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Southwest CEO alleges maintenance meltdown costing airline millions weekly

Southwest planes taken out of service

The CEO of Southwest Airlines said Tuesday the company is losing millions of dollars a week due to a recent maintenance crisis that has been fueled by a labor dispute with its mechanics union. Last week, Southwest sued its mechanics, accusing them of deliberately assessing planes as unsafe to fly, thus directly blaming them as the cause for the cancellation of flights. 

"The damage to the company runs in the millions of dollars weekly in lost revenue due to canceled flights, and millions of dollars weekly in terms of additional costs due to delays and cancellations," said Southwest CEO Gary Kelly at the JP Morgan Conference in New York.  

The airline declared an "operational state of emergency"  following a surge in aircraft being taken out of service due to maintenance write ups. This followed a CBS News investigation into complaints by mechanics that they were under undo pressure to keep planes in service.

Kelly told the analysts at the conference that the airline decided to sue its mechanics because customers were being "harmed" and employees will experience reduced profit sharing because of the union's "bad faith bargaining tactic."

"Our mechanics are superb. They work very hard. They do an outstanding job, and they deserve an updated contract," Kelly added.

The mechanics union confirmed to CBS News it was served with the lawsuit on Tuesday and called Kelly's comments "alarming."

"Southwest's self-imposed 'state of operational emergency' is a reaction to the increased FAA oversight and a way to distract the public from Southwest's own degrading safety standards," said the American Mechanics Fraternal Association in a statement. "Any aircraft being put out of service are being done so for legitimate reasons and any insinuation to the contrary further demonstrates that Southwest Management simply doesn't get it…At some point Southwest needs to stop blaming everyone else and acknowledge there is a problem."

The maintenance crisis comes as Southwest has announced the April launch of its much anticipated service to Hawaii following FAA approval.

The airline has been under heightened FAA oversight for about a year and has been locked in tense contract negotiations with its 2,500 mechanics for six years. Southwest Airlines has accused its mechanics union of "coordinating" to undermine the airline's business by writing improper safety assessments.

Read CBS News' in-depth update regarding the lawsuit here.

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