Condensed Consolidated Balance
| Condensed Consolidated Balance Sheet (USD $) | ||
| In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
| Current assets | ||
| Cash and cash equivalents | $902 | $1,368 |
| Short-term investments | 1,352 | 435 |
| Accounts and other receivables | 225 | 209 |
| Inventories of parts and supplies, at cost | 196 | 203 |
| Deferred income taxes | 365 | 365 |
| Prepaid expenses and other current assets | 87 | 73 |
| Total current assets | 3,127 | 2,653 |
| Property and equipment, at cost | ||
| Flight equipment | 13,761 | 13,722 |
| Ground property and equipment | 1,870 | 1,769 |
| Deposits on flight equipment purchase contracts | 233 | 380 |
| Property and equipment, at cost | 15,864 | 15,871 |
| Less allowance for depreciation and amortization | 5,166 | 4,831 |
| Property and equipment, net | 10,698 | 11,040 |
| Other assets | 275 | 375 |
| Total assets | 14,100 | 14,068 |
| Current liabilities | ||
| Accounts payable | 694 | 668 |
| Accrued liabilities | 918 | 1,012 |
| Current maturities of long-term debt | 198 | 163 |
| Air traffic liability | 1,214 | 963 |
| Total current liabilities | 3,024 | 2,806 |
| Long-term debt less current maturities | 3,378 | 3,498 |
| Deferred income taxes | 1,947 | 1,904 |
| Deferred gains from sale and leaseback of aircraft | 125 | 105 |
| Other non-current liabilities | 409 | 802 |
| Stockholders' equity | ||
| Common stock | 808 | 808 |
| Capital in excess of par value | 1,226 | 1,215 |
| Treasury stock, at cost | (978) | (1,005) |
| Accumulated other comprehensive loss | (715) | (984) |
| Retained earnings | 4,876 | 4,919 |
| Total stockholders' equity | 5,217 | 4,953 |
| Total liabilities and stockholders' equity | $14,100 | $14,068 |
Condensed Consolidated Statemen
| Condensed Consolidated Statement of Operations (USD $) | ||||
| In Millions, except Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| OPERATING REVENUES | ||||
| Passenger | $2,550 | $2,767 | $7,308 | $7,927 |
| Freight | 28 | 37 | 87 | 108 |
| Other | 88 | 87 | 243 | 254 |
| Total operating revenues | 2,666 | 2,891 | 7,638 | 8,289 |
| OPERATING EXPENSES | ||||
| Salaries, wages, and benefits | 909 | 856 | 2,607 | 2,494 |
| Fuel and oil | 826 | 1,051 | 2,250 | 2,795 |
| Maintenance materials and repairs | 184 | 190 | 557 | 523 |
| Aircraft rentals | 47 | 38 | 140 | 115 |
| Landing fees and other rentals | 192 | 167 | 537 | 497 |
| Depreciation and amortization | 162 | 152 | 462 | 445 |
| Other operating expenses | 324 | 351 | 990 | 1,040 |
| Total operating expenses | 2,644 | 2,805 | 7,543 | 7,909 |
| OPERATING INCOME | 22 | 86 | 95 | 380 |
| OTHER EXPENSES (INCOME) | ||||
| Interest expense | 48 | 35 | 140 | 95 |
| Capitalized interest | (5) | (6) | (16) | (20) |
| Interest income | (3) | (7) | (11) | (18) |
| Other (gains) losses, net | 2 | 269 | 2 | (38) |
| Total other expenses (income) | 42 | 291 | 115 | 19 |
| INCOME (LOSS) BEFORE INCOME TAXES | (20) | (205) | (20) | 361 |
| PROVISION (BENEFIT) FOR INCOME TAXES | (4) | (85) | (4) | 127 |
| NET INCOME (LOSS) | ($16) | ($120) | ($16) | $234 |
| NET INCOME (LOSS) PER SHARE, BASIC | -0.02 | -0.16 | -0.02 | 0.32 |
| NET INCOME (LOSS) PER SHARE, DILUTED | -0.02 | -0.16 | -0.02 | 0.32 |
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
| Basic | 742 | 736 | 741 | 734 |
| Diluted | 742 | 736 | 741 | 739 |
1_Condensed Consolidated Statem
| Condensed Consolidated Statement of Cash Flow (USD $) | ||||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net Income (Loss) | ($16) | ($120) | ($16) | $234 |
| Adjustments to reconcile net income (loss) to cash provided by operating activities | ||||
| Depreciation and amortization | 162 | 152 | 462 | 445 |
| Amortization of deferred gains on sale and leaseback of aircraft | (4) | (3) | (11) | (9) |
| Share-based compensation expense | 3 | 4 | 10 | 14 |
| Deferred income taxes | 8 | (48) | 3 | 81 |
| Excess tax benefits from share-based compensation arrangements | (4) | 8 | (6) | 11 |
| Cash collateral received from (provided to) fuel derivative counterparties | 0 | (1,940) | (185) | 495 |
| Unrealized loss (gain) on fuel derivative instruments | 12 | 307 | 79 | 17 |
| Changes in certain assets and liabilities | ||||
| Accounts and other receivables | 12 | 62 | (16) | (105) |
| Other current assets | 11 | (48) | (7) | (98) |
| Accounts payable and accrued liabilities | (147) | (379) | (42) | (46) |
| Air traffic liability | 6 | (28) | 251 | 344 |
| Other, net | 29 | (243) | (29) | (359) |
| Net cash provided by operating activities | 72 | (2,276) | 493 | 1,024 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchases of property and equipment, net | (198) | (178) | (471) | (765) |
| Purchases of short-term investments | (1,707) | (794) | (4,797) | (4,241) |
| Proceeds from sales of short-term investments | 1,608 | 926 | 3,955 | 3,570 |
| Other, net | 0 | 0 | 1 | 0 |
