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Southwest Airlines Reports First Quarter Results

               Southwest Airlines Reports First Quarter Results

Record first quarter operating revenues of $4.1 billion

Net income of $59 million; operating income of $70 million

Excluding special items, net income of $53 million; operating income of $112
million

PR Newswire

DALLAS, April 25, 2013

DALLAS, April 25, 2013 /PRNewswire/ --Southwest Airlines Co. (NYSE:LUV) (the
"Company") today reported its first quarter 2013 results. First quarter 2013
net income was $59 million, or $.08 per diluted share, which included $6
million (net) of favorable special items. This compared to net income of $98
million, or $.13 per diluted share, in first quarter 2012, which included $116
million (net) of favorable special items. Excluding special items, first
quarter 2013 net income was $53 million, or $.07 per diluted share, compared
to a net loss of $18 million, or $.02 loss per diluted share, in first quarter
2012. This exceeded the First Call consensus estimate of $.02 per diluted
share. Operating income for first quarter 2013 was $70 million, compared to
$22 million in first quarter 2012. Excluding special items, operating income
was $112 million for first quarter 2013, compared to $10 million in the same
period last year. Additional information regarding special items is included
in this release and in the accompanying reconciliation tables.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer,
stated, "The significant year-over-year improvement in our first quarter
results (excluding special items) was driven by record first quarter revenues
and a better-than-expected cost performance. On relatively flat available
seat miles year-over-year, total operating revenues of $4.1 billion increased
2.3 percent, or 1.8 percent on a unit basis, compared to first quarter last
year. Passenger revenues were boosted significantly by continued progress on
the AirTran integration, fleet modernization efforts, and the Rapid Rewards
loyalty program. Year-over-year passenger unit revenue trends were relatively
stable through February, and while worse than expected, March passenger unit
revenues outperformed the domestic industry, on a capacity adjusted
basis.Soft revenue trends have continued, thus far, in April, and we expect a
year-over-year decline in our April passenger unit revenues. While we are
cautious about April trends and the potential effects from government
sequestration, recent bookings for May and June have been solid, and lower
fuel prices have roughly offset the revenue weakness thus far in April.

"Based on market prices as of April 22^nd, second quarter 2013 economic fuel
costs, including fuel taxes, are expected to be in the $3.00 to $3.05 per
gallon range, well below second quarter 2012's $3.22 per gallon, including
fuel taxes, and below the original forecast included in our 2013 plan^1.
Also, we now have derivative contracts in place for the remainder of the year
that support estimated fuel costs per gallon below our 2013 plan. First
quarter 2013 economic fuel costs were $3.29 per gallon, which was in line with
our expectation, and 4.4 percent lower than first quarter 2012's all-time high
$3.44 per gallon.

"We are pleased with the early results from revenue initiatives implemented in
first quarter 2013 and are excited about the incremental benefit expected for
future periods. We launched some of our new 2013 ancillary revenue streams,
including selling open premium boarding positions at the gate, increasing our
EarlyBird Check-In™ charge, and increasing certain other fees.

"We also phased in the ability for our Customers to fly connecting itineraries
between the Southwest and AirTran networks, our top priority this year. As of
April 14^th, all 97 destinations within the combined networks can be flown on
a single itinerary, a key milestone of our AirTran integration. Bookings on
these connecting itineraries, thus far, have been strong, giving us further
confidence in our plan to achieve $400 million in net, pre-tax, AirTran
synergies in 2013 (excluding acquisition and integration costs). With
connecting capabilities in place, our ability to optimize the combined
networks and operations is enabled, particularly in Atlanta. This is a
significant milestone. We are now in a position to evolve Atlanta to a
point-to-point operation in fall 2013, similar to our other top ten Southwest
cities. This will allow our People to be substantially more productive
through scheduling our aircraft, flight crews, and ground staff more
constantly throughout the day. Our November schedule (which will open next
month) will offer our Atlanta Customers a wider selection of departure times
throughout the day, with roughly the same number of daily departures. We
expect these changes will grow our local Atlanta traffic.

