Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Relevant comparative operating statistics for the three months ended March 31, 2026 and 2025 are included below. The Company provides these operating statistics because they are commonly used in the airline industry and, as such, 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.

						Three months ended March 31,
						2026						2025						Change
Revenue passengers carried (000s)						29,175						29,990						(2.7)		%
Enplaned passengers (000s)						37,277						37,139						0.4		%
Revenue passenger miles (RPMs) (in millions)(a)						31,151						30,629						1.7		%
Available seat miles (ASMs) (in millions)(b)						42,049						41,432						1.5		%
Load factor(c)						74.1		%				73.9		%				0.2			pts.
Average length of passenger haul (miles)						1,068						1,021						4.6		%
Average aircraft stage length (miles)						778						771						0.9		%
Trips flown						330,371						331,886						(0.5)		%
Seats flown (000s)(d)						53,030						53,237						(0.4)		%
Seats per trip(e)						160.5						160.4						0.1		%
Average passenger fare						$	225.93					$	193.75					16.6		%
Passenger revenue yield per RPM (cents)(f)						21.16						18.97						11.5		%
Operating revenues per ASM (cents)(g)						17.24						15.51						11.2		%
Passenger revenue per ASM (cents)(h)						15.68						14.02						11.8		%
Operating expenses per ASM (cents)(i)						16.46						16.05						2.6		%
Operating expenses per ASM, excluding fuel (cents)						13.23						13.04						1.5		%
Operating expenses per ASM, excluding fuel and profit sharing (cents)						13.11						13.04						0.5		%
Fuel costs per gallon, including fuel tax						$	2.73					$	2.49					9.6		%
Fuel costs per gallon, including fuel tax (economic)						$	2.73					$	2.49					9.6		%
Fuel consumed, in gallons (millions)						496						500						(0.8)		%
Active fulltime equivalent Employees						73,401						71,506						2.7		%
Aircraft at end of period						800						800						—		%

(a)A revenue passenger mile is one paying passenger flown one mile. Also referred to as "traffic," which is a measure of demand for a given period.

(b)An available seat mile is one seat (empty or full) flown one mile. Also referred to as "capacity," which is a measure of supply or the space available to carry passengers in a given period.

(c)Revenue passenger miles divided by available seat miles.

(d)Seats flown is calculated using total number of seats available by aircraft type multiplied by the total trips flown by the same aircraft type during a particular period.

(e)Seats per trip is calculated by dividing seats flown by trips flown.

(f)Calculated as passenger revenue divided by revenue passenger miles. Also referred to as "yield," this is the average cost paid by a paying passenger to fly one mile, which is a measure of revenue production and fares.

(g)Calculated as operating revenues divided by available seat miles. Also referred to as "operating unit revenues" or "RASM," this is a measure of operating revenue production based on the total available seat miles flown during a particular period.

(h)Calculated as passenger revenue divided by available seat miles. Also referred to as "passenger unit revenues", this is a measure of passenger revenue production based on the total available seat miles flown during a particular period.

(i)Calculated as operating expenses divided by available seat miles. Also referred to as "unit costs" or "cost per available seat mile" or "CASM," this is the average cost to fly an aircraft seat (empty or full) one mile, which is a measure of cost efficiency.

Financial Highlights

The Company reports its results in accordance with GAAP. The Company also provides certain non-GAAP financial measures which the Company's management also utilizes to evaluate its ongoing financial performance, and the Company believes provides additional insight to investors as supplemental information to its GAAP results, as noted in the following tables. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

						Three months ended March 31,
(in millions, except per share amounts)
GAAP						2026						2025						% Change
Operating income (loss)						$	330					$	(223)					n.m.
Net income (loss)						$	227					$	(149)					n.m.
Net income (loss) per share, diluted						$	0.45					$	(0.26)					n.m.
Non-GAAP
Operating income (loss)						$	330					$	(128)					n.m.
Net income (loss)						$	227					$	(77)					n.m.
Net income (loss) per share, diluted						$	0.45					$	(0.13)					n.m.

