<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
September 30, 1995 OR
____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
________ TO ________
Commission file No. 1-7259
SOUTHWEST AIRLINES CO.
(Exact name of registrant as specified in its charter)
TEXAS 74-1563240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 36611, Dallas, Texas 75235-1611
(Address of principal executive offices) (Zip Code)
(214) 904-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of Common Stock outstanding as of the close
of business on November 10, 1995:
143,931,917
<PAGE>
<PAGE>
SOUTHWEST AIRLINES CO.
FORM 10-Q
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Southwest Airlines Co.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $365,757 $174,538
Accounts receivable 120,257 75,692
Inventories of parts and supplies 38,157 37,565
Prepaid expenses and other 39,761 27,103
Total current assets 563,932 314,898
Property and equipment:
Flight equipment 2,869,100 2,564,551
Ground property and equipment 426,591 384,501
Deposits on flight equipment
purchase contracts 343,374 393,749
3,639,065 3,342,801
Less allowance for depreciation 958,284 837,838
2,680,781 2,504,963
Other assets 3,555 3,210
$3,248,268 $2,823,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $148,062 $117,599
Accrued liabilities 299,976 288,979
Air traffic liability 181,805 106,139
Income taxes payable 3,211 -
Current maturities of long-term debt 13,711 9,553
Total current liabilities 646,765 522,270
Long-term debt less current maturities 671,066 583,071
Deferred income taxes 273,717 232,850
Deferred gains from sale and leaseback
of aircraft 252,029 217,677
Other deferred liabilities 22,553 28,497
Stockholders' equity:
Common stock 143,865 143,256
Capital in excess of par value 159,612 151,746
Retained earnings 1,078,661 943,704
Total stockholders' equity 1,382,138 1,238,706
$3,248,268 $2,823,071
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<PAGE>
Southwest Airlines Co.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating revenues:
Passenger $735,275 $661,623 $2,042,378 $1,896,604
Freight 16,160 13,052 47,165 39,071
Other 13,540 10,614 34,636 30,082
Total operating
revenues $764,975 685,289 2,124,179 1,965,757
Operating expenses:
Salaries, wages, and
benefits 223,585 195,799 644,415 563,637
Fuel and oil 92,034 82,652 264,090 231,139
Maintenance materials
and repairs 55,729 48,296 159,982 141,939
Agency commissions 31,623 33,675 92,368 103,298
Aircraft rentals 44,229 32,961 124,709 94,988
Landing fees and other
rentals 41,803 37,619 121,779 110,607
Depreciation 38,826 36,298 114,382 102,588
Other operating expenses 123,048 116,279 361,522 337,971
Total operating
expenses 650,877 583,579 1,883,247 1,686,167
Operating income 114,098 101,710 240,932 279,590
Other expenses (income):
Interest expense 15,038 13,102 43,811 40,234
Capitalized interest (8,255) (6,582) (25,155) (18,398)
Interest income (6,849) (1,792) (14,259) (5,937)
Nonoperating losses
(gains), net (51) (146) 1,485 (131)
Total other expenses (117) 4,582 5,882 15,768
Income before income taxes 114,215 97,128 235,050 263,822
Provision for income taxes 46,498 38,509 95,783 104,834
Net income $67,717 $58,619 $139,267 $158,988
Weighted average common
and common equivalent
shares outstanding 151,647 147,320 148,509 147,432
Net income per common and
common equivalent share $.45 $.40 $.94 $1.08
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
Southwest Airlines Co.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net cash provided by
operating activities $49,720 $82,097 $347,923 $334,251
Investing activities:
Net purchases of property
and equipment (213,855) (240,485) (572,141) (613,946)
Financing activities:
Issuance of long-term debt - - 98,811 -
Payment of long-term debt
and capital lease
obligations (2,731) (2,865) (7,758) (62,369)
Payment of cash
dividends (1,438) (1,432) (5,741) (4,290)
Proceeds from aircraft sale
and leaseback
transactions 130,000 315,000 321,650 315,000
Proceeds from Employee
stock plans 3,163 2,032 8,475 6,697
Net cash provided by
financing activities 128,994 312,735 415,437 255,038
Net increase (decrease) in
cash and cash
equivalents (35,141) 154,347 191,219 (24,657)
Cash and cash equivalents at
beginning of period 400,898 116,567 174,538 295,571
Cash and cash equivalents at
end of period $365,757 $270,914 $365,757 $270,914
Cash payments for:
Interest, net of amount
capitalized $14,270 $13,109 $25,381 $29,716
Income taxes $44,449 $26,764 $52,276 $64,274
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
SOUTHWEST AIRLINES CO.
