Item 1. Financial Statements

Southwest Airlines Co.

Condensed Consolidated Balance Sheet

(in millions)

(unaudited)

			March 31, 2026						December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents			$	3,328					$	3,231
Accounts and other receivables			1,254						1,149
Inventories of parts and supplies, at cost			833						775
Prepaid expenses and other current assets			554						490
Total current assets			5,969						5,645
Property and equipment, at cost:
Flight equipment			26,254						26,293
Ground property and equipment			9,317						9,163
Deposits on flight equipment purchase contracts			494						401
Assets constructed for others			88						88
			36,153						35,945
Less allowance for depreciation and amortization			15,777						15,700
			20,376						20,245
Goodwill			970						970
Operating lease right-of-use assets			1,019						1,089
Other assets			1,021						1,112
			$	29,355					$	29,061
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	2,114					$	1,991
Accrued liabilities			2,170						2,349
Current operating lease liabilities			300						312
Air traffic liability			7,049						5,945
Current maturities of long-term debt			851						324
Total current liabilities			12,484						10,921
Long-term debt less current maturities			4,536						4,577
Air traffic liability - noncurrent			1,201						1,219
Deferred income taxes			2,353						2,289
Noncurrent operating lease liabilities			709						768
Other noncurrent liabilities			1,197						1,306
Stockholders' equity:
Common stock			888						888
Capital in excess of par value			4,260						4,322
Retained earnings			16,526						16,388
Accumulated other comprehensive loss			(1)						(24)
Treasury stock, at cost			(14,798)						(13,593)
Total stockholders' equity			6,875						7,981
			$	29,355					$	29,061

See accompanying notes.

Southwest Airlines Co.

Condensed Consolidated Statement of Comprehensive Income (Loss)

(in millions, except per share amounts)

(unaudited)

			Three months ended March 31,
			2026						2025
OPERATING REVENUES:
Passenger			$	6,591					$	5,811
Freight			44						41
Other			614						576
Total operating revenues			7,249						6,428
OPERATING EXPENSES:
Salaries, wages, and benefits			3,297						3,102
Aircraft fuel and related taxes			1,356						1,249
Maintenance materials and repairs			259						292
Landing fees and airport rentals			572						522
Depreciation and amortization			398						396
Other operating expenses			1,037						1,090
Total operating expenses			6,919						6,651
OPERATING INCOME (LOSS)			330						(223)
NON-OPERATING EXPENSES (INCOME):
Interest expense			54						46
Capitalized interest			(12)						(11)
Interest income			(23)						(84)
Other (gains) losses, net			26						18
Total non-operating expenses (income)			45						(31)
INCOME (LOSS) BEFORE INCOME TAXES			285						(192)
PROVISION (BENEFIT) FOR INCOME TAXES			58						(43)
NET INCOME (LOSS)			$	227					$	(149)
NET INCOME (LOSS) PER SHARE, BASIC			$	0.45					$	(0.26)
NET INCOME (LOSS) PER SHARE, DILUTED			$	0.45					$	(0.26)
COMPREHENSIVE INCOME (LOSS)			$	250					$	(148)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			498						584
Diluted			503						584

See accompanying notes.

Southwest Airlines Co.

Condensed Consolidated Statement of Stockholders' Equity

(in millions, except per share amounts)

(unaudited)

						Common stock						Capital in excess of par value						Retained earnings						Accumulated other comprehensive income (loss)						Treasury stock						Total
Balance at December 31, 2025						$	888					$	4,322					$	16,388					$	(24)					$	(13,593)					$	7,981
Repurchase of common stock (b)						—						(53)						—						—						(1,217)			(a)			(1,270)
Issuance of common and treasury stock pursuant to Employee stock plans						—						(26)						—						—						12						(14)
Share-based compensation						—						17						—						—						—						17
Cash dividends, $0.18 per share						—						—						(89)						—						—						(89)
Comprehensive income						—						—						227						23						—						250
Balance at March 31, 2026						$	888					$	4,260					$	16,526					$	(1)					$	(14,798)					$	6,875

(a) Includes excise tax incurred on share repurchases, net of issuances.

(b) For the three months ended March 31, 2026, the Company repurchased 28 million shares of its common stock.

