LUV Southwest Airlines Company Common Stock

Southwest Airlines is a major airline in the United States. It is headquartered in the Love Field neighborhood of Dallas, Texas. It is the fourth-largest airline in North America when measured by passengers carried, as of 2024. With its all-Boeing 737 fleet, Southwest serves over 100 destinations in 42 states, Washington, D.C., Puerto Rico, and ten other countries and territories near the southern United States in the Gulf of Mexico and Caribbean Sea regions: Aruba, the Bahamas, Belize, the Cayman Islands, Costa Rica, Cuba, the Dominican Republic, Mexico, Jamaica, and Turks and Caicos Islands.

The airline was established on March 9, 1967, by Herb Kelleher and Rollin King as Air Southwest Co. and adopted its current name, Southwest Airlines Co., in 1971, when it began operating as an intrastate airline wholly within the state of Texas, first flying between Dallas, Houston, and San Antonio. It began regional interstate service in 1979, expanding nationwide in the following decades.

History

Destinations

Southwest uses a point-to-point system combined with a rolling-hub model in its base cities, in contrast to the hub-and-spoke system of other major airlines. As of June 2026, Southwest Airlines flew to over 100 destinations in 43 states, Puerto Rico, Mexico, Central America, and the Caribbean. This system means that the airline has no real hubs, but rather some airports with more destinations than others.

Interline agreements

Southwest currently has interline agreements with the following airlines:

Air Premia

All Nippon Airways

China Airlines

Condor

EVA Air

Icelandair

Philippine Airlines

Singapore Airlines

Turkish Airlines

Fleet

Passenger experience

Southwest Airlines offers a single-class cabin with economy and extended legroom seating and does not operate separate business or first-class cabins.

The airline provides complimentary light snacks and non-alcoholic beverages on all flights, with alcoholic drinks available for purchase. Complimentary alcoholic beverages are offered on select holidays, including Valentine's Day, St. Patrick's Day, the airline's June 18 anniversary, and Halloween. Southwest does not sell full meals on board.

The airline has become known for informal and sometimes humorous onboard announcements.

Until January 26, 2026, Southwest used an open seating policy in which passengers were assigned a boarding group (A, B, or C) and a number, and selected any available seat upon boarding. A 2012 episode of MythBusters found the process to be faster on average than conventional boarding methods. Assigned seating was introduced beginning January 27, 2026, with passengers grouped by seat location at boarding. Beginning in May 2025, the airline introduced extra-legroom seating in the first rows and at exit doors on Boeing 737-800 and 737 MAX 8 aircraft as part of a phased cabin update.

Southwest maintains a "customer of size" policy under which passengers requiring additional space may purchase a second seat.

In-flight entertainment

Southwest provides complimentary Wi-Fi access to members of its Rapid Rewards program. After connecting, passengers can access the onboard entertainment portal on their personal devices, which includes a flight tracker, on-demand movies, and live television. Beginning in summer 2026, the airline plans to deploy Starlink satellite-based high-speed internet across its fleet.

Rapid Rewards

Southwest introduced a frequent-flyer program, The Company Club, on June 18, 1987, awarding credits based on trips flown rather than distance. The program was renamed Rapid Rewards in 1996. Under the original structure, members earned one credit per one-way flight; 16 credits within 24 months qualified for a free round-trip ticket valid for one year.

On March 1, 2011, Rapid Rewards transitioned to a revenue-based points system in which members earn and redeem points according to ticket price and fare type. The revision eliminated blackout dates and seat restrictions. Since October 18, 2019, points do not expire provided the member remains active.

Corporate affairs

Business trends

The key trends for Southwest Airlines are (as of the end of the calendar year):

Headquarters

The Southwest Airlines headquarters are located on the grounds of Dallas Love Field in Dallas.

On September 17, 2012, Southwest broke ground on a new Training and Operational Support building, across the street from its current headquarters building.

On June 2, 2016, Southwest broke ground on its new office and training facility known as Wings. The newest addition to the corporate campus is composed of a 420,000-square-foot, six-story office building, and a 380,000-square-foot adjoining structure called the Leadership Education and Aircrew Development (LEAD) Center that serves as the new pilot training facility. The LEAD Center has the capacity to house and support 18 flight simulators. It is designed to be expanded to accommodate up to 26 simulator bays. The building opened on April 3, 2018.

On August 16, 2019, Southwest announced an expansion of the LEAD Center to accommodate eight additional simulators for future operational and training demands. On January 2, 2020, it was announced that Southwest would be purchasing an additional 3 acres (1.2 ha) of land adjacent to its Wings and LEAD facilities. No additional details were disclosed.

Employment

As of January 30, 2025, Southwest Airlines had 72,450 active full-time equivalent employees. According to The Washington Post, it uses the hiring motto of seeking people that have a "Servant's Heart, Warrior Spirit, Fun-LUVing Attitude". It also uses the internal practice of ranking "employees first, customers second". Southwest Airlines pilots are represented by the Southwest Airlines Pilot Association union.

Bob Jordan became Southwest's sixth CEO on February 1, 2022, replacing Gary C. Kelly. Kelly continues as chairman of Southwest Airlines. Kelly replaced Jim Parker on July 15, 2004, and assumed the title of president on July 15, 2008, replacing former president Colleen Barrett.

In September 2024, in response to pressure from Elliott Investment Management, Kelly announced that he would not seek reelection as executive chairman in 2025. Jordan is expected to remain as CEO. On October 24, 2024, Kelly announced he would accelerate his retirement, which – along with the previously announced retirements of six other Southwest directors – would go into effect on November 1, 2024. Rakesh Gangwal was announced as independent chair of the board of directors three days later. Gangwal stepped down as chair on August 1, 2025, and Doug Brooks was announced as the new independent chair of the board.

About 83% of Southwest employees are members of a union. The Southwest Airline Pilots' Association, a union not affiliated with the Air Line Pilots Association, represents the airline's pilots. The aircraft maintenance technicians are represented by the Aircraft Mechanics Fraternal Association. Customer service agents and reservation agents are represented by the International Association of Machinists and Aerospace Workers Union. Flight dispatchers, flight attendants, ramp agents, and operations agents are represented by the Transport Workers Union.

The company has appeared on various "best places to work" list, with its employee culture mentioned by Travel and Leisure, CNBC, and Forbes. The company has also been named to Fortune magazine's "Most Admired Companies" list, reaching number 14 in 2021.

Before the COVID-19 pandemic, Southwest never furloughed an employee. As a result of the pandemic, the company launched voluntary separation and extended time-off programs in 2020, and around 16,900 employees volunteered to take an early retirement or long-term leave. Roughly 24% were pilots and 33% were flight attendants. In late 2020, the airline issued some WARN Act notices and announced incipient pay cuts for many employees in response to pandemic impacts, but these measures were rescinded after the Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, providing additional financial aid to US airlines.

The latest five-year labor contract for Southwest Airlines pilots was approved in January 2024.

Following the Elliot board takeover in February 2025, Southwest laid off 1,750 of its non-contract staff, approximately 15% of its corporate workforce.

Impact on carriers

Southwest and its business model have had an influence on other low-cost carriers (LCCs). The competitive strategy combines a high level of employee and aircraft productivity with low unit costs by reducing aircraft turnaround time, particularly at the gate. Europe's EasyJet and Ryanair are two of the best-known airlines to follow Southwest's business strategy in that continent. Other airlines with a business model based on Southwest's system include Canada's WestJet, Malaysia's AirAsia (the first and biggest LCC in Asia), India's IndiGo, Australia's Jetstar, a subsidiary of Qantas (although Jetstar now operates three aircraft types), Philippines' Cebu Pacific, Thailand's Nok Air, Mexico's Volaris, Indonesia's Lion Air and Turkey's Pegasus Airlines.

Lobbying against high-speed rail

In the early 1990s, Southwest Airlines actively opposed proposals to develop high-speed rail in Texas, viewing the project as a competitor to its short-haul flights. The proposed rail system would have connected Dallas, San Antonio, and Houston. Southwest lobbied both the United States Congress and the Texas Legislature, and filed multiple lawsuits aimed at halting the initiative. In a 1991 statement to Texas officials, the airline argued that high-speed rail would only be feasible if it displaced existing airline services and received substantial public subsidies. The project was cancelled in 1994 with many observers citing Southwest’s lobbying efforts as a significant factor in its failure.

Advertising

The company has always employed humor in its advertising. Former slogans include "Love Is Still Our Field", "Just Plane Smart", "The Somebody Else Up There Who Loves You", "You're Now Free to Move About the Country", "THE Low Fare Airline", "Grab your bag, It's On!", and "Welcome Aboard". The airline's slogan (as of 2022) is "Low fares. Nothing to hide. That's TransFarency!"

In March 1992, shortly after Southwest started using the "Just Plane Smart" motto, Stevens Aviation, which had been using "Plane Smart" for its motto, advised Southwest that it was infringing on its trademark. Instead of a lawsuit, the CEOs for both companies staged an arm-wrestling match, dubbed as "Malice in Dallas". It was held at the Dallas Sportatorium and set for two out of three rounds, the loser of each round was to pay $5,000 to the charity of his choice, with the winner gaining the use of the trademarked phrase. A promotional video was created showing the CEOs "training" for the bout (with CEO Herb Kelleher being helped up during a sit-up where a cigarette and glass of Wild Turkey 101 whiskey was waiting) and distributed among the employees and also as a video press release along with the video of the match itself. Herb Kelleher lost the match for Southwest, with Stevens Aviation winning the rights to the phrase. Kurt Herwald, CEO of Stevens Aviation, immediately granted the use of "Just Plane Smart" to Southwest Airlines. The net result was both companies having use of the trademark.

Accidents and incidents

Southwest Airlines has been involved in the following accidents:

March 5, 2000 – Flight 1455: A Boeing 737-300 (registration N668SW) overran the runway upon landing at Burbank Airport in California, injuring 44 people. The captain was later dismissed, and the aircraft was damaged beyond repair. Two people were seriously injured, and 42 had minor injuries.