"We are enthused about planned initiatives for the remainder of the year.
Today, we are announcing details of a new No Show policy that will apply to
Southwest reservations that include Wanna Get Away^® or DING!^® fares and are
made on or after May 10, 2013, for travel on or after September 13, 2013. The
policy is intended to alter behavior, encouraging Customers to cancel unused
nonrefundable fares prior to a flight's departure, allowing us to better
predict future inventory and reduce the number of empty seats on aircraft.
Also, later this quarter, we will implement phase one of our new revenue
management system.

"While we continue to optimize our network and maintain a relatively flat
fleet in 2013, we are also making excellent progress on our fleet
modernization efforts. Thus far this year, we have taken delivery of nine new
Boeing 737-800s and two used Boeing 737-700s, retired three older Boeing
737-300s and one Boeing 737-500, and retrofitted more -700s with our new
Evolve interior. As of
March 31, 2013, nearly 90 percent of the Southwest -700 fleet had the Evolve
interior, and we expect to complete the remainder of the Southwest -700
retrofits in second quarter 2013. Further, all of Southwest's -800s and -700s
are now equipped with WiFi technology.

"We began operating Southwest's first scheduled service outside of the
continental United States on April 14^th, with daily service to San Juan,
Puerto Rico, from Orlando and Tampa Bay, Florida. These flights augment
AirTran's existing service between San Juan and Atlanta, Georgia;
Baltimore/Washington; and Fort Lauderdale, Florida. Since the beginning of the
year, Southwest has also launched service to Branson, Missouri; Charlotte,
North Carolina; Flint, Michigan; Portland, Maine; and Rochester, New York. We
are excited about our growing network and opportunities ahead.Further, as
part of the Dallas Love Field Modernization project, we reached a significant
milestone at our hometown airport with the openingof 11 brand new Southwest
gates and new concessions on April 16^th. This impressive project is on
budget and on track for full completion in second half 2014.

"Our balance sheet and liquidity remain strong with approximately $3.1 billion
in cash and short-term investments at March 31, 2013. Earlier this month, we
replaced our $800 million revolving credit facility with a new $1 billion
five-year revolving credit facility. The $200 million increase enhances our
liquidity and financial flexibility. Despite the uncertainties surrounding
the impact to travel demand from government sequestration and increased
consumer taxes, we remain focused on our 2013 plan to achieve a 15 percent
pre-tax return on invested capital.In first quarter, we returned $115
million to our Shareholders through repurchasing $100 million of common stock
(approximately 9 million shares) and distributing $15 million in dividends."

No Show Policy

Southwest is implementing a No Show policy thatapplies to nonrefundable fares
that are not canceled or changed by a Customer prior to a flight's scheduled
departure. If a Customer has booked a nonrefundable fare anywhere in his/her
itinerary and that portion of the flight is not used and not canceled or
changed by the Customer prior to scheduled departure, all unused funds on the
full itinerary will be lost, and the remaining reservation will be canceled.
The policy applies to reservations made or changed on or after Friday, May 10,
2013, for travel on or after Friday, September 13, 2013. This policy does not
apply to military fares, senior fares, or travel during certain irregular
operations, including severe weather conditions.

The No Show policy will not impact Customers who simply cancel a Wanna Get
Away or DING! fare prior to scheduled departure; in this case, Customers may
reuse their funds toward future travel on Southwest, without a change fee, as
they have always done. Customers who are traveling on a fully refundable
itinerary that does not contain a Wanna Get Away or DING! fare will continue
to have the option of either requesting a refund or holding funds for future
travel.

Financial Results and Outlook

The Company's total operating revenues in first quarter 2013 were $4.1
billion, compared to $4.0 billion in first quarter 2012. Operating unit
revenues increased 1.8 percent from first quarter 2012. Total first quarter
2013 operating expenses of $4.0 billion were comparable to first quarter
2012. The Company incurred $13 million in special charges (before taxes)
during the first quarters of 2013 and 2012 associated with the acquisition and
integration of AirTran. Cumulative costs associated with the acquisition and
integration of AirTran, as of March 31, 2013, totaled $337 million (before
profitsharing and taxes). The Company expects total acquisition and
integration costs to be no more than $550 million (before profitsharing and
taxes). Excluding special items in the first quarters of 2013 and 2012,
operating expenses were approximately $4.0 billion in both periods.

