The Company's GAAP results in the applicable periods may include other charges or benefits that are also deemed special items that the Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends. Excluding fuel and oil expense, special items, and profitsharing, fourth quarter 2021 operating expenses increased 32.0 percent, year-over-year, and increased 1.5 percent compared with fourth quarter 2019. Information about us can be found on the Financial Services Register (register number 115248). Excluding any further option exercises in 2022, the Company's 2022 capital spending would be ~$3.0 billion, also including ~$900 million in non-aircraft capital spending. "With the Omicron variant and weather impacting our results, we expect losses in January and February and a return to profitability in March 2022. We have a solid strategy and intend to reinforce and build upon the core strengths of Southwest with several initiatives that we expect to create value and deliver significant financial benefits. Southwest's contribution may be used to purchase offsets for Southwest from any carbon offset project of Southwest's choice. During 2020, the interest rate swap agreements, which were related to twelve -8 aircraft leases (with deliveries originally scheduled between June 2020 and September 2020), were de-designated as hedges due to the scheduled delivery range no longer being probable, resulting in the mark-to-market changes being recorded to earnings; Losses associated with the partial extinguishment of the Company's convertible notes; and. In addition, the fair market value of fuel derivative contracts settling in 2023 and beyond was an asset of approximately $403 million. As of December 31, 2021, the Company had current and non-current debt obligations that totaled $10.7 billion. The Company believes these economic results provide further insight into the impact of the Company's fuel hedges on its operating performance and liquidity since they exclude the unrealized, noncash adjustments and reclassifications that are recorded in GAAP results in accordance with accounting guidance relating to derivative instruments, and they reflect all cash settlements related to fuel derivative contracts within Fuel and oil expense. Comparative Consolidated Operating Statistics (unaudited), Revenue passenger miles (RPMs) (in millions) (a), Available seat miles (ASMs) (in millions) (b), Passenger revenue yield per RPM (cents) (f), CASM, excluding Fuel and oil expense (cents), CASM, excluding Fuel and oil expense and special items (cents), CASM, excluding Fuel and oil expense, special items, and profitsharing expense (cents), Fuel costs per gallon, including fuel tax (unhedged), Fuel costs per gallon, including fuel tax, Fuel costs per gallon, including fuel tax (economic). As of December 31, 2021, six -700 aircraft remained in temporary storage due to fourth quarter 2021 and first quarter 2022 capacity remaining below respective 2019 levels. Registered Office: 1 College Square South, Anchor Road, Bristol, BS1 5HL. Also referred to as "traffic," which is a measure of demand for a given period. The Company will discuss its fourth quarter and full year 2021 results on a conference call at 12:30 p.m. Eastern Time today. Full year 2021 capital expenditures were $505 million, in line with the Company's expectations, driven primarily by technology, facilities, and operational investments, as well as aircraft-related capital expenditures. To listen to a live broadcast of the conference call please go to www.southwestairlinesinvestorrelations.com. We remain laser focused on addressing staffing and cost challenges, and we are working urgently to return to historic productivity levels by the end of 2023, which, combined with planned ASM growth, we believe should enable a decrease in full year 2023 CASM, excluding fuel and oil expense, special items, and profitsharing, compared with full year 2022. This enables the Company's management, as well as investors and analysts, to consistently assess the Company's operating performance on a year-over-year or quarter-over-quarter basis after considering all efforts in place to manage fuel expense. As a result, the aforementioned measures, as presented, may not be directly comparable to similarly titled measures presented by other companies. Southwest Airlines Celebrates 15 Years of Service in Denver, humanitarian efforts to relocate Afghanistan refugees, www.southwestairlinesinvestorrelations.com, Fourth quarter net income of $68 million, or $0.11 per diluted share, Full year net income of $977 million, or $1.61 per diluted share, driven by a $2.7 billion offset of salaries, wages, and benefits expenses related to the receipt of Payroll Support Program (PSP) proceeds under the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021, Excluding special items, full year net loss of $1.3 billion, or $2.15 loss per diluted share, Launched service to 14 airports: Chicago O'Hare International Airport; Sarasota Bradenton International Airport; Colorado Springs Municipal Airport; Savannah/Hilton Head International Airport; Houston's George Bush Intercontinental Airport; Santa Barbara Airport; Fresno Yosemite International Airport; Destin-Fort Walton Beach Airport; Myrtle Beach International Airport; Bozeman Yellowstone International Airport; Jackson-Medgar Wiley Evers International