New Records, New Adventures

In 2016, we took advantage of some unique growth opportunities that led to flying to new, exciting destinations, including Cuba and Long Beach, California. You’ll find information about our expanded route map in our eighth One Report, along with perspectives from Chairman and CEO Gary Kelly, our 2016 financial data, and a 30,000 foot view of everything Southwest. Welcome. Feel free to stay awhile.

A Word from Gary

"We take great care of our Employees, so they can take great care of our Customers. If we keep our service levels high and our fares low—we can take great care of our Shareholders. And, we have."

- Gary C. Kelly, Chairman and CEO

Key Highlights

To Our Shareholders,1

Following record years in 2014 and 2015, 2016 was another record year. It is remarkable that we were able to sustain, and in some cases, improve upon the dramatic results achieved in 2015. The foundation was laid with strategic initiatives that transformed Southwest during the five years ended 2014. Our results were further boosted by the significant reduction in energy prices, generally range-bound in the $45-$55 a barrel range for Brent crude oil. The result was another year of record traffic, record load factors, record revenues, record profits, and a record year-end stock price (LUV). For the second year in a row, and for only the second time in our history, our annual pre-tax return on invested capital (ROIC)2 was 30 percent or better. It was our 44th consecutive year of profitability, a record unmatched in the domestic airline industry, and a continued display of our leadership in corporate America.

Our 2016 net income was a record $2.24 billion, or $3.55 per diluted share, 2.9 percent and 8.6 percent higher than 2015, respectively. Excluding special items,2 our record 2016 earnings were $2.37 billion, or $3.75 per diluted share, 0.6 percent and 6.5 percent higher than a year ago, respectively.

Total operating revenues topped $20 billion for the first time, up 3.1 percent versus a year ago. On the heels of 2015’s healthy year-over-year available seat mile3 (capacity) growth of 7.2 percent, our 2016 year-over-year capacity growth slowed to 5.7 percent, as several of our strategic growth opportunities were realized (Dallas Love Field; Washington Reagan National; Houston Hobby International). Our goal was to grow revenues in line, or better, than capacity versus a year ago. Operating revenues per available seat mile4 fell slightly, by 1.6 percent, due to significant low fare competition and industry domestic capacity growth outpacing the sluggish economic growth. As a result, our average passenger fare5 fell 3.7 percent versus a year ago. Given that jet fuel prices fell further, year-over-year, the net profit result was still quite exceptional.

We were not planning to add any new cities in 2016; however, as I reported in last year’s Annual Report to Shareholders, slots6 became available in Long Beach, California, and flights resumed between the United States and Cuba. We reacted swiftly to these opportunities and launched service to Long Beach Airport; Varadero, Cuba; Havana, Cuba (our 100th destination); and Santa Clara, Cuba. We serve Long Beach with short-haul flights in California and Cuba from Ft. Lauderdale and Tampa. We also launched service from Los Angeles International Airport to Cancun, Puerto Vallarta, and Los Cabos, Mexico. Additional routes and frequencies within our existing network rounded out the balance of our 2016 expansion. It was another successful year in network development.

Our operating expenses grew slightly faster than capacity. Average 2016 jet fuel prices declined 7.2 percent on an “economic basis” from a year ago.2 Operating expenses per available seat mile (CASM)7 increased 0.4 percent, year-over-year. Excluding fuel and oil expense and special items,2 CASM increased just 1.6 percent, year-over-year.

Our cash flow from operations was a record $4.29 billion, and our free cash flow2 was a record $2.25 billion. Our financial position strengthened, sustaining our solid investment grade credit ratings with all three credit rating agencies. Debt to total capital (including aircraft leases) declined to 32.5 percent as of year-end 2016. Our liquidity increased, as well, with year-end cash and short-term investments of $3.3 billion plus our fully-available $1.0 billion bank line of credit. We returned a record $1.97 billion to Shareholders in 2016, through $222 million in dividends and $1.75 billion in share repurchases. In May 2016, in recognition of our exceptionally strong results, our Board of Directors authorized a $2.0 billion share repurchase program and increased the quarterly dividend by 33 percent to $.10 per share.

We ended the year with 723 aircraft in our all-Boeing 737 (B737) fleet. Currently, our firm aircraft commitments and options would grow the fleet to 750 airplanes by year-end 2018. We have several significant fleet events planned for 2017. First, we are the launch customer with Boeing for the B737-8 (MAX) aircraft. We currently plan to launch this new airplane in commercial service October 1, 2017, and acquire a total of 14 for the year. Second, we plan to retire the 79 remaining B737-300 (Classic) airplanes in our fleet between now and October 1, 2017. Finally, we plan to acquire 39 new B737-800 (NG) aircraft this year. Due to the accelerated retirement of the Classics, we plan to end 2017 with 703 aircraft in our fleet, down from the 723 to start this year. By the end of 2018, all retired Classics will have been replaced with new deliveries from Boeing. The Classics have served us well, but with Boeing’s support, along with expected reduced maintenance, fuel consumption, and out-of-service time, we expect a substantial financial benefit, prospectively, once the Classics are retired. This is an important part of our fleet modernization initiative, which has been underway since 2011. It is exciting to see these long-held plans come together in 2017!

Another long-term effort scheduled to come to fruition in 2017 is the completion and deployment of our new Amadeus Altéa reservation system on May 9, 2017. Our current reservation system dates back to the 1980s. It, too, has served us well, but it is not well suited to our current or future needs. The effort to replace it is significant and strategic, and has been years in the making. We announced the first phase of the deployment into production in December 2016. The project is on track, and we look forward to the next important milestone in this effort. Once implemented, the system provides the foundation for future planned releases with further enhancements. We expect to derive benefits ranging from improved Customer Experiences to improved revenue management. We look forward to giving our Employees better tools that allow us to better serve our Customers and Shareholders.

Another significant long-term effort scheduled for 2017 is the completion of a new five-gate international terminal at the Ft. Lauderdale-Hollywood International Airport (FLL), slated for June 2017. Coincident with the opening is the launch of new international service at FLL by Southwest Airlines. Currently, we serve just The Bahamas and Cuba from FLL, but plan to add service to Belize, Jamaica, and Mexico along with our newest destination, Grand Cayman. This is a much-anticipated and much-needed enhancement to our FLL franchise.

