Southwest Airlines 2001 Annual Report Download - page 3

The combination of farsighted, rather than nearsighted, Company philosophies and policies and of the Southwest People, who
are strong, resolved, dedicated, empathetic, resilient, and also farsighted, rather than nearsighted, in their thoughts and actions,
brought about the following proud results for Southwest in the post September 11 period:
1. Southwest operated 100 percent of its aircraft capacity and provided 100 percent job security, with no loss of pay for its People
from layoffs, furloughs, or unpaid leaves and with no fear by its People of having to reduce their pay or benefits;
2. Southwest was able to fund its year 2000 Employee Profitsharing and fourth quarter 2001 Employee savings plan obligations
in the amount of $197.5 million;
3. Southwest inaugurated service to Southern Virginia through Norfolk;
4. Southwest announced additional nonstop service between the following cities, utilizing two previously deferred new aircraft
deliveries: Baltimore/Washington to Manchester, Orlando, and Ft. Lauderdale; and Long Island/Islip to Orlando and Ft. Lauderdale;
5. Southwest prepared to implement its first nonstop flights between Chicago’s Midway Airport and both Seattle and Oakland,
utilizing four previously deferred new aircraft deliveries;
6. Year over year, Southwest’s fourth quarter 2001 ASM capacity increased by 6.4 percent;
7. Southwest’s Revenue Passenger Mile (RPM) share of the U.S. domestic air passenger market increased by about 2.0 percent
in fourth quarter 2001;
8. Excluding fuel costs (which dropped) and despite greatly increased expenses for added security measures and insurance
coverage, Southwest reduced its fourth quarter operating expenses per ASM by 2.5 percent;
9. Southwest reported a profit of $511.1 million for the year 2001 (including federal grants and special charges) or $412.9 million
(excluding federal grants, special charges, and their related effects), and amended its Profitsharing Plan in order to pay all of its
qualified Employees Profitsharing calculated on the higher ($511.1 million), rather than the lower ($412.9 million), profit figure;
10. Southwest actually reported a profit of $63.5 million for fourth quarter 2001 (including federal grants and special charges)
or $32.4 million (excluding federal grants, special charges, and their related effects); and
11. Based upon all of the above occurrences and the market’s concomitant faith in a prosperous future for Southwest Airlines,
the price of our stock rose, rather than fell, subsequent to September 11.
Including federal grants and special charges, our annual net income declined 18.2 percent to $511.1 million in 2001 (before the
cumulative effect of a change in accounting principle in 2000), and excluding such grants, charges, and their related effects,
our net income declined 34.0 percent to $412.9 million. Seldom does such a significant decline in earnings provide cause for
rejoicing on the part of Employees and Shareholders, but, in the case of 2001, it both does and should. Including federal grants
and special charges, the other major carriers lost a cumulative total of $7.8 billion in all of 2001 and a cumulative total of
$3.3 billion in fourth quarter 2001 alone, reputedly also “furloughing” up to 100,000 employees without pay.
The year 2002 will, in the words of Winston Churchill, demand the expenditure of “blood, toil, tears, and sweat” as our airline
and our nation endeavor to recover from the heartrending catastrophe of September 11, which also deepened an already existing
domestic economic recession and resulted in the imposition of additional security costs upon our industry as well as enhanced
airport processing time upon our industry’s Customers.
We are prepared, and our valorous, good-hearted, and united People are determined that, together, as one, we shall overcome
any obstacle and conquer every adversity, and that our magnificent Canyon Blue Boeings will fly at the forefront of our industry
as it recovers from the ravages of 2001.
For 2002, our wonderful People’s brave hearts will be both informed and inspired by Todd Beamer’s brave words — and his
devotion to the concept of duty with honor:
“LET’S ROLL.”
Most sincerely,
Colleen C. Barrett
President and
Chief Operating Officer
SOUTHWEST AIRLINES CO. 2001 ANNUAL REPORT 3
James F. Parker
Vice Chairman of the Board
and Chief Executive Officer
Herbert D. Kelleher
Chairman of the Board