Southwest Airlines (NYSE:LUV) witnessed trouble on Monday as it canceled nearly 70% of its scheduled flights during the day. This major disruption during the peak holiday season has caught the attention of the U.S. Department of Transportation (DOT).
The department plans to investigate if the “disproportionate and unacceptable” rate of cancellations could have been avoided by the airline. Also, it will examine whether Southwest was able to comply with its customer service plans.
According to FlightAware, a flight tracking service provider, the company has canceled nearly 8,000 flights since Thursday. The low-cost carrier is struggling to manage the large volume of changes that were caused by the winter storm, Elliot, over the past week.
The company said it will be operating at one-third of its usual schedule in the next few days as it continues to sort out operational issues.
Furthermore, Southwest is allowing its customers to rebook flights that were scheduled between December 25 and January 2, along with a cancellation option, at no additional charge. The airline’s quarterly performance is likely to take a hit from the additional expenses incurred as a result of this wide-scale disruption.
Is LUV Stock a Good Buy?
On TipRanks, Southwest has a Strong Buy consensus rating based on six Buys and one Hold. The average price target of $47.57 implies 31.8% upside potential from current levels.
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