LUVSouthwest Airlines
Southwest Airlines Co. (the “Company” or “Southwest”) operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. 10-K, Item 1
- Headquarters
- Dallas, TX
- CEO
- Robert E. Jordan
- Next results
- around Jan 27, 2027
18 paragraphs in Risk Factors of the 10-K filed Feb 5, 2026 with nothing like them in the 10-K filed Feb 7, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 81 Industrials companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
•Introducing a new aircraft manufacturer or fleet type could impose significant operational complexities, regulatory requirements, and costs on the Company.
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•The Company is expanding its use of AI and machine-learning, and any failure in its related strategy, compliance with regulations, or risk management could materially adversely affect its operations, reputation, and/or financial position.
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The Company’s ability to mitigate the impact of fuel price increases or volatility through increased fares or fees could also be limited by the competitive nature of the airline industry and the unpredictability of the market for air travel. Passengers often purchase tickets well in advance of their travel, and the Company may not be able to increase fares, impose fuel surcharges, increase revenues, or decrease other operating costs sufficiently to offset rapid or prolonged fuel price increases. Further, the Company faces the risk that higher fares may drive a decrease in air travel demand generally or a disproportionate decrease in leisure travel due to price sensitivity. Conversely, prolonged periods of low fuel prices may hinder the Company’s ability to execute on its strategic initiatives as other carriers compete by offering lower fares, flying longer-haul routes, or increasing capacity.
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expense. The Company’s low-cost structure can also be negatively impacted by costs over which the Company has limited control. These include costs such as fuel, labor (especially union labor), airport, and regulatory compliance costs.
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The Company may not be able to procure aircraft in the future in a timely manner or on favorable commercial terms, which could limit the Company’s growth or negatively affect the Company’s cost structure and competitive position.
The Company’s ability to execute its growth, fleet modernization, and strategic and operational plans may be affected by the timely procurement of additional aircraft on commercially favorable terms. Industry demand for new
aircraft may exceed supply, and manufacturers may face production constraints, supply chain shortages, changes in production rates, labor disruptions, or order backlogs that limit availability of aircraft. The Company may also encounter less favorable pricing, reduced delivery slot availability, more restrictive contractual terms, or diminished negotiating leverage with aircraft manufacturers, sellers, or lessors. If the Company is unable to procure additional aircraft on acceptable terms or within planned timeframes, the resulting constraints could negatively affect the Company’s ability to meet evolving Customer demands, pursue growth or network expansion opportunities, or replace aircraft planned for retirement, any of which could adversely affect the Company’s competitive position, operating results, and financial condition.
Introducing a new aircraft manufacturer or fleet type could impose significant operational complexities, regulatory requirements, and costs on the Company.
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to optimally adjust capacity. The inability to recruit and retain skilled personnel or the unexpected loss of key skilled personnel could continue to adversely affect the Company’s operations.
Similar paragraph at 1 of 81 other Industrials companies: IEXRead in the 10-K ↗
•laws and regulations, which may change or which may be inconsistent across various jurisdictions; and
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The Company is expanding its use of AI and machine-learning. Any failure in the Company’s AI implementation strategy, compliance with regulations, or failure to otherwise manage the risks related to AI technologies effectively could materially adversely affect its operations, reputation, and/or financial position.
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3 more
•changes to environmental regulations, including mandates affecting the usage of SAF and enhanced emissions and climate reporting obligations;
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The Company has voluntarily set near- and long-term environmental sustainability plans and goals, and any failure or perception of failure to meet or adequately progress against its sustainability plans or goals, which are often aspirational, or any modifications to such goals could adversely affect the Company’s reputation and brand. The Company’s sustainability goals are subject to risks and uncertainties related to the Company’s ability to successfully implement its business strategy, effectively respond to changes in market dynamics, and realize the anticipated benefits and associated cost savings of its actions.