Airport in Mississippi; Eugene Airport in Oregon; Bellingham International Airport in Washington; and Syracuse Hancock International Airport, Launched full-participation in Sabre's GDS platform on July 26, 2021, achieving the Company's goal of enabling industry-standard corporate bookings through multiple GDS platforms, also including Amadeus and Travelport's multiple platforms (Apollo, Worldspan, and Galileo). For the periods presented, in addition to the items discussed above, special items include: Because management believes special items can distort the trends associated with the Company's ongoing performance as an airline, the Company believes that evaluation of its financial performance can be enhanced by a supplemental presentation of results that exclude the impact of special items in order to enhance consistency and comparativeness with results in prior periods that do not include such items and as a basis for evaluating operating results in future periods. "We celebrated our 50th anniversary in 2021, opened 14 new airports, returned the Boeing 737 MAX (MAX) back into service, completed our launch of industry-standard corporate bookings through multiple Global Distribution System (GDS) platforms, and implemented a new maintenance record-keeping systemto name just a few major accomplishments despite the pandemic. 5. southwest podcasts airlines flights iheartradio allaccess reports If you're not sure which See Note Regarding Use of Non-GAAP Financial Measures. 1. Profit after tax from continuing operations: Profit after tax from discontinuing operations: Retained Profit / (Loss) for the Financial Year: Southwest Airlines Financial statements & reports. Our website offers information about investing and saving, but not personal advice. The Company ended 2021 with 728 Boeing 737 aircraft, including 69 Boeing 737-8 (-8) aircraft. Based on our current plan, while we no longer expect to be profitable in first quarter, we expect to be profitable for the remaining three quarters of this year, and for full year 2022. We have the best Employees and Leadership Team in the industry. Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Unrealized/realized (gain) loss on fuel derivative instruments, Loss on partial extinguishment of convertible notes. b. Southwest Airlines Co. 737 Delivery Schedule As of January 27, 2022. Full year 2021 capacity increased 27.6 percent, year-over-year, but decreased 16.1 percent compared with full year 2019.

The following measures are often provided, excluding special items, and utilized by the Company's management, analysts, and investors to enhance comparability of year-over-year results, as well as to industry trends: Fuel and oil expense, non-GAAP; Total operating expenses, non-GAAP; Operating expenses, non-GAAP excluding Fuel and oil expense; Operating expenses, non-GAAP excluding Fuel and oil expense and profitsharing; Operating income (loss), non-GAAP; Other (gains) losses, net, non-GAAP; Income (loss) before income taxes, non-GAAP; Provision (benefit) for income taxes, net, non-GAAP; Net income (loss), non-GAAP; and Net loss per share, diluted, non-GAAP. Full year 2021 cash provided by operations was $2.3 billion, driven primarily by PSP proceeds of $2.7 billion. Adjusted debt is calculated as short-term and long-term debt including the net present value of aircraft rentals related to operating leases. d. Total fixed assets Excluding special items, fourth quarter 2021 CASM increased 4.3 percent, compared with fourth quarter 2019. January and February are seasonally weaker time periods for leisure travel demand, but further softness in leisure bookings related to the Omicron variant, combined with lower than expected business travel demand, is estimated to reduce operating revenues in January and February 2022 by $330 million, combined. vice promotes Additionally, we are further moderating our first half 2022 capacity plans to provide additional buffer to the operation. (g) RASM (unit revenue) - Operating revenue yield per ASM, calculated as operating revenue divided by available seat miles. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. The Company will continue to monitor staffing trends, along with booking and cancellation trends, and adjust capacity, as needed. (c) Aircraft on property, end of period; net of 6 and 28 retirements planned in 1Q 2022 and full year 2022, respectively. I am honored to serve them, our Customers, and our Shareholders, and I appreciate the support of Gary and the Board of Directors as I begin my new role as CEO.". Fourth quarter 2021 CASM, excluding fuel and oil expense, special items, and profitsharing, decreased 14.5 percent, year-over-year, driven primarily by an increase in capacity, and increased 10.6 percent compared with fourth quarter 2019, which was in line with the Company's expectation. The Omicron variant significantly impacted our available staffing beginning in early January 2022, and we temporarily extended incentive pay for Operations Employees through early February 2022, as we strive to maintain sufficient available staffing and minimize flight cancellations. Including assets due in more than one year Excluding special items, fourth quarter 2021 operating expenses increased 51.1 percent, year-over-year, to $4.8 billion, but decreased 4.4 percent compared with fourth quarter 2019.

