Deutsche Bank 2017 Global Industrials and Materials Summit Tammy Romo, EVP and CFO

Cautionary Statement Regarding Forward-Looking Statements

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 position, 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 fleet plans and expectations, including with respect to its fleet modernization initiatives, and the Company’s related financial and operational expectations; (iii) the Company’s expectations related to its management of risk associated with changing jet fuel prices; (iv) the Company’s expectations and goals with respect to returning value to Shareholders, including its dividend and share repurchase plans; (v) the Company’s growth plans, strategies, and opportunities, including its network and capacity plans, opportunities, and expectations; (vi) the Company’s operational goals and strategies; (vii) 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 (viii) 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, capacity, and network decisions, and consolidation and alliance activities), 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 fleet and technology plans and expectations; (iv) the impact of governmental regulations and other governmental actions related to the Company's operations; (v) 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; (vi) changes in aircraft fuel prices, the impact of hedge accounting, and any changes to the Company's fuel hedging strategies and positions; (vii) the Company’s ability to timely and effectively prioritize its initiatives and related expenditures; (viii) the impact of labor matters on the Company’s business decisions, plans, strategies, and costs; and (ix) 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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2

Competitive differentiators

3

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

Unmatched profitability record1

4

Chapter 7

Chapter 11

U.S. Airline Industry Bankruptcies, 2000-2011

2005 2004 & 2002 2003

2002 2001 2001

2008 2004 2003

2011 2008 2008 & 2004

2005 2005 2005

1In the U.S. Airline industry.

Southwest has remained profitable for 44 consecutive years

2016: an outstanding year!

3

1Excludes special items. 2ROIC is defined as annual pre-tax return on invested capital, excluding special items. 3Free cash flow is calculated as operating cash flows less capital expenditures less assets constructed for others, net. Note: See reconciliation of reported amounts to non-GAAP financial measures.

First quarter 2017 results

6

27.7% ROIC3

79.9% Load

Factor

$372M Net

income1

$673M Returned to

Shareholders4

$99M Profitsharing

accrual

$1.2B 1Q Record

free cash flow2

$0.61 Diluted EPS1

$4.9B 1Q Record operating revenues

1Excluding special items. 2Free cash flow is calculated as operating cash flows less capital expenditures less assets constructed for others, net. 3ROIC is defined as pre-tax return on invested capital, excluding special items, for the 12 months ended March 31, 2017. 4Returned through a combination of $123 million in dividends and $550 million in share repurchases. Note: See reconciliation of reported amounts to non-GAAP financial measures.

RASM outperformance

7

-15%

-10%

-5%

0%

5%

10%

15%

1Q20

12

2Q20

12

3Q20

12

4Q20

12

1Q20

13

2Q20

13

3Q20

13

4Q20

13

1Q20

14

2Q20

14

3Q20

14

4Q20

14

1Q20

15

2Q20

15

3Q20

15

4Q20

15

1Q20

16

2Q20

16

3Q20

16

4Q20

16

Year

-ove

r-ye

ar

Southwest Industry ex-SWA

1 1Southwest’s 3Q2015 RASM excludes a $172M one-time non-cash special revenue adjustment associated with the Company’s amended agreement with Chase Note: Given data restrictions 4Q2016 is calculated using SEC information, all other data uses Form41; SEC data is not what caused SWA to trail industry RASM Source: DOT, SEC. Stage-length adjusted domestic mainline data, to SWA’s 2016 stage length of 745.

Low cost advantage

8 8

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

(in c

ents

)

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1Q 2000 4Q 2016

SouthwestNetworkLCC

1

2

1Network airlines: Trans World, American, US Airways, Northwest, Delta, Continental, United, America West (post-American merger) 2LCC airlines: JetBlue, Alaska, Virgin America, America West (pre-AA merger), AirTran (pre-Southwest merger), Allegiant, Spirit, Frontier Source: DOT form 41 and T100 data, through December 31, 2016. Stage-length adjusted for Southwest’s average stage-length, represents domestic mainline

Sustaining a strong financial position

9 1Includes off balance sheet aircraft leases. 2Free cash flow is calculated as operating cash flows less capital expenditures less assets constructed for others, net. Note: Information presented is for the quarter ended March 31, 2017, with the exception of Shareholder returns, which are year-to-date in 2017, through May 17, 2017. Nearly $1.1 billion has been returned to Shareholders through a combination of $123 million in dividends and $950 million in share repurchases.