						Common stock						Capital in excess of par value						Retained earnings						Accumulated other comprehensive income (loss)						Treasury stock						Total
Balance at December 31, 2024						$	888					$	4,199					$	16,332					$	(25)					$	(11,044)					$	10,350
Repurchase of common stock						—						—						—						—						(758)			(a)			(758)
Issuance of common and treasury stock pursuant to Employee stock plans						—						(10)						—						—						13						3
Share-based compensation						—						21						—						—						—						21
Cash dividends, $0.18 per share						—						—						(103)						—						—						(103)
Comprehensive income (loss)						—						—						(149)						1						—						(148)
Balance at March 31, 2025						$	888					$	4,210					$	16,080					$	(24)					$	(11,789)					$	9,365

(a) Includes excise tax incurred on share repurchases, net of issuances.

See accompanying notes.

Southwest Airlines Co.

Condensed Consolidated Statement of Cash Flows

(in millions)

(unaudited)

			Three months ended
			March 31,
			2026						2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)			$	227					$	(149)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			398						396
Deferred income taxes			57						(43)
Gain on sale-leaseback transactions			—						(3)
Changes in certain assets and liabilities:
Accounts and other receivables			(93)						57
Other assets			(61)						145
Accounts payable and accrued liabilities			(79)						(126)
Air traffic liability			1,086						660
Other liabilities			(77)						(63)
Cash collateral provided to derivative counterparties			—						(22)
Other, net			(40)						8
Net cash provided by operating activities			1,418						860
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(630)						(527)
Proceeds from sale of property and equipment			192						26
Proceeds from sale-leaseback transactions			—						24
Purchases of short-term investments			—						(51)
Proceeds from sales of short-term and other investments			—						1,154
Other, net			(7)						(3)
Net cash provided by (used in) investing activities			(445)						623
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt			500						—
Proceeds from Employee stock plans			16						17
Repurchase of common stock			(1,250)						(750)
Payments of long-term debt and finance lease obligations			(6)						(5)
Payments of cash dividends			(93)						(107)
Other, net			(43)						(13)
Net cash used in financing activities			(876)						(858)
NET CHANGE IN CASH AND CASH EQUIVALENTS			97						625
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			3,231						7,509
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	3,328					$	8,134
CASH PAYMENTS FOR:
Interest, net of amount capitalized			$	1					$	11
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Right-of-use assets acquired or modified under operating leases			$	5					$	14

See accompanying notes.

Southwest Airlines Co.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation

2. New Accounting Pronouncements

3. Financial Derivative Instruments

4. Comprehensive Income (Loss)

5. Revenue

6. Net Income (Loss) Per Share

7. Fair Value Measurements

8. Supplemental Financial Information

9. Commitments and Contingencies

10. Debt

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

1. BASIS OF PRESENTATION

Basis of Presentation

Southwest Airlines Co. (the "Company" or "Southwest") operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. The unaudited Condensed Consolidated Financial Statements include accounts of the Company and its wholly owned subsidiaries.

The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements as required in Form 10-K. The unaudited Condensed Consolidated Financial Statements for the interim periods ended March 31, 2026 and 2025 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In most markets the Company serves, demand for air travel has historically been greater, and, therefore, revenues in the airline industry tend to be stronger, during the summer months and peak travel periods, including holidays. As a result, in many cases, the Company's results of operations reflect this seasonality. However, air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers and changes in consumer behavior, unemployment levels, corporate travel budgets, global pandemics, extreme or severe weather and natural disasters, fears or actual acts of terrorism or war, governmental actions, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, have created, and may continue to create, significant volatility in the Company's financial results. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2026. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Operating Segments and Related Disclosures

The Company's chief operating decision maker, the Company's President, Chief Executive Officer, & Vice Chairman of the Board of Directors, assesses performance for the Company's single reportable segment and decides how to allocate resources based on its Net income or loss (see the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss)).

For single reportable segment-level financial information, total assets, revenues from external Customers, depreciation and amortization expense, interest income and interest expense, provision for income taxes, other non-operating expenses, and significant non-cash transactions, see Item 1. Financial Statements.

2. NEW ACCOUNTING PRONOUNCEMENTS

On September 18, 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-06, Accounting for and Disclosure of Software Costs. The new standard modernizes the guidance to reflect the software development approaches currently being used by removing all references to "development stages" from ASC ("Accounting Standards Codification") 350-40 Intangibles—Goodwill and Other - Internal-Use Software. Under ASU 2025-06, only the following criteria in ASC 350-40-25-12(b) and (c) must be met for entities to begin capitalizing software costs: (i) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). This standard is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

may apply the guidance prospectively, retrospectively, or via a modified prospective transition method. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement presentation or results.

