Tag Archives: Southwest Airlines

SWAPA lists the reasons why it is picketing Southwest Airlines

Mission Statement:

The Southwest Airlines Pilots Association (SWAPA) is the union of Southwest Airlines Pilots with the mission of unifying, negotiating, and advocating for safety and security, career enhancement through collective bargaining, demanding contract compliance and job protection, and being the outspoken voice of all Southwest Airlines pilot interests to all audiences while also providing exceptional 24/7 representation and support to the pilots we represent.

Approximately 1,300 off-duty SWAPA pilots held an informational picket line at Dallas’ Love Field terminal yesterday. The union is concerned about poor working conditions as the pilot shortage lingers.

The union has listed the reasons for its concerns in this dramatic poster:

Southwest Airlines aircraft photo gallery:

 

Southwest Airlines announces four new routes

Southwest Airlines today extended its flight schedule through January 4, 2023.

In the newly released extension of the flight schedule, Southwest will offer new nonstop service between:

San Jose, Calif., and Palm Springs, daily except on Saturdays, beginning Nov. 6, 2022;
Nashville and Long Beach, Calif., once daily, beginning Nov. 6, 2022;
Nashville and Steamboat Springs (Hayden), Colo., only on Saturdays, beginning Dec. 17, 2022; and
Colorado Springs and San Diego, on select peak travel days from late November through early January.

Southwest aircraft photo gallery:

Southwest Airlines releases a leadership book

Southwest Airlines is celebrating more than 50 years of putting People first by releasing a one-of-a-kind Leadership book, “Leading with Heart: Living & Working the Southwest Way.” Starting today, Southwest® fans can purchase this unique book, highlighting Living & Working the Southwest Way as a set of fun and engaging Leadership tenets.

This special book represents the Company’s unique approach to Leadership, business, and life, based on more than five decades of insights from Founder Herb Kelleher, as well as President Emeritus Colleen Barrett, Executive Chairman of the Board and former Chief Executive Officer Gary Kelly, Chief Executive Officer Bob Jordan, President & Chief Operating Officer Mike Van de Ven, and many others.

“Our beloved Founder, Herb Kelleher, described Southwest’s take on Leadership best when he said, ‘We think everybody is a Leader no matter what their job is. They’re setting an example by their conduct, and they should be inspirational.’ In other words, everyone has the innate ability to be a positive influence in the lives of those around them, and we want to foster and nurture those qualities,” said Gary Kelly, Executive Chairman of the Board and former Chief Executive Officer for Southwest Airlines. “The intention of this book is about sharing the unique Southwest approach to Leadership.”

As Southwest turns 51 years old this week, the Company celebrates its legacy of Leadership with the release of “Leading with Heart” to give readers a “behind-the-curtain” view into the beginnings of the Company’s unique Culture and how it’s maintained by the carrier’s Employees. This Fun-LUVing book is full of meaningful lessons and interesting anecdotes from Leaders throughout Southwest’s rich history to help readers find useful insights for their workplaces and daily lives. It features a special foreword by Executive Chairman of the Board and former Chief Executive Officer Gary Kelly and it’s endorsed by authors Patrick Lencioni, Dave Ramsey, and Ken Blanchard, as well as by Coach Lou Holtz and Brian Brim, Ed.D.

“Leading with Heart” is the second of two exclusive books Southwest published to commemorate the Company’s colorful history and impactful legacy. The first is “50 Years. One Heart.”—a coffee-table book showcasing 50 important objects and artifacts accompanied by short stories from Southwest’s history—released last December.

“Leading with Heart: Living & Working the Southwest Way” is now available at Southwest® The Store.

About “Leading with Heart: Living & Working the Southwest Way”

  • Hardcover chapter book
  • 6 x 9 inches
  • 208 pages
  • Available exclusively at Southwest The Store for $20 (plus tax and shipping)
  • Represents Southwest Airlines guide to Leadership, business, and life, based on insights from Founder Herb Kelleher, as well as President Emeritus Colleen Barrett, Executive Chairman and former Chief Executive Officer Gary Kelly, Chief Executive Officer Bob Jordan, President & Chief Operating Officer Mike Van de Ven, and other impactful Southwest Leaders past and present
  • Features a special foreword by Executive Chairman of the Board and former Chief Executive Officer Gary Kelly
  • Endorsed by authors Patrick Lencioni, Dave Ramsey, and Ken Blanchard, as well as by Coach Lou Holtz and Brian Brim, Ed.D.
  • Great for Southwest fans, leaders, businesspeople, and higher-education students
  • The second of two books released in celebration of Southwest’s more than 50 years of service

Southwest Airlines invests in sustainable aviation fuel project

Southwest Airlines has announced an investment into SAFFiRE Renewables, LLC (SAFFiRE), a company formed by D3MAX, LLC (D3MAX), as part of a Department of Energy (DOE)-backed project to develop and produce scalable, sustainable aviation fuel (SAF). Funded with a DOE grant matched by Southwest’s investment, SAFFiRE is expected to utilize technology developed by the DOE’s National Renewable Energy Laboratory (NREL) to convert corn stover, a widely available waste feedstock in the U.S., into renewable ethanol that then would be upgraded into SAF.

In 2021, the DOE awarded D3MAX the only pilot-scale grant for SAF production, with a goal to scale technology that could commercialize SAF. According to NREL, this could produce significant quantities of cost-competitive SAF that could provide an 84 percent reduction in carbon intensity compared to conventional jet fuel on a lifecycle basis.  Southwest’s match of the DOE’s grant supports phase one of the project, which is expected to include technology validation, preliminary design, and a business plan for a pilot plant.

“SAF is critical for decarbonizing the aviation sector,” said Bob Jordan, Chief Executive Officer at Southwest®. “This is a unique opportunity to invest in what we believe could be game-changing technology that could facilitate the replacement of up to approximately five percent of our jet fuel with SAF by 2030, with the potential to significantly continue to scale beyond the decade. This first-of-its-kind investment is another step we are taking to address our environmental impact, and it also supports our efforts to partner with organizations and government entities to help our industry reach the goal of carbon neutrality by 2050.”