Economic fuel cost projections do not reflect the potential impact of special items because the Company cannot reliably predict or estimate the hedge accounting impact associated with the volatility of the energy markets, the impact of COVID-19 cases on air travel demand, or the impact to its financial statements in future periods. The Company now expects its first quarter and full year 2022 interest expense to be $90 million and $360 million, respectively, a decrease from its previous expectation of $110 million and $440 million, respectively, due to the Company's adoption of a new accounting standard related to convertible debt. Taxes and fees will not be matched by Southwest or earn points. Following strong travel demand during the holiday period, the Company is experiencing a revenue headwind in first quarter 2022 due to a softness in bookings and an increase in trip cancellations associated with the Omicron variant. While the Company's flight schedule is published for sale through September 5, 2022, the Company is in the process of adjusting its published flight schedules for March through May 2022 in light of recent staffing challenges due to the Omicron variant. The Company ended the year with a solid revenue performance driven primarily by strong leisure demand and fares during the November and December 2021 holiday period, as well as incremental revenue generated from the Company's new co-brand credit card agreement secured in December 2021 with Chase Bank USA, N.A. Including the options exercised on January 1, 2022, the Company's order book with Boeing contains 406 MAX firm orders (271 -7 and 135 -8) and 226 MAX options (-7 or -8) for years 2022 through 2031. Since our announcement last June, Bob has been hard at work on the transition and is well-prepared to take on this important role. Received numerous awards and recognitions, including: Named to FORTUNE's list of World's Most Admired Companies for 2021; ranked #14, Named among the highest ranking carriers for customer satisfaction in the J.D. (a) The Company exercised five -8 options for delivery in 2022 on January 1, 2022. Fourth quarter 2021 operating revenues per available seat mile (RASM, or unit revenues) was 13.77 cents, a decrease of 3.8 percent, driven primarily by a passenger revenue yield decrease of 4.1 percent and a load factor decrease of 2.1 points, compared with fourth quarter 2019. First quarter 2022 managed business revenues are expected to be down 45 percent to 55 percent versus first quarter 2019 levels.

Southwest Communications is sharing news with the world. We are making additional investments to attract and retain talent, including our recent decision to further raise our starting hourly pay rates from $15 per hour to $17 per hour. a) Brent crude oil average market prices as of January20, 2022, were approximately $87 and $84 per barrel for first quarter 2022 and full year 2022, respectively. "On February 1st, Bob Jordan will become the 6th CEO of Southwest.

The following table presents economic fuel costs per gallon1, including the impact of fuel hedging premium expense and fuel derivative contracts, for fourth quarter and full year 2021 and the corresponding prior year periods: As of January 20, 2022, the fair market value of the Company's fuel derivative contracts settling in first quarter 2022 was an asset of approximately $155 million and an asset of approximately $450 million for those settling over the remainder of 2022. (h) PRASM (Passenger unit revenue) - Passenger revenue yield per ASM, calculated as passenger revenue divided by available seat miles. Our fourth quarter 2021 cost performance was in line with expectations, which included hiring thousands of new Employees. e. Includes borrowings. Further information on (i) the Company's fuel hedging program, (ii) the requirements of accounting for derivative instruments, and (iii) the causes of hedge ineffectiveness and/or mark-to-market gains or losses from derivative instruments is included in the Company's Annual Report on Form 10-K for the fiscal year ended December31, 2020 and subsequent filings.

