v3.26.1
Revenue
 6 Months Ended
Jun. 30, 2026
Revenue from Contract with Customer [Abstract]  
REVENUE REVENUE
Passenger Revenues

The Company’s contracts with its Customers primarily consist of ticket sales, which are initially deferred as Air traffic liability. Passenger revenue associated with tickets is recognized when the performance obligation to the Customer is satisfied, which is primarily when travel is provided. For air travel on Southwest, the amount of tickets (which includes flight credits—also referred to as partial tickets) that will go unused, referred to as breakage, is estimated and recognized in Passenger revenue once the scheduled flight date has passed, in proportion to the pattern of rights exercised by the Customer.

Revenue is categorized by revenue source as the Company believes this best depicts the nature, amount, timing, and uncertainty of revenue and cash flow. The following tables provide the components of Passenger revenue and Other revenue recognized for the three and six months ended June 30, 2026 and 2025:
 Three months ended June 30,Six months ended June 30,
(in millions)2026202520262025
Passenger non-loyalty$6,104 (a)$5,448 $11,292 (a)$10,214 
Passenger loyalty - air transportation766 870 1,454 1,670 
Passenger ancillary sold separately (b)875 309 1,591 554 
Total passenger revenues$7,745 $6,627 $14,337 $12,438 
(a) Includes a reversal of previously recognized breakage revenue of approximately $285 million, related to the periods July 2022 through December 2025. See Note 1 for further information.
(b) The increase in Passenger ancillary sold separately in the three and six months ended June 30, 2026 as compared with the respective prior periods was due to the Company's initiative to implement new ancillary products—bag fees for most fare products beginning May 28, 2025, and operating assigned and extra legroom seating for travel beginning January 27, 2026, which includes the co-brand impact associated with those initiatives.

 Three months ended June 30,Six months ended June 30,
(in millions)2026202520262025
Loyalty program$578 $536 $1,135 $1,081 
Other59 37 117 67 
Total other revenues$637 $573 $1,252 $1,148 

Through the Company's co-branded credit card agreement ("Co-brand Agreement") with JPMorgan Chase Bank, N.A. ("Chase"), the Company sells loyalty points, certain marketing benefits, which consist of the use of the Southwest Airlines brand and access to Rapid Rewards Member lists, licensing and advertising elements, the use of the Company’s resource team, and other airline benefits. The Company allocates consideration received to performance obligations based on the relative standalone selling price of those obligations.

In 2025, the Company and Chase amended the Co-brand Agreement—in the first quarter to extend the term of the agreement and add enhanced airline benefits for Cardmembers associated with the Company's planned assigned and extra legroom seating initiative, which went into effect on January 27, 2026, and again in the second quarter to add benefits to Cardmembers related to the Company's changes in its checked bag policy that went into effect on May 28, 2025. For each change to the agreement, the Company estimated the selling prices and volumes over the term of the amended agreement in order to determine the allocation of proceeds to each of the three performance obligations identified in the agreement, which have been characterized as a transportation component, a marketing component, and an airline benefits component. The allocations utilized are reviewed to determine if adjustment is necessary any time there is a modification to the Co-brand Agreement.

The Company defers revenue for points earned by Customers through the Co-brand Agreement and subsequently records Passenger revenue related to loyalty point redemptions for air travel when the travel is delivered. The marketing elements are recognized as Other revenue and the airline benefits are recognized as Passenger revenue when the performance obligations related to those services are satisfied, which is generally the same period consideration is received from Chase. As a result of the 2025 amendments to the Co-brand Agreement, a larger portion of the Company's co-brand Chase® Visa credit card benefits from Chase are now being classified within Passenger revenues commensurate with the Company's ability to satisfy the associated performance obligations, which began in mid-2025 associated with its change in policy for checked bags, and in first quarter 2026 associated with its implementation of assigned and extra legroom seating initiatives.

