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LUV · Southwest Airlines

36 filings

10-K

LUV 10-K Annual Reports

Southwest Airlines - 36 annual reports

Filing record · 2016–202610-K1210-Q338-K204

2025-A
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 2025
This Part IV, Item 15 section of Southwest Airlines Co.'s annual report states that the financial statements are included in Item 8 and that no financial statement schedules are filed. It serves mainly as an index of exhibits filed with, or incorporated by reference into, the report, covering corporate governance, debt instruments, credit facilities, aircraft purchase agreements, government support agreements, compensation plans, and an activist investor cooperation agreement. On governance and capital structure, the exhibits include the Restated Certificate of Formation effective May 18, 2012, and the Fifth Amended and Restated Bylaws effective May 16, 2025. Debt documentation includes indentures dated 1997, 2004, and February 6, 2024, with the 2024 indenture made with U.S. Bank Trust Company, National Association. The company also lists a $1,000,000,000 Revolving Credit Facility Agreement dated August 3, 2016, which was amended several times, most recently by a Fifth Amendment dated August 4, 2023. Other exhibits cover a Boeing purchase agreement (Purchase Agreement No. 3729, dated December 13, 2011) with supplemental agreements through No. 24, Payroll Support Program agreements and a promissory note with the U.S. Department of the Treasury, a Cooperation Agreement with Elliott entities dated October 23, 2024 and its amendment dated February 19, 2025, and the Ernst & Young LLP consent. Certain confidential information in one agreement was omitted as not material.
Feb 6, 2026
2025
Southwest Airlines Annual Report, Year Ended Dec 31, 2025
Southwest Airlines Co. reported record full-year 2025 operating revenues of $28.1 billion (up 2.1% from $27.48 billion in 2024), driven by revenue initiatives including bag fees effective May 28, 2025, and a Chase co-brand agreement amendment. GAAP operating income rose to $428 million from $321 million, while net income fell to $441 million from $465 million, mainly due to lower interest income. Non-GAAP (excluding special items) operating income was $539 million and net income was $512 million, with diluted EPS of $0.93 versus $0.96 a year earlier. Management noted that over 90 percent of GAAP operating income was earned in the fourth quarter, and that the government shutdown in late 2025 weighed on bookings. Fuel expense fell 9.8% to $5.24 billion as the average economic fuel cost dropped to $2.41 per gallon from $2.66, and the company terminated its remaining fuel hedges in second quarter 2025. Salaries, wages, and benefits rose 5.9% to $12.96 billion despite a February 2025 workforce reduction of about 1,750 corporate roles. Cash flow from operations was $1.84 billion, capital expenditures were $2.67 billion, and the company returned $2.9 billion to shareholders through $399 million in dividends and $2.6 billion in accelerated share repurchases. Cash and equivalents fell to $3.23 billion, and the company stated it maintains investment-grade ratings from all three major agencies. The filing also outlines assigned seating, extra legroom seats, a redesigned boarding model that began January 27, 2026, new international partnerships, and Getaways vacation packages, along with a 2026 net capital spending estimate of $3.0 billion to $3.5 billion. The company's fleet stood at 803 Boeing 737 aircraft at year-end, with 617 aircraft on order through 2031 under contractual commitments, and it depends on Boeing and the FAA for the timing of 737-7 certification. Labor unions represent about 84 percent of employees, and several contracts become amendable between 2026 and 2029.
Feb 5, 2026
2024
Southwest Airlines Annual Report, Year Ended Dec 31, 2024
Southwest Airlines Co. reported record full-year 2024 operating revenues of $27.5 billion, up 5.3 percent from $26.1 billion in 2023, driven by continued demand strength, record ancillary revenue, and record passengers carried. Operating income was $321 million on a GAAP basis, up from $224 million, while net income was flat at $465 million, or $0.76 per diluted share. On a non-GAAP basis, excluding special items, operating income fell to $457 million from $893 million and net income fell to $597 million from $980 million. Results were pressured by a 9.8 percent increase in salaries, wages, and benefits to $12.24 billion, reflecting ratified labor contracts, partly offset by a 6.5 percent decline in fuel and oil expense to $5.81 billion as jet fuel prices fell. The company is in the middle of a transformation plan, "Southwest. Even Better.", that includes assigned seating (sales expected in the second half of 2025), premium seating, a redesigned boarding model, international airline partnerships beginning with Icelandair, a new Getaways vacation product, and redeye flights starting February 13, 2025. Management's 2025 outlook projects operating margin excluding special items of 3 to 5 percent and a 2027 target of at least 10 percent, along with a 2027 target of return on invested capital of at least 15 percent. Operating cash flow fell sharply to $462 million in 2024 from $3.2 billion in 2023, largely due to approximately $1.9 billion in labor ratification bonuses paid during the year. Total available liquidity was $9.7 billion at year-end, and the company retained investment-grade ratings from all three major agencies. The company also disclosed a $1.9 billion investment by Elliott Investment Management, a cooperation agreement that reshaped the Board, the termination of its shareholder rights plan, and the planned departures of Chief Financial Officer Tammy Romo and Chief Administration Officer Linda B. Rutherford effective April 1, 2025. Pending litigation includes a DOJ capacity-related inquiry, a USERRA class action, securities and derivative suits tied to the December 2022 operational disruption, and an ERISA class action filed January 28, 2025.
Feb 7, 2025
2023
Southwest Airlines Annual Report, Year Ended Dec 31, 2023
Southwest Airlines Co. reported record full-year 2023 operating revenues of $26.1 billion, but operating income fell to $224 million (GAAP) from $1,017 million in 2022, and net income fell to $465 million from $539 million. Diluted EPS was $0.76 on a GAAP basis versus $0.87. Excluding special items, operating income was $893 million and net income was $980 million, or $1.56 per diluted share. The filing attributes the pressure to higher salaries, wages, and benefits and maintenance expense, plus about $380 million of pre-tax impact from the December 2022 operational disruption in first quarter 2023, a $107 million DOT settlement, and $180 million and $354 million contract ratification charges for Flight Attendants and Pilots. The Company reported a net loss of $252 million for fourth quarter 2023 on a GAAP basis. Liquidity remained substantial, with unrestricted cash and short-term investments of $11.5 billion at December 31, 2023, net cash from operations of $3.2 billion, and capital expenditures of $3.5 billion. The Company carries investment-grade ratings from all three major agencies. It declared quarterly dividends of $0.18 per share, returning $429 million to shareholders in 2023, while share repurchases remain suspended. The Company added 86 Boeing 737 MAX 8 aircraft in 2023 and holds 495 firm MAX orders through 2031. For 2024 it guided to roughly $1.5 billion in incremental pre-tax profit from its network and initiative plan, with capacity up about 6% and a return to profitability targeted after the March 2024 schedule. Key risks include labor costs and open contract negotiations (Flight Attendants and Ramp agents), dependence on Boeing for MAX deliveries and FAA certification of the -7 model, fuel price volatility, and ongoing shareholder and DOT-related litigation tied to the December 2022 disruption.
