Stifel 2017 Transportation & Logistics Conference Tammy Romo, EVP and CFO

This presentation 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. Forward-looking statements are based on, and include statements about, the Company’s estimates, expectations, beliefs, intentions, and strategies for the future, and are not guarantees of future performance. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include without limitation statements related to (i) the Company’s financial goals, strategies, expectations, opportunities, and outlook, and its projected results of operations, including factors expected to impact the Company’s results of operations; (ii) the Company’s expectations and goals with respect to returning value to Shareholders; (iii) the Company’s plans and expectations with respect to its new reservation system and other technology initiatives, and the Company’s related multi-faceted financial and operational expectations and opportunities; and (iv) the Company’s vision. Forward-looking 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) changes in demand for the Company’s services and other changes in consumer behavior; (ii) the impact of economic conditions, fuel prices, actions of competitors (including, without limitation, pricing, scheduling, and capacity decisions and consolidation and alliance activities), governmental actions, and other factors beyond the Company’s control, on the Company’s business decisions, plans, and strategies; (iii) the Company’s dependence on third parties, in particular with respect to its technology plans; (iv) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (v) the impact of labor matters on the Company’s business decisions, plans, strategies, and costs; and (vi) 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, 2016.

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Cautionary Statement Regarding Forward-Looking Statements

Competitive differentiators

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Unmatched profitability record with cost discipline and a strong balance sheet

Outstanding Customer Service and Hospitality that drives brand loyalty and recognition

Low fares and a point-to-point network that support market leadership and scale

The best People and Culture in the industry

Reliable, efficient operations

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An outstanding year!

Sustaining a strong financial position

5 1Includes off balance sheet aircraft leases. Note: Information presented is for the year ended December 31, 2016.

Investment grade rating by

all three agencies

• Cash flow from operations of $4.3 billion

• Capital spending of $2.0 billion

• Debt repayments of $523 million

• Debt issuances of $515 million

• $3.3 billion in unrestricted core cash and short-

term investments and $1 billion line of credit fully undrawn and available

• Balance Sheet leverage of 32.5%1

Balanced capital deployment

Strong balance sheet

Returned nearly $2.0 billion to

Shareholders in 2016

Southwest is focused on preserving a strong balance sheet and healthy cash flows while returning significant value to Shareholders

Significant returns to Shareholders

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$0

$100

$200

$300

$400

$500

$600

$700

2011 2012 2013 2014 2015 2016

Tota

l Cum

ulat

ive

Ret

urn

- Dol

lars

SouthwestNYSE Arca AirlineS&P 500

Low cost advantage

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While the gap to the industry has contracted over the past 10 years, we are committed to preserving a meaningful competitive cost advantage

Source: DOT form 41 and T100 data, through September 30, 2016. Stage-length adjusted for Southwest’s average stage-length, represents domestic mainline. 1Network airlines: AA, AQ, DL, HP (post-AA merger), NW, TW, UA, US 2LCC airlines: B6, VX, G4, NK, F9, HP (pre-AA merger), FL (pre-WN merger)

(in c

ents

)

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1Q 2000 3Q 2016

SouthwestNetworkLCC

1

2

Customer Experience builds loyalty

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“It’s a good experience. I feel a sense of Hospitality that other airlines do not have.”

• 100% seat availability • No blackout dates • Points don’t expire

Rapid Rewards®

Frequent Flyer Program • Live TV • $8 Wi-Fi flat rate per day • Complimentary snacks and beverages

Exceptional Inflight Offerings

Consistently loved and recognized brand

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• InsideFlyer’s 2016 Airline

Program of the Year for Rapid Rewards

• Best Airline (Domestic) and Best Loyalty Credit Card in MONEY Magazine’s Best in Travel Awards

• Air Forwarders Association’s Domestic Carrier of the Year

• Ranked among top Airline Rewards Programs by U.S News & World Report

Awards in 2016

60%

65%

70%

75%

2015 2016

Net Promoter Score

Named in the Top 10 of FORTUNE’S World’s Most Admired Companies

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With Transfarency, we say YES! to our Customers

Culture of celebration & appreciation

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Mission to our Employees

We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.

Our network in 1996

12 Source: EDW DOT Traffic December 1996

By 2006…

13 Source: EDW DOT Traffic December 2006

… and today

14 Source: Diio schedules December 2016

The evolution of our network

15 11996 market share based on enplaned passengers; 2006 and 2016 market share based on revenue passengers. 22006 includes 32 states and the District of Columbia; 2016 includes 40 states, the District of Columbia, and the Commonwealth of Puerto Rico. 3Before taxes and excluding special items.

