Southwest Airlines (LUV) 10-K risk factor changes: FY2025 vs FY2024

If any of these risks actually [removed: occur,] [added: occurs,] it could materially harm the [removed: Company's] [added: Company’s] business, financial condition, or results of operations, or impair the [removed: Company's] [added: Company’s] ability to implement its strategic plans.

The following risk factors are summarized as financial; operational; information [removed: technology;] [added: technology, cybersecurity,] and [added: data privacy; and] legal, regulatory, compliance, and reputational.

- The airline industry is particularly sensitive to changes in economic conditions, and continued or future unfavorable economic conditions [added: or economic uncertainty] could negatively affect the Company’s results of operations and require the Company to adjust its business strategies.

- The Company's [removed: business] [added: business, strategic plans, and profitability] can be significantly [removed: impacted] [added: affected] by the availability of jet [added: fuel,] fuel [added: prices,] and [removed: high and/or volatile] [added: volatility of] fuel prices, and the Company's operations are subject to disruption in the event of any delayed supply of fuel.

- The [removed: Company's] [added: Company’s] low-cost structure has historically been [removed: one of its primary] [added: a] competitive [removed: advantages,] [added: advantage,] and many factors have [removed: adversely affected] and could continue to adversely affect the [removed: Company's] [added: Company’s] ability to control its costs.

- The [removed: Company's results of operations] [added: Company’s business, operating results, and financial condition] could be adversely impacted if it is unable to effectively execute its strategic plans.

If the MAX aircraft were to become unavailable for the [removed: Company's] [added: Company’s] operations, or if the Company were [removed: to continue] [added: not able] to [removed: experience prolonged delivery delays of MAX aircraft,] [added: procure future aircraft in a timely manner or on favorable commercial terms,] the [removed: Company's] [added: Company’s] business plans, strategies, and results of operations could be materially and adversely affected.

- The [removed: Company's business is labor intensive, with most Employees represented by labor unions; therefore, the] Company could be materially adversely affected in the event of conflict with its Employees or its [removed: Employees'] [added: Employees’] representatives or if the Company were unable to employ and retain appropriate numbers of qualified Employees to maintain its operations.

- The Company is currently dependent on a single engine supplier, as well as single suppliers of certain other aircraft parts and equipment; therefore, the Company could be materially adversely affected (i) if it were unable to obtain timely or sufficient delivery of aircraft parts or equipment or adequate maintenance or other [removed: support from any of these suppliers at commercially reasonable terms,] [added: support,] (ii) if suppliers were unable to achieve and/or maintain required regulatory certifications or [removed: approvals of their parts or equipment,] [added: approvals,] or (iii) in the event of a mechanical or regulatory issue associated with the [removed: Company's] [added: Company’s] aircraft parts or equipment.

- The airline industry has faced on-going security concerns and related cost burdens; further threatened or actual terrorist attacks, war, or other [removed: hostilities, even if not made directly on the airline industry,] [added: hostilities] could significantly harm the airline industry and the [removed: Company's] [added: Company’s] operations.

- The Company is heavily dependent on technology to operate its [removed: business and continues to implement substantial changes to its information systems;] [added: business;] any failure, disruption, breach, or delay in the Company’s information systems or in implementation of necessary changes could materially adversely affect its operations.

- The Company is increasingly exposed to cybersecurity attacks and data incidents impacting its IT Systems, [removed: or those of] [added: and such incidents could have a disruptive and material adverse effect on] the Company’s [removed: vendors] [added: business, financial position,] or [removed: service providers.][added: results of operations.]

- The Company is subject to extensive government regulation that may disrupt or necessitate modifications to the Company’s operations, business plans, and strategies, [added: or] increase the [removed: Company's] [added: Company’s] operating [removed: costs, or otherwise limit the Company's ability to conduct business.][added: costs.]

- The Company is subject to various environmental requirements and [removed: risks, including increased regulation, changing consumer preferences, physical, environmental, and climate risks, and risks associated with climate change;] [added: risks;] the cost of compliance with more stringent environmental regulations, failure to comply with environmental regulations, or failure to otherwise manage the risks of climate change effectively could have a material adverse effect on the Company’s results of operations.

- The [removed: Company's] [added: Company’s] future results [removed: will] [added: may] suffer if it is unable to effectively manage its [added: current and contemplated] international operations [removed: and/or] [added: or] Extended Operations.

- The Company is currently subject to regulatory actions and pending litigation, and [removed: if] judgment, penalties, or fines [removed: were to be] rendered against the [removed: Company, such judgment, penalties, or fines] [added: Company] could adversely affect the [removed: Company's] [added: Company’s] operating results.

- The Company’s reputation and brand could be harmed if it were to experience significant negative publicity through social media or [removed: otherwise, including with respect to the Company's voluntary or mandatory ESG-related goals and disclosures.][added: otherwise.]

[removed: - The Company’s Bylaws designate specific courts as the exclusive forum for certain legal actions between the] [added: The] Company [removed: and] [added: has adopted certain provisions in] its [removed: Shareholders, which] [added: Bylaws that] could increase costs to bring a claim, discourage claims, [added: limit the ability of the Company’s Shareholders to bring a claim,] or limit the ability of the Company’s Shareholders to bring a claim in a judicial forum viewed by the Shareholders as more favorable for disputes with the Company or the Company’s directors, officers, or other [removed: Employees.][added: Employees.]

Further, some businesses [removed: have continued to] allow their employees to work remotely [removed: following the COVID-19 pandemic] and/or [removed: have restricted] [added: restrict] non-essential travel for their employees, which has [removed: kept] [added: impacted the] demand for business air [removed: travel below pre-pandemic levels.][added: travel.]

In addition, to the extent business travel [removed: recovers to pre-pandemic levels,] [added: demand increases,] businesses may require the purchase of less expensive tickets to reduce costs.

The Company's business can be significantly [removed: impacted] [added: affected] by the availability of jet [added: fuel,] fuel [added: prices,] and [removed: high and/or volatile] [added: volatility of] fuel [removed: prices,] [added: prices] and the Company's operations are subject to disruption in the event of any delayed supply of fuel; therefore, the Company's strategic plans and future profitability are likely to be [removed: impacted] [added: affected] by [removed: the Company's ability to effectively address] fuel [added: availability,] price [removed: increases] [added: increases,] and fuel price [removed: volatility and availability.][added: volatility.]

Airlines are inherently dependent upon energy to operate, and jet fuel and oil represented approximately [removed: 21.4] [added: 19] percent of the Company's operating expenses for [removed: 2024.][added: 2025.]

[removed: Furthermore, the] [added: The] cost of fuel can be extremely volatile and unpredictable and [added: is] subject to many external factors [added: and market expectations] that are beyond the [removed: Company's] [added: Company’s] control.

For example, fuel prices can be impacted by [removed: political,] [added: geopolitical,] environmental (including those related to climate change), and economic factors, such as (i) dependency on foreign imports of crude oil and [removed: the] potential [removed: for] [added: or actual] hostilities or other conflicts in oil producing [removed: areas;] [added: areas or along global trade routes;] (ii) limitations and/or disruptions in domestic refining or pipeline operations or capacity due to weather, natural disasters, or other factors; (iii) worldwide demand for fuel, particularly in developing countries, which can result in inflated energy prices; (iv) changes in U.S. governmental policies on fuel production, transportation, taxes, and marketing; [removed: and] (v) [added: imposition of economic sanctions on oil-producing countries or specific industry participants; and (vi)] changes in currency exchange rates.

[removed: The] [added: Historically, the] Company [removed: has historically] attempted to manage its risk associated with volatile jet fuel prices by utilizing over-the-counter fuel derivative instruments to hedge a portion of its future jet fuel purchases.

[removed: Because the Company uses a variety of different derivative instruments at different price points,] [added: If] the Company [removed: is subject] [added: were] to [added: resume its fuel hedging program in] the [removed: risk] [added: future, it cannot guarantee] that the fuel derivatives it uses will [removed: not] provide adequate protection against significant increases in fuel prices.

In [removed: some] [added: certain] cases, [removed: these] [added: the type of] derivative instruments [added: utilized] could result in hedging losses, which could result in the Company effectively paying higher than market prices for fuel, thus creating additional volatility in the [removed: Company's] [added: Company’s] earnings.

[removed: Based] [added: However, based] on [removed: the current geopolitical and market dynamics,] higher [added: fuel hedging] premium costs over [removed: time,] [added: time] and [removed: aggressive cost reductions underway,] [added: other factors,] the Company [added: terminated its remaining fuel hedge positions in second quarter 2025 and] does not intend to add new [removed: hedging positions] [added: fuel derivatives] to its [removed: current hedge book.][added: portfolio.]

The [removed: Company's] [added: Company’s prior period] fuel hedging arrangements and the various potential impacts of hedge accounting on the [removed: Company's] [added: Company’s] financial position, cash flows, and results of operations are discussed in more detail under [removed: "Management’s] [added: “Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations," "Quantitative] [added: Operations,” “Quantitative] and Qualitative Disclosures About Market [removed: Risk,"] [added: Risk,”] and in Note 1 and Note 10 to the Consolidated Financial Statements.

A disruption in [removed: that] [added: refinery production or related service and transportation operations affecting] supply could present significant challenges to the [removed: Company's] [added: Company’s] operations and could ultimately cause the cancellation of flights and/or hinder the Company’s ability to provide service to a particular airport.

As discussed below under [removed: "Management’s] [added: “Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations,"] [added: Operations,”] the Company [added: has experienced significant inflationary cost pressure, particularly with respect to Salaries, wages, and benefits]

These include costs such as fuel, [removed: labor,] [added: labor (especially union labor),] airport, and regulatory compliance costs.

[removed: As discussed further under "Management’s Discussion and Analysis of Financial Condition and Results of Operations," the Company's] [added: The Company’s] unionized workforce makes up approximately [removed: 82] [added: 84] percent of its Employees and many have had pay scale increases as a result of contractual rate increases, which has [removed: put pressure on] [added: increased] the [removed: Company's] [added: Company’s] labor costs.

The Company is reliant upon third-party vendors and service providers, and the [removed: Company's low-cost advantage] [added: Company’s competitive position] is dependent in part on its ability to obtain and maintain commercially reasonable terms with those parties.

Disruptions to capital markets, shortages of skilled personnel, supply chain disruptions, increased regulation, geopolitical developments, [added: tariffs,] and/or adverse economic conditions could subject certain of the [removed: Company's] [added: Company’s] third-party vendors and service providers to significant financial pressures, which could lead to delays and other performance issues, ceased operations, or even bankruptcies among these third-party vendors and service providers.

For instance, the cost of insurance premiums related to hail and wind damage has increased for certain facilities, and [added: certain flood insurance is no longer available.]

Any aircraft accident or other incident involving [removed: Southwest,] [added: Southwest or Southwest’s strategic partners,] even if fully insured, could also have a material adverse effect on the [removed: public's] [added: public’s] perception of the Company, which could harm its reputation and business.

The [removed: Company's results of operations] [added: Company’s business, operating results, and financial condition] could be adversely impacted if it is unable to effectively execute its strategic plans.

[removed: The] [added: In both 2024 and 2025, the] Company [removed: has also] announced plans [removed: for] [added: for, and is in the process of implementing,] certain transformational initiatives, such as changing to an assigned seating model, offering [removed: premium seating with] extra [removed: legroom,] [added: legroom seating,] formalizing partnerships with international carriers to expand its network, offering Getaways by Southwest, introducing 24-hour operations, [removed: and] reducing the turn times between [removed: flights.][added: flights, and introducing bag fees for most fare products.]

The [removed: Company’s transformational initiatives are discussed in more detail under “Business.” The] timely and effective execution of the [removed: Company's] [added: Company’s] strategies is dependent upon, among other factors, (i) the [removed: Company's] [added: Company’s] ability to balance its network schedule and capacity with the availability and location of its crew resources; (ii) the [removed: Company's] [added: Company’s] ability to effectively balance its investment of incremental operating expenses and capital expenditures related to its strategies against the need to effectively control costs; (iii) the [removed: Company's] [added: Company’s] ability to timely and effectively implement, transition, and maintain related information technology systems and infrastructure; (iv) the Company’s ability to [added: secure labor agreements or modifications necessary to support certain operational or strategic initiatives; (v) the Company’s ability to] maintain satisfactory relations with its Employees or its Employees’ representatives; [removed: (v)] [added: (vi)] the Company’s ability to [added: retain and] broaden its Customer base; and [removed: (vi)] [added: (vii)] the [removed: Company's] [added: Company’s] dependence on third parties with respect to the execution of its strategic plans.

- Introducing a new aircraft manufacturer or fleet type could impose significant operational complexities, regulatory requirements, and costs on the Company.

- The Company is expanding its use of AI and machine-learning, and any failure in its related strategy, compliance with regulations, or risk management could materially adversely affect its operations, reputation, and/or financial position.

- The Company has adopted certain provisions in its Bylaws that could increase costs to bring a claim, discourage claims, limit the ability of the Company’s Shareholders to bring a claim, or limit the ability of the Company’s Shareholders to bring a claim in certain judicial forums.

Government foreign-relations actions, including tariffs and immigration policies, may also reduce the willingness of non-U.S. persons to travel to or within the United States, including by air.

The Company’s ability to mitigate the impact of fuel price increases or volatility through increased fares or fees could also be limited by the competitive nature of the airline industry and the unpredictability of the market for air travel.

Passengers often purchase tickets well in advance of their travel, and the Company may not be able to increase fares, impose fuel surcharges, increase revenues, or decrease other operating costs sufficiently to offset rapid or prolonged fuel price increases.

Further, the Company faces the risk that higher fares may drive a decrease in air travel demand generally or a disproportionate decrease in leisure travel due to price sensitivity.

Conversely, prolonged periods of low fuel prices may hinder the Company’s ability to execute on its strategic initiatives as other carriers compete by offering lower fares, flying longer-haul routes, or increasing capacity.

The Company may review its approach to hedging from time to time based on market conditions and other factors.

Purchasing jet fuel at prevailing market prices, which could change substantially over short periods of time, may make the Company’s earnings more vulnerable to volatile fuel prices and could have a material adverse effect on the Company’s results of operations and financial condition.

The Company’s ability to enter into fuel derivative instruments in the future could also be limited by market conditions.

expense.

These agreements include required work rules and wage‑rate provisions, as well as other negotiated terms, that may restrict the Company’s operational flexibility and result in increased staffing or scheduling inefficiencies, thereby pressuring its cost structure relative to certain competitors.