In 2021, Southwest set a near-term goal to maintain carbon neutrality to 2019 levels while continuing to grow its operations, part of which includes replacing 10 percent of its total jet fuel consumption with SAF by 2030.

In addition to complementing Southwest’s SAF goals and broader environmental sustainability efforts, this project supports the federal government’s climate strategy, including an ambition for three billion gallons of SAF by 2030 through the SAF Grand Challenge.

“The Department of Energy is committed to turning our ambitious aviation decarbonization goals into realities through strong partnerships across the airline industry,” said U.S. Deputy Secretary of Energy David Turk. “Moving cutting-edge technology advances in sustainable aviation to production scale will save money, reduce carbon emissions, and reshape the future of the airline travel for the benefit of American consumers.”

The pilot project is intended to validate the commercialization of this corn-stover-to-ethanol technology, which could lead to a follow-up phase. If phase one is successful, DOE and Southwest would have the opportunity to fund a second phase investment for the design, fabrication, installation, and operation of a pilot plant producing renewable ethanol utilizing technology developed by D3MAX and NREL. In phase two, the renewable ethanol is planned to be upgraded into SAF by LanzaJet, Inc., at its biorefinery currently under construction in Soperton, Georgia.

“We are extremely excited to be working with Southwest Airlines—they will be a great investor,” said Mark Yancey, CEO of SAFFiRE. “SAFFiRE technology is expected to produce lower carbon SAF compared to conventional jet fuel on a lifecycle basis, which could become carbon negative with process improvements and carbon capture. If we are successful in developing and commercializing this technology, we project the technology can produce 7.5 billion gallons per year of SAF by 2040.”

“NREL is thrilled to contribute its research and development expertise in biofuels to this exciting collaboration with Southwest Airlines, D3MAX, and DOE to potentially bring SAF to the market quickly and economically,” said Adam Bratis, Associate Laboratory Director of BioEnergy Sciences & Technology at NREL.

Southwest is one of the most honored airlines in the world and remains focused on promoting a healthier planet, but the Company can’t accomplish that alone. As described in its 10-Year Environmental Sustainability Plan, Southwest’s plans to reduce, replace, offset, and partner are important next steps in the journey to build a holistic approach to improve its environmental sustainability. Learn more about these efforts by visiting swa.is/planetplan.

Southwest’s Focus on Environmental Sustainability

  • In October 2021 established a plan of action to reduce Southwest’s carbon emissions intensity by at least 20 percent by 20301 and maintain carbon neutral growth every year through the end of the decade.
  • Announced multiple offtake agreements and memoranda of understanding with sustainable aviation fuel producers.
  • In October 2021, Southwest announced the first U.S.-based carbon offset option where individual customers can contribute towards offsetting Southwest’s carbon emissions.2
  • Joined the Vision 2045 campaign, a collaboration among multiple organizations and companies to share films and resources that aim to inspire businesses and people to take action toward a more sustainable future. Southwest content showcased how the Company is making sustainability a priority through a series of near-term actions and long-term goals.
  • Launched opportunities for Southwest® Business Customers to support and advance sustainability initiatives within their corporate travel portfolios.
  • Committed $10 million to Yale University’s Center for Natural Carbon Capture to research technological advancements and find new solutions to reduce net greenhouse gas emissions.
  • Joined the Aviation Climate Taskforce, a new nonprofit founded with a goal to tackle the challenges of reducing carbon emissions in aviation.

1. As compared to 2019, includes scope 1 and 2 emissions and the use of sustainable aviation fuel, and excludes the use of carbon offsets
2. All offsets will be retired in the name of Southwest Airlines Co. Terms and conditions apply.

Southwest Airlines aircraft photo gallery:

Southwest to spend two billion dollars in planned investments to improve the passenger experence

Southwest Airlines, today awarded the 2022 J.D. Power Award for Highest Customer Satisfaction among Economy carriers in North America, announces next steps in its plan to bring the next generation of Customer Experience in travel with Southwest Airlines®, through more than two billion dollars in planned investments. These initiatives are designed to enhance and simplify Customers’ journeys—from booking trips, to traveling through airports, and while inflight—delivering an even more enjoyable, efficient, and productive Customer Experience.

On the ongoing journey to modernize the Customer Experience, Southwest revealed commitments to:

  • Bring enhanced WiFi connectivity onboard aircraft;
  • Install latest-technology onboard power ports to charge personal devices at every seat;
  • Offer larger overhead bins with more space and easier access to carryon items;
  • Launch a new fare category with added flexibility and value, Wanna Get Away PlusTM;
  • Introduce more entertainment options and a wider selection of refreshments in the cabin; and,
  • Enable new self-service capabilities to bring elevated ease in doing business with Southwest, benefiting Employees and Customers.

“You can never stop working to get better, and as our beloved Founder Herb famously said, ‘If you rest on your laurels, you’ll get a thorn in your butt!’ We have a long and proud history of offering Legendary Customer Service and warm Hospitality, and we have bold plans and significant investments to modernize and enhance the Southwest Experience,” said Bob Jordan, Chief Executive Officer. “As we continue to welcome back loyal Customers and win new ones, these initiatives, combined with the best People in the industry, support our Purpose of connecting People to what’s most important in their lives through friendly, reliable, and low-cost air travel.”

Commitment to Connectivity

“Top of our list is giving our Customers reliable connections in the air to those things that are important and accessible to them on the ground,” said Ryan Green, Senior Vice President and Chief Marketing Officer. “We’re investing in our onboard connectivity and bandwidth available to each Customer with upgraded technology that’s now installing across our existing fleet, a strategy to diversify our WiFi vendors on upcoming aircraft deliveries, and plugging Southwest Customers into in-seat power to keep them charged while in the air.”

  • Southwest is upgrading WiFi equipment on its existing fleet with longstanding connectivity provider Anuvu’s latest-generation hardware capable of providing a significant improvement in speed and bandwidth up to 10 times the current hardware onboard.
  • Plans are for the Anuvu latest-generation hardware to be onboard 50 in-service aircraft by the end of May, with a projected 350 aircraft upgraded by the end of October.
  • Testing the upgraded WiFi equipment is now underway on some routes over the western mainland U.S. As part of the test, Southwest is offering free WiFi to all Customers on select flights to understand how the upgraded equipment performs with a large number of Customers using the equipment simultaneously.
  • Alongside its relationship with legacy connectivity provider Anuvu, Southwest recently entered into an agreement with industry-leading satellite connectivity provider Viasat to provide high quality internet and live television programming onboard newly delivered aircraft beginning in the fall of this year.