The expansion of our robust network has driven meaningful results

1996 2006 2016

Daily departures >2,100 >3,200 >3,900

Market share1 11% 18% 24%

Number of cities 49 63 101

Number of states2 24 32 40

Number of countries 1 1 9

Fleet 243 481 723

ROIC3 12% 11% 30%

The nation’s largest domestic airline

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30% 20%

14%

LA Basin (LAX, LGB, ONT, SNA, BUR)

32% 25%

17%

DC/BWI Area (BWI, DCA, IAD)

37% 26%

14%

Denver

Source: Data presented herein as measured by the Department of Transportation O&D Survey for the twelve months ended September 30th, 2016 based on domestic originating passengers boarded. O&D stands for Origin and Destination. 1Metro Areas: An area around a city that includes multiple major airports. 2In terms of domestic passenger traffic. 3Co-terminal: Airports that share a common city or region; for example Newark, LaGuardia and JFK are considered co-terminals to one another.

• 24% of total domestic market share • Market leader in 25 of the top 50

U.S. metro areas1,2 • 67% market share in Southwest

Airlines’ top 100 O&D city pairs • Serve (offer itineraries for sale)

95 of the top 100 domestic O&D city pairs (including co-terminal airports3)

Market share

LUV OA #1 OA #2

32% 22%

15%

Bay Area (OAK, SFO, SJC)

37%

11% 10%

Las Vegas

41% 34%

10%

Phoenix

Focus on Reliability

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2.0

2.5

3.0

3.5

4.0

2015 2016

Baggage Delivery Rate

78%

79%

80%

81%

82%

2015 2016

Ontime Performance

With record passengers in 2016, improvements in OTP and baggage delivery rate were notable operational achievements

Operational initiatives

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Winter Storms

Hercules 2014

Thor 2015

Jonas 2016

Ontime Performance 29.4% 60.8% 72.7%

Bags Mishandled per 1,000 Customers 11.60 4.10 2.69

Customers Delayed Over Two Hours 156,762 28,270 6,584

120+ Minute Tarmac Events 41 5 1

Single reservation system in May 2017!

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New Reservation

System

• Electronic Miscellaneous Documents (EMDs) for ancillary services

• Interline & codeshare • Foreign currency • Foreign point of sale • New distribution capabilities

• O&D Controls • Improved fare flexibility • Ancillary controls

• IROPS automation & optimization • Mobile enhancements at airport • Standby capability & policy

improvements

• Schedule variation • Increased days of inventory • Redeyes • Improved connection times

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Purpose Connect People to what’s important in

their lives through friendly, reliable, and low-cost air travel.

Vision To become the world’s most loved,

most flown, and most profitable airline.

Non-GAAP Reconciliation

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1Net adjustment related to presumption that all aircraft in fleet are owned (i.e., the impact of eliminating aircraft rent expense and replacing with estimated depreciation expense for those same aircraft). 2Average Invested Capital is an average of the five most recent quarter end balances of debt, net present value of aircraft leases, and equity adjusted for hedge accounting.

2016

Net income (loss), as reported 2,244$ Add: Union contract bonuses 356 Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods 9 Add (Deduct): Ineffectiveness from fuel hedges settling in future periods (11) Add (Deduct): Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications) (197) Add: Lease termination expense 22 Add (Deduct): Income tax impact of fuel and special items1 (74) Net income, non-GAAP 2,370$

Year ended December 31,

1Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.

2016 2006 1996Operating income, as reported 3,760$ 934$ 351$ Union contract bonuses 356 - - Net impact from fuel contracts (202) 41 - Asset impariment 21 - - Lease termination expense 22 - - Operating income, non-GAAP 3,957$ 975$ 351$ Net adjustment for aircraft leases1 111 72 84 Adjustment for fuel hedge accounting (152) (52) - Adjusted Operating income, non-GAAP 3,916$ 995$ 435$

Average invested capital2 12,152$ 9,667$ 3,674$ Equity adjustment for hedge accounting 886 (897) - Adjusted average invested capital 13,038$ 8,770$ 3,674$

ROIC, pre-tax 30% 11% 12%

Twelve months ended December 31,

Thank you

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