þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended September 30, 2014
|
|
or
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ________ to ________
|
TEXAS
|
74-1563240
|
(State or other jurisdiction of
|
(IRS Employer
|
incorporation or organization)
|
Identification No.)
|
P.O. Box 36611
|
|
Dallas, Texas
|
75235-1611
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
þ
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,832
|
|
|
$
|
1,355
|
|
Short-term investments
|
1,728
|
|
|
1,797
|
|
||
Accounts and other receivables
|
468
|
|
|
419
|
|
||
Inventories of parts and supplies, at cost
|
429
|
|
|
467
|
|
||
Deferred income taxes
|
237
|
|
|
168
|
|
||
Prepaid expenses and other current assets
|
291
|
|
|
250
|
|
||
Total current assets
|
4,985
|
|
|
4,456
|
|
||
|
|
|
|
||||
Property and equipment, at cost:
|
|
|
|
|
|
||
Flight equipment
|
18,019
|
|
|
16,937
|
|
||
Ground property and equipment
|
2,866
|
|
|
2,666
|
|
||
Deposits on flight equipment purchase contracts
|
601
|
|
|
764
|
|
||
Assets constructed for others
|
570
|
|
|
453
|
|
||
|
22,056
|
|
|
20,820
|
|
||
Less allowance for depreciation and amortization
|
8,091
|
|
|
7,431
|
|
||
|
13,965
|
|
|
13,389
|
|
||
Goodwill
|
970
|
|
|
970
|
|
||
Other assets
|
619
|
|
|
530
|
|
||
|
$
|
20,539
|
|
|
$
|
19,345
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,185
|
|
|
$
|
1,247
|
|
Accrued liabilities
|
1,277
|
|
|
1,229
|
|
||
Air traffic liability
|
3,377
|
|
|
2,571
|
|
||
Current maturities of long-term debt
|
607
|
|
|
629
|
|
||
Total current liabilities
|
6,446
|
|
|
5,676
|
|
||
|
|
|
|
||||
Long-term debt less current maturities
|
2,125
|
|
|
2,191
|
|
||
Deferred income taxes
|
3,360
|
|
|
2,934
|
|
||
Construction obligation
|
521
|
|
|
437
|
|
||
Other noncurrent liabilities
|
658
|
|
|
771
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Common stock
|
808
|
|
|
808
|
|
||
Capital in excess of par value
|
1,280
|
|
|
1,231
|
|
||
Retained earnings
|
7,266
|
|
|
6,431
|
|
||
Accumulated other comprehensive loss
|
(92
|
)
|
|
(3
|
)
|
||
Treasury stock, at cost
|
(1,833
|
)
|
|
(1,131
|
)
|
||
Total stockholders' equity
|
7,429
|
|
|
7,336
|
|
||
|
$
|
20,539
|
|
|
$
|
19,345
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
329
|
|
|
$
|
259
|
|
|
$
|
946
|
|
|
$
|
542
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
238
|
|
|
221
|
|
|
687
|
|
|
643
|
|
||||
Unrealized (gain) loss on fuel derivative instruments
|
63
|
|
|
(58
|
)
|
|
(4
|
)
|
|
(24
|
)
|
||||
Deferred income taxes
|
392
|
|
|
29
|
|
|
472
|
|
|
52
|
|
||||
Changes in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts and other receivables
|
(22
|
)
|
|
73
|
|
|
(83
|
)
|
|
(74
|
)
|
||||
Other assets
|
6
|
|
|
(63
|
)
|
|
(7
|
)
|
|
(83
|
)
|
||||
Accounts payable and accrued liabilities
|
(534
|
)
|
|
(98
|
)
|
|
(86
|
)
|
|
185
|
|
||||
Air traffic liability
|
(108
|
)
|
|
(95
|
)
|
|
806
|
|
|
811
|
|
||||
Cash collateral received from (paid to) derivative counterparties
|
(98
|
)
|
|
80
|
|
|
8
|
|
|
56
|
|
||||
Other, net
|
(26
|
)
|
|
80
|
|
|
(41
|
)
|
|
80
|
|
||||
Net cash provided by operating activities
|
240
|
|
|
428
|
|
|
2,698
|
|
|
2,188
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(433
|
)
|
|
(268
|
)
|
|
(1,340
|
)
|
|
(995
|
)
|
||||
Purchases of short-term investments
|
(415
|
)
|
|
(896
|
)
|
|
(2,344
|
)
|
|
(2,520
|
)
|
||||
Proceeds from sales of short-term and other investments
|
805
|
|
|
805
|
|
|
2,427
|
|
|
2,385
|
|
||||
Other, net
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Net cash used in investing activities
|
(44
|
)
|
|
(359
|
)
|
|
(1,259
|
)
|
|
(1,130
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from Employee stock plans
|
23
|
|
|
12
|
|
|
96
|
|
|
31
|
|
||||
Reimbursement for assets constructed for others
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Payments of long-term debt and capital lease obligations
|
(48
|
)
|
|
(51
|
)
|
|
(167
|
)
|
|
(267
|
)
|
||||
Payments of cash dividends
|
(41
|
)
|
|
(28
|
)
|
|
(138
|
)
|
|
(71
|
)
|
||||
Repayment of construction obligation
|
(3
|
)
|
|
(2
|
)
|
|
(8
|
)
|
|
(3
|
)
|
||||
Repurchase of common stock
|
(200
|
)
|
|
(150
|
)
|
|
(755
|
)
|
|
(501
|
)
|
||||
Other, net
|
(3
|
)
|
|
(6
|
)
|
|
(16
|
)
|
|
(27
|
)
|
||||
Net cash used in financing activities
|
(246
|
)
|
|
(225
|
)
|
|
(962
|
)
|
|
(838
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(50
|
)
|
|
(156
|
)
|
|
477
|
|
|
220
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,882
|
|
|
1,489
|
|
|
1,355
|
|
|
1,113
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,832
|
|
|
$
|
1,333
|
|
|
$
|
1,832
|
|
|
$
|
1,333
|
|
|
|
|
|
|
|
|
|
||||||||
CASH PAYMENTS FOR:
|
|
|
|
|
|
|
|
||||||||
Interest, net of amount capitalized
|
$
|
35
|
|
|
$
|
39
|
|
|
$
|
102
|
|
|
$
|
106
|
|
Income taxes
|
$
|
132
|
|
|
$
|
124
|
|
|
$
|
144
|
|
|
$
|
147
|
|
|
|
|
|
|
|
|
|
||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
|
|
|
|
|
|
|
|
||||||||
Assets constructed for others
|
$
|
27
|
|
|
$
|
15
|
|
|
$
|
59
|
|
|
$
|
90
|
|
|
|
Fuel hedged as of
|
|
|
|
|
|
September 30, 2014
|
|
Derivative underlying commodity type as of
|
|
Period (by year)
|
|
(gallons in millions)
(a)
|
|
September 30, 2014
|
|
Remainder of 2014
|
|
137
|
|
|
WTI crude, Brent crude oil, and Heating oil
|
2015
|
|
1,436
|
|
|
Brent crude oil, Heating oil, and Gulf Coast jet fuel
|
2016
|
|
1,314
|
|
|
Brent crude oil, Heating oil, and Gulf Coast jet fuel
|
2017
|
|
820
|
|
|
WTI crude and Brent crude oil
|
2018
|
|
98
|
|
|
Brent crude oil
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||||
|
|
Balance Sheet
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
||||||||
(in millions)
|
|
location
|
|
9/30/2014
|
|
12/31/2013
|
|
9/30/2014
|
|
12/31/2013
|
||||||||
Derivatives designated as hedges*
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
7
|
|
|
$
|
74
|
|
|
$
|
2
|
|
|
$
|
—
|
|
Fuel derivative contracts (gross)
|
|
Other assets
|
|
95
|
|
|
209
|
|
|
33
|
|
|
1
|
|
||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
4
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other assets
|
|
14
|
|
|
20
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
61
|
|
|
77
|
|
||||
Total derivatives designated as hedges
|
|
$
|
120
|
|
|
$
|
303
|
|
|
$
|
127
|
|
|
$
|
78
|
|
||
Derivatives not designated as hedges*
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
17
|
|
|
$
|
175
|
|
|
$
|
10
|
|
|
$
|
182
|
|
Fuel derivative contracts (gross)
|
|
Other assets
|
|
64
|
|
|
16
|
|
|
54
|
|
|
99
|
|
||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
36
|
|
|
9
|
|
|
40
|
|
|
21
|
|
||||
Total derivatives not designated as hedges
|
|
|
|
$
|
117
|
|
|
$
|
200
|
|
|
$
|
104
|
|
|
$
|
302
|
|
Total derivatives
|
|
|
|
$
|
237
|
|
|
$
|
503
|
|
|
$
|
231
|
|
|
$
|
380
|
|
|
|
Balance Sheet
|
|
September 30,
|
|
December 31,
|
||
(in millions)
|
|
location
|
|
2014
|
|
2013
|
||
Cash collateral deposits provided to counterparties for interest
rate contracts - noncurrent
|
|
Offset against Other noncurrent liabilities
|
|
24
|
|
|
32
|
|
Receivable from third parties for fuel contracts - current
|
|
Accounts and other receivables
|
|
19
|
|
|
57
|
|
Deferred premium gain for fuel contracts - current
|
|