Overall, our outlook continues to be upbeat. Once again, we are off to a very strong start to the year, in terms of operational reliability, Customer satisfaction, and travel demand. There appear to be high expectations for tax reform, regulatory reform, and air traffic control modernization. In turn, there appear to be high expectations for domestic GDP growth. We welcome all of that. In the meantime, while economic growth is still lackluster, energy prices are stable at moderate prices, and travel demand is strong in a very competitive environment. We are positioned and poised to compete vigorously and well. With the fleet plan I outlined previously, we currently plan to grow our capacity approximately 3.5 percent in 2017, split roughly two-thirds to our domestic network and the remainder to international growth. In addition to adding Grand Cayman to our route map, we are consolidating our Ohio cities by closing operations at Akron-Canton Airport and adding flights at nearby Cleveland Hopkins International Airport. We are scheduled to begin service at Cincinnati/Northern Kentucky International Airport (which, admittedly, has been conspicuous in its absence from our expansive route network), and close operations at nearby Dayton International Airport to accommodate it. Much has changed in these Ohio airports, competitively, over the last five to six years, and these moves will position us better. It is never easy to close a location, but we will continue to offer service to Customers in those two markets via Cleveland and Cincinnati.

We have lived through a remarkable period, be it the last 5 years, 10 years, or more than 15 since 9/11. Our People have worked extraordinarily hard to weather the storms, transform Southwest, and still serve our Customers and Shareholders well. They have done that. From 2001 through 2012, there were some tough, lean years. But, our People never faltered. No annual losses. No bankruptcies. No layoffs. No massive reduction in service. Instead, Southwest stayed profitable, job secure, and growing—throughout. Now, our People, our Customers, and our Shareholders are reaping the benefits from those years of hard work. Because of our People, Southwest is well-prepared to compete aggressively for Customers’ business and loyalty. Southwest is committed to provide Shareholder returns. And, Southwest is well-prepared for tougher times, whether it be from economic weakness, energy price spikes, or brutal competition. Our People have us better prepared than ever, in fact. And, we have opportunities to further improve our already excellent operations, our outstanding Customer Service, and our expansive route map.

As I said last year, our Purpose is to connect People to what’s important in their lives through friendly, reliable, and low-cost air travel. We take great care of our Employees, so they can take great care of our Customers. If we do both well—keep our service levels high and our fares low—we can take great care of our Shareholders. And, we have.

This is now the 23rd consecutive year that Southwest has been named to Fortune’s list of World’s Most Admired Companies, coming in at #8. We’re proud of that. And, as America’s largest airline in terms of originating domestic passengers,8 we aspire to more—to become the world’s most loved, most flown, and most profitable airline. Our Vision is audacious, but I believe in our People. They are Warriors!

Please join me in thanking all 53,536 Employees for their hard work and superb results!

Sincerely,
Gary C. Kelly
Chairman and Chief Executive Officer
March 24, 2017

30,000 Foot View

As of Dec. 31, 2016, we proudly operated a network of 101 destinations in the United States and eight additional countries with more than 3,900 departures a day during peak travel season.

System Map

(as of Dec. 31, 2016)

View our interactive route map for our most current list of destinations at: www.southwest.com/routemap

Capacity by Region

(as of Dec. 31, 2016)

Top 10 Airports9

(daily departures as of Dec. 31, 2016)
  1. MDW: 256Chicago Midway
  2. BWI: 235Baltimore-Washington
  3. DEN: 197Denver
  4. LAS: 191Las Vegas
  5. DAL: 180Dallas Love Field
  6. PHX: 172Phoenix
  7. HOU: 168Houston Hobby
  8. ATL: 124Atlanta
  9. LAX: 123Los Angeles
  10. OAK: 122Oakland

Market Share8

Reporting Approach

Our Employees, Customers, Shareholders, suppliers, and community groups all contribute to the many opportunities we see for the future of our Company. We listen to and learn from our many Stakeholders, which helps shape the content of the One Report and reflects our ongoing commitment to connect People to what’s important in their lives.

Awards & Leadership

GRI Content Index

The 2016 Southwest Airlines One Report follows the principles outlined in the Global Reporting Initiative’s (GRI) G4 Guidelines. The GRI is a voluntary, internationally recognized framework for corporate social responsibility reporting that allows organizations to measure and report their efforts in a consistent manner. Our transition to GRI G4 Guidelines for the 2016 One Report resulted in a leaner, more focused report that we believe will help our Stakeholders better access and understand information related to our corporate social responsibility initiatives. Information is presented in the 2016 Southwest Airlines One Report with respect to performance related to our corporate social responsibility key topics, a term we use instead of materiality to avoid confusion with key financial information. This content index depicts our GRI responses for calendar year 2016, unless otherwise noted.

General Standard Disclosures
Strategy and Analysis
IndicatorDescriptionDetail/Location in Report
G4-1Statement from the most senior decision-maker of the organizationA Word from Gary
Organizational Profile
IndicatorDescriptionDetail/Location in Report
G4-3Name of the organizationSouthwest Airlines Co.
G4-4Primary brands, products, and/or services2016 Securities and Exchange Commission Form 10-K
G4-5Location of organization's headquarters2702 Love Field Dr.
Dallas, Texas 75235
USA
G4-6Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the reportWe operate in nine countries: the United States, Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Cuba, and Belize.
G4-7Nature of ownership and legal form2016 Securities and Exchange Commission Form 10-K
G4-8Markets served30,000 Foot View
We serve business and leisure air travelers, and in 2016 operated in the U.S. domestic market as well as some parts of Latin America and the Caribbean region.
G4-9Scale of the reporting organization2016 Securities and Exchange Commission Form 10-K
G4-10Total number of employees (including breakdown by gender and employment type)A Snapshot of Southwest Employees
2016 Securities and Exchange Commission Form 10-K
G4-11Employees covered by collective bargaining agreementsApproximately 83 percent of our Employees are covered by collective bargaining agreements.
G4-12Supply chainTo support our operations, we purchase goods and services from over 10,000 sources across multiple continents and countries but given our network footprint as a North American carrier, the vast majority of our supply base and spend is in the U.S. domestic market. We maintain relationships directly with various types of suppliers, including service providers, contractors, manufacturers, brokers, and wholesalers. Our intent is to provide Southwest with the highest quality products and services at the lowest total costs.