The achievement of the Company’s plans and goals is materially dependent on the performance of third parties and government action, and these goals could be adversely affected by changes in third-party expectations, methodologies, and priorities, which are rapidly evolving. For example, the Company plans to diversify its sources of jet fuel through increasing the volumes of SAF in its operations. The cost of SAF may be prohibitively expensive without appropriate government support, policies, and incentives (including tax credits). The Company may have binding SAF purchase commitments that extend beyond various incentives currently in place, and the presidential administration may take action to revise, repeal, or otherwise modify existing SAF incentives, which could impact the Company’s operations. The Company may also face pressure from local and state governments as they continue advancing their own, sometimes conflicting, climate-related policies. Heightened competition for alternative fuel sources like SAF may impact the Company’s ability to negotiate contracts with third parties at commercially reasonable and economically favorable terms. The Company’s achievement of its sustainability goals (whether mandated or voluntary) may also depend on technology developments that have not yet occurred or been implemented in a commercially feasible and cost-competitive manner. Failures or delays in sufficient SAF production and delivery, or ceased operations or bankruptcies of the Company’s counterparties, could inhibit the Company’s ability to meet its stated goals. Additionally, to the extent that the Company may seek to achieve its climate goals and obligations through the use of carbon offsets, it may be exposed to increased costs, disclosure requirements, and risks related to third parties associated with the procurement of such offsets.
The Company makes certain disclosures regarding sustainability, many of which are based on estimates, assumptions, and timelines which are subject to high levels of uncertainty and inherently difficult to assess in advance. There is no guarantee that Customers, regulators, or other stakeholders will not object to the Company’s use of certain models and accounting methods. Enhanced mandatory climate-related disclosures could lead to reputational or other harm with Customers, regulators, investors, or other stakeholders. Statements or initiatives with respect to sustainability matters are also increasingly subject to heightened scrutiny from the public and governmental authorities. The Company may face pressure from Customers, stakeholders, and financial institutions to change its policies, and such stakeholders may have different, conflicting expectations. Certain regulators, such as the SEC and various state agencies, as well as nongovernmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain sustainability statements, goals, or standards were misleading, false, or otherwise deceptive. Alternatively, the Company could face criticism from
certain “anti-ESG” parties for making environmental or social commitments or pursuing certain environmental or social initiatives that are alleged to be political or polarizing in nature, which could adversely affect the Company’s reputation, business, financial performance, market access, and growth.
The Company could face increased litigation risks relating to alleged direct or indirect climate-related damages resulting from the Company’s operations, statements alleged to have been made by the Company or others in the aviation industry regarding climate change risks, or in connection with any future voluntary or mandatory disclosures the Company may make regarding reported emissions. The Company, as a consumer-facing business, may also face public relations criticism (such as boycotts or negative publicity campaigns) related to its sustainability efforts and policies. Any damage to the Company’s reputation or brand as a result of such litigation, public criticism, or failure to meet or maintain its sustainability plans or goals could adversely affect the Company’s operations, financial condition, and future results.
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The Company’s Bylaws further provide that, as permitted by the TBOC, no shareholder (as defined by the TBOC) may institute or maintain a derivative proceeding unless that shareholder beneficially owns at least three (3) percent of the outstanding shares of the Company.
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New in the latest 10-Q
22 paragraphs in the 10-Q filed Oct 22, 2026 with nothing like them in the 10-Q filed Jul 23, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
Certain columns and rows may not calculate precisely to the reported totals due to the use of rounded numbers.
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Adjustments to reconcile net income to net cash provided by operating activities:
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Right-of-use assets acquired or modified under operating leases $ 116 $ 4 $ 133 $ 38
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Flight and ground equipment acquired or modified under finance leases $ — $ 6 $ — $ 6
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During third quarter 2026, the Company completed its annual review of estimated residual values for long-lived assets and increased the estimated residual values of its Boeing 737-700 ("-700"), Boeing 737-800 ("-800"), and Boeing 737-8 ("-8") engine assets. During third quarter 2025, the Company similarly increased the estimated residual values of its -700 airframe and -700, -800, and -8 engine assets. These revisions were based on updated third-party valuation data and recent market transactions.
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In accordance with Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections, the revisions represent changes in accounting estimates and were accounted for prospectively. The impact of these changes on depreciation expense for the three and nine months ended September 30, 2026 and September 30, 2025 is presented in the tables below.
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delivery expectations multiple times and will continue to closely monitor aircraft delivery timing and further adjust expectations as needed.
