Southwest is evolving its customer experience by assigning seats, premium seating options, redesigning the boarding model, and introducing redeye flights. This marks a significant shift from its traditional open seating model, potentially attracting new customers and increasing revenue.

Available seat miles (ASMs) increased by 8.6% year-over-year in Q2 2024. While this capacity growth contributed to overall revenue increases, it also put downward pressure on unit revenue (RASM).

The company received five 737-8 aircraft deliveries and retired six 737-700s and one 737-800 aircraft during Q2 2024. However, continued delays in Boeing deliveries, particularly for the 737-7, present ongoing planning challenges and necessitate capacity adjustments.

Management highlights a focus on operational excellence and reliability, regaining efficiencies, and increasing productivity. This suggests a commitment to improving operational performance after previous disruptions.

Operating expenses increased 11.4% year-over-year, with significant increases in salaries, wages, benefits, and maintenance. This indicates challenges in controlling costs despite revenue growth.

The Company has conservatively re-planned its capacity and delivery expectations for the remainder of the year and for 2025. The Company will continue to closely monitor the ongoing aircraft delivery delays with Boeing and adjust expectations, conservatively, as needed.

The 10-Q explicitly identifies activist shareholder actions as a risk factor that could negatively affect the Company's business, strategic direction, and results. Elliott Investment Management's significant stake and advocacy for changes are specifically mentioned.

The report repeatedly mentions continued aircraft delivery delays from Boeing, which impact capacity planning and fleet modernization efforts. These delays are a recurring theme and a significant risk factor.

The 10-Q details various ongoing legal proceedings, including class action lawsuits and government inquiries related to capacity and the December 2022 operational disruption. These represent potential liabilities and legal expenses.

The report notes that industry-wide domestic capacity growth is outpacing demand, contributing to a decline in passenger revenue yield per RPM (cents). This indicates increased competition and pricing pressure in the airline industry.

The company is moving forward with plans to assign seats, offer premium seating options, redesign the boarding model, and introduce redeye (i.e., overnight) flying. This is a strategic shift to compete with legacy carriers.

The Company's Rapid Rewards loyalty program had record second quarter new Member additions and an all-time quarterly record level of Member engagement, as measured by an all-time quarterly record spend on the Company's co-branded Chase Visa credit card.

Operating expenses per ASM increased by 2.6%, indicating challenges in improving operational efficiency. This increase is driven by higher fuel and oil expenses, and maintenance material and repair expenses.

Available seat miles per gallon increased 1.1% year-over-year, due to operating more fuel-efficient MAX aircraft. This indicates some progress in improving fuel efficiency.

Maintenance materials and repairs expense increased by 29.2%, driven by engine shop visits, airframe repairs and bulk purchases of materials for seat refurbishment. This suggests potential operational bottlenecks or aging fleet issues.

The company transitioned to a modernized Origin and Destination revenue management system that consistently produced superior results to its prior leg-based revenue management system during an eighteen-month long parallel test prior to launch.

Other operating expenses increased due to higher professional fees driven by an increase in spend on technology enhancements and replacement projects

Federal securities lawsuits allege that the Company made material misstatements to investors regarding the Company’s internal technology and alleged vulnerability to large-scale flight disruptions

The Company continues to estimate its 2024 capital spending to be roughly $2.5 billion, which includes approximately $1.0 billion in aircraft capital spending.

In second quarter 2024, the Company repurchased and terminated the Company's outstanding stock warrants that were previously issued in connection with the Payroll Support Program.

The Company has suspended share repurchase activity until further notice. The Company has approximately $899 million remaining under its current share repurchase authorization.

As part of its commitment to corporate sustainability, the Company published its 2023 One Report and Diversity, Equity, and Inclusion Report on May 8, 2024. These reports describe the Company's sustainability strategies.

The continued deliveries of MAX aircraft are expected to remain critical to the Company's efforts to modernize its fleet, reduce carbon emissions intensity, and achieve its near-term environmental sustainability goals.

While the Company believes that the disclosures contained in the Southwest One Report, the DEI Report, and other voluntary disclosures regarding environmental, social, and governance (“ESG”) matters are responsive to various areas of investor interest, the Company believes that certain of these disclosures address matters that are currently not material in the near term to the Company's operations, strategy, financial condition, or financial results

The Company's Rapid Rewards® loyalty program had record second quarter new Member additions and an all-time quarterly record level of Member engagement, as measured by an all-time quarterly record spend on the Company's co-branded Chase® Visa credit card. Second quarter 2024 managed business revenues (defined as travel booked through the Company's managed business tools) continued to improve on a year-over-year basis. Despite the record revenue performance, second quarter 2024 RASM was 15.90 cents, finishing 3.8 percent lower than second quarter 2023, primarily driven by industry-wide domestic capacity growth outpacing demand.

The Company is also subject to the risk that the fuel derivatives it uses to hedge against fuel price volatility do not provide adequate protection.

The Company and Boeing are in ongoing discussions regarding the negative financial impacts to the Company as a result of aircraft delivery delays.