SOUTHWEST AIRLINES CO

Previous wording

Relevant comparative operating statistics for the three and six months ended June 30, 2026 and 2025 are included below. The Company provides these operating statistics because they are commonly used in the airline industry and, as such, allow readers to compare the Company’s performance against its results for the prior year period, as well as against the performance of the Company’s peers.

Current wording

Relevant comparative operating statistics for the three and nine months ended September 30, 2026 and 2025 are included below. The Company provides these operating statistics because they are commonly used in the airline industry and, as such, allow readers to compare the Company’s performance against its results for the prior year period, as well as against the performance of the Company’s peers.

Previous wording

The Company reports its results in accordance with GAAP. The Company also provides certain non-GAAP financial measures which the Company's management also utilizes to evaluate its ongoing financial performance, and the Company believes provides additional insight to investors as supplemental information to its GAAP results, as noted in the following tables. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Current wording

The Company reports its results in accordance with GAAP. The Company also provides certain non-GAAP financial measures which the Company's management also utilizes to evaluate its ongoing financial performance, and the Company believes provides additional insight to investors as supplemental information to its GAAP results, as noted in the following tables. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures. Within the financial tables presented, certain columns and rows may not calculate precisely to the reported totals due to the use of rounded numbers.

Previous wording

Despite a dynamic cost and fuel environment, the Company’s Operating income, Net income, and Net income per share, diluted, for the three and six months ended June 30, 2026, on a GAAP and non-GAAP basis, improved compared with the same prior year period, driven primarily by strong revenue performance, including an all-time quarterly record Operating revenue performance for the three months ended June 30, 2026, partially offset by higher Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. On a GAAP basis, the Company’s results for the three and six months ended June 30, 2026, included a reversal of $285 million of breakage revenue recorded in prior years related to a portion of flight credits issued to Customers between July 2022 and December 2025 that have either been redeemed or are expected to be redeemed in future periods. This adjustment was treated as a special item and excluded from the Company’s presentation of non-GAAP results. See Note Regarding Use of Non-GAAP Financial Measures and Notes 1 and 5 to the unaudited Condensed Consolidated Financial Statements for further information. Operating expense for the six months ended June 30, 2025, on a non-GAAP basis, excluded pre-tax charges of $115 million, most notably $62 million related to severance and related professional fees associated with the Company's February 2025 reduction in workforce.

Current wording

The Company’s Operating income, Net income, and Net income per share, diluted, for the three and nine months ended September 30, 2026, on a GAAP and non-GAAP basis, improved compared with the same prior year period, driven primarily by strong revenue performance, including third quarter record Operating revenue performance and all-time record unit revenues and passenger yield for the three months ended September 30, 2026, partially offset by higher Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. On a GAAP basis, the Company’s results for the nine months ended September 30, 2026, included a reversal of $285 million of breakage revenue recorded in prior years related to a portion of flight credits issued to Customers between July 2022 and December 2025 that have either been redeemed or are expected to be redeemed in future periods. This adjustment was treated as a special item in second quarter 2026 and excluded from the Company’s presentation of non-GAAP results. See Note Regarding Use of Non-GAAP Financial Measures and Notes 1 and 5 to the unaudited Condensed Consolidated Financial Statements for further information. Operating expense for the nine months ended September 30, 2025, on a non-GAAP basis, excluded pre-tax charges of $122 million, most notably $62 million related to severance and related professional fees associated with the Company's February 2025 reduction in workforce.

Previous wording

The Company has substantially completed the implementation of its previously announced transformational initiatives, which were planned and designed to attract new Customers and improve both the Company's operational and financial performance. Since the introduction of assigned and extra legroom seating on January 27, 2026, the Company has successfully integrated these offerings into its operations, contributing to improved passenger yields and incremental revenue. Despite significantly higher fuel costs, results reflect record revenue performance, significant earnings growth and margin expansion, broad demand strength, continued cost discipline, and strong Customer engagement with the Company’s enhanced product offering.

Current wording

The Company has completed the implementation of its previously announced transformational initiatives, which were planned and designed to attract new Customers and improve both the Company's operational and financial performance. Since the introduction of assigned and extra legroom seating on January 27, 2026, the Company has successfully integrated these offerings into its operations, contributing to improved passenger yields and incremental revenue. Despite significantly higher fuel costs, results reflect strong demand for the Company's enhanced product and continued momentum across the business.

Previous wording

The Company has also continued to enhance its onboard offerings, with improvements such as in-seat power, larger overhead bins, and upgraded WiFi, with the first Starlink-equipped aircraft entering service on June 22, 2026, marking the beginning of a new era of inflight connectivity at Southwest. Work is well underway on a refreshed cabin design, including new, more comfortable RECARO seats. As of July 22, 2026, 107 aircraft retrofitted with RECARO seats have been placed into service. In addition, the Company entered into new partnerships with Singapore Airlines, which will enable jointly operated itineraries connecting through the carriers' shared gateway airports in Los Angeles, Seattle-Tacoma, and San Francisco, and with Air Premia, which will enable travel across the Pacific with interline connections at the carriers' shared gateway airports in Honolulu, Los Angeles, and San Francisco. Since February 13, 2025, the Company has implemented and/or announced strategic partnerships with a total of nine carriers, through which Customers can book itineraries that connect the Company's vast domestic network to destinations around the world.