If new or amended labor agreements include additional pay increases, work rule requirements, or other terms that further elevate costs, the Company’s competitive cost position could be adversely affected.

The Company’s wholly-owned insurance captive uses actuarial services to determine the value of policies and reserves, which can be subject to fluctuation as past trends are not always indicative of future

loss developments.

The execution of the Company’s strategic plans have been and may again be negatively affected by macroeconomic conditions.

The Company’s transformational initiatives are discussed in more detail under “Business.” The Company made certain assumptions in developing its strategic plans and initiatives related to, for example, customer demand (in light of changing economic conditions), fuel costs, delivery of aircraft, aircraft certification approval timelines, labor market constraints and related costs, supply chain constraints, inflationary pressures, voluntary or mandatory groundings of aircraft, its network, competition, market consolidation, and other macroeconomic and geopolitical factors.

Furthermore, the execution of the Company’s strategic plans may exacerbate other risks described in this Form 10-K.

Actual conditions may be different from the Company’s assumptions at any time and could cause the Company to further adjust its strategic plan.

To meet Customer preferences and better compete with the major U.S. airlines, the Company has moved to a more segmented approach, offering a basic economy product

and a premium economy fare product with extra legroom.

The Company has also moved to an assigned seating model and now charges bag fees for most fare products.

The competitiveness of the Company’s offerings could be adversely affected if it is unable to implement new initiatives in a timely and successful manner or if Customers are unwilling to accept the Company’s product and policy changes.

The Company may not be able to procure aircraft in the future in a timely manner or on favorable commercial terms, which could limit the Company’s growth or negatively affect the Company’s cost structure and competitive position.

The Company’s ability to execute its growth, fleet modernization, and strategic and operational plans may be affected by the timely procurement of additional aircraft on commercially favorable terms.

Industry demand for new

aircraft may exceed supply, and manufacturers may face production constraints, supply chain shortages, changes in production rates, labor disruptions, or order backlogs that limit availability of aircraft.

The Company may also encounter less favorable pricing, reduced delivery slot availability, more restrictive contractual terms, or diminished negotiating leverage with aircraft manufacturers, sellers, or lessors.

If the Company is unable to procure additional aircraft on acceptable terms or within planned timeframes, the resulting constraints could negatively affect the Company’s ability to meet evolving Customer demands, pursue growth or network expansion opportunities, or replace aircraft planned for retirement, any of which could adversely affect the Company’s competitive position, operating results, and financial condition.

Introducing a new aircraft manufacturer or fleet type could impose significant operational complexities, regulatory requirements, and costs on the Company.

Renegotiating labor agreements or entering into new labor agreements can require significant costs and extensive bargaining and, in some instances, may not be successful.

As a result, the Company offered a voluntary separation program to certain Employees in 2024, and the Company implemented a reduction in workforce in 2025.

to optimally adjust capacity.

- laws and regulations, which may change or which may be inconsistent across various jurisdictions; and

Similarly, the Company has

actors are increasingly using technologies specifically designed to circumvent cybersecurity measures and avoid detection.

The Company is expanding its use of AI and machine-learning.

Any failure in the Company’s AI implementation strategy, compliance with regulations, or failure to otherwise manage the risks related to AI technologies effectively could materially adversely affect its operations, reputation, and/or financial position.

For example, in November 2025 during the partial government shutdown, the FAA issued an emergency order mandating an industry-wide reduction in flights at 40 major U.S. airports.

Such cybersecurity incidents or data incidents could have a disruptive and material adverse effect on the Company’s business, financial position, or results of operations.

As discussed under "Business - Cost Structure," although market jet fuel prices were volatile throughout the year, Fuel and oil expense for 2024 remained high, primarily due to an increase in fuel gallons consumed.

The Company's ability to mitigate the impact of fuel price increases could also be limited by factors such as its historical low-fare reputation, the portion of its Customer base that purchases travel for leisure purposes, the competitive nature of the airline industry generally, and the risk that higher fares will drive a decrease in demand.

However, energy prices can fluctuate significantly in a relatively short amount of time.

In addition, the Company has had to de-designate certain derivative instruments from their hedging relationships because the derivatives no longer qualify for hedge accounting under applicable accounting standards.

The Company continues to be subject to the risk that its fuel derivatives will no longer qualify for hedge accounting under applicable accounting standards, or that the derivative instruments utilized will not effectively offset changes in the price of the jet fuel consumed, which can create additional earnings volatility.

Adjustments in the Company's overall fuel hedging strategy, as well as the ability of the commodities used in fuel hedging to qualify for special hedge accounting, could continue to affect the Company's results of operations.

In addition, there can be no assurance that the Company would be able to cost-effectively hedge against increases in fuel prices.

For additional discussion of the availability of jet fuel and SAF, please see “The Company is subject to risks related to its voluntary sustainability goals and disclosures, which may affect stakeholder sentiment and the Company’s reputation and brand.”

has experienced significant inflationary cost pressure, particularly with respect to Salaries, wages, and benefits expense.

Jet fuel and oil constituted approximately 21.4 percent of the Company's operating expenses during 2024, and the Company's ability to control the cost of fuel is subject to the external factors discussed in “The Company's business can be significantly impacted by the availability of jet fuel and high and/or volatile fuel prices, and the Company's operations are subject to disruption in the event of any delayed supply of fuel; therefore, the Company's strategic plans and future profitability are likely to be impacted by the Company's ability to effectively address fuel price increases and fuel price volatility and availability.”

Salaries, wages, and benefits constituted approximately 45.1 percent of the Company's operating expenses during 2024.

This limited control has negatively impacted the Company's low-cost structure and position.

certain flood insurance is no longer available.

The execution of the Company's strategic plans was significantly negatively affected by the COVID-19 pandemic.

Nevertheless, the Company has taken actions to address staffing and increase the starting wage rate for certain workgroups, manage its fleet and fleet order book, and better optimize its network.

The Company plans to move to an assigned seating model and will offer a premium economy fare product with extra legroom to meet Customer preferences and better compete with the major U.S. airlines.

In January 2024, the FAA announced that it had informed Boeing that the FAA would not (i) agree to any request from Boeing for an expansion in production or (ii) approve additional production lines for the MAX aircraft until the FAA is satisfied that any applicable Boeing quality control issues are resolved.

In January 2024, Boeing announced plans to withdraw an exemption request with the FAA and incorporate an engineering solution as part of the -7 certification process.

products, or otherwise fulfill their commitments to the Company, could materially adversely affect the Company’s operations.

These events can decrease revenue, increase costs, and adversely impact the Company’s financial condition.

Moreover, any resulting economic dislocations could

Any failure, disruption, or delay in implementation of the Company’s IT Systems could

Any of these events

Moreover, the Company’s planned move to premium seating with extended legroom will require approvals from the FAA and other regulatory agencies for the new cabin layout.

Any delay in such approval could disrupt or necessitate modifications to the Company’s operations and business plans and have a material adverse effect on the Company’s results of operations.

- changes to environmental regulations;

- mandates that affect the usage of SAF;

- changes in laws that may limit the Company's ability to enter into fuel derivative contracts to hedge against increases in fuel prices;

systems, safe drinking water, and the management of hazardous substances and waste materials.

For example, as discussed in more detail under “Business – Regulation,” the federal government, as well as several state and local governments, the governments of other countries, and the United Nations’ International Civil Aviation Organization have implemented legislative and regulatory proposals and voluntary measures intended to reduce GHG emissions.

However, the Company cannot predict what actions the federal government or any local or state governments may take with respect to future efforts to reduce GHG emissions and the timing with respect to the same.

For example, CARB has previously proposed amendments to California’s Low Carbon Fuel Standard (“LCFS”) regulation that would subject intrastate fossil jet fuel to the LCFS, although CARB eventually abandoned this proposal.

Although fossil jet fuel remains an exempted fuel under the currently proposed amendments to the LCFS, any such future amendment that attempts to subject fossil jet fuel to the LCFS could in turn increase the demand for and the costs of the limited supply of SAF currently available and could result in increased costs of fossil jet fuel in the California market because of the need for jet fuel producers to produce SAF or buy LCFS credits.

Other states could propose or adopt similar obligations in the future.

In addition to risks from potential changes to environmental regulation and policy, the transition to lower-carbon technologies could materially adversely affect the Company’s financial results.

For example, lower-carbon technologies, such as SAF, are currently not available at scale or priced cost-competitively as compared to conventional jet fuel and may take a significant amount of time to develop and mature, and the cost to transition to them could be prohibitively expensive without appropriate government support, policies, and incentives in place (including tax credits).

For additional disclosure related to the risks of SAF, see the Risk Factor entitled, “The Company is subject to risks related to its sustainability goals and disclosures, which may affect stakeholder sentiment and the Company’s reputation and brand.”

Finally, the potential acute and chronic physical effects of climate change, such as increased frequency, duration, and severity of extreme weather events, longer-term changes in weather patterns, and other climate-related events,

could affect the Company’s operations, infrastructure, and financial results.

The Company had a record full year [removed: 2024] revenue [removed: performance,] [added: performance in 2025,] producing operating revenues of [removed: $27.5] [added: $28.1] billion, due [added: in part] to continued [removed: demand strength and the benefits from] [added: strong domestic travel demand, as well as] the execution of [removed: tactical actions related to initiatives announced by the Company] [added: transformational initiatives, which has resulted] in [removed: 2024 designed to elevate the Customer Experience on its flights, improve] [added: strong] financial [removed: performance,] [added: performance] and [removed: drive] [added: driven incremental] Shareholder value.

[removed: The] [added: During 2025, the] Company [removed: returned $680 million] [added: continued] to [added: deliver value to its] Shareholders [added: by returning $2.9 billion to Shareholders] through [removed: $430] [added: $399] million in dividend payments and [removed: $250 million] [added: $2.6 billion] through [removed: an] accelerated share repurchase [removed: program] [added: programs] entered into by the Company with [removed: a] third party financial [removed: institution in fourth quarter 2024.][added: institutions.]

[removed: See "Liquidity and Capital Resources" below] for further information on the Company's [removed: 2024] share repurchases.

The Company recorded results for [removed: 2024] [added: 2025] and [removed: 2023,] [added: 2024,] on an accounting principles generally accepted in the United States ("GAAP") and non-GAAP basis, as noted in the following tables.

| (in millions, except per share amounts) | | | | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | |]

| GAAP | | | | | | [removed: 2024] [added: 2025] | | | | | | [removed: 2023] [added: 2024] | | | | | | Change | | | | | | | | | | | | [removed: | | |]

| Operating income | | | | | | $ | [removed: 321] [added: 428] | | | | | $ | [removed: 224 | | |] [added: 321] | | [removed: 43.3] | | | [added: 33.3] | | | | | | | | | | | |

| Net income | | | | | | $ | [removed: 465] [added: 441] | | | | | $ | 465 | | | | | [removed: — | | |] [added: (5.2)] | | | | | | | | | | | |

| Net income per share, diluted | | | | | | $ | [removed: 0.76] [added: 0.79] | | | | | $ | 0.76 | | | | | [removed: — | | |] [added: 3.9] | | | | | | | | | | | |

| Non-GAAP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | |]

| Operating income | | | | | | $ | [removed: 457] [added: 539] | | | | | $ | [removed: 893 | | |] [added: 457] | | [removed: (48.8)] | | | [added: 17.9] | | | | | | | | | | | |

| Net income | | | | | | $ | [removed: 597] [added: 512] | | | | | $ | [removed: 980 | | |] [added: 597] | | [removed: (39.1)] | | | [added: (14.2)] | | | | | | | | | | | |

| Net income per share, diluted | | | | | | $ | [removed: 0.96] [added: 0.93] | | | | | $ | [removed: 1.56 | | |] [added: 0.96] | | [removed: (38.5)] | | | [added: (3.1)] | | | | | | | | | | | |

[removed: On] [added: Additionally, on] a GAAP basis, the Company’s results for the year ended December 31, 2024, included a reversal of $116 million of breakage revenue recorded in prior years related to a portion of flight credits issued to Customers during 2022 and prior that [removed: have] either [removed: been] [added: were] redeemed or are expected to be redeemed in future periods.

See Note [removed: 1] [added: 16] to the [removed: Condensed] Consolidated Financial Statements for further information.

The Company provides the operating data below for the years ended December 31, [removed: 2024] [added: 2025] and [removed: 2023] [added: 2024] because these statistics are commonly used in the airline industry and, therefore, allow readers to compare the Company’s performance against its results for the prior year period, as well as against the performance of the Company’s peers.

