OFFICIAL RULES BlogWorld Stranger Tweetup Contest 1. To Enter: No purchase or obligation necessary. Contest runs November 4, 2011 from 10 a.m. to 9 p.m. CT (“Contest Period”). To enter without purchase or obligation, during the Contest Period find a stranger at BlogWorld, interview them, post your interview on your blog, and then tweet #BlogSouthwest with a link to your blog post. Entries are limited to BlogWorld attendees and to one (1) entry per Twitter account. Anyone found using multiple accounts to enter will be disqualified. Anonymous entries will be considered invalid. You warrant your blog post will not be sexually explicit, unnecessarily violent or derogatory. It cannot promote drugs, alcohol, or firearms. It cannot contain trademarks, logos or copyrighted materials owned by others. 2. Selection of Winner: On or about November 7, 2011 at 5pm CT, members of the Southwest Airlines Emerging Media Team will review all eligible entries received and choose a winner. The judges will be judging on the following qualities: ∙ Creativity and Originality: 20% ∙ Entertaining: 25% ∙ Southwest Appeal: 35% - entry should reflect our Culture and Fun-LUVing Attitude. ∙ Rules: 20% Read and complied with the official rules. Prizes are guaranteed to be awarded. Odds of winning will depend on the total number of eligible entries received. 3. Prize: One (1) Grand Prize to consist of one (1) roundtrip ticket on Southwest Airlines. Approximate retail value $210.00. Ticket is subject to Southwest Airlines terms and conditions; certain restrictions may apply. Travel must be completed between 11/2011 and 12/2012. 4. Eligibility: Contest open to all legal US residents, 21 years and older as of November 4, 2011. Employees of Southwest Airlines Co., AirTran Airways, Inc., and their advertising and promotions agencies, and their immediate families (spouse and parents, children and siblings and their spouses) and individuals living in the same households of such employees are ineligible. Void where prohibited or restricted by law. Contest subject to all applicable federal, state, and local laws and regulations. By participating, entrants agree to these official rules and accept decisions of the Sponsor as final. Void in Puerto Rico and where prohibited by law. The contest is offered in the United States only and shall only be construed and evaluated according to United States law. Do not proceed in this site if you are not located in the United States. 5. To Claim Prize: Potential winner only will be notified by Southwest Airlines via Twitter, and winner must provide valid address (No P.O. Boxes). Unclaimed or undeliverable prize will be forfeited and awarded to an alternate winner. Prize is guaranteed to be awarded. Acceptance of prize constitutes permission (except where prohibited) to use winner's name, hometown and likeness for purposes of advertising, promotion and publicity in any media without additional compensation. Winner must execute and return any required affidavit of eligibility and/or liability/publicity release within one (1) day of notification attempt or prize will be forfeited and an alternate winner may be chosen. If a potential winner cannot be contacted, fails to sign and return the required affidavit of eligibility and liability/publicity release within the required time period, or if a prize or prize notification is returned as undeliverable, potential winner forfeits prize. 6. Limitation of Liability: Neither Sponsor, nor their affiliated entities, are responsible for printing or typographical errors in any related materials; stolen, fraudulent, entries or mail; or transactions that are processed or lost due to computer or electronic malfunction. Winner is solely responsible for payment of all federal, state, and local taxes on prize and for any travel or other expenses not specifically mentioned in prize description. Sponsor reserves the right to cancel or modify Contest if fraud or technical failure compromise the integrity of the Contest as determined by Sponsor in its sole discretion. This Contest offer is being made exclusively by Sponsor. Sponsor not responsible for technical, hardware, software or telephone failures of any kind, lost or unavailable network connections or fraud, incomplete, garbled or delayed computer transmission whether caused by Sponsor, user, or by any of the equipment or programming associated with or utilized in the Contest or by any technical or human error which may occur in the process of submissions which may limit a participants ability to participate in this Contest. 7. Winner's List: To request a Winner's List, send a self addressed return envelope, after November 7, 2011, to Southwest Airlines Emerging Media. All requests must be received by November 22, 2011. 8. Sponsor: Southwest Airlines Co., P.O. Box 36611, Dallas, TX. 75235-1611
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I love the SafteySuit video, but I would love to have 30 million points even more. Come on Brooks. Please hook a brother up!
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Fil er up, too, Mitch, while you are at it!
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Record operating revenues of $4.3 billion Third quarter operating income of $225 million
Mark-down in 2012 through 2015 fuel hedge portfolio drives GAAP net loss
Third quarter profit, excluding special items DALLAS, TEXAS – October 20, 2011 – Southwest Airlines Co. (NYSE:LUV) (the “Company”) today reported its third quarter 2011 results. The Company reported a third quarter 2011 net loss of $140 million, or $.18 per share, which included $262 million (net) of unfavorable special items. This compared to net income of $205 million, or $.27 per diluted share, for third quarter 2010, which included favorable special items totaling $10 million (net). The Company’s operating income was $225 million for third quarter 2011, compared to $355 million for third quarter 2010. Excluding special items, third quarter 2011 net income was $122 million, or $.15 per diluted share, compared to net income of $195 million, or $.26 per diluted share, in third quarter 2010. This exceeded Thomson’s First Call mean estimate of $.14 per diluted share for third quarter 2011. Additional information regarding special items is included in this release and in the accompanying reconciliation tables.
As required by generally accepted accounting principles (GAAP) and accounting pronouncements pertaining to derivative instruments and hedging, the Company’s third quarter 2011 results include $227 million (net) in unrealized, noncash mark-downs relating to a portion of the Company’s fuel hedges for future periods. Actual net cash settlements paid to counterparties for the Company's third quarter 2011 hedging activities were $13 million. The Company believes it is more meaningful to provide its financial results on an “economic” basis reflecting its actual net cash outlays for fuel consumed during the current period, inclusive of settled fuel derivative contracts, as current market prices are not always indicative of actual future settlements. As a result, the Company also provides its financial results, excluding these unrealized, noncash special items, to provide a better measure of the impact of the Company’s fuel hedges on its current period operating performance and liquidity. The actual cash impact of hedges related to fuel to be consumed in future periods will be reported in the applicable future economic results. Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “Excluding special items, third quarter 2011 operating income was $285 million, and third quarter 2011 net income was $122 million. Total third quarter operating revenues were very strong and reached an all-time quarterly record of 4.3 billion. Passenger revenues were driven by strong load factors, revenue yields, and unit revenues, which were all third quarter records. Third quarter passenger unit revenues increased approximately six percent, compared to third quarter last year (on a combined basis as defined below). Despite the cautious economic outlook, our booking trends remain strong. Importantly, business travel has remained stable since spring. Based on October traffic and booking trends, thus far, we expect solid passenger unit revenue year-over-year growth in the fourth quarter. Also, third quarter 2011 Other revenues grew approximately 18 percent, compared to third quarter last year (on a combined basis as defined below), largely due to the All-New Rapid Rewards® program and continued growth in our EarlyBird Check-In™ revenues. While it is disappointing to report a decline in earnings excluding special items, I was pleased with our strong third quarter revenue performance. “In accordance with fuel hedge accounting rules, our third quarter GAAP net results included $227 million of unrealized, noncash mark-downs relating to future periods’ fuel hedges. These special items resulted in a GAAP net loss for the quarter; however, since September 30 th , market prices have rebounded, and our future fuel hedge portfolio has gained back over $300 million in fair value. Our economic fuel costs per gallon, which excludes this GAAP mark-down, increased approximately 34 percent compared to third quarter last year. This surge in fuel costs caused our quarterly profits to decline despite record revenue results.” AirTran became a wholly-owned subsidiary of the Company on May 2, 2011. Results discussed in this release and provided in the accompanying unaudited Condensed Consolidated Financial Statements and Comparative Consolidated Operating Statistics include the results of operations and cash flows for AirTran from May 2, 2011 through September 30, 2011, including the impact of purchase accounting. Periods presented prior to the acquisition date do not include AirTran’s results. However, the Company believes the analysis of specified financial results on a “combined basis” provides more meaningful year-over-year comparability. Financial information presented on a “combined basis” is the sum of the historical financial results of the Company and AirTran for periods prior to the acquisition date, but includes the impact of purchase accounting only as of May 2, 2011. Supplemental financial information presented on a “combined basis” and the accompanying reconciliations have been included in this release. Financial Results and Outlook The Company’s total operating revenues for third quarter 2011 increased 35.1 percent to $4.3 billion, compared to $3.2 billion for third quarter 2010. Operating unit revenues increased 3.6 percent, compared to third quarter 2010. Operating unit revenues increased 6.7 percent from third quarter 2010’s combined unit revenues. Total third quarter 2011 operating expenses were $4.1 billion, compared to $2.8 billion in third quarter 2010. Excluding special items, third quarter 2011 unit costs increased 10.1 percent from third quarter 2010, largely due to a 34 percent year-over-year increase in economic fuel costs per gallon. Third quarter 2011 economic fuel costs of $3.18 per gallon included $.02 per gallon in unfavorable cash settlements for fuel derivative contracts, and a $.04 per gallon benefit from refunds of fuel sales taxes. Based on the Company’s fourth quarter 2011 fuel hedge position and market prices (as of October 17 th ), fourth quarter 2011 economic fuel costs, including fuel taxes, are estimated to be approximately $3.30 per gallon. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables. Excluding fuel and special items in both periods, third quarter 2011 unit costs decreased 1.2 percent from third quarter 2010. Excluding fuel and special items in both periods, third quarter 2011 unit costs increased 1.5 percent from third quarter 2010’s combined 7.27 cents. Based on current cost trends, the Company expects another modest year-over-year increase in its fourth quarter 2011 unit costs, compared to fourth quarter 2010’s combined unit costs of 7.72 cents, excluding fuel and special items in both periods. Operating income for third quarter 2011 was $225 million, compared to $355 million in third quarter 2010. Excluding special items in both periods, operating income was $285 million for third quarter 2011, compared to $389 million for third quarter 2010, and compared to $447 million for third quarter 2010 on a combined basis. Other expenses were $451 million for third quarter 2011, compared to $23 million for third quarter 2010. The $428 million increase in total other expenses primarily resulted from $405 million in Other losses recognized in third quarter 2011, compared to $13 million in Other gains recognized in third quarter 2010. In both periods, these net Other gains/losses primarily resulted from unrealized gains/losses associated with a portion of the Company’s fuel hedging portfolio. Excluding these special items, Other losses were $36 million in third quarter 2011 and $37 million in third quarter 2010, each attributable to the premium costs associated with the Company’s fuel derivative contracts. Fourth quarter 2011 premium costs are currently estimated to be approximately $14 million. Third quarter 2011 net interest expense increased approximately $10 million from third quarter 2010 primarily due to additional debt held by the Company as a result of the AirTran acquisition. Total operating revenues for the nine months ended September 30, 2011 increased 28.5 percent to $11.6 billion, while total operating expenses increased 33.9 percent to $11 billion, resulting in operating income of $546 million, versus $772 million for the comparable period in 2010. Excluding special items in both periods, operating income was $672 million for the nine months ended September 30, 2010, compared to $905 million for the same period last year. On a combined basis, total operating revenues for the nine months ended September 30, 2011 increased 13.9 percent to $12.5 billion, while total operating expenses increased 19.2 percent to $12 billion, resulting in combined year-to-date operating income for 2011 of $515 million, compared to $916 million for the same period last year. Excluding special items in both periods, combined operating income for nine months ended September 30, 2011 was $667 million, compared to $1.1 billion for the same period last year. Net income for the nine months ended September 30, 2011 was $26 million, or $.03 per diluted share, compared to $328 million, or $.44 per diluted share, for the same period last year. Excluding special items, year-to-date net income for 2011 was $263 million, or $.34 per diluted share, compared to $436 million, or $.58 per diluted share, for the same period last year. The Company’s return on invested capital (before taxes and excluding special items) was approximately eight percent for the twelve months ended September 30, 2011, including AirTran’s results beginning May 2, 2011. Additional information regarding pretax return on invested capital is included in the accompanying reconciliation tables. AirTran Acquisition “I am pleased with the overall progress we are making on our AirTran integration,” stated Kelly. “We continue to work with the Federal Aviation Administration to obtain our single operating certificate, which we expect to receive in first quarter 2012. We expect to have the capability to connect the networks of both airlines in first half 2012; however, we have already begun to optimize the coordinated flight schedules. “The negotiating committees and respective boards of the Southwest Airlines Pilots’ Association and the Air Line Pilots Association approved a framework for Pilot seniority list integration, and the agreement has gone to the memberships for vote. I commend the Flight Attendants’ unions from both airlines for recently agreeing on a process agreement, laying the framework to reach a seniority list integration agreement. “Although we have much work ahead, much has already been accomplished. Thus far, we have produced $60 million (before taxes and profitsharing) in annualized cost synergies, primarily attributable to renegotiation of certain AirTran contracts and reduction of corporate overhead. We remain focused on achieving our target of net annual pre-tax synergies in excess of $400 million by 2013.” The Company has incurred $97 million in costs (before taxes) associated with the acquisition and integration of AirTran during 2011, including $22 million in third quarter 2011. The Company expects total acquisition and integration expenses will be approximately $500 million. Including the anticipated benefit of net synergies, but excluding the impact of acquisition and integration expenses, the Company expects the acquisition to be accretive to its fully-diluted earnings per share for full year 2011. Liquidity Net cash provided by operations for the nine months ended September 30, 2011 was $985 million, which reflects the payment of $429 million in fuel hedge collateral deposits to counterparties related to the unfavorable change in the market value of the Company’s future periods’ fuel portfolio. For the nine months ended September 30, 2011, capital expenditures were $548 million. As a result, the Company has generated approximately $400 million free cash flow* thus far in 2011. Based on current trends and projected 2011 capital expenditures of $800 to $900 million, the Company expects to generate free cash flow for the full year 2011. On August 5, 2011, the Company’s Board of Directors authorized a share repurchase program to acquire up to $500 million of the Company’s common stock. During third quarter 2011, the Company purchased approximately 21 million shares of common stock for approximately $175 million. The Company also repaid $191 million in debt during the nine months ended September 30, 2011, and is scheduled to repay approximately $446 million in debt during fourth quarter 2011. The Company ended third quarter 2011 with $3.7 billion in cash and short-term investments, net of $458 million in net cash collateral paid to its fuel hedge counterparties. In addition, the Company also had a fully available unsecured revolving credit line of $800 million. Awards and recognitions
