Southwest Airlines 2007 Annual Report Download - page 28

During 2007, as part of its efforts to improve future
profitability, the Company offered an early retirement
program to certain of its Employees. A total of 608 of
approximately 8,500 eligible Employees elected to par-
ticipate in the program.
Additional Information About Southwest
Southwest was incorporated in Texas in 1967. The
following documents are available free of charge through
the Company’s website, www.southwest.com: South-
west’s annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and any
amendments to those reports that are filed with or fur-
nished to the SEC pursuant to Sections 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended.
These materials are made available through Southwest’s
website as soon as reasonably practicable after they are
electronically filed with, or furnished to, the SEC.
The certifications of the Company’s Chief Execu-
tive Officer and Chief Financial Officer required under
Section 302 of the Sarbanes-Oxley Act have been filed as
Exhibits 31.1 and 31.2 to this report. Additionally, in
2007 the Company’s Chief Executive Officer certified to
the New York Stock Exchange (“NYSE”) that he was
not aware of any violation by the Company of the NYSE’s
corporate governance listing standards.
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
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 SEC, news releases, conferences, Internet postings, or otherwise) that are not
historical facts may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are based on, and include statements about, Southwest’s estimates, expec-
tations, beliefs, intentions, or strategies for the future, and the assumptions underlying these forward-looking statements.
Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current
facts and include, without limitation, words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,”
“forecasts,” “may,” “will,” “should,” and similar expressions. While management believes that these forward-looking
statements are reasonable as and when made, forward-looking statements are not guarantees of future performance and
involve risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is
expressed in or indicated by Southwest’s forward-looking statements or from historical experience or the Company’s
present expectations. Factors that could cause these differences include, but are not limited to, those set forth below under
“Risk Factors.”
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 1A. Risk Factors
Southwest’s business is dependent on the price and
availability of aircraft fuel. Continued periods of
high fuel costs and/or significant disruptions in the
supply of fuel could adversely affect the Company’s
results of operations.
Airlines are inherently dependent upon energy to
operate and, therefore, are impacted by changes in the
prices of jet fuel. The cost of fuel, which has been at
historically high levels over the last three years, is largely
unpredictable and has a significant impact on the Com-
pany’s results of operations. Jet fuel and oil consumed for
fiscal 2007 and 2006 represented approximately 28 per-
cent and 26 percent of Southwest’s operating expenses,
respectively. In both years, jet fuel costs were the second
largest expense incurred by the Company, following only
salaries, wages, and benefits. These costs contributed to
the Company’s decision during 2007 to slow growth and
could continue to impact growth decisions.
Fuel availability, as well as pricing, is also impacted
by political and economic factors. The Company does not
currently anticipate a significant reduction in fuel avail-
ability; however, it is difficult to predict the future avail-
ability of jet fuel due to the following, among other,
factors: dependency on foreign imports of crude oil and
the potential for hostilities or other conflicts in oil pro-
ducing areas; limited refining capacity; and the possibility
of changes in governmental policies on jet fuel produc-
tion, transportation, and marketing. Significant disrup-
tions in the supply of aircraft fuel could adversely affect
the Company’s business, financial condition, and results
of operations.
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