Southwest Airlines 2014 Annual Report Download - page 34

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Form 10-K contains “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are based on, and include statements about, the Company’s estimates, expectations, beliefs,
intentions, and 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,” “may,” “will,” “should,” and similar expressions.
Although management believes 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 the Company’s forward-looking statements or from historical experience
or the Company’s present expectations. Known material risk factors that could cause these differences
are set forth below under “Risk Factors.” Additional risks or uncertainties (i) that are not currently
known to the Company, (ii) that the Company currently deems to be immaterial, or (iii) that could
apply to any company, could also materially adversely affect the Company’s business, financial
condition, or future results.
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
The airline industry is particularly sensitive to changes in economic conditions; in the event of
unfavorable economic conditions or economic uncertainty, the Company’s results of operations
could be negatively affected, which could require the Company to adjust its business strategies.
The airline industry, which is subject to relatively high fixed costs and highly variable and
unpredictable demand, is particularly sensitive to changes in economic conditions. Historically,
unfavorable U.S. economic conditions have driven changes in travel patterns and have resulted in
reduced spending for both leisure and business travel. For some consumers, leisure travel is a
discretionary expense, and short-haul travelers, in particular, have the option to replace air travel with
surface travel. Businesses are able to forego air travel by using communication alternatives such as
videoconferencing and the Internet or may be more likely to purchase less expensive tickets to reduce
costs, which can result in a decrease in average revenue per seat. Unfavorable economic conditions
have also historically hampered the ability of airlines to raise fares to counteract increased fuel, labor,
and other costs. Although the U.S. economy has experienced a moderate recovery since emerging from
a recession in 2009, any future U.S. or global economic uncertainty could negatively affect the
Company’s results of operations and could cause the Company to adjust its business strategies.
The Company’s business has been significantly impacted by high and/or volatile fuel prices and
the Company’s operations are subject to disruption based on the timely supply of fuel; therefore,
the Company’s strategic plans and future profitability are likely to be impacted by the
Company’s ability to effectively address fuel price increases and fuel price volatility and
availability.
Airlines are inherently dependent upon energy to operate, and jet fuel and oil represented
approximately 32 percent of the Company’s operating expenses for 2014. Although the cost of fuel has
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