Feb 6, 2024
2022
Southwest Airlines Annual Report, Year Ended Dec 31, 2022
Southwest Airlines Co. reported record 2022 operating revenues of $23.8 billion, up from $15.8 billion in 2021 and above 2019 levels, driven by strong leisure demand and higher yields. Net income fell to $539 million from $977 million in 2021, which benefited from $2.7 billion of Payroll Support grant allocations that did not recur in 2022. Operating income was $1.017 billion, compared with $1.721 billion in 2021. Fuel and oil expense rose to $5.975 billion, and the company cited a $800 million pre-tax financial impact from the late-December 2022 Winter Storm Elliott disruption, which led to more than 16,700 cancelled flights and a fourth-quarter net loss of $220 million. The balance sheet shows $9.5 billion in cash and cash equivalents plus $2.8 billion in short-term investments at December 31, 2022, against total long-term debt of $8.0 billion. Capital expenditures reached $3.9 billion, largely reflecting aircraft progress and delivery payments, and the company guides to $4.0 to $4.5 billion in 2023 capital spending. The company reinstated a $0.18 quarterly dividend in December 2022 after suspending payouts during the pandemic, and it has suspended share repurchases with about $899 million remaining under its authorization. Key forward-looking items include the Boeing 737 MAX delivery schedule, with 46 contractually due 2022 aircraft rolled into 2023 and about 100 deliveries now estimated for 2023, and the FAA certification timing for the -7 model. Approximately 83 percent of employees are unionized, and several major groups, including pilots and flight attendants, are in negotiations. The company also disclosed pending securities, derivative, and consumer class actions, along with a U.S. Department of Transportation investigation opened in January 2023 related to the December disruption.
Feb 7, 2023
2021
Southwest Airlines Annual Report, Year Ended Dec 31, 2021
Southwest Airlines Co. reported a return to GAAP profitability for 2021, with net income of $977 million and operating income of $1.721 billion, compared with a net loss of $3.074 billion and operating loss of $3.816 billion in 2020. The filing attributes the improvement primarily to the rebound in domestic leisure demand, but notes that results were still well below 2019 levels and that $2.7 billion of Payroll Support grant allocations from the U.S. Treasury (versus $2.3 billion in 2020) contributed to GAAP results. Non-GAAP (excluding special items) results were still a net loss of $1.271 billion for 2021, and the company expects losses in January and February 2022 followed by profitability in March and for the remaining three quarters and full year 2022. The company's balance sheet remained strong, with unrestricted cash and short-term investments of $15.5 billion at December 31, 2021, and total stockholders' equity rising to $10.414 billion. Total debt and finance lease obligations were $10.756 billion, and the company stated its debt-to-assets ratio was 29.5 percent. Operating cash flow was $2.3 billion in 2021 versus a use of $1.1 billion in 2020. Shareholder returns remain suspended: the company has not paid a dividend since the first quarter 2020 and is prohibited from repurchases and dividends through September 30, 2022 under Payroll Support agreements. Investors should weigh several operational and cost risks flagged in the filing. The company reported 2022 capital spending of approximately $5.0 billion, 728 Boeing 737 aircraft at year-end, and about 82 percent of employees represented by unions, with most major labor agreements in negotiations. Management expects unit costs (CASM-X) for 2022 to be up 12 to 16 percent versus 2019, and the company canceled more than 5,600 flights in January 2022, citing staffing challenges tied to the Omicron variant and weather.
Feb 7, 2022
2020
Southwest Airlines Annual Report, Year Ended Dec 31, 2020
Southwest Airlines Co. reported a net loss of $3.07 billion for 2020 compared with net income of $2.30 billion in 2019, as the COVID-19 pandemic sharply reduced demand. Operating revenues fell to $9.05 billion from $22.43 billion, and operating expenses fell to $12.86 billion from $19.47 billion, leaving an operating loss of $3.82 billion. Results include a $2.3 billion allocation of Payroll Support Program proceeds and a $1.4 billion charge for Voluntary Separation Program 2020 and Extended ETO elections, both netted within a single line item. Total operating expenses excluding special items were $14.08 billion, and the company described 2020 as its first annual net loss in 48 years. To bolster liquidity, the company raised $18.9 billion in capital in 2020, net of fees, including $13.6 billion of borrowings and $2.3 billion from a public common stock offering, and it received $3.4 billion under the CARES Act Payroll Support Program. Cash and cash equivalents rose to $11.06 billion from $2.55 billion at year-end 2019, and cash plus short-term investments totaled $13.3 billion at December 31, 2020. Net cash used in operating activities was $1.1 billion in 2020, compared with $4.0 billion provided in 2019. Credit ratings were downgraded in March and April 2020 and remain investment grade. Dividends and share repurchases are suspended through March 31, 2022 under the Payroll Support Program agreements. Looking ahead, the company expects average core cash burn of about $17 million per day in first quarter 2021 and states that cash burn breakeven requires operating revenues to recover to 60 to 70 percent of 2019 levels. The Boeing 737 MAX is scheduled to return to revenue service on March 11, 2021, with 35 MAX 8 deliveries expected through 2021, and 2021 capital expenditures are estimated at no more than $500 million.
Feb 8, 2021
2019
Southwest Airlines Annual Report, Year Ended Dec 31, 2019
Southwest Airlines Co. reported 2019 Operating revenues of $22.43 billion, up from $21.97 billion in 2018, and Operating income of $2.96 billion versus $3.21 billion. Net income was $2.30 billion, or $4.27 per diluted share, compared with $2.47 billion and $4.29 in 2018. The filing attributes the decline mainly to the FAA grounding of the Boeing 737 MAX, which the Company says reduced 2019 operating income by an estimated $828 million, along with unscheduled maintenance disruptions and a U.S. government shutdown in first quarter 2019. Operating expenses rose $712 million, or 3.8 percent, while capacity fell 1.6 percent, and salaries, wages, and benefits increased 8.4 percent. Fuel and oil expense fell 5.8 percent to $4.35 billion, helped by lower jet fuel prices. The Company generated $3.99 billion of operating cash flow and spent $1.03 billion on capital expenditures. It returned $2.4 billion to shareholders through $372 million in dividends and $2.0 billion of share repurchases. It ended 2019 with $4.1 billion of unrestricted cash and short-term investments and a $1.0 billion undrawn revolving credit facility. Fitch upgraded the Company to "A-" in February 2019. The Company has entered a confidential settlement with Boeing for a substantial portion of its 2019 MAX grounding damages, to be recorded as a reduction in aircraft cost basis rather than in 2019 earnings. Compensation for 2020 damages remains under discussion, and no settlement is assumed in the 2020 outlook. The outlook is constrained by the MAX grounding, which the Company has removed from its schedule through June 6, 2020. The Company expects first quarter 2020 ASMs to decline 1.5 to 2.5 percent and first quarter 2020 unit costs excluding fuel and profitsharing to rise 6.0 to 8.0 percent. It also expects first quarter 2020 RASM to increase 3.5 to 5.5 percent. Labor contracts are a significant risk: Flight Attendants and several other groups are in negotiations, and the Pilots' agreement becomes amendable in September 2020. The Company also faces pending litigation, including antitrust class actions and a RICO complaint filed in July 2019 relating to the MAX.
Feb 4, 2020
2018
Southwest Airlines Annual Report, Year Ended Dec 31, 2018
Southwest Airlines Co. reported 2018 results with operating revenues of $21.97 billion, up from $21.15 billion in 2017, and operating income of $3.21 billion, down 5.9 percent year-over-year, as higher market jet fuel prices offset a 3.5 percent increase in Passenger revenues driven by a 3.9 percent increase in capacity. GAAP net income was $2.47 billion, down 26.6 percent, largely because 2017 included a $1.3 billion benefit from re-measuring deferred taxes under the Tax Cuts and Jobs Act. Excluding special items, non-GAAP net income rose 15.1 percent to a record $2.44 billion, and non-GAAP diluted EPS was $4.24. Operating cash flow was $4.9 billion. The company returned $2.3 billion to shareholders in 2018, including $2.0 billion of accelerated share repurchases and $332 million in dividends. It ended the year with $3.7 billion of unrestricted cash and short-term investments, a $1.0 billion undrawn revolving credit facility, and investment grade ratings of A3 (Moody's), BBB+ (S&P) and BBB+ (Fitch). Management plans 2019 capacity growth of no more than five percent and expects 2019 capital expenditures of approximately $1.9 billion. Fuel was hedged at 70 percent of estimated 2019 consumption, and the company disclosed pending litigation, including a $15 million antitrust settlement and a DOJ capacity investigation. Key risks highlighted in the filing include fuel price volatility, labor cost pressure (about 83 percent of employees are unionized, and several work groups are in negotiations), competition from ultra-low-cost carriers, and reliance on Boeing 737 aircraft. The company also flagged a planned 2019 start of Hawaii service that is subject to FAA ETOPS approval.