The Company recorded first quarter 2026 operating revenues of $7.2 billion, a first quarter Company record. This increase was driven primarily by additional ancillary revenues as a result of the Company's previously announced transformational initiatives, resulting in a year-over-year increase in operating revenues of $821 million. Despite the highly volatile fuel environment, the Company's Operating income and Net income for the three months ended March 31, 2026, on a GAAP and non-GAAP basis, improved significantly compared to the same prior year period aided by the record first quarter revenue performance, partially offset by higher Salaries, wages, and benefits expense.

Company Overview

First Quarter 2026 Transformational Initiative Highlights

The Company is focused on executing its previously announced transformational initiatives, which were planned and designed to attract new Customers and improve both the Company's operational and financial performance. The Company began operation of assigned and extra legroom seating flights on January 27, 2026, which required retrofitting 780 aircraft in the months leading up to the change. In addition, the Company entered into a new partnership with All Nippon Airways, which will enable jointly operated itineraries connecting through the carriers' shared gateway airports in Honolulu, San Francisco, Seattle-Tacoma, and Los Angeles. Since February 13, 2025, the Company has implemented and/or announced strategic partnerships with a total of seven carriers, through which Customers can book itineraries that connect the Company's vast domestic network to destinations around the world.

The Company's strategic initiatives have resulted in significant earnings improvement to its financial results. During the quarter, the Company experienced upsell revenue opportunities 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 Company's more-attractive new product offerings. The Company has also continued to enhance its onboard offerings, with improvements such as in-seat power, larger overhead bins, and upgraded WiFi, including the planned integration of at least 300 Starlink-equipped aircraft into the Company's fleet by the end of 2026. Work is well underway on a refreshed cabin design, including new, more comfortable RECARO seats. As of April 22, 2026, 84 aircraft retrofitted with RECARO seats have been placed into service.

Other Initiatives and Quarterly Developments

The Company delivered strong financial performance and significant margin improvement for first quarter 2026 despite significantly higher fuel costs. Results reflect continued progress on the Company’s transformational initiatives, resilient Customer demand during the quarter, and disciplined cost management. While the external environment remains uncertain, the Company remains focused on driving revenue, managing costs, and executing at a high level across the business.

The escalation of geopolitical developments in the Middle East has impacted the market prices of products that are derived from crude oil, including jet fuel. The Company’s first quarter Aircraft fuel and related taxes expense was $1.4 billion, or $2.73 per gallon, which was approximately $164 million higher than it had originally forecasted for the period. However, since the rapid rise primarily took place in March, the impacts to second quarter 2026 results and beyond could be more significant if prices remain elevated. The forward curve on April 16, 2026 implied a second quarter 2026 fuel cost per gallon, including related taxes, between $4.10 and $4.15. The Company currently expects to utilize approximately 555 million gallons of jet fuel during second quarter 2026.

In first quarter 2026, the Company returned over $1.3 billion to Shareholders through a combination of share repurchases and dividends. See "Liquidity and Capital Resources" below and Part II, Item 2 - Issuer Purchases of Equity Securities for further information on the Company's share repurchases.

To improve its financial performance, the Company has also intensified its network optimization efforts. In first quarter 2026, the Company announced plans to suspend operations at Chicago O'Hare International Airport and Washington Dulles International Airport and reduce staffing at Hartsfield-Jackson Atlanta International Airport, Fort Lauderdale-Hollywood International Airport, and Philadelphia International Airport, effective June 4, 2026. A majority of affected Employees were offered the ability to bid for vacant positions across the Company's network and were able to remain employed by the Company.

On February 9, 2026, C. David Cush and Gregg A. Saretsky each submitted his resignation from the Company's Board of Directors (the "Board"), effective February 23, 2026. In connection with the resignations and in accordance with the Company's Fifth Amended and Restated Bylaws, the Board decreased the size of the Board to 11 members effective February 23, 2026.

On April 7, 2026, the Company's 34 Network Operations Control Customer Planners represented by the International Association of Machinists and Aerospace Workers ("IAM") voted to ratify the tentative agreement reached on March 27, 2026, as part of the accretion process to join an existing IAM-represented collective bargaining unit. The newly ratified agreement becomes amendable in December 2027.

