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bob jordan
Sanders Calls on Buttigieg to Hold Southwest CEO Accountable for 'Greed and Incompetence'
"This is a company that got a $7 billion taxpayer bailout and will be handing out $428 million in dividends to their wealthy shareholders," said Sen. Bernie Sanders.
Dec 29, 2022
Sen. Bernie Sanders on Wednesday urged the Transportation Department to ensure Southwest's chief executive pays a price for mass U.S. flight cancellations that have left passengers and employees stranded around the country, throwing lives into chaos and drawing further attention to the company's business practices.
"Southwest's flight delays and cancellations are beyond unacceptable," Sanders (I-Vt.) wrote on Twitter. "This is a company that got a $7 billion taxpayer bailout and will be handing out $428 million in dividends to their wealthy shareholders. The U.S. Department of Transportation must hold Southwest's CEO accountable for his greed and incompetence."
Bob Jordan, who has worked for Southwest for decades and became the company's CEO earlier this year, acknowledged on Tuesday that the airline needs to "upgrade" its outdated scheduling system and other technology that flight attendants and pilots have been warning about for years.
"For more than a decade, leadership shortcomings in adapting, innovating, and safeguarding our operations have led to repeated system disruptions, countless disappointed passengers, and millions in lost profits," the Southwest Airlines Pilots Association (SWAPA) said in a statement Wednesday. "The holiday meltdown has been blamed on weather that had been forecast five days prior, but this problem began many years ago when the complexity of our network outgrew its ability to withstand meteorological and technological disruptions. SWAPA subject matter experts have repeatedly presented years of data, countless proposals that make Southwest pilots more efficient and resilient."
Instead of investing more heavily in such critical upgrades, Southwest pumped billions of dollars into stock buybacks in the years leading up to the Covid-19 pandemic.
Jordan took over as chief executive in February, receiving a generous compensation package that could amount to $9 million for the year. Earlier this month, just weeks before the airline began canceling thousands of flights per day, Jordan announced that the company would reinstate its quarterly dividend, which was suspended at the beginning of the pandemic.
The current payout of 18 cents per share, set to reach shareholders next month, will cost the company $428 million a year.
In an internal message to employees on Tuesday, Jordan said of the ongoing meltdown, "This stops with me."
"I'm accountable for this and I own our issues and I own our recovery," Jordan added.
"Southwest's flight delays and cancellations are beyond unacceptable."
Like Southwest's management, the Transportation Department—headed by Pete Buttigieg—knew there was potential for a holiday travel crisis. The department is currently investigating the ongoing flight cancellations.
"Before the debacle, attorneys general from both parties were sounding alarms about regulators' lax oversight of the airline industry, imploring them and congressional lawmakers to crack down," The Leverreported Wednesday. "Four months before Southwest's mass cancellation of flights, 38 state attorneys general wrote to congressional leaders declaring that Buttigieg's agency 'failed to respond and to provide appropriate recourse' to thousands of consumer complaints about airlines' customer service."
"Weeks before that, New York Attorney General Letitia James (D) sent Buttigieg a letter warning of 'the deeply troubling and escalating pattern of airlines delaying and canceling flights' particularly during holidays," the outlet added.
In November, Buttigieg leveled fines totaling $7.25 million against six airlines for "extreme delays in providing refunds" to customers whose flights had been canceled or significantly altered.
But critics said the punishment was far from adequate, and neither Southwest nor its main competitors were among the companies ordered to pay penalties. The Lever noted Wednesday that Southwest "has spent more than $2 million on lobbying since Biden took office and Buttigieg became secretary of Transportation," and he has faced withering criticism for refusing to take on the increasingly consolidated airline industry.
\u201c1) My @econliberties colleagues released model legislation in September aimed at repealing a thing called federal preemption in the airline industry. You can read about it here: https://t.co/8e9dEmbD7K\u201d— Katie Van Dyck (@Katie Van Dyck) 1672263469
According to Bloomberg, Buttigieg told Jordan on Tuesday that the Transportation Department "expects that Southwest will meet its obligations to passengers and workers and take steps to prevent a situation like this from happening again."
The Christmas travel crisis isn't the first time this year that U.S. airlines have faced backlash over mass cancellations. Around the July 4 holiday, major airlines including Southwest canceled or delayed thousands of flights amid a travel surge.
At the time, Sanders wrote a letter calling on Buttigieg to strengthen federal regulations to impose a fine of "$27,500 per passenger for all domestic flights that are delayed more than two hours and all international flights that are delayed more than three hours when passengers are forced to wait on the tarmac."
The senator also urged the Transportation Department to fine airlines "$55,000 per passenger if they cancel flights that they know cannot be fully staffed."
Buttigieg has yet to do either.
Sen.-elect John Fetterman (D-Pa.), who joined Sanders in calling for a crackdown on the airline industry earlier this year, wrote on Twitter Wednesday that "airlines have a responsibility to their customers."
"When they fail," he added, "we must hold them accountable."
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