Southwest Airlines 2015 Annual Report Download - page 38

Also, on June 30, 2015, the U.S. Department of Justice (“DOJ”) issued a Civil Investigative Demand
(“CID”) to the Company. The CID seeks information and documents about the Company’s capacity
from January 2010 to the present including public statements and communications with third parties
about capacity. In June 2015, the Company also received a letter from the Connecticut Attorney
General requesting information about capacity; and on August 21, 2015, the Attorney General of the
State of Ohio issued an investigative demand seeking information and documents about the Company’s
capacity from December 2013 to the present. The Company is cooperating fully with the DOJ CID and
these two state inquiries.
Further, on July 1, 2015, a complaint was filed in the United States District Court for the Southern
District of New York on behalf of putative classes of consumers alleging collusion among the
Company, American Airlines, Delta Air Lines, and United Airlines to limit capacity and maintain
higher fares in violation of Section 1 of the Sherman Act. Since then, a number of similar class action
complaints have been filed in the United States District Courts for the Central District of California,
the Northern District of California, the District of Columbia, the Middle District of Florida, the
Southern District of Florida, the Northern District of Georgia, the Northern District of Illinois, the
Southern District of Indiana, the Eastern District of Louisiana, the District of Minnesota, the District of
New Jersey, the Eastern District of New York, the Southern District of New York, the Middle District
of North Carolina, the District of Oklahoma, the Eastern District of Pennsylvania, the Northern District
of Texas, the District of Vermont, and the Eastern District of Wisconsin. The complaints seek treble
damages for periods that vary among the complaints, costs, attorneys’ fees, and injunctive relief. On
October 13, 2015, the Judicial Panel on Multi-District Litigation centralized the cases to the United
States District Court in the District of Columbia. The Court has not yet entered a scheduling order
establishing a date for defendants to respond to the complaints. While the Company intends to
vigorously defend these civil cases, results of legal proceedings such as this one cannot be predicted
with certainty.
In addition, on July 8, 2015, the Company was named as a defendant in putative class action filed in
British Columbia, Canada alleging that the Company, Air Canada, American Airlines, Delta Air Lines
and United Airlines colluded to restrict capacity and maintain higher fares for Canadian citizens
traveling in the United States and for travel between the United States and Canada. Similar lawsuits
were filed in Ontario, Quebec and Saskatchewan. The time for the Company to respond to the
complaints has not yet expired. While the Company intends to vigorously defend these civil cases,
results of legal proceedings such as this one cannot be predicted with certainty.
Regardless of merit, these litigation matters and any potential future claims against the Company or
AirTran may be both time consuming and disruptive to the Company’s operations and cause significant
expense and diversion of management attention. Should AirTran and the Company fail to prevail in
these or other matters, the Company may be faced with significant monetary damages or injunctive
relief that could materially adversely affect its business and might materially affect its financial
condition and operating results.
The application of the acquisition method of accounting resulted in the Company recording a
significant amount of goodwill in connection with the acquisition of AirTran, which could result
in significant future impairment charges and negatively affect the Company’s financial results.
The Company recorded goodwill on its Consolidated Balance Sheet as a result of its acquisition of
AirTran. Goodwill is not amortized, but is tested for impairment at least annually. Future impairment
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