Material Changes in Results of Operations

Comparison of the three months ended March 31, 2026 and 2025

			Three months ended March 31,												Increase (Decrease)						Percent change
(in millions)			2026						2025
Passenger			$	6,591					$	5,811					$	780					13.4		%
Freight			44						41						3						7.3
Other			614						576						38						6.6
Total operating revenues			$	7,249					$	6,428					$	821					12.8		%
Salaries, wages, and benefits			$	3,297					$	3,102					$	195					6.3		%
Aircraft fuel and related taxes			1,356						1,249						107						8.6
Maintenance materials and repairs			259						292						(33)						(11.3)
Landing fees and airport rentals			572						522						50						9.6
Depreciation and amortization			398						396						2						0.5
Other operating expenses			1,037						1,090						(53)						(4.9)
Total operating expenses			$	6,919					$	6,651					$	268					4.0		%

Operating Revenues

Total operating revenues for first quarter 2026 increased by $821 million, or 12.8 percent, year-over-year, to achieve a first quarter Company record of $7.2 billion. Passenger revenues for first quarter 2026 increased by $780 million, or 13.4 percent, year-over-year, driven primarily by additional ancillary revenues as a result of the Company's transformational initiatives, including the implementation of bag fees for most fare products beginning in second quarter 2025, and the operation of assigned and extra legroom seating for travel beginning on January 27, 2026. Other revenues for first quarter 2026 increased by $38 million, or 6.6 percent, year-over-year. First quarter 2026 RASM was 17.24 cents, finishing 11.2 percent higher than first quarter 2025. The unit revenue increase was primarily due to an 11.5 percent increase in yield as a result of broad-based demand strength across the network and initiative contributions, including an increase in ancillary revenues, along with a 0.2 point year-over-year increase in Load factor.

Operating Expenses

Operating expenses for first quarter 2026 increased by $268 million, or 4.0 percent, compared with first quarter 2025, and capacity increased 1.5 percent over the same prior year period. The vast majority of the dollar increase was due to higher Salaries, wages, and benefits expense and Aircraft fuel and related taxes expense. The following table presents the Company's Operating expenses per ASM for the first quarter of 2026 and 2025, followed by explanations of these changes on both a dollar and unit basis.

			Three months ended March 31,												Per ASM change						Percent change
(in cents, except for percentages)			2026						2025
Salaries, wages, and benefits			7.84		¢				7.49		¢				0.35		¢				4.7		%
Aircraft fuel and related taxes			3.23						3.01						0.22						7.3
Maintenance materials and repairs			0.62						0.70						(0.08)						(11.4)
Landing fees and airport rentals			1.36						1.26						0.10						7.9
Depreciation and amortization			0.95						0.96						(0.01)						(1.0)
Other operating expenses			2.46						2.63						(0.17)						(6.5)
Total			16.46		¢				16.05		¢				0.41		¢				2.6		%

Operating expenses per ASM for first quarter 2026 increased by 2.6 percent compared with first quarter 2025, primarily due to an increase in Salaries, wages, and benefits expense, which exceeded the year-over-year increase in

capacity. Operating expenses per ASM for first quarter 2026, excluding Aircraft fuel and related taxes expense, profit sharing, and special items (a non-GAAP financial measure), increased 2.3 percent, compared with first quarter 2025, primarily due to contract-driven wage rate inflation in Salaries, wages, and benefits expense in 2026. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Salaries, wages, and benefits expense for first quarter 2026 increased by $195 million, or 6.3 percent, compared with first quarter 2025. On a per ASM basis, first quarter 2026 Salaries, wages, and benefits expense increased 4.7 percent, compared with first quarter 2025. On a dollar and per ASM basis, the majority of the increase was due to contractual step/pay rate increases and related benefits for the Company's workforce.