Southwest pioneered gate-to-gate connectivity in 2010, becoming the first major airline in the United States to offer satellite-based connectivity on domestic flights. The first generation technology brought free live TV, streamed on individual devices. The airline continues to heavily invest in its WiFi product aimed to meet Customers’ connectivity expectations.

Leaping to the Latest In-Seat Power

Southwest plans to install latest-generation onboard USB A and USB C power ports on every seat in the aircraft, with a space-saving system that will not compromise legroom. The airline plans to bring this new convenience and capability onboard 737 MAX aircraft beginning in early 2023.

“The ability to keep your devices charged while you are connected inflight is a request that we’ve heard consistently in ongoing conversations with our Customers,” said Tony Roach, Vice President of Customer Experience and Customer Relations. “With so much that our Customers love about doing business with Southwest, we’re constantly listening to our Employees and our Customers for improvement opportunities, and we’re excited to share some additional news and updates on this ongoing work.”

Wait…there’s more!

  • Bin here, bin there: Alongside its famous “Bags Fly Free” promise that provides every Customer onboard a Southwest flight the option to check two bags for free (weight and size limitations apply), the carrier is making room in the cabin for carryon items with larger overhead bins that also bring easier access to store and retrieve luggage onboard. The larger overhead bins will be on aircraft deliveries beginning early next year.
  • Online, not in line: New functionality for the carrier’s digital platforms and airport kiosks give Customers the ability to handle common requests and help them move more efficiently from curb to gate. By late summer 2022, Customers will be able to purchase Upgraded Boarding A1-A15 positions (when available) on their mobile devices without standing in line at the airport. Also on the horizon, an ability to add lap child travelers when booking online, and the airline recently added lap child check-in at self-service kiosks. Introducing more self-service options builds on the carrier’s effort to reduce wait times with improved and simplified online change functionality; recent improvements have reduced the need for Customers to call to make flight changes, and subsequently reduced hold times to allow Southwest Representatives more availability for specialized Hospitality and Customer Service.
  • More flexibility takes flight: The carrier’s previously announced additional fare, Wanna Get Away Plus, is expected to become available to Customers later this month, bringing a new ability to transfer travel funds1 and to confirm a same-day change2 to an available seat on a different flight between the same origin and destination, without a change in base fare. Southwest also offers a wide variety of accepted payment methods, and provides My Account information in mobile friendly views across the carrier’s digital platforms.
  • Mixing it up: Adding to an expansive beverage selection featuring a number of alcohol options, additional refreshment offerings will begin this summer with a Bloody Mary Mix, followed by a ready-to-drink cocktail in September, alongside new options of Hard Seltzer, and Rosé.3 Southwest also will enhance its inflight entertainment portal to more than double the number of free movies currently available by end of year and coming late May will update the flight tracker to provide 3-D views that offer aircraft information and customized destination guides based on your flight itinerary.

Southwest Airlines aircraft photo gallery (current livery):

 

Southwest reports a net loss of $278 million in the first quarter

Southwest Airlines Company today reported its first quarter 2022 financial results:

  • Net loss of $278 million, or $0.47 loss per diluted share
  • Excluding special items1, net loss of $191 million, or $0.32 loss per diluted share
  • Operating revenues of $4.7 billion, down 8.8 percent compared with first quarter 2019
  • Cash provided by operations of $1.1 billion
  • Liquidity2 of $16.7 billion, well in excess of debt outstanding of $10.7 billion

Bob Jordan, Chief Executive Officer, stated, “While the impact from the Omicron variant in January and February disrupted our anticipated profit recovery in first quarter 2022, we returned to strong profitability in March 2022 on surging travel demand. First quarter 2022 operating revenues per available seat mile (RASM, or unit revenues) increased slightly compared with first quarter 2019, representing our first quarterly RASM increase relative to respective 2019 levels since the pandemic began. Our operational performance improved during February and March 2022 following acute staffing challenges experienced in January due to the Omicron variant. We have made great progress against our hiring plans for this year, increasing our headcount by approximately 3,300 in first quarter 2022, alone, net of attrition. We remain intensely focused on our hiring and training efforts as we work diligently to restore our network and position the Company for future growth. While we are experiencing inflationary pressure from higher jet fuel prices, our fuel hedge is providing significant protection against rising oil prices.

“Based on current plans and expected continued strong bookings, we continue to expect to be solidly profitable for the remaining three quarters of this year, and for full year 2022. Barring any unforeseen events and based on current trends, and despite higher fuel prices and managed business revenues and available seat miles (ASMs, or capacity) remaining below pre-pandemic levels, we expect solid second quarter 2022 profits and operating margins, excluding special items3.

“As we focus on the basics, our priorities for 2022 are clear: getting properly staffed and returning to historic operational reliability; restoring our Customer Service advantage; growing our fleet with The Boeing Company’s (Boeing) most-modern, fuel-efficient 737 aircraft; adding flights and restoring our network, especially on shorter-haul business routes; investing in enabling technologies for enhanced efficiencies; and producing consistent quarterly profits. Among our primary goals is to return to
pre-pandemic levels of productivity as we plan to restore the majority of our route network and better optimize our operations by the end of next year. I am grateful to our People for continuing to demonstrate their resilience and superb Teamwork after more than two years of managing through the pandemic. While it has been an incredibly challenging period, we are greatly encouraged by the progress we are making and believe we are well-positioned for future growth and long-term success with our point-to-point network, low cost and low fare business model, industry-leading balance sheet, and the best Employees and Leadership Team in the industry.”