Feb 5, 2019
2017
Southwest Airlines Annual Report, Year Ended Dec 31, 2017
Southwest Airlines Co. reported that for the 45th consecutive year it was profitable, with 2017 net income of $3.5 billion ($5.79 per diluted share) and operating income of $3.52 billion, down 6.5 percent from 2016. Operating revenues rose to $21.17 billion from $20.43 billion, driven by a 2.9 percent increase in Passenger revenues and a 3.6 percent capacity increase, while Salaries, wages, and benefits rose 7.7 percent and Fuel and oil expense rose 8.0 percent. Net income was boosted by a $1.4 billion reduction in income tax provision from the Tax Cuts and Jobs Act; non-GAAP net income, which excludes special items, was $2.1 billion, down 11.1 percent. The Company reported 2017 operating cash flow of $3.9 billion, capital expenditures of $2.1 billion, and $1.9 billion returned to shareholders through dividends and share repurchases. The Company completed its Amadeus Altéa reservation system transition in 2017, retired its remaining Boeing 737-300 (Classic) fleet, and began scheduled service with the Boeing 737 MAX 8 in October 2017. It ended 2017 with 706 Boeing 737 aircraft and 56,110 active full-time equivalent employees, approximately 83 percent of whom were represented by labor unions. The Company guided to 2018 available seat mile growth in the low five percent range and a planned 2018 capital expenditure of approximately $1.9 billion, and it announced plans to begin selling tickets for Hawaii service in 2018, subject to FAA ETOPS approval. The Company faces significant risks, including fuel price volatility (jet fuel and oil were about 22 percent of 2017 operating expenses), rising labor costs under amended collective-bargaining agreements, and pending antitrust litigation, including a $15 million settlement agreed in December 2017 for a class action alleging capacity-restriction collusion. Management expects the 2018 effective tax rate to be in the 23 to 23.5 percent range.
Feb 7, 2018
2016
Southwest Airlines Annual Report, Year Ended Dec 31, 2016
Southwest Airlines Co. reported that for the 44th consecutive year it was profitable, earning $2.2 billion in net income for 2016 ($3.55 per diluted share), a record, with operating revenues of $20.43 billion and operating income of $3.76 billion, down from $4.12 billion in 2015. Passenger revenues rose on a 5.7 percent increase in capacity and a record 84.0 percent load factor, while Other revenues increased 41.9 percent, largely from the amended co-branded credit card agreement with Chase Bank USA, N.A., which also changed revenue accounting. Operating expenses rose 6.1 percent, driven by salaries, wages and benefits (41 percent of operating expenses), accelerated depreciation from the early retirement of the Classic 737 fleet, and technology project costs, partly offset by lower jet fuel prices. Fuel and oil expense was $3.65 billion, about 22 percent of operating expenses. The company returned a record $2.0 billion to shareholders in 2016, including $222 million in dividends and $1.75 billion in accelerated share repurchases. Net cash provided by operating activities was $4.3 billion, and the company ended the year with $3.3 billion in unrestricted cash and short-term investments and a $1.0 billion undrawn revolving credit facility. Management plans 2017 capacity growth of about 3.5 percent and expects a 2017 capital expenditure of approximately $2.3 billion. Key risks disclosed include fuel price volatility, labor costs (about 83 percent of employees are unionized, with several groups still in negotiations), dependence on Boeing as sole aircraft supplier, and pending antitrust class action litigation related to capacity and fares.
Feb 7, 2017
2015
Southwest Airlines Annual Report, Year Ended Dec 31, 2015
Southwest Airlines Co. reported record 2015 results, with net income of $2.2 billion ($3.27 per diluted share), up 92.0 percent from 2014, marking the 43rd consecutive year of profitability. Operating revenues were $19,820 million, up from $18,605 million, and operating expenses fell 4.1 percent to $15,704 million, mainly because of lower fuel prices. Operating income reached $4,116 million. Excluding special items, non-GAAP net income was a record $2.4 billion ($3.52 per diluted share). The pre-tax ROIC excluding special items was 32.7 percent, compared with 21.2 percent in 2014. The results were helped by a $172 million one-time non-cash special revenue adjustment tied to the July 2015 amended co-branded credit card agreement with Chase Bank USA, N.A., which changed revenue accounting. Fuel and oil expense fell 31.7 percent to $3.6 billion, and the average economic jet fuel price per gallon declined 29.1 percent. Salaries, wages, and benefits rose 17.5 percent to $6.4 billion, reflecting $334 million in accrued union bonuses and record profitsharing expense of $620 million. Several union contracts remain in negotiations, including Pilots and Flight Attendants. Capital returns were significant: the company returned a record $1.4 billion to shareholders in 2015, including $180 million in dividends and $1.2 billion in share repurchases. Liquidity was $3.1 billion of unrestricted cash and short-term investments at year-end, against a $1.0 billion revolving credit facility. The company also faces pending antitrust class actions and a DOJ civil investigative demand related to capacity, which the filing says cannot be predicted with certainty.
Feb 3, 2016
2014-A
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 2014
Southwest Airlines Co. reported record 2014 results in this 10-K. GAAP net income was $1.1 billion, or $1.64 per diluted share, up 50.7 percent from $754 million in 2013, on a 5.1 percent increase in Operating revenues. Operating income was $2.2 billion on a GAAP basis and $2.4 billion on a non-GAAP basis, both described as Company records. Non-GAAP net income, which excludes fuel hedge mark-to-market effects and AirTran acquisition and integration costs, was $1.4 billion, or $2.01 per diluted share. Operating expenses were roughly flat, as lower fuel prices and strategic initiatives offset higher Salaries, wages, and benefits expense, which included a record $355 million of Employee profitsharing expense. Pre-tax ROIC, excluding special items, rose to 21.2 percent from 13.1 percent. The AirTran integration was effectively completed in December 2014, with cumulative acquisition and integration costs of $536 million and an expected total of about $550 million once the remaining AirTran 717-200 aircraft leave the fleet in 2015. The company launched international service in 2014, received 33 Boeing 737-800s, and is the launch customer for the 737 MAX 8 and MAX 7, with firm orders for 170 MAX 8 and 30 MAX 7 aircraft. Management expects 2015 capacity to grow six to seven percent and 2015 capital expenditures of $1.7 billion to $1.8 billion, excluding assets constructed for others. Liquidity remained strong, with unrestricted cash and short-term investments of $3.0 billion at year-end, net cash from operating activities of $2.9 billion, and share repurchases of approximately $955 million during 2014. Fuel hedging was reduced after the second-half 2014 oil price decline, and the company is now effectively unhedged for 2015 at current price levels. The filing notes that fuel derivative contracts had a fair value of $(1,001) million at December 31, 2014, and that $(740) million of losses were deferred in AOCI.