On July 30, 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This standard includes the option for entities to elect a practical expedient that assumes current conditions as of the balance sheet date do not change for the remaining life of the asset as a part of estimating expected credit losses. The Company has elected this practical expedient as of first quarter 2026 and there was no significant impact on its financial statement presentation or disclosures.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard responds to investor input by requiring public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements. This standard is effective for all entities that are subject to Subtopic 220-40, for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, but early adoption is permitted. The Company is evaluating this new standard but does not expect it to have a significant impact on its financial statement disclosures.

3. FINANCIAL DERIVATIVE INSTRUMENTS

Fuel Contracts

Airline operators are inherently dependent upon energy to operate and, therefore, are impacted by changes in jet fuel prices. Furthermore, jet fuel typically represents one of the largest operating expenses for airlines. The Company has historically aimed to reduce volatility in operating expenses through its fuel hedging program. However, based on higher fuel hedging premium costs over time and other factors, the Company discontinued its fuel hedging program and terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio during 2025. The Company does not intend to add additional fuel derivatives.

The Company recorded expenses associated with fuel derivative contracts that settled during the three months ended March 31, 2025, and for amounts that remain in Accumulated Other Comprehensive Income ("AOCI") associated with previously terminated hedges during the three months ended March 31, 2026. These expenses are reflected as a component of Aircraft fuel and related taxes within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss):

Location and amount reclassified from AOCI into income on cash flow hedging relationships
			Income Statement						Three months ended						Three months ended
(in millions)			location						March 31, 2026						March 31, 2025
Fuel derivative contracts (gross)			Aircraft fuel and related taxes						$	29					$	38

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

Derivatives designated and qualified in cash flow hedging relationships
			Loss recognized in AOCI on derivatives, net of tax
			Three months ended
			March 31,
(in millions)			2026						2025
Fuel derivative contracts			$	—					$	29

As of March 31, 2026, approximately $108 million remained in AOCI related to these previously closed positions, with approximately $86 million to be recognized in the remainder of 2026 and $22 million to be recognized in 2027. This balance in AOCI, which does not include any tax impact, will also be characterized as premium expense and similarly reclassified as an increase to Aircraft fuel and related taxes in future periods when the originally forecasted transactions occur (through the end of 2027) and is net of the impact of the cash proceeds from the hedge terminations. See Note 4 for additional information on AOCI.

All cash flows associated with purchasing and selling fuel derivatives (including terminations) are classified as Other operating cash flows in the unaudited Condensed Consolidated Statement of Cash Flows.

Interest Rate Derivatives

The Company holds interest rate swap agreements, which collectively qualify as a fair value hedge, related to its $750 million 5.25% unsecured notes due 2035. The primary objective for the Company's use of these agreements is to hedge against changes in the fair value of the debt instrument caused by changes in market interest rates, specifically SOFR, by converting the fixed rate interest of the debt to a floating rate. Under these agreements, the Company pays SOFR plus a margin on the notional amount of the debt, and receives payments based on the fixed stated rate of the notes.

The fair values of the interest rate swap agreements, which are adjusted regularly, have been aggregated by counterparty for classification in the unaudited Condensed Consolidated Balance Sheet. The following table presents the location of the Company’s interest rate derivative instruments within the unaudited Condensed Consolidated Balance Sheet:

												Liability derivatives
						Balance Sheet						Fair value at						Fair value at
(in millions)						location						3/31/2026						12/31/2025
Derivatives designated as hedges
Interest rate derivative contracts						Other noncurrent liabilities						20						16
Total derivatives designated as hedges												$	20					$	16

The corresponding offsetting adjustment related to the liability (or asset) associated with the Company’s fair value hedges is to Long-term debt less current maturities.

