september 9, 2021 investor booklet

Southwest Airlines Co.September 9, 2021– Investor Booklet

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Cautionary Statement Regarding Forward-Looking StatementsThis booklet contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s Vision; (ii) the Company’s financial position, outlook, goals, expectations, strategies, and projected results of operations; (iii) the Company’s network plans, expectations, and opportunities; (iv) the Company's plans and expectations regarding its fleet, including with respect to its fleet delivery schedule, planned retirements, and carbon emissions; (v) the Company’s environmental sustainability goal; (vi) the Company’s expectations with respect to capital expenditures; and (vii) the Company’s initiatives and related plans and expectations. These forward-looking statements are based on the Company’s current intent, expectations, and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) any negative developments related to the COVID-19 pandemic, including, for example, with respect to the duration, spread, severity, or any recurrence of the COVID-19 pandemic; any variant strains of the underlying virus; the effectiveness, availability, and usage of vaccines; the duration and scope of governmental orders and restrictions related to the COVID-19 pandemic; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company's related business plans and decisions; the impact of the COVID-19 pandemic on the Company's ability to retain key Employees; and the impact of the COVID-19 pandemic on the Company's access to capital; (ii) the impact of fears or actual outbreaks of other diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), consumer perception, economic conditions, fuel prices, fears of terrorism or war, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the Company’s dependence on its workforce, including its ability to employ sufficient numbers of qualified Employees to effectively and efficiently maintain its operations; (iv) the impact of governmental actions and governmental regulations on the Company's plans, strategies, financial results, and operations; (v) the Company's dependence on Boeing with respect to the Company's fleet delivery schedule and related fleet modernization, as well as the Company’s capital expenditure plans and expectations; (vi) the Company's and Boeing's dependence on other third-party providers to perform in accordance with expectations in connection with the manufacture and delivery of aircraft; (vii) the Company's dependence on other third parties, in particular with respect to its fuel supply and its corporate travel enhancements, and the impact on the Company's operations and results of operations of any third party delays or non-performance; (viii) the Company's ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (ix) the impact of labor matters on the Company's results of operations, business decisions, plans, and strategies; and (x) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021.

Notice Regarding Third Party ContentThis presentation may contain information obtained from third parties, including ratings from credit ratings agencies such as S&P Global Ratings. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third party content providers shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and opportunity costs or losses caused by negligence) in connection with any use of their content, including ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.

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Company Overview

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Purpose and Vision

Offer Customers low

fares, convenient

flights, and industry-

leading Customer

Service

Drive Customer

loyalty and grow

share

of wallet

Generate profit and

strengthen financial

position

Invest in airplanes

and People to grow

and develop market

leadership

Deliver an efficient

operation with a

highly-

engaged workforcePurpose: Connect

people to what’s

important in their

lives through friendly,

reliable, low-cost air

travel.

Vision: To become

the world’s most

loved, most efficient,

and most profitable

airline.

Our successful business model starts with an efficient operation and

highly-engaged Employees. This combination makes Southwest unique

and has produced the U.S. airline industry’s most successful low-cost,

low-fare, growth carrier for nearly five decades

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Unparalleled brand consistently loved by Customers

Unmatched profitability record in the U.S. airline industry

with cost discipline and a strong balance sheet

Outstanding Customer Service and Hospitality

that drives brand loyalty and recognition

Low fares and a robust point-to-point network

that support market leadership and non-stop service

The best People and Culture in the industry

Reliable, efficient, low-cost operations

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Robust point-to-point, non-stop route network

2010

2021

Source: Diio Mi. Diio scheduled for FY2021 as of 7/23/21.