Current wording

The Company has also continued to enhance its onboard offerings, with improvements such as in-seat power, larger overhead bins, a refreshed cabin design, with new, more comfortable RECARO seats, and upgraded WiFi, with Starlink-equipped aircraft now in service as part of the Company's ongoing fleet-wide rollout. The Company expects to complete the fleet-wide rollout of Starlink in fall 2027. In addition, the Company entered into new strategic partnerships with TAP Air Portugal, which will enable further travel opportunities to Europe with interline connections at the carriers' shared gateway airports in Boston, Los Angeles, Miami, and San Francisco, and with LOT Polish Airlines, which will offer Passengers access to destinations across Europe and the globe through the carriers' shared gateway airports in Los Angeles, Miami, and San Francisco. Since February 13, 2025, the Company has implemented and/or announced strategic partnerships with a total of 11 carriers, through which Customers may book itineraries that connect the Company's vast domestic network to destinations around the world. In spring 2027, the Company plans to enable Members to earn and redeem Rapid Reward points for travel through new international loyalty partners. The program is expected to initially launch with Icelandair, China Airlines, and Etihad Airways.

Previous wording

In second quarter 2026, the Company also paid $88 million to Shareholders through dividends. See "Liquidity and Capital Resources" below for further information.

Current wording

In third quarter 2026, the Company also paid $176 million to Shareholders through dividends. See "Liquidity and Capital Resources" below for further information.

Previous wording

Total operating revenues for second quarter 2026 increased by $1.2 billion, or 16.4 percent, year-over-year, to achieve an all-time quarterly Company record of $8.4 billion, despite a $285 million decrease related to a breakage adjustment, which was treated as a special item and excluded from the Company's presentation of non-GAAP results. See Note Regarding Use of Non-GAAP Financial Measures and see Notes 1 and 5 to the unaudited Condensed Consolidated Financial Statements for further information. Passenger revenues for second quarter 2026 increased by $1.1 billion, or 16.9 percent, year-over-year, driven primarily by a higher percentage of Customers purchasing higher fare categories as a result of the enhanced fare structure, coupled with an increase in new ancillary products implemented by the Company, including bag fee revenues for first and second checked bags for tickets purchased on or after May 28, 2025, and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives. Other revenues for second quarter 2026 increased by $64 million, or 11.2 percent, year-over-year, driven primarily by improved retail spend on the Company's co-branded credit cards. Second quarter 2026 RASM was 17.91 cents, finishing 16.2 percent higher than second quarter 2025. The unit revenue increase was primarily due to a 15.4 percent increase in yield as a result of broad demand strength and strong Customer engagement with the Company's enhanced product offering, including an increase in ancillary revenues, along with a 0.8 point year-over-year increase in Load factor. Second quarter 2026 RASM, excluding special items, was 18.51 cents, finishing 20.1 percent higher than second quarter 2025. See Reconciliation of Reported Amounts to Non-GAAP Financial Measures and Note Regarding Use of Non-GAAP Financial Measures for further information.

Current wording

Total operating revenues for third quarter 2026 increased by $1.5 billion, or 21.2 percent, year-over-year, to achieve a third quarter Company record of $8.4 billion. Passenger revenues for third quarter 2026 increased by $1.4 billion, or 22.8 percent, year-over-year, driven by a higher percentage of Customers choosing more premium fare benefits as a result of the enhanced fare structure, coupled with an increase in new ancillary products implemented by the Company, including bag fee revenues for first and second checked bags for tickets purchased on or after May 28, 2025 and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives. Other revenues for third quarter 2026 increased by $27 million, or 4.5 percent, year-over-year, driven primarily by new revenue contracts with partners. Third quarter 2026 RASM was 18.55 cents, finishing 21.6 percent higher than third quarter 2025 to achieve an all-time Company record. The unit revenue increase was primarily due to a 23.3 percent increase in yield as a result of broad demand strength and strong Customer engagement with the Company's enhanced product offering, including an increase in ancillary revenues.

Previous wording

Operating expenses for second quarter 2026 increased by $1.1 billion, or 16.1 percent, compared with second quarter 2025, and capacity increased 0.2 percent over the same prior year period. Operating expenses, excluding special items, increased $1.1 billion, or 16.2 percent, compared with second quarter 2025. The vast majority of the dollar increase was due to higher Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. The following table presents the Company's Operating expenses per ASM for the second quarter of 2026 and 2025, followed by explanations of these changes on both a dollar and unit basis.

Current wording

Operating expenses for third quarter 2026 increased by $1.1 billion, or 16.3 percent, compared with third quarter 2025. Operating expenses, excluding special items, increased $1.1 billion, or 15.4 percent, compared with third quarter 2025. The dollar increase was primarily due to higher Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. The following table presents the Company's Operating expenses per ASM for the third quarter of 2026 and 2025, followed by explanations of these changes on both a dollar and unit basis.