| Net cash used in investing activities | (297) | (46) | (1,312) | (1,436) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Issuance of Long-term debt | 124 | 0 | 456 | 600 |
| Proceeds from credit line borrowing | 83 | 0 | 83 | 0 |
| Proceeds from sale and leaseback transactions | 0 | 0 | 381 | 0 |
| Proceeds from Employee stock plans | 4 | 85 | 11 | 113 |
| Repurchase of common stock | 0 | 0 | 0 | (54) |
| Payments of long-term debt and capital lease obligations | (22) | (15) | (64) | (41) |
| Payment of revolving credit facility | 0 | 0 | (400) | 0 |
| Payment of credit line borrowing | 0 | 0 | (91) | 0 |
| Excess tax benefits from share-based compensation arrangements | 4 | (8) | 6 | (11) |
| Payments of cash dividends | (3) | (3) | (13) | (13) |
| Other, net | (9) | 0 | (16) | (5) |
| Net cash provided by financing activities | 181 | 59 | 353 | 589 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 946 | 4,653 | 1,368 | 2,213 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 902 | 2,390 | 902 | 2,390 |
| CASH PAYMENTS FOR | ||||
| Interest, net of amount capitalized | 31 | 39 | 109 | 80 |
| Income taxes | $0 | $57 | $4 | $70 |
BASIS OF PRESENTATION
| BASIS OF PRESENTATION | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| BASIS OF PRESENTATION | 1.BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Southwest Airlines Co. (Company or Southwest) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.The unaudited condensed consolidated financial statements for the interim periods ended September 30, 2009 and 2008, include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods.This includes all normal and recurring adjustments, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.Financial results for the Company, and airlines in general, are seasonal in nature.Historically, the Companys revenues, as well as its overall financial performance, are better in its second and third fiscal quarters than in its first and fourth fiscal quarters.However, as a result of significant fluctuations in revenues and the price of jet fuel in some periods, the nature of the Companys fuel hedging program, the periodic volatility of commodities used by the Company for hedging jet fuel, and the accounting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 815 (ASC Topic 815, originally issued as Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended), the Company has experienced, and may continue to experience, significant volatility in its results in certain fiscal periods.See Note 5 for further information. Operating results for the three months and nine months ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ended December 31, 2009.For further information, refer to the consolidated financial statements and footnotes thereto included in the Southwest Airlines Co. Annual Report on Form 10-K for the year ended December 31, 2008. Certain prior period amounts have been reclassified to conform to the current presentation.In theunaudited Condensed ConsolidatedBalance Sheet as of December 31, 2008,the Company's cash collateral deposits related to fuel derivatives that have been provided to a counterparty have been adjusted to show a net presentationagainst the fair value of the Company's fuel derivative instruments.The entire portion of cash collateral deposits as of December 31, 2008, $240 million, has been reclassified to reduce Other deferred liabilities.In the Companys 2008 Form 10-K filing, these cash collateral deposits were presented gross and all were included as an increase to Prepaid expenses and other current assets.This change in presentation was made in order to comply with the requirements of ASC Subtopic 210-20 (originally issued as part of FIN 39-1, Amendment of FASB Interpretat |
NEW ACCOUNTING PRONOUNCEMENTS
| NEW ACCOUNTING PRONOUNCEMENTS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| NEW ACCOUNTING PRONOUNCEMENTS | 2.NEW ACCOUNTING PRONOUNCEMENTS On August 28, 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, Measuring Liabilities at Fair Value (ASU 2009-05).ASU 2009-05 provides additional guidance clarifying the measurement of liabilities at fair value.ASU 2009-05 is effective in fourth quarter 2009 for a calendar-year entity.The Company is currently evaluating the impact of ASU 2009-05 on its financial position, results of operations, cash flows, and disclosures. On September 23, 2009, the FASB ratified Emerging Issues Task Force Issue No. 08-1, Revenue Arrangements with Multiple Deliverables (EITF 08-1).EITF 08-1 updates the current guidance pertaining to multiple-element revenue arrangements included in ASC Subtopic 605-25, which originated primarily from EITF 00-21, also titled Revenue Arrangements with Multiple Deliverables.EITF 08-1 will be effective for annual reporting periods beginning January 1, 2011 for calendar-year entities.The Company is currently evaluating the impact of EITF 08-1 on its financial position, results of operations, cash flows, and disclosures. |
DIVIDENDS