Guidance and Outlook:
The following tables introduce or update selected financial guidance for second quarter 2022 and full year 2022, as applicable:

 

2Q 2022 Estimation

Operating revenue compared with 2019 (a)

Up 8% to 12%

Load factor

~85%

ASMs compared with 2019

Down ~7%

Economic fuel costs per gallon1,4

$3.05 to $3.15

Fuel hedging premium expense per gallon

$0.05

Fuel hedging cash settlement gains per gallon

$0.61

ASMs per gallon (fuel efficiency)

76 to 78

CASM-X (b) compared with 2019 5

Up 14% to 18%

Debt repayments (millions)

~$20

Interest expense (millions)

~$90

 

 

 2022 Estimation

Previous estimation

ASMs compared with 2019 (c)

Down ~4%

No change

Economic fuel costs per gallon1,4

$2.75 to $2.85

$2.25 to $2.35

Fuel hedging premium expense per gallon

$0.04

$0.05

Fuel hedging cash settlement gains per gallon

$0.54

$0.28

CASM-X (b) compared with 2019 5

Up 12% to 16%

No change

Debt repayments (millions)

~$650

~$455

Interest expense (millions)

~$360

No change

Aircraft (d)

814

No change

Effective tax rate (e)

24% to 26%

23% to 25%

Capital spending (billions) (f)

~$5.0

No change

(a) The Company believes that operating revenues compared with 2019 is a relevant measure of performance due to the significant impacts in 2020 and 2021 from the pandemic.
(b) Operating expenses per available seat mile, excluding fuel and oil expense, profitsharing, and special items.
(c) While the Company’s flight schedule remains published for sale through November 5, 2022, the Company recently adjusted its published flight schedules for June through August 2022 to provide additional buffer to the operation in light of continued available staffing challenges headed into the busy summer travel season. The Company will continue to monitor staffing trends, along with booking and cancellation trends, and adjust capacity, as needed. As such, the Company’s actual flown capacity may differ from currently published flight schedules or current guidance.
(d) Aircraft on property, end of period; net of 22 retirements planned in the remaining three quarters of 2022. Reflects all exercised activity as of April 28, 2022 and the assumption that the Company exercises all 12 remaining 2022 options. The delivery schedule for the Boeing 737-7 (-7) is dependent on the Federal Aviation Administration (“FAA”) issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct.
(e) The Company’s estimated effective tax rate increased due to the tax impact related to the extinguishment of $164 million in principal of its convertible notes for a cash payment of $230 million, which occurred in first quarter 2022. The loss on partial extinguishment of convertible notes is largely disallowed as a deduction for tax purposes.
(f) Represents current contractual payments to Boeing for firm aircraft and the assumptions that the Company exercises all
12 remaining 2022 options, in addition to ~$900 million non-aircraft capital spending. Excluding any further option exercises, the Company’s 2022 capital spending would be ~$4.2 billion, also including ~$900 million in non-aircraft capital spending.

Revenue Results and Outlook:

  • First quarter 2022 operating revenues decreased 8.8 percent to $4.7 billion, compared with first quarter 2019—in line with the Company’s previous guidance
  • First quarter 2022 RASM increased 0.4 percent driven primarily by a passenger yield increase of 1.1 percent, partially offset by a load factor decrease of 4.0 points, all compared with first quarter 2019
  • March 2022 operating revenues increased compared with March 2019—which represented the first monthly operating revenues increase relative to respective 2019 levels since the pandemic began—driven primarily by a significant improvement in passenger yields

The Company was encouraged by the sharp rebound in revenue trends in March 2022, despite $430 million of headwinds experienced during first quarter 2022. Approximately $380 million of the operating revenue headwinds related to softness in bookings and increased passenger cancellations in January and February 2022 associated with the Omicron variant, which is higher than the Company’s previous estimate of $330 million. In addition, the Company’s flight cancellations in January 2022 due to available staffing challenges—exacerbated by weather—resulted in a $50 million negative impact to operating revenues, as previously estimated. The Company’s first quarter 2022 revenue performance from its loyalty program was strong and included incremental revenue from its new co-brand credit card agreement, as expected. First quarter 2022 managed business revenues decreased 55 percent, compared with first quarter 2019. March 2022 managed business revenues decreased 36 percent compared with March 2019, outperforming the Company’s previous guidance of down approximately 40 percent, driven by an increase in business passengers and yields and boosted by its participation in Global Distribution System (GDS) platforms. Despite March 2022 managed business passengers and revenues below March 2019 levels, managed business fares exceeded March 2019, representing the first monthly increase relative to respective 2019 levels since the pandemic began.

Thus far in April, the Company continues to experience strong leisure bookings for spring and summer travel and improving managed business revenue trends broadly across the network. The Company currently expects April 2022 managed business revenues to decrease approximately 30 percent, compared with April 2019, and currently expects continued sequential improvement in May and June 2022, compared with their respective 2019 levels. The Company remains optimistic about the return of business travel demand in 2022 based on the renewed momentum experienced in March and April 2022. The Company is looking forward to the expected launch of its new Wanna Get Away PlusTM fare product in second quarter 2022, and, expects to continue with the rollout of its portfolio of revenue initiatives as outlined at the Company’s Investor Day in December 2021.

Fuel Costs and Outlook:

  • First quarter 2022 fuel costs were $2.30 per gallon—in line with the Company’s previous guidance—and included $0.06 per gallon in premium expense and $0.52 per gallon in favorable cash settlements from fuel derivative contracts
  • First quarter 2022 fuel efficiency improved 2.6 percent compared with first quarter 2019 due to more Boeing 737 MAX (MAX), the Company’s most fuel-efficient aircraft, in the fleet
  • As of April 21, 2022, the fair market value of the Company’s fuel derivative contracts settling in second quarter 2022 through the end of 2024 was an asset of approximately $1.4 billion

The Company’s fuel hedge is providing excellent protection against rising energy prices and significantly offset the market price increase in jet fuel in first quarter 2022. The Company’s current fuel derivative contracts contain a combination of instruments based in West Texas Intermediate and Brent crude oil; however, the economic fuel price per gallon sensitivities4 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of April 21, 2022.