Note: Includes some seasonal/less than daily routes

Including the AirTran acquisition in 2011, added 52 airports to the Southwest route

network since 2010, with 14 near-international destinations in 10 countries

Proprietary & Confidential

SYR Syracuse, NY

11/14/21

Seasonal

Announced 18 new airportsPursuing new revenue opportunities by enhancing options in large metro areas and

adding new leisure destinations

ORD Chicago (O’Hare), IL

2/14/21 ✔

SAV Savannah, GA

3/11/21 ✔

MIA Miami, FL

11/15/20 ✔

JAN Jackson, MS

6/6/21 ✔

SRQ Sarasota, FL

2/14/21 ✔

IAH Houston (Bush), TX

4/12/21 ✔

COS Colorado Springs, CO

3/11/21 ✔

HDN Steamboat Springs, CO

12/19/20 ✔

MTJ Telluride, CO

12/19/20 ✔

PSP Palm Springs, CA

11/15/20 ✔

SBA Santa Barbara, CA

4/12/21 ✔

FAT Fresno, CA

4/25/21 ✔

Seasonal

EUG Eugene, OR

8/29/21 ✔

BLI Bellingham, WA

11/7/21

MYR Myrtle Beach, SC

5/23/21 ✔

BZN Bozeman, MT

5/27/21 ✔

VPS Destin, FL

5/6/21 ✔

City access via co-terminals1

New sources of origin Customers

Leisure destinations

New airport map with service launch date

Airports announced in 2020 and 2021

New airport timeline

By service start date

MIA 11/15/2020

PSP 11/15/2020

HDN 12/19/2020

MTJ 12/19/2020

ORD 2/14/2021

SRQ 2/14/2021

COS 3/11/2021

SAV 3/11/2021

IAH 4/12/2021

SBA 4/12/2021

FAT 4/25/2021

VPS 5/6/2021

MYR 5/23/2021

BZN 5/27/2021

JAN 6/6/2021

EUG 8/29/2021

BLI 11/7/2021

SYR 11/14/2021

1Co-terminal: Airports that share a common city or region; for example, Baltimore, Washington Reagan, and Washington Dulles are considered co-terminals to one another.

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25

9

52

52 1 1 0

SWA AAL DAL UAL ALK JBLU HA SAVE ALGT

Strong presence in top business and leisure markets

Source: Data presented herein as measured by the U.S. DOT O&D Survey for the twelve months ended March 31, 2021 based on domestic originating passengers boarded.

O&D stands for Origin and Destination. 1Metro areas: A geographic area around a city that includes multiple major airports. In some cases, the airports within a metro area may serve separate markets.2Co-terminal: Airports that share a common city or region; for example, Baltimore, Washington Reagan, and Washington Dulles are considered co-terminals to one another.3As of June 30, 2021.

Southwest has 22% of total domestic market share and is the market leader

in 25 of the top 50 U.S. metro areas1 (including co-terminal airports2).

International operations represent <5% of total capacity3

Market leader in top 50 U.S. metro areas1

ULCCLegacy LCC

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Financial preparedness has been our enduring strength

Southwest entered the COVID-19 crisis prepared with the U.S. airline

industry’s strongest balance sheet and business model; tremendous fleet

flexibility; meaningful fuel hedging protection with no floor risk; and ability

to be nimble in uncertain environments

Southwest remained profitable for 47 consecutive years

through 2019, prior to the COVID-19 pandemic.

Our preparedness was due to a balanced approach:

• Investment-grade

balance sheet

• Ample cash and

modest debt

• Sensible financial

commitments

• Consistent

Shareholder returns

• Prudent

investments and

growth rate

• Balance between

market expansion

opportunities,

operational

reliability, and

financial returns

• Robust point-to-

point, non-stop

network

• Sustainable

business model

• All Boeing 737 fleet

• Reliable, efficient

operations

• Low-cost mindset

with focus on

Culture and

empowering

Employees

• History of no pay

cuts, furloughs, or

layoffs

Financial Operations Strategy Culture

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Aggressive expansion of our route network, having opened or

announced 18 new airports since the pandemic began

Launch of Global Distribution System (GDS) access for

corporate travelers

Acceleration of fleet modernization to replace older

737-700 aircraft with the MAX, reduce carbon emissions

Development of steps to support environmental sustainability

goal to be carbon neutral by 2050

Updating strategic planIn process of updating strategic plan with initiatives for next five years

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Recent Updates

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Steps taken in 2020 to address impacts from COVID-19

Capacity

Employees

and

Customers

Reduce Costs

Preserve

Liquidity and

Cash

• Significantly reduced capacity

• Continuously monitored demand and booking trends and adjusted capacity on an ongoing

basis

• Southwest Promise—additional cleaning practices; physical-distancing procedures; required

face masks; additional policies for our Employees to protect themselves and safely transport

our Customers; science-based approach

• Customer policy changes: extended flight credits and status

• Reduced annual 2020 cash outlays and spending by ~$8 billion compared with original plans