Aircraft fuel and related taxes expense for first quarter 2026 increased by $107 million, or 8.6 percent, compared with first quarter 2025. On a per ASM basis, first quarter 2026 Aircraft fuel and related taxes expense increased 7.3 percent. On a dollar and per ASM basis, the increase was primarily attributable to increased jet fuel prices, mainly due to increases during the month of March, particularly due to recent market disruptions and geopolitical events. The following table provides more information on the Company's economic fuel costs per gallon, including the impact of fuel hedging net premium expense associated with previously terminated fuel derivative contracts:

			Three months ended March 31,
			2026						2025
Economic fuel costs per gallon			$	2.73					$	2.49
Fuel hedging premium expense (in millions)			$	29		(a)			$	37
Fuel hedging premium expense per gallon			$	0.06		(a)			$	0.07

(a) Includes amounts reclassified from AOCI associated with hedges previously terminated. See Notes 3 and 4 to the unaudited Condensed Consolidated Financial Statements for further information on the Company's derivative instruments and AOCI, respectively.

The Company's first quarter 2026 available seat miles per gallon ("fuel efficiency") increased 2.4 percent, year-over-year, primarily due to operating more -8 aircraft, the Company's most fuel-efficient aircraft, as a percentage of its fleet. The continued deliveries of MAX aircraft are expected to remain critical to the Company's efforts to modernize its fleet.

Maintenance materials and repairs expense for first quarter 2026 decreased by $33 million, or 11.3 percent, compared with first quarter 2025. On a per ASM basis, Maintenance materials and repairs expense decreased 11.4 percent compared with first quarter 2025. On a dollar and per ASM basis, the decrease was primarily due to a decrease in -700 engine shop visits.

Landing fees and airport rentals expense for first quarter 2026 increased by $50 million, or 9.6 percent, compared with first quarter 2025. On a per ASM basis, Landing fees and airport rentals expense increased 7.9 percent, compared with first quarter 2025. On a dollar and per ASM basis, approximately 65 percent of the increase was attributable to an increase in airport rental expense throughout the network driven by the higher rates charged by airports for leased space, approximately 25 percent of the increase was due to higher landing fees throughout the network driven by increased usage of the heavier -8 aircraft as well as higher rates, and the remaining increase was primarily due to receiving fewer favorable settlements and credits from various airports in 2026.

Depreciation and amortization expense for first quarter 2026 increased $2 million, or 0.5 percent, compared with first quarter 2025. On a per ASM basis, Depreciation and amortization expense decreased 1.0 percent compared with first quarter 2025. On a dollar basis, this increase was primarily due to a $24 million increase driven by new assets for technology, ground equipment, and leasehold improvements being placed into service since first quarter 2025 and a $14 million increase as a result of the acquisition of 54 -8 aircraft being placed into service since first quarter 2025. These increases were partially offset by a $28 million decrease due to a change in estimate for the residual values of certain airframes and engine assets as a result of prevailing market conditions and an $18 million

decrease due to certain Next Generation aircraft and engine assets being retired or becoming fully depreciated since first quarter 2025.

Other operating expenses for first quarter 2026 decreased by $53 million, or 4.9 percent, compared with first quarter 2025. Included within this line item was aircraft rentals expense in the amounts of $76 million and $87 million for the three-month periods ended March 31, 2026 and 2025, respectively. On a per ASM basis, Other operating expenses decreased 6.5 percent, compared with first quarter 2025. On a dollar and per ASM basis, the largest component of the year-over-year decrease was a focused Companywide effort to reduce discretionary expenses, the largest of which was a significant reduction in external consulting spend due to the completion of various transformational initiatives since first quarter 2025.

Non-Operating Expenses (Income)

Interest expense for first quarter 2026 increased by $8 million, or 17.4 percent, compared with first quarter 2025, primarily due to various debt financing transactions executed since first quarter 2025. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

Interest income for first quarter 2026 decreased by $61 million, or 72.6 percent, compared with first quarter 2025, primarily due to lower cash and investment balances and a lower average interest rate in the Company's total investment portfolio.

The following table displays the components of Other (gains) losses, net, for the three months ended March 31, 2026 and 2025:

			Three months ended March 31,
(in millions)			2026						2025
Mark-to-market impact on deferred compensation plan investments			$	25					$	18
Other			1						—
			$	26					$	18

Income Taxes

The Company's effective tax rate was 20.4 percent in first quarter 2026, compared with 22.3 percent in first quarter 2025. The year-over-year decrease in the tax rate was primarily due to higher tax benefits recognized from restricted stock units that vested during first quarter 2026 compared with first quarter 2025.

