Southwest Airlines Co. is a major passenger airline providing scheduled air transportation across the United States and near-international markets. Operating as a low-cost carrier, the company has built a reputation for affordable fares, customer-friendly policies, and a robust domestic route network.
Table of Contents
Company Profile
Headquartered in Dallas, Texas, Southwest serves a vast network of destinations, leveraging an all-Boeing 737 fleet to maintain operational efficiency. The company focuses on point-to-point service, primarily targeting short-haul and medium-haul routes, which differentiates it from competitors with more extensive hub-and-spoke systems. As of December 31, 2024, Southwest employed approximately 74,000 employees, with around 82% represented by labor unions, reflecting its significant workforce and commitment to employee relations.
Southwest’s mission is to connect people to what’s important in their lives through friendly, reliable, and low-cost air travel. Its vision emphasizes becoming the world’s most loved, most efficient, and most profitable airline. The company’s strategic initiatives include enhancing customer experience through innovations like assigned seating, premium seating options, and redeye flights, alongside efforts to modernize operations and improve sustainability. Southwest’s low-cost structure has historically been a competitive advantage, though it faces challenges from rising labor costs, volatile fuel prices, and regulatory changes. The company is also navigating significant transformations, such as fleet modernization and partnerships with other airlines to expand its reach, particularly for international connectivity.
Business Segments
Southwest operates as a single operating segment, providing air transportation for passengers and cargo. This integrated approach allows the company to optimize its revenue pricing and route network, leveraging its all-Boeing 737 fleet for operational flexibility. Below is a detailed breakdown of its business activities, with revenue contributions based on the financial data for the year ended December 31, 2024.
Passenger Transportation
- Description: Southwest’s core business is passenger air transportation, offering scheduled flights across the United States and select near-international markets. The company provides a range of fare products, including Wanna Get Away, Wanna Get Away Plus, Anytime, and Business Select, each tailored to different customer needs. These fares are bundled with customer-friendly policies, such as no change fees, two free checked bags, and flexible cancellation options. In 2024, Southwest introduced assigned seating and premium seating options to enhance the customer experience and align with evolving preferences. The company also launched redeye flights in February 2025 to maximize aircraft utilization and is developing vacation packages through its Getaways by Southwest platform.
- Revenue Contribution: Passenger transportation accounted for approximately 90.5% of total operating revenues, equating to $24.9 billion of the $27.5 billion total revenue in 2024.
Freight and Cargo
- Description: Southwest provides cargo transportation services, leveraging its passenger aircraft to carry freight. This segment includes the transport of goods and packages, primarily for business customers. The company’s cargo operations benefit from its extensive domestic network and reliable scheduling, though they represent a smaller portion of its revenue stream compared to passenger services.
- Revenue Contribution: Freight revenue contributed approximately 0.6% of total operating revenues, or $165 million in 2024.
Other Revenues
- Description: This segment includes ancillary services and co-brand credit card revenues. Ancillary services encompass EarlyBird Check-In, Upgraded Boarding, transportation of pets and unaccompanied minors, and inflight services like Wi-Fi, movies-on-demand, and messaging. The company also earns revenue through its Rapid Rewards loyalty program, particularly via partnerships with Chase Bank for co-branded credit cards. Other revenues also include commissions from vacation packages and advertising on Southwest’s platforms. In 2024, other revenues increased by 2.2% compared to 2023, driven by higher retail spend on co-brand credit cards.
- Revenue Contribution: Other revenues accounted for approximately 8.9% of total operating revenues, totaling $2.45 billion in 2024.
Revenue Breakup Summary (2024):
| Segment | Revenue ($ millions) | Percentage of Total Revenue |
|---|---|---|
| Passenger Transportation | 24,900 | 90.5% |
| Freight and Cargo | 165 | 0.6% |
| Other Revenues | 2,450 | 8.9% |
| Total | 27,515 | 100.0% |
Products and Services
Southwest offers a range of products and services designed to enhance the customer experience while maintaining its low-cost model. Below is a detailed list of offerings, with revenue contributions where applicable.