While we have dedicated Teams within our Supply Chain Management department such as Fuel Management, Aircraft Maintenance, Technology, and Direct and Indirect Procurement, we strive to manage our supply chain holistically and to optimize system efficiency by utilizing analytically rigorous and dynamic approaches. Our Supply Chain Management department has a Team dedicated to monitoring supplier performance, assessing risk and planning in the event of supply chain disruptions, and analyzing our supply chain spend so we can continuously improve performance.

We build sustainable relationships with our suppliers that take into account, among other things, diversity, small and minority owned businesses, environmental aspects, community involvement, human rights, and the highest standards of ethical conduct. We have developed and implemented a thorough procurement policy that includes sections on green procurement and human rights. Southwest Airlines suppliers generally must meet these standards.
G4-13Significant changes during the reporting period regarding size, structure, or ownership2016 Securities and Exchange Commission Form 10-K
2017 Proxy Statement
G4-14Precautionary approachNot reported.
G4-15Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or endorsesAirlines for America (A4A) climate change commitment
Public Relations Research Standards
Diversity Best Practices: the preeminent organization for mid- to large-size organizational diversity thought leaders to share best practices and develop innovative solutions for culture change. Each Southwest Airlines Employee can logon using their wnco.com email.
G4-16Memberships or associationsAirlines for America (A4A) climate change commitment
Public Relations Research Standards
National Diversity Council Board
Workforce Solutions Greater Dallas Board: the local organization mandated to implement a system of services that complement economic development as a resource for employers to access the quality employees they need, and training individuals to be successfully employed.
Identified Material Aspects and Boundaries
IndicatorDescriptionDetail/Location in Report
G4-17Entities included in the organization’s consolidated financial statements or equivalent documents2016 Securities and Exchange Commission Form 10-K
G4-18Process for defining the report content and the Aspect Boundaries, and how the organization has implemented the Reporting Principles for Defining Report ContentOur transition to GRI G4 guidelines for the 2016 One Report resulted in a leaner, more focused report that we believe will help our Stakeholders better access and understand information related to our Corporate Social Responsibility initiatives. Through our previous reporting and interactions with our Stakeholders, Southwest identified a number of sustainability topics which were prioritized through a benchmarking analysis of our industry conducted in 2016 and early 2017. Southwest then worked to identify key topics and related environmental, social, and governance indicators in an effort to provide a reasonable and balanced representation of our Corporate Social Responsibility efforts in the 2016 One Report.
G4-19Material Aspects identified in the process for defining report contentWe have included the following key topics in the 2016 One Report: Economic Performance, Indirect Economic Impact, Energy, Water, Emissions, Effluents and Waste, Compliance, Employment, Training and Education, Human Rights, Freedom of Association and Collective Bargaining, Local Communities, Anti-Corruption, Public Policy, and Product and Service Labeling.
G4-20/21Aspect boundaries2016 Securities and Exchange Commission Form 10-K
Covers only those business activities for which Southwest generally has complete control or ownership. This report does not include facilities primarily controlled by others, such as airport terminal space or outsourced or subcontracted facilities.
G4-22Effect of any restatements of information provided in previous reports, and the reasons for such restatementsSee data tables for any restatements of information provided in previous reports:
Performance Data Table
People Data Table
Planet Data Table
G4-23Significant changes from previous reporting periods in the Scope and Aspect BoundariesThere are no significant changes from previous reporting periods in the Scope and Aspect Boundaries.
Stakeholder Engagement
IndicatorDescriptionDetail/Location in Report
G4-24Stakeholder groups engagedCustomers, Employees, NGOs/Community Groups, Suppliers, Shareholders, and Regulators.
G4-25Basis for identification and selection of stakeholders with whom to engageWe maintain engagement channels with the Stakeholders who we believe may impact, or be impacted by, our business.
G4-26Approach to stakeholder engagementCustomers: Customer Experience surveys are sent to a representative sample of Customers each day post-travel. Daily interaction with our Customer Service Representatives with phone calls, email, or social media. Monthly brand monitoring and other ad hoc research through our Listening Center. Personal contact during travel experience with Customer Service Agents and Flight Crews.

Employees: Daily internal communications on our intranet, including news, department information, blogs, and weekly Window Seat, the weekly news recap via video. Employees are able to interact in the comment sections. Monthly newsletters, annual Southwest Rallies, ongoing union meetings, and biennial Employee surveys.

NGOs/Community Groups: Ongoing efforts with the Chambers of Commerce in each of our domestic cities, working with a variety of charitable organizations, and through one-on-one meetings or calls with industry associations or community influencers.

Suppliers: Ongoing efforts via emails, meetings, and the RFP process, which includes questions on business human rights and environmental practices.

Shareholders: Ongoing communication with our Investor Relations department via phone calls, email, and mail, Investor presentations, Annual Meeting of Shareholders and the Investor Relations website.

Regulators: Ongoing engagement through permitting, compliance, and reporting activities. Safety testing, audits, and screenings.
G4-27Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concernsThroughout this report.
Report Profile
IndicatorDescriptionDetail/Location in Report
G4-28Reporting periodCalendar Year 2016, unless otherwise stated.
G4-29Date of most recent previous reportMay 18, 2016
G4-30Reporting cycleAnnual
G4-31Contact point for questions regarding the report or its contentsSWACitizenship@wnco.com
G4-32"In Accordance" option and the GRI Content Index for the chosen optionIn accordance-Core and GRI Content Index
G4-33Policy and current practice with regard to seeking external assurance for the reportThis report has not been externally assured.
Governance
IndicatorDescriptionDetail/Location in Report
G4-34Governance structure of the organizationCompany Officers
Corporate Governance Guidelines
Board Committees
2017 Proxy Statement
Ethics and Integrity
IndicatorDescriptionDetail/Location in Report
G4-56Values, principles, standards and norms of behavior such as codes of conduct and codes of ethicsPurpose, Vision, Values & Mission Statements
Investor Relations
Supplier Code of Conduct
Specific Standard Disclosures
Economic
IndicatorDescriptionDetail/Location in Report
ECONOMIC PERFORMANCE
DMAWe understand the powerful impacts that our Company can have on the social systems within which we operate and our responsibility to be a good corporate citizen. That is why we have a Community Relations Department committed to engaging and giving back in the communities where our Customers and Employees live and work. Through our Community Outreach Teams, we provide support, leadership, and encouragement to a variety of local, civic, and charitable organizations. We believe in connecting People and championing the communities where our Employees live and work, and we strategically invest our resources to support local needs and the causes that matter most to those Communities. Our Employees get involved through volunteering, serving as Green Ambassadors, and participating on Community Giving Boards to help direct support to local organizations. 

