Form: 8-K

Current report filing

January 17, 2007

Documents


 

 

 
CONTACT: Investor Relations  (214) 792-4415
 
SOUTHWEST AIRLINES REPORTS FOURTH QUARTER EARNINGS AND
34TH CONSECUTIVE YEAR OF PROFITABILITY
2006 RECORD REVENUES OF $9.1 BILLION, UP 20 PERCENT

 
DALLAS, TEXAS - January 17, 2007 - Southwest Airlines (NYSE:LUV) today reported its fourth quarter and full year 2006 results. Net income for fourth quarter 2006 was $57 million, or $.07 per diluted share, compared to $70 million, or $.09 per diluted share, for fourth quarter 2005, including special items for both years. Excluding these special items, fourth quarter 2006 net income was $96 million, or $.12 per diluted share, compared to $81 million, or $.10 per diluted share, for fourth quarter 2005. These results are in line with First Call’s mean estimate of $.12 per diluted share for fourth quarter 2006. For the full year 2006, net income was $499 million, or $.61 per diluted share, compared to $484 million, or $.60 per diluted share, for 2005. Excluding special items, 2006 net income was $587 million, or $.71 per diluted share, compared to $425 million, or $.53 per diluted share for 2005. (Refer to the reconciliation in the accompanying tables for further information regarding special items.)

Fourth Quarter 2006 Financial Highlights:
·  
Record revenues of $2.3 billion, up 15 percent
·  
Net income, excluding special items, of $96 million, up 19 percent
·  
Net income per diluted share, excluding special items, of $.12, up 20 percent

Full Year 2006 Financial Highlights:
·  
Record revenues of $9.1 billion, up 20 percent
·  
Net income, excluding special items, of $587 million, up 38 percent
·  
Net income per diluted share, excluding special items, of $.71, up 34 percent
·  
Repurchased 49 million shares of common stock for a total of $800 million

Gary C. Kelly, CEO, stated: “We are delighted with our 2006 earnings performance, which represented our 34th consecutive year of profitability. Our earnings, excluding special items, increased 38 percent from 2005, far exceeding our goal. With almost 50 percent higher jet fuel costs per gallon, and the security related challenges we faced during the latter part of the year, our Employees had to put forth a tremendous effort to achieve these outstanding results. And, they did. As a result of our People's hard work, innovation, and Warrior Spirit, we continued to improve our efficiency and solidify our position as the Low Cost Leader. As a great place to work with the best Employees, and the Low Cost/Low Fare Leader for the last 35 years, Southwest has democratized the skies with low fares and high quality service to our Customers. As a result of this unwavering commitment, Southwest Airlines now carries the most passengers of any U.S. airline, according to the most recently published monthly figures released by the U.S. Department of Transportation's Bureau of Transportation Statistics. At the same time, our Employees are more productive than they have been in three decades. These are remarkable accomplishments, and I am extremely proud of our Employees and also grateful to our 84 million Customers served in 2006.  
 