Previous wording

Operating expenses per ASM for second quarter 2026 increased by 15.8 percent compared with second quarter 2025, primarily due to an increase in Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. Operating expenses per ASM for second quarter 2026, excluding Aircraft fuel and related taxes expense, profit sharing, and special items (a non-GAAP financial measure), increased 3.4 percent, compared with second quarter 2025, primarily due to wage rate inflation in Salaries, wages, and benefits expense in 2026. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Current wording

Operating expenses per ASM for third quarter 2026 increased by 16.8 percent compared with third quarter 2025, primarily due to an increase in Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. Operating expenses per ASM for third quarter 2026, excluding Aircraft fuel and related taxes expense, profit sharing, and special items (a non-GAAP financial measure), increased 3.8 percent, compared with third quarter 2025, primarily due to wage rate inflation in Salaries, wages, and benefits expense in 2026. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Previous wording

Salaries, wages, and benefits expense for second quarter 2026 increased by $237 million, or 7.3 percent, compared with second quarter 2025. On a per ASM basis, second quarter 2026 Salaries, wages, and benefits expense increased 7.2 percent, compared with second quarter 2025. On a dollar and per ASM basis, the majority of the increase was due to step/pay rate increases and related benefits for the Company's workforce.

Current wording

Salaries, wages, and benefits expense for third quarter 2026 increased by $323 million, or 10.0 percent, compared with third quarter 2025. On a per ASM basis, third quarter 2026 Salaries, wages, and benefits expense increased 10.2 percent, compared with third quarter 2025. On a dollar and per ASM basis, the majority of the increase was due to step/pay rate increases and related benefits for the Company's workforce.

Previous wording

Aircraft fuel and related taxes expense for second quarter 2026 increased by $889 million, or 67.0 percent, compared with second quarter 2025. On a per ASM basis, second quarter 2026 Aircraft fuel and related taxes expense increased 66.1 percent. On a dollar and per ASM basis, the increase was primarily attributable to increased jet fuel prices, particularly due to recent market disruptions and worldwide geopolitical events. The following table provides more information on the Company's fuel costs per gallon, including the impact of fuel hedging net premium expense associated with previously terminated fuel derivative contracts:

Current wording

Aircraft fuel and related taxes expense for third quarter 2026 increased by $821 million, or 61.7 percent, compared with third quarter 2025. On a per ASM basis, third quarter 2026 Aircraft fuel and related taxes expense increased 62.3 percent. On a dollar and per ASM basis, the increase was primarily attributable to increased jet fuel prices, particularly due to market disruptions and worldwide geopolitical events. The following table provides more information on the Company's fuel costs per gallon, including the impact of fuel hedging net premium expense associated with previously terminated fuel derivative contracts:

Previous wording

The Company's second quarter 2026 available seat miles per gallon ("fuel efficiency") increased 1.3 percent, year-over-year, with the improvement primarily due to operating more -8 aircraft, the Company's most fuel-efficient aircraft, as a percentage of its fleet. The continued deliveries of MAX aircraft are expected to remain critical to the Company's efforts to modernize its fleet.

Current wording

The Company's third quarter 2026 available seat miles per gallon ("fuel efficiency") increased 0.7 percent, year-over-year, with the improvement primarily due to operating more -8 aircraft, the Company's most fuel-efficient aircraft, as a percentage of its fleet. The continued deliveries of MAX aircraft are expected to remain critical to the Company's efforts to modernize its fleet.

Previous wording

Maintenance materials and repairs expense for second quarter 2026 decreased by $37 million, or 11.2 percent, compared with second quarter 2025. On a per ASM basis, Maintenance materials and repairs expense decreased 11.4 percent compared with second quarter 2025. On a dollar and per ASM basis, the decrease was primarily due to a decrease in -700 engine shop visits.

Current wording

Maintenance materials and repairs expense for third quarter 2026 increased by $4 million, or 1.3 percent, compared with third quarter 2025. On a per ASM basis, Maintenance materials and repairs expense increased 1.5 percent compared with third quarter 2025. On a dollar and per ASM basis, the increase was primarily due to an increase in -800 and -8 engine repairs.

Previous wording

Landing fees and airport rentals expense for second quarter 2026 increased by $69 million, or 12.2 percent, compared with second quarter 2025. On a per ASM basis, Landing fees and airport rentals expense increased 11.6 percent, compared with second quarter 2025. On a dollar and per ASM basis, approximately 50 percent of the increase was attributable to an increase in airport rental expense throughout the network driven by the higher rates charged by airports for leased space, approximately 25 percent of the increase was due to higher landing fees throughout the network driven by increased usage of the heavier -8 aircraft as well as higher rates, and the remaining increase was primarily due to receiving fewer favorable settlements and credits from various airports in 2026.