Accrued liabilities
|
|
8
|
|
|
—
|
|
Deferred premium gain for fuel contracts - noncurrent
|
|
Other noncurrent liabilities
|
|
4
|
|
|
2
|
|
Offsetting of derivative liabilities
|
|
||||||||||||||||||||||||||
(in millions)
|
|
||||||||||||||||||||||||||
|
|
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
|
||||||||||||
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
|
||||||||||||||||||||
Description
|
|
Balance Sheet location
|
|
Gross amounts of recognized liabilities
|
|
Gross amounts offset in the Balance Sheet
|
|
Net amounts of liabilities presented in the Balance Sheet
|
|
Gross amounts of recognized liabilities
|
|
Gross amounts offset in the Balance Sheet
|
|
Net amounts of liabilities presented in the Balance Sheet
|
|
||||||||||||
Fuel derivative contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
12
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
182
|
|
|
$
|
(182
|
)
|
|
$
|
—
|
|
|
Fuel derivative contracts
|
|
Other assets
|
|
$
|
87
|
|
|
$
|
(87
|
)
|
|
$
|
—
|
|
(a)
|
$
|
100
|
|
|
$
|
(100
|
)
|
|
$
|
—
|
|
(a)
|
Fuel derivative contracts
|
|
Accrued liabilities
|
|
$
|
71
|
|
|
$
|
(40
|
)
|
|
$
|
31
|
|
(a)
|
$
|
21
|
|
|
$
|
(9
|
)
|
|
$
|
12
|
|
(a)
|
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
$
|
61
|
|
|
$
|
(24
|
)
|
|
$
|
37
|
|
(a)
|
$
|
77
|
|
|
$
|
(32
|
)
|
|
$
|
45
|
|
(a)
|
Derivatives in cash flow hedging relationships
|
|||||||||||||||||||||||
|
(Gain) loss recognized in AOCI on derivatives (effective portion)
|
|
(Gain) loss reclassified from AOCI into income (effective portion)(a)
|
|
(Gain) loss recognized in income on derivatives (ineffective portion)(b)
|
||||||||||||||||||
|
Nine months ended
|
|
Nine months ended
|
|
Nine months ended
|
||||||||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||
Fuel derivative contracts
|
$
|
104
|
|
*
|
$
|
113
|
|
*
|
$
|
3
|
|
*
|
$
|
88
|
|
*
|
$
|
(31
|
)
|
|
$
|
27
|
|
Interest rate derivatives
|
2
|
|
*
|
(12
|
)
|
*
|
10
|
|
*
|
14
|
|
*
|
(3
|
)
|
|
(1
|
)
|
||||||
Total
|
$
|
106
|
|
|
$
|
101
|
|
|
$
|
13
|
|
|
$
|
102
|
|
|
$
|
(34
|
)
|
|
$
|
26
|
|
|
Counterparty (CP)
|
|
|
||||||||||||||||||||||||
(in millions)
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
Other
(a)
|
|
Total
|
||||||||||||||
Fair value of fuel derivatives
|
$
|
(5
|
)
|
|
$
|
15
|
|
|
$
|
43
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
53
|
|
Cash collateral held from (by) CP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Aircraft collateral pledged to CP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Letters of credit (LC)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Option to substitute LC for aircraft
|
(250) to (650) (d)
|
|
(100) to (500) (d)
|
|
N/A
|
|
(250) to (650) (d)
|
|
N/A
|
|
|
|
|
||||||||||||||
Option to substitute LC for cash
|
N/A
|
|
>(500)
|
|
(100) to (150) (e)
|
|
(50) to (250) or >(650) (d)
|
|
N/A
|
|
|
|
|
||||||||||||||
If credit rating is investment
grade, fair value of fuel
derivative level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash is provided to CP
|
(50) to (250) or >(650)
|
|
(50) to (100) or >(500)
|
|
>(50)
|
|
(50) to (250) or >(650)
|
|
>(50)
|
|
|
|
|
||||||||||||||
Cash is received from CP
|
>50
|
|
>150
|
|
>175 (c)
|
|
>200
|
|
>30
|
|
|
|
|
||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(250) to (650) (d)
|
|
(100) to (500) (d)
|
|
N/A
|
|
(250) to (650) (d)
|
|
N/A
|
|
|
|
|
||||||||||||||
If credit rating is non-investment
grade, fair value of fuel derivative
level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash is provided to CP
|
(0) to (250) or >(650)
|
|
(0) to (100) or >(500)
|
|
(b)
|
|
(0) to (250) or >(650)
|
|
(b)
|
|
|
|
|
||||||||||||||
Cash is received from CP
|
(b)
|
|
(b)
|
|
(b)
|
|
(b)
|
|
(b)
|
|
|
|
|
||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(250) to (650)
|
|
(100) to (500)
|
|
N/A
|
|
(250) to (650)
|
|
N/A
|
|
|
|
|
|
Three months ended September 30,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
NET INCOME
|
$
|
329
|
|
|
$
|
259
|
|
Unrealized gain (loss) on fuel derivative instruments, net of
deferred taxes of ($124) and $76
|
(210
|
)
|
|
129
|
|
||
Unrealized gain on interest rate derivative instruments, net of
deferred taxes of $3 and $2
|
6
|
|
|
2
|
|
||
Other, net of deferred taxes of $1 and $2
|
1
|
|
|
3
|
|
||
Total other comprehensive income (loss)
|
$
|
(203
|
)
|
|
$
|
134
|
|
COMPREHENSIVE INCOME
|
$
|
126
|
|
|
$
|
393
|
|
|
Nine months ended September 30,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
NET INCOME
|
$
|
946
|
|
|
$
|
542
|
|
Unrealized loss on fuel derivative instruments, net of
deferred taxes of ($60) and ($16)
|
(101
|
)
|
|
(25
|
)
|
||
Unrealized gain on interest rate derivative instruments, net of
deferred taxes of $4 and $16
|
8
|
|
|
26
|
|
||
Other, net of deferred taxes of $4 and $6
|
4
|
|
|
4
|
|
||
Total other comprehensive income (loss)
|
$
|
(89
|
)
|
|
$
|
5
|
|
COMPREHENSIVE INCOME
|
$
|
857
|
|
|
$
|
547
|
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at June 30, 2014
|
$
|
153
|
|
|
$
|
(55
|
)
|
|
$
|
65
|
|
|
$
|
14
|
|
|
$
|
(66
|
)
|
|
$
|
111
|
|
Changes in fair value
|
(340
|
)
|
|
3
|
|
|
—
|
|
|
2
|
|
|
124
|
|
|
(211
|
)
|
||||||
Reclassification to earnings
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
8
|
|
||||||
Balance at September 30, 2014
|
$
|
(181
|
)
|
|
$
|
(46
|
)
|
|
$
|
65
|
|
|
$
|
16
|
|
|
$
|
54
|
|
|
$
|
(92
|
)
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at December 31, 2013
|
$
|
(20
|
)
|
|
$
|
(58
|
)
|
|
$
|
65
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
(3
|
)
|
Changes in fair value
|
(165
|
)
|
|
(5
|
)
|
|
—
|
|
|
8
|
|
|
60
|
|
|
(102
|
)
|
||||||
Reclassification to earnings
|
4
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
13
|
|
||||||
Balance at September 30, 2014
|
$
|
(181
|
)
|
|
$
|
(46
|
)
|
|
$
|
65
|
|
|
$
|
16
|
|
|
$
|
54
|
|
|
$
|
(92
|
)
|
Three months ended September 30, 2014
|
||||||
(in millions)
|
|
Amounts reclassified from AOCI
|
|
Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income
|
||
AOCI components
|
|
|
||||
Unrealized gain on fuel derivative instruments
|
|
$
|
6
|
|
|
Fuel and oil expense
|
|
|
2
|
|
|
Less: Tax Expense
|
|
|
|
$
|
4
|
|
|
Net of tax
|
Unrealized gain on interest rate derivative instruments
|
|
$
|
6
|
|
|
Interest expense
|
|
|
2
|
|
|
Less: Tax Expense
|
|
|
|
$
|
4
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
8
|
|
|
Net of tax
|
Nine months ended September 30, 2014
|
||||||
(in millions)
|
|
Amounts reclassified from AOCI
|
|
Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income
|
||
AOCI components
|
|
|
||||
Unrealized gain on fuel derivative instruments
|
|
$
|
4
|
|
|
Fuel and oil expense
|
|
|
1
|
|
|
Less: Tax Expense
|
|
|
|
$
|
3
|
|
|
Net of tax
|
Unrealized gain on interest rate derivative instruments
|
|
$
|
17
|
|
|
Interest expense
|
|
|
7
|
|
|
Less: Tax Expense
|
|
|
|
$
|
10
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
13
|
|
|
Net of tax
|
Other assets (in millions)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Derivative contracts
|
$
|
86
|
|
|
$
|
145
|
|
Intangible assets (a)
|
366
|
|
|
166
|
|
||
Non-current investments
|
36
|
|
|
44
|
|
||
Other
|
131
|
|
|
175
|
|
||
Other assets