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 “We are very pleased with our solid fourth quarter 2006 earnings performance. Even though our hedged jet fuel cost per gallon increased almost 30 percent, fourth quarter 2006 earnings per diluted share, excluding special items, grew 20 percent to $.12.  Despite growing capacity 10 percent, and the lingering effects of the August London terrorist threat and related carryon restrictions, we achieved a record fourth quarter 2006 load factor of 70.2 percent at healthy yields, which resulted in a steady unit revenue growth rate of 4.2 percent. Based upon our traffic and bookings to date, we expect 2007 first quarter year-over-year unit revenue growth to remain steady. 
“Our fourth quarter 2006 unit costs (economic) increased 3.0 percent due to higher jet fuel prices. Even with a superb fuel hedging position and $118 million in fourth quarter 2006 cash hedging gains, our jet fuel costs per gallon (economic) increased 28 percent from a year ago to $1.56, as expected. We are benefiting from the recent decline in energy prices and are now 100 percent hedged (economic) for first quarter 2007, capped at an average crude-equivalent price of approximately $50 per barrel (compared to over 75 percent hedged at approximately $36 per barrel for first quarter 2006).
"Based on this hedge position and today's market prices, we are forecasting our first quarter 2007 jet fuel costs per gallon (economic) to be in the $1.65 to $1.70 range. We are nearly 95 percent hedged (economic) for the remainder of 2007 at approximately $50 per barrel; 65 percent in 2008 at approximately $49 per barrel; over 50 percent in 2009 at approximately $51 per barrel; over 25 percent in 2010 at $63 per barrel; approximately 15 percent in 2011 at $64 per barrel, and 15 percent in 2012 at $63 per barrel.
“Excluding fuel, our fourth quarter 2006 unit costs were down 3.3 percent compared with a year ago, which is another excellent performance. Based on current cost trends, we expect our first quarter 2007 unit costs, excluding fuel, to increase from fourth quarter 2006’s stellar performance of 6.46 cents. For the full year 2006, our unit costs, excluding fuel, were flat with 2005, right in line with our goals.
"We are pleased with the Customer response to our new service to Washington Dulles International Airport, which was introduced at the beginning of fourth quarter 2006. We are also elated with the strong Customer demand for our new low fare service that we added to and from Dallas Love Field following the implementation of the Wright Amendment Reform Act of 2006, which increased fourth quarter 2006 revenues by approximately $11 million.
 
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"We are very excited about 2007 and are well-positioned to respond to airline industry changes and consolidation. We have significant growth opportunities with or without consolidation and currently plan to add 37 aircraft in 2007 for an estimated eight percent available seat mile increase. These deliveries will bring our fleet to 518 Boeing 737s by the end of 2007. We also recently exercised one Boeing 737-700 option for delivery in 2008, bringing our 2008 firm orders and options to 30 and 4, respectively.
"Based on our financial strength, competitive position, the current economic environment, and the recent decline in jet fuel prices, our current 2007 outlook is favorable and, barring any unforeseen events, we are hopeful that we can exceed our 15 percent growth target for earnings per diluted share, excluding special items, just as we did in 2006.
"As our People demonstrated in 2006, they are the best, and they are the reason we overcame tremendous challenges and achieved excellent results. Among all airlines in the world, Southwest was named the Best Low-Cost Carrier in the 2006 Executive Travel Leading Edge Awards. For the 10th year in a row, Southwest Airlines was also named among the top ten Most Admired Companies in America by Fortune Magazine. These are but two of the many awards and recognitions that our People earned for Southwest, and I am very proud of them and very grateful to them.”
Southwest will discuss its fourth quarter 2006 results on a conference call at 11:30 a.m. Eastern Time today. A live broadcast of the conference call will be available at southwest.com.

Operating Results
Total operating revenues for fourth quarter 2006 increased 14.5 percent to $2.28 billion, compared to $1.99 billion for fourth quarter 2005. Total fourth quarter 2006 operating expenses were $2.10 billion, compared to $1.85 billion in fourth quarter 2005. Including special items, operating income for fourth quarter 2006 was $174 million, an increase of 24.3 percent, compared to $140 million in fourth quarter 2005. Excluding special items, operating income increased 30.1 percent in fourth quarter 2006, to $173 million from $133 million in fourth quarter 2005.
 
