Southwest Airlines gave away as many as 50 billion airline miles after its holiday travel meltdown
- Southwest Airlines offered 25,000 Rapid Rewards points to people affected by its holiday meltdown.
- The carrier sent points to an estimated 2 million people, putting the value at about $750 million.
Southwest Airlines has had to pay a steep price for its holiday meltdown — with the airline saying Thursday that it's sent out 50 billion airline points to customers who were affected by flight delays and cancellations.
The low-cost carrier started sending out 25,000 Rapid Rewards points to qualifying customers in early January. Southwest sent the points to around two million customers, company CEO Bob Jordan told CNBC.
Personal finance site NerdWallet calculates the value of each point at 1.5 cents. That means Southwest has sent out around $750 million worth of Rapid Rewards points to customers who suffered through the holiday travel nightmare, which led to more than 16,000 flight cancellations and left thousands of customers stranded in airports across the country.
"I can't say it enough," Jordan said about the holiday nightmare. "We messed up."
The Dallas-based airline reported a $226 million fourth-quarter loss on Thursday, saying its meltdown in December cost the airline about $800 million — a majority of which was due to travel expense reimbursements and the estimated value of the Rapid Rewards points sent to customers.
The points, which don't expire or have blackout dates, are on top of any refunds or compensation, and customers have until March 31 to claim them using a code sent to their email.
While it appears the 25,000 points are a good chunk of change, the deadline for redeeming the code adds a step the consumer must go through to obtain the free points — and it's possible not every customer will actually use them. Southwest pegs the retail value of the 25,000 points at around $300.
It seems the points could be buying some goodwill with customers who were burned over the holidays by the airline's service failures: Southwest told Insider on Thursday that it is seeing strong point redemption this month, saying it is a "positive sign that customers are sticking with Southwest."
An airline spokesperson also said its March bookings are strong despite the reservation cancellations by customers and the slow rate of bookings in January and February.
The decision to offer free frequent flier points was an effort by Southwest to repair the damage created by its poor December performance. While the carrier managed to secure a $723million profit for the full year despite the chaos, it says it expects the lingering impact from the meltdown will cost another $300 million to $350 million in the first quarter.