Current wording

Landing fees and airport rentals expense for third quarter 2026 increased by $75 million, or 13.7 percent, compared with third quarter 2025. On a per ASM basis, Landing fees and airport rentals expense increased 14.2 percent, compared with third quarter 2025. On a dollar and per ASM basis, approximately 50 percentof the increase was attributable to an increase in airport rental expense throughout the network driven by the higher rates charged by airports for leased space, approximately 30 percentof the increase was due to higher landing fees throughout the network driven by increased usage of the heavier -8 aircraft as well as higher rates, and the remaining increase was primarily due to receiving fewer favorable settlements and credits from various airports in 2026.

Previous wording

Depreciation and amortization expense for second quarter 2026 increased by$2 million, or 0.5 percent, compared with second quarter 2025. On a per ASM basis, Depreciation and amortization expense remained flat compared with second quarter 2025. On a dollar basis, this increase was primarily due to approximately $40 million in increased depreciation as a result of new assets acquired and placed into service, including aircraft, technology, and ground equipment, which was mostly offset by a $25 million decrease in depreciation as a result of a change in estimate for certain airframe and engine assets due to prevailing market conditions and a $16 million reduction due to aircraft and related assets that were retired and/or became fully depreciated since second quarter 2025.

Current wording

Depreciation and amortization expense for third quarter 2026 increased by$4 million, or 1.0 percent, compared with third quarter 2025. On a per ASM basis, Depreciation and amortization expense increased 2.3 percent compared with third quarter 2025. On a dollar and per ASM basis, this increase was primarily due to new assets acquired and placed into service, including aircraft and technology, mostly offset by a decrease in depreciation as a result of a change in estimated residual value for certain engine assets due to prevailing market conditions.

Previous wording

Other operating expenses for second quarter 2026 decreased by $32 million, or 2.8 percent, compared with second quarter 2025. Included within this line item was aircraft rentals expense in the amounts of $75 million and $80 million for the three-month periods ended June 30, 2026 and 2025, respectively. On a per ASM basis, Other operating expenses decreased 2.9 percent, compared with second quarter 2025. On a dollar and per ASM basis, the decrease was primarily due to higher year-over-year gains on the disposition of assets, primarily previously retired engines and aircraft, partially offset by an increase in revenue-related expenses driven by increased credit card transactions, the Company's free inflight WiFi offering, and higher Employee-related expenses driven by redeye flying.

Current wording

Other operating expenses for third quarter 2026 decreased by $97 million, or 8.6 percent, compared with third quarter 2025. Included within this line item was aircraft rentals expense in the amounts of $78 million and $76 million for the three-month periods ended September 30, 2026 and 2025, respectively. On a per ASM basis, Other operating expenses decreased 7.8 percent, compared with third quarter 2025. On a dollar and per ASM basis, the decrease was primarily due to $201 million in additional year-over-year gains on sale-leaseback transactions and the disposition of assets, primarily previously retired engines and aircraft, partially offset by a $64 million increase in revenue-related expenses driven by increased credit card transactions and the Company's free inflight WiFi offering. The remainder of the offset was primarily due to various increased flight-driven expenses that were not individually significant.

Previous wording

Interest expense for second quarter 2026 increased by $25 million, or 64.1 percent, compared with second quarter 2025, primarily due to various debt financing transactions executed since second quarter 2025. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

Current wording

Interest expense for third quarter 2026 increased by $35 million, or 100.0 percent, compared with third quarter 2025, primarily due to various debt financing transactions executed since third quarter 2025. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

Previous wording

Other (gains) losses, net, for second quarter 2026 increased by $13 million, or 48.1 percent, compared with second quarter 2025, primarily related to impacts from the Company's nonqualified benefit plan obligations driven by volatility in the stock market.

Current wording

Other gains, net, for third quarter 2026 decreased by $20 million, or 95.2 percent, compared with third quarter 2025, primarily related to impacts from the Company's nonqualified benefit plan obligations driven by volatility in the stock market.

Previous wording

Total operating revenues for the first six months of 2026 increased $2.0 billion, or 14.7 percent, year-over-year, despite a $285 million decrease related to a breakage adjustment, which was treated as a special item and excluded from the Company's presentation of non-GAAP results. See Note Regarding Use of Non-GAAP Financial Measures and see Note 1 to the unaudited Condensed Consolidated Financial Statements for further information. Passenger revenues for the six months ended June 30, 2026, increased by $1.9 billion, or 15.3 percent, compared with the first six months of 2025, primarily due to a higher percentage of Customers purchasing higher fare categories as a result of the enhanced fare structure, coupled with an increase in bag fee revenues for the first and second checked bags for tickets purchased on or after May 28, 2025, and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives. Other revenues for the first six months of 2026 increased by $104 million, or 9.1 percent, year-over-year, driven primarily by improved retail spend on the Company's co-branded credit cards. The first six months of 2026 RASM was $17.59 cents, finishing 13.8 percent higher than the first six months of 2025. The unit revenue increase was primarily due to a 13.6 percent increase in yield as a result of broad demand strength and strong Customer engagement with the Company's enhanced product offering, including an increase in ancillary revenues, along with a 0.5 point year-over-year increase in Load factor. The first six months of 2026 RASM, excluding special items was 17.91 cents, finishing 15.8 percent higher than the first six months of 2025. See Reconciliation of Reported Amounts to Non-GAAP Financial Measures and Note Regarding Use of Non-GAAP Financial Measures for further information.