• Voluntary Separation Program and Extended Emergency Time Off Program; approximately

25% of workforce participated resulting in approximately $1.0 billion in estimated cost savings

in 2021

• Canceled or deferred hundreds of capital spending projects, cut discretionary spending, and

modified vendor and supplier payment terms

• Reduced combined 2020 and 2021 CapEx by ~$5.5B compared with original plans

• Raised $18.9 billion (net of transaction fees) in 2020: $13.4 billion in debt issuances and sale-

leaseback transactions, $2.2 billion through a common stock offering, and $3.4 billion of PSP

proceeds1

• Repaid $5.5 billion of debt during 2020; Fully available $1.0 billion revolving credit line

ActionsFocus Areas

1Amounts received pursuant to the Payroll Support Program (the “PSP”) under the CARES Act were utilized to directly offset payroll expenses incurred by the Company, including specified benefits,

between April 2020 and September 2020. For further information regarding the PSP, refer to the Company’s Forms 8-K filed April 21, 2020, June 1, 2020, June 30, 2020, July 31, 2020, and September

30, 2020. In January 2021, the Company entered into definitive documentation with the U.S. Treasury for further payroll support under the Consolidated Appropriations Act, 2021 (the "PSP

Extension"). Refer to the Company’s Forms 8-K filed on January 15, 2021 and March 5, 2021 for further information regarding the PSP Extension. In April 2021, the Company entered into definitive

documentation with the U.S. Treasury with respect to funding support pursuant to the American Rescue Plan Act of 2021 (the “ARP”). Refer to the Company’s Form 10-Q filed on April 27, 2021, Form

8-K filed on June 3, 2021, and Form 10-Q filed on July 27, 2021, for further information regarding funding under the ARP.

New Revenue

Opportunities

• Pursued additional revenue opportunities that utilized idle aircraft and Employees

• Added a total of 18 new airports that have either been opened or announced since the

beginning of the pandemic

• GDS participation live with Travelport and Amadeus; Sabre is live as of July 26, 2021

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Second quarter 2021 financial results

82.9% load factor

$(206)Mnet loss1

$85MProfitsharing

$(1)Maverage core

daily cash burn3

(39.3)%

7.6%non-fuel

CASM1,2, y/y & y/2y

$(0.35)loss per

diluted share1

297.6%

(32.2)%operating

revenues, y/y & y/2y

86.8%

(16.4)%available seat

miles, y/y & y/2y

113.0%

(18.9)%RASM, y/y & y/2y

1Excluding special items. 2Excluding profit sharing.3Average core cash burn is calculated as Loss before income taxes, non-GAAP, adjusted for Depreciation and amortization expense; Capital expenditures; and adjusted amortizing debt

service payments; divided by the number of days in the period. The Company utilizes average daily core cash burn to monitor the performance of its core business as a proxy for its ability to

achieve sustainable cash and profit break-even results. Refer to the Company’s Form 8-K filed on July 22, 2021, for further information.

Note: See reconciliation of reported amounts to non-GAAP financial measures.

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Restructured Boeing 737 order bookAs of July 22, 2021

Note: As of July 22, 2021, and is not being updated herein.

(a) Includes 27 737 MAX 8s delivered as of June 30, 2021, consisting of 19 owned and 8 leased aircraft.

(b) The Company intends to exercise three of its 47 options for delivery in 2022 by the end of July 2021. Upon the planned exercise of these options, the

Company’s 2022 order book will consist of 70 MAX 7 firm orders and 44 MAX options. At that point, the Company’s order book will consist of 389 MAX firm orders

(240 MAX 7 and 149 MAX 8) and 262 MAX options.

(c) The Company has flexibility to designate firm orders or options as MAX 7 or MAX 8, upon written advance notification as stated in the contract.

(d) These 9 additional MAX 8 aircraft are leases from various third parties.

