Southwest Airlines Returns Value To Shareholders

Increases Quarterly Dividend

Authorizes New Share Repurchase Program

Continues Fleet Modernization

Southwest Airlines (NYSE: LUV) (the "Company") announces the Southwest Airlines Board of Directors, at its meeting held today, increased the Company's quarterly dividend by 25 percent and authorized a new $1.5 billion share repurchase program.  Under the new $1.5 billion share repurchase authorization, the Company intends to repurchase an initial $300 million of Southwest common stock under an accelerated share repurchase program.  The quarterly dividend will increase to $.075 per share from $.06 per share, beginning with the 155th  consecutive quarterly dividend declared today to Shareholders of record at the close of business on June 3, 2015 on all shares then issued and outstanding.  The dividend will be paid on June 24, 2015. Annualized, this increased dividend amounts to approximately $200 million based on approximately 667 million1 shares of common stock outstanding.

Gary C. Kelly, Chairman of the Board, President, and CEO, stated: "Dedicated to returning value to our Shareholders, we returned substantially all of our free cash flow2 to Shareholders in 2014 through $1.1 billion in share repurchases and dividend payments. In recognition of our strong financial position, performance, and cash flow outlook, the Board's actions today further reinforce our commitment to create value for our Shareholders. The Board increased our quarterly dividend payment by 25 percent and authorized a new $1.5 billion share repurchase program, representing the largest single authorization in our long-standing history of share repurchase programs.

"Our balance sheet and liquidity remain strong with cash and short-term investments of approximately $3.2 billion1, and a fully available unsecured revolving credit line of $1 billion.  We remain the only investment grade U.S. airline by all three credit agencies.  Our debt levels are modest, and we continue to prudently manage our invested capital. 

"Our future is bright at Southwest Airlines, with 50 destinations we could potentially add to our route map over time.  Our 2015 fleet and capacity plans remain unchanged with available seat mile (ASM) growth of approximately seven percent, year-over-year, and roughly 700 aircraft projected by year-end.  As an extension of our fleet modernization initiatives, we have designated our 31 Boeing firm orders in 2016 as 737-800s rather than 737-700s, which will bring our -800 fleet to 135 by the end of 2016.  We are planning to grow our total fleet by two percent in 2016, year-over-year. With a significant number of planned retirements, we expect 2016 net aircraft additions to bring our fleet to roughly 715 aircraft by the end of 2016.  We currently estimate year-over-year ASM growth of six to seven percent in 2016.  Approximately five percent of this year-over-year growth represents the full year effect of 2015's expansion.  We are delighted with the results of our 2015 expansion efforts, and we remain focused on deploying our capital with a balanced and disciplined approach to produce strong returns to our Shareholders."

For 2015, the Company has 19 Boeing 737-800 firm orders, and currently intends to take delivery of 19 pre-owned 737-700 aircraft, including two additional pre-owned 737-700s the Company has recently agreed to purchase. For 2016, the Company has 31 Boeing 737-800 firm orders, and currently intends to take delivery of four pre-owned 737-700 aircraft.

Based on these fleet plans, the Company's firm aircraft capital commitments for 2015 are estimated to be approximately $1.1 billion and in the $1.3 billion to $1.4 billion range for 2016. The Company estimates total capital expenditures in 2015 will be approximately $1.8 billion, excluding assets constructed for others, net of reimbursements, estimated to be in the $50 million to $100 million range.

The Company recently completed its previous total $1 billion share repurchase authorization, including $380 million repurchased this year through $300 million under an accelerated share repurchase program launched in February 2015, and $80 million repurchased on the open market.  Under the total $1 billion share repurchase authorization, the Company repurchased approximately 28 million shares.  The Company's share repurchases under the new $1.5 billion repurchase program will be made in accordance with applicable securities laws in open market, private, or accelerated repurchase transactions from time to time, depending on market conditions, but may be discontinued at any time.

^{1 As of May 11, 2015.}

^{2 Free cash flow is a non-GAAP financial measure. The Company believes free cash flow is a meaningful measure because it demonstrates the Company's ability to service its debt, pay dividends and make investments to enhance Shareholder value. Although free cash flow is commonly used as a measure of liquidity, definitions of free cash flow may differ. The Company calculates free cash flow as operating cash flows less capital expenditures less assets constructed for others plus reimbursements for assets constructed for others.}

Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company's network opportunities; (ii) the Company's fleet and capacity plans and projections; and (iii) the Company's plans with respect to capital deployment and the return of value to Shareholders. These forward-looking statements are based on the Company's current intent, expectations, and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of economic conditions, consumer behavior, fuel prices, actions of competitors (including without limitation pricing, scheduling, and capacity decisions and consolidation and alliance activities), and other factors beyond the Company's control, on the Company's business decisions, plans, and strategies; (ii) the Company's dependence on third parties, in particular with respect to its fleet plans; and (iii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Investor Contact:
Southwest Airlines Investor Relations
214-792-4415

Media Contact:
Southwest Airlines Media Relations
214-792-4847

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