Named the Stevie Award Winner for the Company of the Year-Transportation by The International Business Awards for outstanding performance and Customer Service Received the 2011 Quest for Quality Award for Excellence in Air Cargo from Logistics Management Magazine; ranked first in ontime performance, value, and Customer Service Recognized as one of the top ten safest airlines in the Holistic Safety Rating 2011 by the Air Transport Rating Agency
Southwest will discuss its third quarter 2011 results on a conference call at 12:30 p.m. Eastern Time today. A live broadcast of the conference call will also be available at southwest.com/investor_relations. SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (1) (in millions, except per share amounts) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 Percent Change 2011 2010 Percent Change OPERATING REVENUES: Passenger $ 4,014 $ 3,032 32.4 $ 10,829 $ 8,544 26.7 Freight 35 31 12.9 103 94 9.6 Other 262 129 103.1 618 352 75.6 Total operating revenues 4,311 3,192 35.1 11,550 8,990 28.5 OPERATING EXPENSES: Salaries, wages, and benefits 1,146 938 22.2 3,226 2,748 17.4 Fuel and oil 1,586 926 71.3 4,150 2,681 54.8 Maintenance materials and repairs 272 196 38.8 717 556 29.0 Aircraft rentals 90 43 109.3 214 135 58.5 Landing fees and other rentals 257 210 22.4 705 606 16.3 Depreciation and amortization 191 161 18.6 523 469 11.5 Acquisition and integration 22 1 n.a. 97 1 n.a. Other operating expenses 522 362 44.2 1,372 1,022 34.2 Total operating expenses 4,086 2,837 44.0 11,004 8,218 33.9 OPERATING INCOME 225 355 (36.6) 546 772 (29.3) OTHER EXPENSES (INCOME): Interest expense 50 43 16.3 143 126 13.5 Capitalized interest (3) (5) (40.0) (8) (15) (46.7) Interest income (1) (2) (50.0) (8) (9) (11.1) Other (gains) losses, net 405 (13) n.a. 351 138 n.a Total other expenses 451 23 n.a. 478 240 99.2 INCOME (LOSS) BEFORE INCOME TAXES (226) 332 (168.1) 68 532 (87.2) PROVISION (BENEFIT) FOR INCOME TAXES (86) 127 (167.7) 42 204 (79.4) NET INCOME (LOSS) $ (140) $ 205 (168.3) $ 26 $ 328 (92.1) NET INCOME (LOSS) PER SHARE Basic $ (0.18) $ 0.27 $ 0.03 $ 0.44 Diluted $ (0.18) $ 0.27 $ 0.03 $ 0.44 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 792 746 773 745 Diluted 792 747 774 746 (1) Includes May through September 2011 financial results for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement I for selected financial information on a combined basis, including AirTran for periods prior to the acquisition date. SOUTHWEST AIRLINES CO. RECONCILIATION OF REPORTED AMOUNTS TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions, except per share amounts) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 Percent Change 2011 2010 Percent Change Fuel and oil expense, unhedged $ 1,549 $ 837 $ 4,125 $ 2,411 Add: Fuel hedge losses included in Fuel and oil expense 37 89 25 270 Fuel and oil expense, as reported $ 1,586 $ 926 $ 4,150 $ 2,681 (Deduct): Net impact from fuel contracts (2) (24) (33) (17) (132) Fuel and oil expense, economic $ 1,562 $ 893 74.9 $ 4,133 $ 2,549 62.1 Total operating expenses, as reported $ 4,086 $ 2,837 $ 11,004 $ 8,218 (Deduct): Net impact from fuel contracts (2) (24) (33) (17) (132) Total operating expenses, economic $ 4,062 $ 2,804 $ 10,987 $ 8,086 (Deduct): Charge for Asset impairment, net (3) (14) - (14) - (Deduct): Charge for Acquisition and integration costs, net (4) (22) (1) (95) (1) Total operating expenses, non-GAAP $ 4,026 $ 2,803 43.6 $ 10,878 $ 8,085 34.5 Operating income, as reported $ 225 $ 355 $ 546 $ 772 Add: Net impact from fuel contracts (2) 24 33 17 132 Operating income, economic $ 249 $ 388 $ 563 $ 904 Add: Charge for Asset impairment, net (3) 14 - 14 - Add: Charge for Acquisition and integration costs, net (4) 22 1 95 1 Operating income, non-GAAP $ 285 $ 389 (26.7) $ 672 $ 905 (25.7) Other (gains) losses, net, as reported $ 405 (13) $ 351 138 Add/(Deduct): Net impact from fuel contracts (2) (369) 50 (257) (39) Other losses, net, non-GAAP $ 36 $ 37 (2.7) $ 94 $ 99 (5.1) Income (loss) before income taxes, as reported $ (226) $ 332 $ 68 $ 532 Add/(Deduct): Net impact from fuel contracts (2) 393 (17) 274 171 $ 167 $ 315 $ 342 $ 703 Add: Charge for Asset impairment, net (3) 14 - 14 - Add: Charge for Acquisition and integration costs, net (4) 22 1 95 1 Income before income taxes, non-GAAP $ 203 $ 316 (35.8) $ 451 $ 704 (35.9) Net income (loss) as reported $ (140) $ 205 $ 26 $ 328 Add/(Deduct): Net impact from fuel contracts (2) 393 (17) 274 171 Income tax impact of fuel contracts (154) 7 (105) (64) $ 99 $ 195 $ 195 $ 435 Add: Charge for Asset impairment, net (5) 9 - 9 - Add: Charge for Acquisition and integration costs, net (5) 14 - 59 1 Net income, non-GAAP $ 122 $ 195 (37.4) $ 263 $ 436 (39.7) Net income (loss) per share, diluted, as reported $ (0.18) 0.27 $ 0.03 0.44 Add/(Deduct): Net impact from fuel contracts 0.30 (0.01) 0.22 0.14 $ 0.12 0.26 $ 0.25 0.58 Add: Impact of special items, net (5) 0.03 - 0.09 - Net income per share, diluted, non-GAAP $ 0.15 $ 0.26 (42.3) $ 0.34 $ 0.58 (41.4) (1) Includes May through September 2011 financial results for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement II for a reconciliation of selected combined amounts to non-GAAP items, including AirTran for periods prior to the acquisition date. (2) See Reconciliation of Impact from Fuel Contracts. (3) Net of profitsharing impact. (4) Amounts net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. (5) Amounts net of tax and profitsharing impact (see footnote (4) above). SOUTHWEST AIRLINES CO. RECONCILIATION OF IMPACT FROM FUEL CONTRACTS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 2011 2010 Fuel & Oil Expense Reclassification between Fuel & Oil and Other gains (losses), net, associated with current period settled contracts $ 3 $ 1 $ (6) $ 13 Contracts settling in the current period, but for which gains and/or losses have been recognized in a prior period * (27) (34) (11) (145) Impact from fuel contracts to Fuel & oil expense (24) (33) (17) (132) Operating Income Reclassification between Fuel & Oil and Other gains (losses), net, associated with current period settled contracts $ (3) $ (1) $ 6 $ (13) Contracts settling in the current period, but for which gains and/or losses have been recognized in a prior period * 27 34 11 145 Impact from fuel contracts to Operating Income 24 33 17 132 Other (gains) losses Mark-to-market impact from fuel contracts settling in current and future periods $ (288) $ 27 $ (148) $ (4) Ineffectiveness from fuel hedges settling in future periods (78) 24 (115) (22) Reclassification between Fuel and oil and Other gains (losses), net, associated with current period settled contracts (3) (1) 6 (13) Impact from fuel contracts to Other (gains) losses (369) 50 (257) (39) Net Income Mark-to-market impact from fuel contracts settling in current and future periods $ 288 $ (27) $ 148 $ 4 Ineffectiveness from fuel hedges settling in future periods 78 (24) 115 22 Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications) 27 34 11 145 Impact from fuel contracts to Net Income ** 393 (17) 274 171 (1) Includes May through September 2011 financial results for AirTran. * As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings ** Excludes income tax impact of unrealized items SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING FINANCIAL INFORMATION DETAIL OF AIRLINE THIRD QUARTER 2011 RESULTS AND PURCHASE ACCOUNTING IMPACT (in millions) (unaudited) Three months ended September 30, 2011 Purchase Southwest (1) AirTran (2) Accounting (3) Consolidated OPERATING REVENUES: Passenger $ 3,359 $ 656 $ (1) $ 4,014 Freight 35 - - 35 Other 160 102 - 262 Total operating revenues 3,554 758 (1) 4,311 OPERATING EXPENSES: Salaries, wages, and benefits 1,005 141 - 1,146 Fuel and oil 1,272 314 - 1,586 Maintenance materials and repairs 206 66 - 272 Aircraft rentals 41 59 (10) 90 Landing fees and other rentals 214 43 - 257 Depreciation and amortization 166 16 9 191 Acquisition and integration 19 3 - 22 Other operating expenses 424 98 - 522 Total operating expenses 3,347 740 (1) 4,086 OPERATING INCOME 207 18 - 225 (1) Results presented for Southwest exclude AirTran results and the impact of purchase accounting. (2) Results presented for AirTran exclude Southwest results and the impact of purchase accounting. (3) Represents the impact of purchase accounting. SOUTHWEST AIRLINES CO. RECONCILIATION OF SELECTED CONSOLIDATING FINANCIAL INFORMATION TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions) (unaudited) Three months ended September 30, 2011 Southwest AirTran Fuel and oil expense, standalone unhedged $ 1,232 $ 317 Add/(Deduct): Fuel hedge (gains) losses included in Fuel and oil expense 40 (3) Fuel and oil expense, standalone (2) $ 1,272 $ 314 Deduct: Net impact from fuel contracts (3) (24) - Fuel and oil expense, standalone economic $ 1,248 $ 314 Total operating expenses, standalone (2) $ 3,346 $ 740 Deduct: Net impact from fuel contracts (3) (24) - Total operating expenses, standalone economic $ 3,322 $ 740 Deduct: Charge for Asset impairment, net (4) (14) - Deduct: Charge for Acquisition and integration costs (5) (19) (3) Total operating expenses, standalone non-GAAP $ 3,289 $ 737 Operating income, standalone (2) $ 207 $ 18 Add: Net impact from fuel contracts (3) 24 - Operating income, standalone economic $ 231 $ 18 Add: Charge for Asset impairment, net (4) 14 - Add: Charge for Acquisition and integration costs (5) 19 3 Operating income, standalone non-GAAP $ 264 $ 21 (1) Selected amounts presented in this schedule are standalone non-GAAP financial results for each of Southwest and AirTran. These standalone results exclude the results of the other airline, and the impact of purchase accounting. (2) See Selected Consolidating Financial Information - Detail of Airline Third Quarter 2011 Results and Purchase Accounting Impact for the detail of standalone airline results and the purchase accounting impact. (3) See Reconciliation of Impact from Fuel Contracts. (4) Net of profitsharing impact. (5) No profitsharing impact. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. SOUTHWEST AIRLINES CO. COMPARATIVE CONSOLIDATED OPERATING STATISTICS (1) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 Change 2011 2010 Change Revenue passengers carried 28,208,036 22,879,097 23.3 % 76,437,631 65,739,354 16.3 % Enplaned passengers 35,010,060 27,814,896 25.9 % 94,040,092 79,063,561 18.9 % Revenue passenger miles (RPMs) (000s) 27,322,289 20,673,082 32.2 % 72,402,024 58,041,024 24.7 % Available seat miles (ASMs) (000s) 33,318,089 25,557,692 30.4 % 89,281,174 73,648,997 21.2 % Load factor 82.0 % 80.9 % 1.1 pts 81.1 % 78.8 % 2.3 pts Average length of passenger haul (miles) 969 904 7.2 % 947 883 7.2 % Average aircraft stage length (miles) 690 653 5.7 % 679 646 5.1 % Trips flown 359,630 287,200 25.2 % 974,221 836,314 16.5 % Average passenger fare $ 142.31 $ 132.53 7.4 % $ 141.67 $ 129.97 9.0 % Passenger revenue yield per RPM (cents) 14.69 14.67 0.1 % 14.96 14.72 1.6 % RASM (cents) 12.94 12.49 3.6 % 12.94 12.21 6.0 % PRASM (cents) 12.05 11.86 1.6 % 12.13 11.60 4.6 % CASM (cents) 12.26 11.10 10.5 % 12.32 11.16 10.4 % CASM, excluding fuel (cents) 7.50 7.47 0.4 % 7.68 7.52 2.1 % CASM, excluding special items (cents) 12.08 10.97 10.1 % 12.18 10.98 10.9 % CASM, excluding fuel and special items (cents) 7.38 7.47 (1.2) % 7.56 7.52 0.5 % Fuel costs per gallon, including fuel tax (unhedged) $ 3.16 $ 2.23 41.7 % $ 3.15 $ 2.23 41.3 % Fuel costs per gallon, including fuel tax $ 3.23 $ 2.47 30.8 % $ 3.17 $ 2.48 27.8 % Fuel costs per gallon, including fuel tax (economic) $ 3.18 $ 2.38 33.6 % $ 3.16 $ 2.36 33.9 % Fuel consumed, in gallons (millions) 490 375 30.7 % 1,307 1,075 21.6 % Active fulltime equivalent Employees 45,112 34,836 29.5 % 45,112 34,836 29.5 % Aircraft in service at period-end 699 547 27.8 % 699 547 27.8 % PRASM (Passenger unit revenue) - Passenger revenue yield per ASM RASM (unit revenue) - Operating revenue yield per ASM CASM (unit costs) - Operating expenses per ASM (1) Includes May through September 2011 operating statistics for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement V for consolidated operating statistics on a combined basis, including AirTran for periods prior to the acquisition date. SOUTHWEST AIRLINES CO. RETURN ON INVESTED CAPITAL (1) (in millions) (unaudited) 12 Months Ended 12 Months Ended September 30, 2011 September 30, 2010 Operating Income, as reported $ 761 $ 939 Add: Net impact from fuel contracts 57 163 Add: Acquisition and integration costs, net (2) 117 1 Operating Income, non-GAAP $ 935 $ 1,103 Net adjustment for aircraft leases (3) 110 86 Adjustment for fuel hedge accounting (129) (143) Adjusted Operating Income, non-GAAP $ 916 $ 1,046 Average Invested Capital (4) $ 11,863 $ 10,279 Equity adjustment for fuel hedge accounting 202 534 Adjusted Average Invested Capital $ 12,065 $ 10,813 . ROIC, pretax 8% 10% (1) Calculation includes the impact of the AirTran acquisition as of May 2, 2011. (2) Net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. (3) Net adjustment related to presumption that all aircraft in fleet are owned. (4) Average invested capital represents a five quarter average of debt, net present value of aircraft leases, and equity. SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED BALANCE SHEET (in millions) (unaudited) September 30, December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 1,016 $ 1,261 Short-term investments 2,640 2,277 Accounts and other receivables 369 195 Inventories of parts and supplies, at cost 459 243 Deferred income taxes - 214 Prepaid expenses and other current assets 110 89 Total current assets 4,594 4,279 Property and equipment, at cost: Flight equipment 15,451 13,991 Ground property and equipment 2,303 2,122 Deposits on flight equipment purchase contracts 229 230 17,983 16,343 Less allowance for depreciation and amortization 6,149 5,765 11,834 10,578 Goodwill 970 - Other assets 487 606 $ 17,885 $ 15,463 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,083 $ 739 Accrued liabilities 1,193 863 Air traffic liability 2,058 1,198 Current maturities of long-term debt 986 505 Total current liabilities 5,320 3,305 Long-term debt less current maturities 3,220 2,875 Deferred income taxes 1,856 2,493 Deferred gains from sale and leaseback of aircraft 78 88 Other non-current liabilities 926 465 Stockholders' equity: Common stock 808 808 Capital in excess of par value 1,222 1,183 Retained earnings 5,251 5,399 Accumulated other comprehensive loss (513) (262) Treasury stock, at cost (283) (891) Total stockholders' equity 6,485 6,237 $ 17,885 $ 15,463 SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (1) (in millions) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (140) $ 205 $ 26 $ 328 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 191 161 523 469 Unrealized (gain) loss on fuel derivative instruments 393 (17) 274 171 Deferred income taxes (90) 20 33 96 Amortization of deferred gains on sale and leaseback of aircraft (3) (3) (10) (10) Changes in certain assets and liabilities, net of acquisition: Accounts and other receivables 11 42 (96) (66) Other current assets (42) 7 (180) (6) Accounts payable and accrued liabilities (39) (5) 266 189 Air traffic liability (92) (63) 485 379 Cash collateral received from (provided to) derivative counterparties (409) 15 (429) 150 Other, net 2 23 93 (408) Net cash provided by (used in) operating activities (218) 385 985 1,292 CASH FLOWS FROM INVESTING ACTIVITIES: Payment to acquire AirTran, net of AirTran cash on hand - - (35) - Payments for purchase of property and equipment, net (276) (100) (548) (398) Purchases of short-term investments (1,525) (1,151) (4,788) (4,331) Proceeds from sales of short-term investments 1,664 939 4,414 3,484 Net cash used in investing activities (137) (312) (957) (1,245) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Employee stock plans 4 10 35 45 Proceeds from termination of interest rate derivative instrument - - 76 - Payments of long-term debt and capital lease obligations (48) (39) (110) (123) Payments of convertible debt - - (81) - Payment of credit line borrowing - - - (44) Payments of cash dividends (3) (3) (14) (13) Repurchase of common stock (175) - (175) - Other, net (2) 1 (4) 5 Net cash used in financing activities (224) (31) (273) (130) NET CHANGE IN CASH AND CASH EQUIVALENTS (579) 42 (245) (83) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,595 989 1,261 1,114 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,016 $ 1,031 $ 1,016 $ 1,031 SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: Fair value of equity consideration given to acquire AirTran $ - $ - $ 523 $ - Fair value of common stock issued for conversion of debt $ - $ - $ 78 $ - (1) Includes the impact of the AirTran acquisition as of May 2, 2011. SOUTHWEST AIRLINES CO. FUEL DERIVATIVE CONTRACTS AS OF OCTOBER 17, 2011 Percent of estimated fuel consumption covered by fuel derivative contracts Average WTI Crude Oil price per barrel 4Q 2011 First Half 2012 Second Half 2012 Up to $90 approx. 10% approx. 10% $90 to $100 approx. 15% approx. 25% $100 to $110 approx. 10% approx. 20% approx. 55% $110 to $120 approx. 45% approx. 25% approx. 70% Above $120 (1) approx. 40% approx. 20% approx. 