Our restructured order book allows us to preserve the low-cost advantages

of a single fleet type, and the balance of firm orders and options—along

with flexibility with 737-700 retirement plans—allows the opportunity to

manage our fleet needs over the next decade

-7 firm

orders

-8 firm

orders-8 options Additional -8s Total

2021 -- 19 -- 9 28

2022 67 -- 47 -- 114

2023 30 -- 60 -- 90

2024 30 -- 56 -- 86

2025 30 -- 56 -- 86

2026+ 80 130 46 -- 256

Total 237 149 265 9 660

The Boeing Company 737

(c)

(a)

(d)

(b)

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The Southwest PromiseA multi-layered approach to protecting public health

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Cash and short-term investments of $16.2 billion as of September 7, 2021,

and a fully available revolving credit facility of $1.0 billion

Maintained unencumbered assets with an estimated value of more than

$11 billion, including $9 billion to $10 billion in aircraft1

Net cash position2 of $5.5 billion1, and leverage of 56 percent

Maintained investment-grade rating for 30+ years and is currently the only

U.S. airline with an investment-grade rating by all three rating agencies

Generated profit, on both a GAAP and non-GAAP basis, in both June and

July 2021

The recent negative effects of the pandemic on August and September

revenue trends will make it difficult for the Company to be profitable in

third quarter 2021, without taking into account the benefit of temporary

salaries and wages cost relief provided by payroll support program

proceeds

Sustaining a strong financial position for the future

1As of July 22, 2021, and is not being updated herein.2Net cash position is calculated as the sum of cash and cash equivalents and short-term investments, less the sum of short-term and long-term debt.

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10.3% 10.1%

7.0%

3.7%

8.8%7.9%

7.0%

12.6%

8.8%

0%

5%

10%

15%

SWA DAL UAL AAL ALK HA JBLU ALGT SAVE

Sustained high net margins prior to COVID-19

Source: Based on company research calculated as net income divided by operating revenues, as reported in each respective airline’s 2019 Form 10-K.

2019 net margin

ULCCLegacy LCC

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Proven ability to maintain reliable operations and control

costs

1Legacy airlines: Trans World, American, US Airways, Northwest, Delta, Continental, United, America West (post-American merger)2LCC airlines: JetBlue, Alaska, Virgin America, America West (pre-AA merger), AirTran (pre-Southwest merger)3ULCC airlines: Spirit, Frontier, Allegiant

Source: DOT form 41 and T100 data, through March 31, 2021. 2012 is as of 4Q12; 2021 is as of 1Q21. Estimated unit costs have been stage-length adjusted to Southwest’s average

2017 stage-length, represents domestic mainline.

Domestic operating expenses per ASM, ex-fuel

Southwest business model and point-to-point network provide

sustainable, long-term unit cost advantages compared with the majority

of the domestic airline industry

-

5.00

10.00

15.00

20.00

25.00

30.00

2012 2021

Southwest Legacy

LCC ULCC3

1

2

(in

ce

nts

)

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Leading the U.S. airline industry in Customer Service

Source: Department of Transportation (DOT) Air Travel Consumer Report (ATCR). The DOT ranks all U.S. carriers based on the lowest ratio complaints per 100,000 passengers enplaned.

Note: Southwest earned the best Customer Satisfaction ranking among U.S. Marketing Carriers with the lowest ratio of complaints to the DOT per 100,000 enplaned passengers for 2018,

2019, and 2020. A Marketing Carrier is an airline that advertises under a common brand name, sells reservations, manages frequent flyer programs, and is ultimately responsible for the

airline’s consumer policies. Operating Carriers only handle the flight operations, passenger check-in/boarding, and baggage handling for the respective Marketing Carriers they serve—

Operating Carriers are not responsible for DOT complaints related to policies, procedures, and advertising associated with the Marketing Carrier’s brand.

