1. M c I n t i r e I n v e s t m e n t I n s t i t u t e 1 M C I NTIRE I NVESTMENT I NSTITUTE A T THE U NIVERSITY OF V IRGINIA Mark Fang and Jonathan Wulkan| 9/5/12 Southwest Airlines (NYSE:LUV) - Long

2. M c I n t i r e I n v e s t m e n t I n s t i t u t e LUV IS A LOW COST AIRLINE Founded in 1967 Headquartered in Dallas, TX 39 Straight years of profitability Extreme focus on low operating costs 4 2

3. M c I n t i r e I n v e s t m e n t I n s t i t u t e 3 Share Price: 9.0752-Week Range: 7.15-10.05 Market Capitalization: 6.72bnAverage Volume (3 Month): 9.3m P/E: 20.83Current Assets: 4.7b EPS: 0.43Total Liabilities: 11.7b EV: 6.66bEBITDAR: 950m S TOCK S UMMARY

4. M c I n t i r e I n v e s t m e n t I n s t i t u t e LUV IS A COMPELLING LONG Good Market Position Positive Brand Image Unique Business Model Strong Financials 4

5. M c I n t i r e I n v e s t m e n t I n s t i t u t e LUV HAS A STRONG MARKET POSITION 5

6. M c I n t i r e I n v e s t m e n t I n s t i t u t e W HAT IS IMPORTANT IN THE AIRLINE INDUSTRY ? Revenue Passenger Miles Total Passengers Carried Available Seats Fleet Size 6

7. M c I n t i r e I n v e s t m e n t I n s t i t u t e 7 R EVENUE P ASSENGER M ILES

8. M c I n t i r e I n v e s t m e n t I n s t i t u t e 8 R EVENUE P ASSENGER M ILES 78.09%

9. M c I n t i r e I n v e s t m e n t I n s t i t u t e 9 R EVENUE P ASSENGER M ILES http://www.airlinefinancials.com/airline_data_comparisons.html

10. M c I n t i r e I n v e s t m e n t I n s t i t u t e 10 T OTAL P AX C ARRIED

11. M c I n t i r e I n v e s t m e n t I n s t i t u t e 11 F LEET S IZE

12. M c I n t i r e I n v e s t m e n t I n s t i t u t e 12 F LEET S IZE

13. M c I n t i r e I n v e s t m e n t I n s t i t u t e 13 A VAILABLE S EATS

14. M c I n t i r e I n v e s t m e n t I n s t i t u t e 14 Dedication to the highest quality of Customer Service delivered with a sense of warms, friendliness, individual pride and Company Spirit. LUV

15. M c I n t i r e I n v e s t m e n t I n s t i t u t e 15 C HEAP AND R ELIABLE

16. M c I n t i r e I n v e s t m e n t I n s t i t u t e 16 LUV

17. M c I n t i r e I n v e s t m e n t I n s t i t u t e VAR Visited Chicago O’Hare (United/American Hub) and Midway (Southwest Hub) Asked customers of all three airlines: How satisfied are you with the airline you are travelling on? How likely are you to switch from that airline to another? 17

18. M c I n t i r e I n v e s t m e n t I n s t i t u t e VAR R ESULTS 18

19. M c I n t i r e I n v e s t m e n t I n s t i t u t e VAR R ESULTS 19

20. M c I n t i r e I n v e s t m e n t I n s t i t u t e U NIQUE B USINESS M ODEL 20 Southwest is a low-cost carrier, so how does it keep its prices lower than the competition while maintaining greater profitability? One Aircraft Fleet Fuel Hedging RNP and P2P Customized Service Secondary Airports Lower Op Cost Route Optimization 70% of fuel needs Lowest average fuel prices Shorter Routes More Destinations Maximizes customer value Shortens aircraft turnover time MDW DAL BWI

21. M c I n t i r e I n v e s t m e n t I n s t i t u t e 21 O NE A IRCRAFT F LEET

22. M c I n t i r e I n v e s t m e n t I n s t i t u t e 22 F UEL H EDGING

23. M c I n t i r e I n v e s t m e n t I n s t i t u t e 23 RNP AND R OUTE M ODELS

24. M c I n t i r e I n v e s t m e n t I n s t i t u t e S TRONG F INANCIAL P OSITION 24

25. M c I n t i r e I n v e s t m e n t I n s t i t u t e 25 V ALUATION UnitedDeltaSouthwestUS AirwaysJetBlueAverage P/E Trailing15.7607.90020.6004.23011.53012.004Ratio P/E Forward3.7703.2308.7603.2307.3105.260Ratio Debt/Equity22.666N/A1.65317.0722.87411.066Ratio EV10.87016.8906.6603.7003.0708.238Billion EV/EBITDAR5.5006.5007.0005.5007.0006.300Ratio Market/Book0.5640.4330.9970.4680.4530.583Ratio OPM5.785%1.377%9.940%10.759%10.180%7.608%Percentage Acid Test Ratio0.8340.5490.9290.9601.0300.860Ratio Liabilities37.05945.85511.7298.7245.29121.732Billion Owner's Equity1.635-1.1357.0970.5111.8411.990Billion Current Assets11.7088.4575.1203.8641.6256.155Billion Inventory0.6110.3930.4320.2580.0000.339Billion Current Liabilities13.31214.6935.0473.7561.5787.677Billion Market Cap6.1307.3106.6401.7301.3904.640Billion Organic Rev Growth4.109.8413.323.6813.648.99Percentage

26. M c I n t i r e I n v e s t m e n t I n s t i t u t e 26 V ALUATION UnitedDeltaSouthwestUS AirwaysJetBlueAverage P/E Trailing15.7607.90020.6004.23011.53012.004Ratio P/E Forward3.7703.2308.7603.2307.3105.260Ratio Debt/Equity22.666N/A1.65317.0722.87411.066Ratio EV10.87016.8906.6603.7003.0708.238Billion EV/EBITDAR5.5006.5007.0005.5007.0006.300Ratio Market/Book0.5640.4330.9970.4680.4530.583Ratio OPM5.785%1.377%9.940%10.759%10.180%7.608%Percentage Acid Test Ratio0.8340.5490.9290.9601.0300.860Ratio Liabilities37.05945.85511.7298.7245.29121.732Billion Owner's Equity1.635-1.1357.0970.5111.8411.990Billion Current Assets11.7088.4575.1203.8641.6256.155Billion Inventory0.6110.3930.4320.2580.0000.339Billion Current Liabilities13.31214.6935.0473.7561.5787.677Billion Market Cap6.1307.3106.6401.7301.3904.640Billion Organic Rev Growth4.109.8413.323.6813.648.99Percentage

27. M c I n t i r e I n v e s t m e n t I n s t i t u t e S OUTHWEST 5 YR O RGANIC R EVENUE G ROWTH 27

28. M c I n t i r e I n v e s t m e n t I n s t i t u t e V ALUATION 28 Relative Valuation: (EV/EBITDAR)/5yr Rev Growth

29. M c I n t i r e I n v e s t m e n t I n s t i t u t e C ATALYST -H OW I T P LAYS O UT 29 Fuel prices continue rising, placing a squeeze on all airlines’ operating profits LUV’s margins take a hit, but LUV maintains profitability Other airlines forced to raise prices Passengers defect to LUV

30. M c I n t i r e I n v e s t m e n t I n s t i t u t e R ECOMMENDATION 30 Initiate Long Position Immediately @ 3.5%

31. M c I n t i r e I n v e s t m e n t I n s t i t u t e Q UESTIONS ? 31