|
$
|
619
|
|
|
$
|
530
|
|
Accounts payable (in millions)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Accounts payable trade
|
$
|
189
|
|
|
$
|
189
|
|
Salaries payable
|
142
|
|
|
156
|
|
||
Taxes payable
|
142
|
|
|
146
|
|
||
Aircraft maintenance payable
|
310
|
|
|
331
|
|
||
Fuel payable
|
99
|
|
|
102
|
|
||
Other payables
|
303
|
|
|
323
|
|
||
Accounts payable
|
$
|
1,185
|
|
|
$
|
1,247
|
|
Accrued liabilities (in millions)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Profitsharing and savings plans
|
$
|
268
|
|
|
$
|
244
|
|
Aircraft and other lease related obligations
|
152
|
|
|
173
|
|
||
Vacation pay
|
291
|
|
|
278
|
|
||
Health
|
70
|
|
|
73
|
|
||
Derivative contracts
|
31
|
|
|
12
|
|
||
Workers compensation
|
160
|
|
|
161
|
|
||
Property and other taxes
|
50
|
|
|
62
|
|
||
Other
|
255
|
|
|
226
|
|
||
Accrued liabilities
|
$
|
1,277
|
|
|
$
|
1,229
|
|
Other noncurrent liabilities (in millions)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Postretirement obligation
|
$
|
143
|
|
|
$
|
138
|
|
Non-current lease-related obligations
|
202
|
|
|
290
|
|
||
Other deferred compensation
|
167
|
|
|
163
|
|
||
Deferred gains from sale and leaseback of aircraft
|
57
|
|
|
65
|
|
||
Derivative contracts
|
37
|
|
|
45
|
|
||
Other
|
52
|
|
|
70
|
|
||
Other noncurrent liabilities
|
$
|
658
|
|
|
$
|
771
|
|
(in millions)
|
|
B717 lease/sublease liability
|
||
Balance at December 31, 2012
|
|
$
|
128
|
|
Lease/sublease accretion
|
|
6
|
|
|
Lease/sublease payments, net (a)
|
|
(12
|
)
|
|
Balance at December 31, 2013
|
|
$
|
122
|
|
Lease/sublease accretion
|
|
4
|
|
|
Lease/sublease expense adjustment
|
|
19
|
|
|
Lease/sublease payments, net (a)
|
|
(66
|
)
|
|
Balance at September 30, 2014
|
|
$
|
79
|
|
|
|
|
|
Fair value measurements at reporting date using:
|
||||||||||||
|
|
|
|
Quoted prices in
active markets
for identical assets
|
|
Significant
other observable
inputs
|
|
Significant
unobservable
inputs
|
||||||||
Description
|
|
September 30, 2014
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
1,417
|
|
|
$
|
1,417
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
220
|
|
|
—
|
|
|
220
|
|
|
—
|
|
||||
Certificates of deposit
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
||||
Eurodollar time deposits
|
|
174
|
|
|
—
|
|
|
174
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,500
|
|
|
1,500
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
|
228
|
|
|
—
|
|
|
228
|
|
|
—
|
|
||||
Noncurrent investments (b)
|
|
|
|
|
|
|
|
|
||||||||
Auction rate securities
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
Interest rate derivatives
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Swap contracts (d)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Option contracts (c)
|
|
172
|
|
|
—
|
|
|
—
|
|
|
172
|
|
||||
Option contracts (d)
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
Other available-for-sale securities
|
|
67
|
|
|
62
|
|
|
—
|
|
|
5
|
|
||||
Total assets
|
|
$
|
3,892
|
|
|
$
|
2,979
|
|
|
$
|
669
|
|
|
$
|
244
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
Swap contracts (d)
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||
Option contracts (c)
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
||||
Option contracts (d)
|
|
(63
|
)
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
||||
Interest rate derivatives
|
|
(61
|
)
|
|
—
|
|
|
(61
|
)
|
|
—
|
|
||||
Deferred compensation
|
|
(162
|
)
|
|
(162
|
)
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
(393
|
)
|
|
$
|
(162
|
)
|
|
$
|
(71
|
)
|
|
$
|
(160
|
)
|
|
|
|
|
Fair value measurements at reporting date using:
|
||||||||||||
|
|
|
|
Quoted prices in
active markets
for identical assets
|
|
Significant
other observable
inputs
|
|
Significant
unobservable
inputs
|
||||||||
Description
|
|
December 31, 2013
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
992
|
|
|
$
|
992
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
280
|
|
|
—
|
|
|
280
|
|
|
—
|
|
||||
Certificates of deposit
|
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Eurodollar time deposits
|
|
60
|
|
|
—
|
|
|
60
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,570
|
|
|
1,570
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
|
227
|
|
|
—
|
|
|
227
|
|
|
—
|
|
||||
Noncurrent investments (b)
|
|
|
|
|
|
|
|
|
||||||||
Auction rate securities
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
Interest rate derivatives
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
||||
Option contracts (c)
|
|
458
|
|
|
—
|
|
|
—
|
|
|
458
|
|
||||
Option contracts (d)
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Other available-for-sale securities
|
|
63
|
|
|
58
|
|
|
—
|
|
|
5
|
|
||||
Total assets
|
|
$
|
3,757
|
|
|
$
|
2,620
|
|
|
$
|
626
|
|
|
$
|
511
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
Option contracts (c)
|
|
(274
|
)
|
|
—
|
|
|
—
|
|
|
(274
|
)
|
||||
Option contracts (d)
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
||||
Interest rate derivatives
|
|
(77
|
)
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
||||
Deferred Compensation
|
|
(158
|
)
|
|
(158
|
)
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
(538
|
)
|
|
$
|
(158
|
)
|
|
$
|
(85
|
)
|
|
$
|
(295
|
)
|
|
Fair value measurements using significant
unobservable inputs (Level 3)
|
||||||||||||||
|
Fuel
|
|
Auction rate
|
|
Other
|
|
|
||||||||
(in millions)
|
derivatives
|
|
securities
|
|
securities
|
|
Total
|
||||||||
Balance at June 30, 2014
|
$
|
406
|
|
|
$
|
32
|
|
|
$
|
5
|
|
|
$
|
443
|
|
Total losses (realized or unrealized)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Included in earnings
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
||||
Included in other comprehensive income
|
(291
|
)
|
|
2
|
|
|
—
|
|
|
(289
|
)
|
||||
Purchases
|
77
|
|
(a)
|
—
|
|
|
—
|
|
|
77
|
|
||||
Sales
|
(54
|
)
|
(a)
|
(6
|
)
|
|
—
|
|
|
(60
|
)
|
||||
Settlements
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||
Balance at September 30, 2014
|
$
|
51
|
|
|
$
|
28
|
|
(b)
|
$
|
5
|
|
|
$
|
84
|
|
The amount of total losses for the period
included in earnings attributable to the
change in unrealized gains or losses relating
to assets still held at September 30, 2014
|
$
|
(86
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(86
|
)
|
|
Fair value measurements using significant
unobservable inputs (Level 3)
|
||||||||||||||
|
Fuel
|
|
Auction rate
|
|
Other
|
|
|
||||||||
(in millions)
|
derivatives
|
|
securities
|
|
securities
|
|
Total
|
||||||||
Balance at December 31, 2013
|
$
|
172
|
|
|
$
|
39
|
|
|
$
|
5
|
|
|
$
|
216
|
|
Total gains (losses) (realized or unrealized)
|
|
|
|
|
|
|
|
|
|
|
|||||
Included in earnings
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Included in other comprehensive income
|
(147
|
)
|
|
4
|
|
|
—
|
|
|
(143
|
)
|
||||
Purchases
|
177
|
|
(a)
|
—
|
|
|
—
|
|
|
177
|
|
||||
Sales
|
(154
|
)
|
(a)
|
(15
|
)
|
|
—
|
|
|
(169
|
)
|
||||
Settlements
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
||||
Balance at September 30, 2014
|
$
|
51
|
|
|
$
|
28
|
|
(b)
|
$
|
5
|
|
|
$
|
84
|
|
The amount of total gains for the period
included in earnings attributable to the
change in unrealized gains or losses relating
to assets still held at September 30, 2014