Based on 2019 fuel gallons consumed, the Company's maximum percent of fuel consumption covered by fuel derivative contracts is 37 percent in 2023 and 17 percent in 2024. December 2021 managed business revenues declined 50 percent compared with December 2019, outperforming the Company's previous expectation of down 55 percent to 60 percent versus December 2019 levels, driven by increased passengers and stronger fares. The Company has canceled more than 5,600 flights, thus far, in January 2022, with the majority attributable to available staffing challenges as a result of the Omicron variant, as well as weather-related cancellations, driving an estimated $50 million negative impact to January 2022 operating revenues. Read more about browsers and how to update them here. Copyright 2022 Hargreaves Lansdown. Our Employees' resilience, teamwork, and care for Customers and one another has been a marvel to watch. (a) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item. We dont support this browser anymore. "We are experiencing higher unit cost inflation in 2022 as we continue to navigate the pandemic. (f) The Company's gallons that are covered by derivative contracts represent the maximum number of gallons hedged for each respective period, which may be at different strike prices and at strike prices materially higher than the current market prices. Full year 2021 RASM was 11.96 cents, a decrease of 16.1 percent, primarily due to a passenger revenue yield decrease of 14.2 percent and a load factor decrease of 5.0 points, compared with 2019. All rights reserved. NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES. Over the last two weeks we have returned to solid operational performance like we experienced over the holidays in fourth quarter 2021. Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'. During 2021, the Company retired eight owned -700 aircraft, which were accelerated from 2022 into fourth quarter 2021, and returned 10 leased -700 aircraft, of which one occurred during fourth quarter 2021. While we made significant progress in 2021, the Omicron variant has delayed the demand improvement we were previously expecting in early 2022. Reflects five options exercised on January 1, 2022, for delivery in 2022, and the assumption that the Company exercises all 37 remaining 2022 options. Southwest Airlines Co. Condensed Consolidated Statement of Income (Loss) (in millions, except per share amounts) (unaudited), Payroll support and voluntary Employee programs, net, Southwest Airlines Co. Reconciliation of Reported Amounts to Non-GAAP Items (excluding special items) (See Note Regarding Use of Non-GAAP Financial Measures), (in millions, except per share amounts) (unaudited), Add: Premium cost of fuel contracts designated as hedges, Deduct: Fuel hedge gains included in Fuel and oil expense, net, Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI, Add: Premium cost of fuel contracts not designated as hedges, Fuel and oil expense, excluding special items (economic), Total operating expenses, net, as reported, Add (Deduct): Payroll support and voluntary Employee programs, net, Add: Interest rate swap agreements terminated in a prior period, but for which losses were reclassified from AOCI, Add: Gain from aircraft sale-leaseback transactions, Total operating expenses, excluding special items, Deduct: Fuel and oil expense, excluding special items (economic), Operating expenses, excluding Fuel and oil expense and special items, Operating expenses, excluding Fuel and oil expense, special items, and profitsharing, Deduct: Interest rate swap agreements terminated in a prior period, but for which losses were reclassified from AOCI, Deduct: Premium cost of fuel contracts not designated as hedges, Deduct: Gain from aircraft sale-leaseback transactions, Operating income (loss), excluding special items, Add (Deduct): Mark-to-market impact from fuel contracts settling in current and future periods, Deduct: Mark-to-market impact from interest rate swap agreements, Deduct: Loss on partial extinguishment of convertible notes, Deduct: Post-retirement curtailment charge, Other (gains) losses, net, excluding special items, Income (loss) before income taxes, as reported, Add (Deduct): Mark-to-market impact from fuel contracts settling in current and future periods (a), Add: Mark-to-market impact from interest rate swap agreements, Add: Loss on partial extinguishment of convertible notes, Income (loss) before income taxes, excluding special items, Provision (benefit) for income taxes, as reported, Add (Deduct): Net income (loss) tax impact of fuel and special items (a), Deduct: GAAP to Non-GAAP tax rate difference (b), Provision (benefit) for income taxes, net, excluding special items, Add: GAAP to Non-GAAP tax rate difference (b), Net income (loss), excluding special items, Net income (loss) per share, diluted, as reported, Add (Deduct): Net impact of net income (loss) above from fuel contracts divided by dilutive shares, Add (Deduct): Net income (loss) tax impact of special items (a), Deduct: GAAP to Non-GAAP diluted weighted average shares difference (c), Net income (loss) per share, diluted, excluding special items. See Note Regarding Use of Non-GAAP Financial Measures. access. Proceeds related to the Payroll Support programs, which were used to pay a portion of Employee salaries, wages, and benefits; Charges and adjustments to previously accrued amounts related to the Company's extended leave