Credit Risk and Collateral

The Company had no cash collateral posted or received as of March 31, 2026.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

4. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes changes in the fair value of certain financial derivative instruments that qualified for hedge accounting and actuarial gains/losses arising from the Company’s postretirement benefit obligation. The Company terminated its remaining portfolio of fuel hedging contracts during second quarter 2025, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio and program. See Note 3. The differences between Net income (loss) and Comprehensive income (loss) for the three months ended March 31, 2026 and 2025 were as follows:

			Three months ended March 31,
(in millions)			2026						2025
NET INCOME (LOSS)			$	227					$	(149)
Unrealized loss on fuel derivative instruments, net of deferred taxes of $7 and $—			22			(a)			—
Other, net of deferred taxes of $— and $—			1						1
Total other comprehensive income			$	23					$	1
COMPREHENSIVE INCOME (LOSS)			$	250					$	(148)

(a) Includes reclassification adjustments from AOCI into Aircraft fuel and related taxes associated with hedges previously terminated.

A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three months ended March 31, 2026:

(in millions)			Fuel derivatives												Defined benefit plan items						Other						Deferred tax impact						Accumulated other comprehensive income (loss)
Balance at December 31, 2025			$	(137)											$	106					$	(1)					$	8					$	(24)
Reclassification to earnings			29												—						1						(7)						23
Balance at March 31, 2026			$	(108)											$	106					$	—					$	1					$	(1)

The following table illustrates the significant amounts reclassified out of each component of AOCI for the three months ended March 31, 2026:

Three months ended March 31, 2026
(in millions)						Amounts reclassified from AOCI						Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss)
AOCI components
Unrealized loss on fuel derivative instruments						$	29					Aircraft fuel and related taxes
						7						Less: Tax expense
						$	22					Net of tax
Other						$	2					Other operating expenses
						(1)						Interest expense
						—						Less: Tax expense
						$	1					Net of tax
Total reclassifications for the period						$	23					Net of tax

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

5. REVENUE

Passenger Revenues

The Company’s contracts with its Customers primarily consist of its tickets sold, which are initially deferred as Air traffic liability. Passenger revenue associated with tickets is recognized when the performance obligation to the Customer is satisfied, which is primarily when travel is provided. For air travel on Southwest, the amount of tickets (which includes flight credits—also referred to as partial tickets) that will go unused, referred to as breakage, is estimated and recognized in Passenger revenue once the scheduled flight date has passed.

Revenue is categorized by revenue source as the Company believes it best depicts the nature, amount, timing, and uncertainty of revenue and cash flow. The following tables provide the components of Passenger revenue and Other revenue recognized for the three months ended March 31, 2026 and 2025:

			Three months ended March 31,
(in millions)			2026						2025
Passenger non-loyalty			$	5,188					$	4,766
Passenger loyalty - air transportation			688						800
Passenger ancillary sold separately (a)			715						245
Total passenger revenues			$	6,591					$	5,811

(a) The increase in Passenger ancillary sold separately in first quarter 2026 as compared to first quarter 2025 was due to the Company's initiative to implement new ancillary products—bag fees for most fare products beginning May 28, 2025, and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives.

			Three months ended March 31,
(in millions)			2026						2025
Loyalty program			$	557					$	544
Other			57						32
Total other revenues			$	614					$	576

Through the Company's co-branded credit card agreement ("Co-brand Agreement") with JPMorgan Chase Bank, N.A. ("Chase"), the Company sells loyalty points, certain marketing benefits, which consist of the use of the Southwest Airlines brand and access to Rapid Rewards Member lists, licensing and advertising elements, the use of the Company’s resource team, and other airline benefits. The Company allocates consideration received to performance obligations based on the relative standalone selling price of those obligations.

In 2025, the Company and Chase amended the Co-brand Agreement—in the first quarter to extend the term of the agreement and add enhanced airline benefits for Cardmembers associated with the Company's planned assigned and extra legroom seating initiative, which went into effect on January 27, 2026, and again in the second quarter to add benefits to Cardmembers related to the Company's changes in its checked bag policy that went into effect on May 28, 2025. For each change to the agreement, the Company estimated the selling prices and volumes over the term of the amended agreement in order to determine the allocation of proceeds to each of the three performance obligations identified in the agreement, which have been characterized as a transportation component, a marketing component, and an airline benefits component. The allocations utilized are reviewed to determine if adjustment is necessary any time there is a modification to the Co-brand Agreement.

