Southwest shareholders sue airline after mass cancellations

Shareholders of Southwest Airlines Co. filed a class action lawsuit against the company Thursday, alleging that the airline provided “materially false and misleading” information over a two year period regarding issues that caused a “meltdown” of the company last month.

Over the holiday weekend in December, Southwest canceled thousands of its flights, largely attributing the cancellations to severe winter weather. However, Southwest was the only airline carrier that canceled the majority of its flights, pointing to systemic scheduling issues that have caused problems at the airline for years.

The lawsuit, which was filed by the Rosen Law Firm on behalf of the shareholders in the Southern District of Texas, alleges that Southwest publicly failed to disclose the issues with its scheduling systems or downplayed them in quarterly reports and media appearances by top executives. 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 complaint states that following reports that the company’s technology could not handle its flight scheduling, Southwest Airlines stock 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, when the Baltimore Sun published an article about problems with the company’s scheduling technology, and Dec. 31, 2022.

Southwest also faces another class action lawsuit filed earlier this month that alleges the airline failed to provide refunds to passengers when it canceled more than 15,000 flights in December, according to Reuters.