Southwest Airlines' Dispatchers Ratify 12-year Contract

Southwest Airlines' dispatch Employees, represented by the Southwest Airlines Employees Association (SAEA), today signed an unprecedented 12-year contract with the airline which was ratified by more than 78 percent of the SAEA membership.

The contract, which will be effective through Nov. 30, 2009, provides for the issuance of up to 1,050,000 shares of stock options distributed to dispatch Employees over the term of the agreement. Each of Southwest's 85 current dispatch Employees will receive stock option grants ranging from 6749 shares to 9465 shares, with an exercise price tied to the market value of Southwest Airlines stock as of Sept. 10, 1998; the date on which the contract was ratified. The options for current Employees will become exercisable over a period running to Dec. 1, 2006. Future dispatch Employees will be granted stock options in lesser amounts, at prices tied to the fair market value of Southwest Airlines stock on the date of the grant. The agreement will be retroactive to Dec. 1, 1997, the date on which the previous dispatchers' contract became amendable.

"Many people outside of the airline industry do not realize how important the dispatch function is to the successful operation of an airline," said Herb Kelleher, president, chairman, and CEO of Southwest Airlines.

"We owe much of our success as the industry leader in ontime performance and Customer satisfaction to our dispatch Employees. It is in large part through their resourcefulness, situational awareness, and productivity that we maintain the integrity of our operation.

"We are very proud that our entire dispatch department will this week receive the American Dispatch Federation's Annual National Aviation Safety Award, in recognition of their contributions to Southwest Airlines' 27-year history of safe operations. This is a very prestigious award, and one which the superb members of our dispatch group richly deserve.

"We are very pleased that our dispatch Employees have once again demonstrated their commitment to the future of Southwest Airlines by approving this landmark 12-year contract. The length of the contract, combined with its stock option feature, will enable our dispatch group to participate fully in what we envision to be an outstanding future for Southwest Airlines," Kelleher said.

David Patterson, President of SAEA said, "an agreement of this length would not have been possible without a firm foundation of continued financial success and the strong relationship that exists between the Employees and management here at Southwest Airlines. We are, of course, optimistic that Southwest Airlines, by maintaining a low cost structure, will remain a strong force within the airline industry well into the next century.

"The goal of any airline is to provide a high level of Customer Satisfaction while minimizing costs. Southwest Airlines has successfully achieved both by empowering its frontline Employees and developing innovative labor agreements," Patterson continued. "Southwest Airlines has clearly demonstrated that its number one ranking as the best U.S. Company to work for has been earned through the cooperative spirit of its management and Employees.

"Southwest Airlines' management and the officers of the Southwest Airlines Employees Association have, over many years, forged a spirit of cooperation that consistently results in beneficial reciprocity. It is to Herb's credit that we enjoy the finest Employee-labor relationship in the industry," Patterson said.

Southwest Airlines has been named a charter member of the International Airline Passengers Association's Honor Roll of Airlines among the World's Safest Airlines. Southwest also has been recognized as one of the world's safest airlines by Conde Nast Traveler, a national magazine that specializes in information for business and leisure travelers.