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Operating revenues for the year ended December 31, 2006 increased 19.8 percent to $9.1 billion from 2005, while operating expenses increased 18.9 percent to $8.15 billion, resulting in operating income of $934 million, an increase of $209 million or 28.8 percent. Excluding special items, operating income was $975 million, an increase of $236 million or 31.9 percent. Including the cash benefit of $675 million and $906 million from fuel hedging gains, in 2006 and 2005, respectively, 2006 jet fuel costs per gallon (economic) increased 47.1 percent to $1.50 from the same period in 2005.
   "Other expenses" was $144 million for 2006 versus "other income" of $54 million for 2005. The $198 million swing in total other expenses (income) primarily resulted from $151 million in “other losses” recognized in 2006 versus $90 million in “other gains” recognized in 2005. In both periods, these “other (gains) losses” primarily resulted from unrealized gains/losses associated with Statement of Financial Accounting Standard (SFAS) 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. The cost of the hedging program (which includes the premium costs of derivative contracts) of $52 million in 2006 and $35 million in 2005 is also included in "other (gains) losses."
The fourth quarter 2006 income tax rate of 43.5 percent reflects a $4 million increase to income tax expense, which related to the State of Texas Franchise Tax law enacted in 2006. For the full year, income tax expense decreased by $9 million due to this state law change.  The Company currently expects an effective tax rate of approximately 38 percent in 2007.
                Net cash provided by operations for 2006 was $1.41 billion, which included a $410 million decrease in fuel derivative collateral deposits related to future periods. For the full year 2006, capital expenditures were $1.40 billion, and the Company also repurchased $800 million of its common stock. During fourth quarter 2006, the Company issued $300 million in senior unsecured Notes due 2016 and will redeem $122 million of its debt maturing in 2007. The Company ended 2006 with $1.8 billion in cash and short-term investments, which includes $540 million in fuel derivative collateral deposits. In addition, the Company also had a fully available unsecured revolving credit line of $600 million.
 
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This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Additional information concerning the factors which could cause actual results to differ materially from the forward-looking statements are contained in the Company’s periodic filings with the Securities and Exchange Commission, including without limitation, the Company's Annual Report on Form 10-K for the year ended 2005 and subsequent filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release.



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CONDENSED CONSOLIDATED STATEMENT OF INCOME
                          
(In millions, except per share amounts)
                          
(unaudited)
                          
                           
                           
                           
   
Three months ended
  
Year Ended
  
   
December 31,
  
December 31,
  
           
Percent
          
Percent
  
   
2006
 
2005
 
Change
  
2006
 
2005
 
Change
  
                           
OPERATING REVENUES:
                          
Passenger
  
$
2,191
  
$
1,906
    
15.0
 
$
8,750
  
$
7,279
    
20.2
 
Freight
    
32
   
35
   
(8.6)
 
  
134
   
133
   
0.8
 
Other
    
53
   
46
   
15.2
   
202
   
172
   
17.4
 
Total operating revenues
    
2,276
   
1,987
   
14.5
   
9,086
   
7,584
   
19.8
 
                                   
 
  
OPERATING EXPENSES:
                                      
Salaries, wages, and benefits
    
779
   
725
   
7.4
   
3,052
   
2,782
   
9.7
 
Fuel and oil
    
557
   
395
   
41.0
   
2,138
   
1,341
   
59.4
 
Maintenance materials and repairs
    
126
   
112
   
12.5
   
468
   
446
   
4.9
 
Aircraft rentals
    
39
   
42
   
(7.1)
 
  
158
   
163
   
(3.1)
 
Landing fees and other rentals
    
121
   
109
   
11.0
   
495
   
454
   
9.0
 
Depreciation and amortization
    
134
   
121
   
10.7
   
515
   
469
   
9.8
 
Other operating expenses
    
346
   
343
   
0.9
   
1,326
   
1,204
   
10.1
 
Total operating expenses
    
2,102
   
1,847
   
13.8
   
8,152
   
6,859
   
18.9
 
                                       
OPERATING INCOME
    
174
   
140
   
24.3
   
934
   
725
   
28.8
 
                                       
OTHER EXPENSES (INCOME):
                                      
Interest expense
    
28
   
32
   
(12.5)
 
  
128
   
122
   
4.9
 
Capitalized interest
    
(13
)
  
(11
)
  
18.2
   
(51
)
  
(39
)
  
30.8
 
Interest income
    
(22
)
  
(16
)
  
37.5
   
(84
)
  
(47
)
  
78.7
 
Other (gains) losses, net
    
80
   
22
   
n.a.
    
