LUVSouthwest Airlines

We note that you provide disclosure in the third paragraph on page 3, explaining that "Business travel, while showing modest improvements over several years, remained at reduced levels throughout 2022 and 2023 compared with pre-pandemic levels, as corporate travel patterns continued to lag and evolve post-pandemic." We also see that you discuss initiatives aimed at growing the corporate travel business on page 12,

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and discuss some of the associated risk on page 32. Please expand your discussion and analysis of revenue and passenger levels as necessary to clarify the significance of this business, and to address the implications of the respective trends to comply with Item 303(a) and (b)(2) of Regulation S-K.

The Company believes it has previously met the requirements of Item 303(a) and (b)(2) of Regulation S-K within Management's Discussion and Analysis of Operating Revenues in the 2023 Form 10-K, but will expand its explanation and analysis regarding business travel demand in this section within future filings as requested, to the extent such amounts are material to the respective periods and trends.

The Company categorizes Passenger revenue by revenue source (passenger non-loyalty, passenger loyalty – air transportation, and passenger ancillary sold separately) as it believes these categories

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best depict the nature, amount, timing, and uncertainty of Passenger revenue and cash flow. The Company monitors industry and Customer travel patterns and trends, including trends in business and leisure travel, to help analyze and forecast Passenger revenues, as well as to aid in the future optimization of its network and schedules. While there was a modest improvement in total business-related revenues from 2022 to 2023, it was not the most significant driver of the overall $2.2 billion increase in Passenger revenues year-over-year. Likewise, this year-over-year change was not a material factor in the Company’s decline in Passenger revenue per available seat mile for 2023 versus 2022. Generally, while the number of business travelers and total business trips remained below pre-pandemic levels for 2023, this decreased level of travel was slightly offset through an increase in average fares paid by business Customers (defined as those booking travel on Southwest through the Company’s managed business tools).

Many of the initiatives described in Part 1 of the Form 10-K are not necessarily in reaction to changes in Customer behavior resulting from the pandemic, but are long-term strategies designed to appeal to a wider base of business travelers that may have traditionally flown on larger network carriers. The majority of these strategies were initiated prior to the pandemic, in fact, and are intended to put the Company on a level playing field by reducing the friction or extra efforts that have historically made it more difficult for such Customers to book and travel on Southwest. However, while the Company aspires to increase its market share with regards to the level of business travel it attracts, there is no guarantee that these efforts will be successful.

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We understand from your disclosure that you estimate the useful life of flight equipment at 25 years, and associated residual values that range from 13% to 20% Please explain to us how you established the useful lives and residual values of your aircraft, and describe any efforts undertaken to revisit and update these policies on a regular basis.

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For example, given your disclosure on page 52, that you own 736 Boeing 737 aircraft, tell us how you considered the potential effect on marketability of used aircraft that were subject to the FAA grounding discussed on page 42, to address manufacturing and safety concerns, in estimating residual values and disposal costs. In conjunction with your response, please submit a summary of aircraft sales over the last three years, in the form of a spreadsheet specifying the type of each aircraft and showing for each the acquisition dates and costs, your estimate of the useful lives and residual values, the useful life and residual value percentage applied, the accumulated depreciation and net book values on the disposal dates, the disposal dates and costs and proceeds received in exchange, and the net gain or loss on each transaction. Please provide us with an explanation for how the residual value percentage applied was correlated with the aircraft, and discuss any material variances between the residual values that had been calculated and the net of disposal costs and proceeds. In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.

In estimating the useful lives and expected residual values of its aircraft, the Company primarily has relied upon its actual experience with the same or similar aircraft types, as well as current and projected future resale market value information provided by independent third parties. Flight equipment estimated useful lives are initially based on the number of "cycles" expected to be flown (one take-off and landing) as well as the expected aircraft age at retirement.

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The Company has made a conversion of cycles into years based on both historical and anticipated future utilization of the aircraft. Subsequent revisions to these useful life and residual value estimates could be caused by, among other considerations, changes to aircraft maintenance programs, changes in utilization of the aircraft (actual cycles during a given period of time), governmental regulations on aging aircraft, and changing market prices of new and used aircraft of the same or similar types. The Company evaluates its estimates and assumptions each reporting period and, when warranted, adjusts these estimates and assumptions. Generally, these adjustments are accounted for on a prospective basis through depreciation and amortization expense.