Fare Products
- Wanna Get Away: The lowest fare option, offering flexibility with no change fees and transferable flight credits if canceled at least 10 minutes before departure. Customers earn 6 Rapid Rewards points per dollar spent.
- Wanna Get Away Plus: A higher-tier fare with added benefits, including transferable flight credits, same-day confirmed changes without additional airline charges, and 8 Rapid Rewards points per dollar spent.
- Anytime: A refundable fare allowing same-day standby and confirmed changes without additional charges, earning 10 Rapid Rewards points per dollar spent.
- Business Select: The premium fare, offering priority boarding (A1-A15), a premium drink, 12 Rapid Rewards points per dollar spent, and refundable tickets with same-day change options.
Ancillary Services
- EarlyBird Check-In: Provides automatic check-in for better boarding positions, improving seat selection. Priced separately, it enhances the boarding experience.
- Upgraded Boarding: Allows customers to purchase priority boarding positions (A1-A15) when available, typically at the gate.
- Pet and Unaccompanied Minor Transportation: Southwest offers services for traveling with pets or unaccompanied minors, adhering to specific policies to ensure safety and comfort.
- Inflight Services: Includes free Wi-Fi messaging (via iMessage or WhatsApp), movies-on-demand (over 125 free movies monthly), live and on-demand television (13 live channels, 70 recorded episodes), and a flight tracker. In-seat power and faster Wi-Fi were introduced as part of ongoing cabin enhancements.
- Getaways by Southwest: A forthcoming vacation package platform offering customizable bundles with flights, hotels, and excursions, featuring Southwest’s no-change-fee policy and flexible cancellations.
Rapid Rewards Loyalty Program
- Description: Southwest’s loyalty program allows customers to earn points on flights and partner activities (e.g., co-brand credit cards, hotel stays, car rentals). Points are redeemable for flights, international travel on partner airlines, cruises, gift cards, and more, with no blackout dates or expiration. A-List and A-List Preferred tiers offer benefits like priority check-in, security lane access, and bonus points (25% for A-List, 100% for A-List Preferred). In 2024, 10.1 million flight awards were redeemed, accounting for 14.7% of passenger capacity.
- Revenue Impact: Loyalty program revenues are embedded in passenger and other revenues, primarily through co-brand credit card partnerships. The exact revenue from loyalty points is not isolated but contributes significantly to the $2.45 billion in other revenues.
Revenue Breakup for Products and Services
While exact revenue splits for individual fare products and ancillary services are not fully isolated, the following approximates the contributions based on the company’s revenue structure:
- Fare Products (Passenger Revenue): $24.9 billion (90.5% of total revenue), with Wanna Get Away and Wanna Get Away Plus as the largest contributors due to their affordability, followed by Anytime and Business Select.
- Ancillary Services: Approximately $1.2 billion (4.4% of total revenue), derived from EarlyBird Check-In, Upgraded Boarding, pet/unaccompanied minor fees, and inflight services.
- Loyalty Program and Co-brand Credit Cards: Approximately $1.25 billion (4.5% of total revenue), driven by Chase partnership and point redemptions.
- Freight Services: $165 million (0.6% of total revenue).
Revenue Breakup Summary (2024):
| Product/Service | Revenue ($ millions) | Percentage of Total Revenue |
|---|---|---|
| Fare Products | 24,900 | 90.5% |
| Ancillary Services | 1,200 | 4.4% |
| Loyalty Program/Co-brand Cards | 1,250 | 4.5% |
| Freight Services | 165 | 0.6% |
| Total | 27,515 | 100.0% |
Company History
Southwest Airlines Co. was incorporated in Texas and commenced customer service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities: Dallas, Houston, and San Antonio. Founded by Herbert D. Kelleher and Rollin King, the airline aimed to offer low-cost, frequent flights to democratize air travel. Initially focused on intrastate routes, Southwest expanded rapidly within Texas, capitalizing on its point-to-point model and quick turnaround times.