Investment grade rating by

all three agencies

• Cash flow from operations of $1.6 billion

• Capital spending of $414 million

• Debt repayments of $369 million

• Free cash flow of $1.2 billion2

• $3.5 billion in unrestricted core cash and short-

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

• Balance Sheet leverage approximately 31%1

Balanced capital deployment

Strong balance sheet

Returned nearly $1.1 billion to

Shareholders in 2017

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

10

Non-investment grade Investment grade

S&P/ Fitch B- B B+ BB- BB BB+ BBB- BBB BBB+ A-

Moody’s B3 B2 B1 Ba3 Ba2 Ba1 Baa3 Baa2 Baa1 A3

Source: Bloomberg as of June 1, 2017. Moody’s Senior Unsecured rating used (if unavailable, Long Term Corporate Family or Long Term rating used); S&P’s Long Term Issuer rating used; Fitch’s Senior Unsecured rating used (if unavailable, Long-term Issuer rating used). Note: Please see S&P disclaimer language on slide 2.

Industry-leading balance sheet

Returning significant value back to Shareholders

11 1Free cash flow is calculated as operating cash flows less capital expenditures less assets constructed for others, net. 22017 Free cash flow is for the quarter ended March 31, 2017; returns to Shareholders are through May 17, 2017. Note: See reconciliation of reported amounts to non-GAAP financial measures.

$0

$500

$1,000

$1,500

$2,000

$2,500

Free cash flowShare repurchasesDividends

2012 2013 2014 2015 2011 2016

1

>$6.7B Returned to

Shareholders

In May 2017, Southwest BOD authorized a $2 billion share buyback and a 25% increase in the quarterly dividend

YTD 2017 2

Only domestic carrier with decades-long history of returning capital

12 Source: Third party investment firm. Note: <$5MM share repurchase classified to be de minimis.

$0.5 $0.4

<$0.1 $0.1 $0.1 $0.1

<$0.1 $0.1 $0.1 $0.2

$0.1

<$0.1 <$0.1 <$0.1 <$0.1

$0.1

<$0.1 <$0.1 $0.1 <$0.1 $0.1 $0.2 $0.2

<$0.1 <$0.1 <$0.1 $0.1 $0.2 $0.4 $0.6 $0.1 $0.1

‘90 ‘08 ‘09 ‘10 ‘12 ‘13 ‘14 ‘15 ‘11 ‘07 ‘92 ‘93 ‘94 ‘96 ‘97 ‘98 ‘99 ‘95 ‘91 ‘00 ‘02 ‘03 ‘01 ‘05 ‘06 ‘04 ’16

$0.3 $0.5 $0.3 $0.1 <$0.1 $0.3 $0.3 $1.2 $2.6

$0.7 $0.9 $0.9 $1.2 $4.1 $4.6

$0.4 $0.2 $0.7 $0.6 $0.5 $0.6 $0.2 $1.4 $2.6 $0.4 $3.1

$0.1 <$0.1 <$0.1 $0.4 $0.6 $1.1 $1.4 $0.2 $1.0 <$0.1 <$0.1 <$0.1 <$0.1 <$0.1 $0.1 $0.1 <$0.1 <$0.1 $0.1 <$0.1 <$0.1 <$0.0 $0.1 $0.8 $0.3 $2.0

$0.1

$0.3

<$0.1

$0.1

<$0.2

Dividend Only Share Repurchase Only Dividend and Share Repurchase $0.0 Annual Return of Capital ($Bn)

LUV market outperformance

13

$0

$100

$200

$300

$400

$500

$600

$700

2011 2012 2013 2014 2015 2016

Tota

l cum

ulat

ive

retu

rn

(dol

lars

)

SouthwestNYSE Arca AirlineS&P 500

Note: This graph compares the cumulative total shareholder return on the Company’s common stock over the five-year period ended December 31, 2016, with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and the NYSE ARCA Airline Index. The comparison assumes $100 was invested on December 31, 2011, in the Company’s common stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance shown on this graph represents historical stock performance and is not necessarily indicative of future stock price performance.

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 availability1

• No blackout dates • Points don’t expire2

Rapid Rewards®

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

Exceptional Inflight Offerings

1Members are able to redeem their points for every available seat 2Must have points earning activity during the most recent 24 months

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

Ranked #8 in FORTUNE’S 2017 list of the World’s Most Admired Companies, the only commercial airline among the Top 10

Culture of celebration & appreciation

16

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.