Feb 11, 2015
2014
Southwest Airlines Annual Report, Year Ended Dec 31, 2014
Southwest Airlines Co. reported record 2014 results, with net income of $1.1 billion ($1.64 per diluted share), its 42nd consecutive profitable year. Operating revenues rose to $18.6 billion from $17.7 billion, and operating income increased to $2.2 billion from $1.3 billion. The company effectively completed the integration of AirTran, whose final passenger service occurred on December 28, 2014, and it expects to achieve about $500 million in net pre-tax synergies during 2014. Non-GAAP net income, which excludes fuel hedge accounting effects and special items, was $1.4 billion, or $2.01 per diluted share. Fuel and oil expense fell to $5.29 billion, with an average cost of $2.93 per gallon, and management cited sharply lower fuel prices in late 2014. The company continued fleet modernization, with 665 Boeing 737 aircraft at year-end and firm orders for 170 Boeing 737 MAX 8 and 30 MAX 7 aircraft. It also expanded its network, including new international service and additional slots at Washington Reagan and New York LaGuardia, and the repeal of Wright Amendment restrictions at Dallas Love Field. For 2015, management expects capacity (ASMs) to rise roughly six percent and capital expenditures of $1.7 billion to $1.8 billion. Investors should note that about 83 percent of employees are unionized, and several major labor contracts, including pilots and flight attendants, were in negotiations. The company also carries a $1.0 billion fuel-hedge net liability and $266 million in cash collateral posted to hedge counterparties.
Feb 6, 2015
2013
Southwest Airlines Annual Report, Year Ended Dec 31, 2013
Southwest Airlines Co. reported net income of $754 million for 2013, its 41st consecutive profitable year, up from $421 million in 2012 (diluted EPS $1.05 versus $0.56). Operating revenues were $17.70 billion, up from $17.09 billion, and operating income rose to $1.278 billion from $623 million. The company describes its results as driven primarily by higher passenger revenues, mainly from higher average airfares, and lower fuel costs, primarily due to lower jet fuel prices. Non-GAAP net income, which excludes fuel hedge mark-to-market effects and AirTran acquisition and integration costs, was $805 million, and the company states that this was the highest full-year non-GAAP net income in its history. The company is integrating AirTran Airways, which it acquired in 2011, and expects to complete integration by the end of 2014. During 2013 it connected the Southwest and AirTran networks, so customers can fly between any of the combined 96 destinations on a single itinerary. It also began a transition into international service, starting sales of its first international itineraries in January 2014, and is retiring older 737-300 and 737-500 aircraft while delivering 88 AirTran Boeing 717s to Delta. The fleet totaled 680 aircraft at year-end, and firm orders for Boeing aircraft total 552 across 2014 through 2027, including 170 737 MAX 8 and 30 MAX 7 firm orders. The company ended 2013 with unrestricted cash and short-term investments of $3.2 billion and returned $540 million to shareholders through buybacks and $71 million through dividends. It has a $1 billion revolving credit facility with no amounts outstanding. Its results remain exposed to fuel prices, with fuel and oil expense of $5.76 billion representing 35.1% of operating expenses, and to a pending antitrust class action involving AirTran and Delta, which is in mediation scheduled to begin February 4, 2014.
Feb 4, 2014
2012
Southwest Airlines Annual Report, Year Ended Dec 31, 2012
Southwest Airlines Co. reported 2012 net income of $421 million, its 40th consecutive profitable year, compared with $178 million in 2011. Operating income was $623 million on operating revenues of $17.088 billion, versus $693 million in 2011. Results include the full year of AirTran, which was acquired on May 2, 2011. Net income on a non-GAAP basis was $417 million, excluding fuel hedge mark-to-market effects, acquisition and integration costs, and a $137 million third-quarter 2012 charge tied to the lease/sublease of 88 AirTran Boeing 717s to Delta. Management reports $183 million of acquisition and integration costs in 2012 and expects total costs of no more than $550 million, plus about $400 million of net pre-tax annual synergies expected in 2013. Fuel remained the largest expense at $6.12 billion, or 37.2 percent of operating expenses. Operating expenses per available seat mile rose to 12.85 cents from 12.41 cents. Operating cash flow was $2.06 billion, and the company repurchased about $400 million of its stock during 2012. Year-end unrestricted cash and short-term investments were $3.0 billion, with an undrawn $800 million revolving credit facility. The company has firm orders for 563 Boeing 737 aircraft through 2027, including 150 737 MAX aircraft, and plans to introduce international service from San Juan, Puerto Rico in April 2013. Management plans to keep fleet size roughly flat in 2013, with ASMs expected to rise about two percent. Key risks include fuel price volatility, labor negotiations (most unionized groups are in negotiations or amendable in 2013), integration of AirTran, and an antitrust class action against AirTran and Delta. Management does not expect the pending legal proceedings to have a material adverse effect.
Feb 7, 2013
2011
Southwest Airlines Annual Report, Year Ended Dec 31, 2011
Southwest Airlines Co. reported net income of $178 million ($.23 per diluted share) for 2011, its 39th consecutive profitable year, compared with $459 million ($.61 per diluted share) in 2010. Operating income fell to $693 million from $988 million, as operating expenses rose 34.6 percent while operating revenues rose 29.4 percent. The decline was attributed primarily to higher fuel costs: the average jet fuel cost per gallon rose to $3.19, and fuel and oil expense reached $5.644 billion, 37.7 percent of operating expenses. Fuel hedging losses of $259 million were recognized in 2011 across Fuel and oil expense and Other (gains) losses, net. Non-GAAP net income was $330 million ($.43 per diluted share). The results include AirTran Holdings, Inc., acquired May 2, 2011 for 0.321 Southwest shares and $3.75 cash per AirTran share, with total transaction value of approximately $3.2 billion. AirTran contributed $2.0 billion of operating revenues and a net loss of $23 million for the post-acquisition period. The company recorded $134 million of acquisition and integration costs in 2011 and expects approximately $500 million in total integration costs through 2014, against estimated annual net synergies of more than $400 million in 2013. Management said it does not intend to grow fleet size in 2012 and plans to take delivery of 33 Boeing 737-800 aircraft that year. At year-end, Southwest held $3.1 billion of unrestricted cash and short-term investments, an undrawn $800 million revolving credit facility, and stockholders' equity of $6.877 billion. Net cash provided by operating activities was $1.4 billion in 2011. The company ordered 150 Boeing 737 MAX aircraft, expanded its Next-Generation 737 orders to 200, and reported total Boeing firm orders of 350 for 2012 through 2024. Management said January 2012 passenger unit revenues rose approximately seven percent year over year.
Feb 9, 2012
2010
Southwest Airlines Annual Report, Year Ended Dec 31, 2010
Southwest Airlines Co. reported 2010 net income of $459 million ($.61 per diluted share), its 38th consecutive profitable year, compared with $99 million ($.13 per diluted share) in 2009. Operating revenues rose 16.9 percent to $12.1 billion, outpacing a 10.2 percent increase in operating expenses, which lifted operating income to $988 million from $262 million. Results were driven by higher fares and passenger yield, a record 79.3 percent load factor, and revenue initiatives such as the Bags Fly Free campaign and new ancillary fees. Fuel and oil expense rose to $3.62 billion, with the jet fuel cost per gallon up 18.4 percent, and the company recognized net fuel hedging losses of $426 million across fuel and other expense lines. The pending acquisition of AirTran Holdings, Inc. is the most significant strategic development. Under the September 26, 2010 merger agreement, each AirTran share would convert into 0.321 Southwest shares plus $3.75 in cash, with an adjustment mechanism providing at least $7.25 and up to $7.75 in value per AirTran share. The company expects closing in the second quarter of 2011, subject to AirTran stockholder approval and regulatory clearances, and anticipates approximately $500 million in one-time acquisition and integration costs and net annual synergies of more than $400 million by 2013. The company also plans to launch a new Rapid Rewards frequent flyer program on March 1, 2011, and to begin introducing Boeing 737-800 aircraft in 2012. The balance sheet at December 31, 2010 showed total assets of $15.46 billion, long-term debt of $2.88 billion, and stockholders' equity of $6.24 billion, with cash and short-term investments of $3.5 billion. Net cash provided by operating activities was $1.56 billion. Management guided to 2011 ASM growth of roughly five to six percent and an effective tax rate of 38 to 39 percent, and noted that fuel prices remain the primary threat to profitability. Several shareholder lawsuits challenging the AirTran merger were pending, and the parties to two of them entered a memorandum of understanding to settle on January 26, 2011.