Notes to Condensed Consolidated Financial Statements
1. Basis of presentation - The accompanying unaudited
condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The condensed consolidated financial statements
for the interim periods ended September 30, 1995 and 1994 include
all adjustments (which include only normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. Operating
results for the three and nine month periods ended September 30,
1995 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Southwest Airlines Co. annual
report on Form 10-K for the year ended December 31, 1994.
2. Dividends - During the three month periods ended
September 30, 1995, June 30, 1995, March 31, 1995, September 30,
1994, June 30, 1994 and March 31, 1994, dividends of $.01 were
declared on the 143,840,928, 143,648,993, 143,411,223,
143,141,181, 143,042,383 and 142,856,850 shares of common stock
then outstanding, respectively.
3. Long-term debt - During March 1995, the Company issued
$100 million of 8% senior unsecured notes due March 2005.
Interest on the Notes is payable semi-annually on March 1 and
September 1, commencing September 1, 1995. The Notes may not be
redeemed prior to maturity.
4. Leases - During third quarter 1995, the Company
completed transactions for the sale and leaseback of four new
Boeing 737 aircraft. The lease terms, which require periodic
lease payments through January 2019, increased the Company's
commitments for operating leases by $236.5 million.
5. Reclassifications - Certain prior year amounts have
been reclassified for comparison purposes.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Comparative Consolidated Operating Statistics
Relevant operating statistics for the three and nine month
periods ended September 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue passengers
carried 11,682,228 11,254,033 33,299,341 31,947,498
Revenue passenger miles
(RPMs) (000s) 6,252,006 5,718,949 17,450,334 16,215,299
Available seat miles
(ASMs) (000s) 9,216,522 8,298,603 26,663,719 23,632,900
Load factor 67.8% 68.9% 65.4% 68.6%
Average length of
passenger haul 535 508 524 508
Trips flown 174,312 161,415 508,107 460,881
Average passenger fare $62.94 $58.79 $61.33 $59.37
Passenger revenue yield
per RPM $.1176 $.1157 $.1170 $.1170
Operating revenue yield
per ASM $.0830 $.0826 $.0797 $.0832
Operating expenses per ASM $.0706 $.0703 $.0706 $.0713
Average fuel cost per gallon $.5460 $.5415 $.5404 $.5309
Number of employees at
period-end 19,748 16,417 19,748 16,417
Size of fleet at period-end 219 195 219 195
</TABLE>
Material Changes in Results of Operations
Consolidated net income for the three months ended
September 30, 1995 was $67.7 million ($.45 per share) compared
with $58.6 million ($.40 per share) earned in third quarter 1994.
<PAGE>
<PAGE>
Consolidated operating revenues increased 11.6 percent for
the third quarter of 1995 and 8.1 percent for the nine months
ended September 30, 1995, as compared to the corresponding
periods of the prior year, primarily as a result of an 11.1
percent and 7.7 percent increase, respectively, in consolidated
passenger revenues. The increase in passenger revenues resulted
from a 9.3 percent and 7.6 percent increase in revenue passenger
miles (RPMs) for the three and nine month periods ended September
30, 1995, respectively, coupled with a 7.1 percent and 3.3
percent increase in average passenger fare over these same
periods.
Available seat miles (ASMs) increased 11.1 percent and 12.8
percent in third quarter 1995 and the nine month period ended
September 30, 1995, respectively, resulting in load factors of
67.8 percent and 65.4 percent for these same periods. The
passenger revenue yield per RPM increased 1.6 percent to $.1176
for the three months ended September 30, 1995 and was flat for
the nine months ended September 30, 1995.
The third quarter 1995 load factor and revenue yield per RPM
remained strong compared to second quarter 1995 results of 67.1
percent and $.1185, respectively, primarily due to modest fare
increases and an enhanced fare structure. Bookings were not
strong for October travel. The October 1995 load factor of 60.0
percent was 5.0 points below year ago levels, which were heavily
stimulated by sales and promotional activities. Yield per RPM
was almost 13 percent higher in October 1995 versus October 1994,
however. With respect to the revenue outlook for the remainder
of the fourth quarter 1995, we recently launched a sale with
strong customer response. November and December load factors may
still lag behind year ago levels. Yield per RPM should continue
to exceed year ago levels, although at a lower rate of growth
than October 1995.
