(Reuters) — Shareholders filed a lawsuit in opposition to Southwest Airways Co. on Thursday, accusing the service of fraudulently concealing issues that led final month to an operational meltdown and greater than 15,000 flight cancellations.
In response to the proposed class motion filed in federal court docket in Houston, Southwest publicly downplayed or didn’t disclose severe shortcomings in its flight scheduling software program know-how.
The lawsuit mentioned Southwest additionally didn’t focus on how its “point-to-point” route construction, which differs from the “hub-and-spoke” construction at different massive U.S. airways, might depart it susceptible to surprising dangerous climate.
Shareholders led by Arthur Teroganesian mentioned the insufficient disclosures made Southwest’s statements about its operations in regulatory filings and in a media look by former Chief Government Gary Kelly “materially false and deceptive.”
Mr. Teroganesian mentioned that as the reality got here out, Southwest’s share worth fell about 10% between Dec. 23, 2022, and Jan. 3, 2023, wiping out greater than $2 billion of shareholder worth.
Southwest didn’t instantly reply to requests for remark. Mr. Kelly, his successor Bob Jordan and Chief Monetary Officer Tammy Romo are all named as defendants, along with the airline.
Flight operations at Dallas-based Southwest buckled shortly earlier than Christmas as a fierce winter storm swept throughout the USA.
The service largely restored regular operations by Dec. 30, a number of days after different airways had recovered.
Thursday’s grievance seeks unspecified damages on behalf of Southwest traders from June 13, 2020, when the Baltimore Solar wrote about pc issues on the service, to Dec. 31, 2022.
Southwest has additionally been sued over its alleged failure to offer refunds to passengers affected by December’s climate. The service has pledged to course of refunds and supply expense reimbursements.
In an interview on Thursday, Mr. Jordan mentioned Southwest was all operations to keep away from a repeat of the meltdown. “It simply can’t occur once more,” he mentioned.
The case is Teroganesian v Southwest Airways Co., U.S. District Courtroom, Southern District of Texas.