLINES CO. 36.30 -0.74 -2.00%

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As of last week, Jordan said the company has returned "virtually all of the bags" to customers and "processed nearly all refunds." The company is still processing tens of thousands of reimbursement requests every day. 

"It is our steadfast commitment to make the necessary changes to address the issues we faced and to regain your trust and confidence," Jordan said. We will continue down our path of providing you the exceptional service you expect and deserve from us. 

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