50% Estimated difference in economic jet fuel price per gallon, above/(below) unhedged market prices, including taxes Average WTI Crude Oil price per barrel 4Q 2011 First Half 2012 Second Half 2012 $70 $0.11 $0.11 $0.20 $86 (2) $0.11 $0.06 $0.07 $100 $0.11 $0.03 $0.00 $115 $0.08 ($0.03) ($0.20) Percent of estimated fuel consumption covered by fuel derivative contracts at Period varying WTI crude-equivalent price levels 2013 over 50% 2014 over 40% 2015 over 10% (1) For first half 2012 and second half 2012, if average WTI market prices exceed $150 per barrel and $175 per barrel, respectively, the current estimated fuel consumption covered by fuel derivative contracts in each period would decrease to less than 5%. (2) Based on the fourth quarter 2011 average WTI forward curve and market prices as of October 17, 2011, and current estimated fuel consumption covered by fuel derivative contracts, fourth quarter 2011 economic fuel price per gallon, including taxes, is estimated to be approximately $3.30 per gallon, or $0.11 above market prices. SOUTHWEST AIRLINES CO. 737 FUTURE DELIVERY SCHEDULE (a) AS OF OCTOBER 19, 2011 The Boeing Company -700 -800 Purchase Additional Firm Orders Firm Orders Options Rights -800s Total 2011 2 2(b) 2012 28 5 33 2013 23 8 31 2014 29 6 35 2015 26 1 27 2016 31 7 38 2017 5 17 22 Through 2021 98 98 Total 116(c) 28 39 98 5 286 (a) Includes AirTran's future firm orders and options from Boeing. (b) The Company has already taken delivery of 18 737-700 aircraft through October 19, 2011. (c) The Company is evaluating substituting 737-800s in lieu of 737-700 firm orders currently scheduled for 2013 through 2017. SUPPLEMENTAL COMBINED STATEMENT I SOUTHWEST AIRLINES CO. SELECTED COMBINED FINANCIAL INFORMATION (1) (in millions) (unaudited) Three months ended Nine months ended September 30, September 30, Percent Percent 2011 2010 Change 2011 2010 Change OPERATING REVENUES: Passenger $ 4,014 $ 3,606 11.3 $ 11,641 $ 10,237 13.7 Freight 35 31 12.9 103 94 9.6 Other 262 223 17.5 744 633 17.5 Total operating revenues 4,311 3,860 11.7 12,488 10,964 13.9 OPERATING EXPENSES: Salaries, wages, and benefits 1,146 1,069 7.2 3,418 3,141 8.8 Fuel and oil 1,586 1,132 40.1 4,511 3,292 37.0 Maintenance materials and repairs 272 254 7.1 805 730 10.3 Aircraft rentals 90 103 (12.6) 296 316 (6.3) Landing fees and other rentals 257 250 2.8 759 729 4.1 Depreciation and amortization 191 176 8.5 543 513 5.8 Acquisition and integration 22 1 n.a. 123 1 n.a. Other operating expenses 522 462 13.0 1,518 1,326 14.5 Total operating expenses 4,086 3,447 18.5 11,973 10,048 19.2 OPERATING INCOME 225 413 (45.5) 515 916 (43.8) (1) Selected financial information for the three months ended September 30, 2011, is presented on a consolidated basis. All other selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to Southwest's financial statement classification where appropriate. See Note Regarding Use of Non-GAAP Financial Measures. SUPPLEMENTAL COMBINED STATEMENT II SOUTHWEST AIRLINES CO. RECONCILIATION OF SELECTED COMBINED AMOUNTS FROM SUPPLEMENTAL COMBINED STATEMENT I TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions) (unaudited) Three months ended Nine months ended September 30, September 30, Percent Percent 2011 2010 Change 2011 2010 Change Fuel and oil expense, combined unhedged $ 1,549 $ 1,044 $ 4,504 $ 3,037 Add: Fuel hedge losses included in Fuel and oil expense 37 88 7 255 Fuel and oil expense, as presented on Supplemental Combined Statement I $ 1,586 $ 1,132 $ 4,511 $ 3,292 Deduct: Net impact from fuel contracts (24) (33) (17) (132) Fuel and oil expense, combined economic $ 1,562 $ 1,099 42.1 $ 4,494 $ 3,160 42.2 Total operating expenses, as presented on Supplemental Combined Statement I $ 4,086 $ 3,447 $ 11,973 $ 10,048 Deduct: Net impact from fuel contracts (24) (33) (17) (132) Total operating expenses, combined economic $ 4,062 $ 3,414 $ 11,956 $ 9,916 Deduct: Charge for Asset impairment, net (2) (14) - (14) - Deduct: Charge for Acquisition and integration costs, net (3) (22) (1) (121) (1) Total operating expenses, combined non-GAAP $ 4,026 $ 3,413 18.0 $ 11,821 $ 9,915 19.2 Operating income, as presented on Supplemental Combined Statement I $ 225 $ 413 $ 515 $ 916 Add: Net impact from fuel contracts 24 33 17 132 Operating income, combined economic $ 249 $ 446 $ 532 $ 1,048 Add: Charge for Asset impairment, net (2) 14 - 14 - Add: Charge for Acquisition and integration costs, net (3) 22 1 121 1 Operating income, combined non-GAAP $ 285 $ 447 (36.2) $ 667 $ 1,049 (36.4) (1) Selected financial information for the three months ended September 30, 2011, is presented on a consolidated basis. All other selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to Southwest's financial statement classification where appropriate. (2) Net of profitsharing impact. (3) Amounts net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. SUPPLEMENTAL COMBINED STATEMENT III SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING COMBINED 2011 FINANCIAL INFORMATION (1) (in millions) (unaudited) Nine months ended September 30, 2011 Southwest Airlines Co. (as reported) AirTran (2) Combined OPERATING REVENUES: Passenger $ 10,829 $ 812 $ 11,641 Freight 103 - 103 Other 618 126 744 Total operating revenues 11,550 938 12,488 OPERATING EXPENSES: Salaries, wages, and benefits 3,226 193 3,419 Fuel and oil 4,150 361 4,511 Maintenance materials and repairs 717 88 805 Aircraft rentals 214 81 295 Landing fees and other rentals 705 54 759 Depreciation and amortization 523 20 543 Acquisition and integration 97 26 123 Other operating expenses 1,372 146 1,518 Total operating expenses 11,004 969 11,973 OPERATING INCOME (LOSS) 546 (31) 515 (1) Selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. See Note Regarding Use of Non-GAAP Financial Measures. (2) Results presented for AirTran, on a standalone basis, include periods prior to the acquisition date, conformed to Southwest's financial statement classification where appropriate. SUPPLEMENTAL COMBINED STATEMENT IV SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING COMBINED 2010 FINANCIAL INFORMATION (1) (in millions) (unaudited) Three months ended September 30, 2010 Nine months ended September 30, 2010 (as reported) (as reported) Southwest AirTran Southwest AirTran Airlines Co. (as conformed) Combined Airlines Co. (as conformed) Combined OPERATING REVENUES: Passenger $ 3,032 $ 574 $ 3,606 $ 8,544 $ 1,693 $ 10,237 Freight 31 - 31 94 - 94 Other 129 94 223 352 281 633 Total operating revenues 3,192 668 3,860 8,990 1,974 10,964 OPERATING EXPENSES: Salaries, wages, and benefits 938 131 1,069 2,748 393 3,141 Fuel and oil 926 206 1,132 2,681 611 3,292 Maintenance materials and repairs 196 58 254 556 173 730 Aircraft rentals 43 60 103 135 182 316 Landing fees and other rentals 210 40 250 606 123 729 Depreciation and amortization 161 15 176 469 44 513 Acquisition and integration 1 - 1 1 - 1 Other operating expenses 362 100 462 1,022 304 1,326 Total operating expenses 2,837 610 3,447 8,218 1,830 10,048 OPERATING INCOME 355 58 413 772 144 916 (1) Selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. Results presented for Southwest and AirTran, on a standalone basis, represent previously reported results. AirTran's historical financial information has been conformed to Southwest's financial statement classification where appropriate. See Note Regarding Use of Non-GAAP Financial Measures. SUPPLEMENTAL COMBINED STATEMENT V SOUTHWEST AIRLINES CO. COMBINED OPERATING STATISTICS (1) (unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 Change 2011 2010 Change Revenue passengers carried 28,208,036 27,966,582 0.9 % 82,615,444 80,275,161 2.9 % Enplaned passengers 35,010,060 34,346,991 1.9 % 101,763,544 97,645,251 4.2 % Revenue passenger miles (RPMs) (000s) 27,322,289 25,938,073 5.3 % 78,683,982 72,883,801 8.0 % Available seat miles (ASMs) (000s) 33,318,089 31,819,149 4.7 % 97,220,639 91,834,163 5.9 % Load factor 82.0 % 81.5 % 0.5 pts 80.9 % 79.4 % 1.5 pts Average length of passenger haul (miles) 969 927 4.5 % 952 908 4.8 % Average aircraft stage length (miles) 690 674 2.4 % 686 667 2.8 % Trips flown 359,630 352,087 2.1 % 1,055,888 1,026,229 2.9 % Average passenger fare $ 142.31 $ 128.94 10.4 % $ 140.90 $ 127.53 10.5 % Passenger revenue yield per RPM (cents) 14.69 13.90 5.7 % 14.79 14.05 5.3 % RASM (cents) 12.94 12.13 6.7 % 12.84 11.94 7.5 % PRASM (cents) 12.05 11.33 6.4 % 11.97 11.15 7.4 % CASM (cents) 12.26 10.83 13.2 % 12.32 10.94 12.6 % CASM, excluding fuel (cents) 7.50 7.27 3.2 % 7.68 7.35 4.5 % CASM, excluding special items (cents) 12.08 10.73 12.6 % 12.16 10.80 12.6 % CASM, excluding fuel and special items (cents) 7.38 7.27 1.5 % 7.54 7.35 2.6 % Fuel costs per gallon, including fuel tax (unhedged) $ 3.16 $ 2.21 43.0 % $ 3.14 $ 2.23 40.8 % Fuel costs per gallon, including fuel tax $ 3.23 $ 2.39 35.1 % $ 3.15 $ 2.42 30.2 % Fuel costs per gallon, including fuel tax (economic) $ 3.18 $ 2.32 37.1 % $ 3.14 $ 2.32 35.3 % Fuel consumed, in gallons (millions) 490 472 3.7 % 1,429 1,358 5.2 % PRASM (Passenger unit revenue) - Passenger revenue yield per ASM RASM (unit revenue) - Operating revenue yield per ASM CASM (unit costs) - Operating expenses per ASM (1) Selected operating statistics for the three months ended September 30, 2011, are presented on a consolidated basis. All other selected operating statistics presented in this schedule on a combined basis include operations for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical operating statistics included in the combined presentation have been conformed to Southwest's presentation where appropriate. NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). These GAAP financial statements include unrealized non-cash adjustments and reclassifications, which can be significant, as a result of accounting requirements and elections made under accounting pronouncements relating to derivative instruments and hedging. As a result, the Company also provides financial information in this release that was not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information, including results that it refers to as "economic," which the Company's management utilizes to evaluate its ongoing financial performance and the Company believes provides greater transparency to investors as supplemental information to its GAAP results. The Company's economic financial results differ from GAAP results in that they only include the actual cash settlements from fuel hedge contracts--all reflected within Fuel and oil expense in the period of settlement. Thus, Fuel and oil expense on an economic basis reflects the Company's actual net cash outlays for fuel during the applicable period, inclusive of settled fuel derivative contracts. Any net premium costs paid related to option contracts are reflected as a component of Other (gains) losses, net, for both GAAP and non-GAAP (including economic) purposes in the period of contract settlement. These economic results provide a better measure of the impact of the Company's fuel hedges on its operating performance and liquidity since they exclude the unrealized, non-cash adjustments and reclassifications that are recorded in GAAP results in accordance with accounting guidance relating to derivative instruments, and they reflect all cash settlements related to fuel derivative contracts within Fuel and oil expense. This enables the Company's management, as well as investors, to consistently assess the Company's operating performance on a year-over-year or quarter-over-quarter basis after considering all efforts in place to manage fuel expense. However, because these measures are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, the aforementioned measures, as presented, may not be directly comparable to similarly titled measures presented by other companies. Further information on (i) the Company's fuel hedging program, (ii) the requirements and accounting associated with accounting for derivative instruments, and (iii) the causes of hedge ineffectiveness and/or mark-to-market gains or losses from derivative instruments is included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as well as subsequent quarterly filings. In addition to its "economic" financial measures, as defined above, the Company has also provided non-GAAP financial measures as a result of items that the Company believes are not indicative of its ongoing operations. These include charges for the three and nine months ended September 30, 2011 of $22 million and $97 million, respectively (before the impact of profitsharing and/or taxes) related to expenses associated with the Company's acquisition and integration of AirTran. These also include a charge for the three months endedSeptember 30, 2011 of $17 million (before the impact of profitsharing and/or taxes) for an asset impairment related to the Company's recent decision not to equip its Classic (737-300) aircraft with Required Navigation Performance (RNP) capabilities. The Company believes that evaluation of its financial performance can be enhanced by a presentation of results that exclude the impact of these items in order to evaluate the results on a comparative basis with results in prior periods that do not include such items and as a basis for evaluating operating results in future periods. As a result of the Company's acquisition of AirTran, which closed onMay 2, 2011, the Company has incurred and expects to continue to incur substantial charges associated with integration of the two companies. While the Company cannot predict the exact timing or amounts of such charges, it does expect to treat the charges as special items in its future presentation of non-GAAP results. The Company has also provided other supplemental non-GAAP financial information on a "combined basis." This supplemental non-GAAP financial information on a "combined basis" includes specified combined financial results of the Company and AirTran for periods prior toMay 2, 2011, as if the acquisition had occurred prior to the beginning of the applicable reporting period, but excludes any impact of purchase accounting prior to May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to the Company's financial statement classification where appropriate. The Company believes that evaluation of its financial performance can be enhanced by a presentation of combined results in order to evaluate its prior, current or future period results on a more meaningful, consistent year-over-year basis. The Company believes free cash flow is a meaningful measure because it demonstrates our ability to service our debt, pay dividends and make investments to enhance shareholder value. Although free cash flow is a commonly used as measure of liquidity, definitions of free cash flow may differ; therefore, the Company is providing an explanation of its calculation for free cash flow. For the nine months ended September 30, 2011, the Company generated approximately $400 million in free cash flow, calculated as operating cash flows of $985 million less capital expenditures of $548 million. SOURCE Southwest Airlines Co.
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I luv to drink a great Craft Beer in my travels all over the country; but when Southwest takes me there; I'm very happy to now have Coors Light to get with my Business Select Drink Tickets! I would luv it even better if SWA got some craft beers as well; or even just Sam Adams. However; I'm very VERY happy to be able to tap the rockies on my flights!!! Bring on that Super Cold can!
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Ducks or no ducks, will SWA be serving boiled peanuts now that so many more flights are in the South of the US? Will pie be the new snack? Just hoping...
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09-30-2011
05:43 PM
379 Loves
It's time for the quarter-life crisis edition of the SWA Stew. In this episode, we showcase SLC Cargo, honored by the U.S. Army for honoring a fallen hero. We also flashed back again... this time to Houston! Resident Historian Brian Lusk explains how we got to Houston's Hobby Airport. Our buddy DJ Schneby's post about his big Turntable.FM victory was the third most viewed on the blog. He talked about how he heard about the contest, his strategy around song choices, and what he's gonna do with his roundtrip tickets. The movie Moneyball has received rave reviews-- maybe it's because Southwest is in it? Read Michelle's post about where you can find us on the silver screen! Kansas City-based aviation buff (and overseer of MCI) Justin Meyer was challenged to race a Porsche from K.C. to St. Louis. Justin's mode of transportation was one of Southwest's 737s. Read the comments in his post to see who won.
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DALLAS – Sep 29, 2011 – Southwest Airlines (NYSE: LUV) is celebrating workplace diversity by hosting its second annual Diversity and Inclusion Summit today themed "Join the Conversation about Civility." Diversity and Inclusion Leaders from many North Texas Fortune 500 companies will participate in the dialogue about diversity and inclusion initiatives, fostering civility in the workplace, and sharing best practices.
Joining this year’s conversation as Keynote Speaker is Darrell Scott, Founder and President of Rachel’s Challenge. Scott will be speaking about his daughter Rachel’s (the first victim in the Columbine High School shootings) legacy of kindness and compassion. Hailed by many as uplifting, inspirational, and moving, Rachel’s Challenge is a nationwide program for school-aged children to explore what good character means. The Summit also will feature presentations from the Dallas Holocaust Museum’s Center for Education and Tolerance.
The Summit’s agenda also includes discussions with:
Ellen Torbert, Southwest’s Vice President of Diversity and Inclusion, who will share her personal journey growing up in both a segregated and desegregated society Southwest’s President Emeritus, Colleen Barrett, will speak about lessons from her book “Lead with LUV” and offer insights on the importance of servant leadership. Terry Howard, Director of Diversity and Inclusion for Texas Instruments and Cofounder of the Global Diversity Consortium will share information about this organization. A panel discussion moderated by Debra Hunter Johnson, an attorney and HR professional with more than 20 years of experience in complex workplace litigation. Panelists will include Dr. Betty Gilmore with Southern Methodist University, Steve Blow with the Dallas Morning News, Journalist and Author Ana Cristina Reymundo, and Elizabeth Hebbe, one of the Core Team Members of The Oshkosh Civility Project.
“We are honored to be hosting the Southwest Airlines Diversity and Inclusion Summit for the second year in a row. This Summit presents an opportunity to open our doors and our hearts to have a conversation about the topic of diversity, inclusion, and civility,” said Linda Rutherford, Vice President Communication and Strategic Outreach for Southwest Airlines. “At Southwest, we believe that a modern and diverse workforce is key to our continued success. We are committed to providing our Employees the best tools for their development by engaging in conversations about best practices and the importance of respecting each other in the workplace.”
