SOUTHWEST AIRLINES COLUV

SOUTHWEST AIRLINES CO Earnings Per Share Disclosure

10-KFiled Feb 5, 20262 min read
NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted net income per share (in millions except per share amounts). Basic net income per share is calculated by dividing net income by the weighted average of shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. An immaterial number of shares related to the Company's restricted stock units were excluded from the denominator for the fiscal years ended December 31, 2024 and 2023 because inclusion of such shares would be antidilutive. There were no antidilutive restricted stock units for the fiscal year ended December 31, 2025. During second quarter 2025, the Company's remaining balance of 1.25 percent Convertible Senior Notes due 2025 (the "Convertible Notes") of
$1.6 billion was repaid, settling both principal and accrued interest. Since they were outstanding for a portion of the period prior to repayment, the Convertible Notes had a weighted-average dilutive impact on the net income per share calculation for the year ended December 31, 2025.
Year ended December 31,
 202520242023
NUMERATOR:  
Net income$441 $465 $465 
Add: Interest expense (a)6 20 19 
Deduct: Unrealized mark-to market adjustment on forward contract (a)(b)(5)— — 
Net income attributable to common stockholders$442 $485 $484 
DENOMINATOR:  
Weighted-average shares outstanding, basic540 598 595 
Dilutive effects of convertible notes15 43 43 
Dilutive effect of restricted stock units3 2 2 
Adjusted weighted-average shares outstanding, diluted558 643 640 
NET INCOME PER SHARE:  
Basic$0.82 $0.78 $0.78 
Diluted$0.79 $0.76 $0.76 
(a) Net of profitsharing benefit and income taxes
(b) See Note 8 for further information

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

Other Available Disclosures

Income TaxesRevenueFair ValueLeasesDebtCommitmentsStock CompensationNew StandardsPay vs Performance