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
(in millions)
|
Carrying value
|
|
Estimated fair value
|
|
Fair value level hierarchy
|
||||
5.25% Notes due 2014
|
$
|
350
|
|
|
$
|
350
|
|
|
Level 2
|
5.75% Notes due 2016
|
314
|
|
|
342
|
|
|
Level 2
|
||
5.25% Convertible Senior Notes due 2016
|
114
|
|
|
267
|
|
|
Level 2
|
||
5.125% Notes due 2017
|
317
|
|
|
340
|
|
|
Level 2
|
||
Fixed-rate 717 Aircraft Notes payable through 2017 - 10.38%
|
7
|
|
|
8
|
|
|
Level 2
|
||
French Credit Agreements due 2018 - 1.03%
|
41
|
|
|
41
|
|
|
Level 3
|
||
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
|
25
|
|
|
26
|
|
|
Level 3
|
||
Term Loan Agreement due 2019 - 6.315%
|
186
|
|
|
195
|
|
|
Level 3
|
||
Term Loan Agreement due 2019 - 6.84%
|
73
|
|
|
79
|
|
|
Level 3
|
||
Term Loan Agreement due 2020 - 5.223%
|
382
|
|
|
378
|
|
|
Level 3
|
||
Floating-rate 737 Aircraft Notes payable through 2020
|
309
|
|
|
302
|
|
|
Level 3
|
||
Pass Through Certificates due 2022 - 6.24%
|
355
|
|
|
423
|
|
|
Level 2
|
||
7.375% Debentures due 2027
|
135
|
|
|
162
|
|
|
Level 2
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
NUMERATOR:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
329
|
|
|
$
|
259
|
|
|
$
|
946
|
|
|
$
|
542
|
|
Incremental income effect of interest on 5.25% convertible notes
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Net income after assumed conversion
|
$
|
330
|
|
|
$
|
260
|
|
|
$
|
949
|
|
|
$
|
544
|
|
|
|
|
|
|
|
|
|
||||||||
DENOMINATOR:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding, basic
|
683
|
|
|
703
|
|
|
690
|
|
|
714
|
|
||||
Dilutive effect of Employee stock options and restricted stock units
|
2
|
|
|
2
|
|
|
3
|
|
|
2
|
|
||||
Dilutive effect of 5.25% convertible notes
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
||||
Adjusted weighted-average shares outstanding, diluted
|
691
|
|
|
711
|
|
|
699
|
|
|
722
|
|
||||
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.48
|
|
|
$
|
0.37
|
|
|
$
|
1.37
|
|
|
$
|
0.76
|
|
Diluted
|
$
|
0.48
|
|
|
$
|
0.37
|
|
|
$
|
1.36
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive amounts excluded from calculations:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and restricted stock units
|
—
|
|
|
9
|
|
|
—
|
|
|
10
|
|
|
|
Three months ended September 30,
|
|
|
|
|||||||
|
|
2014
|
|
2013
|
|
Change
|
||||||
Revenue passengers carried
|
|
28,391,882
|
|
|
27,015,866
|
|
|
5.1
|
%
|
|
||
Enplaned passengers
|
|
35,255,248
|
|
|
33,792,804
|
|
|
4.3
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(1)
|
|
28,522,164
|
|
|
27,009,604
|
|
|
5.6
|
%
|
|
||
Available seat miles (ASMs) (000s)
(2)
|
|
33,785,824
|
|
|
33,425,087
|
|
|
1.1
|
%
|
|
||
Load factor
(3)
|
|
84.4
|
%
|
|
80.8
|
%
|
|
3.6
|
|
pts
|
||
Average length of passenger haul (miles)
|
|
1,005
|
|
|
1,000
|
|
|
0.5
|
%
|
|
||
Average aircraft stage length (miles)
|
|
728
|
|
|
708
|
|
|
2.8
|
%
|
|
||
Trips flown
|
|
319,250
|
|
|
332,991
|
|
|
(4.1
|
)%
|
|
||
Average passenger fare
|
|
$
|
160.74
|
|
|
$
|
159.39
|
|
|
0.8
|
%
|
|
Passenger revenue yield per RPM (cents)
(4)
|
|
16.00
|
|
|
15.94
|
|
|
0.4
|
%
|
|
||
Operating revenue per ASM (cents)
(5)
|
|
14.21
|
|
|
13.60
|
|
|
4.5
|
%
|
|
||
Passenger revenue per ASM (cents)
(6)
|
|
13.51
|
|
|
12.88
|
|
|
4.9
|
%
|
|
||
Operating expenses per ASM (cents)
(7)
|
|
12.39
|
|
|
12.43
|
|
|
(0.3
|
)%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.29
|
|
|
8.09
|
|
|
2.5
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
7.99
|
|
|
7.88
|
|
|
1.4
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
2.97
|
|
|
$
|
3.10
|
|
|
(4.2
|
)%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
2.94
|
|
|
$
|
3.06
|
|
|
(3.9
|
)%
|
|
Fuel consumed, in gallons (millions)
|
|
466
|
|
|
466
|
|
|
—
|
%
|
|
||
Active fulltime equivalent Employees
|
|
45,750
|
|
|
45,148
|
|
|
1.3
|
%
|
|
||
Aircraft at end of period
(8)
|
|
685
|
|
|
688
|
|
|
(0.4
|
)%
|
|
|
|
Nine months ended September 30,
|
|
|
|
|||||||
|
|
2014
|
|
2013
|
|
Change
|
||||||
Revenue passengers carried
|
|
82,602,805
|
|
|
81,180,167
|
|
|
1.8
|
%
|
|
||
Enplaned passengers
|
|
101,701,969
|
|
|
100,036,208
|
|
|
1.7
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(1)
|
|
81,267,478
|
|
|
78,695,853
|
|
|
3.3
|
%
|
|
||
Available seat miles (ASMs) (000s)
(2)
|
|
98,356,618
|
|
|
98,457,754
|
|
|
(0.1
|
)%
|
|
||
Load factor
(3)
|
|
82.6
|
%
|
|
79.9
|
%
|
|
2.7
|
|
pts
|
||
Average length of passenger haul (miles)
|
|
984
|
|
|
969
|
|
|
1.5
|
%
|
|
||
Average aircraft stage length (miles)
|
|
721
|
|
|
703
|
|
|
2.6
|
%
|
|
||
Trips flown
|
|
946,231
|
|
|
995,097
|
|
|
(4.9
|
)%
|
|
||
Average passenger fare
|
|
$
|
160.39
|
|
|
$
|
154.28
|
|
|
4.0
|
%
|
|
Passenger revenue yield per RPM (cents)
(4)
|
|
16.30
|
|
|
15.91
|
|
|
2.5
|
%
|
|
||
Operating revenue per ASM (cents)
(5)
|
|
14.21
|
|
|
13.48
|
|
|
5.4
|
%
|
|
||
Passenger revenue per ASM (cents)
(6)
|
|
13.47
|
|
|
12.72
|
|
|
5.9
|
%
|
|
||
Operating expenses per ASM (cents)
(7)
|
|
12.58
|
|
|
12.57
|
|
|
0.1
|
%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.38
|
|
|
8.11
|
|
|
3.3
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
8.12
|
|
|
7.95
|
|
|
2.1
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
3.03
|
|
|
$
|
3.19
|
|
|
(5.0
|
)%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
3.01
|
|
|
$
|
3.13
|
|
|
(3.8
|
)%
|
|
Fuel consumed, in gallons (millions)
|
|
1,357
|
|
|
1,376
|
|
|
(1.4
|
)%
|
|
||
Active fulltime equivalent Employees
|
|
45,750
|
|
|
45,148
|
|
|
1.3
|
%
|
|
||
Aircraft at period-end
(8)
|
|
685
|
|
|
688
|
|
|
(0.4
|
)%
|
|
|
Three months ended September 30,
|
|
Percent
|
|
Nine months ended September 30,
|
|
Percent
|
||||||||||||
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||
Fuel and oil expense, unhedged
|
$
|
1,395
|
|
|
$
|
1,435
|
|
|
|
|
$
|
4,171
|
|
|
$
|
4,282
|
|
|
|
Add (Deduct): Fuel hedge (gains) losses included in Fuel and oil expense
|
(9
|
)
|
|
15
|
|
|
|
|
(46
|
)
|
|
114
|
|
|
|
||||
Fuel and oil expense, as reported
|
$
|
1,386
|
|
|
$
|
1,450
|
|
|
|
|
$
|
4,125
|
|
|
$
|
4,396
|
|
|
|
Deduct: Net impact from fuel contracts
|
(12
|
)
|
|
(21
|
)
|
|
|
|
(27
|
)
|
|
(71
|
)
|
|
|
||||
Fuel and oil expense, non-GAAP (economic)
|
$
|
1,374
|
|
|
$
|
1,429
|
|
|
(3.8)%
|
|
$
|
4,098
|
|
|
$
|
4,325
|
|
|
(5.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses, as reported
|
$
|
4,186
|
|
|
$
|
4,155
|
|
|
|
|
$
|
12,372
|
|
|
$
|
12,378
|
|
|
|
Deduct: Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
(5
|
)
|
|
(17
|
)
|
|
|
|
(5
|
)
|
|
(10
|
)
|
|
|
||||
Deduct: Contracts settling in the current period, but for which gains have been recognized in a prior period*
|
(7
|
)
|
|
(4
|
)
|
|
|
|
(22
|
)
|
|
(61
|
)
|
|
|
||||
Deduct: Acquisition and integration costs
|
(23
|
)
|
|
(28
|
)
|
|
|
|
(78
|
)
|
|
(66
|
)
|
|
|
||||
Total operating expenses, non-GAAP
|
$
|
4,151
|
|
|
$
|
4,106
|
|
|
1.1%
|
|
$
|
12,267
|
|
|
$
|
12,241
|
|
|
0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income, as reported
|
$
|
614
|
|
|
$
|
390
|
|
|
|
|
$
|
1,605
|
|
|
$
|
893
|
|
|
|
Add: Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
5
|
|
|
17
|
|
|
|
|
5
|
|
|
10
|
|
|
|
||||