| | | | | | | [removed: 2024] [added: 2025] | | | | | | [removed: 2023] [added: 2024] | | | | | | Change | | |

| Revenue passengers carried (000s) | | | | | | [removed: 140,023] [added: 134,110] | | | | | | [removed: 137,279] [added: 140,023] | | | | | | [removed: 2.0] [added: (4.2)] | | % |

| Enplaned passengers (000s) | | | | | | [removed: 175,466] [added: 168,334] | | | | | | [removed: 171,817] [added: 175,466] | | | | | | [removed: 2.1] [added: (4.1)] | | % |

| Revenue passenger miles (RPMs) (in millions)(a) | | | | | | [removed: 142,515] [added: 139,443] | | | | | | [removed: 136,256] [added: 142,515] | | | | | | [removed: 4.6] [added: (2.2)] | | % |

| Available seat miles (ASMs) (in millions)(b) | | | | | | [removed: 177,250] [added: 180,046] | | | | | | [removed: 170,323] [added: 177,250] | | | | | | [removed: 4.1] [added: 1.6] | | % |

| Load factor(c) | | | | | | [removed: 80.4] [added: 77.4] | | % | | | | [removed: 80.0] [added: 80.4] | | % | | | | [removed: 0.4] [added: (3.0)] pts. | | |

| Average length of passenger haul (miles) | | | | | | [removed: 1,018] [added: 1,040] | | | | | | [removed: 993] [added: 1,018] | | | | | | [removed: 2.5] [added: 2.2] | | % |

| Average aircraft stage length (miles) | | | | | | [removed: 763] [added: 780] | | | | | | [removed: 730] [added: 763] | | | | | | [removed: 4.5] [added: 2.2] | | % |

| Trips flown | | | | | | [removed: 1,443,866] [added: 1,415,822] | | | | | | [removed: 1,459,427] [added: 1,443,866] | | | | | | [removed: (1.1)] [added: (1.9)] | | % |

| Seats flown (000s)(d) | | | | | | [removed: 230,187] [added: 228,193] | | | | | | [removed: 231,409] [added: 230,187] | | | | | | [removed: (0.5)] [added: (0.9)] | | % |

| Seats per trip(e) | | | | | | [removed: 159.4] [added: 161.2] | | | | | | [removed: 158.6] [added: 159.4] | | | | | | [removed: 0.5] [added: 1.1] | | % |

| Average passenger fare(k) | | | | | | $ | [removed: 178.40] [added: 190.41] | | | | | $ | [removed: 172.18] [added: 178.40] | | | | | [removed: 3.6] [added: 6.7] | | % |

| Passenger revenue yield per RPM (cents)(f)(k) | | | | | | [removed: 17.53] [added: 18.31] | | | | | | [removed: 17.35] [added: 17.53] | | | | | | [removed: 1.0] [added: 4.4] | | % |

| Operating revenues per ASM (cents)(g)(k) | | | | | | [removed: 15.51] [added: 15.59] | | | | | | [removed: 15.32] [added: 15.51] | | | | | | [removed: 1.2] [added: 0.5] | | % |

| Passenger revenue per ASM (cents)(h)(k) | | | | | | [removed: 14.09] [added: 14.18] | | | | | | [removed: 13.88] [added: 14.09] | | | | | | [removed: 1.5] [added: 0.6] | | % |

| Operating expenses per ASM (cents)(i) | | | | | | [removed: 15.32] [added: 15.35] | | | | | | [removed: 15.19] [added: 15.32] | | | | | | [removed: 0.9] [added: 0.2] | | % |

| Operating expenses per ASM, excluding fuel (cents) | | | | | | [removed: 12.05] [added: 12.44] | | | | | | [removed: 11.54] [added: 12.05] | | | | | | [removed: 4.4] [added: 3.2] | | % |

| Operating expenses per ASM, excluding fuel and [removed: profitsharing] [added: profit sharing] (cents) | | | | | | [removed: 11.99] [added: 12.38] | | | | | | [removed: 11.47] [added: 11.99] | | | | | | [removed: 4.5] [added: 3.3] | | % |

| Fuel costs per gallon, including fuel tax | | | | | | $ | [removed: 2.64] [added: 2.41] | | | | | $ | [removed: 2.89] [added: 2.64] | | | | | (8.7) | | % |

| Fuel costs per gallon, including fuel tax, economic | | | | | | $ | [removed: 2.66] [added: 2.41] | | | | | $ | [removed: 2.89] [added: 2.66] | | | | | [removed: (8.0)] [added: (9.4)] | | % |

| Fuel consumed, in gallons (millions) | | | | | | [removed: 2,194] [added: 2,169] | | | | | | [removed: 2,143] [added: 2,194] | | | | | | [removed: 2.4] [added: (1.1)] | | % |

| Active full-time equivalent Employees | | | | | | [removed: 72,450] [added: 72,790] | | | | | | [removed: 74,806] [added: 72,450] | | | | | | [removed: (3.1)] [added: 0.5] | | % |

| Aircraft at end of period(j) | | | | | | 803 | | | | | | [removed: 817] [added: 803] | | | | | | [removed: (1.7)] [added: —] | | % |

| [removed: Economic] [added: Economic] fuel costs per gallon [removed: (c) (d)] | | | [added: $] | [added: 2.41] | | | | | [removed: $2.50 to $2.60] [added: $] | [added: 2.66] | | [added: | | | | | |]

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The Company's operating income, as shown above on a GAAP and non-GAAP basis for the year ended December 31, 2025, increased compared to the same prior year period primarily driven by revenue initiatives, including the Company's policy change related to certain Customers' first and second checked bags that became effective May 28, 2025.

Despite the negative impacts to bookings and travel associated with the government shutdown during a portion of fourth quarter 2025, the Company earned an outsized portion of its 2025 operating income during the period.

On a GAAP basis, the Company achieved in excess of 90 percent, and on a non-GAAP basis, achieved in excess of 70 percent, of its annual operating income during the fourth quarter of the year, both primarily as a result of the ramp-up of its transformational and revenue initiatives over the course of the year.

The Company's net income, as shown above on a GAAP and non-GAAP basis for the year ended December 31, 2025, decreased compared to the same prior year period primarily due to a decrease in interest income driven by a lower cash and investment balance.

*2025 Transformational Initiative Highlights*

The Company experienced a year of meaningful transformation and execution as it implemented its transformational initiatives, which were planned and designed to attract new Customers and improve both the Company's operational and financial performance.

During 2025, the Company:

- Changed its product offering, including the implementation of bag fees for most fare products, addition of a Basic fare product, and transition to new fare products, Choice, Choice Preferred, and Choice Extra;

- Updated its flight credit policy for tickets purchased on or after May 28, 2025;

- Began selling assigned and extra legroom seating for travel beginning January 27, 2026;

- Expanded distribution channels through new partnerships with online travel agencies, Expedia and Priceline;

- Better optimized its Rapid Rewards® program, including variable earn and burn rates;

- Amended its co-brand credit card agreement with JPMorgan Chase Bank, N.A. (“Chase”), including new benefits and improved economics;

- Launched Getaways by Southwest™, an in-house packaged vacations product;

- Announced free Wi-Fi sponsored by T-Mobile for all Rapid Rewards Members beginning October 24, 2025;

- Added redeye flying to increase aircraft utilization and network connectivity;

- Reduced turn time to increase aircraft utilization;

- Deployed new technology boosting operational reliability, a key enabler of the Company's #1 rank in The Wall Street Journal Best U.S. Airlines of 2025;

- Launched a partnership with Hahnair to expand its global ticketing reach; and

- Announced six strategic partnerships with Icelandair, EVA Air, China Airlines, Philippine Airlines, Condor, and Turkish Airlines.

In January 2026, the Company began operating assigned and extra legroom seating for travel beginning on January 27, 2026, which required retrofitting 780 aircraft.

With assigned and extra legroom seating becoming operational, Southwest expects future earnings upside based on how booking behavior related to these initiatives unfolds.

This includes upsell revenue from close-in bookings, which are more closely affiliated with business and price-flexible Customers, as well as growth in business and leisure Customer segments driven by the more attractive new product offering.

The Company has also continued to enhance its onboard offerings, with improvements such as faster WiFi, in-seat power, and larger overhead bins, and work is well underway on a refreshed cabin design, including new, more comfortable RECARO seats.

The first Boeing 737-8 (“-8”) aircraft with an updated cabin was delivered and entered service on October 16, 2025.

*Other Initiatives and Developments*

The Company has also announced its intention to commence new service at multiple locations in an effort to grow its network and provide more destinations for Customers.

These locations include:

- Cyril E.

King International Airport on St. Thomas beginning early 2026;

- McGhee Tyson Airport in Knoxville, Tennessee beginning March 5, 2026;

- Princess Juliana International Airport on St. Maarten beginning April 7, 2026;

- Charles M.

Schulz Sonoma County Airport in Santa Rosa, California beginning April 7, 2026; and

- Ted Stevens Anchorage International Airport in Anchorage, Alaska beginning in the first half of 2026.

In addition, under a forward contract entered into by the Company in December 2025, the Company committed $750 million for an accelerated share repurchase program with a third party financial institution (the “January 2026 ASR Program”) under which the Company paid $750 million in January 2026 and received total delivery of 17,965,193 shares to the Company as settlement in full.

Additionally, the Company launched a $400 million accelerated share repurchase program in January 2026 (the "First Quarter 2026 ASR Program") that is scheduled to be completed by the end of April 2026.

Additional drivers included record ancillary revenue and passengers carried.

During 2024, the Company continued to return value to its Shareholders.

The Company subsequently received 6.8 million shares of common stock in October 2024, representing an estimated 80 percent of the shares to be purchased by the Company under the Fourth Quarter 2024 ASR Program, and an additional one million shares in January 2025 in final settlement of the Fourth Quarter 2024 ASR Program.

The number of shares that the Company ultimately repurchased under the Fourth Quarter 2024 ASR Program was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a

calculation period completed in January 2025.

The Company has $2.25 billion remaining under its September 2024 $2.5 billion share repurchase authorization.

On December 5, 2024, the Company announced its intention to launch a $750 million accelerated share repurchase program in first quarter 2025.

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The Company's financial results, as shown above on a GAAP and non-GAAP basis for the year ended December 31, 2024 versus the year ended December 31, 2023, were affected by higher salaries, wages, and benefits expense, partially offset by lower Fuel and oil expense, primarily driven by lower jet fuel prices.

On a GAAP basis, the Company's results for the year ended December 31, 2023 included incremental expense of $180 million for changes in estimate related to the contract ratification bonus for the Company's Flight Attendants as part of a tentative agreement reached in October 2023 and an incremental expense of $354 million for changes in estimate related to the contract ratification bonus for the Company's Pilots as part of a tentative agreement reached in December 2023, both of which were treated as special items and excluded from the Company's presentation of non-GAAP results.

Additionally, due to the December 2022 operational disruption, as described below, the financial results on a GAAP and non-GAAP basis for the year ended December 31, 2023 included a negative financial impact of approximately $380 million on a pre-tax basis in first quarter 2023 and, on a GAAP basis, a $107 million charge on a pre-tax basis for the Department of Transportation ("DOT") settlement in fourth quarter 2023.

In late December 2022, the Company experienced a wide-scale operational disruption as extreme winter weather across a significant portion of the United States impacted its operational plan and flight schedules.

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.

For first quarter 2023, these events also created a deceleration in bookings, largely isolated to January and February 2023, as well as additional expenses primarily in the form of reimbursing Customers for costs incurred as a result of the flight cancellations.

The financial impact of this disruption on first quarter 2023 results was approximately $380 million on a pre-tax basis.

Other than a fourth quarter 2023 charge associated with a DOT settlement of $107 million, there were no material impacts to operating

revenues or expenses as a result of this disruption beyond first quarter 2023.

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2025 Outlook

The following tables provide selected financial guidance for first quarter 2025, as well as select full year 2025 guidance and 2027 targets, as applicable:

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| | | | | | | | | | 1Q 2025 Estimation | | |

| RASM (a), year-over-year | | | | | | | | | Up 5% to 7% | | |

| ASMs (b), year-over-year | | | | | | | | | Down 2% to 3% | | |

| ASMs per gallon (fuel efficiency) | | | | | | | | | 81 to 83 | | |

| CASM-X (e), year-over-year (c) (f) | | | | | | | | | Up 7% to 9% | | |

| Scheduled debt repayments (millions) | | | | | | | | | ~$5 | | |

| Interest expense (millions) | | | | | | | | | ~$45 | | |

| | | | | | | 2025 Estimation | | | 2027 Targets | | |

| Return on invested capital ("ROIC") after-tax (h) (i) | | | | | | 5% to 8% | | | ≥ 15% | | |

| ASMs (b), year-over-year | | | | | | Up 1% to 2% | | | Up 1% to 2% | | |

(a) Operating revenue per available seat mile ("RASM" or "unit revenues").

(b) Available seat miles ("ASMs" or "capacity").

The Company currently expects second quarter 2025 capacity to increase in the range of 1 percent to 2 percent, year-over-year.

(c) See Note Regarding Use of Non-GAAP Financial Measures for additional information on special items.

In addition, information regarding special items and economic results is included in the accompanying table Reconciliation of Reported Amounts to Non-GAAP Items (also referred to as "excluding special items").

(d) Based on the Company's existing fuel derivative contracts and market prices as of January 21, 2025, first quarter 2025 economic fuel costs per gallon are estimated to be in the range of $2.50 to $2.60.

The Company has at times had interest rate risk in its [added: floating-rate debt obligations and] interest rate swaps, commodity price risk in jet fuel required to operate its aircraft fleet, and market risk in the derivatives used to manage its fuel hedging program and in the form of fixed-rate debt instruments.

As of December 31, [removed: 2024,] [added: 2025,] the Company [added: also] operated a total of [removed: 106] [added: 97] aircraft under operating and finance leases.

[removed: However, except for a small number of aircraft that have lease payments that fluctuate based in part on changes in market interest rates, the remainder of] [added: Therefore,] the [added: Company's] leases are not considered market sensitive financial instruments and, therefore, are not included in the interest rate sensitivity analysis below.

See Note 10 to the Consolidated Financial Statements for information on the Company’s [removed: accounting for its hedging program and for further details on the Company’s] financial derivative instruments.

The Company currently expects to consume approximately 2.2 billion gallons of jet fuel in [removed: 2025.][added: 2026.]

Based on this anticipated usage, a change in jet fuel prices of [removed: just] one cent per gallon would impact the Company’s Fuel and oil expense by approximately $22 million for [removed: 2025, excluding any impact associated with fuel derivative instruments held.][added: 2026.]

The fair values of the derivative [removed: instruments,] [added: instruments held in prior periods,] depending on the type of instrument, were determined by use of present value methods or standard option value models with assumptions about commodity prices based on those observed in underlying markets.

The Company’s credit exposure related to [removed: fuel] derivative instruments [removed: is] [added: in prior periods was] represented by the fair value of contracts that [removed: are] [added: were] in an asset position to the Company.

At such times, these outstanding instruments [removed: expose] [added: exposed] the Company to credit loss in the event of nonperformance by the counterparties to the agreements.

The Company [removed: also at times] has agreements with [removed: each] [added: a majority] of its counterparties associated with its outstanding interest rate swap agreements in which cash collateral may be required based on the fair value of outstanding derivative instruments, as well as the Company’s and its [removed: counterparty’s] [added: counterparties'] credit ratings.

As of December 31, [removed: 2024, the Company had no outstanding interest rate swap agreements and therefore] [added: 2025,] no cash collateral deposits [added: were] provided [added: by] or [removed: held.][added: held by the Company based on its outstanding interest rate swap agreements.]

The Company’s long-term strategy is to maintain [removed: a conservative] [added: an investment grade] balance sheet and generate adequate profits and returns on capital, while growing capacity steadily under the right conditions.

While the Company uses financial leverage, it strives to maintain a strong [added: and efficient] balance sheet and has investment grade credit ratings with all three major credit rating agencies as of December 31, [removed: 2024.][added: 2025.]

[removed: The] [added: All the] Company's senior unsecured notes outstanding as of December 31, [removed: 2024 are all] [added: 2025 were issued as] fixed-rate obligations.

[added: The effect of this] termination was that the interest associated with this debt prospectively reverted back to its original fixed rate.

The Company's total debt divided by total assets was [removed: 19.8] [added: 16.9] percent as of December 31, [removed: 2024.][added: 2025.]

The Company also has some risk associated with changing interest rates due to the short-term nature of its invested cash, which totaled [removed: $7.5] [added: $3.2] billion, [removed: and short-term investments, which totaled $1.2 billion] as of December 31, [removed: 2024.][added: 2025.]

