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Analysts: Southwest is America's favorite economy airline. That won't change despite holiday meltdown.

"People think you're getting great value ... and the pilots are funny," said a director at the consumer research and data analytics firm J.D. Power.
Pristine Floyde searches for a friend's suitcase in a baggage holding area for Southwest Airlines at Denver International Airport on December 28, 2022 in Denver, Colorado. More than 15,000 flights have been canceled by Southwest since winter weather began impacting air travel on December 22.
Pristine Floyde searches for a suitcase last week in a baggage holding area at Denver International Airport.Michael Ciaglo / Getty Images

Travelers love Southwest Airlines, according to J.D. Power's annual ranking of the top U.S. air carriers. Southwest finished first in economy and budget airline rankings published by the consumer research firm last May.

Analysts say that Southwest's position among consumers remains strong despite the airline leaving hundreds of thousands of passengers stranded over the Christmas holiday weekend. The fallout, they say, is unlikely to cause long-term damage to Southwest's brand.

"People think you're getting great value for the money," said Michael Taylor, managing director for travel, hospitality and retail at J.D. Power. 

Plus, the perception of Southwest's customer service remains unparalleled, Taylor said.

"The pilots are funny, the flight attendants are funny," he said. "They really make it seem like they want to fly with you."

Southwest is processing refund requests and reimbursements after it canceled more than 15,000 flights during a massive winter storm that prompted staffing issues and overwhelmed the company's rerouting system. On Tuesday, the airline said it would issue 25,000 rewards points to anyone whose flight was affected.

Southwest CEO Bob Jordan, who took over the company last February, said the company is working on rectifying the issues that led to the widespread cancellations.

“We have plans to invest in tools and technology and processes, but there will be immediate work to understand what lessons are learned here and how we keep this from ever happening again, because it cannot happen again,” Jordan told staff Friday according to CNBC.

In a note to investors tabulating the cost of the debacle, Bank of America research analyst Andrew Didora estimated that Southwest could sustain a financial hit totaling as much as $700 million for the quarter ending in December, which analysts were projecting would see more than $6 billion in revenues. Didora lowered his quarterly earnings-per-share outlook for the company from $0.85 to $0.37 as a result.

Yet, the analyst did not change his overall 2023 outlook for the company, which he said maintains “industry leading” finances and a “strong competitive position.”

Some of the losses suffered by passengers are beyond compensation. Actress Tricia O'Kelley said she and her daughters missed her father's military funeral in Tampa, Florida, because of the cancellations, and could attend only on Zoom. James Walter O'Kelley Jr., a retired Air Force lieutenant who died in June at age 92, had planned the ceremony years in advance.

"He was proud of serving," O'Kelley said.

Taylor at J.D. Power noted that all U.S. airlines, including Southwest, had a successful year in 2022 thanks to soaring demand for post-pandemic air travel, and that Southwest has demonstrated it remains a leader in the sector.

"As we see year in year out, they really do dwarf the competition — that value for money will drive business back to normal levels after this whole event," Taylor said.