 

Estimated economic fuel price per gallon,
including taxes and fuel hedging premiums

Average Brent Crude Oil
price per barrel

2Q 2022

2H 2022

$80

$2.50 – $2.60

$2.40 – $2.50

$90

$2.70 – $2.80

$2.55 – $2.65

Current Market (a)

$3.05 – $3.15

$2.75 – $2.85

$110

$3.10 – $3.20

$2.95 – $3.05

$120

$3.25 – $3.35

$3.15 – $3.25

$130

$3.45 – $3.55

$3.45 – $3.55

     

Fair market value

$295 million

$468 million

Estimated premium costs

$26 million

$26 million

(a) Brent crude oil average market prices as of April 21, 2022, were approximately $107 and $102 per barrel for second quarter 2022 and second half 2022, respectively.

In addition, the Company is providing its maximum percentage of estimated fuel consumption6 covered by fuel derivative contracts in the following table:

Period

Maximum fuel hedged percentage

2022

63% (a)

2023

37% (b)

2024

17% (b)

(a) Based on the Company’s available seat mile plans for full year 2022. The Company is currently 63 percent hedged for second quarter 2022 and 60 percent hedged for second half 2022.
(b) Due to uncertainty regarding available seat mile plans in future years, the Company believes that providing the maximum percentage of fuel consumption covered by derivative contracts in 2023 and 2024 relative to 2019 fuel gallons consumed is a more relevant measure for future coverage.

Non-Fuel Costs and Outlook:

  • First quarter 2022 operating expenses increased 4.3 percent to $4.8 billion, compared with first quarter 2019
  • First quarter 2022 operating expenses, excluding fuel and oil expense, profitsharing, and special items, increased 7.0 percent compared with first quarter 2019
  • First quarter 2022 operating expenses per available seat mile, excluding fuel and oil expense, profitsharing, and special items (CASM-X), increased 17.9 percent compared with first quarter 2019—at the lower end of the Company’s previous guidance range
  • The Company accrued $37 million of profitsharing expense in first quarter 2022, as the Company currently expects to be profitable for full year 2022

The Company’s first quarter 2022 CASM-X increase was primarily due to continued unit cost headwinds from operating at suboptimal productivity levels, inflation in labor rates and airport costs, and $127 million of additional salaries, wages, and benefits expense as a result of incentive pay offered to the Company’s Operations Employees through early February 2022 in an effort to address available staffing challenges related to the Omicron variant. The Company’s first quarter 2022 incentive pay was lower than its previous estimation of $150 million, which, combined with favorable airport settlements and better operational performance in March 2022, drove the Company’s first quarter 2022 CASM-X to the lower end of its previous guidance range.

Based on current cost trends, the Company expects second quarter 2022 CASM-X5 to increase in the range of 14 percent to 18 percent compared with second quarter 2019, due to labor rate inflation across all workgroups; inflation in airport costs; and headwinds from operating at suboptimal productivity levels. The Company continues to experience higher unit cost inflation as it continues to navigate the pandemic recovery and capacity levels remain muted due to available staffing challenges. The Company’s second quarter 2022 published flight schedules include increased short-haul trips in business markets to support the anticipated increase in business travel, relative to its first quarter 2022 flight schedules. Compared with respective 2019 levels, the increase in short-haul trips is expected to drive a sequential 5-point decrease in average stage length from first quarter 2022 to second quarter 2022, adding further pressure to second quarter 2022 CASM-X. Based on current second half 2022 capacity plans, the Company currently expects CASM-X trends to ease sequentially from first half 2022 to second half 2022, but remain elevated above its longer-term expected run rate as the Company scales and better optimizes its network and operations.

Fleet and Capital Spending:
The Company ended first quarter 2022 with 722 Boeing 737 aircraft, compared with the Company’s previous guidance of 725 aircraft, due to three scheduled aircraft deliveries planned in first quarter 2022 shifting to later in 2022. As expected, the Company retired five owned Boeing 737-700 (-700) aircraft, and returned one leased -700 aircraft during first quarter 2022. As of March 31, 2022, four -700 aircraft remained in temporary storage due to first quarter and second quarter 2022 capacity remaining below respective 2019 levels. The Company continues to expect to retire a total of 28 -700 aircraft in 2022.

During first quarter 2022, the Company exercised 15 Boeing 737-8 (-8) options for delivery in 2022 and 12 Boeing -7 options for delivery in 2023. In April 2022, due to the current status of the -7 certification, the Company converted 40 2022 -7 firm orders into 2022 -8 firm orders, moved one 2022 -7 firm order into 2023, and accelerated one 2023 -8 option into 2022. In April 2022, the Company also exercised 16 -8 options for delivery in 2022; exercised 2 -7 options for delivery in 2023; accelerated and exercised 10 2023 -8 options into 2022; and shifted 10 2022 MAX firm orders into 2023, which are reflected as -7 firm orders in the Company’s updated order book.

The Company’s first quarter 2022 capital expenditures were $510 million driven primarily by aircraft-related capital expenditures, as well as technology, facilities, and operational investments. The Company continues to estimate its 2022 capital spending to be approximately $5.0 billion, which assumes the exercise of its 12 remaining 2022 options7 and remains unchanged despite the shift of -7 firm orders to -8 firm orders as the Company contemplated various scenarios in its 2022 plan. The Company’s 2022 capital spending guidance continues to include approximately $900 million in non-aircraft capital spending. The following tables provide further information regarding the Company’s delivery schedule and compare its delivery schedule as of April 28, 2022, with its previous delivery schedule as of December 31, 2021.

New 737 Delivery Schedule as of April 28, 2022:

 

The Boeing Company

 
 

-7 Firm Orders

-8 Firm Orders

-7 or -8 Options

Total

2022

                         21

                         81

                         12

                       114

2023

                         77

                         —

                         13

                         90

2024

                         30

                         —

                         56

                         86

2025

                         30

                         —

                         56

                         86

2026

                         15

                         15

                         40

                         70

2027

                         15

                         15

                          6

                         36

2028

                         15

                         15

                         —

                         30

2029

                         20

                         30

                         —

                         50

2030

                         15

                         45

                         —

                         60

2031

                         —

                         10

                         —

                         10

 

                       238

                       211

                       183

                       632

(a) The delivery schedule for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct.
(b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract.

