<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
March 31, 1998 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) 792-4000
(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 May 11, 1998:
223,154,213
<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>
March 31, 1998 December 31, 1997
<S>
ASSETS
Current assets: <C> <C>
Cash and cash equivalents $506,948 $623,343
Accounts receivable 116,533 76,530
Inventories of parts and supplies 47,918 52,376
Deferred income taxes 19,246 18,843
Prepaid expenses and other current assets 30,567 35,324
Total current assets 721,212 806,416
Property and equipment:
Flight equipment 4,122,352 3,987,493
Ground property and equipment 617,290 601,957
Deposits on flight equipment purchase
contracts 298,235 221,874
5,037,877 4,811,324
Less allowance for depreciation 1,424,036 1,375,631
3,613,841 3,435,693
Other assets 4,158 4,051
$4,339,211 $4,246,160
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $149,706 $160,891
Accrued liabilities 435,574 426,950
Air traffic liability 250,215 153,341
Income taxes payable 31,954 -
Current maturities of long-term debt 14,808 121,324
Other current liabilities 4,037 6,007
Total current liabilities 886,294 868,513
Long-term debt less current maturities 624,775 628,106
Deferred income taxes 443,171 438,981
Deferred gains from sale and leaseback of aircraft 251,795 256,255
Other deferred liabilities 37,543 45,287
Stockholders' equity:
Common stock 222,958 221,207
Capital in excess of par value 172,779 155,696
Retained earnings 1,699,896 1,632,115
Total stockholders' equity 2,095,633 2,009,018
$4,339,211 $4,246,160
</TABLE>
See accompanying notes.
<PAGE>
Southwest Airlines Co.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share amounts)
(unaudited)
[CAPTION]
<TABLE>
Three months ended March 31,
1998 1997
<S>
Operating revenues: <C> <C>
Passenger $894,789 $849,106
Freight 25,142 21,354
Other 22,722 16,635
Total operating revenues 942,653 887,095
Operating expenses:
Salaries, wages, and benefits 298,232 265,794
Fuel and oil 101,476 134,075
Maintenance materials and repairs 71,489 57,238
Agency commissions 38,448 37,092
Aircraft rentals 50,417 50,382
Landing fees and other rentals 50,554 49,011
Depreciation 51,980 48,386
Other operating expenses 168,364 157,914
Total operating expenses 830,960 799,892
Operating income 111,693 87,203
Other expenses (income):
Interest expense 15,711 15,225
Capitalized interest (6,236) (4,422)
Interest income (7,815) (7,962)
Nonoperating losses (gains), net (4,024) 961
Total other expenses (income) (2,364) 3,802
Income before income taxes 114,057 83,401
Provision for income taxes 44,049 32,527
Net income $70,008 $50,874
Net income per share:
Basic $.31 $.23
Diluted $.30 $.23
Weighted average shares outstanding:
Basic 222,250 217,971
Diluted 235,289 223,477
</TABLE>
See accompanying notes.
<PAGE>
Southwest Airlines Co.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
<S> <C> <C>
Net cash provided by operating activities $215,269 $93,511
Investing activities:
Net purchases of property and equipment (235,972) (115,850)
Financing activities:
Issuance of long-term debt - 98,764
Payment of long-term debt and
capital lease obligations (110,089) (4,944)
Payment of cash dividends (4,437) (3,195)
Proceeds from Employee stock plans 18,834 2,285
Net cash provided by (used in) financing
activities (95,692) 92,910
Net increase (decrease) in cash and
cash equivalents (116,395) 70,571
Cash and cash equivalents at
beginning of period 623,343 581,841
Cash and cash equivalents at end of
period $506,948 $652,412
Cash payments for:
Interest, net of amount
capitalized $20,821 $20,827
Income taxes $635 $215
</TABLE>
See accompanying notes.
<PAGE>
SOUTHWEST AIRLINES CO.
Notes to Condensed Consolidated Financial Statements
1. Basis of presentation - The accompanying unaudited
condensed consolidated financial statements of Southwest Airlines
Co. (Company) 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 March 31, 1998 and 1997 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 months ended March 31, 1998 are not necessarily indicative
of the results that may be expected for the year ended December
31, 1998. 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, 1997.
2. Dividends - During the three month period ended March
31, 1998, dividends of $.01 per share were declared on the
222,680,790 shares of common stock then outstanding. During the
three month period ended March 31, 1997, dividends of $.0077 per
share were declared on the 218,002,715 shares of common stock then
outstanding.