151
   
(90
)
  
n.a.
  
Total other expenses (income)
    
73
   
27
   
n.a.
    
144
   
(54
)
  
n.a.
  
                                       
                                       
INCOME BEFORE INCOME TAXES
    
101
   
113
   
(10.6)
 
  
790
   
779
   
1.4
 
PROVISION FOR INCOME TAXES
    
44
   
43
   
2.3
   
291
   
295
   
(1.4)
 
                                       
                                       
NET INCOME
 
$
57
  
$
70
    
(18.6)
 
$
499
  
$
484
    
3.1
 
                                       
                                       
NET INCOME PER SHARE:
                                      
Basic
  
$
.07
  
$
.09
    
(22.2)
 
$
.63
  
$
.61
    
3.3
 
Diluted
  
$
.07
  
$
.09
    
(22.2)
 
$
.61
  
$
.60
    
1.7
 
                                       
WEIGHTED AVERAGE SHARES OUTSTANDING:
                                      
Basic
    
790
   
797
         
795
   
789
       
Diluted
    
813
   
816
         
824
   
806
       

 
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RECONCILIATION OF REPORTED AMOUNTS TO ECONOMIC RESULTS (SEE NOTE)
                  
(in millions, except per share amounts)
                          
(unaudited)
                          
                           
   
Three Months Ended
  
Year Ended
  
   
December 31,
  
December 31,
  
   
 
      
Percent
  
 
      
Percent
  
   
2006
 
2005
 
Change
  
2006
 
2005
 
Change
  
   
 
  
 
      
 
  
 
      
                           
Fuel and oil expense - unhedged
  
$
676
  
$
660
        
$
2,772
  
$
2,233
        
Less: Fuel hedge gains included in fuel and oil expense
    
(119
)
  
(265
)
        
(634
)
  
(892
)
      
GAAP fuel and oil expense, as reported
    
557
   
395
   
41.0
   
2,138
   
1,341
   
59.4
 
Add/(Deduct): Impact from current period settled contracts
                                      
included in Other (gains) losses, net
    
2
   
5
         
20
   
(24
)
      
Add/(Deduct): Fuel contract impact recognized in earnings
                                      
in prior periods for contracts settling in the current period
    
(1
)
  
2
         
(61
)
  
10
       
Fuel and oil expense - economic basis
  
$
558
  
$
402
    
38.8
 
$
2,097
  
$
1,327
    
58.0
 
                                       
                                       
Operating income, as reported
  
$
174
  
$
140
        
$
934
  
$
725
        
Add/(Deduct): Impact from current period settled contracts
                                      
included in Other (gains) losses, net
    
(2
)
  
(5
)
        
(20
)
  
24
       
Add/(Deduct): Fuel contract impact recognized in earnings
                                      
in prior periods for contracts settling in the current period
    
1
   
(2
)
        
61
   
(10
)
      
Operating income - economic fuel basis
  
$
173
  
$
133
    
30.1
 
$
975
  
$
739
    
31.9
 
                                       
                                       
Other (gains) losses, net, as reported
  
$
80
  
$
22
        
$
151
  
$
(90
)
      
Add/(Deduct): Mark-to-market impact from fuel contracts
                                      
settling in future periods
    
(34
)
  
(8
)
        
(42
)
  
77
       
Add/(Deduct): Ineffectiveness from fuel hedges settling in future periods
    
(28
)
  
(11
)
        
(39
)
  
9
       
Add/(Deduct): Impact from current period settled contracts
                                      
included in Other (gains) losses, net
    
(2
)
  
(5
)
        
(20
)
  
24
       
Other (gains) losses, net - economic fuel basis
  
$
16
  
$
(2
)
  
n.a.
 
$
50
  
$
20
    
n.a.
 
