We achieved our 47th consecutive year of profitability in 2019—a record unmatched in U.S. aviation history. By managing in the good times to be prepared for the bad times, we entered the COVID-19 pandemic prepared with the U.S. airline industry’s strongest balance sheet and most successful business model. We have a robust network of point-to-point service, with a strong presence across top leisure and business markets. While the impact of the COVID-19 pandemic presented an unprecedented challenge, we believe that we are well-positioned to effectively manage through the challenging environment and thrive post-pandemic.
#1 in Customer Satisfaction
Maintained #1 Marketing Carrier in Customer Satisfaction per the U.S. Department of Transportation (DOT) data2323) The Department of Transportation (DOT) ranks all U.S. carriers based on the lowest ratio of complaints per 100,000 passengers enplaned, as published in the DOT Air Travel Consumer Report (ATCR). Southwest earned the best Customer Satisfaction ranking among U.S. Marketing Carriers with the lowest ratio of complaints to the DOT per 100,000 enplaned passengers for 2020. A Marketing Carrier is an airline that advertises under a common brand name, sells reservations, manages frequent flyer programs, and is ultimately responsible for the airline’s consumer policies. Operating Carriers only handle the flight operations, passenger check-in/boarding, and baggage handling for the respective Marketing Carriers they serve—Operating Carriers are not responsible for DOT complaints related to policies, procedures, and advertising associated with the Marketing Carrier’s brand.
Global Distribution System
Launched global distribution system (GDS) access for business travelers through partnerships with Travelport and Amadeus; entered into an agreement with Sabre
Strengthened route network with launch of service to six new destinations in 2020, and have, as of April 27, 2021, opened or announced our intention to serve an additional 13 airports in 20212424) The 2020 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. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s environmental sustainability beliefs, plans, and expectations; (ii) the Company’s plans, goals, objectives, and initiatives related to diversity, equity, and inclusion; (iii) the Company’s plans and expectations with respect to Employee training, development, benefits, (including post-retirement benefits) pay, and staffing (including with respect to avoiding furloughs or pay cuts); (iv) the Company’s Vision; (v) the Company’s network plans, expectations, and opportunities, including factors and assumptions underlying the Company’s plans and expectations; (vi) the Company’s initiatives and related goals with respect to global distribution system access and related alliances and capabilities; (vii) the Company’s financial position, outlook, plans, strategies, goals, targets, and projected results of operations; (viii) the Company’s fleet plans and expectations; and (ix) the Company’s initiatives and expectations with respect to fuel efficiency and emissions. 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) the extent of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, including through any new variant strains of the underlying virus; the effectiveness and availability of vaccines; the duration and scope of related government orders and restrictions; the duration and scope of the Company’s actions to address Customer and Employee health concerns; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s related business plans and decisions; and any negative impact of the COVID-19 pandemic on the Company’s access to capital; (ii) the impact of fears or actual outbreaks of other diseases, economic conditions, fuel prices, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the impact of governmental actions and governmental regulations on the Company’s plans, strategies, and operations; (iv) the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule; (v) the Company’s dependence on other third parties for products and services, in particular with respect to global distributions systems and related alliances and capabilities, and the impact on the Company’s operations and results of operations of any third party delays or non-performance; (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 labor matters on the Company’s result of operations, business decisions, plans, and strategies; 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 Dec. 31, 2020.
The COVID-19 pandemic had a significant year-over-year negative impact on travel demand and bookings in 2020, resulting in our first annual net loss since 1972. We remain focused on emerging from this pandemic with the U.S. airline industry’s strongest balance sheet and business model to thrive post-pandemic.