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(a) The FAA completed its certification of the -7 on August 3, 2026, and the Company is expecting the first aircraft to be delivered in late 2026 with entry into service expected in 2027.
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In third quarter 2026, the Company completed sale-leaseback transactions involving various aircraft assets for proceeds of $ 212 million, resulting in a $ 118 million gain recognized in Other operating expenses, net in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income. The aircraft assets were de-recognized from Property and equipment at their remaining net book values at the time of sale. All of the leases from the sale-leasebacks are accounted for as operating leases, and are reflected in Operating lease right-of-use assets and operating lease liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet.
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On October 15, 2026, the Company announced updates to its Rapid Rewards program, including new Milestone rewards, which will enable Members to receive rewards at different points throughout the tier journey, a faster path to tier status for Rapid Rewards Credit Cardmembers, and a new three-tier membership structure of Silver, Gold, and Platinum. Beginning in January 2027, the current A-List tier will become Silver, and the current A-List Preferred tier will become Gold. Platinum status will sit above Silver and Gold, and include unlimited Companion Pass trips. The Company also announced new ways to use Rapid Rewards points. In 2027, Members will be able to redeem points for seat selection on Southwest-operated flights, including extra legroom and preferred seats. Additionally, beginning in November 2026, Members may redeem points for rental cars across all participating car rental partners.
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On September 2, 2026, the Company announced plans for its first-ever airport lounge network, the Southwest Icon Lounge™ network, marking the next chapter of the Southwest Airlines travel experience. The Company is partnering with Chase to combine premium amenities, thoughtful and local design, and the warmth of Southwest's culture to create distinctive spaces for Customers. Construction has begun on the first four Southwest lounges at Austin-Bergstrom International Airport, Baltimore/Washington International Thurgood Marshall Airport, Daniel K. Inouye (Honolulu) International Airport, and Nashville International Airport, with at least seven more lounges planned to open over the next several years across high-demand business and leisure markets. The Company currently expects lounges to open in late 2027. In third quarter 2026, the Company and Chase amended the Co-brand Agreement to extend the term of the agreement and add a new, premium, Southwest Rapid Rewards Credit Card issued by Chase, which is expected to launch in 2027 and provide access to the new Southwest lounge network.
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On August 10, 2026, Varun Krishna and Jason T. Liberty were appointed as members of the Company's Board of Directors (the "Board") effective immediately. In connection with the appointments and in accordance with the Company's Fifth Amended and Restated Bylaws, the Board increased the size of the Board to 13 members, effective immediately.
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On August 3, 2026, the FAA announced the completion of its -7 aircraft certification. Southwest is currently progressing through the FAA's approval process, and expects to be the launch customer. This process includes, among other things, comprehensive training updates, aircraft conformity inspections and documented reviews, scenario exercises, and required validation flights with FAA representatives and inspectors. The Company expects to complete these readiness activities in approximately three to six months, and anticipates taking delivery of its first -7 aircraft in late 2026, with entry into service expected in 2027. However, the timing of the -7 aircraft's entry into service depends on the FAA's issuance of required approvals to the Company, which is outside of the Company's control. The Company therefore offers no assurances that current estimations and timelines are correct.
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8. A credit received from the Department of Transportation ("DOT") regarding a settlement reached for the Company's December 2022 operational disruption in light of the Company significantly improving its on-time performance and completion factor through the Company's investment in its Network Operations Control.
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The Company expects its 2026 net capital spending to be between $2.5 billion and $2.75 billion, which includes the impact of proceeds from sales of assets and sale-leaseback transactions.