Reconciliation of Reported Amounts to Non-GAAP Financial Measures (excluding special items) (unaudited)

(in millions, except per share amounts and per ASM amounts)

						Three months ended March 31,												Percent
						2026						2025						Change
			Aircraft fuel and related taxes, unhedged			$	1,327					$	1,212
(a)			Add: Premium cost of fuel contracts designated as hedges			29						37
			Aircraft fuel and related taxes, as reported (and economic)			$	1,356					$	1,249					8.6
			Total operating expenses, as reported			$	6,919					$	6,651
			Deduct: Litigation accruals			—						(19)
			Deduct: Transformation costs			—						(14)
(b)			Deduct: Severance and related costs			—						(62)
			Total operating expenses, excluding special items			$	6,919					$	6,556					5.5
			Deduct: Aircraft fuel and related taxes expense, excluding special items (economic)			(1,356)						(1,249)
			Operating expenses, excluding Aircraft fuel and related taxes expense and special items			$	5,563					$	5,307					4.8
			Deduct: Profit-sharing expense			(50)						—
			Operating expenses, excluding Aircraft fuel and related taxes expense, special items, and profit sharing			$	5,513					$	5,307					3.9
			Operating income (loss), as reported			$	330					$	(223)
			Add: Litigation accruals			—						19
			Add: Transformation costs			—						14
(b)			Add: Severance and related costs			—						62
			Operating income (loss), excluding special items			$	330					$	(128)					n.m.
			Income (loss) before income taxes, as reported			$	285					$	(192)
			Add: Litigation accruals			—						19
			Add: Transformation costs			—						14
(b)			Add: Severance and related costs			—						62
			Income (loss) before income taxes, excluding special items			$	285					$	(97)					n.m.
			Provision (benefit) for income taxes, as reported			$	58					$	(43)
(c)			Add: Net loss tax impact of fuel and special items			—						23
			Provision (benefit) for income taxes, net, excluding special items			$	58					$	(20)					n.m.
			Net income (loss), as reported			$	227					$	(149)
			Add: Litigation accruals			—						19
			Add: Transformation costs			—						14
(b)			Add: Severance and related costs			—						62
(c)			Deduct: Net loss tax impact of special items			—						(23)
			Net income (loss), excluding special items			$	227					$	(77)					n.m.

						Three months ended March 31,												Percent
						2026						2025						Change
			Net income (loss) per share, diluted, as reported			$	0.45					$	(0.26)
			Add: Impact of special items			—						0.16
(c)			Deduct: Net loss tax impact of special items			—						(0.03)
			Net income (loss) per share, diluted, excluding special items			$	0.45					$	(0.13)					n.m.
			Operating expenses per ASM (cents)			16.46		¢				16.05		¢
			Deduct: Impact of special items			—						(0.23)
			Deduct: Aircraft fuel and related taxes expense divided by ASMs			(3.23)						(3.01)
			Deduct: Profit-sharing expense divided by ASMs			(0.12)						—
			Operating expenses per ASM, excluding Aircraft fuel and related taxes expense, special items, and profit sharing (cents)			13.11		¢				12.81		¢				2.3

(a) Includes amounts reclassified from AOCI associated with hedges previously terminated. See Note 3 to the unaudited Condensed Consolidated Financial Statements for further information.

(b) Represents Employee severance payments and related professional fees resulting from the workforce reduction in February 2025 ($53 million in Salaries, wages, and benefits and $9 million in Other operating expenses).

(c) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.

Note Regarding Use of Non-GAAP Financial Measures

The Company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP. These GAAP financial statements include (i) unrealized noncash reclassifications, as a result of accounting requirements and elections previously made under accounting pronouncements relating to derivative instruments and hedging and (ii) other charges and benefits the Company considers unusual and/or infrequent in nature and thus may make comparisons to its prior or future performance difficult.