First quarter 2013 economic fuel costs, including fuel taxes, decreased 4.4
percent to $3.29 per gallon, compared to $3.44 per gallon in first quarter
2012. The Company now has derivative contracts in place for approximately 95
percent of its estimated fuel consumption for the remainder of the year. As
of April 22^nd, the fair market value of the Company's hedge portfolio through
2017 was a net liability of approximately $151 million, compared to a net
asset of $200 million at March 31^st. Additional information regarding the
Company's fuel derivative contracts is included in the accompanying tables.

First quarter 2013 profitsharing expense was $15 million, compared to no
profitsharing expense in first quarter last year. Excluding fuel,
profitsharing, and special items in both periods, first quarter 2013 unit
costs increased 2.8 percent from first quarter 2012, which was better than
expected largely due to lower workers' compensation claims, favorable airport
settlements, and lower advertising expense.Based on current cost trends, the
Company expects a similar year-over-year increase in its second quarter 2013
unit costs, excluding fuel, profitsharing, and special items in both periods.

Operatingincome for first quarter 2013 was$70 million, compared to $22
million in first quarter 2012. Excluding special items, operating income was
$112 million for first quarter 2013, compared to $10 million in first quarter
2012.

Other income for first quarter 2013 was $24 million, compared to $137 million
in first quarter 2012. This $113 million decrease primarily resulted from $46
million in gains recognized in first quarter 2013, compared to $170 million in
gains in first quarter 2012. In both periods, these gains primarily resulted
from unrealized mark-to-market gains/losses associated with a portion of the
Company's fuel hedging portfolio, which are special items. Excluding these
special items, other losses were $5 million in first quarter 2013, compared to
$6 million in first quarter 2012, primarily attributable to the premium costs
associated with the Company's fuel derivative contracts. Second quarter 2013
premium costs related to fuel derivative contracts are currently estimated to
be approximately $12 million, which is comparable to second quarter 2012. Net
interest expense declined to $22 million in first quarter 2013, compared to
$33 million in first quarter 2012, primarily as a result of the Company's
repayment of its $385 million 6.5 percent notes in March 2012.

Net cash provided by operations was $983 million, and capital expenditures
were $534 million, resulting in $449 million in free cash flow^2 in first
quarter 2013. The Company repaid approximately $164 million in debt and
capital lease obligations during first quarter 2013, and intends to repay
approximately $149 million in debt and capital lease obligations during the
remainder of the year. As of April 23^rd, the Company had approximately $3.2
billion in cash and short-term investments, and a fully available unsecured
revolving credit line of $1 billion.

The Company's return on invested capital (before taxes and excluding special
items) was approximately 8 percent for the twelve months ended March 31,
2013. Additional information regarding pre-tax return on invested capital is
included in the accompanying reconciliation tables. 

Southwest Airlines Awards and Recognitions

  oNamed seventh Most Admired Company in the world by FORTUNE Magazine
  oRecognized as the top travel brand andfifth overall brand by TheBusiness
    Journals inthe American Brand Excellence Awards
  oNamed Domestic Carrier of the Year by the Airforwarders Association
  oNamed to the Airline of the Year list by the Express Delivery and
    Logistics Association
  oAwarded the Air Cargo Excellence Diamond Award by Air Cargo World
  oNamed number one in Customer Service by the 2013 Airline Quality Ratings
  oRecognized as one of the 2013 100 Best Corporate Citizens by CR Magazine
  oAwarded the Grassroots Innovation Award for the Free Hobby Campaign by the
    Public Affairs Council

Conference Call

Southwest will discuss its first quarter 2013 results on a conference call at
12:30 p.m. Eastern Time today. A live broadcast of the conference call also
will be available at http://southwest.investorroom.com.

^1 The Company presented its 2013 plan at its Investor Day held in December
2012. The presentation, including fuel price per gallon assumptions in its
2013 plan, can be found at http://southwest.investorroom.com/past-events.

