Southwest Airlines Co. (LUV) SEC Filings & Earnings Calls

Fuel cost volatility

“Fuel costs per gallon, including fuel tax (unhedged) $ 3.87 $ 2.33 66.1 %” · word for word

Labor cost inflation

“Salaries, wages, and benefits expense for third quarter 2026 increased by $323 million, or 10.0 percent, compared with third quarter 2025.” · word for word

Aircraft delivery delays

“the timing of the -7 aircraft's entry into service depends on the FAA's issuance of required approvals to the Company, which is outside of the Company's control.” · word for word

Fuel cost headwind: Q3 fuel cost $3.92/gal above guidance, Q4 assumed ~$4.55/gal, representing significant EPS pressure.

“Third quarter 2026 fuel cost was $3.92 per gallon, above prior assumptions of $3.70 to $3.75 per gallon. Fuel expense increased by $821 million compared to the third quarter of 2025 and represented a $1.08 headwind to adjusted EPS. Fourth quarter 2026 fuel cost per gallon is assumed to be approximately $4.55.” · word for word

Boeing delivery dependency: 67 aircraft deliveries expected in 2026; any delays could impact capacity and growth plans.

“Expect a total of 67 Boeing 737-8 and 737-7 aircraft deliveries and plan to retire approximately 60 aircraft in 2026. The Company's dependence on The Boeing Company and Boeing suppliers with respect to the Company's aircraft deliveries, fleet and capacity plans.”

Capacity growth moderation: FY26 capacity growth reduced to ~1.2% from prior ~1.5%, indicating potential supply constraints or cautious demand outlook.

“Entered 2026 with a disciplined capacity plan and now expect full-year growth of approximately 1.2%, versus last updated guidance of approximately 1.5%.” · word for word

Heightened risk of losing key senior executive talent, as evidenced by external recruiting activity

“heightened risk of losing key senior executive talent, as evidenced by external recruiting activity involving members of the Company’s senior leadership team” · word for word

Fuel cost volatility

“Fuel costs per gallon, including fuel tax $ 3.92 $ 2.32 69.0 %” · word for word

Geopolitical disruption

“The ongoing geopolitical developments in the Middle East continue to impact the market prices of products that are derived from crude oil, including jet fuel.” · word for word

Labor cost inflation

“Salaries, wages, and benefits expense for second quarter 2026 increased by $237 million, or 7.3 percent, compared with second quarter 2025.” · word for word

Full-year adjusted EPS guidance cut to $3.25-$4.25 from at least $4.00, indicating weaker expected profitability in H2 2026.

“Full-year 2026 adjusted EPS $3.25 to $4.25, replaces prior expectation of at least $4.00.”

Fuel cost remains a major headwind; $889M increase YoY in Q2, with Q3 fuel assumed $3.70-$3.75/gallon.

“Fuel expense increased by $889 million compared to the second quarter of 2025 and represented a $1.17 headwind to adjusted EPS.” · word for word

Capacity growth expected to be flat to slightly negative in Q3 (-1% to 0% YoY), suggesting potential demand softness or operational constraints.

“ASMs year-over-year -1% to flat for Q3 2026.”

Increased debt burden may pressure future cash flows if earnings decline.

“Aggregate outstanding principal amount of Term Loans is $1.5 billion.”

Fuel cost volatility

“Fuel costs per gallon, including fuel tax $ 2.73 $ 2.49 9.6 %” · word for word

Boeing delivery delays

“Boeing continues to experience delays in fulfilling its commitments with regards to delivery of MAX aircraft to the Company” · word for word

Geopolitical risk (Middle East)

“The escalation of geopolitical developments in the Middle East has impacted the market prices of products that are derived from crude oil, including jet fuel.” · word for word

Higher fuel costs ($2.73/gal vs guided ~$2.40) increased expense by $164M; macroeconomic uncertainty may impact full-year guidance.

“Fuel costs $2.73 per gallon, above prior guidance of ~$2.40; full-year EPS guidance of $4.00 requires lower fuel or stronger revenue”

Activist pressure may re-escalate if strategic execution falters

“The Elliott Funds remain significant shareholders of the Issuer based on the Reporting Person's confidence that the Issuer's execution of ongoing strategic initiatives will translate to greater profitability, accretive capital-allocation opportunities and shareholder value creation.” · word for word

Activist pressure may re-escalate if strategic execution falters

“The Elliott Funds remain significant shareholders of the Issuer based on the Reporting Person's confidence that the Issuer's execution of ongoing strategic initiatives will translate to greater profitability, accretive capital-allocation opportunities and shareholder value creation.” · word for word

Execution Risk on Transformation Initiatives

“While the results in 2025 are commendable and the Company’s momentum in 2026 is encouraging, a great deal of work remains.” · word for word

Fuel Price Volatility

“Discontinuation of fuel hedging” · word for word

Labor Relations

“approximately 84 percent of the Company’s Employees are contract employees (as of December 31, 2025), subject to collective bargaining agreements” · word for word

Boeing MAX 7 Certification and Delivery Delays

“the Company’s dependence on The Boeing Company (“Boeing”) and Boeing suppliers with respect to the Company’s aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans” · word for word

Competitive Pressure

“actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities)” · word for word

Leadership transition may introduce uncertainty; no details on departure reason.

“Item 5.02 filing”

Fuel price volatility without hedging

“during second quarter 2025, the Company terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio and program.” · word for word

Labor cost inflation

“Increased labor costs from ratified contracts and rate inflation have negatively impacted not only the Company's cost structure but also the broader airline industry’s costs.” · word for word

Boeing 737 MAX delivery delays

“the Company amended its order book delivery schedule to better allocate aircraft deliveries to the Company’s network and capacity plans, in part due to ongoing aircraft delivery delays.” · word for word

Regulatory compliance costs (DOT/FAA rules)

“The DOT’s August 2023 rule on accessible lavatories requires airlines to have one accessible (i.e., larger) lavatory on new narrow-body aircraft ... The Company anticipates that this rule could impose substantial costs on the Company and have a material effect on the Company's capital expenditures, earnings, and competitive position.” · word for word

Winter Storm Fern impact on Q1 2026 results

“Notwithstanding the impact of Winter Storm Fern, 2026 is off to a strong start.” · word for word

Fuel cost volatility; hedging program discontinued

“Discontinued the fuel hedging program. First quarter 2026 fuel cost per gallon is assumed to be approximately $2.40.”

FAA mandated capacity cuts impacted Q4 RASM

“Fourth quarter 2025 RASM decreased 0.2%, year-over-year, impacted by Federal Aviation Administration mandated cuts.” · word for word

Government shutdown risk: revenue loss from temporary demand decline.

“Lower revenue due to the government shutdown.” · word for word

Fuel cost pressure: higher fuel prices impacting profitability.

“Impact of higher fuel prices.” · word for word

Increased leverage from $1.5B debt issuance may pressure credit metrics.

“Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.” · word for word