3. Long-term debt - During February 1998, the Company
redeemed $100 million in senior unsecured 9 1/4% Notes due
February, 15, 1998, originally issued February 1991. The Notes
were redeemed at par plus accrued interest.
4. Reclassifications - Certain prior year amounts have been
reclassified for comparison purposes.
5. Common stock - On September 25, 1997, the Company's
Board of Directors declared a three-for-two stock split,
distributing 73,577,983 shares on November 26, 1997. All per
share data presented in the accompanying consolidated financial
statements and notes thereto have been restated for the stock
split.
<PAGE>
6. Net income per share - The following table sets forth the
computation of basic and diluted earnings per share (in thousands
except per share amounts):
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
<S> <C> <C>
NUMERATOR:
Net income, available to common
stockholders - numerator for basic and
diluted earnings per share $70,008 $50,874
DENOMINATOR:
Weighted-average shares
outstanding, basic 222,250 217,971
Dilutive effect of Employee stock
options 13,039 5,506
Adjusted weighted-average shares
outstanding, diluted 235,289 223,477
NET INCOME PER SHARE:
Basic $.31 $.23
Diluted $.30 $.23
</TABLE>
7. Recently issued accounting standards - In 1997, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS 130) and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131), both effective for years beginning after December 15,
1997. SFAS 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of financial
statements and is not expected to have any impact on the Company
as the Company does not currently have any transactions which give
rise to differences between net income and comprehensive income.
SFAS 131 establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim financial
reports. The Company is subject to the new requirements
retroactively in 1998; however, SFAS 131 does not currently result
in additional reported segment disclosures.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Comparative Consolidated Operating Statistics
Relevant operating statistics for the three month periods
ended March 31, 1998 and 1997 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997 Change
<S> <C> <C> <C>
Revenue passengers carried 11,848,686 12,046,184 (1.6)%
Revenue passenger miles(RPMs) (000s) 6,898,847 6,533,046 5.6 %
Available seat miles (ASMs) (000s) 11,270,174 10,517,635 7.2 %
Load factor 61.2% 62.1% (0.9) pts.
Average length of passenger haul 582 542 7.4 %
Trips flown 195,177 190,205 2.6 %
Average passenger fare $75.52 $70.49 7.1 %
Passenger revenue yield per RPM $.1297 $.1300 (0.2)%
Operating revenue yield per ASM $.0836 $.0843 (0.8)%
Operating expenses per ASM $.0737 $.0761 (3.2)%
Average fuel cost per gallon $.5022 $.7145 (29.7)%
Number of Employees at period-end 24,151 23,544 2.6 %
Size of fleet at period-end 264 246 7.3 %
</TABLE>
Material Changes in Results of Operations
Consolidated net income for the first quarter ended March 31,
1998 was $70.0 million ($.30 per share, diluted), as compared to
first quarter 1997 net income of $50.9 million ($.23 per share,
diluted), an increase of 37.6%.
First quarter 1998 consolidated operating revenues increased
6.3 percent compared to first quarter 1997 primarily due to a 5.4
percent increase in passenger revenues. The increase in passenger
revenues resulted from a 5.6 percent increase in RPMs offset by a
.2 percent decrease in passenger revenue yield per RPM.
<PAGE>
While RPMs in first quarter 1998 increased 5.6 percent,
available seat miles (ASMs) increased 7.2 percent resulting in a
load factor of 61.2 percent versus 62.1 percent for the first
three months of 1997. The increase in ASMs resulted primarily
from the net addition of 18 aircraft since first quarter 1997.
Revenue passengers carried in first quarter 1998 decreased
1.6 percent when compared to first quarter 1997 primarily due to a
7.4 percent increase in average length of passenger haul in first
quarter 1998 coupled with the Easter holiday falling in March in
1997 rather than April as it did in 1998. Despite the lapse of the
ten percent federal excise tax from January 1, 1997 to March 7,
1997, revenue yield per passenger mile in first quarter 1998
remained relatively unchanged when compared to the same period in
1997 primarily due to a 7.1 percent increase in average passenger
fare in 1998.
The load factor for April 1998 was 68.3 percent, compared to
the April 1997 load factor of 60.8 percent. Management believes
the higher load factor for April 1998 was primarily due to
increased promotional activity in April 1998 coupled with the
Easter holiday falling in April 1998 rather than March as it did
in 1997. Thus far, bookings for May and June are also strong.