The Company defers revenue for points earned by Customers through the Co-brand Agreement and subsequently records Passenger revenue related to loyalty point redemptions for air travel when the travel is delivered. The marketing elements are recognized as Other revenue and the airline benefits are recognized as Passenger revenue

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

when those performance obligations related to those services are satisfied, which is generally the same period consideration is received from Chase. As a result of the 2025 amendments to the Co-brand Agreement, a larger portion of the Company's co-brand Chase® Visa credit card benefits from Chase are now being classified within Passenger revenues commensurate with the Company's ability to satisfy the associated performance obligations, which began in mid-2025 associated with its change in policy for checked bags, and in first quarter 2026 associated with its implementation of assigned and extra legroom seating initiatives.

As of March 31, 2026, and December 31, 2025, the components of Air traffic liability, including contract liabilities based on tickets sold and unused flight credits available to the Customer, both of which are net of recorded breakage, and loyalty points available for redemption, within the unaudited Condensed Consolidated Balance Sheet were as follows:

			Balance as of
(in millions)			March 31, 2026						December 31, 2025
Air traffic liability - passenger travel and ancillary passenger services			$	3,972					$	2,830
Air traffic liability - loyalty program			4,278						4,334
Total Air traffic liability			$	8,250					$	7,164

The balance in Air traffic liability - passenger travel and ancillary passenger services also includes flight credits not currently associated with a ticket that can be applied by Customers towards the purchase of future travel. These flight credits are typically created as a result of a prior ticket cancellation or exchange, and are recorded net of associated breakage. Rollforwards of the Company's Air traffic liability - loyalty program for the three months ended March 31, 2026 and 2025 were as follows:

			Three months ended March 31,
(in millions)			2026						2025
Air traffic liability - loyalty program - beginning balance			$	4,334					$	4,849
Amounts deferred associated with points awarded			662						817
Revenue recognized from points redeemed - Passenger			(688)						(800)
Revenue recognized from points redeemed - Other			(30)						(25)
Air traffic liability - loyalty program - ending balance			$	4,278					$	4,841

Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. Rollforwards of the amounts included in Air traffic liability as of March 31, 2026 and 2025 were as follows:

			Three months ended March 31,
(in millions)			2026						2025
Air traffic liability - beginning balance			$	7,164					$	8,242
Current period sales (a)			7,465						6,471
Revenue from amounts included in contract liability opening balances			(2,482)						(2,608)
Revenue from current period sales			(3,897)						(3,203)
Air traffic liability - ending balance			$	8,250					$	8,902

(a)Current period sales include passenger travel, ancillary services, flight loyalty, and partner loyalty

On May 28, 2025, the Company implemented a change to its flight credit policy. Flight credits created from reservations booked and ticketed or voluntarily changed on or after May 28, 2025, will typically have a specified expiration date of one year or less, depending on the type of fare purchased and form of payment used. Flight credits issued between July 28, 2022, and May 28, 2025, including any future issuances associated with bookings made prior to the policy change on May 28, 2025, do not have an expiration date. The Company also began to issue

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

vacation travel credits for cancelled bookings resulting from the launch of the new Getaways by Southwest™ ("Getaways") product, and these credits will have an 18-month expiration period from the original booking date. As the Company believes that a portion of Customer travel credits (both flight credits and Getaways travel credits) issued will not be redeemed, it estimates and records breakage associated with such amounts.

The amount of Customer travel credits represent approximately 4 percent and 5 percent of the total Air traffic liability balance as of March 31, 2026, and December 31, 2025, respectively.

6. NET INCOME (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share amounts). Basic net income (loss) per share is calculated by dividing Net income (loss) by the weighted average of shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. During second quarter 2025, the Company's remaining balance of 1.25 percent Convertible Senior Notes due 2025 (the "Convertible Notes") of $1.6 billion was repaid, settling both principal and accrued interest. For the three months ended March 31, 2025, the Convertible Notes were determined to be antidilutive.

			Three months ended March 31,
			2026						2025
NUMERATOR:
Net income (loss) attributable to common stockholders			$	227					$	(149)
DENOMINATOR:
Weighted-average shares outstanding, basic			498						584
Dilutive effect of restricted stock units			5						—
Weighted-average shares outstanding, diluted			503						584
NET INCOME (LOSS) PER SHARE:
Basic			$	0.45					$	(0.26)
Diluted			$	0.45					$	(0.26)
Antidilutive amounts excluded from calculations:
Convertible debt			—						44
Restricted stock units			—						3

7. FAIR VALUE MEASUREMENTS

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of March 31, 2026, the Company held certain items that are required to be measured at fair value on a recurring basis, including cash equivalents. The Company may also from time to time hold short-term investments and available-for-sale securities. The majority of the Company’s cash equivalents consist of instruments classified as Level 1. However, the Company classifies any certificates of deposit and time deposits it holds as Level 2 due to the fact that the fair value for these instruments is determined utilizing observable inputs in non-active markets. Equity

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

securities primarily consist of investments with readily determinable market values associated with the Company’s excess benefit plan.