Feb 8, 2011
2009
Southwest Airlines Annual Report, Year Ended Dec 31, 2009
Southwest Airlines Co. reported 2009 net income of $99 million ($.13 per diluted share), down from $178 million ($.24 per share) in 2008. Operating income fell to $262 million from $449 million, and operating revenues declined to $10.35 billion from $11.02 billion. Management attributed the results largely to fuel hedging accounting: the Company recognized a net total of $408 million in losses from fuel hedges in 2009, versus $1.0 billion in net gains in 2008. Jet fuel and oil expense fell to $3.04 billion from $3.71 billion, and the Company cut capacity by 5.1 percent in available seat miles while load factor rose to a record 76.0 percent. The Company responded to the downturn with capacity reductions, fare sales, the "Bags Fly Free" campaign, new ancillary fees, and the Freedom '09 early retirement program, which had a one-time $66 million charge. Management expects a year-over-year increase in unit revenues for first quarter 2010 and anticipates approximately flat ASMs for full-year 2010, with ten new 737-700 deliveries planned. Cash flow from operations was $985 million in 2009, compared with a $1.5 billion outflow in 2008, and cash and short-term investments totaled $2.6 billion at year-end. Investors should note several risks disclosed in the filing: Standard & Poor's and Fitch downgraded the Company's credit rating from BBB+ to BBB, and Moody's lowered its rating from Baa1 to Baa3. The Company also carries $477 million in net fuel derivative liabilities, with $580 million in deferred losses in accumulated other comprehensive income. Approximately 82 percent of employees are unionized, and the Company depends on Boeing as its sole aircraft supplier.
Jan 29, 2010
2008
Southwest Airlines Annual Report, Year Ended Dec 31, 2008
Southwest Airlines Co. reported a net income of $178 million ($.24 per share, diluted) for 2008, its 36th consecutive year of reported profit, down from $645 million ($.84 per share, diluted) in 2007. Operating income fell to $449 million from $791 million, a 43.2 percent decrease, as fuel and oil expense rose $1.0 billion, or 38.0 percent, to $3.7 billion. Operating revenues increased 11.8 percent to $11.02 billion, driven by an 11.8 percent increase in average fares. Management notes that much of the net income decline reflected SFAS 133 fuel hedge accounting adjustments, which were a $19 million net loss in 2008 versus a $360 million net gain in 2007, and that operating income is the better indicator of performance. Fuel hedging was the dominant issue for the year. Cash settlements from fuel derivatives were $1.3 billion in 2008, but the company reduced its net hedge for 2009 through 2013 to approximately ten percent of anticipated consumption after fuel prices collapsed in the fourth quarter. The net fuel derivative liability was $992 million at year-end, and the company states it expects to pay above-market fuel prices in those years. Operating cash flow was negative $1.5 billion in 2008, largely because of a $2.2 billion net outflow from counterparty cash deposits, compared with $2.8 billion provided in 2007. Liquidity included $1.8 billion in cash and short-term investments at year-end, and the company borrowed $600 million under a term loan, $400 million under its revolver, and $400 million of 10.5% secured notes during the year. Looking to 2009, the company plans to reduce its fleet by a net two aircraft, expects first-quarter available seat miles to be four to five percent lower than in first quarter 2008, and plans to begin Minneapolis-St. Paul service in March 2009. Standard & Poor's and Fitch downgraded the company's rating from "A-" to "BBB+", and Moody's affirmed "Baa1". The company did not repurchase shares after February 2008 and states that it does not believe repurchases are prudent under current conditions.
Feb 2, 2009
2007
Southwest Airlines Annual Report, Year Ended Dec 31, 2007
Southwest Airlines Co. reported 2007 net income of $645 million ($.84 per diluted share), up from $499 million ($.61 per diluted share) in 2006. The filing states that this increase was entirely driven by gains and losses recorded under SFAS 133 on fuel derivatives expiring in future periods. Operating income, which excludes these items, declined 15.3 percent to $791 million, primarily because fuel costs rose faster than revenues. Operating revenues rose to $9.86 billion from $9.09 billion, while operating expenses increased to $9.07 billion. Jet fuel averaged $1.70 per gallon in 2007 versus $1.53 in 2006, even after a $686 million reduction to fuel and oil expense from hedging. Management said it expects net cash expenditures for jet fuel in 2008 could increase by more than $500 million compared with 2007. Fuel derivatives in place for 2008 cover over 70 percent of expected consumption at about $51 per barrel of crude oil equivalent. Southwest plans to grow its fleet by a net seven aircraft to 527 737s by year-end 2008, with net ASM capacity growth of four to five percent. Fitch cut the company's senior unsecured debt rating to "A-" in January 2008. The Board authorized a new $500 million share repurchase program in January 2008, following $1.0 billion of repurchases in 2007. The balance sheet at December 31, 2007 showed total assets of $16.77 billion, stockholders' equity of $6.94 billion, and cash plus short-term investments of $2.78 billion. Fuel derivative contracts had a net fair value of $2.4 billion, of which about $1.1 billion is expected to settle in 2008. The company also held $2.0 billion in cash collateral deposits from fuel hedge counterparties, which are included in accrued liabilities.
Feb 4, 2008
2006-A2
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 2006
Southwest Airlines Co. filed Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2006. The amendment's stated purpose is to include the conformed signature of Ernst & Young LLP on its audit report; no other changes are made to the financial statements or to any other item beyond updated exhibits (officer certifications and an updated auditor consent). The financial statements presented show 2006 operating revenues of $9.09 billion ($9,086 million), up from $7.58 billion in 2005, and net income of $499 million, or $.61 per diluted share, compared with $484 million, or $.60 per diluted share, in 2005. Operating expenses rose to $8.15 billion in 2006, led by fuel and oil expense of $2.14 billion, up from $1.34 billion in 2005. Operating income was $934 million, versus $725 million the prior year. Other (gains) losses, net was a $151 million expense in 2006, compared with a $90 million gain in 2005, reflecting fuel-hedge ineffectiveness and the loss of hedge accounting on certain derivatives. The company reported net cash provided by operating activities of $1.41 billion, down from $2.12 billion, and spent $1.40 billion on property and equipment. It repurchased $800 million of common stock in 2006 under three authorizations totaling $1.0 billion. At year-end 2006, Southwest held cash and cash equivalents of $1.39 billion and short-term investments of $369 million, against long-term debt of $1.57 billion (plus $122 million current maturities). Total stockholders' equity was $6.45 billion. The filing states that fuel derivatives had a net fair value asset of approximately $999 million, and that about 95 percent of anticipated 2007 jet fuel requirements were protected by hedges at average crude oil equivalent prices of approximately $50 per barrel. Management also disclosed that a 2006 change in accounting for airframe maintenance was applied retrospectively to prior periods, with the effect on 2006 net income described as not material.