| DIVIDENDS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| DIVIDENDS | 3.DIVIDENDS During the three month periods ended March 31, June 30, and September 30, 2009, dividends of $.0045 per share were declared on the 740 million shares, 741 million shares, and 742 million shares of Common Stock then outstanding, respectively.During the three month periods ended March 31, June 30, and September 30, 2008, dividends of $.0045 per share were declared on the 731 million shares, 733 million shares, and 737 million shares of Common Stock then outstanding, respectively. |
NET INCOME
| NET INCOME (LOSS) PER SHARE | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| NET INCOME (LOSS) PER SHARE | 4.NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net income (loss) per share (in millions except per share amounts): Three months ended September 30, Nine months ended September 30, 2009 2008 2009 2008 NUMERATOR: Net income (loss) $ (16 ) $ (120 ) $ (16 ) $ 234 DENOMINATOR: Weighted-average shares outstanding, basic 742 736 741 734 Dilutive effect of Employee stock options - - - 5 Adjusted weighted-average shares outstanding, diluted 742 736 741 739 NET INCOME (LOSS) PER SHARE: Basic $ (.02 ) $ (.16 ) $ (.02 ) $ .32 Diluted $ (.02 ) $ (.16 ) $ (.02 ) $ .32 The Company has excluded 81 million and 29 million shares, respectively, from its calculations of net income per share, diluted, for the three months ended September 30, 2009 and 2008, and has excluded 80 million and 57 million shares, respectively, from its calculations of net income per share, diluted, for the nine months ended September 30, 2009 and 2008, as they represent antidilutive stock options for the respective periods presented. |
FINANCIAL DERIVATIVE INSTRUMENT
| FINANCIAL DERIVATIVE INSTRUMENTS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| FINANCIAL DERIVATIVE INSTRUMENTS | 5.FINANCIAL DERIVATIVE INSTRUMENTS Fuel Contracts Airline operators are inherently dependent upon energy to operate and, therefore, are impacted by changes in jet fuel prices.Jet fuel and oil (including related taxes) consumed during the three months ended September 30, 2009 and 2008, represented approximately 31 percent and 37 percent of the Companys operating expenses, respectively. The Companys operating expenses have been extremely volatile in recent years due to dramatic increases and declines in energy prices.The Company endeavors to acquire jet fuel at the lowest possible cost and to reduce volatility in operating expenses through its fuel hedging program.Because jet fuel is not traded on an organized futures exchange, there are limited opportunities to hedge directly in jet fuel.However, the Company has found that financial derivative instruments in other commodities, such as crude oil, and refined products such as heating oil and unleaded gasoline, can be useful in decreasing its exposure to jet fuel price volatility.The Company does not purchase or hold any derivative financial instruments for trading purposes. The Company has used financial derivative instruments for both short-term and long-term time frames, and typically uses a mixture of purchased call options, collar structures (which include both a purchased call option and a sold put option), and fixed price swap agreements in its portfolio.Generally, when the Company perceives that prices are lower than historical or expected future levels, the Company prefers to use fixed price swap agreements and purchased call options.However, at times when the Company perceives that purchased call options have become too expensive, it may use more collar structures.Although the use of collar structures and swap agreements can reduce the overall cost of hedging, these instruments carry more risk than purchased call options in that the Company could end up in a liability position when the collar structure or swap agreement settles.With the use of purchased call options, the Company cannot be in a liability position at settlement. The following table provides information about the Companys volume of fuel hedging for the first nine months of 2009, and its portfolio as of September 30, 2009, for future periods.These hedge volumes are presented strictly from an economic standpoint and thus do not reflect whether the hedges qualified or will qualify for special hedge accounting as defined in ASC Topic 815.The Company defines its economic hedge as the net volume of fuel derivative contracts held, including the impact of positions that have been offset through sold positions, regardless of whether those contracts qualify for hedge accounting as defined in ASC Topic 815. Fuel hedged as of Approximate % September 30, 2009 of jet fuel Period (by year) (gallons in millions) consumption 2009 438 31 % * 2010 938 66 % * 2011 559 40 % * 2012 232 17 % * 2013 98 7 % * Period (by quarter for 2009) First quarter 2009 15 4 % Second |
COMPREHENSIVE INCOME
