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The US DoT has decided to waive the final installment of the financial penalty worth $11 million, which is part of a $35 million fine that was issued to Southwest back in December 2023. This decision was made after the DoT evaluated the investment the airline has made in the past two years to improve its on-time performance and completion rate, which has shown a noticeable difference in the airline’s operations.
As such, the DoT believes it is in the best interest of the public for the airline to invest the remaining amount into further improving its operations rather than paying a financial penalty to the DoT. Simple Flying has reached out to Southwest; any response from the airline will be updated in this article.
A Record Penalty Of $35 Million!
Back in December 2023, the United States Department of Transportation (US DoT) issued a significant financial penalty of $35 million to 
Southwest Airlines. This was in response to the operational meltdown the carrier experienced during Winter 2022, which had significant impacts on customers traveling for the Winter Holidays, Christmas, and New Years. The $35 million was meant to be paid in two installments of $12 million and one of $11 million.
As per the details on the DoT document released on Friday, the airline has paid the first two installments by February 2024 and January 2025, worth $24 million. The final $11 million was meant to be paid by January 31, 2026, but in the latest document released, the DoT has waived the final installment, considering Southwest has invested over $112 million in optimizing and improving its Network Operations Control (NOC), and has shown significant improvements in operations and reliability in the past two years.
As such, the document states that the DoT believes the $11 million will be better spent and more beneficial for the passengers if the carrier uses it to invest and make further improvements to its operations, rather than paying the government a monetary penalty. The document states,
“In lieu of payment of the remaining $11 million due to the U.S. Treasury, the amended order provides Southwest with an $11 million credit for operational improvements.”
Significant Improvements In Southwest’s Operations
As per the document, the airline has invested over $112.4 million in its Network Operations Control and has demonstrated significant improvements, with the 2022 data from the DoT showing the airline ranking sixth for on-time performance and eighth in completion factor among the ten largest US airlines. However, since the improvements have been made, the carrier has risen in the ranks, and during the third quarter (Q3) of 2025, Southwest achieved third place for both on-time performance and completion factor.
A considerable amount of the investment was made, focusing on improving gate optimization, enhanced flight planning tools, an improved movement control system, and optimizers for better aircraft and crew network recovery. These investments have considerably improved the airline’s crew, ground, and technical operations and subsequently bettered their customer service, resulting in noticeable improvements to on-time performance and completion factor.
However, the DoT document also specifies that the airline should ensure its operational performance continue at the current level or improve and that the airline is obligated to spend the $11 million credit to invest and further improve operational efficiency.
Southwest Airlines Slashes Full-Year Profit Forecast After Federal Shutdown Impact
The airline has reduced its forecast to $500 million from the initial number of $600 million to $800 million.
Southwest Forced To Re-assess Its Finances
The airline earlier this week also announced that it had to revisit its financial forecasts for 2025 to take into consideration the impacts of the recent 43-day Federal Government shutdown in the US, which resulted in a significant number of flight cancelations and delays, resulting in reduced revenue for the airline and issuing refunds for the affected passengers.
The re-evaluated figures indicate the airline seeing a full-year revenue before tax and interest of approximately $500 million, down from the original forecasted range of $600 million to $800 million, indicating a reduction between 16.7% to 37.5%.
However, it is worth noting that the impacts related to the government shutdown has affected all the US-based carriers forcing all airlines to revisit their financial forecasts. Analysts have concluded that the shutdown could have reduced the Q4 profits for all US airlines by around 30%. For carriers such as 
Delta Air Lines, this has translated to a revenue hit of around $200 million.