At the time of the prior grounding of the Company’s Boeing 737 MAX fleet in 2019, the Company did consider whether such grounding would have an impact on its estimated useful lives and/or residual values—either for its 31 owned MAX-8 aircraft at the time, or its entire owned Boeing 737 fleet. Historically, the Company has operated its aircraft up to or near the initially established useful lives. Additionally, because the issues that led to the grounding were not “structural” in nature (i.e., associated directly with the airframe and/or engines of the aircraft), and because they were not pervasive to other Boeing fleet types (such as the Company’s Next Generation fleet of 737-700s and 737-800s), the Company determined there should be no long-term material impact to its prior estimates. This conclusion was further supported by valuation estimates provided by independent third parties, as well as compensation provided to the Company by Boeing associated with the MAX grounding. As agreed upon in correspondence with the SEC's Office of the Chief Accountant in 2019, this compensation was accounted for as a reduction in the cost basis for the Company’s owned MAX aircraft and thus reduced the book values associated with those aircraft, thereby reducing the risk associated with a potential decline in market value. Further, as the Company has had a number of other (non-MAX) aircraft retirements since this grounding, it has not experienced any material gains or losses associated with the ultimate disposal of the retired aircraft, also supporting the estimates made by the Company.

Estimated residual values can be further impacted by the Company’s decision or intent with respect to how the retired aircraft will be disposed of. For example, the Company could sell the aircraft as a whole unit to a third party that will continue to operate it. Likewise, the Company could determine that the retired airframe and/or engines will be a “tear-down”, where at retirement

LUV-003 the aircraft is taken apart and the parts are either utilized within the Company’s inventory as support for the remaining fleet, or sold as salvage to other third parties to find buyers or to be disposed of as scrap. The initial estimate of residual value applied to an aircraft is inclusive of the entire unit (airframe and two engines). However, at retirement, the majority of the actual value of the total aircraft is associated with the engines, which can be and in most cases are removed and continue to be used as spares to support the Company’s remaining fleet.

In recent years, none of the owned aircraft retired by the Company have been sold as whole units but have been dismantled and the parts consumed within the Company’s inventory. Because the Company’s entire fleet is a version of the Boeing 737 aircraft, there is much commonality with such parts across the fleet. In some instances, if the parts are not usable or repairable, they have been sold as scrap to third party vendors. Typically, the estimated residual values assigned to the Company’s owned aircraft anticipate such treatment at retirement—and historically where the Company has been able to procure a buyer for an entire aircraft at or near retirement, the Company has recorded modest gains on such transactions. Although the Company initially estimates a residual value of approximately 15 percent for an aircraft at the date of initial purchase, as the aircraft nears its intended retirement date and the Company can reasonably gain more certainty about the actual retirement date of the aircraft, the presumed action it will take at retirement (sell as a whole unit or dismantled and consumed internally), and the expected market for used aircraft parts and/or scrap, it will adjust the estimated useful life and expected residual value of each aircraft and the recording of depreciation expense on a prospective basis so that the Company can minimize or eliminate the likelihood of recording a gain and/or loss at the actual retirement date. The impact of changes in the estimated useful lives and/or expected residual values of aircraft has not been material in recent years. Also, except for aircraft that were retired earlier than expected and/or impaired during the pandemic, the Company has not incurred any material gains and/or losses on such retirements in recent years.

The Company also has the opportunity to evaluate the estimated cost/benefit of continuing to operate the aircraft, which it could choose to do in most cases even beyond its estimated 25-year useful life—subject to any limits prescribed by the manufacturer based on the number of cycles flown by that particular aircraft at that time. That decision is based on a number of factors, including: the travel demand environment, the current and expected economics of continuing to operate the aircraft (which include airfares, fuel prices, labor rates and maintenance costs charged by third parties, etc.), the aircraft’s maintenance history and required future maintenance requirements, the Company’s anticipated scheduled deliveries of new aircraft that could replace retiring aircraft and how efficient the replacement aircraft are in comparison (from a cost, fuel efficiency and dependability perspective), and the nature and number of opportunities available to deploy the additional aircraft capacity.

The Company has not sold any aircraft as whole units to third parties during the years 2021-2023. However, it has provided a detail of the requested information for the two airframe sales that it completed with a third party. In addition, six spare engines were sold to third parties during the applicable period and details have also been provided for those.