| COMPREHENSIVE INCOME (LOSS) | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| COMPREHENSIVE INCOME (LOSS) | 6.COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes changes in the fair value of certain financial derivative instruments, which qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses arising from the Companys postretirement benefit obligation.The differences between net income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2009 and 2008, were as follows: Three months ended September 30, (In millions) 2009 2008 Net loss $ (16 ) $ (120 ) Unrealized gain (loss) on derivative instruments, net of deferred taxes of $37 and ($1,015) 61 (1,629 ) Other, net of deferred taxes of $14 and ($2) 21 (3 ) Total other comprehensive income 82 (1,632 ) Comprehensive income (loss) $ 66 $ (1,752 ) Nine months ended September 30, (In millions) 2009 2008 Net income (loss) $ (16 ) $ 234 Unrealized gain (loss) on derivative instruments, net of deferred taxes of $137 and ($111) 222 (160 ) Other, net of deferred taxes of $30 and ($9) 47 (14 ) Total other comprehensive income (loss) 269 (174 ) Comprehensive income $ 253 $ 60 A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three and nine months ended September 30, 2009: Accumulated Fuel other hedge comprehensive (In millions) derivatives Other income (loss) Balance at June 30, 2009 $ (785 ) $ (12 ) $ (797 ) Third quarter 2009 changes in value (40 ) 21 (19 ) Reclassification to earnings 101 - 101 Balance at September 30, 2009 $ (724 ) $ 9 $ (715 ) Accumulated Fuel other hedge comprehensive (In millions) derivatives Other income (loss) Balance at December 31, 2008 $ (946 ) $ (38 ) $ (984 ) 2009 changes in value (85 ) 47 (38 ) Reclassification to earnings 307 - 307 Balance at September 30, 2009 $ (724 ) $ 9 $ (715 ) |
ACCRUED LIABILITIES
| ACCRUED LIABILITIES | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| ACCRUED LIABILITIES | 7.ACCRUED LIABILITIES September 30, December 31, (In millions) 2009 2008 Retirement plans $ 12 $ 86 Aircraft rentals 110 118 Vacation pay 184 175 Advances and deposits 16 23 Fuel derivative contracts 74 246 Deferred income taxes 169 36 Workers compensation 120 122 Other 233 206 Accrued liabilities $ 918 $ 1,012 |
POSTRETIREMENT BENEFITS
| POSTRETIREMENT BENEFITS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| POSTRETIREMENT BENEFITS | 8.POSTRETIREMENT BENEFITS The Company provides postretirement benefits to qualified retirees in the form of medical and dental coverage.Employees must meet minimum levels of service and age requirements as set forth by the Company, or as specified in collective bargaining agreements with specific workgroups.Employees meeting these requirements, as defined, may use accrued unused sick time to pay for medical and dental premiums from the age of retirement until age 65. The following table sets forth the Companys periodic postretirement benefit cost for each of the interim periods identified: Three months ended September 30, (In millions) 2009 2008 Service cost $ 3 $ 4 Interest cost 2 2 Amortization of prior service cost - - Recognized actuarial gain (6 ) (1 ) Net periodic postretirement benefit cost (income) $ (1 ) $ 5 Nine months ended September 30, (In millions) 2009 2008 Service cost $ 10 $ 11 Interest cost 4 4 Amortization of prior service cost 1 1 Recognized actuarial gain (7 ) (2 ) Net periodic postretirement benefit cost $ 8 $ 14 |
FINANCING TRANSACTIONS
| FINANCING TRANSACTIONS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| FINANCING TRANSACTIONS | 9.FINANCING TRANSACTIONS On April 29, 2009, the Company entered into a term loan agreement providing for loans to the Company aggregating up to $332 million, to be secured by mortgages on 14 of the Companys 737-700 aircraft.The Company has borrowed the full $332 million and secured the loan with the requisite 14 aircraft mortgages.The loan matures on May 6, 2019, and is repayable quarterly in installments of principal beginning August 6, 2009.The loan bears interest at the LIBO Rate (as defined in the term loan agreement) plus 3.30 percent, and interest is payable quarterly, beginning August 6, 2009.Concurrent with its entry into the term loan agreement, the Company entered into an interest rate swap agreement that effectively fixes the interest rate on the term loan for its entire term at 6.64 percent.The Company used the proceeds from the term loan for general corporate purposes, including the repayment of the Companys revolving credit facility. On July 1, 2009, the Company entered into a term loan agreement providing for loans to the Company aggregating up to $124 million, to be secured by mortgages on five of the Companys 737-700 aircraft.The Company has borrowed the full $124 million and secured this loan with the requisite five aircraft mortgages.The loan matures on July 1, 2019, and is repayable semi-annually in installments of principal beginning January 1, 2010.The loan bears interest at a fixed rate of 6.84 