The 2010 Diversity and Inclusion Summit was recognized with a Diversity Communications Honor by PR News’ Corporate Social Responsibility Awards.
The Southwest Airlines Diversity and Inclusion Summit was created and is hosted by the Company’s Diversity Council. This Council comprises Southwest Employees who meet every month to improve the recruitment and advancement of women and minorities, work to enhance the Company’s supplier diversity efforts, champion diversity and inclusion training efforts, and create awareness of and show appreciation for cultural or lifestyle differences within the Company’s diverse workforce.
Last year, Hispanic Business Magazine named Southwest Airlines as one of the top Elite companies for diversity.
ABOUT SOUTHWEST AIRLINES
In its 40th year of service, Southwest Airlines continues to differentiate itself from other low-fare carriers--offering a reliable product with exemplary Customer Service. Southwest Airlines is the nation's largest carrier in terms of originating domestic passengers boarded and has recently acquired AirTran Airways, now a wholly owned subsidiary of Southwest Airlines Co. Southwest serves 72 cities in 37 states and is one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet. To read more about how Southwest is doing its part to be a good citizen, visit southwest.com/cares to read the Southwest Airlines One Report(TM). Based in Dallas, Southwest currently operates more than 3,400 flights a day and has more than 35,000 Employees systemwide. www.southwest.com
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What's the problem with people of the same sex kissing on flight?
Is there something wrong with this?
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09-16-2011
10:59 AM
446 Loves
A few lame basketball references, a couple top-viewed blog posts, and SWA Stew: Episode 23 is in the books. Our post about the much-coveted Spring Break schedule opening up landed in the fifth spot. Customer Service was the theme of this week's One Report series post. Capt. Joe Gautille was to fly a P.M. shift on 9/11/01. He wrote a heartful remembrance of that terrible tragedy, and Stephen M. Keller did a video that, if you haven't seen, I would urge you to go check out. Both are very moving. The second most-viewed post on Nuts this week focused on Gary's Halloween costume? What will he be this year? Make your suggestions in the comments section of the Halloween post. Finally, our Turntable.FM promotion earlier this week was an enormous success. This post detailed the rules, and my musical upbringing.
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Autumn 1989 Baseball cap with awkward crease in the middle of the bill? Check. Train sweatshirt with collared polo, fit for a tiny human? Check. Southpaw baseball glove (I'm a righty now) ready to go? Check. First day of school? In the books. Exposure to music: limited to car radio, but I do remember "Maneater" from the very early stages of my life. Summer 1996 Bob Dylan and Joni Mitchell at the United Center in Chicago, IL. A savage night of classic rock. Meaning of the lyrics to "Big Yellow Taxi" eluded me, but I dug the jam, especially live. Pops was there for Bobby D more than Joni. I have a vivid recollection of "Gotta Serve Somebody" being a show-stopper. Enter Middle School. Spring 2003 I went to a toga foam party that got, well, pretty messy. I should probably be ashamed to admit this, but I had a great time. It wasn't the togas that got me dancing, and the foam just got in the way. I don't recall who was behind the wheels of steel (to take a page out of D.J. Paulie D's vernacular), but those beats were groovin', and I was a dancing machine. A couple finals later, and I closed the books on Freshman Year. What's the point? School and music go together. In honor of this musically-academic matrimony, and our constant need to entertain ourselves here at Southwest, we want to see what kind of musical chops our Customers have. And plus: what better way to kick off another school year, whether you're still in school, have kids in school, or dream about being back in school? How are we doing this? We're using Turntable.FM to give five lucky Customers the chance to D.J. for a chance to win roundtrip tickets anywhere Southwest flies. Here's the catch: we won't tell exactly when we'll be offering up this contest, just that it will be sometime during the next few days (during business hours). Fear not! If you follow our Twitter account, you'll see a message encouraging you to join our room on Turntable.FM when the contest is about to happen. Please note that not everybody has access to Turntable.FM (that's how we determine the music geeks from the casual listeners). Turntable is currently in beta form (fitting, then, that we're also testing the waters). Some ground rules: 1. Five D.J.'s will have one hour to spin fan favorites for an audience of judges. The D.J. who has accumulated the most points in the span of that hour will win one roundtrip ticket on Southwest! 2. All songs must be no more than five minutes. Songs over five minutes merit disqualification. No Stairway to Heaven. Just like Wayne's World, and not because we don't like Led Zeppelin. We want to keep it fair. 3. Explicit or offensive lyrics are grounds for disqualification. You will have ample time to stack your playlist, so screen it beforehand. 4. You cannot go away from the keyboard during your hour. If we learn you're on autopilot, you'll get booted (we'll check!). Southwest Airlines ® Turntable.FM Promotion OFFICIAL RULES
No Purchase Necessary to Enter or Win.
Void in Puerto Rico and Where Prohibited by Law 1. PROMOTION PERIOD. The Southwest Airlines Turntable.FM Promotion will take place during the week of September 12, 2011. By participating, each participant agrees to the rules of the Promotion.
2. ELIGIBILITY RESTRICTIONS. Promotion is offered and open only to legal residents of the 48 contiguous United States and the District of Columbia, at least 18 years of age or older at the time of entry who have a Facebook account and have access to Turntable.FM. Facebook accounts are free and are available at www.facebook.com. Employees of Southwest Airlines Co., AirTran Airways, Inc., their advertising and promotions agencies, and their immediate families (spouse and parents, children and siblings and their spouses) and individuals living in the same households of such employees are ineligible. The Promotion is subject to all applicable federal, state, and local laws and regulations. By participating, entrants agree to these official rules and accept decisions of the Sponsor as final. The promotion is offered in the United States only and shall only be construed and evaluated according to United States law. Do not proceed to participate if you are not located in the United States.
3. ELIGIBILITY DETERMINATION. Prizes will be awarded only after eligibility has been determined. This shall include, but not be limited to, participants satisfying all of the elements of the registration eligibility criteria after a review of documentation and determination of Sponsor in its sole discretion, such determination which shall be deemed final. In addition, Entrants shall have fulfilled all of the conditions and accurately completed the documentation required herein. 4. HOW TO ENTER. During the Promotion Period, follow our Twitter account and watch for a message encouraging you to join our room on Turntable.FM. (There will be two (2) messages sent at different times during the Promotion Period.) Participants in the Promotion will be the first (up to 200) to join our room in the five (5) minutes following the Tweet. Once the Southwest Turntable.FM room is full or upon expiration of five (5) minutes, the room will be ‘locked’. Participants will be asked a question by the Promotion moderator. The first five (5) Participants to answer the question correctly will be the Entrants in the Promotion. Entries are limited to one (1) per person. Entrants must have a valid Facebook account to access Turntable.fm and must have their own turntable account or a Facebook friend with a Turntable account. In the event of a dispute over identity of the on-line entrant, entry will be deemed submitted by holder of the email linked to their Turntable account at the time of joining the Southwest Turntable.FM room. Entrants and Participants acknowledge that the Promotion is in no way sponsored, endorsed or administered by or associated with Facebook or Turntable.fm. Any information provided during the Promotion is being provided to Sponsor and not to Facebook. 5. GRAND PRIZE/APPROXIMATE RETAIL VALUE. The two (2) grand prizes will consist of one (1) Southwest Airlines ticket each – good on published Southwest Airlines flights. Tickets are subject to Southwest terms and certain restrictions may apply. 6. POTENTIAL WINNER DETERMINATION The Entrants aka DJs will have 30 minutes to compile a 1 hour play list for judging by the remaining Participants aka the Audience. Sponsor reserves the right to edit the playlist and playlist will be subject to the terms and conditions of Turntable.FM. Chosen songs may not exceed 5 minutes, may not contain explicit or offensive lyrics, and playlists may contain up to 3 songs by the same artist. Entrants may be disqualified if their Playlist contains lengthy or explicit/offensive songs. Entrants must remain at their keyboard during the hour or face disqualification. Once the five playlists have been finalized, Participants remaining in the Southwest room, will judge the individual songs on the playlists, using the “lame” and “awesome” buttons. The Entrant with the most Awesome playlist (i.e. who has accumulated the most Awesome points during the hour) will be the potential winner. The decision of the Participants will be final. Odds of winning will depend on the audiences preference for the songs chosen. In the event of a tie, we will unveil another trivia question, where the first person to answer wins. Potential winners will be required to complete and sign an Affidavit of Eligibility and Liability Release and, where legal, a Publicity Release, which must be returned within seven (7) days after prize notification or prize will be forfeited. In the event that we are unable to contact a potential winner or the Affidavit and Releases are not returned in the required time, the Sponsor will award the Prize to next highest score, subject to timely return of the Affidavit and Releases. Tickets are not transferable, assignable, or redeemable for cash. Acceptance of a prize constitutes permission (except where prohibited) to use winner's name, hometown and likeness for purposes of advertising, promotion and publicity in any media without additional compensation. Inquiries regarding winners may be sent via email after 6:00p.m. CST on September 13, 2011 to write.southwest@wnco.com. The winner's name will also be published on Southwest Airlines Web Site blogsouthwest.com after 9:00a.m. CST on September 14, 2011. Sponsor reserves the right to substitute a prize of comparable or greater value in its sole discretion. Sponsor reserves the right to amend, suspend, or terminate Promotion at any time. 8. LIMITATION OF LIABILITY: Neither Southwest Airlines, Turntable.FM, Facebook, nor their affiliated entities, are responsible for printing or typographical errors in any related materials; stolen, fraudulent, entries or mail; or transactions that are processed or lost due to computer or electronic malfunction. Winner is solely responsible for payment of all federal, state, and local taxes on prize and for any travel or other expenses not specifically mentioned in the prize description. Sponsor reserves the right to cancel or modify Promotion if fraud or technical failure compromise the integrity of the Promotion as determined by Sponsor in its sole discretion. This Promotion offer is being made exclusively by Sponsor. Sponsor is not responsible for technical, hardware, software or telephone failures of any kind, lost or unavailable network connections or fraud, incomplete, garbled or delayed computer transmission whether caused by Sponsor, user, or by any of the equipment or programming associated with or utilized in the promotion or by any technical or human error which may occur in the process of submissions which may limit a participant's ability to participate in this Promotion. 9. SPONSOR. Southwest Airlines Co., P.O. Box 36611, Dallas, TX. 75235-1611
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09-09-2011
06:27 PM
619 Loves
This week's SWA Stew is lightning fast. Okay, it's pretty average in speed (and in comic relief), but we got some pretty solid storm sound effects from the peanut gallery. We kicked it off with everyone's favorite dog bone and elephant ear enthusiast: Gordon Guillory. Viewers also wanted to know what's up with our new drink coupons. Get ready, Spring Breakers. We just opened up our schedule so you can now book through April 9, 2012. NFL legend Carl Banks' new fashion line is out. You can learn all about that here. Topping this edition was Halloween. It's time to make suggestions for Gary's costume this year.
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DALLAS, TEXAS – September 7, 2011 – Southwest Airlines Co. (NYSE: LUV) today reported August 2011 combined traffic results for Southwest Airlines and AirTran. AirTran became a wholly-owned subsidiary of Southwest Airlines Co. (“the Company”) on May 2, 2011. For purposes of comparability, the Company is providing combined traffic results for Southwest Airlines and AirTran for periods prior to the acquisition date. See the accompanying tables for combined results.
The Company flew 9.3 billion revenue passenger miles (RPMs) in August 2011, compared to 9.0 billion combined RPMs flown in August 2010, an increase of 3.9 percent. Available seat miles (ASMs) increased 4.2 percent to 11.3 billion from the August 2010 combined level of 10.9 billion. The load factor for August 2011 was 82.6 percent, compared to the combined load factor of 82.8 percent in August 2010. For August 2011, passenger revenue per ASM (PRASM) is estimated to have increased approximately six percent as compared to August 2010’s combined PRASM.
For the first eight months of 2011, the Company flew 70.8 billion combined RPMs, compared
to 65.4 billion combined RPMs flown for the same period in 2010, an increase of 8.1 percent. The combined year-to-date ASMs increased 6.2 percent to 87.0 billion in 2011, compared to the combined level of 82.0 billion for the same period in 2010. The combined year-to-date load factor was 81.3 percent, compared to the combined load factor of 79.8 percent for the same period in 2010.
This release, as well as past news releases about Southwest Airlines Co., is available online at southwest.com.
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09-02-2011
05:09 PM
722 Loves
When asked how I planned to cut my hair, I knew I had possibilities. There's the well-known "Bowl Cut," which was never really in the running. "The Executive," which is all business. "The Faux Hawk," which is for those who stand in the ocean but never go in past where swimming is required (or is that too abstract?). Confession: this could go on for a lot longer, but I don't think haircut banter is really our core competency on the Nuts blog. This episode, ATL barely snagged the fifth spot (but we still have mad LUV for you, and can't wait for February). Hurricane Irene swept through the East Coast, and left just as quickly as she arrived (enough to leave a mark as the fourth top post). Third came the latest installement to our One Report series. Gordon Guillory submitted a great post about "whatchamacallits," basically funny names for our Maintenance Employees' tools, and for airplane parts, too. The top post goes to Capt. Frog Peele and his son, First Officer Justin Peele. The two recently flew commercially together for the first time, thanks to tinkering with their schedules (and help from some very accomodating fellow Employees!).
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Featured on Ragan.com by Russell Working When frequent flyer Paul Lovine wanted to propose to his girlfriend, aSouthwest Airlines plane seemed like an ideal place to culminate what had long been a commuter relationship. After she accepted, he blogged and tweeted about what happened, and Southwest's social media team picked up on the mentions. So the airline contacted him and ended up writing a heartwarming story for its blog. All of which proves that Twitter and other social media are not only conduits where passengers complain about delayed flights and lost baggage, but are also a source of stories. "Content is everywhere, especially on Twitter," says Brooks Thomas, emerging media coordinator, and speaker at Ragan's upcoming Best Practices in PR conference. "Every tweet is essentially a story idea." Social media fits differently into various organizations' communications and customer relations strategies, from a vital interactive tool to a way of shooing people onto the website. At Southwest,Twitter and Facebook serve as tools both to help make customers happy and to mine feel-good stories that promote its brand. "It's an extension of our corporate newsroom, it's an extension of our customer service efforts, it's an extension of our PR arm, and it's also an extension of our marketing," Thomas says. "It's all those things." Watching the Web As for Lovine and his fiancée, Southwest had long played a role in a commuter relationship, so employees knew the couple. On the day of the proposal, she was planning to fly from Burbank, Calif., to San Francisco to see him, but Lovine flew earlier to her airport. Southwest employees sneaked him onto her plane before boarding began, and he hid in the back. As the flight was under way, he brought out his guitar, sang a Beatles song and knelt to propose. A fellow passenger photographed everything, and Southwest's blog later ran those pictures. In addition to its main Facebook page, the airline produces local "station pages" run by staff at each airport it serves. The Make-A-Wish Foundation, which enriches the lives of children with life-threatening illnesses, asked whether a boy could ride in one of the tractors that push back the airplanes in Chicago's Midway Airport. The boy would also drop by the cockpit of a plane, visit the air traffic control tower, lunch with firefighters and fly in a helicopter. The Southwest employee who manages the local Facebook page contacted Thomas, suggesting it as a story. Another Southwest employee, who drove the tractor, put together an entry for the blog, writing, "This was one of the best days of my career." "We're not positioning our employees in any sort of way to be corporate shills or anything like that," Thomas says, "but we're allowing them to be empowered like that and to seize opportunities." Southwest also directs mainstream media to its blog through tweets, although reporters often call first when they see a promising tweet or Facebook entry. Media willing to use corporate video Southwest has increasingly found the media willing to use the video its shoots, including brief interviews. With staff at stations nationwide winnowed by cuts, TV producers have become more willing to snatch up the video, known as B-roll, that they can weave into their reports. Thomas distributes the video to interested media using a Dropbox link. "I'm an ex-news guy," Thomas says, "and even four years ago, I don't think that an assignment editor would say, 'Yes, give me that video,' just because of objectivity and wanting to use their own stuff. But they're willing to use it these days." As for the more serious side of Twitter—dealing with customers' gripes—Southwest hired a new five-member social media customer relations team in March. Its members monitor social media, blogs and aviation forums, solving problems in a few minutes that used to take communicators hours. (Southwest uses Radian6 and CoTweet Enterprise to monitor mentions online.) This is because customer relations has the databases to bring up people's information and resolve issues without calling around to baggage or other areas. "They immediately reach out to the customer, they look in their database, they see what they can do, and they do it," Thomas says. "As this has ramped up, the quality of our content has increase multifold." A reservoir of good will Southwest can draw story ideas from customers because it has a reservoir of good will from its brand culture, Thomas says. It has also encouraged employees to suggest ideas, leading to an idea from a father and son who got to fly together as pilot and co-pilot. The dad ended up writing a first-person piece for the blog. Southwest spreads the word among its employees about the need for ideas through its internal blog called SWALife. Step One in building a good brand name is to generate content, Thomas says. That requires organizations to ask themselves what impact they are making on the community and their customers. "If you give them content, you're going to start getting more fans," Thomas says.