LUV-004

Airframe Sales:

Acquisition date Acquisition cost Projected residual % value at acquisition Projected residual $ value at acquisition Aircraft retirement date Age at retirement (Yrs) Accumulated depreciation at retirement

Aircraft #1 12/17/1997 [***] 15 % [***] 3/22/2021 23.28 [***]

Aircraft #2 12/29/1998 [***] 15 % [***] 3/22/2021 22.24 [***]

Net book value (NBV) at retirement Allocation of NBV to engines Allocation of NBV to airframe/rotables* Impair-ments recorded Airframe sale date Sale price Gain/loss on sale Disposal costs

Aircraft #1 $ 5,993,026 $ 4,014,310 $ 1,414,814 $ (563,902) 3/30/2022 $ 1,100,000 $ — $ (220,000)

Aircraft #2 $ 6,992,276 $ 4,988,082 $ 1,180,727 $ (823,467) 3/30/2022 $ 1,100,000 $ — $ (220,000)

*Of the amount listed, $880K consists of the airframe, and the remainder is related to rotables.

Engine Sales:

Acquisition date Acquisition cost Projected residual % value at acquisition Projected residual $ value at acquisition Aircraft retirement date Age at retirement (Yrs) Accumulated depreciation at retirement

Aircraft #1 10/26/1998 [***] 15 % [***] 9/23/2022 24.88 [***]

Aircraft #2 6/8/1998 [***] 15 % [***] 3/22/2021 25.43 [***]

Aircraft #3-1* 3/7/2014 [***] 15 % [***] 11/9/2023 9.75 [***]

Aircraft #3-2* 3/7/2014 [***] 15 % [***] 11/9/2023 9.78 [***]

Aircraft #4 4/10/1998 [***] 15 % [***] 3/18/2022 25.70 [***]

Aircraft #5 3/30/1998 [***] 15 % [***] 12/6/2021 25.76 [***]

Net book value (NBV) at retirement Allocation of NBV to engines (per engine)** Allocation of NBV to airframe/rotables Impair-ments recorded Engine sale date Sale price Gain/loss on sale (per engine) Disposal costs

Aircraft #1 $ 4,077,612 $ 1,388,325 $ 857,191 $ — 9/6/2023 $ 1,700,000 $ 311,675 $ —

Aircraft #2 $ 6,366,992 $ 1,426,577 $ 324,265 $ — 11/6/2023 $ 1,700,000 $ 273,423 $ —

Aircraft #3-1* $ 3,272,335 $ 1,187,542 $ 880,000 $ — 12/4/2023 $ 1,700,000 $ 512,458 $ —

Aircraft #3-2* $ 3,272,335 $ 1,187,542 $ 880,000 $ — 12/15/2023 $ 1,700,000 $ 512,458 $ —

Aircraft #4 $ 4,743,208 $ 1,429,163 $ 616,512 $ — 12/15/2023 $ 1,700,000 $ 270,837 $ —

Aircraft #5 $ 5,772,794 $ 1,431,868 $ 173,647 $ — 12/28/2023 $ 1,700,000 $ 268,132 $ —

*The two engines on this same aircraft were purchased used from a third party in 2014 and depreciated over a useful life of approximately 12 years from the date of acquisition (manufacture date of 12/20/2000).

**The allocation provided is for each of the two engines included in the NBV at retirement less additional depreciation recorded on the engines while they were held and used as spares prior to their sale date.

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We understand from your response to prior comment 1 that although you routinely monitor industry and customer travel patterns, including trends in business and leisure travel, to both analyze and forecast passenger revenues and to aid in the future optimization of your network and schedules, you do not regard information about business travel revenue to be material to investors, though would provide some explanation