Current wording

Total operating revenues for the first nine months of 2026 increased $3.5 billion, or 16.9 percent, year-over-year, which included a $285 million decrease related to a breakage adjustment, which was treated as a special item and excluded from the Company's presentation of non-GAAP results. See Note Regarding Use of Non-GAAP Financial Measures and see Notes 1 and 5 to the unaudited Condensed Consolidated Financial Statements for further information. Passenger revenues for the nine months ended September 30, 2026, increased by $3.3 billion, or 17.8 percent, compared with the first nine months of 2025, primarily due to a higher percentage of Customers choosing more premium fare benefits as a result of the enhanced fare structure coupled with an increase in new ancillary products implemented by the Company, including bag fee revenues for first and second checked bags for tickets purchased on or after May 28, 2025 and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives. Other revenues for the first nine months of 2026 increased by $129 million, or 7.4 percent, compared with the first nine months of 2025. On a dollar basis, approximately 50 percent of the increase was driven by higher retail spend on the Company's co-branded credit cards and approximately 50 percent was driven by new revenue contracts with partners. The first nine months of 2026 RASM was $17.92 cents, finishing 16.4 percent higher than the first nine months of 2025. The unit revenue increase was primarily due to a 16.9 percent increase in yield as a result of broad demand strength and strong Customer engagement with the Company's enhanced product offering, including an increase in ancillary revenues. The first nine months of 2026 RASM, excluding special items was 18.13 cents, finishing 17.8 percent higher than the first nine months of 2025. See Reconciliation of Reported Amounts to Non-GAAP Financial Measures and Note Regarding Use of Non-GAAP Financial Measures for further information.

Previous wording

Operating expenses for the first six months of 2026 increased $1.4 billion, or 10.2 percent, compared with the first six months of 2025, and capacity increased 0.8 percent over the same prior year period. The vast majority of the dollar increase was due tohigher Aircraft fuel and related taxes expense, Salaries, wages, and benefits expense, and Landing fees and airport rentals expense. The following table presents the Company's Operating expenses per ASM for the first six months of 2026 and 2025, followed by explanations of these changes on a dollar and unit basis.

Current wording

Operating expenses for the first nine months of 2026 increased $2.5 billion, or 12.3 percent, compared with the first nine months of 2025. The dollar increase was primarily due tohigher Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. The following table presents the Company's Operating expenses per ASM for the first nine months of 2026 and 2025, followed by explanations of these changes on a dollar and unit basis.

Previous wording

Operating expenses per ASM for the first six months of 2026 increased 9.3 percent, compared with the first six months of 2025, primarily due to an increase in Aircraft fuel and related taxes expense, Salaries, wages, and benefits expense, and Landing fees and airport rentals expense. Operating expenses per ASM for the first six months of 2026, excluding Aircraft fuel and related taxes expense, profit sharing, and special items (a non-GAAP financial measure), increased 2.9 percent, year-over-year, primarily due to wage rate inflation in Salaries, wages, and benefits expense. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Current wording

Operating expenses per ASM for the first nine months of 2026 increased 11.8 percent, compared with the first nine months of 2025, primarily due to an increase in Aircraft fuel and related taxes expense and Salaries, wages, and benefits expense. Operating expenses per ASM for the first nine months of 2026, excluding Aircraft fuel and related taxes expense, profit sharing, and special items (a non-GAAP financial measure), increased 3.2 percent, year-over-year, primarily due to wage rate inflation in Salaries, wages, and benefits expense. See Note Regarding Use of Non-GAAP Financial Measures and the Reconciliation of Reported Amounts to Non-GAAP Financial Measures for additional detail regarding non-GAAP financial measures.

Previous wording

Salaries, wages, and benefits expense for the first six months of 2026 increased by $433 million, or 6.8 percent, compared with the first six months of 2025. On a per ASM basis, Salaries, wages, and benefits expense for the first six months of 2026 increased 5.7 percent, compared with the first six months of 2025. On a dollar and per ASM basis, the majority of the increase was due to step/pay rate increases and related benefits for the Company's workforce.

Current wording

Salaries, wages, and benefits expense for the first nine months of 2026 increased by $755 million, or 7.9 percent, compared with the first nine months of 2025. On a per ASM basis, Salaries, wages, and benefits expense for the first nine months of 2026 increased 7.3 percent, compared with the first nine months of 2025. On a dollar and per ASM basis, the majority of the increase was due to step/pay rate increases and related benefits for the Company's workforce.