Consolidated freight revenues increased 23.8 percent in the
third quarter of 1995 and 20.7 percent for the nine months ended
September 30, 1995 as compared to the same periods of the prior
year, primarily due to increased capacity, as well as an increase
in air freight and United States mail services. Other revenues
increased 27.6 percent in the third quarter 1995 and 15.1 percent
for the nine months ended September 30, 1995, primarily due to
increased charter and inflight service revenues.
<PAGE>
<PAGE>
Operating expenses per ASM increased 0.4 percent for the
three months and decreased 1.0 percent for the nine months ended
September 30, 1995 as follows:
Southwest Airlines Co.
Consolidated Operating Expenses per ASM
(in cents except percent change)
<TABLE>
<CAPTION>
Three months ended
September 30,
Increase Percent
1995 1994 (decrease) change
<S> <C> <C> <C> <C>
Salaries, wages, and benefits 2.12 2.10 .02 1.0
Profitsharing and Employee
savings plans .30 .26 .04 15.4
Fuel and oil 1.00 1.00 - -
Maintenance materials
and repairs .61 .58 .03 5.2
Agency commissions .34 .40 <.06> <15.0>
Aircraft rentals .48 .40 .08 20.0
Landing fees and other rentals .45 .45 - -
Depreciation .42 .44 <.02> <4.5>
Other operating expenses 1.34 1.40 <.06> <4.3>
Total 7.06 7.03 .03 0.4
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended
September 30,
Increase Percent
1995 1994 (decrease) (change)
<S> <C> <C> <C> <C>
Salaries, wages,and benefits 2.18 2.13 .05 2.3
Profitsharing and Employee
savings plans .24 .25 <.01> <4.0>
Fuel and oil .99 .98 .01 1.0
Maintenance materials
and repairs .60 .60 - -
Agency commissions .35 .44 <.09> <20.5>
Aircraft rentals .47 .40 .07 17.5
Landing fees and other rentals .45 .47 <.02> <4.3>
Depreciation .43 .43 - -
Other operating expenses 1.35 1.43 <.08> <5.6>
Total 7.06 7.13 <.07> <1.0>
</TABLE>
<PAGE>
<PAGE>
Profitsharing and Employee savings plans expense per ASM
increased 15.4 percent for the three months ended September
30,1995 and decreased 4.0 percent for the nine months ended
September 30, 1995, respectively, as compared to the same periods
of the prior year primarily due to corresponding fluctuations in
operating income per ASM and increased Company contributions to
Employee savings plans for noncontract Employees and certain
Employee groups covered by collective bargaining agreements.
Fleet service employees are subject to an agreement with the
Ramp, Operations and Provisioning Association, which became
amendable in December 1994 and is currently in mediation.
Southwest's mechanics and related employees are subject to an
agreement with the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America (the Teamsters),
which became amendable August 16, 1995. Southwest is currently
in negotiations with the Teamsters for a new contract.
Fuel and oil expense per ASM has remained relatively
flat year over year due to the stability of fuel prices. The
average price paid for fuel during the first nine months of 1995
increased only 1.8 percent over the corresponding period of 1994.
Since the end of third quarter 1995, fuel prices have averaged
approximately $.57 per gallon.
Agency commissions per ASM decreased by 15.0 percent and
20.5 percent for the three month and nine month periods ended
September 30, 1995, as compared to the corresponding periods of
1994. As a result of 1994 and first quarter 1995 enhancements to
Southwest's ticket delivery systems for direct Customers, as
described below, the travel agency sales mix decreased from
approximately 52 percent of total passenger sales in third
quarter 1994 to 43 percent in third quarter 1995. The Company
expects to maintain this travel agency sales mix in fourth
quarter 1995.
In response to actions taken by our competitor-owned
reservations systems, we reduced our operating costs and enhanced
our ticket delivery systems by developing our own Southwest
Airlines Air Travel ("SWAT") system, allowing high-volume travel
agents direct access to reservations; introduced overnight ticket
delivery for travel agents; reduced to three the number of
advanced days reservations required for overnight delivery of
tickets to customers (Ticket By Mail); developed our own
Ticketless system, which was rolled out system-wide on January
31, 1995; and effective March 30, 1995, subscribed to a new level
of service with SABRE that allows SABRE travel agencies to
electronically pursue other cost-effective solutions for
automating non-SABRE travel agency bookings.
<PAGE>
Aircraft rentals per ASM increased 20.0 percent and 17.5
percent for the three and nine month periods ended September 30,
1995, compared to the corresponding periods of 1994. The
increase was primarily due to the sale/leaseback financing of
four aircraft during third quarter 1995 and six aircraft during
second quarter 1995 with long-term operating leases and a higher
percentage of the fleet consisting of leased aircraft.
