Once again, Southwest Airlines (NYSE:LUV) generated headlines for the wrong reasons, this time for a brief pause to its departures. Unfortunately, today’s disruption was due to a firewall failure. This incident follows a massive disruption during last year’s holiday season, resulting in a significant financial hit. In response to the latest incident, LUV stock dipped almost 2% in early afternoon trading.
According to Reuters, the Dallas-based carrier stated that a vendor-supplied firewall malfunctioned Tuesday morning. This failure “unexpectedly” dropped connections to some operational data, forcing Southwest to temporarily pause all flights.
Flight tracker FlightAware shows that 43% of Southwest’s flights have incurred delays so far. In addition, Reuters reports that many of these impacted flights will likely be canceled later in the day. To address customer concerns, the airliner asked passengers whose flights were canceled to request a refund.
LUV Stock Receives Another Ugly Reminder
While this latest incident hardly ranks as the worst operational disruption in the company’s history, it also materialized far too close to the Christmas holiday disturbance that significantly hurt LUV stock. Late last year, Reuters reported a staffing crisis caused by inclement weather overwhelmed Southwest’s crew scheduling software. Ultimately, this circumstance negatively affected travel plans for two million customers.
At the time, the disruption resulted in over 16,700 flight cancellations. The news agency reported that it cost Southwest more than $1 billion. It also remarked that “[a] sharp rebound in travel demand from the pandemic lows has exposed the fragility of the aviation system.”
Also, CNBC reported that Southwest’s holiday meltdown last year resulted in an $800 million pretax hit for the fourth quarter. Adding context, the airline’s upgraded scheduling software couldn’t manage the various crew assignment changes necessary to accommodate the impact of severe winter weather.
CNBC also mentioned that Tuesday’s issues did not appear to be related to the aforementioned software.
Why It Matters
Moving forward, prospective investors of LUV stock should monitor analysts’ assessments to see if their opinions have changed. According to TipRanks, the most recent rating comes from BofA Securities’ Andrew Didora, who pegged LUV as a “buy.” Also, the expert forecasts shares to hit $39, implying over 22% upside potential.
Overall, LUV stock carries a consensus view of “moderate buy.” Individual ratings break down as six “buys,” six “holds” and zero “sells.” Finally, the average price target lands at $42.58, implying almost 34% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.