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Fri, Aug 26, 2011Customers encouraged to check airline web sites for flight-specific information DALLAS and ORLANDO, Fla., Aug. 26, 2011 /PRNewswire via COMTEX/ -- Southwest Airlines (NYSE: LUV) and its subsidiary, AirTran Airways, have each made service adjustments in advance of Hurricane Irene's arrival, to ensure the safety of the carriers' Employees, Customers, and aircraft. Southwest expects to cancel some 400 flights along the eastern seaboard through Monday. AirTran expects to cancel approximately 300 during the same time period. Customers should contact the airline on which they are booked for travel (Southwest Reservations (800) 435-9792, or AirTran Reservations (800) 247-8726), or look for updated travel advisories and reaccommodation tools on their respective carrier's web site: Southwest Airlines http://www.southwest.com; or AirTran Airways http://www.airtran.com. Customers traveling to/from the following cities within the specified timeframe may change their reservation* for another travel date, without penalty: Richmond, Va (RIC)**, Norfolk, Va(ORF), Newport News, Va (PHF)**, Atlantic City, NJ (ACY)**, Newark, NJ (EWR), Ronald Reagan Washington National (DCA)**, Washington-Dulles International (IAD), Baltimore/Washington (BWI), Philadelphia (PHL), Allentown/Bethlehem, PA (ABE)**, Boston Logan (BOS), Providence, RI (PVD), Manchester, NH (MHT), Portland, ME (PWM)**, LaGuardia, NY (LGA), Islip/Long Island, NY (ISP), Albany, NY (ALB), White Plains, NY(HPN)**, Hartford, CT (BDL), Charleston, NC (CHS), Raleigh-Durham, NC (RDU), and Nassau Bahamas (NAS)**. **AirTran-only service *Reaccommodation policies, by carrier: Southwest Airlines: Customers holding reservations for travel to/from the affected cities starting Saturday, August 27 thru Monday, August 29 are eligible to reschedule their flight in accordance with our accommodation procedures. Customers may rebook their flight in the original class of service or travel standby (within 14 days of the original date of travel between the original city-pairs) without paying any additional charge. AirTran Airways: Passengers who are traveling to or from the affected cities on August 25 through August 29 may adjust their travel 3 days prior through 7 days after the original scheduled departure date, based on space availability, without change fees or fare adjustments. For specific airport information including number of daily departures and number of Employees, please visit http://www.swamedia.com . SOURCE Southwest Airlines
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08-26-2011
04:52 PM
11 Loves
Surprised isn't the word. Stunned, amazed, astounded, astonished, awe-struck, gob-smacked,confused, and concerned might be more appropriate conditions. I thought for sure that by now, you would be sharing a macho grande latte with Harvey Levin on TMZ or doing a barbeque show on Oprah's network.
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Southwest Airlines Cargo was recently honored to receive the 2011 Quest for Quality Award, awarded by Logistics Management Magazine. In addition to the award recognition for top air cargo carriers, Southwest Airlines Cargo received the highest overall score among all air cargo carriers. Southwest topped three of five critical categories including: Ontime Performance, Value, and Customer Service.
Vice President of Southwest Airlines Cargo & Charters Matt Buckley said, “Quality and overall Customer Experience are key to the success of Southwest Airlines Cargo. We are honored to be recognized by Logistics Management readers as we strive for continuous improvement in our overall experience and value. I applaud the superb teamwork of our Employees across our system for their dedication to excellence.”
Quest for Quality is the most extensive market research study conducted in the logistics industry. Each year, the study evaluates and measures transportation service providers, determines relevant criteria when selecting a provider, and examines performance measurements and expectations of each provider. For the past 28 years, Logistics Management’s Quest for Quality has been regarded in the transportation and logistics industries as one of the most important measures of Customer Satisfaction and performance excellence.
Group Editorial Director of Peerless Media and publisher of Logistics Management Michael Levans said, “The fact that Southwest Airlines has maintained this high level of scoring over the past few years is a true testament to the carrier’s commitment to customer service. While every freight transportation mode faced monumental operating challenges during the Great Recession, no other mode had to navigate the level of volatility that the air cargo sector faced. To come out on top during this period is an admirable achievement.”
Congratulations to the Cargo, Ramp, and Operations Employees across our system for this prestigious award!”
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- Initial Schedule of Fifteen Daily Departures Begins Feb. 12, 2012 - Fares starting as low as $79 one-way - Southwest, AirTran Take First Steps to Blend Frequent Flyer Programs ATLANTA, Aug. 22, 2011 /PRNewswire via COMTEX/ -- Southwest Airlines (NYSE: LUV) is launching new service to Atlanta (ATL) on Feb. 12, 2012, bringing greatly reduced fares and new flexibility for both business and leisure Customers. With initial fares for nonstop travel as low as $79 one-way, the first Southwest flights to and from Georgia will also mark a significant and eagerly anticipated milestone in the carrier's acquisition of AirTran Airways. Southwest President, Chairman, and CEO Gary Kelly revealed details of Southwest's firstAtlanta schedule during a luncheon with the Metro Atlanta Chamber of Commerce. "We're bringing especially great value to those of you who travel last-minute," Kelly told the audience of business leaders. "Here in Atlanta, our fully refundable, walk-up fares will be, on average, more than 30 percent lower than anything currently in these markets. And we are bringing the flexibility Southwest Customers already enjoy in other cities because we don't charge a $150 fee simply to change your plans." From Atlanta, Southwest initially will offer 15 nonstop departures each day to five destinations: Baltimore/Washington (BWI), Chicago Midway (MDW), Denver (DEN), Houston Hobby (HOU), and Austin, Texas (AUS)--a route not previously served by AirTran Airways. NEW ATLANTA SERVICE BEGINNING FEB. 12, 2012 (open today for purchase on southwest.com): $99 each way between Atlanta and Austin - two daily roundtrips $79 each way between Atlanta and Baltimore/Washington- four daily roundtrips $99 each way between Atlanta and Denver - two daily roundtrips $99 each way between Atlanta and Houston Hobby - three daily roundtrips $79 each way between Atlanta and Chicago Midway - four daily roundtrips "We've said all along that this deal to bring AirTran's People, planes and places into the Southwest family is about offering more--more destinations and spreading more low fares farther, through the strength of our network." The nonstop flights make possible additional direct or connecting service between Atlantaand 48 destinations on Southwest Airlines. The inaugural schedule also brings, for the first time, one-stop/no change-of-plane service between Atlanta and Dallas' Love Field on Southwest Airlines. In a first step toward blending frequent flyer programs, Kelly announced top-tier members of both carriers' frequent flyer loyalty programs-- A-List Members of Southwest's All New Rapid Rewards and elite A+ Members of AirTran's A+ Rewards--will enjoy some, limited reciprocal benefits when flying on either carrier beginning today. A-List benefits include extra Rapid Reward points, Priority Boarding, access to priority security lanes, and more. On the flip side, Southwest A-List and A-List Preferred Members booking on AirTran will get Free Business Class upgrades, no baggage fees, and all other benefits that AirTran's elite Members enjoy. Visit southwest.com/travelexperience to learn more about Southwest's legendary Customer Service with No Hidden Fees. Southwest doesn't charge a fee to check a first or second bag; there's no charge for onboard sodas or snacks; there's never a fee to speak with one of our Agents on the phone; and Southwest does not charge a fee to change a reservation. In its 40th year of service, Southwest Airlines continues to differentiate itself from other low-fare carriers--offering a reliable product with exemplary Customer Service. Southwest Airlines is the nation's largest carrier in terms of originating domestic passengers boarded and has acquired AirTran Airways, now a wholly owned subsidiary of Southwest Airlines Co. With the addition of Atlanta, Southwest will serve 73 cities in 38 states and remains one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet. To read more about how Southwest is doing its part to be a good citizen, visit southwest.com/cares to read the Southwest Airlines One Report(TM). Based in Dallas, Southwest currently operates more than 3,400 flights a day and has more than 35,000 Employees. Introductory Fare Rules Southwest Airlines sale fares are available for purchase Aug. 22, 2011, through Sep. 5, 2011,11:59 p.m. PDT, and travel must take place between Feb. 12, 2012, and March 9, 2012. Fares are available only on southwest.com or swabiz.com. Fares do not include a federal excise tax of $3.70 per takeoff and landing. Fares do not include airport-assessed passenger facility charges (PFC) of up to $9.00 and U.S. government-imposed September 11th Security Fee of up to $5.00 one-way. Seats are limited. Fares may vary by destination, flight, and day of week, and won't be available on some flights that operate during very busy travel times and holiday periods. Fares are available for one-way travel. Fares may be combined with other combinable fares. Fares are not combinable with Senior Fares. When combining fares, all rules and restrictions apply. Fares are nonrefundable but may be applied toward the purchase of future travel on Southwest Airlines. Fares are not available through the Group Desk. Any change in the itinerary may result in an increase in fare. Standby travel requires an upgrade to the Anytime fare. Fares are subject to change until ticketed. Fares are valid on published, scheduled service only. southwest.com
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DALLAS and ATLANTA, Aug. 22, 2011 /PRNewswire via COMTEX/ -- Southwest Airlines (NYSE: LUV) today announced that on Aug. 17, 2011, its Board of Directors appointed J. Veronica Biggins to the Board. For a photo of Biggins, please click here:http://swa.wieck.com/photos/439d99f6-f4a1-a972-f360-f8004e4eb42c?search=biggins. Biggins was a member of the Board of Directors for AirTran Holdings, Inc., parent company of AirTran Airways, which was acquired by Southwest Airlines in a deal that was completed inMay 2011. Biggins is a Managing Director in the Atlanta office of Diversified Search, LLC, a privately-held executive and board search firm focused on helping corporations build effective leadership teams. Biggins joined Diversified Search (formerly Hodge Partners) in 2007. Previously, she was Senior Partner and Head of Diversity Practice at Heidrick & Struggles in Atlanta, where she created the firm's first diversity practice, trained internal consultants on what diversity means, and advised clients on how to embed an effective diversity practice within their businesses. "We are honored to have Veronica join the Board, and we know that she will be a great addition to the comprehensive Leadership that currently sits on the Southwest Board of Directors," said Gary Kelly, Chairman of the Board, President, and Chief Executive Officer for Southwest Airlines. "Her ties to the Atlanta community and her previous experience as a member of the Board of Directors for AirTran Holdings, Inc., will be a tremendous asset to our Team. Her background and experience in human resources, recruitment, and diversity also will serve us well." Biggins also served as Assistant to the President of the United States and Director of Presidential Personnel under President Bill Clinton. In that capacity, she was responsible for directing the recruitment, nomination, and appointment process for all political appointees within the federal government, including the placement of agency heads, ambassadors and members of presidential boards and commissions. Biggins earned a Bachelor of Arts degree from Spelman College and a Masters of Education degree from Georgia State University. She also completed Harvard University's Advanced Leadership Initiative class in 2010. Her background includes 20 years' experience with NationsBank (now Bank of America) and its predecessor, The Citizens and Southern National Bank. Prior to joining the White House, she was one of the highest ranking females in the banking industry, serving as Executive Vice President for Corporate Community Relations. She currently serves on the Board of Directors for Avnet, Inc., and Zep Inc., and has formerly served on several boards, including AirTran Holdings, NDC Health, Cameron Ashley,Morrison's Corporation, and the Atlanta Life Insurance Company. In the Atlanta community, she serves as a Board member for the East Lake Foundation; on the Atlanta Advisory Board for the Savannah College of Art and Design; on the Board of Trustees for the Woodruff Arts Center; and as a member of the Atlanta Rotary Club. Biggins served as Vice Chairman of the U.S. Delegation to the United Nations Fourth World Conference on Women in Beijing. She's been recognized by many organizations for her leadership, including being named to Ebony's List of 100 Best and Brightest Black Women and Georgia Trend magazine's list of the 100 most influential Georgians. She also received a Points of Light Award from President George W. Bush for her leadership of the Czech Slovak American Enterprise Fund. Biggins will initially serve for a term lasting until Southwest's next Annual Meeting of Shareholders. Other members of Southwest's Board of Directors are: David W. Biegler;William H. Cunningham, Ph.D.; John G. Denison; Gary C. Kelly; Nancy B. Loeffler; John T. Montford; Douglas H. Brooks, Thomas M. Nealon, and Daniel D. Villanueva. About Southwest Airlines Co. In its 40th year of service, Southwest Airlines continues to differentiate itself from other low-fare carriers--offering a reliable product with exemplary Customer Service. Southwest Airlines is the nation's largest carrier in terms of originating domestic passengers boarded. Southwest serves 72 cities in 37 states and is one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet. To read more about how Southwest is doing its part to be a good citizen, visit southwest.com/cares to read the Southwest Airlines One Report(TM). Based in Dallas, Southwest currently operates more than 3,400 flights a day and has more than 35,000 Employees systemwide. Earlier this year, Southwest Airlines completed the acquisition of AirTran Holdings, Inc., and now operates AirTran Airways as a wholly-owned subsidiary. AirTran serves 63 cities in 30 states and currently operates more than 790 flights a day. Additionally, AirTran serves seven international destinations in the Caribbean and Mexico. AirTran employs more than 8,500 Employees across the country.
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08-19-2011
06:35 PM
506 Loves
This 19th Episode of the SWA Stew is J.P.-less. But we can still chastise him, right? Right. You'll notice, though, that this episode of the Stew is devoid of any really loud laughter. At first, I thought this would be a good thing. I quickly realized, "No, Brooks, now nobody will laugh, because you're just not that funny." C'est la vie. This episode of the Stew recaps the final set of winners in the Showing LUV to Our Communities contest. Princess also gets another shout-out. New to the list this week are our Communication Interns' SWAmazing story of their internships, the big Snow Cone Tour, and LUV at 30,000 feet. Link LUV: SWAmazing Summer Meeting my Dad Stay Cool, Dudes and Dudettes Final 10 Winners of Showing LUV to Our Communities Contest LUV at 30,000 Feet
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08-12-2011
03:17 PM
640 Loves
A phony lapse in judgment keeps me on my toes. We didn't really do it live, okay? This week, we're talking about schedule openings, part two of a Blog Teamer's amazing story about Family, conserving energy in this ridiculous heat, an Intern's heartwarming reunion with her biological Dad, and the latest set of ten winners in the Showing LUV to our Communities contest! We also bid a heartfelt farewell to J.P., the Intern we never wanted (just kidding. We'll miss you, J.P.). Link LUV: Schedules Extended to March 9, 2012 We Are Family Part II Going Green: Energy Conservation During Record-Breaking Heat Meeting My Dad Southwest Airlines Announces Third 10 Winners for Showing LUV to Our Communities Contest
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After moving back to Dallas, I had a brief stint as a mascot. I was the now-defunct Frisco Thunder's very own Thundercat. Sweat-stung and blinded by crazy lighting, I would navigate the crowd on intuition alone, knowing I had a duty to the audience. Hurling myself over railings, sliding head-first toward the field goal post--I did it all. A cumbersome servitude? Yes. The highest honor? Undoubtedly. Or so I thought. Fast forward some four years, and there I sat, in the back room of our Southwest Lounge at Oshkosh's EAA AirVenture. For days, we had (unsuccessfully) attempted to coerce volunteers and Coworkers to dress up in the Spirit Junior costume. Only for a brief while did we manage to get one of our interns, Jacob, to wear the plane and become T.J. LUV. But did he really become T.J. LUV? I digress. Clearly, this young Jedi was unaware the dedication required to truly become one with Spirit Junior. T.J. LUV requires complete and total immersion. Recalling my earlier mascot days, I knew I had what it took. I slipped my arms through Spirit Junior's weighty straps. The costume washed over me. I was T.J. LUV. Armed with V.I.P. tickets, off I went. It all culminated into the following video...
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08-05-2011
04:33 PM
724 Loves
Okay, I think I am refreshed from Oshkosh, where there were plenty of shenanigans. This episode of the 'Stew features our usually suspects of late: more DishTrip, schedule extensions, and the second set of Showing LUV to Our Communities winners. It also includes the STL stop of our Conservation in Action Tour, and our lovely One Report. Uh, yes, and after a year of working here, I was finally coerced into dressing up like Spirit Jr. Don't worry, there's more where that came from. The things we do for this great Company... Link LUV: Conservation in Action: A Little Time in the 'Lou Southwest Announces Second 10 Winners for Showing LUV to Our Communities 1,600 Ticket Giveaway 2010 One Report: Our Current Performance Celebrate Southwest's Big 4-0 and Win Your Own Dish Trip to San Antonio! Schedules Extend to March 9, 2012
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DALLAS, TEXAS – August 5, 2011 – Southwest Airlines Co. (NYSE: LUV) today reported July 2011 combined traffic results for Southwest Airlines and AirTran. AirTran became a wholly-owned subsidiary of Southwest Airlines Co. (“the Company”) on May 2, 2011. For purposes of comparability, the Company is providing combined traffic results for Southwest Airlines and AirTran for periods prior to the acquisition date. See the accompanying tables for combined results.
