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Southwest stock sinks after mass flight cancellations, scrutiny from Biden admin

Shares of Southwest (LUV) sank as much as 6% on Tuesday after the airline canceled thousands of flights, leaving passengers stranded at airports and drawing scrutiny from federal officials.

Southwest had canceled more than 2,590 flights on Tuesday as of 2:30 p.m. ET, or about 63% of its scheduled flights, according to tracker FlightAware.

The disruption exacerbates a meltdown that began over the holiday weekend and saw 2,900 flights canceled on Monday.

The U.S. Transportation Department (USDOT) said Monday evening it would investigate whether the outsized share of flights canceled by Southwest Airlines were in the company’s control.

A winter storm this weekend prompted a wave of airline cancellations, but Southwest has been hit particularly hard as flight challenges extend past the holiday weekend.

"USDOT is concerned by Southwest Airlines’ disproportionate and unacceptable rate of cancellations and delays as well as the failure to properly support customers experiencing a cancellation or delay," the department said in a tweet late Monday.

The cancellations also drew the ire of President Joe Biden, who said in a tweet specifically referencing Southwest's disruption that his administration was working to ensure airlines were "held accountable."

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By comparison, United (UAL) canceled only 72 flights on Tuesday, Delta (DAL) scrapped 34 flights, and American Airlines (AAL) and JetBlue (JBLU) each called off 25 flights, according to FlightAware data.

Southwest plans to operate roughly one third of its schedule for the next several days in order to help recover operations, a spokesperson told Yahoo Finance.

“We were fully staffed and prepared for the approaching holiday weekend when the severe weather swept across the continent,” Southwest said in a statement. “These operational conditions forced daily changes to our flight schedule at a volume and magnitude that still has the tools our teams use to recover the airline operating at capacity.”

In an interview with the Wall Street Journal on Monday, Chief Executive Bob Jordan said this was "the largest-scale event" he has ever seen.

SAN FRANCISCO, CA - DECEMBER 26: Passengers lined up by the Southwest Airlines counter at San Francisco International Airport (SFO) in San Francisco, California, United States on December 26, 2022 as Southwest cancels more than  2,800 U.S. flights on Monday amid fierce winter storms. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)
Passengers lined up by the Southwest Airlines counter at San Francisco International Airport (SFO) in San Francisco, California, United States on December 26, 2022 as Southwest cancels more than 2,800 U.S. flights on Monday amid fierce winter storms. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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