In the 1980s, Southwest grew beyond Texas, adding destinations like New Orleans, Albuquerque, and Phoenix, establishing itself as a low-cost leader. The 1990s saw further expansion, with the airline entering markets like California, the Midwest, and the East Coast. The acquisition of Morris Air in 1993 and the introduction of the Rapid Rewards program in 1987 (later revamped) solidified its customer-centric approach. By 2000, Southwest was a major U.S. carrier, known for its no-frills service, single aircraft type, and high-frequency flights.
The 2000s brought challenges, including post-9/11 industry downturns and rising fuel costs, but Southwest maintained profitability through cost discipline and hedging strategies. In 2011, the acquisition of AirTran Airways expanded Southwest’s network, adding international destinations like Mexico and the Caribbean. The company continued to innovate, launching Wi-Fi in 2013, modernizing its fleet with Boeing 737 MAX aircraft, and enhancing its loyalty program.
In 2020, the COVID-19 pandemic disrupted operations, prompting Southwest to extend flight credit expirations and secure federal payroll support. The company rebounded strongly, achieving record revenues of $27.5 billion in 2024. Recent strategic shifts include assigned seating, premium seating, redeye flights (launched February 2025), and airline partnerships (e.g., Icelandair in 2025). Southwest also completed a $100 million maintenance hangar expansion in Phoenix in 2024, reinforcing its operational capabilities.
Brands
Southwest operates under a single primary brand, “Southwest Airlines,” with no separate sub-brands for its services. The brand is synonymous with low-cost travel, customer-friendly policies, and a fun, approachable culture. Below are key brand-related offerings and their revenue contributions:
Southwest Airlines
- Description: The core brand encompasses all passenger and cargo services, fare products, and ancillary offerings. Southwest’s brand identity emphasizes affordability, reliability, and hospitality, reflected in policies like two free checked bags, no change fees, and open seating (transitioning to assigned seating in 2025). The brand is promoted through Southwest.com, the Southwest App, and marketing campaigns highlighting its “Transfarency” philosophy.
- Sub-components:
- Rapid Rewards: The loyalty program, a critical brand element, drives customer retention through point accumulation and redemption. It includes A-List and A-List Preferred tiers, enhancing brand loyalty.
- Getaways by Southwest: An emerging brand extension, this vacation package platform integrates flights, hotels, and excursions, leveraging Southwest’s customer-friendly policies.
- SWABIZ: A corporate booking tool for business travelers, offering streamlined reservations and reporting.
- Revenue Contribution: The Southwest Airlines brand accounts for 100% of revenues, as all services (passenger, freight, and ancillary) are marketed under this umbrella. Passenger services contribute $24.9 billion (90.5%), freight $165 million (0.6%), and other revenues (including Rapid Rewards and SWABIZ) $2.45 billion (8.9%).
Brand Revenue Breakup (2024):
| Brand Component | Revenue ($ millions) | Percentage of Total Revenue |
|---|---|---|
| Southwest Airlines | 27,515 | 100.0% |
| – Passenger Services | 24,900 | 90.5% |
| – Freight Services | 165 | 0.6% |
| – Other (Rapid Rewards, SWABIZ, etc.) | 2,450 | 8.9% |
Geographical Presence
Southwest primarily operates in the United States, with a growing presence in near-international markets. Its network spans 121 airports across 11 countries, with a focus on domestic point-to-point routes. Below is a detailed breakdown of its geographical presence and revenue contributions.
United States
- Description: Southwest serves 103 airports across the U.S., including major hubs like Dallas (Love Field), Houston (Hobby), Chicago (Midway), Denver, and Atlanta. The company’s domestic network emphasizes short-haul and medium-haul flights, with an average stage length of 761 miles in 2024. Key markets include Las Vegas, Phoenix, Baltimore, and Orlando, with redeye flights introduced in 2025 to enhance connectivity (e.g., Las Vegas to Baltimore, Los Angeles to Nashville).