Add: Contracts settling in the current period, but for which gains have been recognized in a prior period*
|
7
|
|
|
4
|
|
|
|
|
22
|
|
|
61
|
|
|
|
||||
Add: Acquisition and integration costs
|
23
|
|
|
28
|
|
|
|
|
78
|
|
|
66
|
|
|
|
||||
Operating income, non-GAAP
|
$
|
649
|
|
|
$
|
439
|
|
|
47.8%
|
|
$
|
1,710
|
|
|
$
|
1,030
|
|
|
66.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income, as reported
|
$
|
329
|
|
|
$
|
259
|
|
|
|
|
$
|
946
|
|
|
$
|
542
|
|
|
|
Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods
|
44
|
|
|
(76
|
)
|
|
|
|
5
|
|
|
(112
|
)
|
|
|
||||
Add (Deduct): Ineffectiveness from fuel hedges settling in future periods
|
11
|
|
|
15
|
|
|
|
|
(31
|
)
|
|
27
|
|
|
|
||||
Add: Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications)
|
7
|
|
|
4
|
|
|
|
|
22
|
|
|
61
|
|
|
|
||||
Add (Deduct): Income tax impact of fuel contracts
|
(23
|
)
|
|
22
|
|
|
|
|
2
|
|
|
10
|
|
|
|
||||
Add: Acquisition and integration costs, net (a)
|
14
|
|
|
17
|
|
|
|
|
49
|
|
|
41
|
|
|
|
||||
Net income, non-GAAP
|
$
|
382
|
|
|
$
|
241
|
|
|
58.5%
|
|
$
|
993
|
|
|
$
|
569
|
|
|
74.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share, diluted, as reported
|
$
|
0.48
|
|
|
$
|
0.37
|
|
|
|
|
$
|
1.36
|
|
|
$
|
0.75
|
|
|
|
Add (Deduct): Net impact to net income above from fuel contracts divided by dilutive shares (a)
|
0.05
|
|
|
(0.05
|
)
|
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
|
||||
Add: Impact of special items, net (a)
|
0.02
|
|
|
0.02
|
|
|
|
|
0.07
|
|
|
0.06
|
|
|
|
||||
Net income per share, diluted, non-GAAP
|
$
|
0.55
|
|
|
$
|
0.34
|
|
|
61.8%
|
|
$
|
1.42
|
|
|
$
|
0.79
|
|
|
79.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses per ASM (cents)
|
|
12.39
|
¢
|
|
|
12.43
|
¢
|
|
|
|
|
12.58
|
¢
|
|
|
12.57
|
¢
|
|
|
Deduct: Fuel expense divided by ASMs
|
(4.10
|
)
|
|
(4.34
|
)
|
|
|
|
(4.20
|
)
|
|
(4.46
|
)
|
|
|
||||
Deduct: Impact of special items
|
(0.07
|
)
|
|
(0.08
|
)
|
|
|
|
(0.08
|
)
|
|
(0.07
|
)
|
|
|
||||
Operating expenses per ASM, non-GAAP, excluding fuel and special items (cents)
|
|
8.22
|
¢
|
|
|
8.01
|
¢
|
|
2.6%
|
|
|
8.30
|
¢
|
|
|
8.04
|
¢
|
|
3.2%
|
|
|
|
|
||||
|
Twelve Months Ended
|
|
Twelve Months Ended
|
||||
|
September 30, 2014
|
|
September 30, 2013
|
||||
Operating income, as reported
|
$
|
1,991
|
|
|
$
|
984
|
|
Net impact from fuel contracts
|
40
|
|
|
100
|
|
||
Acquisition and integration costs
|
97
|
|
|
81
|
|
||
Operating income, non-GAAP
|
$
|
2,128
|
|
|
$
|
1,165
|
|
Net adjustment for aircraft leases (1)
|
136
|
|
|
134
|
|
||
Adjustment for fuel hedge accounting
|
(70
|
)
|
|
(42
|
)
|
||
Adjusted Operating income, non-GAAP
|
$
|
2,194
|
|
|
$
|
1,257
|
|
|
|
|
|
||||
Average invested capital (2)
|
$
|
11,616
|
|
|
$
|
11,769
|
|
Equity adjustment for hedge accounting
|
(61
|
)
|
|
81
|
|
||
Adjusted average invested capital
|
$
|
11,555
|
|
|
$
|
11,850
|
|
|
|
|
|
||||
ROIC, pre-tax
|
19.0
|
%
|
|
10.6
|
%
|
|
|
Three months ended
|
|
|
|
Nine months ended
|
|
|
||||||||||||||
(in millions, except per share amounts)
|
|
September 30,
|
|
|
|
September 30,
|
|
|
||||||||||||||
GAAP
|
|
2014
|
|
2013
|
|
Percent Change
|
|
2014
|
|
2013
|
|
Percent Change
|
||||||||||
Operating income
|
|
$
|
614
|
|
|
$
|
390
|
|
|
57.4
|
%
|
|
$
|
1,605
|
|
|
$
|
893
|
|
|
79.7
|
%
|
Net income
|
|
$
|
329
|
|
|
$
|
259
|
|
|
27.0
|
%
|
|
$
|
946
|
|
|
$
|
542
|
|
|
74.5
|
%
|
Net income per share, diluted
|
|
$
|
0.48
|
|
|
$
|
0.37
|
|
|
29.7
|
%
|
|
$
|
1.36
|
|
|
$
|
0.75
|
|
|
81.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income
|
|
$
|
649
|
|
|
$
|
439
|
|
|
47.8
|
%
|
|
$
|
1,710
|
|
|
$
|
1,030
|
|
|
66.0
|
%
|
Net income
|
|
$
|
382
|
|
|
$
|
241
|
|
|
58.5
|
%
|
|
$
|
993
|
|
|
$
|
569
|
|
|
74.5
|
%
|
Net income per share, diluted
|
|
$
|
0.55
|
|
|
$
|
0.34
|
|
|
61.8
|
%
|
|
$
|
1.42
|
|
|
$
|
0.79
|
|
|
79.7
|
%
|
Period
|
Average percent of estimated fuel consumption covered by fuel derivative contracts at varying WTI/Brent Crude Oil, Heating Oil, and Gulf Coast Jet Fuel-equivalent price levels
|
|
Fourth quarter 2014
|
Approx. 20%
|
|
2015
|
Approx. 40%
|
|
2016
|
Approx. 40%
|
|
2017
|
Approx. 40%
|
|
2018
|
Approx. 5%
|
Year
|
|
Fair value (liability) of fuel derivative contracts at September 30, 2014
|
|
Amount of gains (losses) deferred in AOCI at September 30, 2014 (net of tax)
|
||||
Remainder of 2014
|
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
2015
|
|
(22
|
)
|
|
(89
|
)
|
||
2016
|
|
56
|
|
|
(22
|
)
|
||
2017
|
|
21
|
|
|
2
|
|
||
2018
|
|
$
|
3
|
|
|
$
|
—
|
|
Total
|
|
$
|
53
|
|
|
$
|
(113
|
)
|
|
Estimated economic jet fuel price per gallon,
including taxes |
|
Average Brent Crude Oil price per barrel
|
4Q 2014 (2)
|
|
$70
|
$2.30 - $2.35
|
|
$80
|
$2.50 - $2.55
|
|
Current Market (1)
|
$2.70 - $2.75
|
|
$100
|
$3.00 - $3.05
|
|
$110
|
$3.20 - $3.25
|
|
Estimated Premium Costs (3)
|
$13 million
|
|
Three months ended September 30,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
44
|
|
|
$
|
(76
|
)
|
Ineffectiveness from fuel hedges settling in future periods
|
11
|
|
|
15
|
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
(5
|
)
|
|
(17
|
)
|
||
Premium cost of fuel contracts
|
15
|
|
|
22
|
|
||
Other
|
1
|
|
|
(3
|
)
|
||
|
$
|
66
|
|
|
$
|
(59
|
)
|
|
Nine months ended September 30,
|
|
Per ASM
|
|
Percent
|
|||||||||
(in cents, except for percentages)
|
2014
|
|
2013
|
|
change
|
|
change
|
|||||||
Salaries, wages, and benefits
|
|
4.10
|
¢
|
|
|
3.81
|
¢
|
|
|
0.29
|
¢
|
|
7.6
|
%
|
Fuel and oil
|
4.20
|
|
|
4.46
|
|
|
(0.26
|
)
|
|
(5.8
|
)
|
|||
Maintenance materials and repairs
|
0.75
|
|
|
0.85
|
|
|
(0.10
|
)
|
|
(11.8
|
)
|
|||
Aircraft rentals
|
0.23
|
|
|
0.28
|
|
|
(0.05
|
)
|
|
(17.9
|
)
|
|||
Landing fees and other rentals
|
0.86
|
|
|
0.86
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
0.70
|
|
|
0.65
|
|
|
0.05
|
|
|
7.7
|
|
|||
Acquisition and integration
|
0.08
|
|
|
0.07
|
|
|
0.01
|
|
|
14.3
|
|
|||
Other operating expenses
|
1.66
|
|
|
1.59
|
|
|
0.07
|
|
|
4.4
|
|
|||
Total
|
|
12.58
|
¢
|
|
|
12.57
|
¢
|
|
|
0.01
|
¢
|
|
0.1
|
%
|
|
Nine months ended September 30,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
5
|
|
|
$
|
(112
|
)
|
Ineffectiveness from fuel hedges settling in future periods
|
(31
|
)
|
|
27
|
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
(5
|
)
|
|
(10
|
)
|
||
Premium cost of fuel contracts
|
49
|
|
|
39
|
|
||
Other
|
(2
|
)
|
|
(2
|
)
|
||
|
$
|
16
|
|
|
$
|
(58
|
)
|
|
The Boeing Company
737 NG
|
|
|
The Boeing Company
737 MAX
|
|
|
|||||||
|
-700 Firm Orders
|
|
-800 Firm Orders
|
Options
|
Additional -700 A/C
|
|
-7
Firm Orders |
-8
Firm Orders |
|
Options
|
|
Total
|
|
2014
|
—
|
|
33
|
—
|
22
|
|
—
|
—
|
|
—
|
|
55
|
(3)
|
2015
|
—
|
|
19
|
—
|
14
|
|
—
|
—
|
|
—
|
|
33
|
|
2016
|
31
|
|
—
|
10
|
4
|
|
—
|
—
|
|
—
|
|
45
|
|
2017
|
15
|
|
—
|
12
|
—
|
|
—
|
14
|
|
—
|
|
41
|
|
2018
|
10
|
|
—
|
12
|
—
|
|
—
|
13
|
|
—
|
|
35
|
|
2019
|
—
|
|
—
|
—
|
—
|
|
15
|
10
|
|
—
|
|
25
|
|
2020
|
—
|
|
—
|
—
|
—
|
|
14
|
22
|
|
—
|
|
36
|
|
2021
|
—
|
|
—
|
—
|
—
|
|
1
|
33
|
|
18
|
|
52
|
|
2022
|
—
|
|
—
|
—
|
—
|
|
—
|
30
|
|
19
|
|
49
|
|
2023
|
—
|
|
—
|
—
|
—
|
|
—
|
24
|
|
23
|
|
47
|
|
2024
|
—
|
|
—
|
—
|
—
|
|
—
|
24
|
|
23
|
|
47
|
|
2025
|
—
|
|
—
|
—