The Company flew 10.0 billion revenue passenger miles (RPMs) in July 2011, compared to 9.5 billion combined RPMs flown in July 2010, an increase of 5.9 percent. Available seat miles (ASMs) increased 6.6 percent to 11.8 billion from the July 2010 combined level of 11.1 billion. The load factor for July 2011 was 85.1 percent, compared to the combined load factor of 85.6 percent in July 2010. For July 2011, passenger revenue per ASM (PRASM) is estimated to have increased approximately one percent as compared to July 2010’s combined PRASM.
For the first seven months of 2011, the Company flew 61.4 billion combined RPMs, compared
to 56.4 billion combined RPMs flown for the same period in 2010, an increase of 8.8 percent. The combined year-to-date ASMs increased 6.5 percent to 75.7 billion in 2011, compared to the combined level of 71.1 billion for the same period in 2010. The combined year-to-date load factor was 81.1 percent, compared to the combined load factor of 79.4 percent for the same period in 2010.
This release, as well as past news releases about Southwest Airlines Co., is available online at southwest.com.
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DALLAS, TEXAS – August 4, 2011 – Southwest Airlines Co. (NYSE:LUV) (the “Company”) today reported second quarter 2011 net income of $161 million, or $.21 per diluted share, compared to net income of $112 million, or $.15 per diluted share, for second quarter 2010. Operating income was $207 million for second quarter 2011, compared to $363 million for second quarter 2010. The 2011 results include the results of AirTran since the May 2, 2011, acquisition date. Prior periods do not include AirTran’s results.
Both periods’ results included special items related to non-cash, mark-to-market, and other items associated with a portion of the Company’s fuel hedge portfolio. In addition, second quarter 2011 results included approximately $40 million (net of taxes) in charges primarily related to financial advisory fees and severance payments in association with the Company’s acquisition and integration of AirTran. Excluding special items in both periods, second quarter 2011 net income was $121 million, or $.15 per diluted share, compared to $216 million, or $.29 per diluted share, for second quarter 2010. Additional information regarding special items is included in this release and in the accompanying reconciliation tables.
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “With energy prices surging, and Brent crude oil near $120 a barrel, significant revenue growth was critical to achieve second quarter 2011 operating income of $276 million and net income of $121 million (both excluding special items). Record load factors and record passenger yields resulted in a record $3.9 billion in passenger revenues. Still, with our economic fuel costs rising 72 percent, our year-over-year revenue growth could not keep pace. However, total operating revenues of $4.1 billion, another record, is a notable accomplishment.
“Southwest Airlines celebrated a momentous milestone this quarter with the closing of our AirTran acquisition, and it couldn’t have come at a more critical time with volatile fuel prices and economic uncertainty. We have the opportunity to optimize AirTran’s flight schedule to boost its profitability. Ultimately, integrating their network into Southwest’s provides even more substantial opportunities to boost combined revenues and profits. The acquisition has the dual benefit of positioning the Company for future growth in an improving economic environment or cushioning it against worsening economic conditions. As we undertake the multi-year effort to successfully integrate AirTran into Southwest Airlines, we will continue to focus on our safe, efficient, and reliable operations; strong Culture; and outstanding Customer Service.”
AirTran became a wholly-owned subsidiary of the Company on May 2, 2011. Second quarter 2011 results discussed in this release and provided in the accompanying unaudited Condensed Consolidated Financial Statements and Comparative Consolidated Operating Statistics include the results of operations and cash flows for AirTran from May 2, 2011 through June 30, 2011, including the impact of purchase accounting. Periods presented prior to the acquisition date do not include AirTran’s results. However, the Company believes the analysis of specified financial results on a “combined basis” provides more meaningful year-over-year comparability. Financial information on a “combined basis” is the sum of the historical financial results of the Company and AirTran for periods prior to the acquisition date, but includes the impact of purchase accounting only as of May 2, 2011. Supplemental financial information on a “combined basis” and accompanying reconciliations have been included in this release and at southwest.com/investor_relations.
Financial Results
The Company’s total operating revenues for second quarter 2011 increased 30.6 percent to $4.1 billion, compared to $3.2 billion for second quarter 2010. Operating unit revenues increased 5.7 percent compared to second quarter 2010. On a combined basis, operating unit revenues increased 7.4 percent from second quarter 2010. Based on bookings and revenue trends thus far, the Company expects third quarter 2011 unit revenues to improve from third quarter 2010’s combined unit revenue performance of 12.13 cents.
Total second quarter 2011 operating expenses were $3.9 billion, compared to $2.8 billion in second quarter 2010. Excluding special items, second quarter 2011 unit costs increased 13.5 percent from second quarter 2010, mostly due to a 38.4 percent year-over-year increase in economic fuel costs per gallon. Second quarter 2011 economic fuel costs of $3.28 per gallon included $.03 per gallon in favorable cash settlements for fuel derivative contracts. Based on the Company’s third quarter 2011 fuel hedge position and market prices (as of August 1 st ), third quarter 2011 economic fuel costs, including fuel taxes, are estimated to be approximately $3.30 per gallon. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.
Excluding fuel and special items in both periods, second quarter 2011 unit costs increased 1.4 percent from second quarter 2010. On a combined basis, nonfuel unit costs, excluding special items, increased 3.1 percent from second quarter last year. Based on current cost trends, the Company expects its third quarter 2011 unit costs, excluding fuel and special items, to increase slightly from third quarter 2010’s combined unit costs, excluding fuel and special items, of 7.27 cents.
Operating income for second quarter 2011 was $207 million, compared to $363 million in second quarter 2010. Excluding special items in both periods, operating income was $276 million for second quarter 2011 compared to $414 million for second quarter 2010. On a combined basis, second quarter 2011 operating income, excluding special items, was $295 million, compared to $488 million in second quarter 2010.
The second quarter year-over-year $259 million swing in “Other (gains) losses, net” primarily resulted from unrealized gains/losses associated with the Company’s fuel hedging program. Excluding these special items, “Other losses, net” primarily consisted of premium costs associated with the Company’s fuel derivative contracts of $26 million in second quarter 2011, compared to $30 million in second quarter 2010. On a combined basis, second quarter 2011 “Other gains” was $125 million compared to “Other losses” of $187 million in second quarter 2010. Excluding special items and on a combined basis, “Other losses, net” primarily consisted of premium costs totaling $28 million in second quarter 2011, compared to $37 million in second quarter 2010.
Total operating revenues for the six months ended June 30, 2011 increased 24.8 percent to $7.2 billion, while total operating expenses increased 28.5 percent to $6.9 billion, resulting in operating income in first half 2011 of $321 million, versus $417 million in first half 2010. Excluding special items in both periods, operating income was $387 million for first half 2011, compared to $516 million for the same period last year. On a combined basis, total operating revenues for the six months ended June 30, 2011 increased 15.1 percent to $8.2 billion, while total operating expenses increased 19.5 percent to $7.9 billion, resulting in combined operating income in first half 2011 of $290 million, versus $503 million in first half 2010 . Excluding special items in both periods, combined operating income for first half 2011 was $382 million, compared to $602 million for the same period last year.
Net income for first half 2011 was $166 million, or $.22 per diluted share, compared to $123 million, or $.17 per diluted share, for the same period last year. Excluding special items, net income for first half 2011 was $142 million, or $.19 per diluted share, compared to $239 million, or $.32 per diluted share, for the same period last year.
The Company’s return on invested capital (before taxes and excluding special items) was approximately nine percent for the twelve months ended June 30, 2011, including AirTran’s results beginning May 2, 2011. Additional information regarding pretax return on invested capital is included in the accompanying reconciliation tables.
AirTran Acquisition
“Of course, the highlight of the quarter was welcoming AirTran to the Southwest family on May 2 nd ,” stated Kelly. “Our integration efforts are well underway, and I am pleased with our progress thus far. We implemented a new leadership structure for the combined companies following the acquisition, and Employee communication channels were enhanced to ensure Employees of both airlines remain well-informed of the integration plans and progress. We have streamlined a number of corporate functions and renegotiated many contracts, which will produce approximately $50 million (before taxes and profitsharing) in annualized cost synergies.
“Our labor workgroups are making good progress on seniority list integration discussions. The Pilot negotiating committees of the Southwest Airlines Pilots’ Association (SWAPA) and the Air Line Pilots Association (ALPA) have agreed on a framework for seniority list integration. The agreement has been unanimously approved by the SWAPA Board. If approved by the ALPA Board, the agreement will go to the memberships for ratification. I commend our Pilots for their dedication and leadership to have already accomplished this integral step towards a successful integration.
“Although AirTran is expected to operate under the AirTran brand for another couple of years, stations with a dual airline presence are being transitioned to locate ticket counters and gates in closer proximity. We will begin transitioning aircraft, airports, and Employees next year. We expect to receive our single operating certificate from the Federal Aviation Administration in first quarter 2012.
“These accomplishments, among many others, are noteworthy in just three months time. I thank all of our hard-working Employees for their unwavering efforts as we integrate these two great companies, and position Southwest for an exciting and healthy future.”
The Company has incurred $75 million in costs associated with the acquisition and integration of AirTran during 2011, of which $58 million were in second quarter 2011. The Company expects total acquisition and integration costs will be approximately $500 million. Including the anticipated benefit of net synergies, but excluding the impact of acquisition and integration costs, the Company expects the acquisition to be accretive to its fully-diluted earnings per share in 2011, as it was in second quarter 2011. The Company currently estimates that net annual pre-tax synergies will exceed $400 million by 2013.
Capacity Plans
Kelly continued, “Given the pessimistic near-term outlook for fuel prices and the U.S. economy, we have re-evaluated our capacity plans. We trimmed our 2012 winter schedule, published last week, which began to coordinate the Southwest and AirTran networks. We have reduced our planned 2012 capacity to be equal to or less than our 2011 combined available seat miles. We will be aggressive in our efforts to optimize our combined networks and redeploy capacity more profitably.”
The Company expects its 2011 combined available seat miles to grow in the four to five percent range as compared to its 2010 combined capacity.
Liquidity
Net cash provided by operations for second quarter 2011 was $237 million and capital expenditures were $215 million. The acquisition of AirTran was funded with $518 million of cash on hand, and 44 million shares of the Company’s common stock. After considering the cash balances acquired from AirTran, the net cash outlay was $35 million. Subsequent to the acquisition date, a portion of the convertible notes previously held by AirTran note holders were either converted or called by the Company for an aggregate of approximately seven million shares of the Company’s common stock and $81 million in cash. The Company’s $600 million bank credit facility, which was due to expire in October 2012, was replaced during the second quarter with a new, five-year, $800 million unsecured revolving credit line. The Company also terminated AirTran’s $100 million combined revolving credit and letter of credit facility. As of June 30, 2011, the Company had $4.4 billion in unrestricted cash and short-term investments, which did not include $85 million in net cash collateral held by its fuel hedge counterparties.
Net cash provided by operations for first half 2011 was $1.2 billion, and capital expenditures were $272 million, resulting in approximately $900 million in free cash flow. The Company repaid $143 million in debt during first half 2011, and is scheduled to repay approximately $494 million in debt for the remainder of 2011, and approximately $560 million in 2012. The Company expects to generate free cash flow for all of 2011, based on current trends and projected 2011 capital expenditures of approximately $900 million.
Awards and recognitions
Voted the Customer Satisfaction Leader in Consumer Reports’ list of airline ratings receiving the highest rankings in check-in ease, cabin crew service, cabin cleanliness, baggage handling, and seating comfort Named first in the American Customer Satisfaction Index in the Transportation sector Ranked sixth in the 2011 Customer Service Hall of Fame by MSN Money, the only airline to make the top ten Ranked second in the J.D. Power and Associates 2011 North America Airlines Satisfaction Study based on overall customer satisfaction with cost and fees, inflight service, flight crew, aircraft, boarding & baggage, check-in, and reservations Recognized by Glassdoor as one of the best companies for work-life balance Named one of the 100 Top Military Friendly Employers by GI Jobs magazine Awarded for Best Practices in Supplier Diversity by the Dallas Fort Worth Minority Business Council Recognized as a 2011 Stevie Award Winner in the Transportation category by The International Business Awards for outstanding performance in the workplace worldwide
