The holiday travel season is hectic enough for almost anyone, but for airline Southwest (NYSE:LUV), it’s been a disaster. A colossal snowstorm on Christmas Eve, coupled with staffing crunches, was bad enough. Then throw in the normal array of troubles, and that left Southwest scrambling. Now, it’s facing the music, which sounds more like a funeral march than the echoes of Auld Lang Syne.
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The fallout from that catastrophic evening is just now starting up, and it’s looking like a potentially bigger disaster still. The Senate Commerce Committee—as confirmed by chair Maria Cantwell—plans hearings on the matter. Specifically, the hearings will target the large number of cancellations that came about. Cantwell elaborated, saying that the hearings would also look into what caused the cancellations and how well Southwest communicated with displaced passengers in the meantime.
That’s just for starters, however…and how bad is the news when Senate hearings are just the start? Southwest now faces lawsuits from customers who were not immediately reimbursed for their canceled flights. A class-action lawsuit alleges that Southwest did not live up to its contract of carriage, which calls for refunds on canceled flights as well as reimbursement for hotel stays, meals, and other expenses incurred as a result of a canceled flight. Southwest’s stock price has also taken it on the chin as a result, and it’s still down slightly in Thursday afternoon’s trading.
Despite this, Wall Street is sticking strong with Southwest. Analyst consensus calls it a Strong Buy. The stock also offers 39.01% upside potential thanks to its average price target of $46.50 per share.