Accordingly, the Company also provides financial information in this filing that was not prepared in accordance with GAAP and should not be considered as a substitute for the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information (also referred to as "excluding special items"). Management believes special items can distort the trends associated with the Company’s ongoing performance. Therefore, management utilizes non-GAAP financial measures to evaluate the Company’s financial performance, anticipate future operating results, and assess trends without the impact of items that can vary significantly from period to period. The following measures are often provided, excluding special items, and are utilized by the Company’s management, analysts, and investors to enhance comparability of year-over-year results, as well as to industry trends: Total operating expenses, non-GAAP; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense and profit sharing; Operating income (loss), non-GAAP; Income (loss) before income taxes, non-GAAP; Provision (benefit) for income taxes, net, non-GAAP; Net income (loss), non-GAAP; Net income (loss) per share, diluted, non-GAAP; and Operating expenses per ASM, non-GAAP, excluding Aircraft fuel and related taxes expense and profit sharing (cents).

For the periods presented, special items include:

1.Charges associated with tentative litigation settlements regarding paid short-term military leave to certain Employees;

2.Expenses associated with professional advisory fees related to the Company's implementation of its comprehensive transformational plan; and

3.Charges associated with severance, post-employment benefits, and professional fees as a result of the Company's reduction in workforce.

Liquidity and Capital Resources

Net cash provided by operating activities was $1.4 billion for the three months ended March 31, 2026, compared with $860 million provided by operating activities in the same prior year period. Historically, operating cash inflows are primarily derived from selling tickets for future flights and providing air transportation to Customers. The vast majority of tickets are purchased prior to the day on which travel is provided and, in some cases, several months before the anticipated travel date. Operating cash outflows are related to the recurring expenses of airline operations. The operating cash flows for the three months ended March 31, 2026, were largely impacted by the Company's net results (as adjusted for noncash items), a $97 million profit-sharing contribution related to 2025 results pursuant to the Company's Retirement Savings Plan, and a $1.1 billion increase in Air traffic liability driven by seasonal bookings for future travel. The operating cash flows for the three months ended March 31, 2025, were largely impacted by the Company's net results (as adjusted for noncash items), a $103 million profit-sharing contribution related to 2024 results pursuant to the Company's Retirement Savings Plan, and a $660 million increase in Air traffic liability driven by seasonal bookings for future travel. Net cash provided by operating activities is primarily used to finance capital expenditures, repay debt, provide Shareholder returns, and provide working capital.

Net cash used in investing activities totaled $445 million during the three months ended March 31, 2026, compared with $623 million provided by investing activities in the same prior year period. Investing activities in both years included Capital expenditures, as well as proceeds from the sale of various capital assets, and the prior year also included changes in the balance of the Company's short-term and noncurrent investments. During the three months ended March 31, 2026, gross Capital expenditures were $630 million, and the Company had $192 million proceeds from sales, compared with $527 million gross Capital expenditures, and $26 million proceeds from sales in the same prior year period. Capital expenditures increased, year-over-year, largely due to an increase in average delivery payment balances for scheduled future aircraft deliveries during the three months ended March 31, 2026, compared to the same prior year period. Proceeds from sales increased, year-over-year, due to the timing of various aircraft and engine sales in the three months ended March 31, 2026, compared to March 31, 2025.

The Company continues to expect its 2026 net capital spending to be in the range of $3.0 billion to $3.5 billion based on its expectation of 66 -8 aircraft deliveries in 2026, with the remainder representing non-aircraft capital spending, partially offset by proceeds from sales of various capital assets. The Company continues to plan for approximately 60 aircraft retirements in 2026.

Net cash used in financing activities was $876 million during the three months ended March 31, 2026, compared with $858 million used in financing activities for the same prior year period. During the three months ended March 31, 2026, the Company paid $93 million in cash dividends to Shareholders related to the fourth quarter 2025 declaration. The first quarter 2026 dividend declaration of $89 million was paid in April 2026. Additionally, the Company expended $1.25 billion to repurchase the Company's outstanding common stock through accelerated share repurchase programs (each, an "ASR") and open market share repurchases during the three months ended March 31, 2026. The repurchases of common stock amounts in the unaudited Consolidated Statement of Cash Flows may differ from the unaudited Consolidated Statement of Stockholder's Equity due to the timing of excise taxes incurred and subsequent payment on share repurchases, net of issuances. During the three months ended March 31, 2026, the Company entered into the Term Loan Credit Agreement with a third-party bank, providing for the $500 million senior secured Term Loan Credit Facility that was drawn in full on the closing date. The Term Loan Facility matures in full on March 11, 2029. Additionally, during first quarter 2026, the Company made the decision to prepay the PSP3 Payroll Support Program in advance of the fifth anniversary date in April 2026. As a result, the balance as of March 31, 2026, was classified as Current maturities of long-term debt in the accompanying unaudited Condensed Consolidated Balance Sheet. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information. The Company may engage in early debt repurchases from time to time at its discretion; however, no other potential early future repurchases are included in the Company's Current maturities of long-term debt unless otherwise disclosed as of March 31, 2026. During the three months ended March 31, 2025, the Company paid $107 million in cash dividends to Shareholders related to the fourth quarter 2024 declaration and the Company repurchased $750 million of the Company's outstanding common stock through authorized share repurchases.