- Revenue Contribution: The U.S. market accounts for approximately 95% of passenger revenue, or $23.7 billion, due to Southwest’s extensive domestic network.
Near-International Markets
- Description: Southwest serves 18 airports in 10 countries, including Mexico, the Caribbean, and Central America. Destinations include Cancun, Montego Bay, and San Jose, Costa Rica. The company’s partnership with Icelandair (launched in 2025) adds transatlantic connectivity, with plans for further airline partnerships to expand international reach.
- Revenue Contribution: Near-international markets contribute approximately 5% of passenger revenue, or $1.2 billion, reflecting their smaller but growing share.
Geographical Revenue Breakup (2024):
| Region | Revenue ($ millions) | Percentage of Passenger Revenue |
|---|---|---|
| United States | 23,700 | 95.0% |
| Near-International | 1,200 | 5.0% |
| Total Passenger Revenue | 24,900 | 100.0% |
Note: Freight and other revenues are not geographically segmented in the provided data, so they are included in the total revenue of $27.5 billion but not split by region.
Financial Statements
Below are the consolidated financial statements for Southwest Airlines Co. for the year ended December 31, 2024, presented in table format.
Consolidated Statement of Income
| (in millions, except per share amounts) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Operating Revenues | |||
| Passenger | 24,900 | 23,585 | 22,693 |
| Freight | 165 | 168 | 189 |
| Other | 2,450 | 2,401 | 1,879 |
| Total Operating Revenues | 27,515 | 26,154 | 24,761 |
| Operating Expenses | |||
| Salaries, wages, and benefits | 12,360 | 11,298 | 10,821 |
| Fuel and oil | 5,812 | 6,231 | 6,058 |
| Maintenance materials and repairs | 1,053 | 988 | 800 |
| Landing fees and airport rentals | 1,610 | 1,555 | 1,506 |
| Depreciation and amortization | 1,605 | 1,523 | 1,351 |
| Other operating expenses | 4,113 | 3,974 | 3,648 |
| Total Operating Expenses | 26,553 | 25,569 | 24,184 |
| Operating Income | 962 | 585 | 577 |
| Other Expenses (Income) | |||
| Interest expense | 462 | 469 | 501 |
| Capitalized interest | (45) | (30) | (22) |
| Interest income | (418) | (414) | (161) |
| Other (gains) losses, net | 4 | (62) | 141 |
| Total Other Expenses (Income) | 3 | (37) | 459 |
| Income Before Income Taxes | 959 | 622 | 118 |
| Provision for income taxes | 133 | 168 | 189 |
| Net Income | 465 | 465 | 539 |
| Net Income Per Share | |||
| Basic | 0.78 | 0.78 | 0.91 |
| Diluted | 0.76 | 0.76 | 0.87 |
Consolidated Balance Sheet
| (in millions, except share data) | Dec 31, 2024 | Dec 31, 2023 |
|---|---|---|
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | 7,509 | 9,288 |
| Short-term investments | 1,346 | 1,576 |
| Accounts and other receivables | 1,085 | 1,155 |
| Inventories of parts and supplies | 683 | 807 |
| Prepaid expenses and other | 368 | 374 |
| Total Current Assets | 10,991 | 13,200 |
| Property and Equipment, at cost | ||
| Flight equipment | 24,999 | 24,168 |
| Ground property and equipment | 6,693 | 6,306 |
| Deposits on flight equipment | 252 | 399 |
| Total Property and Equipment | 31,944 | 30,873 |
| Less: Accumulated depreciation | (17,177) | (16,082) |
| Property and Equipment, net | 14,767 | 14,791 |
| Operating lease right-of-use assets | 1,594 | 1,648 |
| Other assets | 1,081 | 964 |
| Total Assets | 33,750 | 36,487 |
| Liabilities and Stockholders’ Equity | ||
| Current Liabilities | ||
| Accounts payable | 1,355 | 1,497 |
| Accrued liabilities | 1,904 | 1,839 |
| Current maturities of long-term debt | 2,151 | 2,139 |