(The immediately preceding sentence is a forward-looking statement
which involves uncertainties that could result in actual results
differing materially from expected results. Some significant
factors include, but may not be limited to, competitive pressure
such as fare sales and capacity changes by other carriers, general
economic conditions, and variations in advance booking trends.)
Consolidated freight revenues increased 17.7 percent in the
first quarter of 1998 as compared to the same period in 1997 due
to increased capacity and retention of increased business
resulting, in part, from the United Parcel Service labor strike in
third quarter 1997. Other revenues increased 36.6 percent in first
quarter 1998 primarily due to increased revenues from the sale of
frequent flyer segment credits to participating partners in the
Company's Rapid Rewards frequent flyer program.
Operating expenses per ASM for first quarter 1998 decreased
3.2 percent to $.0737, compared to $.0761 for first quarter 1997,
primarily due to a 29.7 percent decline in average jet fuel
prices, partially offset by higher aircraft engine overhaul costs
and higher profitsharing and Employee savings plan contributions.
Excluding jet fuel costs and related taxes, operating expenses per
ASM were up 2.3 percent in first quarter 1998 when compared to
first quarter 1997. Although unit costs are expected to continue
benefiting from lower fuel prices in second quarter 1998 versus
second quarter 1997, total operating expenses per ASM are expected
to increase primarily due to higher maintenance costs. (The
immediately preceding sentence is a forward-looking statement
which involves uncertainties that could result in actual results
differing materially from expected results. Such uncertainties
include, but may not be limited to, the largely unpredictable
levels of jet fuel prices.)
<PAGE>
Southwest Airlines Co.
Operating Expenses per ASM
(in cents except percent change)
<TABLE>
<CAPTION>
Three months ended
March 31,
Increase Percent
1998 1997 (decrease) change
<S> <C> <C> <C> <C>
Salaries, wages, and benefits 2.38 2.30 .08 3.5
Employee profitsharing and savings plans .27 .23 .04 17.4
Fuel and oil .90 1.28 (.38) (29.7)
Maintenance materials and repairs .63 .54 .09 16.7
Agency commissions .34 .35 (.01) (2.9)
Aircraft rentals .45 .48 (.03) (6.3)
Landing fees and other rentals .45 .47 (.02) (4.3)
Depreciation .46 .46 - -
Other operating expenses 1.49 1.50 (.01) (.7)
Total 7.37 7.61 (.24) 3.2
</TABLE>
Salaries, wages, and benefits per ASM increased 3.5 percent
in first quarter 1998 due to, among other things, increased hours
due to weather delays, increased training costs, and increased
health care costs.
The Company's Customer Service and Reservations Sales Agents
are subject to an agreement with the International Association of
Machinists and Aerospace Workers, AFL-CIO (IAM), which became
amendable in November 1997 and is currently under negotiation.
Flight Dispatchers are represented by Southwest Airlines Employees
Association, pursuant to an agreement which became amendable in
November 1997 and is also currently under negotiation.
Profitsharing and Employee savings plan expenses per ASM
increased 17.4 percent from first quarter 1997 to first quarter
1998, primarily due to increased earnings available for
profitsharing in 1998.
Fuel and oil expense per ASM decreased 29.7 percent in first
quarter 1998 due to a corresponding decrease in the average jet
fuel cost per gallon from the same period in 1997. The average
price paid for jet fuel in first quarter 1998 was $.5022 per
gallon, compared to $.7145 per gallon in first quarter 1997. Since
the end of first quarter 1998, fuel prices have averaged below
$.50 per gallon.
Maintenance materials and repairs per ASM increased 16.7
percent for the three months ended March 31, 1998 as compared to
the corresponding period of the prior year. The increase was
primarily due to higher engine overhaul costs in first quarter
1998 when compared to the same period in 1997. The Company had an
unusually low number of aircraft engine overhauls in first quarter
1997. Management believes that the Company's power-by-the-hour
contract with General Electric, which began in August 1997,
resulted in lower first quarter 1998 maintenance costs than the
Company would have otherwise experienced.
Agency commissions per ASM decreased 2.9 percent for the
first quarter of 1998 as compared to the first quarter of 1997,
primarily due to a decrease in the percentage of commissionable
sales.
Aircraft rentals per ASM decreased 6.3 percent for the first
quarter of 1998 as compared to the first quarter of 1997 due to a
lower percentage of the aircraft fleet being leased.
Landing fees and other rentals per ASM decreased 4.3 percent
for first quarter 1998 as compared to first quarter 1997 primarily
due to airport credits received in 1998 coupled with a 4.1 percent
increase in the average aircraft stage length in first quarter
1998.
