New YorkCNN — The cost of the service meltdown at Southwest Airlines over the year-end holidays cost the airline nearly $1 billion and will cause the company to report a loss rather than a profit in the fourth quarter, the airline said in a filing on Friday.

The airline, the nation’s largest domestic carrier, said the cost of canceling more than 16,700 flights between December 21 and 29 will be somewhere between $725 million and $825 miilion. A bit more than half the cost - between $400 million and $425 million - will come from lost ticket revenue that will be refunded to customers.

Other costs include compensation for customers, both to pay for any out-of-pocket expenses and the cost of booking flights on other airlines, as well as providing 25,000 points to the frequent flier accounts of affected customers. There are also increased operating costs, such as additional compensation for employees, such as overtime pay

WASHINGTON (Reuters) - The U.S. Transportation Department (USDOT) said it planned to seek higher penalties for airlines and others that broke consumer protection rules, saying they were necessary to deter future violations.

USDOT said in a notice posted on its website it intended to hold airlines, ticket agents and others "accountable and deter future misconduct by seeking higher penalties that would not be viewed as simply a cost of doing business."

Airlines for America, an industry group, declined comment.

The notice comes after Transportation Department Secretary Pete Buttigieg vowed in recent days to take a hard line on Southwest Airlines if it failed to compensate travelers after cancelling nearly 16,000 flights in the week ending Dec. 29.

White House press secretary Karine Jean-Pierre said Tuesday the Transportation Department "will seek fines from Southwest if it doesn't cover" required costs.

USDOT fines for airline consumer violations have often been a fraction of potential penalties. Last year, Air Canada agreed to a $4.5 million settlement to resolve a USDOT investigation into claims that thousands of air passenger refunds had been delayed. USDOT initially sought a $25.5 million penalty.

Air Canada got $2.5 million credited toward the settlement for passenger refunds and paid only $2 million in fines.