Apr 24, 2007
2006-A
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 2006
Southwest Airlines Co. filed this annual report on February 27, 2007, signed by Laura Wright, Senior Vice President-Finance and Chief Financial Officer, for the fiscal year ended December 31, 2006. The filing consists mainly of Item 11 (Executive Compensation) and Item 15 (Exhibits and Financial Statement Schedules). Item 11 incorporates by reference the compensation sections of the definitive proxy statement for the Annual Meeting of Shareholders to be held May 16, 2007. Item 15 states that the financial statements are included in Item 8 of the annual report, and that no financial statement schedules are filed. The bulk of the document is an exhibit index. It lists the restated articles and amendments, the bylaws as amended through January 2007, and several debt instruments, including a $600,000,000 Competitive Advance and Revolving Credit Facility Agreement dated April 20, 2004, as amended in August 2005, and indentures dated in 1991, 1997, 2004 and 2005. The Boeing Purchase Agreement No. 1810 and its numerous supplemental agreements are listed, with Supplemental Agreement No. 51 noted as filed on February 1, 2007 with the original annual report. The index also covers the company's compensation plans, including stock option plans, the Profit Sharing Plan and 401(k) Plan, and the employment and severance contracts for named executives. Amendment No. 8 to the Profit Sharing Plan and Amendment No. 7 to the 401(k) Plan are noted as filed on February 1, 2007 with the original report, as is the Ernst & Young LLP consent. Some exhibits are incorporated by reference to earlier Forms 10-K, 10-Q, 8-K and S-8 filings, and certain confidential information in Boeing-related exhibits has been omitted under a Confidential Treatment Application. The Section 906 certifications by Chief Executive Officer Gary C. Kelly and Chief Financial Officer Laura H. Wright are dated February 27, 2007 and refer to an Annual Report on Form 10-K/A for the period ended December 31, 2006. The certifications state that the report fully complies with Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and fairly presents, in all material respects, the company's financial condition and results of operations.
Feb 28, 2007
2006
Southwest Airlines Annual Report, Year Ended Dec 31, 2006
Southwest Airlines Co. reported 2006 net income of $499 million ($.61 per diluted share), up $15 million, or 3.1 percent, from $484 million in 2005. Operating income rose $209 million, or 28.8 percent, to $934 million on operating revenues of $9.09 billion, up 19.8 percent. Passenger revenue yield per RPM increased 6.9 percent and the load factor reached a company record 73.1 percent. Operating expenses rose 18.9 percent, driven primarily by jet fuel: the average cost per gallon was $1.53, up 48.5 percent from 2005, and fuel and oil expense was $2.14 billion. Fuel hedging produced cash settlements of $675 million in 2006 and a reduction to fuel expense of $634 million, while net losses of $101 million in Other (gains) losses reflected hedge ineffectiveness and loss of hedge accounting. The company stated it expects 2007 jet fuel expenditures to rise between $400 million and $500 million over 2006, with about 95 percent of expected 2007 fuel consumption hedged at roughly $50 per barrel of crude oil equivalent. Southwest plans to add 37 737-700 aircraft in 2007, for a net ASM capacity increase of approximately eight percent and a fleet of 518 737s by year-end. Cash flow from operations was $1.4 billion in 2006, down from $2.1 billion in 2005, and the company repurchased $800 million of common stock under $1.0 billion of authorized programs. Year-end cash and short-term investments totaled $1.8 billion. The filing also highlights risks including fuel price volatility, labor contract negotiations (the pilots' agreement became amendable in September 2006 and talks had recently begun), the Wright Amendment Reform Act of 2006 affecting Dallas Love Field, the August 2006 security restrictions that the company estimated cost more than $40 million in passenger revenue in August and September, and the December 2005 Chicago Midway accident (Flight 1248), for which the company stated it expects coverage by insurance.
Feb 1, 2007
2005
Southwest Airlines Annual Report, Year Ended Dec 31, 2005
Southwest Airlines Co. ("Southwest") reported 2005 net income of $548 million ($.67 per diluted share), up 75.1% from $313 million in 2004, on operating revenues of $7.58 billion and operating income of $820 million, up 48.0%. Operating revenues rose 16.1%, driven by a 10.8% increase in available seat miles, a record 70.7% load factor, and a 2.8% rise in passenger revenue yield per RPM. Fuel and oil expense rose to $1.34 billion, or 19.8% of operating expenses, despite a hedging gain of $892 million that offset much of the jet fuel price increase; the average jet fuel cost per gallon rose to $1.03 from $.83. The company ended 2005 with cash and cash equivalents of $2.28 billion, total assets of $14.22 billion, and stockholders' equity of $6.68 billion. Net cash provided by operating activities was $2.23 billion. Fuel hedge contracts had a fair value of $1.7 billion at year-end, and the company held $950 million in cash collateral deposits under bilateral collateral provisions. Management said it has hedged over 70% of anticipated 2006 fuel consumption at about $36 per barrel, but that the 2006 hedge position is weaker than in 2005, and it expects a significant increase in fuel costs in the first quarter of 2006. Looking ahead, Southwest plans about 8% ASM capacity growth in 2006 with 33 new 737-700 deliveries, and its board authorized a new $300 million share repurchase program in January 2006. The filing also discloses a change in accounting for heavy maintenance on 737-300 and 737-500 aircraft effective January 1, 2006, and the adoption of SFAS 123R, which management expects to add about $65 million to 2006 salaries, wages, and benefits expense. A December 8, 2005 accident involving Flight 1248 at Chicago Midway Airport is disclosed, with management not expecting a material adverse effect given insurance coverage.
Feb 1, 2006
2004
Southwest Airlines Annual Report, Year Ended Dec 31, 2004
Southwest Airlines Co. reported net income of $313 million ($.38 per share, diluted) for 2004, its 32nd consecutive year of profit, compared with $442 million ($.54 per share, diluted) in 2003. The 2003 result included a $271 million government grant under the Emergency Wartime Supplemental Appropriations Act; excluding that grant, 2004 net income rose $15 million, or 5.0 percent, versus 2003's $298 million. Operating revenues increased $593 million, or 10.0 percent, to $6.53 billion, driven by an 11.4 percent increase in revenue passenger miles and a 2.7 point rise in load factor to 69.5 percent, while passenger revenue yield per RPM fell 1.8 percent amid heavy fare discounting. Operating expenses rose $522 million, or 9.6 percent, with fuel and oil expense per ASM up 12.1 percent as the average jet fuel cost per gallon rose to 82.8 cents from 72.3 cents, partly offset by $455 million in hedging gains. The company ended 2004 with $1.3 billion in cash and cash equivalents, total assets of $11.34 billion, and stockholders' equity of $5.52 billion. Operating cash flow was $1.2 billion, and the company repurchased about $246 million of common stock during the year. Southwest expects ASM capacity to grow about 10 percent in 2005 with a net addition of 29 aircraft, and it expects unit costs excluding fuel to be lower than in 2004. Fuel hedges cover approximately 85 percent of anticipated 2005 fuel consumption at a crude oil equivalent price of about $26 per barrel. The filing also describes the company's first codeshare arrangement with ATA Airlines at Chicago Midway, following a $40 million purchase of certain ATA assets and $40 million in debtor-in-possession financing provided to ATA.