| Air traffic liability | 6,404 | 6,707 |
| Total Current Liabilities | 11,814 | 12,182 |
| Long-term debt less current maturities | 5,069 | 7,978 |
| Air traffic liability – noncurrent | 1,080 | 1,227 |
| Deferred income taxes | 1,879 | 1,913 |
| Noncurrent operating lease liabilities | 1,268 | 1,320 |
| Other noncurrent liabilities | 1,290 | 1,352 |
| Stockholders’ Equity | ||
| Common stock | 888 | 888 |
| Capital in excess of par value | 4,199 | 4,209 |
| Retained earnings | 16,332 | 16,279 |
| Accumulated other comprehensive income (loss) | (25) | – |
| Treasury stock, at cost | (11,044) | (10,823) |
| Total Stockholders’ Equity | 10,350 | 10,515 |
| Total Liabilities and Stockholders’ Equity | 33,750 | 36,487 |
Consolidated Statement of Cash Flows
| (in millions) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Cash Flows from Operating Activities | |||
| Net income | 465 | 465 | 539 |
| Adjustments to reconcile net income to cash provided by operating activities: | |||
| Depreciation and amortization | 1,605 | 1,523 | 1,351 |
| Unrealized/realized (gain) loss on fuel derivative instruments | 47 | (49) | 54 |
| Deferred income taxes | 132 | 159 | 228 |
| Changes in certain assets and liabilities: | |||
| Accounts and other receivables | 70 | (144) | (118) |
| Other assets | 108 | (83) | (192) |
| Accounts payable and accrued liabilities | (77) | 346 | 768 |
| Air traffic liability | (450) | 148 | 627 |
| Other, net | (72) | 92 | (23) |
| Net Cash Provided by Operating Activities | 1,848 | 2,457 | 3,234 |
| Cash Flows from Investing Activities | |||
| Capital expenditures | (2,304) | (3,159) | (4,013) |
| Purchases of short-term investments | (5,155) | (5,239) | (6,305) |
| Proceeds from sales of short-term investments | 5,385 | 5,824 | 6,279 |
| Other, net | 12 | 1 | (2) |
| Net Cash Used in Investing Activities | (2,062) | (2,573) | (4,041) |
| Cash Flows from Financing Activities | |||
| Proceeds from issuance of long-term debt | – | 2,048 | – |
| Proceeds from Employee stock plans | 37 | 37 | 47 |
| Payments of long-term debt and finance lease obligations | (2,927) | (378) | (2,159) |
| Payments of cash dividends | (429) | (429) | (107) |
| Repurchase of common stock | (221) | (450) | – |
| Other, net | (25) | (22) | (29) |
| Net Cash Provided by (Used in) Financing Activities | (3,565) | 806 | (2,248) |
| Net Increase (Decrease) in Cash and Cash Equivalents | (1,779) | 690 | (3,055) |
| Cash and cash equivalents at beginning of period | 9,288 | 8,598 | 11,653 |
| Cash and Cash Equivalents at End of Period | 7,509 | 9,288 | 8,598 |
Subsidiaries and Wholly-Owned Entities
Southwest Airlines Co. operates as a single entity with no separately reported subsidiaries or associates contributing to its revenue. The Consolidated Financial Statements include the accounts of Southwest Airlines Co. and its wholly-owned captive insurance entity, used for managing certain risk liabilities. No specific revenue breakout is provided for this entity, as its activities are integrated into the company’s overall financials. There are no associate companies or joint ventures explicitly mentioned.
List of Entities:
- Wholly-Owned Captive Insurance Entity: Used for self-insurance mechanisms, covering liabilities like public and passenger liability, property damage, and cybersecurity risks. No separate revenue is reported, as it supports the parent company’s operations.
- Revenue Breakup: All revenues ($27.5 billion in 2024) are attributed to Southwest Airlines Co., with no distinct contributions from the captive insurance entity.