The Company currently invests available cash in [removed: certificates of deposit,] [added: time deposits,] highly rated money market instruments, [removed: treasury securities, U.S. government agency securities,] and other highly rated financial instruments, depending on market conditions and operating cash requirements.

A hypothetical 10 percent change in market interest rates as of December 31, [removed: 2024,] [added: 2025,] would have resulted in an approximate [removed: $46] [added: $32] million change in the fair value of the Company’s fixed-rate debt instruments.

A change in market interest rates could, however, have a corresponding effect on earnings and cash flows associated with the Company’s [added: debt that has been converted to a floating interest rate and] invested cash (excluding cash collateral deposits held, if applicable) [removed: and short-term investments] because of the floating-rate nature of these items.

Assuming floating market rates in effect as of December 31, [removed: 2024] [added: 2025,] were held constant throughout a 12-month period, a hypothetical 10 percent change in those rates would have resulted in an [removed: approximate $36 million] [added: immaterial] impact on the Company’s net earnings and cash flows.

Utilizing these assumptions and considering the Company’s cash balance (excluding the impact of cash collateral deposits held from or provided to counterparties, if applicable) and [removed: short-term investments] [added: floating-rate debt] outstanding as of December 31, [removed: 2024,] [added: 2025,] an increase in rates would have a net [removed: negative] [added: positive] effect on the Company’s earnings and cash flows, while a decrease in rates would have a net [removed: positive] [added: negative] effect on the Company’s earnings and cash flows.

However, a [added: hypothetical] 10 percent change in market rates would not impact the Company’s earnings or cash flow associated with the Company’s publicly traded fixed-rate debt.

As of December 31, [removed: 2024,] [added: 2025,] the Company was in compliance with this covenant and there were no amounts outstanding under the Amended Credit Agreement.

Credit card processors have financial risk associated with tickets purchased for [added: air] travel because the processor generally forwards the cash related to the purchase to the Company soon after the purchase is completed, but the air travel generally occurs after that time; therefore, the processor will have liability if the Company does not ultimately provide the air travel.

There was no cash reserved for this purpose as of December 31, [removed: 2024.][added: 2025.]

Should [added: Customer] chargebacks processed by Chase Paymentech reach a certain level, [added: cash] proceeds from advance ticket sales could be held back and used to establish a reserve account to cover such chargebacks and any other [removed: disputed] [added: Customer-disputed] charges that might occur.

As of December 31, [removed: 2024,] [added: 2025,] no [added: cash] holdbacks were in place.

As of December 31, [removed: 2024,] [added: 2025,] the Company was in compliance with all credit card processing agreements.

The Company previously operated a small number of aircraft that had lease payments that fluctuated based in part on changes in market interest rates.

The last fluctuating lease expired in July 2025.

Hedging and Aircraft Fuel Risk

Changes in fuel prices could materially affect the Company’s results of operations.

As discussed in Note 10 to the Consolidated Financial Statements, the Company discontinued its fuel hedging program in 2025.

During second quarter 2025, the Company terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio and program.

Consequently, the Company is fully exposed to fluctuations in fuel prices like most of its competitors.

During fourth quarter 2025, the Company entered into interest rate swap agreements as a hedge related to its $750 million 5.25% Notes due 2035.

The primary objective for the Company's use of this interest rate hedge was to hedge against changes in the fair value of the debt instrument caused by changes in market interest rates, specifically SOFR.

The hedge strategy is to eliminate the changes in fair value of the debt by converting the fixed rate interest of the debt to a floating rate.

Under these interest rate swap agreements, the Company pays SOFR plus a margin every six months on the notional amount of the debt, and receives payments based on the fixed stated rate of the notes every six months until the date the notes become due.

These interest rate swap agreements collectively qualify as a fair value hedge.

As a result of the fixed-to-floating interest rate swap agreements in place, the average floating rate recognized during 2025 was approximately 5.44 percent, based on actual and forward rates as of December 31, 2025.

Following the issuance of the Company's $750 million 5.25% Notes due 2035 in fourth quarter 2025, the deferred gain of $23 million associated with these terminated swaps is now being amortized as a reduction to Interest expense over the life of the notes.

Hedging

The Company purchases jet fuel at prevailing market prices, but seeks to manage market risk through execution of a documented hedging strategy.

The Company utilizes financial derivative instruments, on both a short-term and a long-term basis, as a form of insurance against the potential for significant, or catastrophic, increases in fuel prices.

As of December 31, 2024, the Company held a net position of fuel derivative instruments that represented a hedge for a portion of its anticipated jet fuel purchases for future periods through 2027.

The Company may increase or decrease the volume of fuel hedged based on its expectation of future market prices and its forecasted fuel consumption levels, while considering the significant premium cost that can be associated with different types of hedging strategies.

Based on the current geopolitical and market dynamics, higher premium costs over time, and aggressive cost reductions underway, the Company does not intend to add new hedging positions to its current hedge book.

See Note 10 to the Consolidated Financial Statements for further information.

The gross fair value of outstanding financial derivative instruments related to the Company’s jet fuel market price risk as of December 31, 2024, was an asset of $130 million.

In addition, $22 million in cash collateral deposits were held by the Company in connection with these instruments based on their fair value as of December 31, 2024.

An immediate 10 percent increase or decrease in underlying fuel-related commodity prices from prices as of December 31, 2024 would correspondingly change the fair value of the commodity derivative instruments in place by approximately $100 million.

Fluctuations in the related commodity derivative instrument cash flows may change by more or less than this amount based upon further fluctuations in futures prices, as well as related income tax effects.

In addition, this does not consider changes in cash or letters of credit utilized as collateral provided to or by counterparties, which would fluctuate in an amount equal to or less than this amount, depending on the type of collateral arrangement in place with each counterparty.

This sensitivity analysis uses industry standard valuation models and holds all inputs constant as of December 31, 2024, levels, except underlying futures prices.

As of December 31, 2024, the Company had nine counterparties for which the derivatives held were an asset and none in a loss position.

To manage credit risk, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market position of the fuel hedging program and its relative market position with each counterparty.

However, if one or more of these counterparties were in a liability position to the Company and were unable to meet their obligations, any open derivative contracts with the counterparty could be subject to early termination, which could result in substantial losses for the Company.

As of December 31, 2024, the Company had agreements with all of its active counterparties containing early termination

rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount based on the counterparty’s credit rating.

The Company also had agreements with counterparties in which cash deposits and letters of credit may be required to be posted as collateral whenever the net fair value of derivatives associated with those counterparties exceeds specific thresholds.

Refer to the counterparty credit risk and collateral table provided in Note 10 to the Consolidated Financial Statements for the fair values of fuel derivatives, amounts held as collateral, and applicable collateral posting threshold amounts as of December 31, 2024, at which such postings are triggered.

The Company is also subject to the risk that the fuel derivatives it uses to hedge against fuel price volatility do not provide adequate protection.

For example, historically, a portion of the fuel derivatives in the Company's hedge portfolio have been based on the market price of WTI crude oil.

As mentioned above in "Critical Accounting Policies and Estimates", since the Company could no longer demonstrate that derivatives based on WTI crude oil prices would result in effective hedges on a prospective basis, the change in fair value of all of the Company's derivatives based in WTI have been recorded to Other (gains) losses during the second half of 2024.

The Company currently has no WTI-based derivatives that settle beyond 2024.

In recent years, jet fuel prices have been more closely correlated with changes in the price of Brent crude oil, and therefore the Company has attempted to mitigate some of this risk by entering into more fuel hedges based on Brent crude.

The Company has found that financial derivative instruments in commodities, such as WTI crude oil, Brent crude oil, and refined products, such as heating oil and unleaded gasoline, can be useful in decreasing its exposure to jet fuel price volatility.

In addition, to add further protection, the Company has in the past periodically entered into jet fuel derivatives for short-term timeframes.

Jet fuel is not widely traded on an organized futures exchange and, therefore, there are limited opportunities to hedge directly in jet fuel for time horizons longer than approximately 24 months into the future.

Due to the significance of the Company’s current fuel hedging program and the historical emphasis that the Company has placed on utilizing fuel derivatives to reduce its fuel price risk, the Company has created a system of governance and management oversight and has put in place a number of internal controls designed so that procedures are properly followed and accountability is present at the appropriate levels.

For example, the Company has put in place controls designed to: (i) create and maintain a comprehensive risk management policy; (ii) provide for proper authorization by the appropriate levels of management; (iii) provide for proper segregation of duties; (iv) maintain an appropriate level of knowledge regarding the execution of and the accounting for derivative instruments; and (v) have key performance indicators in place in order to adequately measure the performance of its hedging activities.

The Company believes the governance structure that it has in place is adequate given the size and sophistication of its hedging program.

The effect of this

The effect of this termination is that the value of the swaps originally recorded in AOCI, a gain of $23 million, will be amortized to Interest expense over the life of new debt instruments, which could be issued through 2027.

Southwest’s unique route network, [removed: low] [added: competitive] fares, and famous Hospitality continue to make the Company an attractive choice for Customers in cities across the United States and near-international destinations.

As of December 31, [removed: 2024,] [added: 2025,] Southwest had a total of 803 Boeing 737 aircraft in its fleet and served 117 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.

As part of the Company's ongoing modernization efforts, [removed: during third quarter 2024,] the Company [removed: announced] [added: is executing] several transformational initiatives designed to elevate the Customer Experience on its flights, improve financial performance, and drive Shareholder value, including:

- Assigned [added: and Extra Legroom] Seating: [added: On January 27, 2026,] Southwest [removed: will introduce an] [added: began operating] assigned [added: and extra legroom] seating [removed: model] to better align with airline passenger preferences.

- Global Airline Partnerships: [added: In 2025,] Southwest [removed: is seeking] [added: launched its first] partnerships with international carriers to expand its network and connect Customers with more global destinations to generate additional demand for travel across the Southwest network.

- 24-Hour Operations: [added: In 2025,] Southwest [removed: is scheduled to add] [added: added] 24-hour operation capabilities with the introduction of overnight (i.e., redeye) flights [removed: on February 13, 2025] in key markets to maximize aircraft utilization.

- Marketing & Distribution Evolution: In order to attract new Customers and reach them where they are performing travel searches today, Southwest [removed: has] expanded into new channels such as [added: Expedia, Priceline,] Google Flights, Kayak, and Skyscanner to broaden its Customer base and begin to engage them in its loyalty program.

[removed: By not concentrating operations exclusively through one or more central transfer points,] Southwest's route structure has allowed for more direct nonstop routing than a traditional hub-and-spoke service.

[removed: Southwest’s unique network blends] [added: By blending] intentional connectivity offered by hub-and-spoke models and point-to-point nonstops, [removed: allowing] the Company [added: is able] to capture nonstop demand and provide reliable one-stop itinerary options.

Southwest’s unique route network has also enabled it to provide its markets with frequent, conveniently timed flights and [removed: low] [added: competitive] fares.

For example, Southwest [removed: currently] offers [added: up to] 12 weekday roundtrips between Dallas Love Field and Houston Hobby, [removed: six] [added: 12] weekday roundtrips between [removed: Denver] [added: Sacramento] and [removed: Chicago Midway, six] [added: San Diego, 12] weekday roundtrips between [removed: Los Angeles International] [added: San Diego] and [removed: Las Vegas, eight] [added: San Jose, 12] weekday round trips between [removed: Burbank] [added: Las Vegas] and [removed: Oakland,] [added: San Diego,] and [removed: ten] [added: 11] weekday roundtrips between [removed: Phoenix] [added: Las Vegas] and [removed: Denver.][added: Sacramento.]

Southwest complements its high-frequency short-haul routes with mid-range and long-haul nonstop service, including flights between Hawaii and California, Las Vegas, and Phoenix, and between markets such as [added: Las Vegas and Washington Reagan,] Los Angeles and Nashville, New York LaGuardia and Houston, Los Angeles and Baltimore, Oakland and Houston, and San Diego and Baltimore.

As the domestic travel market has matured and structural changes have reduced the demand for short-haul travel, [removed: especially post-pandemic,] the Company has increased its proportion of longer-haul flights.

Further, [removed: during 2024,] the Company [removed: announced] [added: introduced] 24-hour operation capabilities [added: in 2025] with the [removed: introduction] [added: commencement] of redeye flights.

| | | | [added: | | | 2025 | | | | | |] 2024 | | | [added: | | |] 2023 | | | [added: | | |] 2022 | | | [added: | | | 2021 | | |]

| Percentage of Customers flying nonstop | | | 74% | | | [removed: 73%] [added: 74%] | | | [removed: 74%] [added: 73%] | | |

| Nonstop city pairs | | | [removed: 850] [added: 871] | | | [removed: 805] [added: 850] | | | [removed: 825] [added: 805] | | |

| Average stage length (miles) | | | [removed: 763] [added: 780] | | | [removed: 730] [added: 763] | | | [removed: 728] [added: 730] | | |

| Average trip duration (hours) | | | [removed: 2.0] [added: 2.1] | | | 2.0 | | | 2.0 | | |

[removed: During 2024, the] [added: The] Company [added: also] sought to [removed: restructure] [added: enhance connectivity] and better optimize its network to [removed: better] match capacity to demand and adjust for [removed: post-pandemic] Customer travel patterns by reducing short-haul trips, redistributing resources to longer-haul trips in more profitable markets, and reducing flying on weekdays and at off-peak times with lower travel demand.

[removed: Further,] [added: In response to market conditions,] the Company redeployed underperforming capacity by significantly reducing service at [removed: Atlanta,] [added: Atlanta and] Fort Lauderdale, [removed: and Chicago O’Hare,] while expanding service at [removed: Nashville.][added: Nashville and San Diego.]

The Company is continuing to improve the connectivity and efficiency of its network through redesigns in smaller cities and the [removed: planned] introduction of redeye flying.

A key component of the Company's business strategy is its focus on cost discipline and charging [removed: competitively low] [added: competitive] fares.

The Company's low-cost strategy includes, among other elements, [removed: (i)] the [removed: use of a single aircraft type, the Boeing 737, and (ii) the] Company's route [removed: structure.][added: structure, which includes]

[added: Additionally,] Southwest's use of a single aircraft [removed: type has historically allowed] [added: type, the Boeing 737, allows] for simplified scheduling, maintenance, flight operations, safety management, and training activities.

[removed: Southwest's route structure includes] service to and from many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Burbank, Manchester, Oakland, San Jose, and Providence.

