Commitments and Contingencies

The Company's contractual order book with The Boeing Company ("Boeing") for 737-7 ("-7") and 737-8 ("-8") aircraft (together, the "MAX aircraft"), which extends to 2031, was designed to support the Company's growth and fleet modernization plans, while also providing significant flexibility and optionality to manage its fleet gauge and size, including opportunities to accelerate fleet modernization efforts. The Company received 13 -8 aircraft deliveries from Boeing in second quarter 2026 and retired 10 aircraft (including five 737-700 ("-700") aircraft and the sale of one -700 aircraft and four 737-800 ("-800") aircraft). In addition, during second quarter 2026, the Company exercised six -7 options for delivery in 2027. During the six months ended June 30, 2026, the Company converted 19 2026 deliveries from -7 to -8 firm orders.

Boeing continues to experience delays in fulfilling its commitments with regards to delivery of MAX aircraft to the Company, primarily as a result of manufacturing challenges and delays in achieving Federal Aviation Administration ("FAA") certification of one of its new aircraft types, the -7, for which Southwest expects to be the launch customer. As a result of Boeing's delivery delays, the Company has previously replanned its capacity and delivery expectations multiple times and will continue to closely monitor the ongoing aircraft delivery delays with Boeing and further adjust expectations as needed.

As of June 30, 2026, the Company had the following firm orders and options for future periods:


	The Boeing Company
	-7 Firm Orders		-8 Firm Orders		-7 or -8 Options		Total

2026	82		85		—		167	(c)
2027	37		46		7		90
2028	15		50		25		90
2029	38		34		18		90
2030	45		—		45		90
2031	45		—		45		90
	262	(a)	215	(b)	140	(b)	617

(a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct.

(b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract.

(c) Includes 23 -8 deliveries received year-to-date through June 30, 2026. In addition, the Company has included 81 of its 2024 and 2025 contractual but undelivered aircraft (27 -7s and 54 -8s) within its 2026 contractual commitments. The 2026 contractual detail is as follows:


	The Boeing Company
	-7 Firm Orders	-8 Firm Orders	Total
2024 Contractual Deliveries	27	—	27
2025 Contractual Deliveries	—	54	54
2026 Contractual Deliveries	55	31	86
2026 Combined Contractual Total	82	85	167

Based on the Company's current agreement with Boeing, capital commitments associated with firm orders as of June 30, 2026, were:


(in billions)	Remainder of 2026			2027		2028		2029		2030		2031		Total
Payments for capital commitments	$	3.9	(a)	$	3.0	$	2.7	$	2.5	$	1.5	$	1.2	$	14.8

(a) Capital commitments associated with the Company's firm orders in 2026 of $3.9 billion include approximately $2.7 billion primarily related to the existing remaining scheduled 86 MAX aircraft to be delivered in 2026 and $1.2 billion related to 58 MAX aircraft (27 -7s and 31 -8s) that were contractually committed for 2024 and 2025, but were not received.

Subsequent to June 30, 2026, and through July 23, 2026, the Company exercised two -7 options for delivery in 2027, resulting in an immaterial change to the Company's capital commitments noted above.

The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business and records a liability for such claims when it is probable that a loss will be incurred and the amount is reasonably estimable.

On December 27, 2019, a former Customer Service Agent at Oakland International Airport, filed a putative class action complaint in the Superior Court of California, for the County of Santa Clara, against the Company alleging the following seven claims under the California Labor Code and Business & Professions Code: (1) failure to provide meal periods; (2) failure to provide rest periods; (3) failure to pay hourly wages; (4) failure to provide accurate wage statements; (5) failure to timely pay all final wages; (6) unfair competition; and (7) civil penalties for the foregoing. Plaintiff filed a First Amended Complaint on October 15, 2021, that asserted the same causes of action and added a named plaintiff. The First Amended Complaint primarily seeks unpaid wages, interest thereon, and associated civil and statutory penalties, along with attorneys’ fees and costs. On February 26, 2025, the Court granted class certification as to the first cause of action for failure to provide meal periods, denied certification on the second through fourth causes of action, and granted certification on the fifth and sixth causes of action only insofar as they are predicated on the first cause of action. The certified class consists of all of the Company’s non-exempt ground Employees in California who worked a shift in excess of five hours for the time period between October 24, 2014, forward. On April 17, 2025, the Company filed a summary judgment motion arguing that Plaintiffs’ first cause of action, and all causes of action predicated thereon, failed as a matter of law. The motion was granted on July 25, 2025. Judgment was entered in favor of the Company on September 2, 2025, and Plaintiffs filed a notice of appeal on September 4, 2025. On May 6, 2026, Plaintiffs filed their opening appellate brief. The Company’s answering brief is due on August 4, 2026. The Company is currently not able to estimate a range of possible loss with regards to the litigation to which it is a defendant.