 Previous 737 Delivery Schedule as of December 31, 2021 (a):

The Boeing Company

 

-7 Firm Orders

-8 Firm Orders

-7 or -8 Options

Total

2022

                         72

                         —

                         42

                       114

2023

                         52

                         —

                         38

                         90

2024

                         30

                         —

                         56

                         86

2025

                         30

                         —

                         56

                         86

2026

                         15

                         15

                         40

                         70

2027

                         15

                         15

                          6

                         36

2028

                         15

                         15

                         —

                         30

2029

                         20

                         30

                         —

                         50

2030

                         15

                         45

                         —

                         60

2031

                         —

                         10

                         —

                         10

 

                       264

                       130

                       238

                       632

(a) The ‘Previous 737 Delivery Schedule’ is for reference and comparative purposes only. It should no longer be relied upon. See ‘New 737 Delivery Schedule’ for the Company’s current aircraft order book.

 Liquidity and Capital Deployment:

  • The Company ended first quarter 2022 with approximately $15.7 billion in cash and short-term investments and a fully available revolving credit line of $1.0 billion
  • The Company had a net cash position8 of $5.0 billion, and adjusted debt9 to invested capital (leverage) of 56 percent as of March 31, 2022
  • As of March 31, 2022, the Company had unencumbered assets with an estimated value of more than $11.0 billion, including aircraft value estimated in the range of $9.0 billion to $9.5 billion, and approximately $2.0 billion in non-aircraft assets such as spare engines, ground equipment, and real estate
  • The Company paid approximately $323 million during first quarter 2022 to retire debt and finance lease obligations, including the extinguishment of $164 million in principal of the Company’s convertible notes for a cash payment of $230 million, and the extinguishment of $30 million in principal of its 5.125% Notes due 2027 for a cash payment of $34 million, as well as $59 million in scheduled debt payments
  • The Company had current and non-current debt obligations of $10.7 billion as of March 31, 2022
  • The Company’s first quarter 2022 cash provided by operations was $1.1 billion

Awards and Recognitions:

  • Named to FORTUNE’s list of World’s Most Admired Companies; ranked #28
  • Named the #3 U.S. airline in the Wall Street Journal’s annual ranking for 2021
  • #2 Marketing Carrier in Customer Satisfaction per the U.S. Department of Transportation10
  • Named the top domestic airline for customer service by the 2022 Elliot Readers’ Choice Customer Service Awards
  • Named to Glassdoor’s Best Places to Work list for the 13th consecutive year
  • Designated a 2022 Military Friendly Company by Viqtory
  • Named as A Best Place To Work For LGBTQ+ Equality from the Human Rights Campaign Foundation
  • Designated one of the Best Companies for Latinos to Work 2022 by Latino Leaders Magazine
  • Recognized by Comparably as one of the “Best Places to Work 2022: Dallas Metropolitan Area”

Environmental, Social, and Governance (ESG):

  • On Earth Day, April 22, 2022:
    • Published the Company’s annual integrated corporate social responsibility and environmental sustainability report—the Southwest Airlines One Report—a comprehensive, integrated report that includes information on the Company’s Citizenship efforts and key topics including People, Performance, and Planet, along with reporting guided by the Global Reporting Initiatives (GRI) Standards, Sustainability Accounting Standards Board (SASB), and United Nations Sustainable Development Goals (UNSDG) frameworks.
    • Published the Southwest Airlines Diversity, Equity, & Inclusion Report (DEI), a companion piece to the One Report. This comprehensive report is focused on the Company’s current DEI priorities and path forward.
    • Externally highlighted the Company’s 10-year environmental sustainability plan to reduce carbon emissions intensity by at least 20 percent by 2030; maintain carbon neutrality to 2019 levels each year through the end of the decade; and replace 10 percent of total jet fuel consumption with sustainable aviation fuel by 2030—all while continuing to grow the airline.
    • Announced the opportunity for Southwest Customers to earn 20 Rapid Rewards® bonus points on every dollar spent to help Southwest offset its carbon emissions11 from April 22, 2022 through May 22, 202212.
  • Donated more than $4 million in transportation to 76 grant recipients through the carrier’s Medical Transportation Grant Program.
  • Joined the Vision 2045 campaign, a collaboration among multiple organizations and companies to share films and resources that aim to inspire businesses and people to take action toward a more sustainable future. Southwest content showcased how the Company is making sustainability a priority through a series of near-term actions and long-term goals.
  • Launched additional opportunities for Southwest® Business Customers to support and advance sustainability initiatives within their corporate travel portfolios.
  • Announced Texas Southern University (TSU) as a university partner in the airline’s First Officer development and recruitment program: Destination 225°. TSU is the first Historically Black College or University (HBCU) to join Destination 225° and provides a pathway for qualified collegiate aviators to join the Southwest Team as professional Pilots. In addition, announced Advanced Airlines and SkyWest Airlines as Destination 225° program partners.
  • Launched an internal enhancement of our Employee volunteer program, allowing Employees the opportunity to be rewarded for their volunteer service to 501(c)(3) nonprofit organizations and schools.

First Quarter 2022 Supplemental Financial Results
(unaudited)

The Company believes certain 2022 measures compared with 2019 are also relevant due to the significant impacts in 2020 and 2021 from the pandemic. Therefore, the below supplemental information is provided for reference.

As reported    
 

Three months ended March 31,

 
(in millions, except per share and unit costs)

2022

2019

Percent Change

Net income (loss)

$               (278)  

$                387

n.m.

Net income (loss) per share, diluted

$               (0.47)  

$                0.70

n.m.

Operating revenues

$              4,694   

$              5,149

(8.8)

Operating expenses

$              4,845   

$              4,644

4.3

Operating expenses, excluding Fuel and oil expense

$              3,841   

$              3,629

5.8

Operating expenses, excluding Fuel and oil expense and profitsharing

$              3,804   

$              3,541

7.4

RASM (cents)

                13.65   

                13.59

0.4

Passenger revenue yield per RPM (cents)

                15.62   

                15.45

1.1

CASM (cents)

                14.09   

                12.26

14.9

CASM, excluding Fuel and oil expense and profitsharing (cents)

                11.06   

                 9.35

18.3

Fuel costs per gallon, including fuel tax

$                2.30   

$                2.05

12.2

Revenue passengers carried (000s)

              26,029   

              31,296

(16.8)

Available seat miles (ASMs)

              34,384   

              37,885

(9.2)

Load factor

77.0 %

81.0 %

(4.0) pts.