^2 See Note Regarding use of Non-GAAP financial measures

Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Specific forward-looking
statements include without limitation statements related to (i) the Company's
financial targets and outlook and projected results of operations; (ii) the
integration of AirTran and the Company's related financial and operational
expectations, including expected benefits and costs associated with the
integration; (iii) the Company's network plans, opportunities, and
expectations; (iv) the Company's fleet plans, including its fleet
modernization plans and expectations; (v) the Company's other strategic
initiatives and its related plans and expectations; (vi) the Company's
expectations with respect to liquidity and capital expenditures; and (vii) the
Company's plans and expectations related to managing risk associated with
changing jet fuel prices. These forward-looking statements are based on the
Company's current intent, expectations, and projections and are not guarantees
of future performance. These statements involve risks, uncertainties,
assumptions, and other factors that are difficult to predict and that could
cause actual results to vary materially from those expressed in or indicated
by them. Factors include, among others, (i) the impact of the economy on
demand for the Company's services and the impact of fuel prices, economic
conditions, and actions of competitors (including, without limitation,
pricing, scheduling, and capacity decisions and consolidation and alliance
activities) on the Company's business decisions, plans, and strategies; (ii)
the impact of any governmental action related to the Company's operations
(including, without limitation, the Federal Aviation Administration's
furloughs of air traffic controllers); (iii) 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; (iv) the Company's ability to timely and effectively prioritize
its strategic initiatives and related expenditures; (v) the Company's ability
to effectively integrate AirTran and realize the expected synergies and other
benefits from the integration; (vi) the Company's dependence on third parties
with respect to certain of its initiatives, in particular its fleet
initiatives; (vii) changes in fuel prices, the impact of hedge accounting, and
any changes to the Company's fuel hedging strategies and positions; and (viii)
other factors, as described in the Company's filings with the Securities and
Exchange Commission, including the detailed factors discussed under the
heading "Risk Factors" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2012.



Southwest Airlines Co.

Condensed Consolidated Statement of Income

(in millions, except per share amounts)

(unaudited)
                                     Three months ended March 31,
                                     2013             2012            Percent
                                                                      change
OPERATING REVENUES:
Passenger                            $   3,838        $  3,751    (1) 2.3
Freight                              39               37              5.4
Other                                207              203         (1) 2.0
Total operating revenues       4,084            3,991           2.3
OPERATING EXPENSES:
Salaries, wages, and benefits        1,183            1,141           3.7
Fuel and oil                         1,457            1,510           (3.5)
Maintenance materials and repairs    291              272             7.0
Aircraft rentals                     93               88              5.7
Landing fees and other rentals       266              254             4.7
Depreciation and amortization        210              201             4.5
Acquisition and integration          13               13              —
Other operating expenses             501              490             2.2
 Total operating expenses       4,014            3,969           1.1
OPERATING INCOME                     70               22              n.a.
OTHER EXPENSES (INCOME):
Interest expense                     29               40              (27.5)
Capitalized interest                 (5)              (5)             —
Interest income                      (2)              (2)             —
Other gains, net                     (46)             (170)           (72.9)
 Total other income             (24)             (137)           (82.5)
INCOME BEFORE INCOME TAXES           94               159             (40.9)
PROVISION FOR INCOME TAXES           35               61              (42.6)
NET INCOME                           $   59           $  98           (39.8)
NET INCOME PER SHARE:
Basic                                $   0.08         $  0.13
Diluted                              $   0.08         $  0.13
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic                                725              771
Diluted                              727              772

(1) The Company made a fourth quarter 2012 reclassification to change the
allocation of revenues associated with its sale of frequent flyer points
directly to Customers and the redemption of those points for flights. The
Company has thus reclassified $7 million in Operating revenues for the three
months ended March 31, 2012, from Other revenues to Passenger revenues to
conform to the current presentation.





Southwest Airlines Co.

Reconciliation of Reported Amounts to Non-GAAP Items

(See Note Regarding Use of Non-GAAP Financial Measures)

(in millions, except per share amounts)