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
2026
|
—
|
|
—
|
—
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
2027
|
—
|
|
—
|
—
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
Total
|
56
|
(1)
|
52
|
34
|
40
|
|
30
|
170
|
(2)
|
191
|
|
573
|
|
|
|
|
|
Average
|
|
Number
|
|
Number
|
|
Number
|
||||
Type
|
|
Seats
|
|
Age (Yrs)
|
|
of Aircraft
|
|
Owned
|
|
Leased
|
||||
717-200
|
|
117
|
|
13
|
|
|
37
|
|
|
10
|
|
|
27
|
|
737-300
|
|
137 or 143
|
|
21
|
|
|
122
|
|
(a)
|
76
|
|
|
46
|
|
737-500
|
|
122
|
|
23
|
|
|
13
|
|
|
10
|
|
|
3
|
|
737-700
|
|
137 or 143
|
|
10
|
|
|
436
|
|
(b)
|
383
|
|
|
53
|
|
737-800
|
|
175
|
|
1
|
|
|
77
|
|
|
70
|
|
|
7
|
|
TOTALS
|
|
|
|
|
|
685
|
|
|
549
|
|
|
136
|
|
Issuer Purchases of Equity Securities (1)
|
||||||||||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
|
|
|
|
|
|
Total number of
|
|
Maximum dollar
|
||||||
|
|
|
|
|
|
shares purchased
|
|
value of shares that
|
||||||
|
|
Total number
|
|
Average
|
|
as part of publicly
|
|
may yet be purchased
|
||||||
|
|
of shares
|
|
price paid
|
|
announced plans
|
|
under the plans
|
||||||
Period
|
|
purchased
|
|
per share
|
|
or programs
|
|
or programs
|
||||||
July 1, 2014 through
July 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
780,356,300
|
|
August 1, 2014 through
August 31, 2014
|
|
6,430,622
|
|
(2)(3)
|
$
|
—
|
|
(2)(3)
|
6,430,622
|
|
|
$
|
580,356,300
|
|
September 1, 2014 through
September 30, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
580,356,300
|
|
Total
|
|
6,430,622
|
|
|
|
|
6,430,622
|
|
|
|
(1)
|
On May 14, 2014, the Company’s Board of Directors authorized the repurchase of up to $1 billion of the Company’s common stock in a new share repurchase authorization. Repurchases are made in accordance with applicable securities laws in open market, private, or accelerated repurchase transactions from time to time, depending on market conditions, and may be discontinued at any time.
|
(2)
|
Under an accelerated share repurchase program entered into by the Company with a third party financial institution in second quarter 2014 (“Second Quarter ASR Program”), the Company paid $200 million and received an initial delivery of 6,021,678 shares during second quarter 2014, representing an estimated 75 percent of the shares to be purchased by the Company under the Second Quarter ASR Program based on a price of $24.91 per share, which was the closing price of the Company’s common stock on the New York Stock Exchange on May 14, 2014. Final settlement of this Second Quarter ASR Program occurred in August 2014 and was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period completed in August 2014. Upon settlement, the third party financial institution delivered 1,390,299 additional shares of the Company’s common stock to the Company. In total, the average purchase price per share for the 7,411,977 shares repurchased under the Second Quarter ASR Program, upon completion of the Second Quarter ASR Program in August 2014, was $26.98.
|
(3)
|
During August 2014, under the Third Quarter ASR Program the Company paid $200 million and received an initial delivery of 5,040,323 shares during third quarter 2014, representing an estimated 75 percent of the shares to be purchased by the Company under the Third Quarter ASR Program based on a price of $29.76 per share, which was the closing price of the Company's common stock on the New York Stock Exchange on August 15, 2014. Final settlement of this Third Quarter ASR Program occurred in October 2014 and was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period completed in October 2014. Upon settlement, the third party financial institution delivered 1,107,489 additional shares of the Company’s common stock to the Company. In total, the average purchase price per share for the 6,147,812 shares repurchased under the Third Quarter ASR Program, upon completion of the Third Quarter ASR Program in October 2014, was $32.53.
|
3.1
|
Restated Certificate of Formation of the Company, effective May 18, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-7259)).
|
3.2
|
Amended and Restated Bylaws of the Company, effective November 19, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated November 19, 2009 (File No. 1-7259)).
|
10.1
|
Supplemental Agreement No. 88 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company. (1)
|
10.2
|
Amended and Restated Southwest Airlines Co. 2005 Excess Benefit Plan (as amended and restated effective for plan years beginning on and after January 1, 2015) (2)
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
32.1
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer. (3)
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
(1)
|
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
|
(2)
|
Management contract or compensatory plan or arrangement.
|
(3)
|
Furnished, not filed.
|
|
SOUTHWEST AIRLINES CO.
|
|
|
|
|
October 29, 2014
|
By
|
/s/ Tammy Romo
|
|
|
|
|
|
Tammy Romo
|
|
|
Senior Vice President Finance & Chief Financial Officer
|
|
|
(On behalf of the Registrant and in
|
|
|
her capacity as Principal Financial
|
|
|
and Accounting Officer)
|
3.1
|
Restated Certificate of Formation of the Company, effective May 18, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-7259)).
|
3.2
|
Amended and Restated Bylaws of the Company, effective November 19, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated November 19, 2009 (File No. 1-7259)).
|
10.1
|
Supplemental Agreement No. 88 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company. (1)
|
10.2
|
Amended and Restated Southwest Airlines Co. 2005 Excess Benefit Plan (as amended and restated effective for plan years beginning on and after January 1, 2015) (2)
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
32.1
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer. (3)
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
(1)
|
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
|
(2)
|
Management contract or compensatory plan or arrangement.
|
(3)
|
Furnished, not filed.
|
Supplemental Agreement No. 88
|
|
to
|
|
Purchase Agreement No. 1810
|
|
between
|
|
THE BOEING COMPANY
|
|
and
|
|
SOUTHWEST AIRLINES CO.
|
|
Relating to Boeing Model 737-7H4 and 737-8H4 Aircraft
|
P.A. No. 1810
|
SA-88-1
|
3.
|
Attachment A to Letter Agreement No. SWA-PA-1810-LA-1001315R3, *** is deleted in its entirety and a new Attachment A (identified by “SA-88”) is attached hereto and incorporated into the Purchase Agreement by this reference. The new Attachment A reflects the revised delivery month of MSN 36909.
|
THE BOEING COMPANY
|
SOUTHWEST AIRLINES CO.
|
By:
/s/ Jeff Solomon
|
By:
/s/ Chris Monroe
____________
|
Its:
Attorney‑In‑Fact
|
Chris Monroe
Its:
VP, Treasurer
_______________
|
P.A. No. 1810
|
SA-88-2
|
TABLE OF CONTENTS
|
||
|
Page
|
SA
|
|
Number
|
Number
|
1.
|
Subject Matter of Sale
|
1-1
|
SA-82
|
|
|
|
|
2.
|
Delivery, Title and Risk
|
|
|
|
of Loss
|
2-1
|
SA-28
|
|
|
|
|
3.
|
Price of Aircraft
|
3‑1
|
SA-82
|
|
|
|
|
4.
|
Taxes
|
4-1
|
|
|
|
|
|
5.
|
Payment
|
5‑1
|
|
|
|
|
|
6.
|
Excusable Delay
|
6‑1
|
|
|
|
|
|
7.
|
Changes to the Detail
|
|
|
|
Specification
|
7-1
|
SA-73
|
|
|
|
|
8.
|
Federal Aviation Requirements and
|
|
|
|
Certificates and Export License
|
8-1
|
|
|
|
|
|
9.