Southwest will discuss its second quarter 2011 results on a conference call at 11:30 a.m. Eastern Time today. A live broadcast of the conference call will also be available at southwest.com/investor_relations.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s growth plans and expectations, including network and capacity plans and expectations; (ii) the Company’s financial outlook; (iii) the Company’s plans and expectations related to managing risk associated with changing jet fuel prices; (iv) the Company’s plans and expectations with respect to its acquisition of AirTran, including the expected costs and benefits of the acquisition, as well as the Company’s integration plans and expectations; and (v) the Company’s expectations with respect to liquidity. These forward-looking statements are based on the Company's current intent, expectations, and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) changes in the price of aircraft fuel, the impact of hedge accounting, and any changes to the Company’s fuel hedging strategies and positions; (ii) the impact of the economy on demand for air travel and fluctuations in consumer demand generally for the Company’s services; (iii) the impact of fuel prices and economic conditions on the Company’s overall business plan and strategies; (iv) the Company’s ability to successfully integrate AirTran and realize the expected synergies from the transaction; (v) actions of competitors, including without limitation pricing, scheduling, and capacity decisions, and consolidation and alliance activities; (vi) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (vii) the impact of governmental regulations on the Company’s operations; and (viii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (1) (in millions, except per share amounts) (unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 Percent Change 2011 2010 Percent Change OPERATING REVENUES: Passenger $ 3,876 $ 3,016 28.5 $ 6,814 $ 5,511 23.6 Freight 36 33 9.1 67 63 6.3 Other 224 119 88.2 357 224 59.4 Total operating revenues 4,136 3,168 30.6 7,238 5,798 24.8 OPERATING EXPENSES: Salaries, wages, and benefits 1,125 946 18.9 2,078 1,810 14.8 Fuel and oil 1,527 933 63.7 2,565 1,754 46.2 Maintenance materials and repairs 246 194 26.8 444 360 23.3 Aircraft rentals 79 45 75.6 125 92 35.9 Landing fees and other rentals 247 206 19.9 448 396 13.1 Depreciation and amortization 176 154 14.3 332 308 7.8 Acquisition and integration 58 - n.a. 75 - n.a. Other operating expenses 471 327 44.0 850 661 28.6 Total operating expenses 3,929 2,805 40.1 6,917 5,381 28.5 OPERATING INCOME 207 363 (43.0) 321 417 (23.0) OTHER EXPENSES (INCOME): Interest expense 51 42 21.4 94 83 13.3 Capitalized interest (2) (5) (60.0) (5) (10) (50.0) Interest income (4) (4) - (7) (6) 16.7 Other (gains) losses, net (113) 146 n.a. (54) 150 n.a. Total other (income) expenses (68) 179 n.a. 28 217 n.a. INCOME BEFORE INCOME TAXES 275 184 49.5 293 200 46.5 PROVISION FOR INCOME TAXES 114 72 58.3 127 77 64.9 NET INCOME $ 161 $ 112 43.8 $ 166 $ 123 35.0 NET INCOME PER SHARE: Basic $ 0.21 $ 0.15 $ 0.22 $ $0.17 Diluted $ 0.21 $ 0.15 $ 0.22 $ $0.17 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 780 745 764 744 Diluted 787 746 765 745 (1) Includes May and June 2011 financial results for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement I for selected financial information on a combined basis, including AirTran for periods prior to the acquisition date. SOUTHWEST AIRLINES CO. RECONCILIATION OF REPORTED AMOUNTS TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions, except per share amounts) (unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 Percent Change 2011 2010 Percent Change Fuel and oil expense, unhedged $ 1,533 843 $ 2,577 1,573 Add/(Deduct): Fuel hedge (gains) losses included in Fuel and oil expense (6) 90 (12) 181 Fuel and oil expense, as reported $ 1,527 933 $ 2,565 1,754 Add/(Deduct): Net impact from fuel contracts (2) (11) (51) 6 (99) Fuel and oil expense, economic $ 1,516 882 71.9 $ 2,571 1,655 55.3 Total operating expenses, as reported $ 3,929 2,805 $ 6,917 5,381 Add/(Deduct): Net impact from fuel contracts (2) (11) (51) 6 (99) Total operating expenses, economic $ 3,918 2,754 $ 6,923 5,282 Add: Charge for Acquisition and integration costs, net (3) (58) - (72) - Total operating expenses, non-GAAP $ 3,860 2,754 40.2 $ 6,851 5,282 29.7 Operating income (loss), as reported $ 207 363 $ 321 417 Add/(Deduct): Net impact from fuel contracts (2) 11 51 (6) 99 Operating income, economic $ 218 414 $ 315 516 Add: Charge for Acquisition and integration costs, net (3) 58 - 72 - Operating income, non-GAAP $ 276 414 (33.3) $ 387 516 (25.0) Other (gains) losses, net, as reported $ (113) 146 $ (54) 150 Add/(Deduct): Net impact from fuel contracts (2) 140 (115) 111 (88) Other losses, net, non-GAAP $ 27 31 (12.9) $ 57 62 (8.1) Income before income taxes, as reported $ 275 184 $ 293 200 Add/(Deduct): Net impact from fuel contracts (2) (129) 166 (117) 187 $ 146 350 $ 176 387 Add: Charge for Acquisition and integration costs, net (3) 58 - 72 - Income before income taxes, non-GAAP $ 204 350 (41.7) $ 248 387 (35.9) Net income, as reported $ 161 112 $ 166 123 Add/(Deduct): Net impact from fuel contracts (2) (129) 166 (117) 187 Income tax impact of fuel contracts 49 (62) 45 (71) $ 81 216 $ 94 239 Add: Charge for Acquisition and integration costs, net (4) 40 - 48 - Net income, non-GAAP $ 121 216 (44.0) $ 142 239 (40.6) Net income per share, diluted, as reported $ 0.21 0.15 $ 0.22 0.17 Add/(Deduct): Net impact from fuel contracts (0.10) 0.14 (0.09) 0.15 $ 0.11 0.29 $ 0.13 0.32 Add: Impact of special items, net (4) 0.04 - 0.06 - Net income per share, diluted, non-GAAP $ 0.15 0.29 (48.3) $ 0.19 0.32 (40.6) (1) Includes May and June 2011 financial results for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement II for a reconciliation of selected combined amounts to non-GAAP items, including AirTran for periods prior to the acquisition date. (2) See Reconciliation of Impact from Fuel Contracts. (3) Amounts net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. (4) Amounts net of taxes and profitsharing as described in footnote (3) above. SOUTHWEST AIRLINES CO. RECONCILIATION OF IMPACT FROM FUEL CONTRACTS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions) (unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 Fuel & Oil Expense Add/(Deduct): Reclassification between Fuel & Oil and Other (gains) losses, net, associated with current period settled contracts $ (11) $ 7 $ (9) $ 11 Add/(Deduct): Contracts settling in the current period, but for which gains and/or (losses) have been recognized in a prior period * - (58) 15 (110) Impact from fuel contracts to Fuel & oil expense (11) (51) 6 (99) Operating Income Add/(Deduct): Reclassification between Fuel & Oil and Other (gains) losses, net, associated with current period settled contracts $ 11 $ (7) $ 9 $ (11) Add/(Deduct): Contracts settling in the current period, but for which gains and/or (losses) have been recognized in a prior period * - 58 (15) 110 Impact from fuel contracts to Operating Income 11 51 (6) 99 Other (gains) losses Add/(Deduct): Mark-to-market impact from fuel contracts settling in current and future periods $ 136 $ (57) $ 139 $ (31) Add/(Deduct): Ineffectiveness from fuel hedges settling in future periods (7) (51) (37) (46) Add/(Deduct): Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts 11 (7) 9 (11) Impact from fuel contracts to Other (gains) losses 140 (115) 111 (88) Net Income Add/(Deduct): Mark-to-market impact from fuel contracts settling in current and future periods $ (136) $ 57 $ (139) $ 31 Add/(Deduct): Ineffectiveness from fuel hedges settling in future periods 7 51 37 46 Add/(Deduct): Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications) - 58 (15) 110 Impact from fuel contracts to Net Income ** (129) 166 (117) 187 (1) Includes May and June 2011 financial results for AirTran. * As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings ** Excludes income tax impact of unrealized items SOUTHWEST AIRLINES CO. COMPARATIVE CONSOLIDATED OPERATING STATISTICS (1) (unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 Change 2011 2010 Change Revenue passengers carried 27,114,480 22,883,422 18.5 % 48,229,595 42,860,257 12.5 % Enplaned Passengers 33,430,914 27,554,201 21.3 % 59,030,032 51,248,665 15.2 % Revenue passenger miles (RPMs) (000s) 25,883,849 20,206,229 28.1 % 45,079,735 37,367,943 20.6 % Available seat miles (ASMs) (000s) 31,457,412 25,471,845 23.5 % 55,963,085 48,091,305 16.4 % Load Factor 82.3 % 79.3 % 3.0 pts 80.6 % 77.7 % 2.9 pts Average length of passenger haul (miles) 955 883 8.2 % 935 872 7.2 % Average aircraft stage length (miles) 685 650 5.4 % 672 642 4.7 % Trips flown 340,768 287,222 18.6 % 614,591 549,114 11.9 % Average passenger fare $ 142.94 $ 131.82 8.4 % $ 141.29 $ 128.60 9.9 % Passenger revenue yield per RPM (cents) 14.97 14.93 0.3 % 15.12 14.75 2.5 % RASM (cents) 13.15 12.44 5.7 % 12.93 12.06 7.2 % PRASM (cents) 12.32 11.84 4.1 % 12.18 11.46 6.3 % CASM (cents) 12.49 11.01 13.4 % 12.36 11.19 10.5 % CASM , excluding fuel (cents) 7.63 7.35 3.8 % 7.77 7.54 3.1 % CASM, excluding special items (cents) 12.27 10.81 13.5 % 12.24 10.98 11.5 % CASM, excluding fuel and special items (cents) 7.45 7.35 1.4 % 7.64 7.54 1.3 % Fuel costs per gallon, including fuel tax (unhedged) $ 3.31 $ 2.26 46.5 % $ 3.15 $ 2.24 40.6 % Fuel costs per gallon, including fuel tax $ 3.30 $ 2.50 32.0 % $ 3.13 $ 2.49 25.7 % Fuel costs per gallon, including fuel tax (economic) $ 3.28 $ 2.37 38.4 % $ 3.14 $ 2.35 33.6 % Fuel consumed, in gallons (millions) 462 372 24.2 % 817 701 16.5 % Active fulltime equivalent Employees 43,805 34,636 26.5 % 43,805 34,636 26.5 % Aircraft in service at period-end 694 544 27.6 % 694 544 27.6 % PRASM (Passenger unit revenue) - Passenger revenue yield per ASM RASM (unit revenue) - Operating revenue yield per ASM CASM (unit costs) - Operating expenses per ASM (1) Includes May and June 2011 operating statistics for AirTran, and the impact of purchase accounting as of May 2, 2011. See Supplemental Combined Statement V for consolidated operating statistics on a combined basis, including AirTran for periods prior to the acquisition date. SOUTHWEST AIRLINES CO. RETURN ON INVESTED CAPITAL (1) (in millions) (unaudited) 12 Months Ended 12 Months Ended June 30, 2011 June 30, 2010 Operating Income, as reported $ 892 $ 607 Add/(Deduct): Net impact from fuel contracts 65 181 Add: Acquisition and integration costs, net (2) 79 - Add: Charge for voluntary early out program, net - 56 Operating Income, Non-GAAP $ 1,036 $ 844 Net adjustment for aircraft leases (3) 96 90 Adjustment for fuel hedge accounting (130) (141) Adjusted Operating Income, Non-GAAP $ 1,002 $ 793 Average Invested Capital (4) $ 11,134 $ 10,057 Equity adjustment for fuel hedge accounting 224 604 Adjusted Average Invested Capital $ 11,358 $ 10,661 . ROIC, pretax 9% 7% (1) Calculation includes the impact of the AirTran acquisition as of May 2, 2011. (2) Net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. (3) Net adjustment related to presumption that all aircraft in fleet are owned. (4) Average invested capital represents a five quarter average of debt, net present value of aircraft leases, and equity. SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED BALANCE SHEET (1) (in millions) (unaudited) June 30, December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 1,595 $ 1,261 Short-term investments 2,779 2,277 Accounts and other receivables 389 195 Inventories of parts and supplies, at cost 394 243 Deferred income taxes - 214 Prepaid expenses and other current assets 264 89 Total current assets 5,421 4,279 Property and equipment, at cost: Flight equipment 15,255 13,991 Ground property and equipment 2,286 2,122 Deposits on flight equipment purchase contracts 226 230 17,767 16,343 Less allowance for depreciation and amortization 6,046 5,765 11,721 10,578 Goodwill 971 - Other assets 832 606 $ 18,945 $ 15,463 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,049 $ 739 Accrued liabilities 1,130 863 Air traffic liability 2,149 1,198 Current maturities of long-term debt 990 505 Total current liabilities 5,318 3,305 Long-term debt less current maturities 3,242 2,875 Deferred income taxes 2,263 2,493 Deferred gains from sale and leaseback of aircraft 82 88 Other non-current liabilities 838 465 Stockholders' equity: Common stock 808 808 Capital in excess of par value 1,219 1,183 Retained earnings 5,398 5,399 Accumulated other comprehensive loss (107) (262) Treasury stock, at cost (116) (891) Total stockholders' equity 7,202 6,237 $ 18,945 $ 15,463 (1) June 30, 2011 balances include the impact of the AirTran acquisition and the preliminary purchase accounting allocation. SOUTHWEST AIRLINES CO. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (1) (in millions) (unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 161 $ 112 $ 166 $ 123 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 176 154 332 308 Unrealized (gain) loss on fuel derivative instruments (129) 166 (119) 187 Deferred income taxes 95 63 123 75 Amortization of deferred gains on sale and leaseback of aircraft (3) (3) (7) (7) Changes in certain assets and liabilities, net of acquisition: Accounts and other receivables (21) (42) (107) (108) Other current assets (46) 5 (138) (14) Accounts payable and accrued liabilities 67 279 305 195 Air traffic liability 64 86 576 442 Cash collateral received from (provided to) fuel derivative counterparties (49) 130 (20) 135 Other, net (78) (410) 91 (423) Net cash provided by operating activities 237 540 1,202 913 CASH FLOWS FROM INVESTING ACTIVITIES: Payment to acquire AirTran, net of AirTran cash on hand (35) - (35) - Payments for purchase of property and equipment, net (215) (159) (272) (298) Purchases of short-term investments (1,779) (1,800) (3,263) (3,180) Proceeds from sales of short-term investments 1,440 1,349 2,750 2,546 Net cash used in investing activities (589) (610) (820) (932) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Employee stock plans 27 23 31 35 Proceeds from termination of interest rate derivative instrument - - 76 - Payments of long-term debt and capital lease obligations (32) (25) (62) (85) Payments of convertible debt (81) - (81) - Payment of credit line borrowing - (44) - (44) Payments of cash dividends (3) (3) (10) (10) Other, net (3) (2) (2) (2) Net cash used in financing activities (92) (51) (48) (106) NET CHANGE IN CASH AND CASH EQUIVALENTS (444) (121) 334 (125) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,039 1,110 1,261 1,114 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,595 $ 989 $ 1,595 $ 989 SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: Fair value of equity consideration given to acquire AirTran $ 523 $ - $ 523 $ - Fair value of common stock issued for conversion of debt $ 78 $ - $ 78 $ - (1) Includes the impact of the AirTran acquisition as of May 2, 2011. SOUTHWEST AIRLINES CO. FUEL DERIVATIVE CONTRACTS AS OF AUGUST 1, 2011 Percent of estimated fuel consumption covered by fuel derivative contracts Average WTI Crude Oil price per barrel 3Q 2011 4Q 2011 Up to $90 approx. 55% approx. 60% $90 to $95 approx. 45% approx. 60% $95 to $110 (1) approx. 55% approx. 45% $110 to $120 (2) approx. 70% approx. 75% Above $120 (2) approx. 65% approx. 65% Estimated difference in economic jet fuel price per gallon, above/(below) unhedged market prices, including taxes Average WTI Crude Oil price per barrel 3Q 2011 4Q 2011 $85 $0.04 $0.09 $96 (1) ($0.03) ($0.02) $115 ($0.16) ($0.19) $130 ($0.33) ($0.42) Percent of estimated fuel consumption covered by fuel derivative contracts at Full Year varying WTI crude-equivalent price levels Second Half 2011 approx. 50% (2) 2012 approx. 65% (3) 2013 over 50% 2014 over 40% 2015 over 10% (1) Based on the third quarter 2011 average WTI forward curve and market prices as of August 1, 2011, and current estimated fuel consumption covered by fuel derivative contracts, third quarter 2011 economic fuel price per gallon, including taxes, is estimated to be approximately $3.30 per gallon, or $0.03 below market prices. (2) Based on the second half 2011 average WTI forward curve and market prices as of August 1, 2011, the Company has approximately 50% of its estimated second half 2011 fuel consumption covered by fuel derivative contracts. If prices settle between $110 and $120 per barrel, the estimated second half 2011 fuel consumption covered by fuel derivative contracts increases to approximately 75%, and if prices settle above $120 per barrel, the coverage decreases to approximately 65%. (3) Based on the 2012 average WTI forward curve and market prices as of August 1, 2011, the Company has approximately 65% of its estimated 2012 fuel consumption covered by fuel derivative contracts. If prices settle between $110 and $120 per barrel, the estimated 2012 fuel consumption covered by fuel derivative contracts increases to approximately 85%; if prices settle between $120 and $130 per barrel, the coverage decreases to approximately 55%; and if prices settle above $130 per barrel, the coverage decreases to approximately 35%. SOUTHWEST AIRLINES CO. 737 FUTURE DELIVERY SCHEDULE (a) AS OF AUGUST 3, 2011 The Boeing Company -700 -800 Purchase Additional Firm Orders Firm Orders Options Rights -800s Total 2011 6 6(b) 2012 6 20 2 5 33 2013 25 6 31 2014 29 6 35 2015 26 1 27 2016 31 7 38 2017 5 17 22 Through 2021 98 98 Total 128(c) 20 39 98 5 290 (a) Includes AirTran's future firm orders and options from Boeing. (b) The Company has already taken delivery of 14 737-700 aircraft through August 2, 2011. (c) The Company is evaluating substituting 737-800s in lieu of 737-700 firm orders currently scheduled for 2012 through 2017. SUPPLEMENTAL COMBINED STATEMENT I SOUTHWEST AIRLINES CO. SELECTED COMBINED FINANCIAL INFORMATION (1) (in millions) (unaudited) Three months ended Six months ended June 30, June 30, Percent Percent 2011 2010 Change 2011 2010 Change OPERATING REVENUES: Passenger $ 4,113 $ 3,621 13.6 $ 7,627 $ 6,631 15.0 Freight 36 33 9.1 67 63 6.3 Other 258 215 20.0 483 410 17.8 Total operating revenues 4,407 3,869 13.9 8,177 7,104 15.1 OPERATING EXPENSES: Salaries, wages, and benefits 1,173 1,077 8.9 2,271 2,072 9.6 Fuel and oil 1,631 1,152 41.6 2,925 2,160 35.4 Maintenance materials and repairs 269 251 7.2 532 476 11.8 Aircraft rentals 99 106 (6.6) 206 213 (3.3) Landing fees and other rentals 260 251 3.6 502 480 4.6 Depreciation and amortization 182 169 7.7 352 337 4.5 Acquisition and integration 79 - n.a. 101 - n.a. Other operating expenses 509 426 38.0 998 863 27.3 Total operating expenses 4,202 3,432 22.4 7,887 6,601 19.5 OPERATING INCOME 205 437 (53.1) 290 503 (42.3) OTHER EXPENSES (INCOME): Interest expense 56 65 (13.8) 115 128 (10.2) Capitalized interest (3) (6) (50.0) (6) (11) (45.5) Interest income (3) (5) (40.0) (7) (7) - Other (gains) losses, net (125) 187 n.a. (97) 192 n.a. Total other (income) expenses (75) 241 n.a. 5 302 n.a. INCOME BEFORE INCOME TAXES $ 280 $ 196 42.9 $ 285 $ 201 41.8 (1) Selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to Southwest's financial statement classification where appropriate. See Note Regarding Use of Non-GAAP Financial Measures. SUPPLEMENTAL COMBINED STATEMENT II SOUTHWEST AIRLINES CO. RECONCILIATION OF SELECTED COMBINED AMOUNTS FROM SUPPLEMENTAL COMBINED STATEMENT I TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions) (unaudited) Three Months Ended Six Months Ended June 30, June 30, Percent Percent 2011 2010 Change 2011 2010 Change Fuel and oil expense, combined unhedged $ 1,646 1,068 $ 2,955 1,993 Add/(Deduct): Fuel hedge (gains) losses included in Fuel and oil expense (15) 84 (30) 167 Fuel and oil expense, as presented on Supplemental Combined Statement I $ 1,631 1,152 $ 2,925 2,160 Add/(Deduct): Net impact from fuel contracts (11) (51) 6 (99) Fuel and oil expense, combined economic $ 1,620 1,101 47.1 $ 2,931 2,061 42.2 Total operating expenses, as presented on Supplemental Combined Statement I $ 4,202 3,432 $ 7,887 6,601 Add/(Deduct): Net impact from fuel contracts (11) (51) 6 (99) Total operating expenses, combined economic $ 4,191 3,381 $ 7,893 6,502 Add: Charge for Acquisition