SOUTHWEST AIRLINES CO
For the period ended Dec 31, 2025. Filed Feb 5, 2026.
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FY2025 · Filed Feb 5, 2026
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12. Accumulated Other Comprehensive Income (Loss)
- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensive income includes changes in the fair value of certain financial derivative instruments that qualified for hedge accounting and actuarial gains/losses arising from the Company’s postretirement benefit obligation. During second quarter 2025, the Company terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio and program. See Note 10. A rollforward of the amounts included in AOCI, net of taxes, is shown below for 2025 and 2024:
| (in millions) | Fuel derivatives | Defined benefit plan items | Other | Deferred tax impact | Accumulated othercomprehensive income (loss) |
|---|---|---|---|---|---|
| Balance at December 31, 2023 | $(135) | $149 | $(15) | $1 | $— |
| Changes in fair value | (130) | 25 | — | 25 | (80) |
| Reclassification to earnings | 72 | (7) | 8 | (18) | 55 |
| Balance at December 31, 2024 | $(193) | $167 | $(7) | $8 | $(25) |
| Changes in fair value | (89) | (68) | — | 37 | (120) |
| Reclassification to earnings | 145 | 7 | 6 | (37) | 121 |
| Balance at December 31, 2025 | $(137) | $106 | $(1) | $8 | $(24) |
The following table illustrates the significant amounts reclassified out of each component of AOCI for the year ended December 31, 2025:
| Year ended December 31, 2025 | ||
|---|---|---|
| (in millions) | Amounts reclassified from AOCI | Affected line item in the Consolidated Statement of Income |
| AOCI components | ||
| Unrealized loss on fuel derivative instruments | $145 | Fuel and oil expense |
| 33 | Less: Tax expense | |
| $112 | Net of tax | |
| Unrealized loss on defined benefit plan | $7 | Other (gains) losses, net |
| 2 | Less: Tax expense | |
| $5 | Net of tax | |
| Other | $6 | Other operating expenses |
| 2 | Less: Tax expense | |
| $4 | Net of tax | |
| Total reclassifications for the period | $121 | Net of tax |
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