Community Giving Boards are made up of local Employees from various work groups who evaluate donation requests Southwest receives from nonprofit charitable organizations in their community. The Boards donate complimentary, roundtrip travel to approved organizations for fundraising or transportation purposes.

People
EC-1Direct economic value generated and distributedPerformance
2016 Securities and Exchange Commission Form 10-K
EC-2Climate change risks and opportunitiesPlanet
2016 Securities and Exchange Commission Form 10-K
Southwest has voluntarily reported our greenhouse gas emissions through CDP (formerly the Carbon Disclosure Project) for the past eight years. In our CDP response, we quantify climate change impacts, risks, and opportunities on our business, and provide information on how we’re integrating climate change into our business strategy. You can find Southwest’s CDP response at www.cdp.net. We have invested more than $565 million in fuel efficiency projects since 2002.
EC-3Coverage of defined benefit plan obligationsWe provided approximately $852 million toward Employee retirement through 401(k) and ProfitSharing contributions plus an additional ProfitSharing cash award of $85 million, based on 2016 results. 92 percent of our Employees participated in our 401(k) plans.

For the 2016 plan year, each eligible Employee received a ProfitSharing award equal to 13.2 percent of eligible compensation. Southwest announced a new funding structure that pays part of the ProfitSharing award to the retirement plan and part in cash. Most Employees will receive 10 percent of eligible compensation as a contribution to the ProfitSharing Plan and the remainder—approximately 3.2 percent—in cash. Some Employees will receive the entire ProfitSharing award in the retirement plan as specified in their collective bargaining agreement.
INDIRECT ECONOMIC IMPACT
DMAOur performance impacts more than our Company. Our low fares stimulate economies in cities where we fly. We also make investments in infrastructure and services that more broadly affect the communities we serve in terms of jobs, access to services, or other impacts. Working with local communities and regulators, we strive to maximize the benefits of our investments to local and regional economies.
EC-8Significant indirect economic impactMany Different Ways to Give
Helping Build Community with Heart

Environmental
IndicatorDescriptionDetail/Location in Report
DMA
(for all reported environmental topics)
We recognize the importance of environmental stewardship and believe it’s our responsibility to protect our planet now and for future generations. We do our part to make environmentally responsible decisions and to minimize our impact on the environment by collecting and analyzing information on our energy consumption, emissions, and waste, and continually improving the actions we take to mitigate our impacts. We set goals and use an environmental management system (EMS) and chemical management system (CMS) to help us maintain compliance with environmental regulations, minimize costs and risk, and measure our efforts to improve our environmental performance.

Given fuel is one of our largest expenses and the burning of it produces greenhouse gas (GHG) emissions, we strive to reduce future emissions while continuing to provide safe, reliable, and affordable air transportation for our Customers. We are paying attention to regulations and agreements that are being formulated by both the EPA and the International Civil Aviation Organization (ICAO), that aim to reduce carbon emissions from commercial aircraft. The ICAO is expected to finalize its emissions standards in 2017.  We are currently meeting our GHG emission targets without using offsets.

Our environmental policy is a source for all Employees to understand how they can be a part of our Culture of global citizenship.

All of Southwest’s Leaders and Employees are responsible for carrying out our environmental policy by:

  • Complying with all environmental laws and regulations

  • Striving to meet our annual goal of zero environmental violations in our operations

  • Maintaining our EMS, following procedures, and training our Employees to meet our compliance goals

  • Continuing to improve our performance regarding our environmental goals and initiatives, including our goals for reducing GHG emissions

  • Auditing our operations for environmental compliance and implementing corrective actions where needed

  • Auditing our environmental vendors to ensure their operations are compliant and they demonstrate a commitment to environmental stewardship

  • Providing transparency of our environmental performance to our Stakeholders through public reporting and third-party verification and assurance of our GHG emissions inventory

  • Conserving natural resources, including efficient use of water and raw materials, and using alternative fuels and renewable energy where possible while continuing to meet our operational requirements

  • Minimizing waste, pollution, and emissions from our operations and preventing it where possible while remaining true to the triple bottom line of Performance, People, and Planet


Maintaining compliance with all local, state, and federal environmental laws and regulations is fundamental to our environmental policy. We continually work to meet our annual goal of zero recorded environmental violations that would result in monetary fines in our operations. Our Environmental Services Team regularly conducts audits to review compliance, and we are working to improve our performance by maintaining and improving our EMS, following environmental guidelines and procedures, implementing corrective action, and training our Employees to meet our compliance goals.

Our standard auditing protocol assesses a location’s record keeping, permit status, and compliance with requirements of regulatory plans such as Storm Water Pollution Prevention Plans and Spill Prevention, Control, and Countermeasure Plans. We perform a visual, walk-through inspection to confirm that key compliance practices are enacted in each of the cities we serve. We also track spills at all of our locations, audit findings and corresponding corrective action, and information about permits and their expiration dates.

