Southwest Airlines 2015 Annual Report Download - page 54

compared with the Company’s ROIC of 21.2 percent for the twelve months ended December 31, 2014.
The increase in ROIC was achieved primarily through successful integration of AirTran, operational
and network enhancements, and declining fuel prices.
During 2015, the Company continued to return significant value to its Shareholders. The Company
returned a record $1.4 billion to Shareholders through a combined $180 million in dividend payments
and $1.2 billion through three separate accelerated share repurchase programs and the buyback of its
common shares on the open market. On January 25, 2016, the Company launched a new accelerated
share repurchase program by advancing $500 million to a financial institution in a privately negotiated
transaction (“First Quarter 2016 ASR Program”). The Company received an initial delivery of shares,
representing an estimated 75 percent of the shares to be purchased by the Company under the First
Quarter 2016 ASR Program. The specific number of shares that the Company ultimately will
repurchase under the First Quarter 2016 ASR Program will be determined based generally on a
discount to the volume-weighted average price per share of the Company’s common stock during a
calculation period to be completed no later than April 2016. The purchase will be recorded as a
treasury share purchase for purposes of calculating earnings per share. Subsequent to the launch of the
First Quarter 2016 ASR Program, the Company has $200 million remaining under its existing $1.5
billion share repurchase program. See Part II, Item 5 for further information on the Company’s share
repurchase authorizations.
Company Overview
Following the Company’s effective completion of the AirTran integration at the end of 2014, one of
the Company’s primary areas of focus was on allowing its expanded network to develop, while also
improving the reliability of its operations. Throughout most of 2015, the Company had a significantly
higher than normal portion of its network considered under development, due to new service
implemented upon converting both international and domestic destinations over from AirTran to
Southwest, as well as growth in existing Southwest markets including Dallas, Houston, Washington
D.C, and New York. In 2016, the portion of those markets under development will return to a more
long-term historical figure based on capacity. Following the integration of AirTran, the Company also
made investments in its 2015 flight schedule to improve its overall on-time performance. The
Company’s on-time performance during 2015 as reported through November 2015 was approximately
80 percent, which increased approximately 7 points compared to full year 2014.
During 2015, the Company took several steps designed to enhance its existing service in cities across
the network or to connect existing cities with new service not previously offered by Southwest, most
notably:
• The Company began offering daily nonstop flights to 20 new cities from Dallas Love Field, marking
the Company’s most robust schedule ever offered at Dallas Love Field, with 180 daily departures to 50
nonstop destinations.
• The Company connected Central America to the Company’s network with the addition of Liberia,
Costa Rica; San Jose, Costa Rica; and Belize City, Belize in 2015.
• The Company began service to Puerto Vallarta, Mexico in June 2015.
• During October 2015, the all-new international terminal at Houston Hobby opened and the Company
commenced service from Houston Hobby to Mexico (Cancun, Mexico City, Puerto Vallarta, Cabo San
Lucas/Los Cabos), Belize City, Belize; San Jose, Costa Rica; Liberia, Costa Rica; and Montego Bay,
Jamaica.
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