                                       
                                       
Net income, as reported
  
$
57
  
$
70
        
$
499
  
$
484
        
Add/(Deduct): Mark-to-market impact from fuel contracts
                                      
settling in future periods
    
34
   
8
         
42
   
(77
)
      
Add/(Deduct): Ineffectiveness from fuel hedges settling in future periods
    
28
   
11
         
39
   
(9
)
      
Add/(Deduct): Fuel contract impact recognized in earnings
                                      
in prior periods for contracts settling in the current period
    
1
   
(2
)
        
61
   
(10
)
      
Income tax impact of unrealized items
    
(24
)
  
(6
)
        
(54
)
  
37
       
Net income - economic fuel basis
  
$
96
  
$
81
    
18.5
 
$
587
  
$
425
    
38.1
 
                                       
                                       
Net income per share, diluted, as reported
  
$
.07
  
$
.09
        
$
.61
  
$
.60
        
Add/(Deduct): Impact of fuel contracts, net of income taxes
    
.05
   
.01
         
.10
   
(.07
)
      
Net income per share, diluted - economic fuel basis
  
$
.12
  
$
.10
    
20.0
 
$
.71
  
$
.53
    
34.0
 
                                       
Note regarding use of non-GAAP financial measures
                                      
The non-GAAP items referred to in this news release are provided as supplemental information, and should not be relied upon as alternative measures to
     
Generally Accepted Accounting Principles (GAAP). These non-GAAP measures include items calculated by the Company on an "economic" basis, which
     
excludes certain unrealized items that are recorded as a result of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities", as amended.
      
The unrealized items consist of gains or losses for derivative instruments that will settle in future accounting periods or gains or losses that have been
     
recognized in prior period results, but which have settled in the current period. This includes ineffectiveness, as defined, for future period instruments and
     
the change in market value for future period derivatives that no longer qualified for special hedge accounting, as defined in SFAS 133.
            
                                       
The Company's management utilizes both the GAAP and the non-GAAP results in this news release to evaluate the Company's performance and believes
      
that comparative analysis of results can be enhanced by excluding the impact of the unrealized items. Management believes in certain cases, the Company's
     
GAAP results are not indicative of the Company's operating performance for the applicable period, nor should they be considered in developing trend analysis
for future periods. In addition, since fuel expense is such a large part of the Company's operating costs and is subject to extreme volatility, the Company
     
believes it is useful to provide investors with the Company's true economic cost of fuel for the periods presented, based on cash settlements from hedging
     
activities including gains or losses recognized in prior periods, but excluding the unrealized impact of hedges that will settle in future periods.
      
 
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SOUTHWEST AIRLINES CO.
                          
COMPARATIVE CONSOLIDATED OPERATING STATISTICS
                          
(unaudited)
                          
                           
   
Three months ended
  
Year ended
  
   
December 31,
  
December 31,
 
   
2006
 
2005
 
Change
  
2006
 
2005
 
Change
  
                           
Revenue passengers carried
    
21,057,097
   
19,485,341
   
8.1
%
  
83,814,823
   
77,693,875
   
7.9
%
Enplaned passengers
    
24,073,919
   
22,225,745
   
8.3
%
  
96,276,907
   
88,379,900
   
8.9
%
Revenue passenger miles (RPMs) (000s)
    
16,799,816
   
15,139,361
   
11.0
%
  
67,691,289
   
60,223,100
   
12.4
%
Available seat miles (ASMs) (000s)
    
23,914,966
   
21,748,689
   
10.0
%
  
92,663,023
   
85,172,795
   
8.8
%
Load factor
    
70.2
%
  
69.6
%
  
0.6
 pts.  
73.1
%
  
70.7
%
  
2.4
 pts.
Average length of passenger haul (miles)
    
798
   
777
   
2.7
%
  
808
   
775
   
4.3
%
Average aircraft stage length (miles)
    
626
   
615
   
1.8
%
  
622
   
607
   
2.5
%
Trips flown
    
279,903
   
259,377
   
7.9
%
  
1,092,331
   
1,028,639
   
6.2
%
Average passenger fare
  
 
$104.07
  
 
$97.83
    
6.4
%
 
$104.40
  
 
$93.68
    
11.4
%
Passenger revenue yield per RPM (cents)
    