[removed: The] [added: In 2025, the] Company [removed: expects to further increase] [added: increased] asset utilization through its introduction of redeye flights and its initiatives to decrease the amount of time it takes to turn an aircraft (the time needed to unload Passengers from an arriving flight and load Passengers on the same aircraft for its subsequent flight).

Such investments [removed: include] [added: included] moving to a [removed: fully] digital (i.e., paperless) process, [removed: improved] [added: improving] communication tools for Employees, and [added: launching] better visual and real-time information to assist both Customers and Employees.

[removed: These] [added: Key] initiatives [added: have been fully implemented and] are designed to lower unit costs, as the Company is expected to be able [removed: to] [added: to, at a minimum,] generate [removed: either] the same number of available seat miles (“ASMs”) with fewer [removed: aircraft or produce more ASMs utilizing the same number of aircraft in its fleet.][added: aircraft.]

In addition, the Company [removed: is targeting] [added: continues to target] other cost savings initiatives, including capitalizing on identified supply chain opportunities and improving its corporate efficiency through automation and better allocation of resources.

Although the Company’s jet fuel prices per gallon were generally lower in [removed: 2024,] [added: 2025,] as compared with [removed: 2023, they remain at high levels.][added: 2024, Fuel and oil expense remained the Company's second largest operating cost category for 2025.]

The table below shows the Company's average cost of jet fuel inclusive of fuel taxes and fuel hedging impacts, for each year beginning in 2011 and during each quarter of [removed: 2024.][added: 2025.]

The Company’s fuel efficiency was aided in [removed: 2024,] [added: 2025,] as compared with [removed: 2023, through] [added: 2024, by] the addition of [removed: 22] [added: 55] -8 aircraft to its fleet and by the retirement of [removed: 34] [added: 48] of its oldest, least fuel-efficient [removed: Boeing 737-700 (“-700”)] [added: -700] aircraft and the retirement of [removed: two] [added: seven] Boeing 737-800 ("-800") aircraft.

As of December 31, [removed: 2024,] [added: 2025,] the Company had [removed: 245 -8] [added: 300 Boeing 737-8 (“-8”)] aircraft in its fleet.

In [added: the] second and fourth [removed: quarter 2024,] [added: quarters of 2025,] the Company entered into supplemental agreements (the “Supplements”) to its purchase agreement with The Boeing Company (“Boeing”) relating to the Company's purchase of -8 and Boeing 737-7 ("-7", and, together with -8, the "MAX aircraft").

Pursuant to the Supplements, the Company amended its order book delivery schedule to better allocate aircraft deliveries to the Company’s network and capacity [removed: plans.][added: plans, in part due to ongoing aircraft delivery delays.]

The Company held [removed: 180] [added: 152] remaining MAX options as of December 31, [removed: 2024,] [added: 2025,] in addition to [removed: 492] [added: 465] firm orders of MAX aircraft to be delivered through 2031.

The Company retains significant flexibility to manage its fleet size, including opportunities to accelerate fleet modernization efforts (e.g., through accelerated retirements of the Company's [removed: -700] [added: Boeing 737-700 (“-700”)] aircraft) if growth opportunities do not materialize.

The Company [removed: previously announced] plans to [added: continue to] pursue opportunities to take advantage of [removed: current] [added: favorable] market conditions through the sale [removed: and/or sale-leaseback] of certain aircraft, with the intention of replacing most, if not all, of such aircraft with new [removed: -8 and -7 aircraft from Boeing, at the favorable pricing available in the Company’s order book with Boeing, by the end of 2031, assuming that Boeing is able to meet aircraft delivery expectations.][added: aircraft.]

| Available seat miles per fuel gallon consumed | | | | | | [removed: 80.8] [added: 83.0] | | | | | | [removed: 79.5] [added: 80.8] | | | | | | [removed: 77.3] [added: 79.5] | | | | | | [removed: 79.2] [added: 77.3] | | | | | | [removed: 81.3] [added: 79.2] | | |

Passengers can now choose between a standard seat, a preferred seat near the front of the cabin, or an extra legroom seat with additional pitch.

- Redesigned Boarding Model: Southwest evolved its boarding process beginning January 27, 2026, by prioritizing Customers into boarding groups based on seat location, fare bundle, and loyalty program status, beginning with extra legroom seats in boarding groups 1 and 2.

- Getaways by Southwest™: Southwest launched a new in-house vacation product, Getaways by Southwest (“Getaways”), in August 2025 to offer customizable vacation packages that come with Customer-friendly policies including a generous cancellation policy and flexibility with no change fees.

The Company intends to expand redeye flights to additional markets in 2026.

By not concentrating operations exclusively through one or more central transfer points,

Southwest now offers over 50 peak-day redeye flights during peak periods and includes flights across the continental United States and from Hawaii to the U.S. mainland, with plans to offer flights from Alaska to the U.S. mainland in 2026.

During 2025, the Company focused on expanding its network, announcing service at five new locations beginning in 2026, including Cyril E.

King International Airport in St. Thomas; McGhee Tyson Airport in Knoxville, Tennessee; Ted Stevens Anchorage International Airport in Alaska; Charles M.

Schulz Sonoma County Airport in Santa Rosa, California; and Princess Juliana International Airport in St. Maarten.

Additionally, the Company launched partnerships with six international airlines to provide Customers access to more global destinations.

The Company’s partnerships with international carriers have improved its international connectivity with its domestic network.

Fuel and Fleet

Based on higher fuel hedging premium costs over time and other factors, during second quarter 2025, the Company terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio and program.

| 2025 | | | | | | $ | 5,240 | | | | | $ | 2.41 | | | | | 19.0 | | % |

| First Quarter 2025 | | | | | | $ | 1,249 | | | | | $ | 2.49 | | | | | 18.8 | | % |

| Second Quarter 2025 | | | | | | $ | 1,327 | | | | | $ | 2.32 | | | | | 18.9 | | % |

| Third Quarter 2025 | | | | | | $ | 1,331 | | | | | $ | 2.40 | | | | | 19.3 | | % |

| Fourth Quarter 2025 | | | | | | $ | 1,333 | | | | | $ | 2.45 | | | | | 18.9 | | % |

The Supplements also include certain confidential credits and other concessions provided to the Company by Boeing.

The Company expects to use the proceeds of its fleet transactions to support its capital allocation strategy.

Labor

The Company implemented a reduction in its workforce in February 2025 designed to reduce operating costs, increase efficiency, and create a leaner and more agile organization as part of its transformational plan.

The reduction in workforce provided for the reduction of approximately 1,750 Employee roles, or 15 percent of corporate positions.

For 2026, the Company plans to keep corporate headcount expense flat to 2025 levels and will focus on operational efficiencies within frontline teams.

General

In 2025, Southwest introduced a new, “Basic” fare on its lowest priced tickets, replacing Southwest’s “Wanna Get Away®” offering.

Southwest also introduced new fare products including “Choice,” “Choice Preferred,” and “Choice Extra,” replacing Southwest’s previous “Wanna Get Away Plus®,” “Anytime,” and “Business Select®” offerings.

For travel on or before January 26, 2026, fare bundles included open seating.

For travel on or after January 27, 2026, fare bundles include assigned seating.

For flights booked and ticketed or changed on or after May 28, 2025, Southwest introduced bag fees for most fare products.

However, the Company continues to offer two free checked bags to Rapid Rewards® A-List Preferred Members and Customers traveling on Choice Extra fares and offers one free checked bag to A-List Members and co-brand Cardmembers under its credit card program (weight and size limitations apply).

For the Basic fare bundle, Southwest does not charge fees for cancellations, and any changes to flight reservations require an upgrade to the Choice fare.

They are non-refundable and non-changeable except as allowed by Southwest’s 24-hour cancellation policy or a fare upgrade to Choice, Choice Preferred, or Choice Extra.

If a Customer cancels a Basic fare ticket at least 10 minutes prior to the flight’s original departure time, the Customer may be eligible for a flight credit for the fare paid for unused travel by the Customer (“flight credit”).

Flight credits originating from a Basic fare purchase will expire six months from ticketing date.

Customers purchasing a Basic fare are assigned a standard seat at check-in or may purchase a standard, preferred, or extra legroom seat, if available.

They are non-refundable, but, subject to Southwest’s No-Show Policy, Customers are eligible for a Transferable Flight Credit™ if they cancel a Choice fare ticket.

Transferable Flight Credits issued for Choice fare tickets purchased on or after May 28, 2025, will expire one year from the date of booking and ticketing.

Customers purchasing a Choice fare receive the choice of any standard seat at booking or may purchase a preferred or extra legroom seat, if available.

Transferable Flight Credits issued for Choice Preferred fare tickets purchased on or after May 28, 2025, will expire one year from the date of booking and ticketing.

The Company expects to begin selling assigned seats in the second half of 2025, with its first flights operating with the new seating model in the first half of 2026.

- Premium Seating: Southwest will offer extra legroom options with additional pitch while maintaining a standard economy seat pitch.

- Redesigned Boarding Model: Southwest will evolve its boarding process with seat assignments while focusing on operational efficiency and improving the Customer Experience.

The updated boarding process will be designed to maintain Southwest's unique and popular approach in boarding through position numbers and signage displayed on stanchions within the gate area.

Icelandair will become Southwest's initial partner with an expected launch on February 13, 2025 through Baltimore-Washington International Airport, which will serve as its first U.S. gateway for the carriers.

The Icelandair partnership is expected to add Denver and Nashville gateways during 2025, and Southwest intends to add at least one additional partner carrier in 2025.

- Getaways by Southwest™: In 2025, Southwest intends to launch a new product, Getaways by Southwest, offering vacation packages that are unique to the industry and come with Customer-friendly policies.

These customizable vacation bundles are expected to feature Southwest's generous cancellation policy and flexibility with its no change fees for flights extending to hotels and other elements of packaged vacations.

- Service Modernization: To drive efficiency and improvement in Customer Service, Southwest is transitioning to a digital-first model, offering more self-service options designed to augment the Company’s contact centers and airport experience.

In 2024, the United States Department of Transportation (“DOT”) approved the Company’s bid to offer nonstop round-trip flights between Las Vegas and Washington Reagan.

Service between Las Vegas and Washington Reagan begins February 13, 2025, with daily service beginning March 6, 2025.

Booking of redeye flying on initial routes became available in July 2024, with the first redeye flights scheduled on February 13, 2025, in five initial nonstop markets: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.

In response to market conditions, the Company ceased service at Cozumel, Mexico; Houston Bush Intercontinental; Syracuse; and Bellingham in 2024.

Additionally, the Company is taking a cross-functional, methodical approach to market maturation efforts.

To further improve international connectivity with its domestic network, as discussed under “Company Initiatives,” the Company is scheduled to begin operating as a partner with Icelandair on February 13, 2025 to provide for transatlantic connectivity and announced plans to add at least one more partner during 2025.

These efforts are underway and are scheduled to be fully implemented by November 2025.

For example, in 2024, the Company added 22 Boeing 737 MAX 8 (“-8”) aircraft to its fleet, with the goal of lowering operating costs, improving potential growth opportunities, better optimizing the Company's network, reducing carbon emissions per ASM, and further modernizing the Company's fleet with more fuel-efficient aircraft.

Fuel and oil expense remained the Company's second largest operating cost category for 2024.

| First Quarter 2024 | | | | | | $ | 1,531 | | | | | $ | 2.92 | | | | | 22.8 | | % |

| Second Quarter 2024 | | | | | | $ | 1,599 | | | | | $ | 2.76 | | | | | 23.0 | | % |

| Third Quarter 2024 | | | | | | $ | 1,417 | | | | | $ | 2.52 | | | | | 20.7 | | % |

| Fourth Quarter 2024 | | | | | | $ | 1,264 | | | | | $ | 2.38 | | | | | 19.0 | | % |

During December 2024, the Company received gross proceeds of $871 million from the sale-leaseback of 35 aircraft (see Note 7 to the Consolidated Financial Statements for more details on the sale-leaseback transactions), which the Company expects to use in support of its capital allocation strategy, which includes funding future fleet modernization and providing Shareholder returns.

As a result of these efforts, the Company expects its net fleet capital expenditures during the near term to moderate significantly from recent levels, with the added benefit of further accelerating the modernization of the Company’s fleet.

The Company continues to undertake a number of other fuel conservation initiatives, which are discussed in detail under “Environmental Sustainability.”

| | | | | | | 2024 | | | | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

The Company has also entered into fuel derivative contracts to manage its risk associated with significant increases in fuel prices.

Based on the current geopolitical and market dynamics, higher premium costs over time, and aggressive cost reductions underway, the Company does not intend to add new hedging positions to its current hedge book.

The Company expects to continue these efforts in 2025 by minimizing hiring and improving corporate efficiency.

All fare products include the privilege of two free checked bags (weight and size limits apply).

- “Wanna Get Away Plus” fares are often subject to advance purchase requirements.

Subject to Southwest’s No-Show Policy, Wanna Get Away Plus fares also enable a same-day confirmed change, free of airline charges,

If there is no open seat on this different flight, a traveler may request to be added to the standby list for that flight.

They are refundable if canceled, subject to Southwest’s No-Show Policy, or flight credit may be applied towards future travel on Southwest.

Anytime fares also receive EarlyBird Check-In®.

See “Ancillary Services” below for further information about EarlyBird Check-In.

Business Select fares also include additional perks such as priority boarding with a boarding position in the first 15 boarding positions within boarding group “A,” 12 Rapid Rewards points per dollar spent on the base fare—the highest loyalty point multiplier of all Southwest fare products, one complimentary premium beverage coupon for the day of travel on flights over 250 miles (Customers must be of legal drinking age to drink alcoholic beverages), and free inflight internet service, where available.

In order to enhance and expand upon its already generous and flexible ticketing policies, the Company announced in July 2022 that flight credits will no longer expire.

Flight credits for non-refundable fares are issued as long as the reservation is cancelled more than ten minutes prior to the scheduled departure.

Transferable Flight Credits or refunds for refundable fares are issued regardless of cancellation time.

[added: In June 2015,] the Company also received a letter from the Connecticut Attorney General requesting information about capacity.

After notice was provided to the proposed settlement class and the Court held a fairness [removed: hearing] [added: hearing,] the Court issued an order granting final approval of the settlement on May 9, 2019.

On February 3, 2021, the Court granted the plaintiff’s motion for class certification and issued an order certifying a class comprised of current or former Employees who, during their employment with the Company at any time from October 10, 2004, through the date of judgment in this action, have taken short-term military leave and were subject to a [removed: collective bargaining] [added: collective-bargaining] agreement, except for Employees subject to the Transport Workers Union Local 550 agreement covering meteorologists.

