Southwest Shareholders Sue Airline for Providing Misleading Information
Shareholders of Southwest Airlines Co. have filed a class action lawsuit against the company today. They say the airline provided “materially false and misleading” information over a two year period regarding issues that caused its holiday meltdown.
Southwest canceled around 16,500 flights within less than 10 days at the end of the year. While weather was partly to blame, Southwest was the only airline carrier that canceled the majority of its flights. For three days in a row the airline canceled more than 60% of its flights. That points to systemic scheduling issues that have plagued the airline for years.
The lawsuit alleges that Southwest publicly failed to disclose the issues with its scheduling systems or downplayed them in its quarterly reports and media appearances. Among other statements, the lawsuit points to former Southwest CEO Gary Kelly claiming that previous scheduling issues were a result of “human error,” not “a lack of technological capability.” The lawsuit also cites several events during the last two years where errors lead to cancellations.
Following reports that the company’s scheduling system was to blame for themass cancelations, Southwest Airlines stock (LUV) dropped by more than 12 percent between Dec. 23 and Dec. 28.
The class action suit is seeking damages for investors who purchased or otherwise acquired Southwest shares between June 13, 2020. That’s when Baltimore Sun published an article titled “Southwest Glitch Delays BWI Flights: Problem With Computer System Affected Airports Nationwide, Airline’s Website.” This article discussed how Southwest Airlines experienced problems with its computer system for a significant part of an afternoon, causing “significant flight delay” at airports around the country. Specifically, for about three hours, visitors to Southwest.com could not check into their flights, purchase tickets, or check their flight’s status.
Southwest is also facing another class action lawsuit filed earlier this month that alleges the airline failed to provide refunds to passengers when it canceled flight over the holiday weekend.
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