Planet
Environmental Initiatives
ENERGY
EN-3Energy consumptionRespecting Our Resources by Using Them Efficiently
Planet Data Table
EN-5Energy intensityPlanet Data Table
EN-6Reduction of energy consumptionWorking to Find a Better Way
EN-7Reductions in energy requirements of servicesPushing Innovation in Fuel Efficiency
Planet Data Table
We increased our fuel efficiency (available seat miles3 per gallon of fuel) from 73.9 in 2015, to 74.4 in 2016.
WATER
EN-8Total quantity consumed by sourcePlanet Data Table
EMISSIONS
EN-15GHG emissions (Scope 1)Reducing Emissions by Striving to Be the Best
Plugging in to Reduce Airport Emissions
Making the Most of Our Idle Time
Planet Data Table
EN-16GHG emissions (Scope 2)Reducing Emissions by Striving to Be the Best
Planet Data Table
EN-17GHG emissions (Scope 3)Planet Data Table
EN-18GHG emissions intensityReducing Emissions by Striving to Be the Best
Planet Data Table
EN-19GHG emissions reductionReducing Emissions by Striving to Be the Best
Planet Data Table
EN-20Emissions of ozone-depleting substancesOne of the most important issues surrounding chemical management is the use of ozone-depleting substances. The ozone layer prevents harmful ultraviolet light from passing through the atmosphere, and the use of these substances can cause a decrease in the total volume of the ozone layer. Potential ozone-depleting substances Southwest presently uses include refrigerants found in the HVAC systems and appliances of Southwest operated buildings and the air conditioning systems of company vehicles. In every location except our Headquarters Campus, we contract the servicing of our refrigerant systems. For this reason, we estimate the use of these substances for reporting purposes. In 2016, the estimated emissions are 3,395 metric tons of CO2e based on an upper-bound assumption of the expected losses that would occur from Southwest facilities. We do not produce or import ozone-depleting substances in Southwest operations.
EN-21Quantity of hazardous air pollutantsPlanet Data Table
EFFLUENTS AND WASTE
EN-23Total weight of solid waste by disposal typePlanet Data Table
EN-24Total number and volume of significant spillsWe recognize that spills of chemicals, oils, and fuels can have a significant impact on our planet, so we make every effort to prevent them. However, we acknowledge that despite our best efforts, some spills do happen because of equipment failure or human error. We provide our Employees 24/7 access to guidance and emergency response assistance with spill response, and we track our spills using an online spill reporting form. This not only makes it simple for our Employees to report a spill in a timely and accurate manner, but it also provides automatic notification to the entire Environmental Services Team upon submittal for quick response and regulatory agency reporting when required. The Environmental Services Team also compiles and analyzes details from all spills so operating groups can assess spill prevention strategies. In 2016, we had four spills that were reportable to the National Response Center per regulatory requirements. None of the spills required reporting in our financial statements as a liability.
COMPLIANCE
EN-29Monetary value of significant finesPlanet Data Table
Social: Labor Practices and Decent Work
IndicatorDescriptionDetail/Location in Report
DMAEmployees are the heartbeat of Southwest. We focus on bringing the best People into the Southwest Family with a competitive compensation and benefits package. We then provide a positive working environment, training, and encouragement to help them succeed. Therefore, our approach to employment and labor practices is a critical strategy guided by our Executive Vice President Corporate Services and our People and General Counsel departments, which includes a section devoted solely to Labor and Employee Relations.

We are committed to:

  • Seeking talented People

  • Maintaining positive union relations

  • Investing in training and educational opportunities to enhance Employees’ skills

  • Fostering an atmosphere that promotes equal opportunity

  • Providing our Employees with a safe and stable work environment

  • Maintaining equal opportunity for learning and personal growth


We conduct a biennial Employee survey to assess job satisfaction of our Employees, and we use information from the survey to improve our ability to attract, develop and retain talented Employees who will help us meet Southwest’s business needs today and tomorrow.

People
EMPLOYMENT
LA-2Benefits provided to full-time EmployeesInvesting in Our Future, One Employee at a Time
Employee Benefits
In 2016, more than 56,300 active and inactive Southwest Employees participated in at least one component of the Company’s Employee benefits program. Southwest offers standard benefits to both full-time and part-time Employees. In the case of tuition reimbursement, Southwest Airlines provides the following maximum annual benefit, which will be counted toward the calendar year in which reimbursement is made:

  • Graduate Degrees: $5,000 for a full-time Employee, $2,500 for a part-time Employee.

  • Undergraduate Degrees, Individual/Preparatory courses and Certificate Programs: $2,500 for a full-time Employee, $1,250 for a part-time Employee.


Many of the components offered to Employees in our Employee benefits program also are offered to dependents and/or committed partners.
TRAINING
LA-9Hours of annual Employee trainingTraining the Southwest Way
People Data Table
Social: Human Rights
IndicatorDescriptionDetail/Location in Report
INVESTMENT
DMAAt Southwest, we are strong supporters of protecting each individual’s basic human and civil rights and are guided by fundamental principles to not only comply with the law at all times, but also to avoid the appearance of impropriety in the actions of our Employees and our business partners. We reflect these principles in various policies and our conduct toward Employees, Customers, suppliers, and the communities we serve.

We have created and adhere to Company policies to support and respect the protection of human rights within our sphere of influence. These policies include our commitment to:

  • Prohibit any form of harassment, discrimination, or retaliation in the workplace based on race, color, religion, age, sex, sexual orientation, gender identity, pregnancy, marital status, national origin, disability, veteran status, genetic information, or other legally protected statuses

  • Respect the right of Employees to associate freely

  • Recognize lawful rights of Employees to choose or not choose collective bargaining representation


Corporate Policies
HR-2Employee training on human rightsTraining the Southwest Way
People Data Table
Policy on Harassment, Sexual Harassment, Discrimination, and Retaliation
44 percent of Employees and over 5,000 contractors received training on Human Rights in 2016.

We conduct training on human rights issues as they relate to harassment, discrimination, or retaliation for all new hires. Human rights training and information (including training on human trafficking and notification to law enforcement authorities) is available for existing Employees through a variety of vehicles, including our Guidelines for Employees, our Disability Discrimination & Workplace Accommodation Policy, in both written and audio versions, and our Most Compliant Leader training, an eight-hour program required bi-annually of all Leaders, Supervisors, and above, and our harassment online learning module.
FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
HR-4Freedom of association and collective bargainingCorporate Policies
We have not identified operations or suppliers where the right to exercise freedom of association and collective bargaining are being violated. We take preventative measures to avoid this risk by implementing our Code of Conduct.
Social: Society
IndicatorDescriptionDetail/Location in Report
LOCAL COMMUNITIES
DMAWe understand the powerful impacts that our Company can have on the social systems within which we operate and our responsibility to be a good corporate citizen. That is why we have a Community Relations Department committed to engaging and giving back in the communities where our Customers and Employees live and work. Through our Community Outreach Teams, we provide support, leadership, and encouragement to a variety of local, civic, and charitable organizations. We believe in connecting People and championing the communities where our Employees live and work, and we strategically invest our resources to support local needs and the causes that matter most to those Communities. Our Employees get involved through volunteering, serving as Green Ambassadors, and participating on Community Giving Boards to help direct support to local organizations. 