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and analysis if you consider that information material in the future. You explain that you categorize passenger revenues by source, though identify revenue categories based on whether the tickets were purchased or acquired through loyalty program point redemptions. You state that these two categories "...best depict the nature, amount, timing, and uncertainty of Passenger revenue and cash flow," though do not mention either of these categories in your discussion and analysis on page 68. We see that a section of your website is dedicated to corporate/business travel, covering various features and initiatives, such as the business travel program booking tool, dedicated account management teams, coordination programs for meetings and groups, and support for travel management companies, which collectively does not clearly reconcile with your view of the revenue source as not material. Given these observations, considering your efforts at monitoring, analyzing and forecasting business and leisure travel patterns, including the associated trends and revenues and use of that information in resource allocation decisions, explain to us why you would not also identify business and leisure ticket revenues, individually as sources on page 107 to comply with FASB ASC 606-10-50-5 and 55-89 through 55-91. As part of your response, please identify the economic factors and various correlations that you considered in identifying the non-loyalty and loyalty passenger revenue source categories as depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors; explain how you would similarly evaluate economic factors and correlations for the business and leisure travel revenue sources; and provide us with a schedule showing non-loyalty and loyalty passenger revenues separately attributable to business and leisure ticket sales during each of the last five fiscal years. If you continue to regard such information as not material for disclosure in the notes to the financial statements, or in the discussion and analysis of your results of operations, provide us with the analyses that you performed in formulating these views.

Southwest Airlines Co. (the “Company”) has received the letter dated April 9, 2024 from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2023, File No. 001-07259, filed with the Commission on February 6, 2024. The Company respectfully requests an extension to the deadline for responding to the letter in order for the Company to devote appropriate time and resources to consider the Staff’s comments and complete its responses.

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The Company expects to provide its response to the letter via EDGAR by May 10, 2024.

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It appears you have elected the transition provision pursuant to ASC 606-10-65-1(f)(4) in regard to the aggregate effect of historical modifications to the co-branded credit card agreement with Chase Bank USA, N.A.

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In so doing, ASC 606-10-65-1(g)(2) states that to the extent reasonably possible a qualitative assessment of the estimated effect of applying this expedient is required to be disclosed, but this disclosure is not apparent. Please advise.

In making the election of the transition provision pursuant to ASC 606, the Company did not believe it was reasonably possible to provide a qualitative assessment of applying the contract modification transition practical expedient without performing a complete quantitative analysis of each modification. To perform a complete quantitative analysis, the Company would require the assistance of an independent third party to perform a historical valuation and attempt to re-create valid assumptions many years after the fact, which would have been costly and time consuming.

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Without knowing the movement in each assumption in the valuation, the Company does not believe it is reasonably possible to estimate the impact of applying this practical expedient.

In order to address the Staff’s request to provide a qualitative assessment, the Company modified its disclosures in the most recent Form 10-Q for the quarterly period ended June 30, 2018, that was filed on August 1, 2018. After filing such Form 10-Q, the Company is proposing further relatively minor modifications that it would make in future filings to further clarify its disclosures and address the

Staff’s comment. Please advise whether the staff believes the comment has been adequately addressed in the following, which would replace the existing two paragraphs in Note 5 of the Notes to Condensed Financial Statements (unaudited) on pages 22 and 23 of the Form 10-Q in future filings:

ASC 606 requires the Company to allocate consideration received to performance obligations based on relative fair value of those obligations. The Company has a co-branded credit card agreement (“Agreement”) with Chase Bank USA, N.A. (“Chase”), through which the Company sells loyalty points and certain marketing components, which consist of use of Southwest Airlines’ brand and access to Rapid Rewards Member lists, licensing and advertising elements, and use of the Company’s resource team. The Company estimated the selling prices and volumes over the term of the Agreement in order to determine the allocation of proceeds to each of the two performance obligations identified in the agreement-which have been characterized as a transportation component and a marketing component. The allocations utilized are reviewed to determine if adjustment is necessary any time there is a modification to the Agreement. The Company records Passenger revenue related to loyalty point redemptions for air travel when the travel is delivered. The marketing elements are recognized as Other revenue when earned following the sales-based royalty method, as intellectual property was determined to be the predominate component of this performance obligation in the Agreement.

The Company has elected the transition provision within ASC 606 to reflect the aggregate effect of historical modifications to the Agreement on January 1, 2018, when (i) identifying the satisfied and unsatisfied performance obligations, (ii) determining the transaction price, and (iii) allocating the transaction price to the satisfied and unsatisfied performance obligation. When applying the full retrospective adoption provisions of ASC 606, the Company determined the transaction price for all satisfied and unsatisfied performance obligations in the Agreement and performed a single allocation of the transaction price to those performance obligations, based on the relative selling prices on January 1, 2016. In applying this transition provision, the Company evaluated the historical modifications of the contract and did not identify any new performance obligations throughout the periods prior to adoption of the new standard. The Company did not believe it was reasonably possible to quantitatively estimate the impact of applying this transition provision to contract modifications prior to January 1, 2016.

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