13.04
   
12.59
   
3.6
%
  
12.93
   
12.09
   
6.9
%
Operating revenue yield per ASM (cents)
    
9.52
   
9.14
   
4.2
%
  
9.81
   
8.90
   
10.2
%
Operating expenses per ASM (GAAP, in cents)
    
8.79
   
8.49
   
3.5
%
  
8.80
   
8.05
   
9.3
%
Operating expenses per ASM (economic, in cents)
    
8.79
   
8.53
   
3.0
%
  
8.75
   
8.04
   
8.8
%
Operating expenses per ASM, excluding fuel (cents)
    
6.46
   
6.68
   
(3.3
)%
  
6.49
   
6.48
   
0.2
%
Fuel costs per gallon, excluding fuel tax (unhedged)
  
 
$1.89
 
 
$2.01
    
(6.0
)%
 
$1.99
  
 
$1.73
    
15.0
%
Fuel costs per gallon, excluding fuel tax (GAAP)
  
 
$1.55
  
 
$1.20
    
29.2
%
 
$1.53
  
 
$1.03
    
48.5
%
Fuel costs per gallon, excluding fuel tax (economic)
  
$1.56
  
$1.22
    
27.9
%
 
$1.50
  
 
$1.02
    
47.1
%
Fuel consumed, in gallons (millions)
    
357
   
327
   
9.2
%
  
1,389
   
1,287
   
7.9
%
Number of Employees at period-end
    
32,664
   
31,729
   
2.9
%
  
32,664
   
31,729
   
2.9
%
Size of fleet at period-end
   
481
   
445
   
8.1
%
  
481
   
445
   
8.1
%


/more

 
SOUTHWEST AIRLINES CO.
              
CONDENSED CONSOLIDATED BALANCE SHEET
              
(in millions)
             
(unaudited)
              
   
December 31,
   
2006
      
2005
  
               
ASSETS
             
Current assets:
              
Cash and cash equivalents
  
$
1,390
        
$
2,280
  
Short-term investments
    
369
         
251
 
Accounts and other receivables
    
241
         
258
 
Inventories of parts and supplies, at cost
    
181
         
150
 
Fuel derivative contracts
    
369
         
641
 
Prepaid expenses and other current assets
    
51
         
40
 
Total current assets
    
2,601
         
3,620
 
                     
Property and equipment, at cost:
                    
Flight equipment
    
11,769
         
10,592
 
Ground property and equipment
    
1,356
         
1,256
 
Deposits on flight equipment purchase contracts
    
734
         
660
 
     
13,859
         
12,508
 
Less allowance for depreciation and amortization
    
3,765
         
3,296
 
     
10,094
         
9,212
 
Other assets
    
765
         
1,171
 
   
$
13,460
        
$
14,003
  
                     
LIABILITIES & STOCKHOLDERS' EQUITY
                   
Current liabilities:
                    
Accounts payable
  
$
643
        
$
524
  
Accrued liabilities
    
1,323
         
2,074
 
Air traffic liability
    
799
         
649
 
Current maturities of long-term debt
    
122
         
601
 
Total current liabilities
    
2,887
         
3,848
 
                     
Long-term debt less current maturities
    
1,567
         
1,394
 
Deferred income taxes
    
2,104
         
1,681
 
Deferred gains from sale and leaseback of aircraft
    
120
         
136
 
Other deferred liabilities
    
333
         
269
 
Stockholders' equity:
                    
Common stock
    
808
         
802
 
Capital in excess of par value
    
1,142
         
963
 
Retained earnings
    
4,307
         
4,018
 
Accumulated other comprehensive income
    
582
         
892
 
Treasury stock, at cost
    
(390
)
        
-
 
Total stockholders' equity
    
6,449
         
6,675
 
   
$
13,460
        
$
14,003
  

 
/more

 
                 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                  
(in millions)
                  