programs; Adjustments for prior period losses reclassified from Accumulated other comprehensive income (loss) ("AOCI") associated with forward-starting interest rate swap agreements that were terminated in prior periods related to twelve -8 aircraft leases; Gains associated with the sale-leaseback of ten Boeing 737-800 aircraft and ten Boeing -8 aircraft to third parties; A noncash impairment charge related to 20 Boeing 737-700 aircraft that were retired during 2020 and eight Boeing 737-700 aircraft that were retired in 2021; Unrealized losses related to twelve forward-starting interest rate swap agreements. Includes approximately $15.5 billion in cash and short-term investments and a fully available revolving credit line of $1.0 billion. Changes in certain assets and liabilities: Cash collateral received from derivative counterparties, Net cash provided by (used in) operating activities, Proceeds from sale-leaseback transactions, Proceeds from sales of short-term and other investments, Net cash provided by (used in) investing activities, Proceeds from Payroll Support Program loan and warrants, Payments of long-term debt and finance lease obligations, Payments of terminated interest rate derivative instruments, Payments for repurchases and conversions of convertible debt, Net cash provided by (used in) financing activities, CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD, CASH AND CASH EQUIVALENTS AT END OF PERIOD, Southwest Airlines Co. Fuel Derivative Contracts As of January 20, 2022, Estimated economic fuel price per gallon, including taxes and fuel hedging premiums (e), Average Brent Crude Oil price per barrel, Estimated fuel hedging premium expense per gallon (b), Maximum fuel hedged (gallons in millions) (f). Fourth quarter 2021 represented the Company's best quarterly revenue performance since the pandemic began, with operating revenues performing in line with the Company's most recent expectations. investments are right for you, please request advice, for example from our, Read more about browsers and how to update them here, Register for online As such, the Company's actual flown capacity may differ from currently published flight schedules or current guidance. Also referred to as "capacity," which is a measure of the space available to carry passengers in a given period. The Company provides supplemental non-GAAP financial information (also referred to as "excluding special items"), including results that it refers to as "economic," which the Company's management utilizes to evaluate its ongoing financial performance and the Company believes provides additional insight to investors as supplemental information to its GAAP results. The volume of gallons covered by derivative contracts that ultimately get exercised in any given period may vary significantly from the volumes provided, as market prices and the Company's fuel consumption fluctuates. Compared with 2019, operating expenses, excluding fuel and oil expense, special items, and profitsharing, decreased 6.8 percent, and increased 11.1 percent on a unit basis. (i) CASM (unit costs) - Operating expenses per ASM, calculated as operating expenses divided by available seat miles. DALLAS, TEXAS -Southwest Airlines Co. (NYSE: LUV) (the "Company") today reported its fourth quarter and full year 2021 financial results: Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, "We ended 2021 on a high note with our first quarterly profit, excluding special items, since fourth quarter 2019 before the COVID-19 pandemic began. a. The Company realized approximately $1.1 billion of full year 2021 cost savings from voluntary separation and extended leave programs compared with full year 2019, and expects no material cost savings from these programs in 2022 and beyond. The Company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). (b) The Company exercised 22 -7 options for delivery in 2023 during fourth quarter 2021, and exercised an additional 7 -7 options for delivery in 2023 on January 1, 2022. 7. As of December 31, 2021, the Company had approximately $15.5 billion in cash and short-term investments and a fully available revolving credit line of $1.0 billion. The Company accrued $43 million of profitsharing expense in fourth quarter 2021, for a total of $230 million in 2021, compared with no profitsharing in 2020. (b) Fuel hedging premium expense per gallon is included in the Company's estimated economic fuel price per gallon estimates above. See Note Regarding Use of Non-GAAP Financial Measures for additional information on special items. Fourth quarter 2021 operating expenses increased 52.6 percent, year-over-year, to $4.9 billion, but decreased 4.1 percent compared with fourth quarter 2019. Excluding fuel and oil expense, special items, and profitsharing, full year 2021 operating expenses increased 10.7 percent, and decreased 13.3 percent on a unit basis, both year-over-year. Therefore, the below supplemental information is provided for reference. (c) The delivery schedule for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. It should only be considered an indication and not a recommendation. The Company's fourth quarter 2021 fuel efficiency declined 4.2 percent, year-over-year, due to the removal from storage and return to service of more of the Company's least fuel-efficient aircraft, the Boeing 737-700 (-700), to support sequentially increasing flight schedules.

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