Previous wording

Aircraft fuel and related taxes expense for the first six months of 2026 increased $996 million, or 38.7 percent, compared with the first six months of 2025. On a per ASM basis, Aircraft fuel and related taxes expense for the first six months of 2026 increased 37.5 percent. On a dollar and per ASM basis, the increase was primarily attributable to higher jet fuel prices, particularly due to market disruptions and worldwide geopolitical events that began in March 2026. The following table provides more information on the Company's fuel cost per gallon, including the impact of fuel hedging net premium expense associated with previously terminated fuel derivative contracts:

Current wording

Aircraft fuel and related taxes expense for the first nine months of 2026 increased $1.8 billion, or 46.5 percent, compared with the first nine months of 2025. On a per ASM basis, Aircraft fuel and related taxes expense for the first nine months of 2026 increased 46.0 percent. On a dollar and per ASM basis, the increase was primarily attributable to increased jet fuel prices, particularly due to market disruptions and worldwide geopolitical events. The following table provides more information on the Company's fuel cost per gallon, including the impact of fuel hedging net premium expense associated with previously terminated fuel derivative contracts:

Previous wording

Maintenance materials and repairs expense for the first six months of 2026 decreased $71 million, or 11.4 percent, compared with the first six months of 2025. On a per ASM basis, Maintenance materials and repairs expense decreased 11.4 percent, compared with the first six months of 2025. On a dollar and per ASM basis, the decrease was primarily due to a decrease in -700 engine shop visits.

Current wording

Maintenance materials and repairs expense for the first nine months of 2026 decreased $66 million, or 7.2 percent, compared with the first nine months of 2025. On a per ASM basis, Maintenance materials and repairs expense decreased 7.2 percent, compared with the first nine months of 2025. On a dollar and per ASM basis, the decrease was primarily due to a $114 million decrease in -700 engine repairs. This decrease was partially offset by a $22 million increase in -8 engine repairs, as well as higher maintenance materials and repair expenses for airframes and engines across the fleet, none of which were individually material.

Previous wording

Landing fees and airport rentals expense for the first six months of 2026 increased $118 million, or 10.8 percent, compared with the first six months of 2025. On a per ASM basis, Landing fees and airport rentals expense increased 10.6 percent, compared with the first six months of 2025. On a dollar and per ASM basis, approximately 55 percent of the increase was attributable to an increase in airport rental expense throughout the network driven by the higher rates charged by airports for leased space, approximately 25 percent of the increase was due to higher landing fees throughout the network driven by increased usage of the heavier -8 aircraft as well as higher rates, and approximately 20 percent was due to receiving fewer favorable settlements and credits from various airports in 2026.

Current wording

55 percent of the increase was attributable to an increase in airport rental expense throughout the network driven by the higher rates charged by airports for leased space, approximately 30 percent of the increase was due to higher landing fees throughout the network driven by increased usage of the heavier -8 aircraft as well as higher rates, and approximately 15 percent of the increase was due to receiving fewer favorable settlements and credits from various airports in 2026.

Previous wording

Depreciation and amortization expense for the first six months of 2026 increased $5 million, or 0.6 percent, compared with the first six months of 2025. On a per ASM basis, Depreciation and amortization expense remained flat compared with the first six months of 2025. On a dollar basis, this increase was primarily due to approximately $78 million in increased depreciation as a result of new assets acquired and placed into service, including aircraft, technology, and ground equipment, and various other individual increases that were not significant. These increases were mostly offset by a $53 million decrease in depreciation as a result of a change in estimate for certain airframe and engine assets due to prevailing market conditions and a $34 million reduction due to aircraft and related assets that were retired and/or became fully depreciated since second quarter 2025.

Current wording

Depreciation and amortization expense for the first nine months of 2026 increased $9 million, or 0.8 percent, compared with the first nine months of 2025. On a per ASM basis, Depreciation and amortization expense remained flat compared with the first nine months of 2025. On a dollar basis, this increase was primarily due to increased depreciation as a result of new assets acquired and placed into service, including aircraft, technology, and ground equipment, and various other increases that were not individually significant. This increasewas mostly offset by a decrease in depreciation as a result of a change in estimated residual value for certain airframe and engine assets due to prevailing market conditions.

Previous wording

Other operating expenses for the first six months of 2026 decreased $84 million, or 3.8 percent, compared with the first six months of 2025. Included within this line item was aircraft rentals expense in the amount of $150 million and $167 million for the six months ended June 30, 2026 and 2025, respectively. On a per ASM basis, Other operating expenses decreased 4.4 percent, compared with the first six months of 2025. On a dollar and per ASM basis, the decrease was primarily due to higher year-over-year gains on the disposition of assets, primarily previously retired engines and aircraft, partially offset by an increase in revenue-related expenses driven by increased credit card transactions, the Company's free inflight WiFi offering, and higher Employee-related expenses driven by redeye flying.

Current wording

Other operating expenses for the first nine months of 2026 decreased $180 million, or 5.4 percent, compared with the first nine months of 2025. Included within this line item was aircraft rentals expense in the amount of $228 million and $243 million for the nine months ended September 30, 2026 and 2025, respectively. On a per ASM basis, Other operating expenses decreased 5.6 percent, compared with the first nine months of 2025. On a dollar and per ASM basis, the decrease was primarily due to (i) $359 million in additional year-over-year gains on sale-leaseback transactions and the disposition of assets, primarily previously retired engines and aircraft and (ii) a $75 million decrease in external consulting services related to non-recurring Company-wide initiatives. This was partially offset by a $172 million increase in revenue-related expenses driven primarily by increased credit card transactions and the Company's free inflight WiFi offering, and a $49 million increase in Employee-related expenses driven by increased redeye flying and inflation in lodging rates in 2026.