(unaudited)
  
Three months ended
  
Year ended
  
   
December 31,
  
December 31,
  
   
2006
 
2005
 
2006
 
2005
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Net income
  
$
57
  
$
70
  
$
499
  
$
484
  
Adjustments to reconcile net income to
                         
cash provided by operating activities:
                          
Depreciation and amortization
    
134
   
121
   
515
   
469
 
Deferred income taxes
    
39
   
44
   
277
   
291
 
Amortization of deferred gains on sale and
                          
leaseback of aircraft
    
(4
)
  
(4
)
  
(16
)
  
(16
)
Share-based compensation expense
    
14
   
23
   
80
   
80
 
Excess tax benefit from share-based compensation expense
    
(5
)
  
(28
)
  
(60
)
  
(47
)
Changes in certain assets and liabilities:
                          
Accounts and other receivables
    
24
   
76
   
(5
)
  
(9
)
Other current assets
    
40
   
34
   
87
   
(59
)
Accounts payable and accrued liabilities
    
(50
)
  
(152
)
  
(223
)
  
855
 
Air traffic liability
    
(169
)
  
(126
)
  
150
   
120
 
Other
    
63
   
(26
)
  
102
   
(50
)
Net cash provided by operating activities
    
143
   
32
   
1,406
   
2,118
 
                           
CASH FLOWS FROM INVESTING ACTIVITIES:
                          
Purchases of property and equipment, net
    
(353
)
  
(204
)
  
(1,399
)
  
(1,146
)
Change in short-term investments, net
    
(14
)
  
(66
)
  
(117
)
  
6
 
Payment for assets of ATA Airlines, Inc.
    
-
   
-
   
-
   
(6
)
Debtor in possession loan to ATA Airlines, Inc.
    
-
   
-
   
20
   
-
 
Other investing activities, net
    
-
   
-
   
1
   
-
 
Net cash used in investing activities
    
(367
)
  
(270
)
  
(1,495
)
  
(1,146
)
                           
CASH FLOWS FROM FINANCING ACTIVITIES:
                          
Issuance of long-term debt
    
300
   
-
   
300
   
300
 
Proceeds from Employee stock plans
    
35
   
73
   
260
   
132
 
Payments of long-term debt and capital lease obligations
    
(470
)
  
(12
)
  
(607
)
  
(149
)
Payments of cash dividends
    
-
   
-
   
(14
)
  
(14
)
Repurchase of common stock
    
(200
)
  
-
   
(800
)
  
(55
)
Excess tax benefits from share-based compensation arrangements
    
5
   
28
   
60
   
47
 
Other, net
    
(3
)
  
1
   
-
   
(1
)
Net cash provided by (used in) financing activities
    
(333
)
  
90
   
(801
)
  
260
 
                           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
(557
)
  
(148
)
  
(890
)
  
1,232
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
1,947
   
2,428
   
2,280
   
1,048
 
                           
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  
$
1,390
  
$
2,280
  
$
1,390
  
$
2,280
  

 

/more


SOUTHWEST AIRLINES CO
            
737-700 DELIVERY SCHEDULE
            
                   
                   
 
The Boeing Company
        
         
Purchase
 
Previously
    
 
Firm
 
Options
 
Rights
 
Owned
 
Total
                   
2006
34
          
2*
 
36**
2007
37
              
37
2008
30
  
4
          
34
2009
18
  
18
          
36
2010
10
  
32
          
42
2011
10
  
30
          
40
2012
10
  
30
          
40
2008-2014
-
  
-
  
54
      
54
 
149
 
114
 
54
 
2
 
319
                   
                   
* Acquired two previously owned 737-700 aircraft from Ford Company (one
   during third quarter and one during fourth quarter 2006).
      
**2006 delivery dates: six in first quarter, eleven in second quarter, thirteen
  
     in third quarter and six in fourth quarter.
          
 
 

 
***