The Company [removed: denies] [added: continues to deny] all allegations of wrongdoing, believes the [removed: plaintiff’s] [added: plaintiffs'] positions are without merit, and intends to vigorously defend itself [removed: in all respects.][added: against the appeal.]

The Company [removed: denies] [added: and its Board deny] all allegations of wrongdoing, [removed: believes] [added: believe] the plaintiffs' positions are without merit, and [removed: intends] [added: intend] to vigorously defend [removed: itself] [added: themselves] in all respects.

Two complaints alleging violations of federal securities laws and seeking certification as a class action [removed: have been] [added: were] filed (on January 10, 2023, and March 13, 2023, respectively) against the Company and certain of its officers in the United States District Court for the Southern District of Texas in Houston.

The deadline in the first of these two cases to file a motion seeking appointment of lead plaintiff was March 13, 2023; four separate motions were filed, and three of the parties seeking appointment [removed: have continued to contest] [added: contested] the issue.

[added: The] Company and the individual defendants filed a reply brief on February 23, 2024.

[removed: Since] [added: Starting on or] about January 24, 2023, the Company’s senior officers and the Board [removed: have] received multiple derivative demand letters from legal counsel for purported Southwest Shareholders demanding that the Board investigate claims, initiate legal action, and take remedial measures in connection with the service disruptions occurring in December 2022.

On June 15, 2023, a second shareholder derivative suit was filed against certain of the Company’s current and former officers and directors in the United States District Court for the Northern District of Texas, asserting claims under Section 14(a) of the Exchange Act [removed: and for damages from alleged breach of fiduciary duty, indemnification, and unjust enrichment derivatively on the Company’s behalf against the individual defendants based on similar factual allegations as contained in the demand letters and in the federal class action complaints.]

The state court cases have been consolidated into one [added: state court] case, and [removed: a motion is pending to consolidate] the federal cases [added: were later consolidated] into one federal case.

The Derivative Actions and Demands [removed: have] [added: were] all [removed: been] stayed, formally or by agreement, pending the outcome of the investigation by the Special Litigation Committee.

On December 26, 2024, the Board received a seventh demand letter, and on January 31, 2025, received an eighth demand letter, each containing allegations substantially similar to those presented in certain of the prior Derivative Actions and Demands, which [removed: will be] [added: are being] addressed consistent with applicable Texas law governing such demands.

Based on the Company's wide-scale operational disruption, which led to the cancelation of a significant number of flights between December 21 and December 29, 2022, the Company has been subject to inquiries and investigations by governmental agencies (including with respect to a December 2023 settlement with the DOT) and could be [removed: subject to fines and/or penalties resulting from those inquiries and investigations, as well as litigation from Customers and Shareholders.]

The Company’s management does not expect that the outcome in any of its currently ongoing legal proceedings or the outcome of any proposed adjustments presented to date by the Internal Revenue Service and state and local [removed: income tax authorities, individually or collectively, will have a material adverse effect on the Company’s financial]

On October 29, 2024, the Company filed a motion to decertify the class, which was then fully briefed and set for hearing.

On February 13, 2025, the parties filed a notice of settlement advising the Court that they reached a settlement in principle, and the parties made a stipulated request for the Court to vacate the case schedule, including the hearing on the Company's decertification motion, and to set a deadline of June 19, 2025, for the filing of either a motion for preliminary approval of the class settlement or a status update about the timing of the remaining steps in the settlement process.

The Court granted the stipulation on February 14, 2025.

On June 20, 2025, the Court granted the parties’ stipulated request to continue the deadline for filing a motion for preliminary approval of the class settlement and the Court reset the deadline for

August 21, 2025.

On September 25, 2025, plaintiffs filed a motion for preliminary approval of the settlement class.

The class proposed in the settlement modifies the class definition to use an end date of January 1, 2026 (rather than treating the date of judgment as the end date).

The settlement includes an $18.5 million settlement fund and prospective relief that includes a differential pay benefit for up to ten days of military leave per year, which will remain in place for at least five years once initiated.

On December 11, 2025, the Court granted preliminary approval of the settlement and set the final approval hearing for May 14, 2026.

On December 27, 2019, a former customer service agent at Oakland International Airport, filed a putative class action complaint in the Superior Court of California, for the County of Santa Clara, against the Company alleging the following seven claims under the California Labor Code and Business & Professions Code: (1) failure to provide meal periods; (2) failure to provide rest periods; (3) failure to pay hourly wages; (4) failure to provide accurate wage statements; (5) failure to timely pay all final wages; (6) unfair competition; and (7) civil penalties for the foregoing.

Plaintiff filed a First Amended Complaint on October 15, 2021, that asserted the same causes of action and added a named plaintiff.

The First Amended Complaint primarily seeks unpaid wages, interest thereon, and associated civil and statutory penalties, along with attorneys’ fees and costs.

On February 26, 2025, the Court granted class certification as to the first cause of action for failure to provide meal periods, denied certification on the second through fourth causes of action, and granted certification on the fifth and sixth causes of action only insofar as they are predicated on the first cause of action.

The certified class consists of all of the Company’s non-exempt ground employees in California who worked a shift in excess of five hours for the time period between October 24, 2014, forward.

On April 17, 2025, the Company filed a summary judgment motion arguing that Plaintiffs’ first cause of action, and all causes of action predicated thereon, failed as a matter of law.

The motion was granted on July 25, 2025.

Judgment was entered in favor of the Company on September 2, 2025, and Plaintiffs filed a notice of appeal on September 4, 2025.

The Company intends to continue to vigorously defend itself in all respects.

Following more recent communications by the parties regarding the status of the stay, the Court directed the parties to file a joint status report, which was filed on February 24, 2025, with the

Company renewing its request that the case be dismissed for lack of standing and lack of subject matter jurisdiction in light of the Fifth Circuit’s decision regarding the Sherman Complaint, which the plaintiffs opposed.

On March 11, 2025, the Court heard argument of the parties’ respective positions on the Company’s request for dismissal for lack of standing and lack of subject matter jurisdiction.

On June 9, 2025, the Court issued an order dismissing the case for lack of standing and lack of subject matter jurisdiction and entered final judgment in favor of the Company.

On July 9, 2025, the plaintiffs in the case filed a notice of appeal to the Fifth Circuit Court of Appeals.

The appeal has now been fully briefed by the parties.

No oral argument has been set.

The plaintiffs opposed both requests for relief.

On April 3, 2025, the United States District Court for the Southern District of Texas conducted a hearing on the Company’s motion for reconsideration and requested the parties to confer and submit an agreed post-hearing briefing schedule in order for the Court to evaluate and determine the sufficiency of the allegations in Plaintiffs’ amended complaint in accordance with the Private Securities Litigation Reform Act.

The parties' respective briefing on these issues has been completed and the matter remains pending for a decision by the Court.

and for damages from alleged breach of fiduciary duty, indemnification, and unjust enrichment derivatively on the Company’s behalf against the individual defendants based on similar factual allegations as contained in the demand letters and in the federal class action complaints.

On April 1, 2025, the Company filed a motion to dismiss or stay the consolidated state court derivative actions based on the forum selection clause in the Company’s bylaws and the pendency of the related federal derivative cases.

In May 2025, the Company and the plaintiffs in the state court derivative actions filed a joint stipulation and proposed order to stay the state court derivative actions and, among other things, to make a ruling on a motion to dismiss in the federal derivative case binding upon the state court derivative actions.

On June 18, 2025, the Company filed a motion to lift the stay in the consolidated federal derivative actions and an accompanying motion to dismiss based on the Special Litigation Committee's report, conclusions, and resolution.

The parties have submitted to the Court a stipulation with a proposed schedule pertaining to further briefing and related proceedings in connection with the motion to dismiss.

The stipulation has not yet been signed by the Court.

subject to fines and/or penalties resulting from those inquiries and investigations, as well as litigation from Customers and Shareholders.

On April 29, 2025, the Company received a demand letter addressed to the Board, dated April 28, 2025, from a purported Southwest Shareholder contending that the Company’s directors and senior officers breached their fiduciary duties in connection with the Board’s decision to end Southwest’s Bags Fly Free policy and to begin charging passengers for bags.

The letter demanded that the Board investigate the circumstances surrounding the policy change and bring suit against individual directors and officers who allegedly breached their duties to the Company.

On June 27, 2025, the Company sent a response to the demand letter on behalf of the Board rejecting the allegations and denying them and any other form of wrongdoing.

The response letter also noted that the Board approved an amendment and restatement of the Company’s bylaws that, among other things, established a minimum ownership threshold of three percent of Southwest’s outstanding shares in order for a Southwest shareholder to institute or maintain a derivative proceeding, consistent with the provisions in Texas Senate Bill 29, which was signed into law on May 14, 2025.

The response letter further noted that the purported shareholder who sent the demand letter claims to hold only 100 shares of the Company’s stock and thus fell well short of the three percent threshold.

In June 2015,

On October 29, 2024, the Company filed a motion to decertify the class.

The motion is fully briefed and a hearing on the motion is set for February 27, 2025.

The Court has set a trial date of September 11, 2025.

The case remains stayed, and there has been no effort either to lift the stay or to further pursue the asserted claims following the dismissal of the Sherman Complaint.

The

The plaintiffs oppose that relief but have not yet filed their opposition brief.

In that regard, on December 15, 2023, the plaintiffs in the two state court derivative cases filed an unopposed motion to consolidate the two state derivative cases, to appoint lead counsel, and to stay the consolidated state court derivative case pending the outcome of the ongoing inquiry of the Special Litigation Committee.

Further, in light of the ongoing inquiry of the Special Litigation Committee, on December 19, 2023, the Company filed an unopposed motion to extend a stay of the federal derivative case until at least February 26, 2024.

On February 26, 2024, the Company filed a second unopposed motion to extend the stay of the federal derivative case until at least April 26, 2024.

On April 26, 2024, the Company filed a third motion to extend the stay of the federal derivative case until at least June 25, 2024.

On July 2, 2024, the Company filed a fourth motion to extend the stay of the federal derivative case until at least July 25, 2024.

On July 27, 2024, the Company filed an additional motion to further extend the stay until September 23, 2024.

The Company and its counsel intend to take steps on behalf of the Company to implement the resolution of the Special Litigation Committee, including making appropriate motions in accordance with applicable Texas law governing derivative demands and litigation procedure.

condition, results of operations, or cash flow.

For the fiscal year ended December 31, [removed: 2024][added: 2025]

[removed: ][added: ]

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $17,086,581,902] [added: $16,890,396,912] computed by reference to the closing sale price of the common stock on the New York Stock Exchange on June 30, [removed: 2024,] [added: 2025,] the last trading day of the registrant’s most recently completed second fiscal quarter.

Number of shares of common stock outstanding as of the close of business on February [removed: 5, 2025: 592,661,084] [added: 3, 2026: 491,317,990] shares

Portions of the Definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held May [removed: 14, 2025,] [added: 07, 2026,] are incorporated into Part III of this Annual Report on Form 10-K.

| Item 1. | | | [removed: [Business](#i4afe0e32efd24336856aece63cff8bbf_13)] [added: [Business](#id4b63aa117ff4ef0ac41217a4f4b5530_13)] | | | [removed: [3](#i4afe0e32efd24336856aece63cff8bbf_13)] [added: [3](#id4b63aa117ff4ef0ac41217a4f4b5530_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i4afe0e32efd24336856aece63cff8bbf_19)] [added: Factors](#id4b63aa117ff4ef0ac41217a4f4b5530_19)] | | | [removed: [32](#i4afe0e32efd24336856aece63cff8bbf_19)] [added: [27](#id4b63aa117ff4ef0ac41217a4f4b5530_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i4afe0e32efd24336856aece63cff8bbf_22)] [added: Comments](#id4b63aa117ff4ef0ac41217a4f4b5530_22)] | | | [removed: [52](#i4afe0e32efd24336856aece63cff8bbf_22)] [added: [46](#id4b63aa117ff4ef0ac41217a4f4b5530_22)] | | |

| Item 1C. | | | [removed: [Cybersecurity](#i4afe0e32efd24336856aece63cff8bbf_25)] [added: [Cybersecurity](#id4b63aa117ff4ef0ac41217a4f4b5530_25)] | | | [removed: [52](#i4afe0e32efd24336856aece63cff8bbf_25)] [added: [46](#id4b63aa117ff4ef0ac41217a4f4b5530_25)] | | |

| Item 2. | | | [removed: [Properties](#i4afe0e32efd24336856aece63cff8bbf_28)] [added: [Properties](#id4b63aa117ff4ef0ac41217a4f4b5530_28)] | | | [removed: [56](#i4afe0e32efd24336856aece63cff8bbf_28)] [added: [50](#id4b63aa117ff4ef0ac41217a4f4b5530_28)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i4afe0e32efd24336856aece63cff8bbf_31)] [added: Proceedings](#id4b63aa117ff4ef0ac41217a4f4b5530_31)] | | | [removed: [57](#i4afe0e32efd24336856aece63cff8bbf_31)] [added: [51](#id4b63aa117ff4ef0ac41217a4f4b5530_31)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i4afe0e32efd24336856aece63cff8bbf_34)] [added: Disclosures](#id4b63aa117ff4ef0ac41217a4f4b5530_34)] | | | [removed: [62](#i4afe0e32efd24336856aece63cff8bbf_34)] [added: [57](#id4b63aa117ff4ef0ac41217a4f4b5530_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#i4afe0e32efd24336856aece63cff8bbf_43)] [added: Securities](#id4b63aa117ff4ef0ac41217a4f4b5530_43)] | | | [removed: [65](#i4afe0e32efd24336856aece63cff8bbf_43)] [added: [60](#id4b63aa117ff4ef0ac41217a4f4b5530_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i4afe0e32efd24336856aece63cff8bbf_49)] [added: Operations](#id4b63aa117ff4ef0ac41217a4f4b5530_49)] | | | [removed: [67](#i4afe0e32efd24336856aece63cff8bbf_49)] [added: [63](#id4b63aa117ff4ef0ac41217a4f4b5530_49)] | | |

| | | | [Liquidity and Capital [removed: Resources](#i4afe0e32efd24336856aece63cff8bbf_79)] [added: Resources](#id4b63aa117ff4ef0ac41217a4f4b5530_79)] | | | [removed: [85](#i4afe0e32efd24336856aece63cff8bbf_79)] [added: [74](#id4b63aa117ff4ef0ac41217a4f4b5530_79)] | | |