(unaudited)
                                         Three months ended March 31,
                                         2013            2012          Percent
                                                                       Change
Fuel and oil expense, unhedged           $    1,405      $   1,479
Add: Fuel hedge losses included in Fuel  52              31
and oil expense
Fuel and oil expense, as reported        $    1,457      $   1,510
Add (Deduct): Net impact from fuel       (29)            25
contracts (1)
Fuel and oil expense, economic           $    1,428      $   1,535     (7.0)
Total operating expenses, as reported    $    4,014      $   3,969
Add (Deduct): Net impact from fuel       (29)            25
contracts (1)
Total operating expenses, economic       $    3,985      $   3,994
Deduct: Acquisition and integration      (13)            (13)
costs
Total operating expenses, non-GAAP       $    3,972      $   3,981     (0.2)
Operating income, as reported            $    70         $   22
Add (Deduct): Net impact from fuel       29              (25)
contracts (1)
Operating income (loss), economic        $    99         $   (3)
Add: Acquisition and integration costs   13              13
Operating income, non-GAAP               $    112        $   10        n.a.
Other gains, net, as reported            $    (46)       $   (170)
Add: Net impact from fuel contracts (1)  51              176
Other losses, net, non-GAAP              $    5          $   6         (16.7)
Income before income taxes, as reported  $    94         $   159
Deduct: Net impact from fuel contracts   (22)            (201)
(1)
                                         $    72         $   (42)
Add: Acquisition and integration costs   13              13
Income (loss) before income taxes,       $    85         $   (29)      n.a.
non-GAAP
Net income, as reported                  $    59         $   98
Deduct: Net impact from fuel contracts   (22)            (201)
(1)
Add: Income tax impact of fuel contracts 8               77
                                         $    45         $   (26)
Add: Acquisition and integration costs,  8               8
net (2)
Net income (loss), non-GAAP              $    53         $   (18)      n.a.
Net income per share, diluted, as        $    0.08       $   0.13
reported
Deduct: Net impact from fuel contracts   (0.02)          (0.16)
                                         $    0.06       $   (0.03)
Add: Impact of special items, net (2)    0.01            0.01
Net income (loss) per share, diluted,    $    0.07       $   (0.02)    n.a.
non-GAAP

(1) See Reconciliation of Impact from Fuel Contracts.
(2) Amounts net of tax.





Southwest Airlines Co.

Reconciliation of Impact from Fuel Contracts

(See Note Regarding Use of Non-GAAP Financial Measures)

(in millions)

(unaudited)
                                                  Three months ended March 31,
                                                  2013             2012
Fuel and oil expense
Reclassification between Fuel and oil and Other
(gains), net,
                                                  $    —           $   (2)
 associated with current period settled
contracts
Contracts settling in the current period, but for
which gains and/or
                                                  (29)             27
 (losses) have been recognized in a prior
period (1)
Impact from fuel contracts to Fuel and oil        $    (29)        $   25
expense
Operating Income
Reclassification between Fuel and oil and Other
losses, net, associated                           $    —           $   2

 with current period settled contracts
Contracts settling in the current period, but for
which gains and/or
                                                  29               (27)
 (losses) have been recognized in a prior
period (1)
Impact from fuel contracts to Operating Income    $    29          $   (25)
Other losses, net
Mark-to-market impact from fuel contracts         $    61          $   205
settling in future periods
Ineffectiveness from fuel hedges settling in      (10)             (31)
future periods
Reclassification between Fuel and oil and Other
losses, net, associated                           —                2

 with current period settled contracts
Impact from fuel contracts to Other losses, net   $    51          $   176
Net Income
Mark-to-market impact from fuel contracts         $    (61)        $   (205)
settling in future periods
Ineffectiveness from fuel hedges settling in      10               31
future periods
Other net impact of fuel contracts settling in
the current or a prior                            29               (27)

 period (excluding reclassifications)
Impact from fuel contracts to Net Income (2)      $    (22)        $   (201)



(1) As a result of prior hedge ineffectiveness and/or contracts
marked-to-market through the income statement.
(2) Excludes income tax impact of unrealized items.





Southwest Airlines Co.