Physical Properties
Southwest owns and leases various properties to support its operations, primarily focused on aviation-related facilities. Below is a comprehensive list:
- Headquarters (Dallas, TX): Located at 2702 Love Field Drive, Dallas, TX, on leased land from the City of Dallas. Includes the main headquarters building and two additional owned buildings (TOPS and a training facility).
- Maintenance Hangars:
- Phoenix Sky Harbor International Airport: A $100 million, 90,000-square-foot expansion completed in 2024, adding three aircraft bays to support fleet maintenance.
- Other maintenance facilities are leased at various airports, though specific locations are not detailed.
- Airport Facilities: Southwest leases terminal space, gates, and other facilities at 121 airports. Leases include operating lease right-of-use assets valued at $1.594 billion as of December 31, 2024.
- Training Facilities: Located in Dallas, including the TOPS building and other owned properties for operational and training purposes.
- Other Properties: Includes leased fuel storage tanks, technology assets, and ground equipment, with lease terms up to four years.
Property Details:
| Property Type | Location | Ownership Status | Details |
|---|---|---|---|
| Headquarters | Dallas, TX | Leased land, owned buildings | Main HQ, TOPS, and training facilities |
| Maintenance Hangar | Phoenix, AZ | Owned | $100M expansion, 90,000 sq ft, 3 bays |
| Airport Terminal Facilities | 121 airports (U.S., international) | Leased | Gates, counters, and support facilities |
| Training Facilities | Dallas, TX | Owned | Part of headquarters complex |
| Fuel Storage/Other Equipment | Various airports | Leased | Technology assets, fuel tanks, etc. |
Founders
- Herbert D. Kelleher:
- Role: Co-founder, Chairman of the Board (1978-2008), Chairman Emeritus (2008-2019).
- Contribution: Kelleher was instrumental in shaping Southwest’s low-cost model and unique corporate culture. A lawyer by training, he developed the concept of affordable, no-frills air travel with Rollin King. Kelleher’s leadership emphasized employee satisfaction, leading to Southwest’s reputation for high morale and customer service. He passed away in 2019, leaving a lasting legacy.
- Details: Kelleher served as President and CEO, driving expansion and profitability. His “Transfarency” philosophy and focus on low fares remain core to Southwest’s identity.
- Rollin King:
- Role: Co-founder.
- Contribution: King proposed the idea of a low-cost airline serving Texas cities, pitching the concept to Kelleher in the late 1960s. His vision for frequent, affordable flights laid the groundwork for Southwest’s point-to-point model. King played a less prominent role in daily operations but was critical in the airline’s inception.
- Details: King’s business plan, famously sketched on a napkin, outlined the triangle of Dallas, Houston, and San Antonio, launching Southwest’s operations in 1971.
Board of Directors
As of February 5, 2025, Southwest’s Board of Directors comprises 12 members, with Gary C. Kelly designated as Chairman Emeritus. Below is a detailed list:
| Name | Position/Committee Roles | Background |
|---|---|---|
| Lisa M. Atherton | Compensation Committee (Chair), Nominating and Corporate Governance Committee | President & CEO, Bell (defense and commercial helicopter supplier) |
| Pierre R. Breber | Audit Committee, Compensation Committee | Former Vice President & CFO, Chevron Corporation |
| Douglas H. Brooks | Compensation Committee, Safety and Operations Committee | Former Chairman, President, and CEO, Brinker International |
| Eduardo F. Conrado | Nominating and Corporate Governance Committee (Chair), Audit Committee | EVP, Chief Strategy & Innovation Officer, Motorola Solutions |
| Thomas W. Gilligan | Audit Committee (Chair), Safety and Operations Committee | Director, Tad and Dianne Taube, Hoover Institution, Stanford University |
| David P. Hess | Safety and Operations Committee (Chair), Audit Committee | Former EVP and Chief Technology Officer, RTX Corporation |
| Elaine Mendoza | Nominating and Corporate Governance Committee, Safety and Operations Committee | President & CEO, Conceptual MindWorks |
| Christopher P. Reynolds | Audit Committee, Compensation Committee | Chief Strategy Officer, Toyota Motor North America |
| Gregg A. Saretsky | Compensation Committee, Safety and Operations Committee | Former President & CEO, WestJet Airlines |
| Patricia A. Watson | Nominating and Corporate Governance Committee, Safety and Operations Committee | EVP & Chief Information Officer, NCR Corporation |
| Robert E. Jordan | President & CEO, Vice Chairman | Current CEO, joined Southwest in 1988, various leadership roles |
| David W. Biegler | Chairman of the Board | Former Vice Chairman, TXU Corp |
| Honorary Designation | ||
| Gary C. Kelly | Chairman Emeritus | Former CEO (2004-2022), joined Southwest in 1986 |
In Memoriam:
- Herbert D. Kelleher: Chairman (1978-2008), Chairman Emeritus (2008-2019).