 

Adjusted for special items    
 

Three months ended March 31,

 
(in millions, except per share and unit costs)

2022

2019

Percent Change

Net income (loss)

$               (191)  

$                387

n.m.

Net income (loss) per share, diluted

$               (0.32)  

$                0.70

n.m.

Operating revenues

$              4,694   

$              5,149

(8.8)

Operating expenses

$              4,829   

$              4,644

4.0

Operating expenses, excluding Fuel and oil expense

$              3,825   

$              3,629

5.4

Operating expenses, excluding Fuel and oil expense and profitsharing

$              3,788   

$              3,541

7.0

RASM (cents)

                13.65   

                13.59

0.4

Passenger revenue yield per RPM (cents)

                15.62   

                15.45

1.1

CASM (cents)

                14.04   

                12.26

14.5

CASM, excluding Fuel and oil expense and profitsharing (cents)

                11.02   

                 9.35

17.9

Fuel costs per gallon, including fuel tax (economic)

$                2.30   

$                2.05

12.2

Revenue passengers carried (000s)

              26,029   

              31,296

(16.8)

Available seat miles (ASMs)

              34,384   

              37,885

(9.2)

Load factor

77.0 %

81.0 %

(4.0) pts.

Southwest Airlines aircraft photo gallery:

Southwest Airlines bolsters its schedule for the summer, especially in San Diego and San Jose

Southwest Airlines  Boeing 737-800 WL N8558Z (msn 63602) BFI (Brian Worthington). Image: 957290.

Southwest Airlines added additional service to its flight schedule beginning in early June, including more options for California travel; new service for Hawaii, the Pacific Northwest, and the Caribbean also announced. New routes, additional flights, and the carrier’s flight schedule through Nov. 5, 2022, are now available.

Committed to California

Building on a 20-year legacy as the largest carrier of California air travelers, Southwest is setting forth a summer flight schedule that offers more flights in key markets up and down the Golden State, including these weekday schedules beginning June 5:

            San Diego and Sacramento – up to 20 times each way
            San Diego and San Jose – up to 20 times each way
            San Diego and Oakland – up to 14 times each way

Also on June 5, new nonstop service begins once daily between Sacramento and Santa Barbara.

The Way to San Jose

Throughout the summer, Southwest will increase service on these routes between:

            San Jose, Calif. and Las Vegas – weekday service up to 13 times a day each way
            San Jose, Calif. and Long Beach, Calif. – weekday service up to four times each way
            San Jose, Calif. and Orange County/Santa Ana, Calif. – weekday service up to 10 times each way

Northwest by Southwest

Additional access between the Pacific Northwest and the Peninsula/Silicon Valley grows with new Southwest service between San Jose, Calif. and Eugene, Ore., once daily beginning June 5and with additional flights on existing routes between:

            San Jose and Boise – weekday service twice a day each way
            San Jose and Spokane – weekday service up to twice a day each way
            San Jose and Portland, Ore. – weekday service six times a day each way
            San Jose and Seattle/Tacoma – weekday service six times a day each way

Hawaii with Heart

Recently commemorating three years of serving the Hawaiian Islands, Southwest is increasing the number of flights within the Aloha State to offer interisland service at more times of day to connect people in the islands with business, family, and fun. New, once daily service nonstop between Kahului (Maui) and Lihue (Kauai) begins June 5with additional flights offered on existing interisland routes.

Interisland Service

Beginning June 5

Beginning Sept. 5

Honolulu (Oahu) and
Kahului (Maui)

currently six times daily

Eight times each way

11 times each way

Honolulu (Oahu) and 

Hilo (Island of Hawaii)

currently four times daily

Five times each way

Honolulu (Oahu) and 

Kona (Island of Hawaii)

currently four times daily

Five times each way

Six times each way

Honolulu (Oahu) and
Lihue (Kauai)

currently four times daily

Five times each way

Six times each way

Kona (Island of Hawaii) and
Kahului (Maui)

currently once daily

Will operate twice daily June 5 through Sept. 4

Cuba Service

The carrier’s popular value in providing authorized travel between the U.S. and Cuba is available to more Southwest Customers with a tripling of service from South Florida beginning May 4, roundtrip three times daily on the carrier’s Fort Lauderdale/Hollywood—Havana route. That same week, an additional roundtrip on Saturdays begins May 7 on the Tampa, Fla.—Havana route, to complement daily roundtrip service.

Top Copyright Photo: Southwest Airlines Boeing 737-800 WL N8558Z (msn 63602) BFI (Brian Worthington). Image: 957290.

Southwest Airlines aircraft slide show:

Southwest Airlines aircraft photo gallery:

 

Southwest Airlines announces Wanna Get Away Plus™

Southwest Airlines has announced Wanna Get Away Plus™, a new fare that joins Wanna Get Away®, Anytime, and Business Select® in the Company’s fare product lineup. This fare will be available to Customers late in the second quarter of 2022.

Wanna Get Away Plus™ provides Customers even more flexibility, choice, and rewards for a modest buy-up from Wanna Get Away. In addition to the benefits offered across all our fares (2 free checked bags1, no change fees2, free TV/movies/messaging3), Wanna Get Away Plus™ offers:

  • Transferable flight credit(s), a new benefit that enables Customers to make a one-time transfer of eligible unused flight credit to a new traveler for future use.4
  • More flexibility through same-day confirmed change/same-day standby.5
  • More earning power with 8X Rapid Rewards points.

In addition, Customers who opt for a refundable Anytime or Business Select fare and our Tier Members will receive more benefits. Business Select and Anytime fares will have the same transferable flight credit benefit as Wanna Get Away Plus. Anytime fares will also gain EarlyBird Check-In6, Priority Lane7, and Express Lane8 benefits. Tier Members (A-List /A-List Preferred Customers) will now receive same-day confirmed change in addition to same-day standby9.

These changes to Business Select and Anytime will all be available to all Customers when Wanna Get Away Plus™ is available for sale in all Southwest channels.