Other operating expenses per ASM decreased 4.3 percent and
5.6 percent for the three and nine month periods ended September
30, 1995, respectively. These decreases were primarily due to
operating efficiencies resulting from the transition of Morris
operational functions to Southwest, commencing first quarter
1994.
Other expenses (income) for the three months and nine months ended
September 30, 1995 included interest expense, capitalized interest,
interest income, and nonoperating gains and losses. Interest
expense increased in the first nine months of 1995 as compared to
the first nine months of 1994 due to the March 1995 issuance of
$100 million of 8 percent senior unsecured Notes due March 2005.
Capitalized interest increased for the three month and nine month
periods ended September 30, 1995 as a result of increased
aircraft progress payments as compared to the same periods of the
prior year. Interest income increased for the three and nine
months ended September 30, 1995 due to higher invested cash
balances and higher short-term interest rates.
We expect our unit costs to increase in fourth quarter 1995
versus fourth quarter 1994, due to reduced aircraft utilization
and a 4.3 cent per gallon jet fuel tax that went into effect
October 1. Although efforts are underway in Congress to defer
imposition of the tax for two years, our industry's previous two
year tax exemption expired, by its term, on October 1, 1995 and
the tax will be collected, as of that date, even if only on an
interim basis.
Material Changes in Financial Condition
Net cash provided by operating activities was $49.7 million
for the three months ended September 30, 1995. During third
quarter 1995, the Company generated $130.0 million from the
sale/leaseback of four Boeing 737 aircraft. During the twelve
months ended September 30, 1995, cash of $424.9 million was
provided from operations. This cash was primarily used to
finance aircraft-related expenditures and provide working
capital.
For the twelve months ended September 30, 1995, net capital
expenditures were $746.8 million, which were primarily for the
purchase of 20 new and one used 737-300 aircraft, which had been
previously leased by Morris, and progress payments for future
aircraft deliveries.
As of September 30, 1995, the Company had authority by its
Board of Directors to purchase 3,750,000 shares of its common
stock from time to time on the open market. No shares have been
purchased pursuant to this authority since 1990.
The Company's contractual commitments at September 30, 1995,
consist primarily of scheduled aircraft acquisitions. These
contractual commitments were affected by third quarter amendments
to certain aircraft purchase contracts, which modified future
progress payments. Seven 737-300s are scheduled for delivery in
the remainder of 1995, 18 in 1996, and 13 in 1997. Four 737-700s
are scheduled for delivery in 1997, 16 in 1998, 16 in 1999, 15 in
2000, and 12 in 2001. In addition, the Company has options to
purchase up to eight 737-300s in 1997 and up to sixty-three 737-
700s during 1998-2004. The Company has the option, which must be
exercised two years prior to the contractual delivery date, to
substitute 737-600s or 737-800s for the 737-700s delivered
subsequent to 1999. Aggregate funding needed for these
commitments is approximately $2,609.4 million at September 30,
1995 due as follows: $136.3 million in 1995; $429.3 million in
1996; $468.0 million in 1997; $447.0 million in 1998; $551.3
million in 1999; $351.0 million in 2000; and $226.5 million in
2001. Additionally, the Company currently intends to exercise
eight of its 1997 purchase options, which would increase funding
requirements by $7.5 million in 1995, $22.7 million in 1996, and
$220.1 million in 1997.
Boeing is currently experiencing a work stoppage affecting
approximately 32,500 machinists and aerospace workers which may
impact future aircraft deliveries. The Company has received three
of its seven scheduled fourth quarter aircraft deliveries and
anticipates receiving two additional deliveries prior to year
end. At this point, we do not know when we will receive our
remaining fourth quarter deliveries or what impact the strike
might have on 1996 deliveries. In any event, we do not believe
the Boeing strike will have a material adverse effect on our
fourth quarter 1995 flight schedule.
The Company has various options available to meet its
capital and operating commitments, including cash on hand at
September 30, 1995 of $365.8 million, and a $460 million
revolving credit line with a group of banks. In addition, the
Company will also consider various external financing options to
maximize earnings and cash flows and to maintain a strong capital
structure.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company has received examination reports from
the Internal Revenue Service proposing certain
adjustments to Southwest's income tax returns for 1987
through 1991. The adjustments relate to certain types
of aircraft financings consummated by Southwest, as
well as other members of the aviation industry, during
that time period. Southwest intends to vigorously
protest the adjustments made with which it does not
agree. The industry's difference with the IRS involves
complex issues of law and fact which are likely to take
a substantial period of time to resolve. Management
believes that final resolution of such protest will not
have a materially adverse effect upon the results of
operations of Southwest.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None to be reported.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(11.1) Computation of Earnings Per Share
(27) Financial Data Schedule
b) Reports on Form 8-K
The following report on Form 8-K was
filed during
the quarter.