Previous wording

Interest expense for the first six months of 2026 increased $33 million, or 38.8 percent, compared with the first six months of 2025, primarily due to various debt financing transactions executed since second quarter 2025. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

Current wording

Interest expense for the first nine months of 2026 increased $68 million, or 56.7 percent, compared with the first nine months of 2025, primarily due to various debt financing transactions executed since third quarter 2025. See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information.

Previous wording

Interest income for the first six months of 2026 decreased $81 million, or 58.7 percent, compared with the first six months of 2025, primarily due to lower investment balances and a lower average interest rate in the Company's total investment portfolio.

Current wording

Interest income for the first nine months of 2026 decreased $82 million, or 47.7 percent, compared with the first nine months of 2025, primarily due to lower average investment balances and a lower average interest rate in the Company's total investment portfolio.

Previous wording

Other (gains) losses, net, for the first six months of 2026 increased $4 million, or 44.4 percent, compared with the first six months of 2025, primarily related to impacts from the Company's nonqualified benefit plan obligations driven by volatility in the stock market.

Current wording

Other gains, net, for the first nine months of 2026 decreased $15 million, or 53.6 percent, compared with the first nine months of 2025, primarily related to impacts from the Company's nonqualified benefit plan obligations driven by volatility in the stock market.

Previous wording

The Company's effective tax rate was approximately 22.2 percent for the first six months of 2026, compared with 27.4 percent for the first six months of 2025. The first half 2025 tax rate was higher than first half 2026 due to certain discrete tax items and lower pre-tax book income in 2025, both of which had a disproportionate impact on first half 2025's tax rate.

Current wording

The Company's effective tax rate was approximately 22.9 percent for the first nine months of 2026, compared with 24.6 percent for the first nine months of 2025. The first nine months 2025 tax rate was higher than the first nine months 2026 due to certain discrete tax items and lower pre-tax book income in 2025, both of which had a disproportionate impact on the 2025 tax rate.

Previous wording

(c) The Equity adjustment in the denominator adjusts for the cumulative impacts, in Accumulated other comprehensive income and Retained earnings, of gains and/or losses that will settle in future periods, including those associated with the Company's terminated fuel hedges. The current period impact of these gains and/or losses is reflected in the Net impact from fuel contracts in the numerator.

Current wording

(c) The Equity adjustment in the denominator adjusts for the cumulative impacts, in Accumulated other comprehensive income and Retained earnings, of gains and/or losses that will settle in future periods, including those associated with the Company's terminated fuel hedges. The prior period impact of these gains and/or losses is reflected in the Net impact from fuel contracts in the numerator.

Previous wording

(e) The GAAP twelve month rolling tax rate as of June 30, 2025, was 22.3 percent, and the Non-GAAP twelve month rolling tax rate was 22.6 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.

Current wording

(d) The GAAP twelve month rolling tax rate as of September 30, 2026, was 22.2 percent, and the Non-GAAP twelve month rolling tax rate was 22.7 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.

Previous wording

(d) The GAAP twelve month rolling tax rate as of June 30, 2026, was 21.5 percent, and the Non-GAAP twelve month rolling tax rate was 22.4 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.

Current wording

(e) The GAAP twelve month rolling tax rate as of September 30, 2025, was 21.8 percent, and the Non-GAAP twelve month rolling tax rate was 22.4 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.

Previous wording

Reversal of breakage revenue recorded in prior years related to a portion of non-expiring flight credits issued to Customers between July 2022 and December 2025 that have either been redeemed or are expected to be redeemed in future periods;

Current wording

Reversal of breakage revenue recorded in prior years related to a portion of non-expiring flight credits issued to Customers that have either been redeemed or are expected to be redeemed in future periods;

Previous wording

Non-cash impairment charges to remove certain assets from the unaudited Condensed Consolidated Balance Sheet that are no longer in use;

Current wording

Non-cash impairment charges to remove certain assets no longer in use that are not related to the direct operations of the Company from the unaudited Condensed Consolidated Balance Sheet;

Previous wording

A charge associated with a settlement reached with the Department of Transportation ("DOT") as a result of the Company's December 2022 operational disruption.

Current wording

A credit received from the Department of Transportation ("DOT") regarding a settlement reached for the Company's December 2022 operational disruption in light of the Company significantly improving its on-time performance and completion factor through the Company's investment in its Network Operations Control.

