No company had a worse 2022 than Southwest (LUV), and you likely know why.
At the end of last year, Southwest dampened holiday plans for thousands of people by canceling or massively delaying flights, including nearly 75% (or 4,000 domestic flights) on the day after Christmas alone. As the week between Christmas and New Year’s went on, more than 16,700 flights were impacted, which could end up costing Southwest $825 million, at least.
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The frustrating thing for both airline experts and Southwest’s own employees is that this situation was entirely preventable. While the main culprit were the massive winter storms, every airline had to weather those, but Southwest clearly buckled under the pressure in comparison to its competitors as it had far more outages and cancellations than any other airline.
Last year, Southwest’s employees began picketing and demonstrating at public events in order to bring attention to the airline’s need to update its flight programming software, which by many accounts was decades overdue.
Southwest’s Public Image Went From Worse To Worse
Employees were complaining that the company’s then newly installed CEO Bob Jordan, who took over in February of 2022, was not willing to spend enough to recruit and train the pilots and staff necessary for the airline to run smoothly, nor was he willing to spend to update the flight programming software.
Instead, the company’s reputation for sterling customer service took a hit while, critics allege, executives have decided to pay themselves large bonuses and pay shareholders dividends. The result was that people were stranded and front desk attendants had to accept the majority of the public’s outrage, when none of it was their fault.
Dan Gellert, Chief Operating Officer at the online travel agency Skiplagged, saw a breakdown like this coming, a mile away, and told us that "the biggest lesson learned is that you need to continually be investing for the future.
"Southwest is notorious for always being very cost focused so that they can maximize the returns for Wall Street," he added.
In response, CEO Jordan pleaded for forgiveness, sending an e-mail to customers acknowledging the airlines’ mistakes, saying “we fell short of your expectations and the high standards we have of ourselves, and for that we are deeply sorry.”
He then promised the company would work with “great urgency” to process refunds and reimbursement requests and to give people impacted 25,000 Rapid Rewards points as a gesture of goodwill for their inconvenience.” Except, of course, that “urgency’ wasn’t forthcoming as intended, as many reports surfaced of people not getting their refunds in a timely manner.
The Southwest CEO Got Paid Out in 2022
Now, reports have emerged that Jordan got a 75% pay hike last year, for a total of $5.3 million, up from $3 million in 2021, back when he was executive vice president.
Now, the pay hike was part of his promotion and happened before the incident, but you’d think someone who was being paid that much money would show some level of ownership or competence. It's also worth noting that the CEO before him, Gary Kelly, was paid $5.1 million in 2022 (Kelly was CEO in January and executive chairman for the remainder of the year).
Airline CEOs are notoriously paid large sums of money for their position. In 2021, Delta (DAL) CEO Ed Bastian made $12.4 million. United (UAL) CEO Scott Kirby made $9.85 million during the same period. And American Airlines (AAL) CEO Doug Parker was paid $7.24 million. Southwest's own Gary Kelly clocked in at $5.8 million in 2021, (though in 2020, Kelly cut his base salary to prevent employee furloughs).