Other operating expense per ASM decreased .7 percent for
first quarter 1998 as compared to first quarter 1997 primarily due
to lower advertising and credit card processing costs partially
offset by increased costs resulting from the Year 2000 remediation
program.
Other expense (income) for the first quarter of 1998 included
interest expense, capitalized interest, interest income, and
nonoperating gains and losses. Interest expense increased
slightly in first quarter 1998 primarily due to higher average
outstanding debt balances in first quarter 1998. Capitalized
interest increased $1.8 million in first quarter 1998 as a result
of higher first quarter 1998 progress payment balances caused by
Boeing aircraft delivery delays. Interest income decreased
slightly in first quarter 1998 due to lower invested cash
balances. Nonoperating gains in first quarter 1998 include
contractual penalties due from Boeing caused by delays in the
delivery of 737-700 aircraft.
Material Changes in Financial Condition
Net cash provided by operating activities was $215.3 million
for the three months ended March 31, 1998 and $732.3 million for
the 12 months then ended. Cash generated was primarily used to
finance aircraft-related capital expenditures and provide working
capital.
During the 12 months ended March 31, 1998, net capital
expenditures were $809.0 million, which primarily related to the
purchase of six new 737-700 aircraft, twelve new 737-300 aircraft,
two used 737-300 aircraft, and progress payments for future
aircraft deliveries.
During February 1998, the Company redeemed the $100 million
senior unsecured 9 1/4% Notes due February, 15, 1998 issued in
February 1991.
The Company recently announced new service to Manchester, New
Hampshire beginning June 7, 1998, with nonstop service to
Baltimore/Washington, Chicago Midway, Nashville, and Orlando.
As of March 31, 1998, the Company had authority from its
Board of Directors to purchase up to 2,500,000 shares of its
common stock from time to time on the open market. No shares have
been purchased since 1990.
The Company's contractual commitments consist primarily of
scheduled aircraft acquisitions. As of April 30, 1998, eighteen
737-700s are scheduled for delivery in the remainder of 1998, 25
in 1999, 24 in 2000, 21 in 2001, 21 in 2002, eight in 2003, and
five in 2004. In addition, the Company has options to purchase up
to sixty-two 737-700s during 2003-2006. 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 scheduled
subsequent to 1999. Aggregate funding needed for these commitments
was approximately $2,857.7 million at April 30, 1998 due as follows:
$318.2 million in 1998; $753.0 million in 1999; $592.7 million in
2000; $510.1 million in 2001; $428.4 million in 2002; $166.2 million
in 2003; and $89.1 million in 2004.
During first quarter 1998, Boeing continued to experience
production delays related to the 737 production line. As of April
30, 1998, Southwest had leased or purchased four used 737-300
aircraft which became available on the open market, and expects to
acquire a fifth used aircraft in May 1998. These additional
aircraft partially mitigate the impact of the Boeing delays on
operations. Boeing currently expects delays to continue in 1998,
which will also delay further expansion to new cities to 1999.
Boeing will continue to compensate Southwest for these delivery
delays.
The Company has various options available to meet its capital
and operating commitments, including cash on hand at March 31,
1998 of $506.9 million, internally generated funds, and a
revolving credit line with a group of banks of up to $475 million
(none of which had been drawn at March 31, 1998). In addition,
the Company will also consider various borrowing or leasing
options to maximize earnings and supplement cash requirements.
The Company currently has outstanding shelf registrations for
the issuance of $414 million in public debt securities which it
currently intends to substantially utilize for aircraft financings
during 1998, 1999, and 2000.
Impact of the Year 2000
The Company is currently converting its computer systems to
be year 2000 compliant and expects to have the conversion
substantially completed by March 31, 1999. The Company has
expensed $5.1 million ($1.1 million in first quarter 1998) of
costs incurred to date related to the year 2000 issue. The total
remaining cost of the year 2000 project is presently estimated at
$13.9 million, which will be expensed as incurred. The costs of
the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's
best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain
resources. There can be no guarantee that these estimates will be
achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and
cost of personnel trained in this area and the ability to locate
and correct all relevant computer code.