| | | | [Critical Accounting Policies and [removed: Estimates](#i4afe0e32efd24336856aece63cff8bbf_85)] [added: Estimates](#id4b63aa117ff4ef0ac41217a4f4b5530_85)] | | | [removed: [89](#i4afe0e32efd24336856aece63cff8bbf_85)] [added: [78](#id4b63aa117ff4ef0ac41217a4f4b5530_85)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i4afe0e32efd24336856aece63cff8bbf_91)] [added: Risk](#id4b63aa117ff4ef0ac41217a4f4b5530_91)] | | | [removed: [94](#i4afe0e32efd24336856aece63cff8bbf_91)] [added: [81](#id4b63aa117ff4ef0ac41217a4f4b5530_91)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i4afe0e32efd24336856aece63cff8bbf_97)] [added: Data](#id4b63aa117ff4ef0ac41217a4f4b5530_97)] | | | [removed: [98](#i4afe0e32efd24336856aece63cff8bbf_97)] [added: [84](#id4b63aa117ff4ef0ac41217a4f4b5530_97)] | | |

| | | | [Southwest Airlines Co. Consolidated Balance [removed: Sheet](#i4afe0e32efd24336856aece63cff8bbf_100)] [added: Sheet](#id4b63aa117ff4ef0ac41217a4f4b5530_100)] | | | [removed: [98](#i4afe0e32efd24336856aece63cff8bbf_100)] [added: [84](#id4b63aa117ff4ef0ac41217a4f4b5530_100)] | | |

| | | | [Southwest Airlines Co. Consolidated Statement of [removed: Income](#i4afe0e32efd24336856aece63cff8bbf_103)] [added: Income](#id4b63aa117ff4ef0ac41217a4f4b5530_103)] | | | [removed: [99](#i4afe0e32efd24336856aece63cff8bbf_103)] [added: [85](#id4b63aa117ff4ef0ac41217a4f4b5530_103)] | | |

| | | | [Southwest Airlines Co. Consolidated Statement of Comprehensive [removed: Income](#i4afe0e32efd24336856aece63cff8bbf_106)] [added: Income](#id4b63aa117ff4ef0ac41217a4f4b5530_106)] | | | [removed: [100](#i4afe0e32efd24336856aece63cff8bbf_106)] [added: [86](#id4b63aa117ff4ef0ac41217a4f4b5530_106)] | | |

| | | | [Southwest Airlines Co. Consolidated Statement of Stockholders’ [removed: Equity](#i4afe0e32efd24336856aece63cff8bbf_109)] [added: Equity](#id4b63aa117ff4ef0ac41217a4f4b5530_112)] | | | [removed: [101](#i4afe0e32efd24336856aece63cff8bbf_109)] [added: [87](#id4b63aa117ff4ef0ac41217a4f4b5530_112)] | | |

| | | | [Southwest Airlines Co. Consolidated Statement of Cash [removed: Flows](#i4afe0e32efd24336856aece63cff8bbf_112)] [added: Flows](#id4b63aa117ff4ef0ac41217a4f4b5530_115)] | | | [removed: [102](#i4afe0e32efd24336856aece63cff8bbf_112)] [added: [88](#id4b63aa117ff4ef0ac41217a4f4b5530_115)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i4afe0e32efd24336856aece63cff8bbf_115)] [added: Statements](#id4b63aa117ff4ef0ac41217a4f4b5530_118)] | | | [removed: [103](#i4afe0e32efd24336856aece63cff8bbf_115)] [added: [89](#id4b63aa117ff4ef0ac41217a4f4b5530_118)] | | |

| Item 9. | | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#i4afe0e32efd24336856aece63cff8bbf_193)] [added: Disclosure](#id4b63aa117ff4ef0ac41217a4f4b5530_202)] | | | [removed: [151](#i4afe0e32efd24336856aece63cff8bbf_193)] [added: [137](#id4b63aa117ff4ef0ac41217a4f4b5530_202)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i4afe0e32efd24336856aece63cff8bbf_196)] [added: Procedures](#id4b63aa117ff4ef0ac41217a4f4b5530_205)] | | | [removed: [151](#i4afe0e32efd24336856aece63cff8bbf_196)] [added: [137](#id4b63aa117ff4ef0ac41217a4f4b5530_205)] | | |

| Item 9B. | | | [Other [removed: Information](#i4afe0e32efd24336856aece63cff8bbf_199)] [added: Information](#id4b63aa117ff4ef0ac41217a4f4b5530_208)] | | | [removed: [152](#i4afe0e32efd24336856aece63cff8bbf_199)] [added: [138](#id4b63aa117ff4ef0ac41217a4f4b5530_208)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i4afe0e32efd24336856aece63cff8bbf_202)] [added: Inspections](#id4b63aa117ff4ef0ac41217a4f4b5530_211)] | | | [removed: [152](#i4afe0e32efd24336856aece63cff8bbf_202)] [added: [138](#id4b63aa117ff4ef0ac41217a4f4b5530_211)] | | |

| Item 10. | | | [Directors, Executive Officers, and Corporate [removed: Governance](#i4afe0e32efd24336856aece63cff8bbf_208)] [added: Governance](#id4b63aa117ff4ef0ac41217a4f4b5530_217)] | | | [removed: [153](#i4afe0e32efd24336856aece63cff8bbf_208)] [added: [139](#id4b63aa117ff4ef0ac41217a4f4b5530_217)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i4afe0e32efd24336856aece63cff8bbf_211)] [added: Compensation](#id4b63aa117ff4ef0ac41217a4f4b5530_220)] | | | [removed: [153](#i4afe0e32efd24336856aece63cff8bbf_211)] [added: [139](#id4b63aa117ff4ef0ac41217a4f4b5530_220)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i4afe0e32efd24336856aece63cff8bbf_214)] [added: Matters](#id4b63aa117ff4ef0ac41217a4f4b5530_223)] | | | [removed: [154](#i4afe0e32efd24336856aece63cff8bbf_214)] [added: [140](#id4b63aa117ff4ef0ac41217a4f4b5530_223)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i4afe0e32efd24336856aece63cff8bbf_217)] [added: Independence](#id4b63aa117ff4ef0ac41217a4f4b5530_226)] | | | [removed: [154](#i4afe0e32efd24336856aece63cff8bbf_217)] [added: [140](#id4b63aa117ff4ef0ac41217a4f4b5530_226)] | | |

| Item 14. | | | [Principal Accounting Fees and [removed: Services](#i4afe0e32efd24336856aece63cff8bbf_220)] [added: Services](#id4b63aa117ff4ef0ac41217a4f4b5530_229)] | | | [removed: [155](#i4afe0e32efd24336856aece63cff8bbf_220)] [added: [141](#id4b63aa117ff4ef0ac41217a4f4b5530_229)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i4afe0e32efd24336856aece63cff8bbf_226)] [added: Schedules](#id4b63aa117ff4ef0ac41217a4f4b5530_235)] | | | [removed: [156](#i4afe0e32efd24336856aece63cff8bbf_226)] [added: [142](#id4b63aa117ff4ef0ac41217a4f4b5530_235)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i4afe0e32efd24336856aece63cff8bbf_229)] [added: Summary](#id4b63aa117ff4ef0ac41217a4f4b5530_238)] | | | [removed: [161](#i4afe0e32efd24336856aece63cff8bbf_229)] [added: [147](#id4b63aa117ff4ef0ac41217a4f4b5530_238)] | | |

| [Signatures](#id4b63aa117ff4ef0ac41217a4f4b5530_241) | | | | | | [148](#id4b63aa117ff4ef0ac41217a4f4b5530_241) | | |

| [Signatures](#i4afe0e32efd24336856aece63cff8bbf_232) | | | | | | [162](#i4afe0e32efd24336856aece63cff8bbf_232) | | |

[added: These technologies and systems include, among others, the Company's website and] reservation system; mobile application; flight dispatch and tracking systems; flight simulators; check-in kiosks; aircraft maintenance, planning, and record keeping systems; telecommunications systems; flight planning and scheduling systems; crew scheduling systems; human resources systems; and financial planning, management, and accounting systems.

This team collaborates closely with other internal teams as well as with external [added: experts such as] legal advisors, communication specialists, and other key stakeholders, as appropriate, in identifying, protecting from, detecting, responding to, and recovering from cybersecurity incidents.

[removed: The incident response plan includes standard processes for reporting and] escalating cybersecurity incidents, as appropriate, to senior management, the Audit Committee, and the Board.

For a detailed discussion of the Company’s cybersecurity related risks, see “Item [removed: 1A Risk Factors—Information Technology, Cybersecurity, and Data Privacy Risks.”][added: 1A.]

The Company’s CIO, CISO, members of the cybersecurity team, or other advisors, as requested by the Audit Committee, report [removed: quarterly] [added: periodically] on the Company’s technology, data protection, and cybersecurity strategies [removed: and risks.]

Cybersecurity topics are presented to the Audit Committee on a [removed: quarterly] [added: periodic] basis and generally highlight any significant cybersecurity incidents, the cyber threat landscape, cybersecurity program enhancements, cybersecurity risks and related mitigation activities, and any other relevant cybersecurity topics.

[added: As needed, the Audit Committee reviews with] management the Company’s business continuity and disaster recovery plans and capabilities and the effectiveness of the Company’s escalation procedures.

- The [added: Executive Vice President and] CIO provides leadership for the Company’s technology department.

The CIO holds an undergraduate degree from Cornell [added: University] and has served in various roles in information technology for over 20 years, including [added: Senior] Vice President, [added: Vice President,] Senior Director, [removed: Manager] [added: Manager,] and Consultant.

- The CISO is responsible for leading the Company’s cybersecurity strategy and [removed: department while ensuring] [added: department, as well as] the protection of data and assets across the Company’s facilities, airports, and aircraft.

The CISO has served in various roles in cybersecurity for over [removed: 15] [added: 19] years.

The incident response plan includes standard processes for reporting and

Risk Factors—Information Technology, Cybersecurity, and Data Privacy Risks.”

and risks.

These technologies and systems include, among others, the Company's website and

As needed, the Audit Committee reviews with

Southwest operated a total of 803 Boeing 737 aircraft as of December 31, [removed: 2024,] [added: 2025,] of which [removed: 88] [added: 82] and [removed: 18] [added: 15] were under operating and finance leases, respectively.

The following table details information on the 803 aircraft as of December 31, [removed: 2024:][added: 2025:]

| 737-700 | | | | | | [removed: 143] [added: 143(b)] | | | | | | [removed: 19] [added: 20] | | | | | | [removed: 353] [added: 305] | | | | | | [removed: 326] [added: 286] | | | | | | [removed: 27] [added: 19] | | |

| 737-800 | | | | | | 175 | | | | | | [removed: 9] [added: 10] | | | | | | [removed: 205] [added: 198] | | | | | | [removed: 155] [added: 149] | | | | | | [removed: 50] [added: 49] | | |

| Totals | | | | | | | | | | | | [removed: 12] [added: 11] | | | | | | 803 | | | | | | [removed: 697] [added: 706] | | | | | | [removed: 106] [added: 97] | | |

In second quarter and fourth quarter [removed: 2024,] [added: 2025,] the Company entered into supplemental agreements with Boeing relating to its contractual order book for -7 and -8 aircraft.

These agreements provide flexibility in support of the Company's growth plans and fleet [removed: modernization.][added: modernization and include certain confidential credits and other concessions provided to the Company by Boeing.]

As of December 31, [removed: 2024,] [added: 2025,] the Company had firm deliveries and options for -7 and -8 aircraft as follows:

| 2027 | | | [removed: 19] [added: 25] | | | | | | 46 | | | | | | [removed: 25] [added: 19] | | | | | | | | | | | | 90 | | | | | |

(a) The delivery timing for the -7 is dependent on the [removed: Federal Aviation Administration ("FAA")] [added: FAA] issuing required certifications and approvals to Boeing and the Company.

(c) The Company has included the remaining [removed: 63] [added: 81] of its 2024 [added: and 2025] contractual but undelivered aircraft (27 -7s and [removed: 36] [added: 54] -8s) within its [removed: 2025] [added: 2026] contractual commitments.

As Boeing continues to ramp up production and works to certify the -7, the Company [removed: is currently using a planning assumption of 38] [added: expects 66] -8 aircraft deliveries in [removed: 2025.][added: 2026.]

The [removed: 2025] [added: 2026] contractual detail is as follows:

| 2024 Contractual Deliveries | | | 27 | | | | | | [removed: 36] [added: —] | | | | | | | | | | | | | | | | | | [removed: 63] [added: 27] | | | | | |

| 2025 Contractual Deliveries | | | [removed: 43] [added: —] | | | | | | [removed: 30] [added: 54] | | | | | | | | | | | | | | | | | | [removed: 73] [added: 54] | | | | | |

The Company [removed: has begun] [added: completed] construction on a new [added: 129,000 square foot] aircraft maintenance [removed: facility, expected to be completed in 2025,] [added: facility] at Baltimore-Washington International [removed: Airport.][added: Airport in the second quarter of 2025.]

| 737 -8 | | | | | | 175 | | | | | | 3 | | | | | | 300 | | | | | | 271 | | | | | | 29 | | |

(b)In January 2026, the Company completed retrofits on its -700 fleet to reduce the number of seats to 137 in connection with its implementation of extra legroom seating.

| 2026 | | | 101 | | | | | | 66 | | | | | | — | | | | | | | | | | | | 167 | | | (c) | | |

| | | | 269 | | | (a) | | | 196 | | | (b) | | | 152 | | | (b) | | | | | | | | | 617 | | | | | |

| 2026 Contractual Deliveries | | | 74 | | | | | | 12 | | | | | | | | | | | | | | | | | | 86 | | | | | |

| 2026 Combined Contractual Total | | | 101 | | | | | | 66 | | | | | | | | | | | | | | | | | | 167 | | | | | |

| 737 -8 | | | | | | 175 | | | | | | 3 | | | | | | 245 | | | | | | 216 | | | | | | 29 | | |

| 2025 | | | 70 | | | | | | 66 | | | | | | — | | | | | | | | | | | | 136 | | | (c) | | |

| 2026 | | | 64 | | | | | | — | | | | | | 22 | | | | | | | | | | | | 86 | | | | | |

| | | | 296 | | | (a) | | | 196 | | | (b) | | | 180 | | | | | | | | | | | | 672 | | | | | |

| 2025 Combined Contractual Total | | | 70 | | | | | | 66 | | | | | | | | | | | | | | | | | | 136 | | | | | |

In 2024, the Company completed a multi-year, $100 million project, which nearly doubled the size of the Company’s maintenance hangar at Phoenix Sky Harbor.