|
Representatives, Inspection,
|
|
|
|
Flights and Test Data
|
9-1
|
|
|
|
|
|
10.
|
Assignment, Resale or Lease
|
10‑1
|
|
|
|
|
|
11.
|
Termination for Certain Events
|
11‑1
|
|
|
|
|
|
12.
|
Product Assurance; Disclaimer and
|
|
|
|
Release; Exclusion of Liabilities;
|
|
|
|
Customer Support; Indemnification
|
|
|
|
and Insurance
|
12-1
|
|
|
|
|
|
13.
|
Buyer Furnished Equipment and
|
|
|
|
Spare Parts
|
13-1
|
|
|
|
|
|
14.
|
Contractual Notices and Requests
|
14‑1
|
|
|
|
|
|
15.
|
Miscellaneous
|
15‑1
|
|
|
|
|
|
P.A. No. 1810
|
i
|
|
K/SWA
|
|
SA-88
|
Table of Contents
|
||
|
|
SA
|
|
|
Number
|
1a
|
Aircraft Information Table – Block 700LUV Aircraft
|
|
SA-85
|
|
|
|
|
1b
|
Aircraft Information Table – Block 800LUV Aircraft
|
|
SA-82
|
|
|
|
|
1c
|
Aircraft Information Table – Block 800LUV Aircraft
|
|
SA-88
|
|
(non-ETOPS Configuration)
|
|
|
1810-1R1
|
Waiver of Aircraft Demonstration Flight
|
|
SA-75
|
P.A. No. 1810
|
ii
|
|
K/SWA
|
|
SA-88
|
Table of Contents
|
||
|
|
SA
|
|
|
Number
|
P.A. No. 1810
|
iii
|
|
K/SWA
|
|
SA-88
|
Table of Contents
|
||
|
|
SA
|
|
|
Number
|
SWA-PA-1810-LA-1105888R4
|
***
|
|
SA-85
|
|
|
|
|
SWA-PA-1810-LA-1105889
|
***
|
|
SA-75
|
|
|
|
|
SWA-PA-01810/03729-LA-1301169
|
***
|
|
SA-83
|
|
|
|
|
SWA-PA-1810-LA-1303010
|
***
|
|
SA-85
|
Table
|
Title
|
Last Updated under SA
|
Current Status
|
1
|
Aircraft Information Table
|
SA-75
|
Inactive
|
2
|
Option Aircraft Information Table
|
SA-74
|
Deleted under SA-75
|
Exhibits
|
Title
|
Last Updated under SA
|
Current Status
|
A
|
Aircraft Configuration – 737-700
|
SA-36
|
Inactive
|
A-Winglet
|
Aircraft Configuration
|
SA-36
|
Inactive
|
A-1-Winglet
|
Aircraft Configuration
|
SA-36
|
Inactive
|
A-1A
|
Aircraft Configuration - 737-700 Block T-W-2c
|
SA-36
|
Inactive
|
A-2
|
Aircraft Configuration - 737-700 Block T-W-2 / T-W-2a
|
SA-47
|
Inactive
|
A-3
|
Aircraft Configuration - 737-700 Block T-W-2 / T-W-2a
|
SA-61
|
Inactive
|
P.A. No. 1810
|
iv
|
|
K/SWA
|
|
SA-88
|
TABLE OF CONTENTS
|
A-4
|
Aircraft Configuration - 737-700 Block T-W-2b Aircraft
|
SA-66
|
Inactive
|
C.2
|
737-800 Customer Support Variables
|
SA-71
|
Deleted under SA-75
|
D
|
Price Adjustment Due to
Economic Fluctuations – Aircraft Price Adjustment
(July 1992 Base Price)
|
|
Inactive
|
D-1
|
Price Adjustment Due to Economic Fluctuations – Aircraft Price Adjustment
(July 1999 Base Price)
|
SA-13
|
Inactive
|
E.2
|
737-800 Buyer Furnished Equipment Provisions Document
|
SA-73
|
Deleted under SA-75
|
Letter Agreement
|
Title
|
Last Updated under SA
|
Current Status
|
6‑1162‑RLL‑933R21
|
Option Aircraft
|
SA-60
|
Deleted under SA-75
|
6‑1162‑RLL‑935R1
|
Performance Guarantees
|
SA-1
|
Inactive
|
6‑1162‑RLL‑936R4
|
Certain Contractual Matters
|
SA-4
|
Inactive
|
6‑1162‑RLL‑937
|
Alternate Advance Payment Schedule
|
|
Inactive
|
6‑1162‑RLL‑938
|
***
|
|
Inactive
|
6‑1162‑RLL‑939R1
|
Certification Flight Test Aircraft
|
SA-1
|
Inactive
|
6‑1162‑RLL‑940R1
|
Training Matters
|
SA-1
|
Inactive
|
6‑1162‑RLL‑942
|
Open Configuration Matters
|
|
Inactive
|
6‑1162‑RLL‑943R1
|
Substitution Rights
|
SA-6
|
Deleted under SA 75
|
6‑1162‑RLL‑944
|
***
|
|
Inactive
|
6-1162-RLL-945
|
Comparison of 737-7H4 and 737-3H4 Block Fuel Burn
|
|
Inactive
|
6-1162-RLL-1855R3
|
Additional Contractual Matters
|
SA-4
|
Inactive
|
6-1162-RLL-1856
|
***
|
SA-1
|
Inactive
|
6-1162-RLL-1857
|
Service Ready Validation Program Field Test
|
SA-1
|
Inactive
|
6-1162-RLL-1858R1
|
Escalation Matters
|
SA-4
|
Inactive
|
6-1162-RLL-2036
|
Amortization of Costs for
Customer Unique Changes
|
SA-1
|
Inactive
|
P.A. No. 1810
|
v
|
|
K/SWA
|
|
SA-88
|
TABLE OF CONTENTS
|
Letter Agreement
|
Title
|
Last Updated under SA
|
Current Status
|
6-1162-RLL-2037
|
Reconciliation of the Aircraft Basic Price
|
SA-1
|
Inactive
|
6-1162-RLL-2073
|
Maintenance Training Matters
|
SA-1
|
Inactive
|
6-1162-KJJ-058R1
|
Additional Substitution Rights
|
SA-71
|
Deleted under SA-75
|
6-1162-KJJ-150
|
Flight Control Computer & Mode Control Panel Spares Matter
|
SA-14
|
Inactive
|
6-1162-MSA-185R3
|
Delivery Change Contractual Matters
|
SA-21
|
Inactive
|
6-1162-JMG-747R1
|
***
|
SA-36
|
Inactive
|
6-1162-CHL-217
|
Rescheduled Flight Test Aircraft
|
SA-32
|
Inactive
|
6-1162-NIW-606R1
|
***
|
SA-36
|
Inactive
|
6-1162-NIW-640
|
Early Delivery of Two April 2004 Aircraft
|
SA-35
|
Inactive
|
6-1162-NIW-889
|
Warranty - Exterior Color Schemes and Markings for YA143 and on
|
SA-39
|
Inactive
|
6-1162-NIW-1142
|
***
|
SA-43
|
Inactive
|
6-1162-NIW-1369
|
***
|
SA-46
|
Inactive
|
6-1162-NIW-1983
|
***
|
SA-62
|
Inactive
|
SWA-PA-1810-LA-1000419
|
***
|
SA-64
|
Inactive
|
6-1162-NIW-890R1
|
***
|
SA-75
SA-39
|
Inactive
|
6-1162-KJJ-054R2
|
Business Matters
|
SA-75
|
Inactive
|
6-1162-JMG-669R9
|
***
|
SA-75
SA-75
SA-54
|
Inactive
|
SWA-PA-1810-LA-02710R1
|
***
|
SA-72
|
Inactive
|
P.A. No. 1810
|
vi
|
|
K/SWA
|
|
SA-88
|
Table 1c to
|
Purchase Agreement No. PA-01810
|
Aircraft Delivery, Description, Price and Advance Payments
|
Block 800LUV Aircraft (non-ETOPS Configuration)
|
Airframe Model/MTOW:
|
737-800
|
174200 pounds
|
|
Detail Specification:
D019A001SWA38P-1 Rev C (3/29/2013)
|
||
|
|
|
|
|
|
|
Engine Model/Thrust:
|
CFM56-7B27
|
27300 pounds
|
Note 1
|
Base Aircraft Price Base Year/Escalation Formula:
|
Jul-11
|
ECI-MFG/CPI
|
|
|
|
|
|
|
|
Base Aircraft Price:
|
|
***
|
|
Engine Price Base Year/Escalation Formula:
|
N/A
|
N/A
|
Special Features:
|
***
|
|
|
Add'l Features/Changes
|
***
|
Total Special Features (Exhibit A-7)
|
***
|
|
|
|
|
|
|
|
|
Sub-Total of Airframe and Features:
|
***
|
|
Aircraft Price Escalation Data:
|
|
|
|
|
|
|
Engine Price (Per Aircraft):
|
***
|
|
Base Year Index (ECI):
|
***
|
|
|
|
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
***
|
|
Base Year Index (CPI):
|
***
|
|
|
|
|
|
Buyer Furnished Equipment (BFE) Estimate:
|
***
|
|
|
|
|
|
|
|
|
Seller Purchased Equipment (SPE) Estimate:
|
***
|
|
|
|
Delivery
Date
|
Number of
Aircraft
|
Escalation
Factor
(Airframe)
|
Aircraft
Serial
Number
|
Escalation
Forecast
|
Sub-Block
Note 2
|
Escalation Estimate
Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
***
|
24 Mos.
***
|
21/18/12/9/6 Mos.