See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 for additional
information related to the Company's year 2000 issue remediation
efforts.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
There have been no material changes in information required
to be provided under this Item during first quarter 1998. See Item
7A. Quantitative and Qualitative Disclosures About Market Risk in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company received a statutory notice of deficiency
from the Internal Revenue Service (the "IRS") in which
the IRS proposed to disallow deductions claimed by the
Company on its federal income tax returns for the
taxable years 1989 through 1991 for the costs of certain
aircraft inspection and maintenance procedures. The IRS
has proposed similar adjustments to the tax returns of
numerous other members of the airline industry. In
response to the statutory notice of deficiency, the
Company filed a petition in the United States Tax court
on October 30, 1997, seeking a determination that the
IRS erred in disallowing the deductions claimed by the
Company and that there is no deficiency in the Company's
tax liability for the taxable years in issue. It is
expected that the Tax Court's decision will not be
entered for several years. Management believes that the
final resolution of this controversy will not have a
materially adverse effect upon the results of operations
of the Company. This forward-looking statement is based
on management's current understanding of the relevant
law and facts; it is subject to various contingencies
including the views of legal counsel, changes in the
IRS' position, the potential cost and risk associated
with litigation and the actions of the IRS, judges and
juries.
Item 2. Changes in Securities
Recent Sales of Unregistered Securities
During the first quarter of 1998, Herbert D. Kelleher
exercised unregistered options to purchase Southwest
Common Stock as follows:
<TABLE>
<CAPTION>
Number of Shares Date of
Purchased Exercise Price Exercise
<S> <C> <C> <C>
151,875 $1.00 1/9/98
20,000 $4.0139 1/28/98
</TABLE>
The issuance of the above shares to Mr. Kelleher were
deemed exempt from the registration provisions of the
Securities Act of 1933, as amended (the "Act"), by
reason of the provision of Section 4(2) of the Act
because, among other things, of the limited number of
participants in such transactions and the agreement and
representation of Mr. Kelleher that he was acquiring
such securities for investment and not with a view to
distribution thereof. The certificates representing the
shares issued to Mr. Kelleher contain a legend to the
effect that such shares are not registered under the Act
and may not be transferred except pursuant to a
registration statement which has become effective under
the Act or to an exemption from such registration. The
issuance of such shares was not underwritten.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Effective December 31, 1998, Gary A. Barron has elected
to relinquish his position as executive vice president-
chief operations officer. Barron, 53, will, however,
remain an executive vice president of Southwest Airlines
through at least December 31, 2000, with
responsibilities primarily in the labor relations area.
James C. Wimberly, formerly vice president-ground
operations, will transition under Barron's direction for
the remainder of this year, and on January 1, 1999, will
replace Barron as executive vice president-chief
operations officer. Flight operations; inflight
services; maintenance; fuel management; and ground
operations will report to Wimberly, 45, in his new
position.
Dave Ridley has been named vice president-ground
operations, effective May 1, 1998. Ridley, 45, was vice
president-marketing and sales, and will now oversee the
8,000 Employees who work in cargo; customer service; and
ramp and operations at the Company's 52 airport
locations. He will also become a member of the Company's
Executive Planning Committee.
Joyce C. Rogge became vice president-marketing and the
Company's sole marketing officer effective May 1, 1998.
Previously, Rogge, 40, was vice president-advertising
and promotions, and shared responsibility for marketing
and pricing with Ridley. In her new position, she will
also oversee field marketing; product distribution; and
the group and packages business.
Effective May 1, 1998, Donna D. Conover has been named
vice president-inflight service and provisioning,
replacing William Q. Miller, 54, who previously
announced his retirement as head of inflight. Conover,
45, was director-system support for ground operations
and will now oversee approximately 4,500 flight
attendants as well as the aircraft provisioning
function.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(27) Financial Data Schedule
b) Reports on Form 8-K
None
<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>
May 14, 1998 /s/ Gary C. Kelly
Date Gary C. Kelly
Vice President - Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
(27) Financial Data Schedule
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092380
<NAME> SOUTHWEST AIRLINES CO.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 506,948
<SECURITIES> 0
<RECEIVABLES> 116,533
<ALLOWANCES> 0
<INVENTORY> 47,918
<CURRENT-ASSETS> 721,212
<PP&E> 5,037,877
<DEPRECIATION> 1,424,036
<TOTAL-ASSETS> 4,339,211
<CURRENT-LIABILITIES> 886,294
<BONDS> 0
0
0
<COMMON> 222,958
<OTHER-SE> 1,872,675
<TOTAL-LIABILITY-AND-EQUITY> 4,339,211
<SALES> 0
<TOTAL-REVENUES> 942,653
<CGS> 0
<TOTAL-COSTS> 830,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,711
<INCOME-PRETAX> 114,057
<INCOME-TAX> 44,049
<INCOME-CONTINUING> 70,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,008
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.30
</TABLE>