Comparative Consolidated Operating Statistics

(unaudited)
                                  Three months ended March 31,
                                  2013            2012             Change
Revenue passengers carried        25,203,934      25,560,822       (1.4)%
Enplaned passengers               30,712,625      31,154,453       (1.4)%
Revenue passenger miles (RPMs)    23,756,743      23,684,869       0.3%
(000s)
Available seat miles (ASMs)       30,801,424      30,632,893       0.6%
(000s)
Load Factor                       77.1%           77.3%            (0.2) pts.
Average length of passenger haul  943             927              1.7%
(miles)
Average aircraft stage length     693             685              1.2%
(miles)
Trips flown                       318,514         333,896          (4.6)%
Average passenger fare            $    152.29     $   146.72   (1) 3.8%
Passenger revenue yield per RPM   16.16           15.83        (1) 2.1%
(cents)
RASM (cents)                      13.26           13.03            1.8%
PRASM (cents)                     12.46           12.24        (1) 1.8%
CASM (cents)                      13.03           12.96            0.5%
CASM, excluding fuel (cents)      8.30            8.03             3.4%
CASM, excluding special items     12.89           12.99            (0.8)%
(cents)
CASM, excluding fuel and special  8.26            7.99             3.4%
items (cents)
CASM, excluding fuel, special     8.21            7.99             2.8%
items, and profitsharing (cents)
Fuel costs per gallon, including  $    3.24       $   3.32         (2.4)%
fuel tax (unhedged)
Fuel costs per gallon, including  $    3.36       $   3.39         (0.9)%
fuel tax
Fuel costs per gallon, including  $    3.29       $   3.44         (4.4)%
fuel tax (economic)
Fuel consumed, in gallons         432             443              (2.5)%
(millions)
Active fulltime equivalent        45,791          46,227           (0.9)%
Employees
Aircraft in service at period-end 696             694              0.3%



RASM (unit revenue) - Operating revenue yield per ASM
PRASM (Passenger unit revenue) - Passenger revenue yield per ASM
CASM (unit costs) - Operating expenses per ASM
(1) The Company made a fourth quarter 2012 reclassification to change the
allocation of revenues associated with its sale of frequent flyer points
directly to Customers and the redemption of those points for flights. The
Company has thus reclassified $7 million in Operating revenues for the three
months ended March 31, 2012, from Other revenues to Passenger revenues to
conform to the current presentation.





Southwest Airlines Co.

Return on Invested Capital (1)

(See Note Regarding Use of Non-GAAP Financial Measures)

(in millions)

(unaudited)
                                      Twelve Months Ended  Twelve Months Ended
                                      March 31, 2013       March 31, 2012
Operating Income, as reported         672                  600
Add (Deduct): Net impact from fuel    86                   (5)
contracts
Add: Acquisition and integration      182                  130
costs (2)
Add: Asset impairment, net (3)        —                    14
Operating Income, non-GAAP            940                  739
Net adjustment for aircraft leases    121                  139
(4)
Adjustment for fuel hedge accounting  (35)                 (82)
Adjusted Operating Income, non-GAAP   1,026                796
Average invested capital (5)          12,261               12,779
Equity adjustment for fuel hedge      98                   166
accounting
Adjusted average invested capital     12,359               12,945
ROIC, pre-tax                         8%                   6%



(1) Calculation includes the impact of the AirTran acquisition as of May 2,
2011.
(2) The Company amended its profitsharing plan during second quarter 2011 to
defer the profitsharing impact of integration costs incurred from April 1,
2011, through December 31, 2013. The profitsharing impact will be realized in
2014 and beyond.
(3) Net of profitsharing impact.
(4) Net adjustment related to presumption that all aircraft in fleet are
owned.
(5) Average invested capital represents a five quarter average of debt, net
present value of aircraft leases, and equity.





Southwest Airlines Co.

Condensed Consolidated Balance Sheet

(in millions)

(unaudited)
                                                      March 31,  December 31,

                                                      2013       2012
ASSETS
Current assets:
Cash and cash equivalents                        $  1,338   $   1,113
 Short-term investments                           1,797      1,857
 Accounts and other receivables                   429        332
 Inventories of parts and supplies, at cost       480        469
 Deferred income taxes                            255        246
 Prepaid expenses and other current assets        215        210
 Total current assets                       4,514      4,227
Property and equipment, at cost:
 Flight equipment                                 16,643     16,367
 Ground property and equipment                    2,754      2,714
 Deposits on flight equipment purchase contracts  594        416
                                                      19,991     19,497
 Less allowance for depreciation and amortization 6,861      6,731
                                                      13,130     12,766
Goodwill                                              970        970
Other assets                                          583        633
                                                      $  19,197  $   18,596
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                 $  1,250   $   1,107
 Accrued liabilities                              1,004      1,102
 Air traffic liability                            2,877      2,170
 Current maturities of long-term debt             280        271
 Total current liabilities                  5,411      4,650
Long-term debt less current maturities                2,708      2,883
Deferred income taxes                                 2,904      2,884
Deferred gains from sale and leaseback of aircraft    60         63
Other noncurrent liabilities                          1,153      1,124
Stockholders' equity:
 Common stock                                     808        808
 Capital in excess of par value                   1,214      1,210
 Retained earnings                                5,818      5,768
 Accumulated other comprehensive loss             (111)      (119)
 Treasury stock, at cost                          (768)      (675)
 Total stockholders' equity                 6,961      6,992
                                                      $  19,197  $   18,596