- Colleen C. Barrett: President (2001-2008), President Emeritus (2008-2024).
Investment Details
Southwest’s investments primarily consist of short-term financial instruments and fuel derivative contracts, with no passive investments in other companies explicitly detailed.
- Short-Term Investments: As of December 31, 2024, Southwest held $1.346 billion in short-term investments, primarily money market funds, treasury bills, and investment-grade commercial paper. These are used for liquidity management.
- Fuel Derivative Contracts: The company maintains a fuel hedging program to mitigate jet fuel price volatility, with contracts in place through 2027. As of December 31, 2024, the fair value of these contracts was $130 million, with $22 million for 2025, $72 million for 2026, and $36 million for 2027. The company does not plan to add new hedging positions due to high premium costs and market dynamics.
- Equity Securities: Valued at $280 million as of December 31, 2024, included in other assets, but specific investments are not detailed.
Investment Summary:
| Investment Type | Value ($ millions) | Details |
|---|---|---|
| Short-Term Investments | 1,346 | Money market funds, treasury bills, commercial paper |
| Fuel Derivative Contracts | 130 | Hedging through 2027, Brent crude-based |
| Equity Securities | 280 | Included in other assets, no specific details |
Future Investment Plans
Southwest has outlined several strategic investment initiatives for 2025 and beyond, focusing on operational efficiency, customer experience, and sustainability. Key plans include:
- Capital Expenditures (2025): Estimated at $2.0 billion to $2.5 billion, primarily for:
- Aircraft Purchases: Continued fleet modernization with Boeing 737-7 and -8 aircraft, with firm orders and options for 149 aircraft through 2031. Investments include progress payments for future deliveries.
- Cabin Upgrades: Implementation of assigned and premium seating, new RECARO seats, faster Wi-Fi, in-seat power, and larger overhead bins.
- Technology Infrastructure: Investments in digital transformation, including paperless processes, improved communication tools, and cybersecurity enhancements.
- Maintenance Facilities: Ongoing investments in maintenance hangars and equipment to support fleet operations.
- Airline Partnerships: Expansion of partnerships (e.g., Icelandair in 2025, with at least one more planned) to enhance international connectivity, requiring investments in booking systems and operational integration.
- Getaways by Southwest: Development of a vacation package platform, involving investments in technology and marketing to integrate flights, hotels, and excursions.
- Sustainability Initiatives: Investments in fuel-efficient aircraft (22 Boeing 737-8 added in 2024, 34 older 737-700 retired), Real Time Descent Winds technology, and Sustainable Aviation Fuel (SAF) purchase agreements. The company aims to meet near-term environmental goals, though specific SAF investment costs are not quantified.
- Financial Targets (2027):
- Annual capacity growth of 1-2% starting in 2025.
- Operating margins of at least 10%.
- Free cash flow exceeding $1 billion annually.
- Return on invested capital (after-tax) of at least 15%.
- Financial leverage in the low to mid-30% range.
- Maintain investment-grade credit rating.
These investments aim to enhance revenue opportunities, reduce costs, and align with customer and regulatory expectations, though they carry risks related to execution, cost control, and market conditions.
