Southwest Airlines 2003 Annual Report Download - page 45

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FORWARD LOOKING STATEMENTS
Some statements in this Form 10-K (or otherwise made by the Company or on the Company’s behalf from
time to time in other reports, filings with the Securities and Exchange Commission, news releases,
conferences, World Wide Web postings or otherwise) which are not historical facts, may be “forward-
looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about
Southwest’s estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions
underlying these forward-looking statements. Southwest uses the words "anticipates," "believes,"
"estimates," "expects," "intends," "forecasts," "may," "will," "should," and similar expressions to identify
these forward-looking statements. Forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from historical experience or the Company’s present expectations.
Factors that could cause these differences include, but are not limited to:
• Items directly linked to the September 11, 2001 terrorist attacks, such as the adverse impact of new
airline and airport security directives on the Company’s costs and Customer demand for travel, changes
in the Transportation Security Administration's scope for managing U.S. airport security, the availability
and cost of war-risk and other aviation insurance, including the federal government's provision of third
party war-risk coverage, and the possibility of additional incidents that could cause the public to question
the safety and/or efficiency of air travel.
• War or other military actions by the U.S. or others.
• Competitive factors, such as fare sales and capacity decisions by the Company and its competitors,
changes in competitors' flight schedules, mergers and acquisitions, codesharing programs, and airline
bankruptcies.
• General economic conditions, which could adversely affect the demand for travel in general and
consumer ticket purchasing habits, as well as decisions by major freight Customers on how they allocate
freight deliveries among different types of carriers.
• Factors that could affect the Company’s ability to control its costs, such as the results of Employee labor
contract negotiations, Employee hiring and retention rates, costs for health care, the largely unpredictable
prices of jet fuel, crude oil, and heating oil, the continued effectiveness of the Company's fuel hedges,
changes in the Company's overall fuel hedging strategy, capacity decisions by the Company and its
competitors, unscheduled required aircraft airframe or engine repairs and regulatory requirements, changes
in commission policy, availability of capital markets, future financing decisions made by the Company,
and reliance on single suppliers for both the Company’s aircraft and its aircraft engines.
• Disruptions to operations due to adverse weather conditions and air traffic control-related constraints.
Caution should be taken not to place undue reliance on the Company’s forward-looking statements, which
represent the Company’s views only as of the date this report is filed. The Company undertakes no obligation
to update publicly or revise any forward-looking statement, whether as a result of new information, future
events, or otherwise.
Item 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Southwest has interest rate risk in its floating rate debt obligations and interest rate swaps, and has
commodity price risk in jet fuel required to operate its aircraft fleet. The Company purchases jet fuel at
prevailing market prices, but seeks to manage market risk through execution of a documented hedging
strategy. Southwest has market sensitive instruments in the form of fixed rate debt instruments and financial
derivative instruments used to hedge its exposure to jet fuel price increases. The Company also operates 96
aircraft under operating and capital leases. However, leases are not considered market sensitive financial
instruments and, therefore, are not included in the interest rate sensitivity analysis below. Commitments
related to leases are disclosed in Note 8 to the Consolidated Financial Statements. The Company does not
purchase or hold any derivative financial instruments for trading purposes. See Note 2 to the Consolidated
Financial Statements for information on the Company's accounting for its hedging program and Note 10 to
the Consolidated Financial Statements for further details on the Company's financial derivative instruments.