On July 23, 2025, the Board approved a $2.0 billion share repurchase authorization of the Company's common stock. The Company repurchased $750 million of its outstanding common stock through an ASR in January 2026 (the "January 2026 ASR Program") under its current $2.0 billion authorization. The Company received a total of 17,965,193 shares under the January 2026 ASR Program. The Company also repurchased $400 million of its outstanding common stock through an ASR from January to March 2026 (the "First Quarter 2026 ASR Program") under its current $2.0 billion authorization. The Company received a total of 7,970,589 shares under the First Quarter 2026 ASR Program. Following the completion of the First Quarter 2026 ASR Program, during the period from March 13, 2026 through March 19, 2026, the Company repurchased $100 million of its outstanding common stock on the open market. The Company received a total of 2,494,040 shares of its common stock through the open market repurchases. See Part II, Item 2 for further information on the Company's share repurchases. These purchases were recorded as treasury share repurchases for purposes of calculating earnings per share. Subject to certain conditions, repurchases may be made in accordance with applicable securities laws in open market or private, including accelerated repurchase transactions from time to time, depending on market conditions.

The Company is a "well-known seasoned issuer" and currently has an effective shelf registration statement registering an indeterminate amount of debt and equity securities for future sales. The Company intends to use the proceeds from any future securities sales off this shelf registration statement for general corporate purposes.

The Company has access to $1.5 billion under the Amended Credit Agreement, which expires in August 2028. For the three months ended March 31, 2026 and 2025 there were no amounts outstanding under the Amended Credit Agreement. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

As of March 31, 2026, the Company carried a working capital deficit of approximately $6.5 billion, in which its current liabilities exceed its current assets. This is common within the airline industry and is primarily due to the nature of the Air traffic liability account, which is related to advance ticket sales, unused flight credits available to Customers, and loyalty deferred revenue, which are performance obligations for future Customer flights, do not require future settlement in cash, and are mostly nonrefundable. See Note 5 to the unaudited Condensed Consolidated Financial Statements for further information.

The Company believes it has various options available to meet its capital and operating commitments, including unrestricted cash of $3.3 billion as of March 31, 2026, and anticipated future internally generated funds from operations. The Company continues to have a large base of unencumbered aircraft and other related assets with a net book value of approximately $16.5 billion. The Company regularly evaluates its capital structure to efficiently manage financial risks, liquidity access, and cost of capital. The Company may consider, from time to time, additional financing arrangements, including secured or unsecured debt, as appropriate. In March 2026, the Company entered into the Term Loan Facility, which is secured by a grant of a security interest in certain aircraft and related assets with a minimum collateral coverage ratio requirement. In addition, the Company continues to maintain investment-grade credit ratings by all three major credit agencies (Moody's, S&P Global, and Fitch).

As of April 23, 2026, for the years 2026 through 2031, the Company has firm orders with Boeing for 473 MAX aircraft (258 -7s and 215 -8s), less 10 -8 aircraft received to date in 2026, and 144 MAX options (-7s or -8s). The contractual order book as of April 23, 2026, does not include the impact of delivery delays and is subject to change based on ongoing discussions with Boeing and their production capability. See Note 9 to the unaudited Condensed Consolidated Financial Statements for further information.