Community Giving Boards are made up of local Employees from various work groups who evaluate donation requests Southwest receives from nonprofit charitable organizations in their community. The Boards donate complimentary, roundtrip travel to approved organizations for fundraising or transportation purposes.

People
SO-1Local community engagementHelping Build Community with Heart
People Data Table
At the national level, our Heart of the Community program is on a mission to build connections that bring People together and strengthen communities for a more resilient future.

Through our work with the pioneering nonprofit organization, Project for Public Spaces, we’ve invested $2 million into 18 projects since the program launched in 2014. The investment has yielded tangible social, economic, and community benefits. Through our first initial evaluation (from the first five communities), 147 new jobs were created, $7.7 million in visitor spending was generated, and grant recipients saw a four-to-one ROI from the Southwest investment.
ANTI-CORRUPTION
DMAAt Southwest, we strive to maintain accountability and transparency of our business practices to reduce or eliminate corruption. We require all Employees to annually certify receipt and understanding of our Code of Ethics and Insider Trading Policy. We also employ robust auditing procedures to analyze and monitor business activities, which further enhance our ability to maintain high ethical standards. We continually review our systems to provide transparency and accountability, and we update our corporate governance policies when needed.
SO-4Anti-corruption communicationCorporate Governance Guidelines
In 2016, more than 59,000 Southwest AirlinesEmployees and certain business associates certified receipt of Code of Ethics and Insider Trading policy. During 2016, we also distributed our Foreign Corrupt Practices Act Policy and Anti-Corruption Compliance Procedures to all Company Officers, Senior Leaders of all departments, and select Employees and contractors who are involved with Southwest’s financial records and/or international operations. In 2016, more than 2,500 individuals received and completed a compliance questionnaire regarding the Foreign Corrupt Practices Act.
PUBLIC POLICY
DMAWe must continually adapt to new laws and regulations. Legislative and regulatory changes have the potential to limit our opportunities for growth, and government policies and legislation can have a deep impact on how we do business. We present our views on these topics to a wide range of policymakers and Stakeholder groups through trade associations and interactions with public officials at the federal level and in the states and communities we serve. We participate in industry associations such as Airlines for America (A4A) and have developed our own public outreach programs such as our Key Contact Program, which features Days on the Hill. Our involvement allows us to gain insight into core issues for the airline industry as a whole and to advocate jointly for regulations that support a healthy, competitive industry. We also benefit from the opportunity to share technical expertise and operational knowledge that leads to better Customer Safety, Service, and overall efficiency.

Southwest has adopted a policy that it will primarily use its affiliated political action committee, the Southwest Airlines Co. Freedom Fund (Freedom Fund), which is financed through voluntary Employee contributions, to support political campaigns, and that Company funds will be limited to supporting selected political campaigns at the state and local level in compliance with the laws of the relevant states and localities. All political campaign contributions from the Freedom Fund or by the Company directly are approved by the Vice President of Governmental Affairs and overseen by Southwest Airlines’ Senior Vice President General Counsel, with an annual summary of those contributions provided to the Southwest Airlines Board of Directors. All political contributions are intended to promote the interests of the Company and are not guided by any private political preferences of any Employee. All contributions by the Freedom Fund are disclosed via publicly available reports filed monthly with the Federal Election Commission. The Company strives to comply with all applicable federal, state, and local campaign finance restrictions and disclosure requirements.
SO-6Political contributionsIn 2016, the Company contributed $78,250 directly to political campaigns at the state and/or local level in six states (California, Illinois, Maryland, Missouri, Nevada, and Texas). No Company funds were used to support or finance any political campaign at the federal level or to influence any ballot measure, nor has the Company supported or financed any independent expenditure committee or any political entity organized under section 527 of the Internal Revenue Code, including so-called Super PACs.

In 2016, A4A, our airline industry trade association, determined that $1,255,240 of the total dues paid by the Company to A4A were nondeductible lobbying expenses. Southwest pays dues to several other national, state, and local trade associations and chamber organizations, in which a portion of those dues are used by these organizations for nondeductible lobbying activities; however, in all cases, that portion is less than $5,000 annually for each organization.
Social: Product Responsibility
IndicatorDescriptionDetail/Location in Report
PRODUCT AND SERVICE LABELING
DMASouthwest has always focused on the Customer, with features such as no first or second checked bag (size and weight limits apply) or change fees (fare differences apply), and with a constant desire to improve the Customer Experience. We measure our Customer Satisfaction on an ongoing basis by tracking various sources of Customer Satisfaction data such as our Net Promoter Score, the American Customer Satisfaction Index, and the U.S. Department of Transportation’s Customer Satisfaction Ratings. We also measure Customer Satisfaction through our own Tracking Local Customers platform and through the Customer Experience survey which is sent to a representative sample of Customers each day post-travel. Survey results are reported to Leaders of the Company and to Leaders in the various Customer touchpoint areas who use the results to measure performance of key activities. We also do monthly brand monitor research and other ad hoc research that evaluates Customer and Non-Customer perceptions and experiences. Additionally, we track feedback received through various channels such as call centers and social media to learn how we are doing.

We recognize the importance of communicating openly, accurately, and responsibly about our service to our Customers, and we are committed to Transfarency,® honest communication about our fares, so Customers can make informed choices.

Our Customer Service actions are further communicated to our Customers through the use of various channels or Customer Insight opportunities that allow for two-way communication with our Customers, such as through Southwest’s Listening Center and social media. In all these channels, we’re answering questions and looking for ways to connect our Customers to what’s important in their lives.

People
Customer Service Policies (click on “Customer Commitments”)
PR-5Customer satisfactionSticking with Customers Makes Them Stick with You
People Data Table
External Customer commendations increased by 19 percent in 2016, and our U.S. DOT score related to consumer complaints per 100,000 enplanements improved by 10 percent from 2015. Our American Customer Satisfaction Score improved by two points in 2016, compared with the previous year.

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Reporting Archive

* We’ve made changes recently, so there may be some links within our archived reports that point to pages that no longer exist or have been moved from that web location. Please contact us at SWACitizenship@wnco.com if you are unable to find what you need or have any questions.