percent, and interest is payable semi-annually, beginning January 1, 2010.The Company used the proceeds from the term loan for general corporate purposes. During May 2009, the Company fully repaid the $400 million it had previously borrowed in 2008 under its former $600 million revolving credit facility.On September 29, 2009, the Company entered into a new $600 million unsecured revolving credit facility expiring in October 2012 and terminated the previous facility which would have expired in August 2010.At the Companys option, interest on the new facility can be calculated on one of several different bases.The new facility also contains a financial covenant requiring a minimum coverage ratio of adjusted pre-tax income to fixed obligations, as defined.As of September 30, 2009, the Company was in compliance with this covenant and there were no amounts outstanding under the revolving credit facility. |
COMMITMENTS AND CONTINGENCIES
| COMMITMENTS AND CONTINGENCIES | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| CONTINGENCIES | 10.COMMITMENTS AND CONTINGENCIES During the first quarter and early second quarter of 2008, the Company was named as a defendant in two putative class actions on behalf of persons who purchased air travel from the Company while the Company was allegedly in violation of FAA safety regulations. Claims alleged by the plaintiffs in these two putative class actions include breach of contract, breach of warranty, fraud/misrepresentation, unjust enrichment, and negligent and reckless operation of an aircraft.The Company believes that the class action lawsuits are without merit and intends to vigorously defenditself.Also in connection with this incident, during the first quarter and early second quarter of 2008, the Company received four letters from Shareholders demanding the Company commence an action on behalf of the Company against members of its Board of Directors and any other allegedly culpable parties for damages resulting from an alleged breach of fiduciary duties owed by them to the Company.In August 2008, Carbon County Employees Retirement System and Mark Cristello filed a related Shareholder derivative action in Texas state court naming certain directors and officers of the Company as individual defendants and the Company as a nominal defendant.The derivative action claims breach of fiduciary duty and seeks recovery by the Company of alleged monetary damages sustained as a result of the purported breach of fiduciary duty, as well as costs of the action.A Special Committee appointed by the Independent Directors of the Company has been evaluating the Shareholder demands.The parties have submitted to the court a proposed settlement that has been preliminarily approved by the court. The Company is from time to time subject to various other legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the Internal Revenue Service (IRS). The Company's management does not expect that the outcome in any of its currently ongoing legal proceedings or the outcome of any proposed adjustments presented to date by the IRS, individually or collectively, will have a material adverse effect on the Company's financial condition, results of operations, or cash flow. During 2008, the City of Dallas approved the Love Field Modernization Program (LFMP), a project to reconstruct Dallas Love Field (Airport) with modern, convenient air travel facilities.Pursuant to a Program Development Agreement (PDA) with the City of Dallas, the Company is managing this project, and major construction is expected to commence during late 2009, with completion scheduled for October 2014.Although subject to change, at the current time the project is expected to include the renovation of the Airport airline terminals and complete replacement of gate facilities with a new 20-gate facility, including infrastructure, systems and equipment, aircraft parking apron, fueling system, roadways and terminal curbside, baggage handling systems, passenger loading bridges and support systems, and other supporting infrastructure. The PDA authorizes the Company to spend up to $75 million, which would be reimbursed upon the |
FAIR VALUE MEASUREMENTS
| FAIR VALUE MEASUREMENTS | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| FAIR VALUE MEASUREMENTS | 11.FAIR VALUE MEASUREMENTS The Company adopted ASC Topic 820 (originally issued as SFAS 157, Fair Value Measurements) as of January 1, 2008.ASC Topic 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2009, the Company held certain items that are required to be measured at fair value on a recurring basis.These included cash equivalents, short-term investments, certain noncurrent investments, interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities.Cash equivalents consist of short-term, highly liquid, income-producing investments, all of which have maturities of 90 days or less, including money market funds, U.S. Government obligations, and