Southwest Airlines Company

Hello, everyone, and welcome to the Southwest Airlines third quarter 2025 conference call. I'm Gary, and I'll be moderating today's call, which is being recorded. A replay will be available on southwest.com in the investor relations section. After today's remarks, there's an opportunity to ask questions. To queue up for an opportunity to ask a question, press star, then one. To withdraw your question, the command is star, then two. Now, Lauren Yett from Investor Relations will begin the discussion. Please go ahead, Lauren.

Thank you. Hello, everyone, and welcome to Southwest Airlines' third quarter 2025 earnings call. In just a moment, we will share our prepared remarks, after which we will move into Q&A. I am joined today by our President, CEO, and Vice Chairman of the Board, Bob Jordan, Chief Operating Officer, Andrew Watterson, and Chief Financial Officer, Tom Doxey. A quick reminder that we will make forward-looking statements, which are based on our current expectation of future performance, and our actual results could differ materially from expectations. Also, we will reference our non-GAAP results, which exclude special items that are called out and reconciled to GAAP results in our earnings press release. Our press release with third quarter 2025 results and supplemental information, including our initiative highlights, were both issued yesterday afternoon and are available on our investor relations website. And now I am pleased to turn the call over to you, Bob.

Thank you, Lauren, and thanks everyone for joining us today. The third quarter was another story of continued strong execution across the board, operational reliability, cost discipline, and the delivery of initiatives against our transformational plan. Southwest continues to transform at a faster pace than ever before. And I'm pleased with the results of our strategic transformation that we saw during the third quarter and the quality of the initiatives delivered. Both costs and revenue finished meaningfully ahead of expectations and the rollout and impact of our initiatives remain firmly on track. We began selling assigned and extra legroom seating in July, a major milestone for our customer experience and product changes. The rollout was smooth and while still early, we're right on track with our expectations and we're already seeing a four point improvement in customer net promoter score on aircraft with this new configuration. Additionally, we have continued to launch new products and services showing our commitment to meeting the needs of our customers and our ability to execute quickly. Starting tomorrow, we will be offering free Wi-Fi, sponsored by our partner T-Mobile, for our Rapid Awards members. We continue to roll out our updated cabins with larger overhead bins, in-seat power, upgraded lighting, and more. We expanded our distribution channels, launching a partnership with Priceline. We launched our new in-house vacation product, Getaways by Southwest. We announced a new partnership with EVA Air to provide customers more connection opportunities. We announced new markets, including the additions of Knoxville, Tennessee, St. Martin, Santa Rosa, California, and our first-ever flights to Alaska, servicing Anchorage, all to start in 2026. And we aren't done. While we don't have specifics to share today, we're actively looking at continued changes to widen our product offering for our customers, provide additional premium revenue opportunities and further enhance our rapid rewards loyalty program and co-brand economics, including things like premium seating, airport lounges, and long-haul international destinations served by Southwest Airlines. And our customers are responding to these enhancements. Our brand net promoter score has returned to the level seen prior to our policy changes announced in March, and we are excited to deliver further enhancements as we improve the customer experience. Our strategic plan continues to progress well, and we're encouraged by the sustained outperformance of Bag P revenue and the momentum across other key revenue and cost initiatives. We saw a clear positive inflection in the demand environment beginning in early July, which continued throughout the quarter, and we are proud to report record third quarter revenue performance. Looking to fourth quarter, we expect to deliver an all-time quarterly record revenue performance. We maintain strong cost discipline across the organization, significantly beating our CASMX guide for the quarter. We have identified additional cost-saving opportunities in the back half of the year and remain confident in our full-year EBIT guidance range of $600 to $800 million. We are entering the fourth quarter with confidence and anticipate meaningful margin expansion as the benefit from our initiatives continues to mature as we execute our transformational plan. Our people delivered a strong operational performance throughout the quarter. Their dedication, their resilience, and the world-class hospitality continue to set Southwest apart. We've made measurable progress across nearly every key operational metric since January, and we continue to lead the industry as we track our performance against the Wall Street Journal airline scorecard. These results stand out even more given the hurdles that we've faced, including summer weather. ongoing ATC constraints, and the full rollout of reduced turn times across many of our stations, and it's a testament to our operational excellence and the heart of our company. While we're not providing 2026 guidance today, we're excited about the opportunities ahead and confident in our strategy. In 2026, we expect to recognize even greater benefits from our portfolio of Southwest-specific initiatives, including a full year of revenue from backfees. We expect to deliver more than $1 billion of incremental EBIT from assigned and extra legroom seating in 2026 and hit full run rate of approximately $1.5 billion in 2027. We will continue to be disciplined in our cost execution across the organization and expect that momentum to continue into 2026. You know, it's just an exciting time at Southwest Airlines. We're transforming faster than ever before, and the momentum is real. And with that, I'll turn it over to Andrew to share more on our revenue and operational performance. Thanks, Bob.