Important footnotes and disclosures

1) The 2016 Southwest Airlines One Report 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. Forward-looking statements are based on, and include statements about, the Company’s estimates, expectations, beliefs, intentions, and strategies for the future, and are not guarantees of future performance. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s Vision; (ii) the Company’s fleet plans, strategies, and expectations, including its fleet modernization initiatives, and the Company’s related financial and operational expectations; (iii) the Company’s financial position, outlook, goals, targets, strategies, plans, expectations, and projected results of operations, including specific factors expected to impact the Company’s results of operations; (iv) the Company’s plans and expectations with respect to its new reservation system and other technology initiatives, and the Company’s related multi-faceted financial and operational expectations and opportunities; (v) the Company’s construction initiatives and related operational expectations; (vi) the Company’s growth plans, strategies, and opportunities, including the Company’s network and capacity plans, opportunities, and expectations; (vii) the Company’s expectations and goals with respect to returning value to Shareholders; (viii) the Company’s expectations related to its management of risk associated with changing jet fuel prices; and (ix) the Company’s initiatives and related plans and expectations. 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 demand for the Company’s services and other changes in consumer behavior; (ii) the impact of economic conditions, fuel prices, actions of competitors (including without limitation pricing, scheduling, and capacity and network decisions and consolidation and alliance activities), and other factors beyond the Company’s control, on the Company’s business decisions, plans, and strategies; (iii) the Company’s dependence on third parties, in particular with respect to its fleet, technology, and construction plans; (iv) 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; (v) the impact of governmental regulations and other governmental actions related to the Company’s operations; (vi) the Company’s ability to timely and effectively prioritize its initiatives and related expenditures; (vii) the impact of labor matters on the Company’s business decisions, plans, strategies, and costs; (viii) changes in aircraft fuel prices, the impact of hedge accounting, and any changes to the Company’s fuel hedging strategies and positions; and (ix) 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 Dec. 31, 2016.


2) The Company's Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These GAAP financial statements include (i) 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 and (ii) other charges and benefits the Company believes are not indicative of its ongoing operational performance.

As a result, the Company also provides financial information in this report 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 additional insight to investors as supplemental information to its GAAP results. The non-GAAP measures provided that reflect the Company’s performance on an economic fuel cost basis include Fuel and oil expense, non-GAAP; Total operating expenses, non-GAAP; Operating expenses, non-GAAP; Net income, non-GAAP; and Net income per share, diluted, non-GAAP. The Company's economic Fuel and oil expense 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 has historically been utilized by the Company, as well as some of the other airlines that utilize fuel hedging, as it 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. The Company believes 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 and analysts, 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.

In addition, the Company’s GAAP results in the applicable periods include other charges or benefits that are deemed “special items” that the Company believes are not indicative of its ongoing operations and make its results difficult to compare to prior periods, anticipated future periods, or to its competitors’ results. Financial measures identified as non-GAAP (or as excluding special items) have been adjusted to exclude special items. Special items include:

1. A one-time $172 million Special revenue adjustment in July 2015 as a result of the Company’s amendment of its co-branded credit card agreement with Chase Bank USA, N.A. and the resulting required change in accounting methodology. This increase to revenue represented a nonrecurring required acceleration of revenues associated with the adoption of Accounting Standards Update 2009-13;

2. Union contract bonuses recorded for certain workgroups. As the bonuses would only be paid at ratification of the associated tentative agreement and would not represent an ongoing expense to the Company, management believes its results for the associated periods are more usefully compared if the impacts of ratification bonus amounts are excluded from results. Generally, union contract agreements cover a specified three- to five- year period, although such contracts officially never expire, and the agreed upon terms remain in place until a revised agreement is reached, which can be several years following the amendable date;

3. Expenses associated with the Company’s acquisition and integration of AirTran Holdings, LLC, the parent company of AirTran Airways, Inc. (“AirTran”). Such expenses were primarily incurred during the acquisition and integration period of the two companies from 2011 through 2015 as a result of the Company’s acquisition of AirTran, which closed on May 2, 2011. The exclusion of these expenses provides investors with a more applicable basis with which to compare results in future periods now that the integration process has been completed;

4. A gain resulting from a litigation settlement received in January 2015. This cash settlement meaningfully lowered Other operating expenses during the applicable period, and the Company does not expect a similar impact on its cost structure in the future;

5. A noncash impairment charge related to leased slots at Newark Liberty International Airport as a result of the Federal Aviation Administration announcement in April 2016 that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3; and

6. Lease termination costs recorded during 2016 as a result of the Company acquiring five of its Boeing 737-300 aircraft off operating leases, as part of the Company’s strategic effort to phase out its Classic aircraft from operations by the end of third quarter 2017 in the most economically advantageous manner possible. The Company had not budgeted for these early lease termination costs, as they were subject to negotiations being concluded with the third party lessors. The Company recorded the fair value of the aircraft, as well as any associated remaining obligations to the balance sheet as debt.

Because management believes each of these items can distort the trends associated with the Company’s ongoing performance as an airline, the Company believes that evaluation of its financial performance can be enhanced by a supplemental presentation of results that exclude the impact of these items in order to enhance consistency and comparativeness with results in prior periods that do not include such items and as a basis for evaluating operating results in future periods. The following measures are often provided, excluding special items, and utilized by the Company’s management, analysts, and investors to enhance comparability of year-over-year results, as well as to compare results to other airlines: Operating revenues, non-GAAP; Total operating expenses, non-GAAP; Operating expenses, non-GAAP, excluding Fuel and oil expense; Net income, non-GAAP; and Net income per share, diluted, non-GAAP.

The Company has also provided free cash flow, which is a non-GAAP financial measure. The Company believes free cash flow is a meaningful measure because it demonstrates the Company's ability to service its debt, pay dividends, and make investments to enhance Shareholder value. Although free cash flow is commonly used as a 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 year ended Dec. 31, 2016, the Company generated $2.3 billion in free cash flow, calculated as operating cash flows of $4.3 billion less capital expenditures of $2.0 billion less assets constructed for others of $109 million plus reimbursements for assets constructed for others of $107 million.