The 90,000 square foot expansion added three new aircraft bays to the facility.

The following information regarding the Company’s executive officers is as of February 5, [removed: 2025.][added: 2026.]

| Robert E. Jordan | | | President & Chief Executive Officer | | | [removed: 64] [added: 65] | | |

| Andrew M. Watterson | | | Chief Operating Officer | | | [removed: 58] [added: 59] | | |

| [removed: Ryan C. Green] [added: Tom Doxey] | | | Executive Vice President & Chief [removed: Transformation] [added: Financial] Officer | | | [removed: 48] [added: 46] | | |

| Justin Jones | | | Executive Vice President Operations | | | [removed: 46] [added: 47] | | |

| [removed: Tammy Romo] [added: Lauren Woods] | | | Executive Vice President & Chief [removed: Financial] [added: Information] Officer | | | [removed: 62] [added: 49] | | |

[removed: Green] [added: Tom Doxey] has served as the Company’s Executive Vice President & Chief [removed: Transformation] [added: Financial] Officer since [removed: November 2024.][added: March 2025.]

Mr. [removed: Green] [added: Roach] joined the Company in [removed: 2002] [added: 2001] in the Marketing Department.

[removed: Tammy Romo] [added: Lauren Woods] has served as the [removed: Company's] [added: Company’s] Executive Vice President & Chief [removed: Financial] [added: Information] Officer since [removed: July 2015.][added: December 2025.]

| Tony Roach | | | Executive Vice President & Chief Customer & Brand Officer | | | 46 | | |

Mr. Doxey also served as President of Breeze Airways from May 2022 to August 2024, Senior Vice President of Technical Operations at United Airlines from May 2019 to April 2022, Chief Financial Officer of Operations at United Airlines from December 2016 to May 2019, Vice President of Fleet and Corporate Finance at Allegiant Air from March 2013 to December 2016, in other fleet and finance-related roles at Allegiant Air from July 2009 to March 2013, and in various Finance roles at US Airways from October 2006 to July 2009.

Tony Roach has served as the Company's Executive Vice President & Chief Customer & Brand Officer since March 2025.

Mr. Roach also served as Senior Vice President & Chief Customer Officer from December 2022 to March 2025, Vice President Customer Experience & Customer Relations from May 2021 to December 2022, Managing Director Customer Experience from June 2020 to May 2021, Managing Director Marketing from September 2019 to June 2020, Senior Director Customer Experience from September 2018 to September 2019, Director Customer Experience from January 2017 to September 2018, Senior Manager in the Marketing Department from February 2014 to January 2017, and Manager in the Marketing Department from December 2010 to February 2014.

Ms. Woods also served as Senior Vice President & Chief Information Officer from February 2023 to December 2025, Vice President Technology from August 2021 to February 2023, Managing Director Technology from February 2019 to August 2021, Senior Director Technology from April 2016 to February 2019, Director in the Corporate Delivery Department from November 2014 to April 2016, Senior Manager Technology from October 2012 to November 2014, and Manager Technology from March 2010 to October 2012.

| Linda B. Rutherford | | | Chief Administration Officer | | | 58 | | |

Ryan C.

Mr. Green also served as Executive Vice President Commercial Transformation from July to November 2024, Executive Vice President & Chief Commercial Officer from October 2022 to July 2024, Senior Vice President & Chief Marketing Officer from February 2019 to October 2022, Vice President & Chief Marketing Officer from April 2017 to February 2019, Vice President Marketing from February 2016 to April 2017, Managing Director Customer Strategy and Development from October 2013 to February 2016, Senior Director Loyalty & Partnerships from July 2010 to October 2013, Director Customer Loyalty from November 2007 to July 2010, Senior Manager Loyalty Marketing from January 2007 to November 2007, and Manager Business Development from July 2004 to January 2007.

Ms. Romo also served as Senior Vice President Finance & Chief Financial Officer from September 2012 to July 2015, Senior Vice President of Planning from February 2010 to September 2012, Vice President of Financial Planning from September 2008 to February 2010, Vice President Controller from February 2006 to August 2008, Vice President Treasurer from September 2004 to February 2006, Senior Director of Investor Relations from March

2002 to September 2004, Director of Investor Relations from December 1994 to March 2002, Manager of Investor Relations from September 1994 to December 1994, and Manager of Financial Reporting from September 1991 to September 1994.

The Company has announced Ms. Romo’s resignation from her position of Executive Vice President & Chief Financial Officer effective April 1, 2025.

Linda B.

Rutherford has served as the Company’s Chief Administration Officer since October 2022.

Ms. Rutherford also served as Chief Communications Officer from October 2022 to December 2023, Executive Vice President People & Communications from June 2021 to October 2022, Senior Vice President & Chief Communications Officer from October 2017 to June 2021, Vice President & Chief Communications Officer from January 2016 to October 2017, Vice President Communications & Strategic Outreach from April 2007 to January 2016, Vice President Public Relations & Community Affairs from December 2005 to April 2007, Director Public Relations from May 2001 to December 2005, Senior Manager Public Relations from February 1999 to May 2001, and Manager Public Relations from February 1997 to February 1999.

Ms. Rutherford joined the Company in 1992 as a Public Relations Coordinator.

The Company has announced Ms. Rutherford’s resignation from her position of Chief Administration Officer effective April 1, 2025.

As of February [removed: 5, 2025,] [added: 3, 2026,] there were approximately [removed: 10,623] [added: 10,253] holders of record of the Company’s common stock.

The following graph compares the cumulative total Shareholder return on the Company’s common stock over the five-year period ended December 31, [removed: 2024,] [added: 2025,] with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and the NYSE ARCA Airline Index.

The comparison assumes $100 was invested on December 31, [removed: 2019,] [added: 2020,] in the Company’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.

[removed: ][added: ]

| | | | | | | [removed: 12/31/2019] [added: 12/31/2020] | | | | | | [removed: 12/31/2020] [added: 12/31/2021] | | | | | | [removed: 12/31/2021] [added: 12/31/2022] | | | | | | [removed: 12/31/2022] [added: 12/31/2023] | | | | | | [removed: 12/31/2023] [added: 12/31/2024] | | | | | | [removed: 12/31/2024] [added: 12/31/2025] | | |

| Southwest Airlines Co. | | | | | | $ | 100 | | | | | $ | [removed: 87] [added: 92] | | | | | $ | [removed: 80] [added: 72] | | | | | $ | [removed: 63] [added: 64] | | | | | $ | [removed: 55] [added: 76] | | | | | $ | [removed: 66] [added: 95] | |

| NYSE ARCA Airline | | | | | | $ | 100 | | | | | $ | [removed: 76] [added: 98] | | | | | $ | [removed: 74] [added: 64] | | | | | $ | [removed: 48] [added: 83] | | | | | $ | [removed: 63] [added: 83] | | | | | $ | [removed: 63] [added: 88] | |

| Issuer Purchases of Equity Securities (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | |]

| Period | | | | | | Total number of shares purchased | | | | | | Average price paid per share (2) | | | | | | Total number of shares purchased as part of publicly announced plans or programs | | | | | | Maximum dollar value of shares that may yet be purchased under the plans or programs | | | [added: | | |]

(1) On [removed: May 15, 2019,] [added: September 25, 2024,] the Board authorized the repurchase of up to [removed: $2.0] [added: $2.5] billion of the Company’s common stock, of which [removed: approximately $899 million] [added: no amounts] remained as of [removed: September 2024.][added: the end of second quarter 2025.]

(2) Excludes immaterial amount of excise tax on share repurchases, net of [removed: issuances, payable in April 2025.][added: issuances.]

(3) Under an accelerated share repurchase program entered into by the Company with a [removed: third party] [added: third-party] financial institution in [removed: fourth] [added: third] quarter [removed: 2024] [added: 2025] (the [removed: "Fourth] [added: "Third] Quarter [removed: 2024] [added: 2025] ASR Program"), the Company paid $250 million and received an initial delivery of [removed: 6,795,787] [added: 6,368,213] shares during [removed: October 2024,] [added: September 2025,] representing an estimated 80 percent of the shares to be purchased by the Company under the [removed: Fourth] [added: Third] Quarter [removed: 2024] [added: 2025] ASR Program.

This share amount was based on the [removed: $29.43] [added: $32.66] closing price of the Company's common stock on [removed: October 25, 2024.][added: November 10, 2025.]

Final settlement of the Fourth Quarter [removed: 2024] [added: 2025] ASR Program occurred in [removed: January] [added: December] 2025 and was based on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period completed in [removed: January] [added: December] 2025.

Upon settlement, the third party financial institution delivered [removed: 1,010,663] [added: 106,178] additional shares of the Company’s common stock to the Company.

Upon completion of the Fourth Quarter [removed: 2024] [added: 2025] ASR Program in [removed: January] [added: December] 2025, the average purchase price per share for the [removed: 7,806,450] [added: 1,330,918] shares repurchased was [removed: $32.02.][added: $37.57.]

| S&P 500 | | | | | | $ | 100 | | | | | $ | 129 | | | | | $ | 105 | | | | | $ | 133 | | | | | $ | 166 | | | | | $ | 196 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | (a) | | | | | | (b) | | | | | | (c) | | | | | | (d) | | | | | |

| October 1, 2025 through October 31, 2025 | | | | | | 1,409,551 | | | | | | $ | — | | (3) | | | 1,409,551 | | | | | | $ | 1,750,000,000 | | | | |

| November 1, 2025 through November 30, 2025 | | | | | | 1,224,740 | | | | | | $ | — | | (4) | | | 1,224,740 | | | | | | $ | 1,700,000,000 | | | | |

| December 1, 2025 through December 31, 2025 | | | | | | 106,178 | | | | | | $ | — | | (4) | | | 106,178 | | | | | | $ | 1,700,000,000 | | (5)(6) | | |

| Total | | | | | | 2,740,469 | | | | | | | | | | | | 2,740,469 | | | | | | | | | | | |

On July 23, 2025, the Board approved a $2.0 billion share repurchase authorization of the Company's common stock.

This share amount was based on the $31.39 and $31.43 closing price of the Company's common stock on September 5, 2025 and September 15, 2025, respectively.

Upon settlement, the third-party financial institution delivered 1,409,551 additional shares of the Company’s common stock to the Company in October 2025 based on a discount to the volume-weighted average price per share of the Company's common stock during the calculation period.

Upon completion of the Third Quarter 2025 ASR Program in October 2025, the average purchase price per share for the 7,777,764 shares repurchased was $32.14.

(4) Under an accelerated share repurchase program entered into by the Company with a third party financial institution in fourth quarter 2025 (the "Fourth Quarter 2025 ASR Program"), the Company paid $50 million and received an initial delivery of 1,224,740 shares during November 2025, representing an estimated 80 percent of the shares to be purchased by the Company under the Fourth Quarter 2025 ASR Program.

(5) In addition, under a forward contract entered into by the Company in December 2025, the Company committed $750 million for an accelerated share repurchase program with a third party financial institution (the “January 2026 ASR Program”) under which the Company paid $750 million in January 2026 and received total delivery of 17,965,193 shares as settlement in full.

Upon completion of the January 2026 ASR Program in January 2026, the average purchase price per share of the 17,965,193 shares repurchased was $41.75.

The $750 million paid in January correspondingly reduced the maximum dollar value of shares that may yet be purchased under the repurchase program to $950 million.

(6) Under an accelerated share repurchase program entered into by the Company with a third party financial institution in January 2026 (the "First Quarter 2026 ASR Program"), the Company paid $400 million and received an initial delivery of 6,597,939 shares during January 2026, representing an estimated 80 percent of the shares to be purchased by the Company under the First Quarter 2026 ASR Program.

This share amount was based on the $48.50 closing price of the Company's

common stock on January 29, 2026.

Final settlement of the First Quarter 2026 ASR program is scheduled to occur by the end of April 2026 and will be based on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period to be completed at time of settlement.

The $400 million paid in first quarter 2026 correspondingly reduced the maximum dollar value of shares that may yet be purchased under the repurchase program to $550 million.

| S&P 500 | | | | | | $ | 100 | | | | | $ | 118 | | | | | $ | 152 | | | | | $ | 125 | | | | | $ | 157 | | | | | $ | 197 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | (a) | | | | | | (b) | | | | | | (c) | | | | | | (d) | | |

| October 1, 2024 through October 31, 2024 | | | | | | 6,795,787 | | | | | | $ | — | | (3) | | | 6,795,787 | | | | | | $ | 2,250,000,000 | |

| November 1, 2024 through November 30, 2024 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 2,250,000,000 | |

| December 1, 2024 through December 31, 2024 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 2,250,000,000 | |

| Total | | | | | | 6,795,787 | | | | | | | | | | | | 6,795,787 | | | | | | | | |

On September 25, 2024, the Board terminated and replaced this previous share repurchase authorization with a new $2.5 billion share repurchase authorization of the Company’s common stock.

| | | | December 31, [removed: 2024] [added: 2025] | | | | | | December 31, [removed: 2023] [added: 2024] | | |

| Cash and cash equivalents | | | $ | [removed: 7,509] [added: 3,231] | | | | | $ | [removed: 9,288] [added: 7,509] | |

| Short-term investments | | | [removed: 1,216] [added: —] | | | | | | [removed: 2,186] [added: 1,216] | | |

| Accounts and other receivables | | | [removed: 1,110] [added: 1,149] | | | | | | [removed: 1,154] [added: 1,110] | | |

| Inventories of parts and supplies, at cost | | | [removed: 800] [added: 775] | | | | | | [removed: 807] [added: 800] | | |

| Prepaid expenses and other current assets | | | [removed: 639] [added: 490] | | | | | | [removed: 520] [added: 639] | | |

| Total current assets | | | [removed: 11,274] [added: 5,645] | | | | | | [removed: 13,955] [added: 11,274] | | |

| Flight equipment | | | [removed: 25,202] [added: 26,293] | | | | | | [removed: 26,060] [added: 25,202] | | |

| Ground property and equipment | | | [removed: 8,244] [added: 9,163] | | | | | | [removed: 7,460] [added: 8,244] | | |

| Deposits on flight equipment purchase contracts | | | [removed: 413] [added: 401] | | | | | | [removed: 236] [added: 413] | | |

| Assets constructed for others | | | 88 | | | | | | [removed: 62] [added: 88] | | |

| Less allowance for depreciation and amortization | | | [removed: 14,891] [added: 15,700] | | | | | | [removed: 14,443] [added: 14,891] | | |