Feb 4, 2005
2003
Southwest Airlines Annual Report, Year Ended Dec 31, 2003
Southwest Airlines Co. (LUV) reported net income of $442 million ($.54 per diluted share) for 2003, up from $241 million ($.30 per diluted share) in 2002, an increase of 83.4 percent. Operating income rose to $483 million from $417 million, an increase of 15.8 percent. Results include $271 million of "Other gains" from the Emergency Wartime Supplemental Appropriations Act; excluding government grants in both years, net income was $298 million ($.36 per diluted share) versus $216 million ($.27) in 2002. Operating revenues were $5.94 billion, up 7.5 percent, on a 5.6 percent increase in revenue passenger miles, and the company carried 65.7 million revenue passengers with a 66.8 percent load factor. Costs rose with capacity: operating expenses per available seat mile increased 2.6 percent to 7.60 cents, driven mainly by salaries, wages and benefits and fuel. The company hedged over 80 percent of anticipated 2004 fuel consumption, with derivative instruments capping prices at about $24 per barrel, and forecast first-quarter 2004 fuel cost of 75 to 80 cents per gallon. Cash from operations was $1.3 billion, cash and equivalents totaled $1.87 billion, and stockholders' equity reached $5.05 billion. The board authorized up to $300 million in share repurchases in January 2004. Management expects 2004 ASM capacity growth of 7 to 8 percent, planned 47 Boeing 737-700 deliveries, and a reservations-center consolidation costing about $20 million, mostly in first quarter 2004. The filing also notes that unit revenues remained more than 10 percent below pre-September 11, 2001 levels, that the company does not expect a full revenue recovery until business travel returns, and that it intends to begin service to Philadelphia in May 2004.
Jan 29, 2004
2002
Southwest Airlines Annual Report, Year Ended Dec 31, 2002
Southwest Airlines Co. reported 2002 net income of $241.0 million ($.30 per share, diluted), down from $511.1 million ($.63 per share, diluted) in 2001, a decrease of $270.1 million or 52.9 percent. Operating income fell to $417.3 million from $631.1 million, a decrease of 33.9 percent. Management described 2002 as one of the most difficult years in commercial aviation history, but noted the company was the only major carrier to remain profitable for the 30th consecutive year. Operating revenues were $5.52 billion, down $33.4 million or .6 percent, as passenger revenues fell amid a 65.9 percent load factor versus 68.1 percent in 2001, on capacity growth of 5.5 percent. Results were supported by $48 million of Air Stabilization Act grant gains in 2002, versus $235 million in 2001; excluding special items, adjusted net income was $198.1 million ($.24 per share, diluted). Cost control was a key theme. Operating expenses per available seat mile fell 1.7 percent to 7.41 cents, driven by lower profitsharing, fuel and commission expense, although insurance costs per ASM rose more than 175 percent. Fuel averaged 68.01 cents per gallon, with hedges covering approximately 83 percent of expected 2003 fuel consumption. Management expects 2003 operating expenses per ASM to rise on higher fuel and salary costs, while forecasting ASM growth of about four percent. The balance sheet remained solid, with cash and cash equivalents of $1.82 billion at year-end, total assets of $8.95 billion, and stockholders' equity of $4.42 billion. Long-term debt rose to $1.55 billion from $1.33 billion after a $385 million 6.5% notes offering in March 2002. Operating cash flow was $520.2 million, down from $1.48 billion in 2001, and the company had aircraft purchase commitments of about $3.2 billion. The company has an unfunded aircraft delivery schedule of 17 Boeing 737-700s in 2003.
Feb 5, 2003
2001
Southwest Airlines Annual Report, Year Ended Dec 31, 2001
Southwest Airlines Co. reported net income of $511.1 million, or $.63 per diluted share, for fiscal 2001, compared with $625.2 million ($.79 per diluted share) before the cumulative accounting effect in 2000. Operating income fell to $631.1 million from $1,021.1 million, a decrease of 38.2 percent. Operating revenues were $5.56 billion, down 1.7 percent, as the September 11, 2001 terrorist attacks sharply reduced passenger demand and yields. The company was profitable in each quarter of 2001, but fourth-quarter operating income was only $37.1 million, and the filing says it is not yet known whether first-quarter 2002 will be profitable without the expected federal grant. The 2001 results include $235 million in gains from grants under the Air Transportation Safety and System Stabilization Act, along with about $48 million in special charges tied to the attacks. Excluding these items, net income was $412.9 million. The company cut costs per available seat mile by 2.5 percent to $.0754, helped by lower average fuel prices of $.7086 per gallon, which were 10.0 percent below 2000. Fuel hedging gains totaled $79.9 million. Balance sheet liquidity strengthened considerably. Cash and cash equivalents rose to $2.28 billion from $523.0 million, funded by a $475 million revolving credit borrowing, $614.3 million of Pass Through Certificates, and $1.5 billion of operating cash flow. Long-term debt rose to $1.33 billion, and stockholders' equity reached $4.01 billion. Management reports that it deferred aircraft deliveries with Boeing and placed 19 aircraft through a special purpose trust, and that 2002 capacity is expected to grow about 3.5 percent.
Feb 4, 2002
2000
Southwest Airlines Annual Report, Year Ended Dec 31, 2000
Southwest Airlines Co. reported a record 2000 for its 28th consecutive year of profit and its ninth consecutive record annual profit, despite the highest jet fuel prices since 1990. Operating revenues rose to $5.65 billion from $4.74 billion in 1999, and operating income reached $1.02 billion, up from $781.6 million. Net income after the cumulative accounting change was $603.1 million ($1.14 per diluted share), compared with $474.4 million ($.89 per diluted share) in 1999. The filing attributes the results to increased capacity, strong demand, and revenue management, with operating margin of 18.1 percent and net profit margin before the accounting change of 11.1 percent. Costs rose sharply on fuel: fuel and oil expense was $804.4 million, or $.0134 per ASM, up 44.1 percent per ASM, and the average fuel price was $.7869 per gallon. Hedging gains of $113.5 million partly offset this. The company hedged about 80 percent of its 2001 anticipated jet fuel requirements and forecasts a first-quarter 2001 fuel price no higher than first-quarter 2000's $.82 per gallon. Operating cash flow was $1.3 billion, net capital expenditures were $1.1 billion, and cash and equivalents were $523 million at year-end, with no borrowings under its $475 million revolving credit line. Looking ahead, the company plans capacity growth of about 11 percent in 2001 with a net addition of 21 aircraft, including 25 new Boeing 737-700 deliveries. Firm aircraft commitments total about $4.0 billion through 2007, of which $668.3 million relates to 2001. The company also announced a three-for-two stock split payable February 15, 2001, and a commission rate cut for travel agents beginning January 1, 2001. An IRS revenue ruling of December 21, 2000 supports the industry's deduction of aircraft inspection and maintenance costs, which management believes will not have a materially adverse effect on results.
Jan 26, 2001
1999
Southwest Airlines Annual Report, Year Ended Dec 31, 1999
Southwest Airlines Co. reported record results for fiscal 1999, its 27th consecutive year of profitability and its eighth consecutive year of record annual profit. Operating revenues rose to $4.74 billion, up 13.7 percent from $4.16 billion, and operating income reached $781.6 million, up 14.3 percent. Net income was $474.4 million, or $.89 per diluted share, compared with $433.4 million ($.82) in 1998, an increase of 9.4 percent. The operating margin of 16.5 percent was the highest since 1981, and the load factor hit a record 69.0 percent. Growth was driven by a 9.3 percent increase in revenue passengers carried and a 16.1 percent increase in revenue passenger miles, with capacity (ASMs) up 11.2 percent. Cost pressures were concentrated in fuel. Fuel and oil expense rose 13.4 percent per ASM, reflecting a 15.4 percent increase in average jet fuel prices, and fourth-quarter fuel cost per gallon rose 54.5 percent. Management said fuel prices in the fourth quarter reached their highest levels since 1991 and expects significantly higher jet fuel prices in first quarter 2000. As of February 24, 2000, the company had hedged approximately 57 percent of first-quarter 2000 fuel requirements and 85 percent of second-quarter requirements, and it expects to add 30 or more aircraft in 2000 with capacity growth of about 12 percent. Cash from operations was $1.00 billion, net capital expenditures were $1.17 billion, and cash and equivalents ended the year at $418.8 million with no borrowings under a $475 million revolving credit line. The filing also notes a $22.1 million after-tax cumulative effect charge in first-quarter 2000 from adopting SAB 101, which changes the accounting for sales of Rapid Rewards flight segment credits. Other items include an IRS Tax Court dispute over 1989 to 1991 maintenance deductions, which management does not expect to be materially adverse, and a $250 million share repurchase authorization under which 5.6 million shares had been bought back for $90.5 million by year-end.