Hear more about Wanna Get Away Plus™ and existing fare enhancements from Andrew Watterson, Executive Vice President & Chief Commercial Officer, and Jonathan Clarkson, Vice President, Marketing, Loyalty & Products.

Check out our new fare lineup:

 

Fare grid disclaimers

  1. First and second checked bags. Weight and size limits apply.
  2. If you need to change an upcoming flight itinerary, you’ll only pay the cost in fare difference.
  3. Failure to cancel a reservation at least 10 minutes prior to scheduled departure may result in forfeited funds.
  4. To receive a flight credit you must cancel your flight at least 10 minutes prior to scheduled flight departure. See My Account for flight credit expiration dates.
  5. Transferable flight credit allows you to transfer your flight credit to another person. Both must be Rapid Rewards™ Members and only one transfer is permitted. The expiration date is 12 months from the date the ticket was booked. For bookings made through a Southwest™ Business channel, there is a limitation to transfer only between employees within the organization.
  6. Same-day change/Same-day standby: For same-day changes, if there’s an open seat on a different flight on the same calendar day as your original flight and it’s between the same cities, you can book a confirmed seat on the new flight free of airline charges. If there isn’t an open seat, ask a Southwest Gate Agent to add you to the same-day standby list. If there are any government taxes and fees associated with these itinerary changes, you will be required to pay those. Your original boarding position is not guaranteed.
  7. Refundable, as long as you cancel your reservation at least ten (10) minutes prior to the scheduled departure of your flight. If you cancel, you’re eligible to receive 100% of your ticket value as a refund to your original form of payment. Southwest flight credit(s) from a previous reservation that are applied toward a Business Select or Anytime Fare will be refunded as flight credit(s). For travel booked with Rapid Rewards points, if canceled, points will be returned to the Rapid Rewards account holder who booked the ticket.
  8. Priority lane: This priority lane gets you to the front of the ticket counter faster. A-List or A-List Preferred Members already enjoy the priority lane (where available). Express lane: This security lane gets you through the security line faster. A-List or A-List Preferred Members enjoy this benefit too.
  9. EarlyBird Check-In™ means you will automatically be checked in to your flight 36 hours prior to scheduled departure. For Anytime fares purchased between 36 and 24 hours, the boarding position assignment process has begun so this may impact the boarding position assigned to you. If you purchase an Anytime fare within 24 hours of your flight’s scheduled departure, you will not receive the EarlyBird Checkin benefit. In an irregular operation situation, the boarding position is not guaranteed.
  10. Flights traveling 175 miles or less only serve water.

  1. Weight and size limits apply
  2. Fare difference may apply
  3. (Available only on WiFi-enabled aircraft. Limited-time offer. Where available. Only allows access to iMessage and WhatsApp (must be downloaded before the flight.  Due to licensing restrictions, on WiFi-enabled flights, Free Live TV and iHeartRadio may not be available for the full duration of the flight.)
  4. Both must be Rapid Rewards Members and expiration dates apply.  For bookings made through a Southwest™ Business channel, there is a limitation to transfer only between employees within the organization.
  5. If there are any government taxes and fees associated with a change to a Customer’s itinerary, the Customer will be responsible to pay those.
  6. (benefit not available if flight departure is within 24 hours of your flight’s scheduled departure)
  7. Where available.
  8. Where available
  9. (free of airline charges). If there are any government taxes and fees associated with a change to a Customer’s itinerary, the Customer will be responsible to pay those.

Southwest completes a new hangar at Denver

Southwest Airlines is celebrating the completion of a major infrastructure investment to support its long-term vision for its Denver operation with the opening of a new Technical Operations complex at Denver International Airport (DEN). The nearly three-year, $100 million, 130,000 square foot project includes a large aircraft maintenance hangar and room for offices, training, and warehousing to support the carrier’s Technical Operations Team; and represents Southwest’s® continued commitment to Denver by bringing more job opportunities to the community.

Colorado One parked inside Southwest Airlines’ Technical Operations Hangar in Denver, Colo.

The new hangar adds an important location within Southwest’s network to support scheduled, overnight maintenance of its fleet of nearly 730 Boeing 737 aircraft*. The facility includes:

  • A 130,000 square-foot hangar with offices, a training area, warehouse space, and maintenance shops;
  • Space inside the hangar for three Boeing 737s and room for eight additional 737s outdoors;
  • And serves as the new home for Southwest’s more than 100 Denver-based Technical Operations Employees.

The Technical Operations Team will begin moving into the facility in the coming weeks. The hangar joins six other Southwest Airlines® aircraft maintenance hangars located throughout the country including AtlantaChicago (Midway), Dallas (Love Field), Houston (Hobby)Orlando, and Phoenix.

Supporting More Growth at DEN

 

Southwest Airlines will begin moving into the first gates of a 16-gate expansion project on the C concourse within the next few months. Once completed, Southwest will have the ability to use up to 40 gates, the most gates it has at any airport it serves.

With the anticipated growth in the coming years, the airline is doing preliminary work to build larger spaces for its Provisioning, Ground Support Equipment, and Cargo Teams. It is also creating an expanded People Department at DEN, which will support the airline’s robust recruiting efforts. Today, the airline is one of the largest employers in the city with nearly 5,000 People based in Denver.

Southwest is making changes to its special liveries

"Illinois One" with the new colors tail

Southwest Airlines has decided to make some changes to its special liveries as older Boeing 737-700s are being phased out or repainted.

The two Boeing 737-700 retro jets in the “Desert Gold” livery (N711HK and N714CB) will be replaced with a single Boeing 737-8 MAX 8 (N871HK) and will also serve as a dedication to founder Herbert D. Kelleher.

N711HK is operating its last scheduled revenue flight today.

N714CB will operate its last revenue flight on May 15.

The Colleen Barrett Boeing 737-700 (N266WN) will be replaced with a single Boeing 737-8 MAX 8 (N872CB).

Illinois One (above) and Tennessee One (below) special liveries will be returning on Boeing 737-800s.

Top Copyright Photo: Southwest Airlines Boeing 737-7H4 WL N918WN (msn 29843) (Illinois One) FLL (Bruce Drum). Image: 104439.

Southwest Airlines aircraft slide show:

Southwest Airlines aircraft photo gallery: