Southwest Airlines Co.

Overview

• Operates Southwest Airlines, a major U.S. passenger airline serving the United States and near-international markets.
• Primary fleet: Boeing 737 family. As of December 31, 2025, the company had 803 Boeing 737 aircraft (82 on operating leases and 15 on financing leases).
• Destination footprint: 117 destinations across 42 states, the District of Columbia, Puerto Rico, and ten near-international countries (Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos).

Fleet and capacity

• Total aircraft: 803 Boeing 737s (as of 12/31/2025).
  • 737-700: 305 total (286 owned, 19 leased); average seats 143; average age ~20 years
  • 737-800: 198 total (149 owned, 49 leased); average seats 175; average age ~10 years
  • 737-8 (MAX 8): 300 total (271 owned, 29 leased); average seats 175; average age ~3 years
  • Combined: 706 owned, 97 leased
• Firm orders and options for MAX aircraft (as of 12/31/2025):
  • -7: 269 firm orders
  • -8: 196 firm orders
  • MAX options: 152
  • Combined MAX-related commitments: 617; 2026 deliveries are expected to include substantial MAX-8 activity
• Fleet strategy:
  • Flexibility to designate firm orders as -7 or -8 and to accelerate replacements of older aircraft with newer, more efficient units.
  • Strategy supports expanding capacity and the network while maintaining efficiency.

Network and operations

• Route structure: point-to-point network focused on core stations to boost connectivity and reliability, blending nonstop service with selective hub-style connections.
• Nonstop service and performance (three-year data):
  • Percentage of customers flying nonstop: 74% (2025, 2024); 73% (2023)
  • Nonstop city pairs: 871 (2025); 850 (2024); 805 (2023)
  • Average nonstop stage length: 780 miles (2025); 763 (2024); 730 (2023)
  • Average trip duration: ~2.1 hours (2023–2025)
• Redeye operations and 24-hour capability:
  • Introduced 24-hour redeye flights in 2025; over 50 peak-day redeye flights during peak periods across continental U.S. and Hawaii routes; plans to add Alaska redeyes in 2026.
• International expansion:
  • 2025: launched international interline partnerships with Icelandair, China Airlines, EVA Air, Philippine Airlines, Condor, Turkish Airlines, and a separate partnership with Hahnair to broaden international ticketing and currency options.
  • Additional gateways and partnerships are under exploration for 2026.

Customer experience and product offerings

• Fare structure (2025–2026 transition):
  • Introduced “Basic” fare (lowest price, open seats at booking; nonrefundable and non-changeable except under a 24-hour policy or fare upgrades).
  • Introduced “Choice,” “Choice Preferred,” and “Choice Extra” (replacing Wanna Get Away, Plus, Anytime, and Business/Select families).
  • Bag fees implemented for many fare products starting May 2025.
  • Benefits and services vary by fare type, including seat selection options, change policies, and credits.
• Loyalty program: Rapid Rewards
  • Points earned based on base fare and fare class; higher fare products earn more points.
  • Points redeemable on every available seat, every day, with no blackout dates; points do not expire.
  • Supports transfers, purchases, gifts, and donations of points.
  • Transferable Flight Credits introduced for certain fare types; expiration tied to booking date.
  • 2025 flight awards redeemed: 9.1 million (10.1 million in 2024; 10.9 million in 2023).
  • Reward redemptions represented roughly 13.7% of revenue passenger miles flown in 2025.
• Getaways by Southwest:
  • Launched August 2025 as an in-house vacation package product.
  • Includes hotel partnerships and vacation packages with cancellation flexibility; two free checked bags for Getaways packages; 18-month vacation credits.
• Digital and distribution:
  • Primary channels: Southwest.com and the Southwest App (about 78% of passenger revenues in 2025; 81% in 2024).
  • Expanded distribution through Google Flights, Kayak, Skyscanner, Expedia, Priceline; interline and international partnerships enable local-currency ticketing for Southwest segments.
• Customer service enhancements:
  • Free Wi‑Fi for Rapid Rewards Members via T‑Mobile (began Oct 2025).
  • In-flight entertainment with movies and TV; in-seat power; larger overhead bins; refreshed cabin design.
  • TSA PreCheck touchless ID and other self-service features launched in 2025.

People and labor

• Headcount and structure (as of 12/31/2025):
  • Active full-time equivalent (FTE) employees: 72,790
    • Air operations: 32,214 (Pilots, Flight Attendants, Dispatchers, etc.)
    • Ground operations: 21,734 (Ramp, Maintenance, Customer Service, etc.)
    • Customer Representatives and Source of Support Representatives: 2,629
    • Maintenance and engineering: 3,727
    • Additional noncontract employees: 12,486
  • On-leave employees: 4,607
  • Labor representation: ~84% of employees represented by labor unions
  • Approximate group distributions (FTE):
    • Pilots: ~10,321
    • Flight Attendants: ~21,197
    • Material Specialists: 474
    • Ramp/Operations/Provisioning/Freight/Agents: ~17,565
    • Flight Simulator Technicians: 53
    • Flight Crew Training Instructors: 205
    • Dispatchers: 508
    • Aircraft Appearance Technicians: 209
    • Mechanics and related: 2,999
    • Facilities Maintenance Technicians: 45
    • Customer Service Agents/Representatives/Support: 6,798
    • Meteorologists: 15
• Labor relations:
  • Twelve union groups with active contracts; next amendable dates extend into 2027–2029 (pilots amendable January 2029; flight attendants May 2028).
  • Multi-year personnel strategy focused on right-sizing corporate headcount while maintaining frontline operational staffing.

Financial highlights and cost metrics

• Fuel and oil expense for 2025: $5.240 billion.
• Average jet fuel cost per gallon (including taxes and hedging): $2.41 in 2025 (quarterly range approximately $2.32–$2.49).
• Fuel efficiency: Available seat miles per gallon (ASM per gallon) improved to 83.0 in 2025 (80.8 in 2024; 79.5 in 2023).
• Labor costs: salaries, wages, and benefits represented approximately 46.9% of operating expenses in 2025.
• Credit and fleet metrics:
  • Maintains an investment-grade balance sheet with ratings from Moody’s, S&P, and Fitch.
  • Strong liquidity objective and an active fleet monetization plan that includes sale-leasebacks and replacements as potential options.

Market and competitive landscape

• Operates in a highly competitive fare environment.
• Ongoing expansion by redeploying capacity to longer-haul, higher-demand markets and by forming global partnerships to extend network reach.
• Continues to expand channels and partnerships to broaden customer acquisition and loyalty engagement.

Scope and operations

• Blended network strategy: core stations with high-frequency short-haul flying complemented by longer-haul and redeye service to balance connectivity, efficiency, and customer preferences.
• Transformational initiatives include assigned seating with seat selection options, redeye operations, globally integrated partnerships, and the Getaways vacation product to enhance the customer experience and expand international connectivity.
• Industry risks such as fuel price volatility, labor costs, regulatory changes, and aviation-safety requirements are managed through fleet strategy, cost discipline, and technology investments.

Business focus

• Low-cost, high-efficiency U.S. passenger airline operating a point-to-point network with select international connections.
• Single-aircraft-type fleet strategy (Boeing 737 family) with ongoing MAX investments and flexibility between -7 and -8 designations.
• Direct distribution through proprietary digital platforms, supplemented by third-party channels.
• Loyalty program (Rapid Rewards) that drives retention and reward redemptions.
• Continued focus on digital transformation, customer experience enhancements, product innovation, and labor relations management.