Mar 28, 2000
1998
Southwest Airlines Annual Report, Year Ended Dec 31, 1998
Southwest Airlines Co. reported record 1998 results in its Form 10-K for the fiscal year ended December 31, 1998. Consolidated operating revenues rose 9.1 percent to $4,163,980 thousand (about $4.16 billion), operating income reached $683,611 thousand (about $683.6 million), and net income was $433,431 thousand (about $433.4 million, or $1.23 per diluted share), an increase of 36.4 percent over 1997. Management cited the highest net profit margin since 1981 of 10.4 percent and the highest operating profit margin since 1981 of 16.4 percent, and noted the company's seventh consecutive year of record annual profit. Unit costs benefited from a 26.9 percent decline in average jet fuel prices. Operating expenses per available seat mile fell to 7.32 cents from 7.40 cents, and the company hedged 77 percent of its first-quarter 1999 and 56 percent of its second-quarter 1999 fuel needs using fixed price swaps. Capacity growth was steady, with the fleet at 280 Boeing 737 aircraft at year-end and 105 737-700s on firm order, with aggregate firm commitments of about $2.49 billion through 2004. Cash from operations was $886.1 million, capital expenditures were $947.1 million, and the company repurchased $100 million of its stock while holding $378.5 million in cash and no borrowings under its $475 million revolving credit line. The filing also flags risks including the Wright Amendment limits on Love Field service, an IRS dispute over aircraft maintenance deductions that management does not expect to be materially adverse, the phase-out of Stage 2 aircraft under the Airport Noise and Capacity Act, and Year 2000 remediation, with total costs of $11.0 million expensed to date and about $7 million remaining.
Mar 26, 1999
1997-A
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 1997
Southwest Airlines Co. filed Amendment No. 1 to its Form 10-K annual report for the fiscal year ended December 31, 1997. The amendment, signed April 3, 1998 by Vice President-Finance and Chief Financial Officer Gary C. Kelly, changes only Item 14, Exhibit 27, which contains restated Financial Data Schedules. The filing states that the remaining exhibits are not affected. The amendment text itself reports no operating results, balance sheet figures, or other financial metrics. Investors seeking the restated figures would need to review Exhibit 27, which the filing identifies as the only changed item. The filing does not describe the reasons for the restatement. The registrant is a Texas corporation headquartered at P.O. Box 36611, Dallas, Texas, with Commission File No. 1-7259.
Apr 8, 1998
1997
Southwest Airlines Annual Report, Year Ended Dec 31, 1997
Southwest Airlines Co. reported record 1997 net income of $317.8 million ($1.40 per diluted share), up from $207.3 million ($0.92 per share) in 1996, an increase of 53.3 percent. Operating revenues rose 12.1 percent to $3,816.8 million, driven by an 11.3 percent increase in passenger revenues, while operating expenses grew 7.8 percent to $3,292.6 million. Operating expenses per available seat mile fell 1.3 percent to 7.40 cents, which management attributed to lower jet fuel prices, lower engine repair costs and cost reduction efforts. Operating income reached $524.2 million, compared with $350.8 million in 1996. The company ended 1997 with 261 Boeing 737 aircraft serving 51 cities, and it took its first Boeing 737-700 delivery in December 1997. Firm aircraft commitments total approximately $3,109.8 million through 2004, of which $565.7 million relates to 1998. Cash and cash equivalents were $623.3 million at year-end, and the company had no borrowings under its $475 million revolving credit line. Load factor declined to 63.7 percent from 66.5 percent as promotional fare activity decreased. Management highlighted risks including the October 1997 federal excise tax changes, which it estimated could add roughly $30 million to its 1998 tax burden, Boeing 737 production delays, Year 2000 remediation costs (with $4.0 million expensed to date and $15 million remaining), and an IRS dispute over aircraft maintenance deductions for 1989 through 1991, which management believes will not have a materially adverse effect.
Mar 19, 1998
1996-A
Southwest Airlines Annual Report (Amendment), Year Ended Dec 31, 1996
Southwest Airlines Co. filed this Form 10-K/A (Amendment No. 1) on July 10, 1997 for the fiscal year ended December 31, 1996. The filing does not present financial statements or operating results. Its sole purpose is to file an amended Exhibit 10.3: Supplemental Agreement No. 1, dated as of February 26, 1997, to Purchase Agreement No. 1810 with The Boeing Company, covering the Boeing Model 737-7H4 aircraft. The amendment is signed by Gary C. Kelly, Vice President - Finance and Chief Financial Officer. The supplemental agreement updates the aircraft purchase terms. The base agreement covers 63 firm 737-7H4 aircraft. Option provisions were expanded to 67 option aircraft, plus 49 rollover option aircraft, with deliveries scheduled from October 1998 through 2006. The warranty period was extended from 36 to 48 months, the Program Changes provisions were removed, and several letter agreements were revised or added. These cover escalation sharing (Boeing shares one-half of escalation up to 3% per year in 1997 and 1998), service ready validation program testing, and maintenance training. Most price, performance, and credit terms are redacted as confidential under Rule 24b-2. For investors, the filing is a contract amendment rather than a periodic results report. It shows a commitment to acquire additional 737-7H4 aircraft, with the option structure and delivery schedule set out above.
Jul 10, 1997
1995
Southwest Airlines Annual Report, Year Ended Dec 31, 1995
Southwest Airlines Co. reported record 1995 results in its annual report on Form 10-K for the fiscal year ended December 31, 1995. Net income rose to $182.6 million ($1.23 per share) from $179.3 million ($1.22 per share) in 1994, an increase of 1.8 percent. Operating revenues grew 10.8 percent to $2,872.8 million, driven by a 10.5 percent increase in passenger revenues, while operating expenses rose 12.5 percent to $2,559.2 million. Operating expenses per ASM fell 0.1 percent for the second consecutive year, though management said near-term per-ASM reductions will be harder given higher jet fuel prices and the October 1995 fuel tax increase. Load factor declined to 64.5 percent from 67.3 percent as capacity (ASMs) grew 12.6 percent against 7.9 percent RPM growth. Southwest ended 1995 with $317.4 million in cash and cash equivalents, total assets of $3.26 billion, and stockholders' equity of $1.43 billion. Operating cash flow was $456.4 million, and capital expenditures were $728.6 million, mainly for 23 new 737-300 aircraft. The company had $461.5 million of 1996 aircraft commitments within roughly $2.61 billion of total firm commitments through 2001, and a revolving credit line of up to $460 million that was undrawn at year-end. The fleet comprised 224 Boeing 737 aircraft, with 78 percent Stage 3, and the company planned to add a net 17 aircraft in 1996 for its Florida expansion, including service to Tampa and Ft. Lauderdale in January 1996 and Orlando in April 1996. Management flagged uncertainties for 1996, including the national budget impasse, the lapse of the 10 percent federal ticket tax, a proposed deferral of the jet fuel tax, and possible FAA funding reform. January 1996 passenger revenue yield exceeded January 1995 by more than 10 percent, aided by the ticket tax lapse, while monthly load factors were below year-ago levels. The company also noted that several larger competitors had initiated or were studying low-cost shorthaul service in its markets.
Mar 28, 1996