Southwest has set the bar high for customer satisfaction, earning the

DOT’s best ranking among Marketing Carriers for 27 of the past 30 years

2018 2019

Customer Satisfaction ranking among Marketing Carriers

Southwest produced the

best Customer Satisfaction

ranking among Marketing

Carriers

Southwest produced its

best annual ontime

performance since 2003

Southwest generated its

best-ever annual

baggage handling

results

In 2020…

2020

#1 #1 #1

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Pillars of our strength position us strongly amidst impact

from COVID-19 pandemic

1Global Distribution System

Robust Network with Strong Presence in Many Attractive Metro Areas1

Proven Ability to Maintain Reliable Operations and Control Costs & Capex5

Unparalleled Brand and Customer Loyalty with Award-Winning Rapid Rewards Program2

Organic Growth Opportunities: New Destinations,

Densifying Existing Network, Reservation System, and GDS16

Large Fleet of Modern Boeing 737s, Industry ‘Workhorses’,

a Substantial Portion of Which are Unencumbered4

Commitment to Strong Balance Sheet with Sustainable Debt Balance and Significant Liquidity7

Highly Defensible, Low Fare, Point-to-Point Network3

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Proven Leadership Team

GARY C. KELLY

Chairman of the Board &

Chief Executive Officer

34 years at Southwest

BOB JORDAN

Executive Vice President and

Incoming Chief Executive

Officer33 years at Southwest

ANDREW WATTERSON

Executive Vice President

and Chief Commercial

Officer


TAMMY ROMO

Executive Vice President &

Chief Financial Officer


ALAN KASHER

Executive Vice President

Daily Operations


MIKE VAN DE VEN

President & Chief

Operating Officer


MARK SHAW

Executive Vice

President, Chief Legal

and Regulatory Officer


LINDA RUTHERFORD

Executive Vice

President People &

Communications29 years at Southwest

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Non-GAAP reconciliation

in millions, except per share amounts

2019 2020 2021

Fuel and oil expense, unhedged 1,138$ 254$ 802$

Add: Premium cost of fuel contracts 28 13 14

Add (Deduct): Fuel hedge (gains) losses included in Fuel and oil expense, net (30) (10) (13)

Fuel and oil expense, as reported 1,136$ 257$ 803$

Add: Fuel hedge contracts settling in the current period, but for which losses were

reclassified from AOCI - 10 5

Add: Premium cost of fuel contracts not designated as hedges - 11 10

Fuel and oil expense, excluding special items (economic) 1,136$ 278$ 818$

Total operating expenses, as reported 4,941$ 2,135$ 3,414$

Add: Payroll support and voluntary Employee programs, net - 784 740

Add: Fuel hedge contracts settling in the current period, but for which losses were

reclassified from AOCI - 10 5

Add: Interest rate swap agreements terminated in a prior period, but for which losses

were reclassified from AOCI - - 1

Add: Premium cost of fuel contracts not designated as hedges - 11 10

Add: Gain on sale of retired Boeing 737-300 aircraft - 222 -

Total operating expenses, excluding special items 4,941$ 3,162$ 4,170$

Deduct: Fuel and oil expense, excluding special items (economic) (1,136) (278) (818)

Operating expenses, excluding Fuel and oil expense and special items 3,805$ 2,884$ 3,352$

Deduct: Profitsharing expense (170) - (85)

Operating expenses, excluding Fuel and oil expense, special items, and

profitsharing3,635$ 2,884$ 3,267$

Three months ended June 30,

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Non-GAAP reconciliation (continued)

(a) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.

(b) Adjustment related to GAAP and Non-GAAP diluted weighted average shares difference, due to the Company being in a Net income position on a GAAP basis versus a Net loss

position on a Non-GAAP basis.

in millions, except per share amounts

2021

Net income (loss), as reported 348$

Deduct: Payroll support and voluntary Employee programs, net (740)

Deduct: Fuel hedge contracts settling in the current period, but for which losses were

reclassified from AOCI(5)

Deduct: Interest rate swap agreements terminated in a prior period, but for which

losses were reclassified from AOCI(1)

Add: Mark-to-market impact from fuel contracts settling in current and future periods (11)

Add (Deduct): Net income (loss) tax impact of special items (a) 203

Net income (loss), excluding special items (206)$

Net income (loss) per share, diluted, as reported 0.57$

Add (Deduct): Impact of special items (1.21)

Deduct: Net impact of net income (loss) above from fuel contracts divided by dilutive

shares(0.03)

Add (Deduct): Net income (loss) tax impact of special items (a) 0.33

Deduct: GAAP to Non-GAAP diluted weighted average shares difference (b) (0.01)

Net income (loss) per share, diluted, excluding special items (0.35)$

Three months ended June 30,

september 9, 2021 investor booklet

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