Southwest Airlines Co.

Condensed Consolidated Statement of Cash Flows

(in millions)

(unaudited)
                                                  Three months ended March 31,
                                                  2013             2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                   $    59          $   98
 Adjustments to reconcile net income to cash
provided by (used in) operating activities:
 Depreciation and amortization                210              201
 Unrealized gain on fuel derivative           (21)             (201)
instruments
 Deferred income taxes                        2                14
 Amortization of deferred gains on sale and   (3)              (3)
leaseback of aircraft
 Changes in certain assets and liabilities:
 Accounts and other receivables         (97)             (68)
 Other assets                           (25)             (51)
 Accounts payable and accrued           120              225
liabilities
 Air traffic liability                  707              720
 Cash collateral received from fuel     28               147
derivative counterparties
 Other, net                             3                143
 Net cash provided by operating activities    983              1,225
CASH FLOWS FROM INVESTING ACTIVITIES:
 Payments for purchase of property and        (534)            (127)
equipment, net
 Purchases of short-term investments          (725)            (621)
 Proceeds from sales of short-term            787              736
investments
 Net cash used in investing activities        (472)            (12)
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from Employee stock plans           6                5
 Payments of long-term debt and capital lease (164)            (431)
obligations
 Payments of cash dividends                   (15)             (7)
 Repurchase of common stock                   (100)            (50)
 Other, net                                   (13)             (1)
 Net cash used in financing activities        (286)            (484)
NET CHANGE IN CASH AND CASH EQUIVALENTS           225              729
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  1,113            829
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $    1,338       $   1,558



Southwest Airlines Co.

Fuel Derivative Contracts

As of April 22, 2013
                        Estimated economic jet fuel price per gallon,

                        including taxes
Average Brent Crude Oil 2Q 2013 (2)           Second Half of 2013 (2)
price per barrel
$80                     $2.95 - $3.00         $2.90 - $2.95
$90                     $2.95 - $3.00         $2.95 - $3.00
Current Market (1)      $3.00 - $3.05         $3.00 - $3.05
$110                    $3.10 - $3.15         $3.20 - $3.25
$120                    $3.15 - $3.20         $3.30 - $3.35
                        Average percent of estimated fuel consumption covered
                        by
Period                  fuel derivative contracts at varying WTI/Brent crude
                        oil-
                        equivalent price levels
2014                    Approx. 60%
2015                    Approx. 35%
2016                    Approx. 30%
2017                    Approx. 50%



(1) Brent crude oil average market prices as of April 22, 2013 were
approximately $101 and $99 per barrel for second quarter and second half 2013,
respectively.
(2) The Company has approximately 95 percent of its second quarter and second
half 2013 estimated fuel consumption covered by fuel derivative contracts with
approximately 75 percent at varying Gulf Coast jet fuel-equivalent prices and
the remainder at varying Brent crude oil-equivalent prices. The economic fuel
price per gallon sensitivities provided above assume the relationship between
Brent crude oil and refined products based on market prices as of April 22,
2013.



Southwest Airlines Co.