and integration costs, net (2) (79) - (98) - Total operating expenses, combined non-GAAP $ 4,112 3,381 21.6 $ 7,795 6,502 19.9 Operating income, as presented on Supplemental Combined Statement I $ 205 437 $ 290 503 Add/(Deduct): Net impact from fuel contracts 11 51 (6) 99 Operating income, combined economic $ 216 488 $ 284 602 Add: Charge for Acquisition and integration costs, net (2) 79 - 98 - Operating income, combined non-GAAP $ 295 488 (39.5) $ 382 602 (36.5) Other (gains) losses, net, as presented on Supplemental Combined Statement I $ (125) 187 $ (97) 192 Add/(Deduct): Net impact from fuel contracts 155 (149) 162 (116) Other losses, net, combined non-GAAP $ 30 38 (21.1) $ 65 76 (14.5) Income (loss) before income taxes, as presented on Supplemental Combined Statement I $ 280 196 $ 285 201 Add/(Deduct): Net impact from fuel contracts (144) 200 (168) 215 $ 136 396 $ 117 416 Add: Charge for Acquisition and integration costs, net (2) 79 - 98 - Income before income taxes, combined non-GAAP $ 215 396 (45.7) $ 215 416 (48.3) (1) Selected combined amounts presented in this schedule include financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to Southwest's financial statement classification where appropriate. (2) Amounts net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. SUPPLEMENTAL COMBINED STATEMENT III SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING COMBINED 2011 FINANCIAL INFORMATION (1) (in millions) (unaudited) Three months ended June 30, 2011 Six months ended June 30, 2011 Southwest Southwest Airlines Co. Airlines Co. (as reported) AirTran (2) Combined (as reported) AirTran (2) Combined OPERATING REVENUES: Passenger $ 3,876 $ 237 $ 4,113 $ 6,814 $ 812 $ 7,627 Freight 36 - 36 67 - 67 Other 224 34 258 357 126 483 Total operating revenues 4,136 271 4,407 7,238 938 8,177 OPERATING EXPENSES: Salaries, wages, and benefits 1,125 49 1,173 2,078 193 2,271 Fuel and oil 1,527 104 1,631 2,565 361 2,925 Maintenance materials and repairs 246 23 269 444 88 532 Aircraft rentals 79 20 99 125 81 206 Landing fees and other rentals 247 14 260 448 54 502 Depreciation and amortization 176 6 182 332 20 352 Acquisition and integration 58 21 79 75 26 101 Other operating expenses 471 38 509 850 146 998 Total operating expenses 3,929 275 4,202 6,917 969 7,887 OPERATING INCOME (LOSS) 207 (4) 205 321 (31) 290 OTHER EXPENSES (INCOME): Interest expense 51 5 56 94 21 115 Capitalized interest (2) - (3) (5) - (6) Interest income (4) - (3) (7) - (7) Other (gains) losses, net (113) (12) (125) (54) (43) (97) Total other expenses (income) (68) (7) (75) 28 (22) 5 INCOME (LOSS) BEFORE INCOME TAXES $ 275 $ 3 $ 280 $ 293 $ (9) $ 285 (1) Selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. See Note Regarding Use of Non-GAAP Financial Measures. (2) Results presented for AirTran, on a standalone basis, represent periods prior to the acquisition date, conformed to Southwest's financial statement classification where appropriate. SUPPLEMENTAL COMBINED STATEMENT IV SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING COMBINED FINANCIAL INFORMATION (1) DETAIL OF AIRLINE SECOND QUARTER 2011 RESULTS AND PURCHASE ACCOUNTING IMPACT (in millions) (unaudited) Three months ended June 30, 2011 Purchase Southwest (2) AirTran (3) Accounting (4) Combined (5) OPERATING REVENUES: Passenger $ 3,413 $ 704 $ (4) $ 4,113 Freight 36 - - 36 Other 151 107 - 258 Total operating revenues 3,600 811 (4) 4,407 OPERATING EXPENSES: Salaries, wages, and benefits 1,027 146 - 1,173 Fuel and oil 1,310 321 - 1,631 Maintenance materials and repairs 201 68 - 269 Aircraft rentals 45 60 (6) 99 Landing fees and other rentals 217 43 - 260 Depreciation and amortization 160 16 6 182 Acquisition and integration 34 45 - 79 Other operating expenses 406 103 - 509 Total operating expenses 3,400 802 - 4,202 OPERATING INCOME (LOSS) 200 9 (4) 205 OTHER EXPENSES (INCOME): Interest expense 44 13 (1) 56 Capitalized interest (2) (1) - (3) Interest income (3) - - (3) Other (gains) losses, net (163) 38 - (125) Total other (income) expenses (124) 50 (1) (75) INCOME (LOSS) BEFORE INCOME TAXES $ 324 $ (41) $ (3) $ 280 (1) See Note Regarding Use of Non-GAAP Financial Measures. (2) Results presented for Southwest exclude AirTran results for May and June 2011, and exclude the impact of purchase accounting. (3) Results presented for AirTran include all three months, before and after the acquisition date, and exclude the impact of purchase accounting. (4) Represents the impact of purchase accounting as of May 2, 2011. (5) See Supplemental Combined Statement III for a reconciliation of this combined information to our historical GAAP reported amounts. SUPPLEMENTAL COMBINED STATEMENT V SOUTHWEST AIRLINES CO. RECONCILIATION OF SELECTED STANDALONE AMOUNTS FROM SUPPLEMENTAL COMBINED STATEMENT IV TO NON-GAAP ITEMS (1) (SEE NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES) (in millions, except per share amounts) (unaudited) Three Months Ended June 30, 2011 Southwest AirTran Fuel and oil expense, standalone unhedged $ 1,307 $ 339 Add/(Deduct): Fuel hedge (gains) losses included in Fuel and oil expense 3 (18) Fuel and oil expense, standalone as presented on Supplemental Combined Statement IV (2) $ 1,310 $ 321 Add/(Deduct): Net impact from fuel contracts (11) - Fuel and oil expense, standalone economic $ 1,299 $ 321 Total operating expenses, standalone as presented on Supplemental Combined Statement IV (2) $ 3,400 $ 802 Add/(Deduct): Net impact from fuel contracts (11) - Total operating expenses, standalone economic $ 3,389 $ 802 Add: Charge for Acquisition and integration costs (3) (34) (45) Total operating expenses, standalone non-GAAP $ 3,355 $ 757 Operating income, standalone as presented on Supplemental Combined Statement IV (2) $ 200 $ 9 Add/(Deduct): Net impact from fuel contracts 11 - Operating income, standalone economic $ 211 $ 9 Add: Charge for Acquisition and integration costs (3) 34 45 Operating income, standalone non-GAAP $ 245 $ 54 Other (gains) losses, net, standalone as presented on Supplemental Combined Statement IV (2) $ (163) $ 38 Add/(Deduct): Net impact from fuel contracts 190 (35) Other losses, net, standalone non-GAAP $ 27 $ 3 Income (loss) before income taxes, standalone as presented on Supplemental Combined Schedule IV (2) $ 324 $ (41) Add/(Deduct): Net impact from fuel contracts (179) 35 $ 145 $ (6) Add: Charge for Acquisition and integration costs (3) 34 45 Income before income taxes, standalone non-GAAP $ 179 $ 39 (1) Selected amounts presented in this schedule are standalone non-GAAP financial results for each of Southwest and AirTran. These standalone results exclude the results of the other airline, and the impact of purchase accounting. (2) See Supplemental Combined Schedule IV for the detail of standalone airline results and the purchase accounting impact as of May 2, 2011. (3) No profitsharing impact. The Company amended its profitsharing plan during second quarter 2011 to defer the profitsharing impact of integration costs incurred from April 1, 2011 through December 31, 2013. The profitsharing impact will be realized in 2014 and beyond. SUPPLEMENTAL COMBINED STATEMENT VI SOUTHWEST AIRLINES CO. SELECTED CONSOLIDATING COMBINED 2010 FINANCIAL INFORMATION (1) (in millions) (unaudited) Three months ended June 30, 2010 Six months ended June 30, 2010 (as reported) (as reported) Southwest AirTran Southwest AirTran Airlines Co. (as conformed) Combined Airlines Co. (as conformed) Combined OPERATING REVENUES: Passenger $ 3,016 $ 605 $ 3,621 $ 5,511 $ 1,120 $ 6,631 Freight 33 - 33 63 - 63 Other 119 96 215 224 186 410 Total operating revenues 3,168 701 3,869 5,798 1,306 7,104 OPERATING EXPENSES: Salaries, wages, and benefits 946 131 1,077 1,810 262 2,072 Fuel and oil 933 219 1,152 1,754 406 2,160 Maintenance materials and repairs 194 57 251 360 116 476 Aircraft rentals 45 61 106 92 121 213 Landing fees and other rentals 206 45 251 396 84 480 Depreciation and amortization 154 15 169 308 29 337 Other operating expenses 327 99 426 661 202 863 Total operating expenses 2,805 627 3,432 5,381 1,220 6,601 OPERATING INCOME 363 74 437 417 86 503 OTHER EXPENSES (INCOME): Interest expense 42 23 65 83 45 128 Capitalized interest (5) (1) (6) (10) (1) (11) Interest income (4) (1) (5) (7) - (7) Other (gains) losses, net 146 41 187 150 42 192 Total other expenses 179 62 241 216 86 302 INCOME BEFORE INCOME TAXES $ 184 $ 12 $ 196 $ 201 $ - $ 201 (1) Selected financial information presented in this schedule on a combined basis includes financial results for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. Results presented for Southwest and AirTran, on a standalone basis, represent previously reported results. AirTran's historical financial information has been conformed to Southwest's financial statement classification where appropriate. See Note Regarding Use of Non-GAAP Financial Measures. SUPPLEMENTAL COMBINED STATEMENT VII SOUTHWEST AIRLINES CO. COMBINED OPERATING STATISTICS (1) (unaudited) Three months ended Six months ended June 30, 2011 June 30, 2011 2011 2010 Change 2011 2010 Change Revenue passengers carried 28,826,013 27,997,507 3.0 % 54,407,408 52,308,579 4.0 % Enplaned passengers 35,559,232 34,084,746 4.3 % 66,753,484 63,298,260 5.5 % Revenue passenger miles (RPMs) (000s) 27,646,263 25,403,035 8.8 % 51,361,693 46,945,728 9.4 % Available seat miles (ASMs) (000s) 33,639,005 31,722,856 6.0 % 63,902,550 60,015,014 6.5 % Load factor 82.2 % 80.1 % 2.1 pts 80.4 % 78.2 % 2.2 pts Average length of passenger haul (miles) 959 907 5.7 % 944 897 5.2 % Average aircraft stage length (miles) 691 671 3.0 % 684 664 3.0 % Trips flown 362,691 352,352 2.9 % 696,258 674,142 3.3 % Average passenger fare $ 142.68 $ 129.33 10.3 % $ 140.17 $ 126.77 10.6 % Passenger revenue yield per RPM (cents) 14.88 14.25 4.4 % 14.85 14.13 5.1 % RASM (cents) 13.10 12.20 7.4 % 12.80 11.84 8.1 % PRASM (cents) 12.23 11.41 7.2 % 11.93 11.05 8.0 % CASM (cents) 12.49 10.82 15.4 % 12.34 11.00 12.2 % CASM, excluding fuel (cents) 7.64 7.19 6.3 % 7.76 7.40 4.9 % CASM, excluding special items (cents) 12.22 10.66 14.6 % 12.20 10.83 12.7 % CASM, excluding fuel and special items (cents) 7.41 7.19 3.1 % 7.61 7.40 2.8 % Fuel costs per gallon, including fuel tax (unhedged) $ 3.32 $ 2.27 46.3 % $ 3.14 $ 2.24 40.2 % Fuel costs per gallon, including fuel tax $ 3.29 $ 2.45 34.3 % $ 3.11 $ 2.43 28.0 % Fuel costs per gallon, including fuel tax (economic) $ 3.27 $ 2.34 39.7 % $ 3.11 $ 2.32 34.1 % Fuel consumed, in gallons (millions) 495 469 5.5 % 940 886 6.1 % PRASM (Passenger unit revenue) - Passenger revenue yield per ASM RASM (unit revenue) - Operating revenue yield per ASM CASM (unit costs) - Operating expenses per ASM (1) Selected operating statistics presented in this schedule on a combined basis include operations for Southwest and AirTran for all periods presented, including AirTran for periods prior to the acquisition date. These combined results include the impact of purchase accounting as of May 2, 2011. AirTran's historical operating statistics included in the combined presentation have been conformed to Southwest's presentation where appropriate. NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). These GAAP financial statements include unrealized non-cash adjustments and reclassifications, which can be significant, as a result of accounting requirements and elections made under accounting pronouncements relating to derivative instruments and hedging. As a result, the Company also provides financial information in this release that was not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information, including results that it refers to as "economic," which the Company's management utilizes to evaluate its ongoing financial performance and the Company believes provides greater transparency to investors as supplemental information to its GAAP results. The Company's economic financial results differ from GAAP results in that they only include the actual cash settlements from fuel hedge contracts--all reflected within Fuel and oil expense in the period of settlement. Thus, Fuel and oil expense on an economic basis reflects the Company's actual net cash outlays for fuel during the applicable period, inclusive of settled fuel derivative contracts. Any net premium costs paid related to option contracts are reflected as a component of Other (gains) losses, net, for both GAAP and non-GAAP (including economic) purposes in the period of contract settlement. These economic results provide a better measure of the impact of the Company's fuel hedges on its operating performance and liquidity since they exclude the unrealized, non-cash adjustments and reclassifications that are recorded in GAAP results in accordance with accounting guidance relating to derivative instruments, and they reflect all cash settlements related to fuel derivative contracts within Fuel and oil expense. This enables the Company's management, as well as investors, to consistently assess the Company's operating performance on a year-over-year or quarter-over-quarter basis after considering all efforts in place to manage fuel expense. However, because these measures are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, the aforementioned measures, as presented, may not be directly comparable to similarly titled measures presented by other companies. Further information on (i) the Company's fuel hedging program, (ii) the requirements and accounting associated with accounting for derivative instruments, and (iii) the causes of hedge ineffectiveness and/or mark-to-market gains or losses from derivative instruments is included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. In addition to its "economic" financial measures, as defined above, the Company has also provided non-GAAP financial measures as a result of items that the Company believes are not indicative of its ongoing operations. These include charges for the three and six months ended June 30, 2011 of $58 million and $75 million, respectively (before the impact of profitsharing and/or taxes) related to expenses associated with the Company's acquisition and integration of AirTran. The Company believes that evaluation of its financial performance can be enhanced by a presentation of results that exclude the impact of these items in order to evaluate the results on a comparative basis with results in prior periods that do not include such items and as a basis for evaluating operating results in future periods. As a result of the Company's acquisition of AirTran, which closed on May 2, 2011, the Company has incurred and expects to continue to incur substantial charges associated with integration of the two companies. While the Company cannot predict the exact timing or amounts of such charges, it does expect to treat the charges as special items in its future presentation of non-GAAP results. The Company has also provided other supplemental non-GAAP financial information on a "combined basis." This supplemental non-GAAP financial information on a "combined basis" includes specified combined financial results of the Company and AirTran for periods prior to May 2, 2011, as if the acquisition had occurred prior to the beginning of the applicable reporting period, but excludes any impact of purchase accounting prior to May 2, 2011. AirTran's historical financial information included in the combined presentation has been conformed to the Company's financial statement classification where appropriate. The Company believes that evaluation of its financial performance can be enhanced by a presentation of combined results in order to evaluate its prior, current or future period results on a more meaningful, consistent year-over-year basis. SOURCE Southwest Airlines Co.
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Southwest Airlines has won an International Stevie Award for Transportation in the 2011 International Business Awards. Recipients of International Stevie Award trophies were selected from more than 3,000 entries received from organizations and individuals in more than 40 nations. Organizations all over the world are eligible to compete in The International Business Awards, and can enter in any of more than 40 categories from Company of the Year and Best New Product of the Year to Corporate Social Responsibility Program of the Year and Executive of the Year. Stevie Awards are conferred in four programs: The American Business Awards, The International Business Awards, the Stevie Awards for Women in Business, and the Stevie Awards for Sales & Customer Service. Honoring organizations of all types and sizes and the people behind them, the Stevie recognize outstanding performances in the workplace worldwide. Complete lists of honorees and other details are available at www.stevieawards.com/iba
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07-29-2011
04:15 PM
563 Loves
Well gosh, it's Oshkosh! This week's SWA Stew comes to you from Oshkosh, Wisconsin, home of what's been dubbed the "World's Greatest Aviation Celebration!" Planes new and old, pilots new and old--this place has it all! Highlights in this sixteenth episode of the 'Stew include the P-3 Orion, more charity, more beer (with DishTrip), Flashing back to our first dispatch office, and the schedule opening extravaganza! Yep, you can now book flights through March 9, 2012! Link LUV: Oshkosh AirVenture Plane of the Day: P-3 Orion Flashback Friday: Our First Dispatch Office Special Dish Trip: Beer in Boston Schedule Extended to March 9, 2012 Show LUV to Our Communities: First 10 Winners Announced
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Nicely summed up; properly humble. well played.
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