August 11, 2000 – Flight 1763: A Boeing 737-700 (registration N798SW) en route from Las Vegas, Nevada, to Salt Lake City, Utah, experienced an air rage incident in which a passenger attempted to storm the cockpit. He was restrained by other passengers but died of asphyxiation during the struggle. One other passenger sustained a minor injury.

December 8, 2005 – Flight 1248: A Boeing 737-700 (registration N471WN) overran the runway during landing at Chicago Midway International Airport in Illinois during heavy snow, striking several cars on a nearby street and killing a six-year-old boy. Several passengers and people on the ground were injured. One person on the ground was killed, nine others were seriously injured, and three people on board sustained minor injuries.

July 13, 2009 – Flight 2294: A Boeing 737-300 (registration N387SW) operating from Nashville International Airport to Baltimore/Washington International Airport diverted to Yeager Airport in Charleston, West Virginia, after a hole formed in the fuselage near the tail, causing cabin depressurization. The aircraft landed safely and was later repaired. No injuries were reported. Following the incident, Boeing issued a service bulletin recommending additional inspections to detect potential cracking in this area of the fuselage skin. The U.S. Federal Aviation Administration (FAA) subsequently issued an airworthiness directive mandating these inspections for all Boeing 737 Classic aircraft.

April 1, 2011 – Flight 812: A Boeing 737-300 (registration N632SW) diverted to Yuma International Airport after a hole appeared in the fuselage while en route from Phoenix Sky Harbor International Airport to Sacramento International Airport. The aircraft landed safely. Two passengers sustained minor injuries. The incident was similar to Flight 2294 and prompted the FAA to issue a second airworthiness directive requiring more frequent inspections.

July 22, 2013 – Flight 345: A Boeing 737-700 (registration N753SW) suffered a hard landing at New York's LaGuardia Airport after a flight from Nashville International Airport. The nose gear collapsed and penetrated the electronics bay, causing the aircraft to slide off the runway. The captain was dismissed, and the aircraft was scrapped. Ten passengers sustained minor injuries.

August 4, 2016 – Flight 149: A Boeing 737-300 (registration N368SW) suffered a nose gear collapse during pushback at Baltimore/Washington International Airport after a tug operator exceeded safe towing speed. The aircraft sustained severe damage and was written off. No one was injured.

August 27, 2016 – Flight 3472: A Boeing 737-700 (registration N766SW) suffered an uncontained engine failure while en route from New Orleans to Orlando, damaging the engine nacelle and fuselage. The aircraft diverted safely to Pensacola International Airport. No one was injured.

April 17, 2018 – Flight 1380: A Boeing 737-700 (registration N772SW) suffered an uncontained engine failure while en route from New York–LaGuardia to Dallas, causing debris to shatter a window. Cabin depressurization partially ejected a passenger, who later died from her injuries. Eight other passengers sustained minor injuries.

Controversies and passenger incidents

In October 2019, a Southwest flight attendant filed a lawsuit against the airline, claiming that two pilots had livestreamed footage from a camera hidden in the plane's toilet to an iPad, and that one of the pilots said that such cameras were a "top-secret security measure" installed in all of the airline's 737-800 aircraft. Southwest and the pilot union stated that the film was a hoax and a "poor attempt at humor" by one of the pilots, who had previously recorded himself on a different aircraft, fully clothed.

In February 2020, a report conducted by the DOT inspector general found that Southwest was flying airplanes with safety concerns and that the Federal Aviation Administration was failing to properly oversee the airline.

Citing four whistleblowers, federal investigators with the US Office of Special Counsel released a report on July 27, 2022, that follows up on the 2020 DOT inspector general's report. The 2022 report claims that Southwest stonewalled Federal Aviation Administration (FAA) investigations into maintenance and piloting safety lapses, and criticized the FAA for failing to adequately oversee the airline, stating that senior FAA staff "mismanaged and interfered" with investigations "in the face of SWA's intimidation tactics". The report accuses Southwest of misusing the FAA's Aviation Safety Action Program (ASAP) to hide pilot errors, while accusing the FAA of failing to adequately oversee Southwest's mechanics, and of failing to adequately vet maintenance records provided by the airline for forty-nine 737 aircraft purchased from foreign carriers whose documentation practices did not meet FAA standards.

Christmas 2022 meltdown

The airline experienced severe delays and thousands of flight cancellations starting on December 21, 2022, and continuing through Christmas. Many cancellations were due to bad weather from the severe late December winter storm across much of the United States, but industry experts and SWAPA also blamed inadequate staffing and the airline's "outdated" employee scheduling system, citing reports of pilots awaiting work assignments for up to eight hours. On December 26, the airline initiated a massive system "reset", preemptively canceling thousands of flights and halting ticket sales over concerns that travelers might buy tickets for flights that were subsequently canceled.

In December 2023, the airline reached a settlement with the United States Department of Transportation for a record-breaking $140 million fine, exceeding the previous record by a factor of roughly 30. The financial impact from the crisis exceeded $1.1 billion in losses. The settlement included a $35 million fine payable directly to the federal government. However, USDOT waived the final $11 million payment of the fine.