The Company’s interest rate derivative instruments consist of over-the-counter contracts, which are not traded on a public exchange. Interest rate derivatives currently consist solely of swap agreements. See Note 3 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these swap contracts as Level 2. The Company also considered counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company consistently applied these valuation techniques in all periods presented and believes it obtained the most accurate information available for the types of derivative contracts it holds.

Included in Equity securities are the Company’s investments primarily associated with its deferred compensation plans, which consist of mutual funds that are publicly traded and for which market prices are readily available. These plans are non-qualified deferred compensation plans designed to hold contributions in excess of limits established by the Internal Revenue Code of 1986, as amended. The distribution timing and payment amounts under these plans are made based on the participant’s distribution election and plan balance. Assets related to the funded portions of the deferred compensation plans are held in a rabbi trust, and the Company remains liable to these participants for the unfunded portion of the plans. The Company records changes in the fair value of plan obligations and plan assets, which net to zero, within the Salaries, wages, and benefits line and Other (gains) losses, net line, respectively, of the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss).

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026, and December 31, 2025:

												Fair value measurements at reporting date using:
												Quoted prices in active markets for identical assets						Significant other observable inputs
Description						March 31, 2026						(Level 1)						(Level 2)
Assets						(in millions)
Cash equivalents:
Cash equivalents (a)						$	2,878					$	2,878					$	—
Time deposits						450						—						450
Equity Securities						348						348						—
Total assets						$	3,676					$	3,226					$	450
Liabilities
Interest rate derivatives (see Note 3)						$	(20)					$	—					$	(20)

(a) Cash equivalents are primarily composed of money market investments.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

												Fair value measurements at reporting date using:
												Quoted prices in active markets for identical assets						Significant other observable inputs
Description						December 31, 2025						(Level 1)						(Level 2)
Assets						(in millions)
Cash equivalents:
Cash equivalents (a)						$	2,831					$	2,831					$	—
Time deposits						400						—						400
Equity Securities						457						457						—
Total assets						$	3,688					$	3,288					$	400
Liabilities
Interest rate derivatives (see Note 3)						$	(16)					$	—					$	(16)

(a) Cash equivalents are primarily composed of money market investments.

The Company did not have any material assets or liabilities measured at fair value on a nonrecurring basis, or on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2026, or the year ended December 31, 2025.

The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, as of March 31, 2026, are presented in the table below. The fair values of the Company’s publicly held debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. All privately held debt agreements are categorized as Level 3. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items.

(in millions)			Maturity date			Carrying value						Estimated fair value						Fair value level hierarchy
3.000% Notes			2026			$	300					$	297					Level 2
7.375% Debentures			2027			103						106						Level 2
3.450% Notes			2027			300						294						Level 2
5.125% Notes			2027			1,727						1,734						Level 2
4.375% Notes			2028			750						741						Level 2
Term Loan Credit Facility			2029			500						500						Level 3
2.625% Notes			2030			500						458						Level 2
1.000% Payroll Support Program Loan (a)			2031			426						430						Level 3
5.250% Notes			2035			730						685						Level 2

(a) The interest rate would have changed to SOFR plus two percent on April 24, 2026; however, the Company prepaid this loan in full on April 22, 2026. See Note 10 for further information.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

8. SUPPLEMENTAL FINANCIAL INFORMATION

(in millions)			March 31, 2026						December 31, 2025
Trade receivables			$	171					$	98
Credit card receivables			206						152
Business partners			725						739
Taxes receivable			6						6
Reinsurance receivable and losses recoverable			78						89
Other			68						65
Accounts and other receivables			$	1,254					$	1,149

(in millions)			March 31, 2026						December 31, 2025
Intangible assets, net			$	296					$	296
Equity securities			348						457
Prepaid maintenance			311						299
Other			66						60
Other assets			$	1,021					$	1,112