obligations of U.S. Government backed agencies.Short-term investments consist of short-term, highly liquid, income-producing investments, which have maturities of greater than 90 days but less than one year, including U.S. Government obligations, obligations of U.S. Government backed agencies, and certain auction rate securities.For all short-term investments, at each reset period, the Company accounts for the transaction as Proceeds from sales of short-term investments for the security relinquished, and a Purchase of short-term investments for the security purchased, in the accompanying unaudited Condensed Consolidated Statement of Cash Flows.Derivative instruments are related to the Companys fuel hedging program and interest rate hedges.Noncurrent investments consist of certain auction rate securities, primarily those collateralized by student loan portfolios, which are guaranteed by the U.S. Government.Other available-for-sale securities primarily consist of investments associated with the Companys excess benefit plan. The Companys fuel derivative instruments consist of over-the-counter (OTC) contracts, which are not traded on a public exchange.These contracts include both swaps as well as different types of option contracts.See Note 5 for further information on the Companys derivative instruments and hedging activities.The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.Therefore, the Company has categorized these swap contracts as Level 2.The Company determines the value of option contracts utilizing a standard option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are quoted by financial institutions that trade these contracts.In situations where the Company obtains inputs via quotes from financial institutions, it verifies the reasonableness of these quotes via similar quotes |
EARLY RETIREMENT OFFER
| EARLY RETIREMENT OFFER | |
| 9 Months Ended
Sep. 30, 2009 | |
| Notes to Financial Statements [Abstract] | |
| EARLY RETIREMENT OFFER | 12.EARLY RETIREMENT OFFER On April 16, 2009, the Company announced Freedom 09, a one-time voluntary early out program offered to eligible Employees, in which the Company offered cash bonuses, medical/dental coverage for a specified period of time, and travel privileges based on work group and years of service.The purpose of this voluntary initiative and other initiatives is to right-size headcount in conjunction with the Companys current plans to reduce its capacity by five percent in 2009, and to help reduce costs.Virtually all of the Companys Employees hired before March 31, 2008 were eligible to participate in the program.Participants last day of work will fall between July 31, 2009 and April 15, 2010, as assigned by the Company based on the operational needs of particular work locations and departments, determined on an individual-by-individual basis.The Company did not have a target for the number of Employees expected to accept the package. Employees electing to participate in Freedom 09 were required to notify the Company of their election by June 19, 2009.However, Employees had until July 16, 2009 to rescind their election and remain with the Company.Following the deadline to rescind such election, a total of 1,404 Employees have remained as participants in Freedom 09, consisting of the following breakdown among workgroups:439 from Customer Support and Services, 464 from Ground Operations and Provisioning, 113 Flight Attendants, 20 Pilots, 91 from Maintenance, and 277 Managerial and Administrative Employees.In accordance with the accounting guidance in ASC Topic 715 (originally issued as FAS 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits), the Company accrued total costs of approximately $66 million during third quarter 2009 related to Freedom 09all of which are reflected in salaries, wages, and benefits.Of this amount, approximately $32 million was paid out to Employees who left the Company prior to September 30, 2009, and the remaining $34 million will be paid out in subsequent periods.The Company may need to replace some of the positions with newly hired Employees to meet operational demands; however, the Company expects that many of the positions will not be filled based on the Companys recent capacity reductions. |
Document Information
| Document Information | |
| 9 Months Ended
Sep. 30, 2009 | |
| Document Information [Line Items] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2009-09-30 |
Entity Information
| Entity Information (USD $) | ||
| 9 Months Ended
Sep. 30, 2009 | Jun. 30, 2009
| |
| Entity Information [Line Items] | ||
| Entity Registrant Name | Southwest Airlines Co. | |
| Entity Central Index Key | 0000092380 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Well-known Seasoned Issuer | Yes | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Large Accelerated Filer | |
| Public Float | $4,984,514,098 | |
| Entity Common Stock, Shares Outstanding | 741,793,978 |