As of June 30, 2026, and December 31, 2025, the components of Air traffic liability, including contract liabilities based on tickets sold and unused flight credits available to the Customer, both of which are net of recorded breakage, and loyalty points available for redemption, within the unaudited Condensed Consolidated Balance Sheet were as follows:
 Balance as of
(in millions)June 30, 2026December 31, 2025
Air traffic liability - passenger travel and ancillary passenger services$4,010 $2,830 
Air traffic liability - loyalty program4,174 4,334 
Total Air traffic liability$8,184 $7,164 

The balance in Air traffic liability - passenger travel and ancillary passenger services also includes flight credits not currently associated with a ticket that can be applied by Customers towards the purchase of future travel. These flight credits are typically created as a result of a prior ticket cancellation or exchange, and are recorded net of associated breakage. Rollforwards of the Company's Air traffic liability - loyalty program for the three and six months ended June 30, 2026 and 2025 were as follows:

Three months ended June 30,Six months ended June 30,
(in millions)2026202520262025
Air traffic liability - loyalty program - beginning balance$4,278 $4,841 $4,334 $4,849 
Amounts deferred associated with points awarded695 748 1,357 1,565 
Revenue recognized from points redeemed - Passenger(766)(870)(1,454)(1,670)
Revenue recognized from points redeemed - Other(33)(26)(63)(51)
Air traffic liability - loyalty program - ending balance$4,174 $4,693 $4,174 $4,693 

Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied. Rollforwards of the amounts included in Air traffic liability as of June 30, 2026 and 2025 were as follows:

Six months ended June 30,
(in millions)20262025
Air traffic liability - beginning balance$7,164 $8,242 
Current period sales (a)14,891 12,489 
Revenue from amounts included in contract liability opening balances(3,515)(3,855)
Revenue from current period sales(10,356)(8,580)
Air traffic liability - ending balance$8,184 $8,296 
(a)Current period sales include passenger travel, ancillary services, flight loyalty, and partner loyalty
On May 28, 2025, the Company implemented a change to its flight credit policy. Flight credits created from reservations booked and ticketed or voluntarily changed on or after May 28, 2025, will typically have a specified expiration date of one year or less, depending on the type of fare purchased and form of payment used. Flight credits issued between July 28, 2022, and May 28, 2025, including any future issuances associated with bookings made prior to the policy change on May 28, 2025, do not have an expiration date.

However, some non-expiring flight credits continued to be issued subsequent to May 28, 2025, primarily due to reservations for future travel that were already in place as of that date that were subsequently modified or cancelled. During second quarter 2026, in association with its former policy in which flight credits did not expire, the Company determined that a reversal of a portion of previously recognized breakage revenue was warranted. Approximately $7.9 billion in non-expiring flight credits were issued by the Company between July 2022 and December 2025. The Company had estimated a portion of those non-expiring flight credits would not be redeemed by Customers, and correspondingly recorded estimated breakage for those amounts over those periods. Due to higher-than-projected Customer redemptions of these non-expiring flight credits, along with updated projections of future redemptions, the Company has revised its estimates with regard to the remaining non-expiring flight credits that remain available for redemption. The Company determined that a reversal of a portion of previously recognized
breakage revenue of $285 million was warranted and recorded this adjustment during the three months ended June 30, 2026. This change in breakage revenue, and the corresponding impact to Passenger revenue, is considered a change in estimate (see Note 1 for further clarification).

The Company issues vacation travel credits for cancelled bookings resulting from the Getaways by Southwest™ ("Getaways") product, and these credits have an 18-month expiration period from the original booking date. As the Company believes that a portion of Customer travel credits (both flight credits and Getaways travel credits) issued will not be redeemed, it estimates and records breakage associated with such amounts.
The amount of Customer travel credits represents approximately 6 percent and 5 percent of the total Air traffic liability balance as of June 30, 2026, and December 31, 2025, respectively.