Southwest Airlines Co. (LUV  ) has received a warning from the U.S. Department of Transportation that it may face a fine due to significant operational disruptions last December that caused widespread flight cancellations and passenger distress.

This disruption and subsequent recovery efforts resulted in the cancellation of more than 16,700 flights during the period from December 21 through December 31, 2022.

The incident was attributed to a failure in the airline's crew scheduling software, which was unable to adapt to staffing alterations, reported Reuters.

On October 27, 2023, the Department of Transportation notified the company about the failure to provide adequate customer service assistance, prompt flight status notifications, and proper and prompt refunds and that the assessment of a civil penalty is warranted.

Southwest has expressed its intention to cooperate fully with the Department of Transportation to address these issues, which may include agreeing to a civil penalty as part of the resolution process.

Price Action: LUV shares are trading lower by 0.12% at $22.31 on Monday.