What happened

Winter weather over the holiday weekend led to a meltdown at Southwest Airlines (LUV -0.11%), with the discounter forced to cancel a sizable portion of its total flight schedule and leave millions of travelers stranded. On Tuesday, investors headed for the emergency exits, sending shares of Southwest down as much as 9%.

So what

Winter storms and busy travel weekends are never a good mix for the airline industry, but one carrier stood out as the clear Grinch. Southwest was forced to cancel more than 30% of its flights per day over the weekend.

While other airlines were getting back to normal on Tuesday, Southwest said it was cancelling more than two-thirds of today's schedule and planned to operate at a reduced schedule through Thursday as it works to get flight crews and airplanes back into their normal rotation.

The airline wrote in an update on its website:

With consecutive days of extreme winter weather across our network behind us, continuing challenges are impacting our customers and employees in a significant way that is unacceptable. And our heartfelt apologies for this are just beginning. We're working with safety at the forefront to urgently address wide-scale disruption by rebalancing the airline and repositioning crews and our fleet, ultimately to best serve all who plan to travel with us.

Though the apology is nice, it is unlikely to mean much to the thousands of travelers stranded in airports around the country, uncertain about when they will be able to get home. And while travel delay horror stories have become all too common in recent years, Southwest's reputation as a more customer-friendly company has been a key to its marketing success for years.

The operational meltdown will also likely mean Southwest CEO Bob Jordan will be called to Washington at some point to explain what happened. President Biden was one of a number of lawmakers to chime in about the situation, on Twitter pledging that his administration is "working hard to ensure airlines are held accountable."

Now what

You can't control the weather, and airline investors have learned that these meltdowns, though terrible at the moment, tend to do little to alter the long-term trajectory of a stock. These cancellations are almost certainly material enough that they will cause Southwest to miss fourth-quarter expectations set prior to the travel season, but Southwest will, given time, be able to rebuild its schedule and continue with business as normal.

That's not to say long-term Southwest holders shouldn't be paying attention. The meltdown is a fresh data point supporting the argument that Southwest, once the upstart maverick that was upending the aviation industry, has evolved and matured into an airline similar to the ones it was once trying to disrupt. The airline's point-to-point network, long considered one of its strengths, also made it more vulnerable to this storm, a reminder that there is no business model immune to industry pressures.

LUV PS Ratio Chart

Airline PS Ratio data by YCharts

Southwest throughout its history has commanded a premium valuation. Even after Monday's declines, the airline is still valued at a multiple of sales that is twice that of its three largest competitors.

Southwest is still a quality airline, but it is going to have to do better than this past week if it hopes to continue to enjoy that premium multiple. For new investments, Delta Air Lines (DAL -2.89%) and United Airlines (UAL -4.57%) appear to be better choices right now.