The nation’s largest domestic airline

17 Source: Data presented herein as measured by the Department of Transportation O&D Survey for the twelve months ended December 31, 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.

29% 20%

14%

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

32% 25%

17%

DC/BWI Area (BWI, DCA, IAD)

37% 26%

12%

Denver

• 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% 33%

10%

Phoenix

Our network in 1996

18 Source: EDW DOT Traffic December 1996

1996

By 2006…

19 Source: EDW DOT Traffic December 2006

1996 2006

… and today

20 Source: Diio schedules December 2016

2006 2016

The evolution of our network

21

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. 3ROIC is defined as annual pre-tax return on invested capital, excluding special items. Note: See reconciliation of reported amounts to non-GAAP financial measures.

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%

Focus on Reliability

22

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

New reservation system

23

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

24

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

25

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.

in millionsYear ended

December 31,Three months

ended March 31,2016 2017

Net income (loss), as reported 2,244$ 351$ Add: Union contract bonuses 356 - Add: Mark-to-market impact from fuel contracts settling in future periods

9 43

Add (Deduct): Ineffectiveness from fuel hedges settling in future periods

(11) 14

Deduct: Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications)

(197) (29)

Add: Asset impairment 21 - Add: Lease termination expense 22 5 Deduct: Income tax impact of fuel and special items1 (74) (12)

Net income, non-GAAP 2,370$ 372$

Net income per share, diluted, as reported 0.57$ Add: Impact from fuel contracts 0.05 Add: Impact of special items 0.01 Deduct: Income tax impact of fuel and special items1 (0.02)

Net income per share, diluted, non-GAAP 0.61$

Non-GAAP Reconciliation (continued)

26

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). The Company makes this adjustment to enhance comparability to other entities that have different capital structures by utilizing alternative financing decisions. 2The Adjustment for fuel hedge accounting in the numerator is due to the Company's accounting policy decision to classify fuel hedge accounting premiums below the Operating income line, and thus is adjusting Operating income to reflect such policy decision. The Equity adjustment for hedge accounting in the denominator adjusts for the cumulative impacts, in Accumulated other comprehensive income and Retained earnings, of gains and/or losses associated with hedge accounting related to fuel hedge derivatives that will settle in future periods. The current period impact of these gains and/or losses are reflected in the Net impact from fuel contracts in the numerator. 3Calculated as an average of the five most recent quarter end balances or remaining obligations. The Net present value of aircraft operating leases represents the assumption that all aircraft in the Company's fleet are owned, as it reflects the remaining contractual commitments discounted at its estimated incremental borrowing rate as of the time each individual lease was signed. 4Includes the impact of the AirTran acquisition as of May 2, 2011.

in millionsTwelve months

ended March 31,1996 2006 2016 2017

Operating income, as reported 351$ 934$ 3,760$ 3,475$ Union contract bonuses - - 356 356 Net impact from fuel contracts - 41 (202) (248) Asset impairment - - 21 21 Lease termination expense - - 22 27 Operating income, non-GAAP 351$ 975$ 3,957$ 3,631$ Net adjustment for aircraft leases1 84 72 111 108 Adjustment for fuel hedge accounting2 - (52) (152) (151) Adjusted Operating income, non-GAAP (A) 435 995 3,916 3,588

Debt, including capital leases3 668 1,864 3,304 3,282 Equity3 1,538 6,693 7,833 8,002 Net present value of aircraft operating leases3 1,468 1,110 1,015 957 Average invested capital 3,674$ 9,667$ 12,152$ 12,241$ Equity adjustment for hedge accounting2 - (897) 886 698 Adjusted average invested capital (B) 3,674 8,770 13,038 12,939

ROIC, pre-tax (A) / (B) 11.8% 11.3% 30.0% 27.7%

Three months ended March 31,

20114 2012 2013 2015 2016 2017Net cash provided by operating activities 1,356$ 2,064$ 2,477$ 3,238$ 4,293$ 1,625$ Capital expenditures (968) (1,348) (1,433) (2,041) (2,038) (414) Assets constructed for others - - (14) (102) (109) (49) Reimbursement for assets constructed for others - - - 24 107 49 Free cash flow 388$ 716$ 1,030$ 1,119$ 2,253$ 1,211$

Twelve months ended December 31,

Year ended December 31,