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The Company's contractual order book with Boeing for MAX aircraft extends through 2031. The Company regularly engages in discussions with its airframe and engine suppliers regarding its near-term and long-term fleet needs and order book adjustments. As of October 22, 2026, for the years 2026 through 2031, the Company has firm
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Legal proceedings
On August 26, 2021, a complaint alleging breach of contract and seeking certification as a class action was filed against the Company in the United States District Court for the Western District of Texas in Waco. The complaint alleges that the Company breached its Contract of Carriage and other alleged agreements in connection with its use of the allegedly defective MAX aircraft manufactured by The Boeing Company. The complaint seeks damages on behalf of putative classes of customers who provided valuable consideration, whether in money or other form (e.g., voucher, miles/points, etc.), in exchange for a ticket for air transportation with the Company, which transportation took place between August 29, 2017, and March 13, 2019. The complaint generally seeks money damages, declaratory relief, and attorneys’ fees and other costs. On October 27, 2021, the Company filed a multi-faceted motion challenging the complaint based upon lack of subject matter jurisdiction, the existence of a prior-filed complaint on appeal in the Fifth Circuit (the “Sherman Complaint”), improper venue, and failure to state a claim, and seeking to have the complaint's class contentions stricken. That motion was fully briefed by both parties and was argued to a United States Magistrate Judge on June 27, 2022. On July 5, 2022, the Magistrate Judge granted the motion in part and ordered the case stayed until the issuance of the Fifth Circuit's opinion in the Sherman Complaint. On November 28, 2022, the parties jointly notified the Court of the Fifth Circuit's decision regarding the Sherman Complaint. On March 23, 2023, the parties jointly notified the Court of the dismissal of the Sherman Complaint for lack of jurisdiction. Following more recent communications by the parties regarding the status of the stay, the Court directed the parties to file a joint status report, which was filed on February 24, 2025, with the Company renewing its request that the case be dismissed for lack of standing and lack of subject matter jurisdiction in light of the Fifth Circuit’s decision regarding the Sherman Complaint, which the plaintiffs opposed. On March 11, 2025, the Court heard argument of the parties’ respective positions on the Company’s request for dismissal for lack of standing and lack of subject matter jurisdiction. On June 9, 2025, the Court issued an order dismissing the case for lack of standing and lack of subject matter jurisdiction and entered final judgment in favor of the Company. On July 9, 2025, the plaintiffs in the case filed a notice of appeal to the Fifth Circuit Court of Appeals. The appeal
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was fully briefed by the parties. On April 16, 2026, the Fifth Circuit Court of Appeals issued an unpublished opinion affirming the ruling of the District Court and holding that the plaintiffs lack Article III standing and the case therefore cannot proceed. The deadlines for the plaintiffs to seek any further appellate relief, including for filing a petition for writ of certiorari with the United States Supreme Court, have passed without further action by the plaintiffs, and this matter has concluded.
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the District Court signed a memorandum opinion and order granting the defendants’ motion to dismiss and dismissing with prejudice all claims of the plaintiff. Also on March 17, 2026, the Court signed a final judgment dismissing with prejudice all claims of the plaintiff. On April 15, 2026, the plaintiff filed a notice of appeal to the United States Court of Appeals for the Fifth Circuit. On July 13, 2026, the plaintiff filed his opening appeal brief. The Company thereafter filed its response brief in support of the District Court’s dismissal order, and the plaintiff’s reply brief was filed on October 16, 2026. The Company and its Board deny all allegations of wrongdoing, believe the plaintiffs' positions and appeal are without merit, and intend to vigorously defend themselves in all respects, including in opposing the appeal.
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Item 6
10.1 Supplemental Agreement No. 26 to Purchase Agreement No. 3729, dated December 13, 2011, between the Boeing Company and the Company. (1)
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10.2 $2,000,000,000 Revolving Credit Facility Agreement among Southwest Airlines Co., the Banks party thereto, Barclays Bank PLC, Bank of America, N.A., BNP Paribas, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc., PNC Bank, National Association, Standard Chartered Bank, U.S. Bank National Association, and Wells Fargo Bank, N.A., as Documentation Agents, JPMorgan Chase Bank, N.A. and Citibank, N.A., as Co-Administrative Agents, and JPMorgan Chase Bank, N.A., as Paying Agent, dated ...
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(1) Certain confidential information contained in this agreement has been omitted because it is both not material and is of the type that the registrant treats as private or confidential.
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Oct 22, 2026 against Item 1A of the 10-K filed Feb 5, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:
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There have been no material changes to the factors disclosed in Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
1 paragraph in the 10-Q's Item 1A, and none of them adds, rewords or quietly edits a paragraph of the 10-K's.
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