During 2020, we launched service to six new destinations, and have, as of April 27, 2021, opened or announced our intention to serve an additional 13 airports in 2021. We are utilizing idle aircraft and Employees, leveraging additional airports in or near cities where our Customer base is large, and adding easier access to popular leisure-oriented destinations from across our domestic-focused, point-to-point network.
|Year ended Dec. 31,||2020||2019||CHANGE|
|Operating revenues||$ 9,048||$ 22,428||(59.7) %|
|Operating expenses||$ 12,864||$ 19,471||(33.9) %|
|Operating income (loss)||$ (3,816)||$ 2,957||n.m.|
|Operating margin||(42.2) %||13.2 %||(55.4) pts.|
|Net income (loss)||$ (3,074)||$ 2,300||n.m.|
|Net margin||(34.0) %||10.3 %||(44.3) pts.|
|Net income (loss) per share - basic||$ (5.44)||$ 4.28||n.m.|
|Net income (loss) per share - diluted||$ (5.44)||$ 4.27||n.m.|
|Stockholders' equity||$ 8,876||$ 9,832||(9.7) %|
|Stockholders' equity per common share outstanding||$ 15.03||$ 18.94||(20.6) %|
|Revenue passengers carried (000s)||54,088||134,056||(59.7) %|
|Revenue passenger miles (RPMs) (in millions)5353) A revenue passenger mile (RPM) is one paying Passenger flown one mile. Also referred to as “traffic,” which is a measure of demand for a given period.||54,221||131,345||(58.7) %|
|Available seat miles (ASMs) (in millions)5454) 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.||103,456||157,254||(34.2) %|
|Passenger load factor5555) Passenger load factor is RPMs 34 divided by ASMs 26 .||52.4 %||83.5 %||(31.1) pts.|
|Passenger revenue yield per RPM (cents)5656) Calculated as Passenger revenue divided by RPMs 34 . 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.||14.14||15.82||(10.6) %|
|Operating revenue yield per ASM (cents)5757) Calculated as operating revenues divided by ASMs 26 . 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.||8.75||14.26||(38.6) %|
|Operating expenses per ASM (cents)5858) Calculated as operating expenses divided by ASMs 26 . Also referred to as “unit costs” or “costs 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.||12.43||12.38||0.4 %|
|Aircraft at end of period5959) Includes 32 Boeing MAX 737 aircraft in long-term storage as of Dec. 31, 2020. Includes 60 Boeing 737 Next Generation aircraft removed from the active fleet and remaining in long-term storage as of Dec. 31, 2020.||718||747||(3.9) %|
|Average age of fleet||12||12||Not Reported|
|Active, full-time equivalent Employees at year-end6060) Active, full-time equivalent Employees as of Dec. 31 for specific calendar year. Included 10,421 Employees participating in the Extended Emergency Time Off program as of Dec. 31, 2020.||56,537||60,767||(7.0) %|
|Year ended December 31,||2020|
|Net loss, as reported||$ (3,074)|
|Deduct: Payroll support and voluntary Employee programs, net||(967)|
|Deduct: Contracts settling in the current period, but for which losses were reclassified from Accumulated Other Comprehensive Income (AOCI)||(25)|
|Deduct: Gain from aircraft sale-leaseback transactions||(222)|
|Add: Impairment of long-lived assets||32|
|Add: Mark-to-market impact from fuel contracts settling in current and future periods||40|
|Add: Mark-to-market impact from interest rate swap agreements||28|
|Add: Post-retirement curtailment charge||53|
|Add: Net loss tax impact of special items, excluding GAAP to Non-GAAP tax rate difference6262) 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. The Non-GAAP tax rate considers the appropriate tax treatment for special items and also reflects the anticipated benefit of carrying back full-year 2020 net losses to claim tax refunds against previous cash taxes paid relating to tax years 2015 through 2019, some of which were at higher rates than the current year. The impact to Net loss may not be equivalent to the special item multiplied by the effective tax rate, in all cases.||376|
|Add: GAAP to Non-GAAP tax rate difference6363) Adjustment related to GAAP and Non-GAAP tax rate differences, primarily due to the Payroll Support Program proceeds being excluded as a special item.||247|
|Net loss, excluding special items||$ (3,512)|