Southwest Airlines Announces 1998 Profitsharing Contribution

Southwest Airlines Employees will receive more than $120 million in profitsharing based on 1998 financial results, the Company reported today.

The contributions, which are based on Southwest’s $433.4 million net profit for 1998, are the largest profitsharing contributions ever made by the carrier. Each year, the contribution, based on the previous year’s profits, is contributed to the profitsharing plan in September.

Southwest introduced the first profitsharing plan in the U.S. airline industry. Through this plan, Employees can invest in a number of investment options with their profitsharing contributions.

“Announcing the profitsharing contribution is one of our most exciting events,” said Herb Kelleher, Southwest’s chairman, president, and CEO. “The Employees work hard each year to ensure Southwest’s success, and this is a great way to reward them for their efforts. Our healthy financial performance and growth as a Company has meant huge growth in the profits we can share with Employees.”

The 1998 profitsharing contribution of $120,696,957, represents 13.7 percent of eligible salaries. From 1992 through 1997, each Southwest Employee received an average of 9.5 percent of their eligible salary as additional compensation in the form of profitsharing contributions. The plan has grown significantly since its inception, Kelleher said. In 1990, for example (a year in which all other major carriers lost money), nearly $12.6 million—or 4.5 percent of eligible salaries—was contributed to the profitsharing plan.


Southwest has made contributions to the profitsharing plan every year since the first contribution of $175,000 based on 1974 earnings. Including the contribution of more than $120 million for 1998, Southwest has contributed more than $564 million to the plan. Over the last five years, Southwest has contributed to the plan $91.3 million for 1997; $59.9 million for 1996; $54.0 million for 1995; $52.8 million for 1994; and $45.0 million for 1993. The total value of the profitsharing plan was about $1.05 billion at Dec. 31, 1998, prior to the contribution for 1998.

The 4,553 eligible Southwest Employees based in North Texas will receive $27,098,836 in 1998 contributions. Additionally, Southwest will allocate $16,408,534 to the 3,061 eligible California-based Employees and $23,743,160 to the 4,008 Arizona-based eligible Employees.

To illustrate the growth in profitsharing contributions: An Employee in 1990 who earned $25,000 would have received $1,125 in profitsharing contributions. For 1998, an Employee who earned $25,000 will receive $3,425 in profitsharing.

As a leader in the industry, Southwest has reported annual profits for 26 consecutive years as a result of its dedication to a low cost, high Customer satisfaction strategy, Kelleher said. The profitsharing plan is just one of the many reasons why Southwest is a highly sought-after workplace for professionals.

Southwest Airlines, the nation’s premier shorthaul, point-to-point, low-fare carrier, was named the Most Admired Airline in FORTUNE magazine’s 1999 list of Most Admired Companies. Southwest operates nearly 2,400 flights a day with a jet fleet of 284 Boeing 737s.