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SOUTHWEST AIRLINES CO.
2014 ANNUAL REPORT TO SHAREHOLDERS
To our Shareholders:
The year 2014 was historic for Southwest Airlines, the culmination of years’ worth of
hard work. It was our 42nd consecutive year of profitability, an unprecedented feat for the
airline industry. Our 2014 net income of $1.1 billion easily surpassed the previous annual
record in 2013. Excluding special items1, Southwest’s record earnings surged over 73 percent,
compared with 2013. Along with it, Southwest’s common stock (LUV) surged 125 percent to
a year-end record $42.32 per share, making it the number one performer of the S&P 500, and
besting the previous 2001 record closing price per share by almost double. It is not dramatic to
say that Southwest was transformed in 2014 through the launch of international service; the
repeal of the Wright Amendment; the acquisition of slots at Washington Reagan National and
New York LaGuardia Airports; and the completion of the AirTran integration (which was
acquired in 2011). Other strategic initiatives launched since 2010 also helped propel our
earnings performance, including our Rapid Rewards®frequent flyer program, the addition of
the Boeing 737-800 model, and our fleet modernization program. To commemorate the
historic year, record results, and transformation, we unveiled a bold new look for our aircraft
and branding. We believe the completion of the ambitious strategy to transform, along with
the record results, positions Southwest exceptionally well for the future.
Our record 2014 net income was $1.1 billion, or $1.64 per diluted share. Excluding
special items, our record 2014 earnings were $1.4 billion, or $2.01 per diluted share.
Operating income increased 74.1 percent, compared with 2013, to a record $2.2 billion.
Excluding special items, our operating income was $2.4 billion, an increase of 64.9 percent,
compared with 2013. Our annual pre-tax return on invested capital, excluding special items
(ROIC), was 21.2 percent, an increase of 8.1 points compared with 2013, and ahead of our
minimum 15 percent target.
Total operating revenues were a record $18.6 billion, an increase of 5.1 percent compared
with 2013. The 2014 results were driven by a solid 2.0 percent increase in passenger revenue
yield and a 2.4 point increase in load factor, with capacity up just one-half percent, all compared
with 2013. Our operating revenues per available seat mile, passenger revenue yield, and load
factor were all record performances. Southwest has worked hard to optimize the combined
AirTran and Southwest route networks, with superb results. And, the revenue generated from our
strategic initiatives (AirTran acquisition, Rapid Rewards, Fleet Modernization, B737-800) has
exceeded our expectations. Finally, the strong revenue results were achieved despite the
significant mix of developmental routes generated from the AirTran integration, the Dallas Love
Field expansion, and the slots acquired at LaGuardia and Reagan National.
1Additional information regarding non-GAAP financial measures is included in the accompanying Form 10-K for the fiscal
year ended December 31, 2014.

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