Southwest Airlines Co. flight cancellations during the 2022 winter holidays revealed the extent of the carrier’s “outdated and ineffective” information technology systems, hurting the company’s stock price, an investor says in a proposed class suit.
Winter storms disrupted travel, but “not all domestic airlines were affected equally,” Arthur Teroganesian says in his complaint filed Thursday in the US District Court for the Western District of Texas.
Problems with Southwest’s crew scheduling system compounded “an aggressive flight schedule that left it prone to greater cancellations than its competitors” in situations like nationwide storms, according to his complaint.
News reports about Southwest’s information technology in late December led to stock-price drops of 12% and 3%, he says.
The Dallas-based carrier has already said it expects to post a fourth quarter loss after having to cancel more than 16,700 flights last month.
The suit also names former CEO Gary Kelly, current CEO Robert E. Jordan, and Tammy Romo, the company’s chief financial officer, as defendants.
They and Southwest downplayed and concealed the business risks associated with its outdated technology in public statements and filings, Teroganesian says.
Causes of Action: Section 10(b) And Rule 10b-5; Section 20(a) of the Exchange Act.
Potential Class Size: Hundreds or thousand, the complaint estimates.
Relief: Damages.
Response: Southwest doesn’t “have anything to share at this time on this pending litigation,” spokesman Chris Perry said in an email Friday.
Attorneys: Cochran Law PLLC and the Rosen Law Firm PA represent the plaintiff and the proposed class.
The case is Teroganesian v. Southwest Airlines Co., S.D. Tex., No. 4:23-cv-00115, complaint 1/12/23.
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