The following table details information on the aircraft in the Company's fleet as of March 31, 2026:

												Average Age (Yrs)						Number of Aircraft						Number Owned						Number Leased
Type						Seats
737-700						137						20						294						277						17
737-800						175						11						196						147						49
737-8						175						3						310						281						29
Totals												11						800						705						95

Critical Accounting Policies and Estimates

For information regarding the Company’s Critical Accounting Policies and Estimates, see the "Critical Accounting Policies and Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). Forward-looking statements are based on, and include statements about, the Company's estimates, expectations, beliefs, intentions, and strategies for the future, and the assumptions underlying these forward-looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, statements related to the following:

• the Company’s estimated fuel costs and fuel efficiency and the assumptions underlying the Company’s fuel-related expectations and estimates;

• the Company's expectations with respect to fleet transactions;

• the Company's expectations with respect to share repurchases;

• the Company’s expectations regarding passenger demand, revenue management, revenue trends, and bookings;

• the Company’s focus areas, goals, opportunities, and initiatives, including with respect to continued progress on the Company’s transformational initiatives, driving revenue, managing costs, and executing at a high level across the business;

• the Company’s plans and expectations with respect to the Company’s delivery of WiFi and Starlink-equipped aircraft, airline partnerships, cabin design and seating, and the Company’s Co-brand Agreement with Chase;

• the Company’s plans and expectations with respect to improving financial performance, Shareholder returns, capital structure, capital allocation, capital deployment, infrastructure investments, debt repurchases, and additional financing arrangements, including secured or unsecured debt;

• the Company’s fleet plans and expectations, including with respect to fleet modernization, fleet retrofits, fleet utilization, flexibility, fleet strategy and extracting value from the fleet and the fleet order book, and expected fleet deliveries and retirements, and underlying expectations and dependencies;

• the Company’s network plans and expectations;

• the Company’s labor plans and expectations, including with respect to reducing staffing at certain airports;

• the Company’s financial expectations, targets and goals, including with respect to fuel prices, income taxes, leverage, liquidity, balance sheet goals, and cost mitigation;

• the Company’s short-term and long-term financial and operational goals;

• the Company’s cash flow expectations and capital spending guidance, in particular with respect to aircraft capital expenditures and underlying aircraft delivery expectations;

• the Company’s expectations with respect to its ability to meet its ongoing capital and operating commitments, including underlying assumptions and factors that could impact this ability;

• the Company's assessment of financial and market risks; and

• the Company's plans and expectations related to legal and regulatory proceedings.

While management believes these forward-looking statements are reasonable as and when made, forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed in or indicated by the Company's forward-looking statements or from historical experience or the Company's present expectations. Factors that could cause these differences include, among others:

• the impact of fuel price changes, fuel price volatility, and fuel availability on the Company's business plans and results of operations, including with respect to fuel price increases and supply chain constraints related to geopolitical conflict;

• the impact of geopolitical conflict, consumer perception, consumer uncertainties with respect to government shutdowns or trade policies (including the imposition of tariffs), economic conditions, banking conditions, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), socio-demographic trends, and other factors beyond the Company's control on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results;

• the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives;

• the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as the Company's ability to obtain any required governmental approvals, on the Company's plans, strategies, financial results, and operations;

• the Company's dependence on Boeing, Boeing’s suppliers, and the FAA with respect to the Company's fleet plans and deliveries, capacity and operational plans, and other operational plans, strategies, and goals;

• consumer behavior and response with respect to the Company's new commercial products and policies;

• the impact of labor and hiring matters on the Company’s business decisions, plans, strategies, and results;

• the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to operational excellence and reliability, revenue management, online travel agencies, fuel supply, maintenance, environmental sustainability, Global Distribution Systems, and the impact on the Company's operations and results of operations of any third party delays or non-performance;

• the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives;

• the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees to effectively and efficiently maintain its operations;

• the impact of fears or actual acts of terrorism or war, political instability, cyber-attacks, and other factors beyond the Company’s control on the Company’s plans, financial results, operations, and ability to adequately insure against risks;

• the cost and effects of the actions of activist shareholders; and

• other factors as set forth in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the detailed factors discussed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Caution should be taken not to place undue reliance on the Company's forward-looking statements, which represent the Company's views only as of the date this report is filed. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.