Previous wording

Net cash provided by operating activities was $530 million for the three months ended June 30, 2026, compared with $401 million provided by operating activities in the same prior year period. Net cash provided by operating activities was $1.9 billion for the six months ended June 30, 2026 compared with $1.3 billion provided by operating activities in the same prior year period. Historically, operating cash inflows are primarily derived from selling tickets for future flights and providing air transportation to Customers. The vast majority of tickets are purchased prior to the day on which travel is provided and, in some cases, several months before the anticipated travel date. Operating cash outflows are related to the recurring expenses of airline operations. The operating cash flows for the six months ended June 30, 2026, were largely impacted by the Company's net results (as adjusted for noncash items), a $97 million profit-sharing contribution related to 2025 results pursuant to the Company's Retirement Savings Plan, and a $1.0 billion increase in Air traffic liability driven by seasonal bookings for future travel. The operating cash flows for the six months ended June 30, 2025, were largely impacted by the Company's net results (as adjusted for noncash items), a $103 million profit-sharing contribution related to 2024 results pursuant to the Company's Retirement Savings Plan, and a $55 million increase in Air traffic liability driven by higher ticket sales. Net cash provided by operating activities is primarily used to finance capital expenditures, repay debt, provide Shareholder returns, and provide working capital.

Current wording

Net cash provided by operating activities was $513 million for the three months ended September 30, 2026, compared with $287 million provided by operating activities in the same prior year period. Net cash provided by operating activities was $2.5 billion for the nine months ended September 30, 2026 compared with $1.5 billion provided by operating activities in the same prior year period. Historically, operating cash inflows are primarily derived from selling tickets for future flights and providing air transportation to Customers. The vast majority of tickets are purchased prior to the day on which travel is provided and, in some cases, several months before the anticipated travel date. Operating cash outflows are related to the recurring expenses of airline operations. The operating cash flows for the nine months ended September 30, 2026, were largely impacted by the Company's net results (as adjusted for noncash items), a $97 million profit-sharing contribution related to 2025 results pursuant to the Company's Retirement Savings Plan, a $1.1 billion increase in Air traffic liability driven by seasonal bookings for future travel, and gains of $272 million and $118 million on the sale of property and equipment and sale-leaseback transactions, respectively. The operating cash flows for the nine months ended September 30, 2025, were largely impacted by the Company's net results (as adjusted for noncash items), a $103 million profit-sharing contribution related to 2024 results pursuant to the Company's Retirement Savings Plan, and a $117 million decrease in Air traffic liability driven by a decrease in flight points earned and more flight credits redeemed by Customers. Net cash provided by operating activities is primarily used to finance capital expenditures, repay debt, provide Shareholder returns, and provide working capital.

Previous wording

Net cash used in investing activities totaled $560 million during the three months ended June 30, 2026, compared with $882 million used in investing activities in the same prior year period. Net cash used in investing activities totaled $1.0 billion during the six months ended June 30, 2026, compared with $259 million used in investing activities in the same prior year period. Investing activities in both years included Capital expenditures, as well as proceeds from the sale of various capital assets, and the prior year also included changes in the balance of the Company's short-term and noncurrent investments. During the six months ended June 30, 2026, gross Capital expenditures were $1.4 billion, and the Company had $450 million proceeds from sales of assets, compared with $1.2 billion gross Capital expenditures, and $51 million proceeds from sales of assets in the same prior year period. Capital expenditures increased, year-over-year, largely due to an increase in average delivery payment balances for scheduled future aircraft deliveries during the six months ended June 30, 2026, compared with the same prior year period. Proceeds from sales increased, year-over-year, due to the timing and volume of various aircraft and engine sales in the six months ended June 30, 2026, compared with June 30, 2025.

Current wording

Net cash used in investing activities totaled $509 million during the three months ended September 30, 2026, compared with $428 million used in investing activities in the same prior year period. Net cash used in investing activities totaled $1.5 billion during the nine months ended September 30, 2026, compared with $687 million used in investing activities in the same prior year period. Investing activities in both years included Capital expenditures, as well as proceeds from the sale of various capital assets, and the prior year also included changes in the balance of the Company's short-term and noncurrent investments. During the nine months ended September 30, 2026, gross Capital expenditures were $2.5 billion, and the Company had $735 million proceeds from sales of property and equipment, as well as $212 million raised from sale-leaseback transactions (See Note 10 to the unaudited Condensed Consolidated Financial Statements for further information on the sale-leaseback transactions), compared with $1.9 billion gross Capital expenditures, and $108 million proceeds from sales of property and equipment in the same prior year period. Capital expenditures increased, year-over-year, largely due to an increase in progress and delivery payment balances for scheduled future aircraft deliveries during the nine months ended September 30, 2026, compared with the same prior year period. Proceeds from sales increased, year-over-year, due to the timing and volume of various aircraft and engine sales in the nine months ended September 30, 2026, compared with September 30, 2025.

Previous wording

The Company expects its 2026 net capital spending to be toward the low end of, or below, the $3.0 billion to $3.5 billion range based on its expectation of 64 -8 aircraft deliveries in 2026, with the remainder representing non-aircraft capital spending, partially offset by proceeds from sales of assets. The Company continues to plan for approximately 60 aircraft retirements in 2026.

Current wording

The Company expects its 2026 net capital spending to be between $2.5 billion and $2.75 billion, which includes the impact of proceeds from sales of assets and sale-leaseback transactions.