The Company has also provided its calculation of return on invested capital, which is a measure of financial performance used by management to evaluate its investment returns on capital. Return on invested capital is not a substitute for financial results as reported in accordance with GAAP, and should not be utilized in place of such GAAP results. Although return on invested capital is not a measure defined by GAAP, it is calculated by the Company, in part, using non-GAAP financial measures. Those non-GAAP financial measures are utilized for the same reasons as those noted above for Net income, non-GAAP and Operating income, non-GAAP - the comparable GAAP measures include charges or benefits that are deemed “special items” that the Company believes are not indicative of its ongoing operations and make its results difficult to compare to prior periods, anticipated future periods, or to its competitors’ results, and the Company’s profitability targets and estimates, both internally and externally, are based on results excluding special items since in the vast majority of cases the “special items” cannot be reliably predicted or estimated. The Company believes non-GAAP return on invested capital is a meaningful measure because it quantifies the Company’s effectiveness in generating returns, relative to the capital it has invested in its business. Although return on invested capital is commonly used as a measure of capital efficiency, definitions of return on invested capital differ; therefore, the Company is providing an explanation of its calculation for non-GAAP return on invested capital in the accompanying reconciliation tables (see Return on Invested Capital), in order to allow investors to compare and contrast its calculation to those provided by other companies.

Information regarding special items and reconciliations of reported amounts to amounts excluding special items are included in the accompanying reconciliation tables in the Performance section.


3) An available seat mile (ASM) is one seat (empty or full) flown one mile. Also referred to as “capacity,” which is a measure of the space available to carry Passengers in a given period.


4) Calculated as operating revenues divided by available seat miles. Also referred to as "operating unit revenues" or "RASM," this is a measure of operating revenue production based on the total available seat miles flown during a particular period. Year ended 2015 RASM excludes a $172 million one-time special revenue adjustment. Including the special revenue adjustment, RASM would have been 14.11 cents for the year ended 2015.


5) The average amount of passenger revenue per revenue passenger carried.


6) A slot is the right of an air carrier, pursuant to regulations by the Federal Aviation Administration, to operate a takeoff or landing at a specific time at certain airports.


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


8) As measured by the Department of Transportation O&D Survey for the twelve months ended Sept. 30, 2016 based on domestic originating passengers.


9) Average number of weekday flights as of Dec. 31, 2016.


10) Number of scheduled flights that arrived less than 15 minutes after scheduled arrival time divided by total scheduled flights.


11) Load factor is RPMs15 divided by ASMs.3


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


13) Average distance in miles the aircraft is flown per trip.


14) U.S. Department of Transportation Form 41 and T100 data, through Sept. 30, 2016. Based on costs that have been adjusted for Southwest’s average stage length and represents domestic mainline.


15) An RPM is one paying Passenger flown one mile. Also referred to as "traffic," which is a measure of demand for a given period.


16) Aircraft in the Company's fleet at yearend, less Boeing 717-200s removed from service in preparation for transition out of the fleet.


17) The 2016 Southwest Airlines One Report may contain information obtained from third parties, including ratings from credit ratings agencies such as S&P Global Ratings. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES, OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.


18) Source: Bloomberg as of March 16, 2017. Moody’s Senior Unsecured rating used (if unavailable, Long Term Corporate Family or Long Term rating used); S&P’s Long Term Issuer rating used; Fitch’s Senior Unsecured rating used (if unavailable, Long-term Issuer rating used).


19) In terms of domestic passenger traffic.


20) Metro areas are areas around cities that may include multiple major airports; Co-terminal: Airports that share a common city or region; for example, Newark, LaGuardia and JFK are considered co-terminals to one another.


21) Earnings before interest and taxes.


22) Active, full-time equivalent Employees as of Dec. 31 for specified calendar year.


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


24) Net adjustment related to presumption that all aircraft in fleet are owned (i.e., the impact of eliminating aircraft rent expense and replacing with estimated depreciation expense for those same aircraft). The Company makes this adjustment to enhance comparability to other entities that have different capital structures by utilizing alternative financing decisions.


25) The Adjustment for fuel hedge accounting in the numerator is due to the Company’s accounting policy decision to classify fuel hedge accounting premiums below the Operating income line, and thus is adjusting Operating income to reflect such policy decision. The Equity adjustment for hedge accounting in the denominator adjusts for the cumulative impacts in Accumulated other comprehensive income and Retained earnings, of gains and/or losses associated with hedge accounting related to fuel hedge derivatives that will settle in future periods. The current period impact of these gains and/or losses are reflected in the Net impact from fuel contracts in the numerator.


26) Calculated as an average of the five most recent quarter end balances or remaining obligations. The Net present value of aircraft operating leases represents the assumption that all aircraft in the Company’s fleet are owned, as it reflects the remaining contractual commitments discounted at its estimated incremental borrowing rate as of the time each individual lease was signed.


27) Flight includes Cabin Service Support, Inflight, and Flight Operations. Ground, Customer, and Fleet Services includes Provisioning, Customer Services, Ground Operations, and Operations Coordination Center.


28) Based on Independent Sector’s estimated value of a volunteer hour. For more information, visit: http://www.independentsector.org/resource/the-value-of-volunteer-time/


29) Source: Southwest Airlines Heart of the Community Impact Evaluation: 2016 (Research conducted by Nicolas Ronderos Consulting).


31) Each plane ticket is valued at $400.


32) Includes Southwest’s contributions to Employee health and welfare plans, workers’ compensation insurance, and employer payroll taxes.


33) A revenue ton mile (RTM) is one ton of revenue traffic (passenger and cargo) transported one mile.


34) Conversions to MWh are based on default densities and heating values from the CDP guidance document, “Technical Note: Conversion of fuel data to MWh.” We use this unit of measurement for consistency with our CDP reporting.


35) Eligible equipment includes belt loaders, pushbacks, and bag tugs.


36) Water consumption is primarily for domestic use at our facilities.


37) NOx and SOx emissions are reported in our annual emissions inventories for our DAL and PHX facilities. Data is from prior year due to air emissions reporting cycle.


38) Material recycled from aircraft and select facilities as part of the Southwest co-mingled recycling program. Does not include international flights due to regulations that require waste from international flights to be incinerated. Does not include AirTran flights.

Important footnotes and disclosures

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