(in millions)			March 31, 2026						December 31, 2025
Accounts payable trade			$	404					$	389
Salaries, withholdings, and payroll taxes			559						563
Ticket taxes and fees			474						333
Aircraft maintenance payable			34						45
Fuel payable			208						157
Dividends payable			89						93
Third party services			205						201
Other payable			141						210
Accounts payable			$	2,114					$	1,991

(in millions)			March 31, 2026						December 31, 2025
Profit-sharing and savings plans			$	109					$	157
Vacation pay			697						684
Health			208						206
Workers' compensation			247						242
Property and income taxes			69						73
Interest			68						27
Deferred supplier credits			21						24
Bonus pay			39						147
Reinsurance payable and losses payable			155						175
Aircraft maintenance			56						85
Advances and deposits			127						142
Other			374						387
Accrued liabilities			$	2,170					$	2,349

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

(in millions)			March 31, 2026						December 31, 2025
Postretirement obligation			$	318					$	321
Other deferred compensation			397						512
Deferred co-brand revenue			432						429
Other			50						44
Other noncurrent liabilities			$	1,197					$	1,306

Other Operating Expenses

Other operating expenses consist of aircraft rentals, distribution costs, advertising expenses, personnel expenses, professional fees, certain technology-related costs, other operating costs, and any gains or losses on asset sales, none of which individually exceeded 10 percent of Total operating expenses.

9. COMMITMENTS AND CONTINGENCIES

Commitments

The Company's contractual order book with The Boeing Company ("Boeing") for 737-7 ("-7") and 737-8 ("-8") aircraft (together, the "MAX aircraft"), which extends to 2031, was designed to support the Company's growth and fleet modernization plans, while also providing significant flexibility and optionality to manage its fleet gauge and size, including opportunities to accelerate fleet modernization efforts if growth opportunities do not materialize. The Company received 10 -8 aircraft deliveries from Boeing in first quarter 2026 and retired 13 aircraft (including eight 737-700 ("-700") aircraft and the sale of three -700 aircraft and two 737-800 ("-800") aircraft). In addition, during first quarter 2026, the Company exercised six -7 options for delivery in 2027 and converted 19 2026 deliveries from -7 to -8 firm orders.

Boeing continues to experience delays in fulfilling its commitments with regards to delivery of MAX aircraft to the Company, primarily as a result of manufacturing challenges and delays in achieving Federal Aviation Administration ("FAA") certification of one of its new aircraft types, the -7, for which Southwest expects to be the launch customer. As a result of Boeing's delivery delays, the Company has previously replanned its capacity and delivery expectations multiple times and will continue to closely monitor the ongoing aircraft delivery delays with Boeing and further adjust expectations as needed.

As of March 31, 2026, the Company had the following firm orders and options for future periods:

									The Boeing Company
									-7 Firm Orders						-8 Firm Orders									-7 or -8 Options												Total
2026									82						85									—												167			(c)
2027									31						46									13												90
2028									15						50									25												90
2029									38						34									18												90
2030									45						—									45												90
2031									45						—									45												90
									256			(a)			215						(b)			146									(b)			617

(a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

(b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract.

(c) Includes 10 -8 deliveries received year-to-date through March 31, 2026. In addition, the Company has included 81 of its 2024 and 2025 contractual but undelivered aircraft (27 -7s and 54 -8s) within its 2026 contractual commitments. The 2026 contractual detail is as follows:

			The Boeing Company
			-7 Firm Orders						-8 Firm Orders																		Total
2024 Contractual Deliveries			27						—																		27
2025 Contractual Deliveries			—						54																		54
2026 Contractual Deliveries			55						31																		86
2026 Combined Contractual Total			82						85																		167

Based on the Company's current agreement with Boeing, capital commitments associated with firm orders as of March 31, 2026, were:

(in billions)						Remainder of 2026						2027			2028			2029			2030			2031			Total
Payments for capital commitments						$	4.1		(a)			$	2.8		$	2.7		$	2.5		$	1.5		$	1.2		$	14.8

(a) Capital commitments associated with the Company's firm orders in 2026 of $4.1 billion include approximately $2.6 billion primarily related to the existing remaining scheduled 86 MAX aircraft to be delivered in 2026 and $1.5 billion related to 71 MAX aircraft (27 -7s and 44 -8s) that were contractually committed for 2024 and 2025, but were not received.

