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U.S. Senate Commerce Committee chair Maria Cantwell confirmed that the panel will hold hearings on the large number of cancellations Southwest Airlines (NYSE:LUV) saw at the end of December.
Cantwell said consumers need refunds and reimbursements for their expenses. Her statement came after Southwest (LUV) announced that it is awarding customers effected by cancellations 25,000 Rapid Rewards points it values at more than $300 as a goodwill gesture.
“The problems at Southwest Airlines over the last several days go beyond weather. The Committee will be looking into the causes of these disruptions and its impact to consumers. Many airlines fail to adequately communicate with consumers during flight cancellations.”
As far Q4 earnings results, Bank of America analyst Andrew Didora used past operational issues as a guideline to estimate the cancellations could cost $600M to $700M split between lost revenue and higher costs (passenger reimbursements, ticket refunds). BofA slashed its Q4 EPS estimate on LUV to $0.37 from $0.85. The consensus Q4 EPS estimate is still at $0.71, but likely to head lower as other analysts adjust ahead of the earnings report.
Shares of LUV have been climbing back from their late December tumble with a 3.13% gain on Wednesday and another 0.59% rise in the premarket session on Thursday.
Read the latest breakdown on Southwest Airlines from Seeking Alpha contributors.