***
|
Total
***
|
|||||||
Sep-2013
|
3
|
***
|
36933, 36912, 36914
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Nov-2013
|
3
|
***
|
36915, 33939, 42526
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Dec-2013
|
3
|
***
|
36917, 36919, 36731
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Mar-2014
|
2
|
***
|
37004, 36896
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Apr-2014
|
3
|
***
|
42384, 36894, 36895
|
***
|
|
***
|
***
|
***
|
***
|
***
|
May-2014
|
3
|
***
|
36897, 42385, 42521
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2014
|
4
|
***
|
36898, 36905, 42522, 42523
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2014
|
2
|
***
|
60082, 60083
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
Jul-2014
|
1
|
***
|
36911
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jul-2014
|
3
|
***
|
60084, 60085, 60086
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
Aug-2014
|
6
|
***
|
36907, 42524,35973, 42525,
36935, 42528
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Sep-2014
|
2
|
***
|
42527, 42531
|
***
|
|
***
|
***
|
***
|
***
|
***
|
SWA-PA-01810
|
|
SA-88
|
63879 / 63887 / 64110 / 64111 / 66379 / 68788
/ 70150
|
Boeing Proprietary
|
Page 1
|
Table 1c to
|
Purchase Agreement No. PA-01810
|
Aircraft Delivery, Description, Price and Advance Payments
|
Block 800LUV Aircraft (non-ETOPS Configuration)
|
Delivery
Date
|
Number of
Aircraft
|
Escalation
Factor
(Airframe)
|
Aircraft
Serial
Number
|
Escalation
Forecast
|
Sub-Block
Note 2
|
Escalation Estimate
Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
***
|
24 Mos.
***
|
21/18/12/9/6 Mos.
***
|
Total
***
|
|||||||
Sep-2014
|
1
|
***
|
36909
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Oct-2014
|
1
|
***
|
36920
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Nov-2014
|
1
|
***
|
36971
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Dec-2014
|
2
|
***
|
37037, 37045
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Dec-2014
|
2
|
***
|
42529, 42530
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jan-2015
|
2
|
***
|
36899, 42535
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Feb-2015
|
3
|
***
|
36901, 36654, 36906
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Mar-2015
|
2
|
***
|
36902, 36936
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Apr-2015
|
2
|
***
|
36649, 36652
|
***
|
|
***
|
***
|
***
|
***
|
***
|
May-2015
|
2
|
***
|
36903, 36657
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2015
|
2
|
***
|
36655, 36656
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Nov-2015
|
3
|
***
|
36937, 36715, 36940
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Dec-2015
|
3
|
***
|
36941, 36734, 35976
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Total:
|
61
|
SWA-PA-01810
|
|
SA-88
|
63879 / 63887 / 64110 / 64111 / 66379 / 68788
/ 70150
|
Boeing Proprietary
|
Page 2
|
Attachment A to SWA-PA-1810-LA1001315R3
|
Page 1 of 2
|
No.
1
|
Model
737-700
|
Aircraft Block
T-W-2b
|
MSN's
36962
|
Current Delivery Mo.
July-11
|
Base Year
1999
|
***
***
|
2
|
737-700
|
T-W-2b
|
36963
|
July-11
|
1999
|
***
|
3
|
737-700
|
T-W-2b
|
36965
|
August-11
|
1999
|
***
|
4
|
737-700
|
T-W-2b
|
36967
|
October-11
|
1999
|
***
|
5
|
737-800
|
800LUV
|
36980
|
March-12
|
2011
|
***
|
6
|
737-800
|
800LUV
|
36983
|
April-12
|
2011
|
***
|
7
|
737-800
|
800LUV
|
36985
|
May-12
|
2011
|
***
|
8
|
737-800
|
800LUV
|
36987
|
May-12
|
2011
|
***
|
9
|
737-800
|
800LUV
|
36990
|
July-12
|
2011
|
***
|
10
|
737-800
|
800LUV
|
36992
|
August-12
|
2011
|
***
|
11
|
737-800
|
800LUV
|
36994
|
September-12
|
2011
|
***
|
12
|
737-800
|
800LUV
|
37003
|
November-12
|
2011
|
***
|
13
|
737-800
|
800LUV
|
37009
|
December-12
|
2011
|
***
|
14
|
737-800
|
800LUV
|
36973
|
March-13
|
2011
|
***
|
15
|
737-800
|
800LUV
|
36998
|
March-13
|
2011
|
***
|
16
|
737-800
|
800LUV
|
36908
|
April-13
|
2011
|
***
|
17
|
737-800
|
800LUV
|
36933
|
September-13
|
2011
|
***
|
18
|
737-800
|
800LUV
|
42526
|
November-13
|
2011
|
***
|
19
|
737-800
|
800LUV
|
37004
|
March-14
|
2011
|
***
|
20
|
737-800
|
800LUV
|
42521
|
May-14
|
2011
|
***
|
21
|
737-800
|
800LUV
|
42522
|
June-14
|
2011
|
***
|
22
|
737-800
|
800LUV
|
60082
|
June-14
|
2011
|
***
|
23
|
737-800
|
800LUV
|
60083
|
June-14
|
2011
|
***
|
24
|
737-800
|
800LUV
|
42523
|
June-14
|
2011
|
***
|
25
|
737-800
|
800LUV
|
60084
|
July-14
|
2011
|
***
|
26
|
737-800
|
800LUV
|
60085
|
July-14
|
2011
|
***
|
27
|
737-800
|
800LUV
|
60086
|
July-14
|
2011
|
***
|
28
|
737-800
|
800LUV
|
42524
|
August-14
|
2011
|
|
29
|
737-800
|
800LUV
|
42525
|
August-14
|
2011
|
***
|
30
|
737-800
|
800LUV
|
36935
|
August-14
|
2011
|
|
31
|
737-800
|
800LUV
|
42527
|
September-14
|
2011
|
|
32
|
737-800
|
800LUV
|
42528
|
August-14
|
2011
|
***
|
33
|
737-800
|
800LUV
|
42531
|
September-14
|
2011
|
|
34
|
737-800
|
800LUV
|
36909
|
September-14
|
2011
|
|
35
|
737-800
|
800LUV
|
42529
|
December-14
|
2011
|
|
36
|
737-800
|
800LUV
|
42530
|
December-14
|
2011
|
|
37
|
737-800
|
800LUV
|
37045
|
December-14
|
2011
|
|
38
|
737-800
|
800LUV
|
37037
|
December-14
|
2011
|
|
39
|
737-800
|
800LUV
|
42535
|
January-15
|
2011
|
|
40
|
737-800
|
800LUV
|
36940
|
November-15
|
2011
|
|
41
|
737-700
|
700LUV
|
36938
|
April-16
|
2011
|
|
42
|
737-700
|
700LUV
|
36939
|
May-16
|
2011
|
|
43
|
737-700
|
700LUV
|
36945
|
July-16
|
2011
|
|
44
|
737-700
|
700LUV
|
36977
|
September-16
|
2011
|
|
45
|
737-700
|
700LUV
|
42532
|
January-17
|
2011
|
|
46
|
737-700
|
700LUV
|
36910
|
January-17
|
2011
|
|
47
|
737-700
|
700LUV
|
36970
|
February-17
|
2011
|
|
48
|
737-700
|
700LUV
|
36969
|
February-17
|
2011
|
|
SA-88
|
Attachment A to SWA-PA-1810-LA1001315R3
|
Page 2 of 2
|
SA-88
|
|
|
Page
|
ARTICLE I
|
DEFINITIONS
|
1
|
ARTICLE II
|
ELIGIBILITY
|
3
|
ARTICLE III
|
CREDITS TO ACCOUNT
|
3
|
ARTICLE IV
|
ENTITLEMENT TO BENEFITS
|
4
|
ARTICLE V
|
PAYMENT OF BENEFITS
|
5
|
ARTICLE VI
|
IN-SERVICE WITHDRAWALS AND LOANS
|
8
|
ARTICLE VII
|
ADMINISTRATION OF THE PLAN
|
8
|
ARTICLE VIII
|
CLAIMS REVIEW PROCEDURE
|
9
|
ARTICLE IX
|
LIMITATION OF RIGHTS
|
11
|
ARTICLE X
|
LIMITATION OF ASSIGNMENT AND PAYMENTS TO LEGALLY INCOMPETENT DISTRIBUTEE
|
11
|
ARTICLE XI
|
AMENDMENT TO OR TERMINATION OF THE PLAN
|
11
|
ARTICLE XII
|
STATUS OF PARTICIPANT AS UNSECURED CREDITOR
|
12
|
ARTICLE XIII
|
GENERAL AND MISCELLANEOUS
|
13
|
|
SOUTHWEST AIRLINES CO.
|
|
|
|
|
|
By:
|
/s/ Gary C. Kelly
|
|
Name:
|
Gary C. Kelly
|
|
Its:
|
President & Chief Executive Officer
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|