Subsequent to March 31, 2026, and through April 23, 2026, the Company exercised two -7 options for delivery in 2027, resulting in the Company's 2027 capital commitments increasing to $2.9 billion.

Contingencies

The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business and records a liability for such claims when it is probable that a loss will be incurred and the amount is reasonably estimable.

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 is currently not able to estimate a range of possible loss with regards to the litigation to which it is a defendant.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

10. DEBT

Convertible Notes

On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of Convertible Notes, bearing interest at a rate of 1.25 percent, payable semi-annually in arrears. The Company repurchased $689 million during the two year period ending December 31, 2022, and the remaining $1.6 billion principal amount of the Convertible Notes was repaid at maturity during second quarter 2025 utilizing available cash on hand. An immaterial amount of Convertible Note conversions settled at maturity.

In first quarter 2025, the Company recognized $8 million total interest expense associated with the Convertible Notes, including $3 million of non-cash amortization of debt issuance costs and $5 million of contractual coupon interest. The unamortized debt issuance costs were recognized as non-cash interest expense based on the 5-year term of the notes, through May 1, 2025, less amounts that were required to be accelerated immediately upon conversion or repurchases.

Payroll Support Program Loan due 2031

During 2020 and 2021, the Company entered into definitive documentation with the United States Department of the Treasury ("Treasury") with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support Program" in April 2020 under the Coronavirus Aid, Relief, and Economic Security Act; the "PSP2 Payroll Support Program” in January 2021 under the Consolidated Appropriations Act, 2021; and the "PSP3 Payroll Support Program" in April 2021 under the American Rescue Plan Act of 2021.

As consideration for its receipt of funding under each of these Payroll Support programs, the Company issued promissory notes in favor of Treasury (each initially classified as a component of Long-term debt less current maturities in the unaudited Condensed Consolidated Balance Sheet). The note associated with the PSP1 Payroll Support Program was originally due in April 2030 but was redeemed early on April 17, 2025, in the amount of $976 million. The note associated with the PSP2 Payroll Support Program was originally due in January 2031 but was redeemed early on December 29, 2025, in the amount of $566 million. All payments were made utilizing available cash on hand.

The note associated with the PSP3 Payroll Support Program was originally due in April 2031. On December 30, 2025, the Company made a partial prepayment on this note in the amount of $100 million. On April 22, 2026, the Company made an early prepayment of the outstanding loan balance of $426 million, utilizing available cash on hand. As of March 31, 2026, the note associated with the PSP3 Payroll Support Program was classified as Current maturities of long-term debt in the accompanying unaudited Condensed Consolidated Balance Sheet.

Term Loan Credit Agreement

On March 11, 2026, the Company entered into a new term loan credit agreement (the "Term Loan Credit Agreement") with a third-party bank, providing for a $500 million senior secured term loan credit facility (the "Term Loan Facility") that was drawn in full on the closing date. The Term Loan Facility matures in full on March 11, 2029, and the Company has the right at any time to prepay the loans, in whole or in part, without premium or penalty, upon at least three business days’ prior written notice to the Agent. Amounts prepaid under the Term Loan Credit Agreement may not be reborrowed. Additionally, the Term Loan Facility includes an uncommitted incremental term loan feature allowing up to $1 billion in incremental term loan commitments to be established from time to time in accordance with the terms and conditions set forth in the Term Loan Credit Agreement. The Term Loan Facility is secured by a grant of a security interest in certain aircraft and related assets.

Notes to Condensed Consolidated Financial Statements			Southwest Airlines Co. Notes to Condensed Consolidated Financial Statements (unaudited)

Generally, amounts outstanding under the Term Loan Facility bear interest at interest rates based on either the Term SOFR (as defined in the Term Loan Credit Agreement) for designated interest periods selected by the Company or the Alternate Base Rate (as defined in the Term Loan Credit Agreement), plus an applicable margin. The underlying Term SOFR is subject to a floor of 0.00% per annum, and the Alternate Base Rate is subject to a floor of 1.00% per annum.

Revolving Credit Facility

As of March 31, 2026, the Company had access to $1.5 billion under its amended and restated revolving credit facility (the "Amended Credit Agreement"), which expires in August 2028, reflecting the Company’s exercise of the accordion feature to increase the size of the facility on July 22, 2025. For the three months ended March 31, 2026 and 2025, there were no amounts outstanding under the Amended Credit Agreement.