737 Delivery Schedule

As of April 24, 2013
             The Boeing Company                   The Boeing Company
             737 NG                               737 MAX
             -700       -800           Additional Firm
             Firm       Firm   Options            Orders     Options Total
             Orders     Orders         -700s
2013         —          18     —       2          —          —       20    (3)
2014         5          26     15      —          —          —       46
2015         36         —      12      —          —          —       48
2016         31         —      12      —          —          —       43
2017         30         —      25      —          4          —       59
2018         25         —      28      —          15         —       68
2019         —          —      —       —          33         —       33
2020         —          —      —       —          34         —       34
2021         —          —      —       —          34         18      52
2022         —          —      —       —          30         19      49
2023         —          —      —       —          —          23      23
2024         —          —      —       —          —          23      23
2025         —          —      —       —          —          23      23
Through 2027 —          —      —       —          —          44      44
             127    (1) 44     92      2          150    (2) 150     565



(1) The Company has flexibility to substitute 737-800s in lieu of 737-700 firm
orders.
(2) The Company has flexibility to accept MAX 7 or MAX 8 deliveries.
(3) Includes nine 737-800s and two leased 737-700s delivered through April 24,
2013.

NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES

The Company's unaudited consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
(GAAP). These GAAP financial statements include (i) unrealized non-cash
adjustments and reclassifications, which can be significant, as a result of
accounting requirements and elections made under accounting pronouncements
relating to derivative instruments and hedging and (ii) other charges the
Company believes are not indicative of its ongoing operational performance.

As a result, the Company also provides financial information in this release
that was not prepared in accordance with GAAP and should not be considered as
an alternative to the information prepared in accordance with GAAP. The
Company provides supplemental non-GAAP financial information, including
results that it refers to as "economic," which the Company's management
utilizes to evaluate its ongoing financial performance and the Company
believes provides greater transparency to investors as supplemental
information to its GAAP results. The Company's economic financial results
differ from GAAP results in that they only include the actual cash settlements
from fuel hedge contracts--all reflected within Fuel and oil expense in the
period of settlement. Thus, Fuel and oil expense on an economic basis reflects
the Company's actual net cash outlays for fuel during the applicable period,
inclusive of settled fuel derivative contracts. Any net premium costs paid
related to option contracts are reflected as a component of Other (gains)
losses, net, for both GAAP and non-GAAP (including economic) purposes in the
period of contract settlement. The Company believes these economic results
provide a better measure of the impact of the Company's fuel hedges on its
operating performance and liquidity since they exclude the unrealized,
non-cash adjustments and reclassifications that are recorded in GAAP results
in accordance with accounting guidance relating to derivative instruments, and
they reflect all cash settlements related to fuel derivative contracts within
Fuel and oil expense. This enables the Company's management, as well as
investors, to consistently assess the Company's operating performance on a
year-over-year or quarter-over-quarter basis after considering all efforts in
place to manage fuel expense. However, because these measures are not
determined in accordance with GAAP, such measures are susceptible to varying
calculations and not all companies calculate the measures in the same manner.
As a result, the aforementioned measures, as presented, may not be directly
comparable to similarly titled measures presented by other companies.

Further information on (i) the Company's fuel hedging program, (ii) the
requirements of accounting for derivative instruments, and (iii) the causes of
hedge ineffectiveness and/or mark-to-market gains or losses from derivative
instruments is included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2012.

In addition to its "economic" financial measures, as defined above, the
Company has also provided other non-GAAP financial measures, including results
that it refers to as "excluding special items," as a result of items that the
Company believes are not indicative of its ongoing operations. These include
expenses associated with the Company's acquisition and integration of AirTran.
The Company believes that evaluation of its financial performance can be
enhanced by a presentation of results that exclude the impact of these items
in order to evaluate the results on a comparative basis with results in prior
periods that do not include such items and as a basis for evaluating operating
results in future periods. As a result of the Company's acquisition of
AirTran, which closed on May 2, 2011, the Company has incurred and expects to
continue to incur substantial charges associated with integration of the two
companies. While the Company cannot predict the exact timing or amounts of
such charges, it does expect to treat the charges as special items in its
future presentation of non-GAAP results.

The Company has also provided free cash flow, which is a non-GAAP financial
measure. The Company believes free cash flow is a meaningful measure because
it demonstrates the Company's ability to service its debt, pay dividends and
make investments to enhance shareholder value. Although free cash flow is
commonly used as a measure of liquidity, definitions of free cash flow may
differ; therefore, the Company is providing an explanation of its calculation
for free cash flow. For the three months ended March 31, 2013, the Company
generated $449 million in free cash flow, calculated as operating cash flows
of $983 million less capital expenditures of $534 million.



SOURCE Southwest Airlines Co.

Contact: Investor Relations, +1-214-792-4415
 
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