Form 8-K dated September 20, 1995 filed
for the purpose of filing certain documents in
connection with, and incorporated by reference
into, Southwest Airlines Company's Registration
Statement on Form
S-3 (File No. 33-59113), as declared
effective on May 9, 1995 and Southwest Airlines
Company's Registration Statement on Form S-3 (File
No. 33-54587), as declared effective on July 21,
1994, relating to Pass Through Certificates,
series 1995-A.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SOUTHWEST AIRLINES CO.
<TABLE>
<S> <C>
November 13, 1995 /s/ Gary C. Kelly
Date Gary C. Kelly
Vice President - Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
</TABLE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
<S> <C>
(11.1) Computation of Earnings Per Share
(27) Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 365,757
<SECURITIES> 0
<RECEIVABLES> 120,257
<ALLOWANCES> 0
<INVENTORY> 38,157
<CURRENT-ASSETS> 563,932
<PP&E> 3,639,065
<DEPRECIATION> 958,284
<TOTAL-ASSETS> 3,248,268
<CURRENT-LIABILITIES> 646,765
<BONDS> 0
<COMMON> 143,865
0
0
<OTHER-SE> 1,238,273
<TOTAL-LIABILITY-AND-EQUITY> 3,248,268
<SALES> 0
<TOTAL-REVENUES> 2,042,378
<CGS> 0
<TOTAL-COSTS> 1,883,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,811
<INCOME-PRETAX> 235,050
<INCOME-TAX> 95,783
<INCOME-CONTINUING> 139,267
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,267
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
</TABLE>
<PAGE>
EXHIBIT (11.1)
Page 1 of 4
Southwest Airlines Co.
Computation of Earnings Per Share
For the Three Months Ended September 30, 1995
<TABLE>
Fully
Primary Diluted
<S> <C> <C>
Weighted average shares outstanding 143,791,540 143,791,540
Shares issuable upon exercise of outstanding
stock options (treasury stock method) 7,855,352 7,856,359
Weighted average common and common
equivalent shares 151,646,892 151,647,899
Earnings for per share computations $67,717,000 $67,717,000
Earnings per common and common equivalent share $0.45 $0.45
</TABLE>
<PAGE>
<PAGE>
EXHIBIT (11.1)
Page 2 of 4
<TABLE>
<CAPTION>
Southwest Airlines Co.
Computation of Earnings Per Share
For the Three Months Ended September 30, 1994
Fully
Primary Diluted
<S> <C> <C>
Weighted average shares outstanding 143,110,112 143,110,112
Shares issuable upon exercise of outstanding
stock options (treasury stock method) 4,209,683 4,209,683
Weighted average common and common
equivalent shares 147,319,795 147,319,795
Earnings for per share computations $58,619,000 $58,619,000
Earnings per common and common equivalent $0.40 $0.40
share
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT (11.1)
Page 3 of 4
Southwest Airlines Co.
Computation of Earnings Per Share
For the Nine Months Ended September 30, 1995
Fully
Primary Diluted
<S> <C> <C>
Equivalent shares outstanding at March 31,1995 146,532,231 146,532,231
Equivalent shares outstanding at June 30, 1995 147,347,541 147,466,666
Equivalent shares outstanding at
September 30, 1995 151,646,892 151,647,899
Total shares outstanding 445,526,664 445,646,796
Average number of equivalent shares outstanding 148,508,888 148,548,932
Earnings for per share computations $139,267,000 $139,267,000
Earnings per common and common equivalent share $0.94 $0.94
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT (11.1)
Page 4 of 4
Southwest Airlines Co.
Computation of Earnings Per Share
For the Nine Months Ended September 30, 1994
Fully
Primary Diluted
<S> <C> <C>
Equivalent shares outstanding at March 31, 1994 147,600,272 147,601,742
Equivalent shares outstanding at June 30, 1994 147,374,478 147,374,478
Equivalent shares outstanding at September 30,1994 147,319,795 147,319,795
Total shares outstanding 442,294,545 442,296,015
Average number of equivalent shares outstanding 147,431,515 147,432,005
Earnings for per share computations $158,988,000 $158,988,000
Earnings per common and common equivalent share $1.08 $1.08
</TABLE>
