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EMPLOYEE RETIREMENT PLANS | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
EMPLOYEE RETIREMENT PLANS | EMPLOYEE RETIREMENT PLANS Defined Contribution Plans The Company has defined contribution plans covering substantially all of its Employees. Contributions under all defined contribution plans are primarily based on Employee compensation and performance of the Company. The Company sponsors Employee savings plans under section 401(k) of the Internal Revenue Code of 1986, as amended. The Southwest Airlines Co. 401(k) Plan includes Company matching contributions and the Southwest Airlines Pilots Retirement Saving Plan has non-elective Company contributions. In addition, the Southwest Airlines Co. ProfitSharing Plan (the "ProfitSharing Plan") is a defined contribution plan to which the Company may contribute a percentage of its eligible pre-tax profits, as defined, on an annual basis. No Employee contributions to the ProfitSharing Plan are allowed. Amounts associated with the Company's defined contribution plans expensed in 2023, 2022, and 2021, reflected as a component of Salaries, wages, and benefits, were $941 million, $793 million, and $749 million, respectively. Postretirement Benefit Plans The Company provides postretirement benefits to qualified retirees in the form of medical and dental coverage. Employees must meet minimum levels of service and age requirements as set forth by the Company, or as specified in collective-bargaining agreements with specific workgroups. Employees meeting these requirements, as defined, may use accrued unused sick time to pay for medical and dental premiums from the age of retirement until age 65. The following table shows the change in the accumulated postretirement benefit obligation ("APBO") for the years ended December 31, 2023 and 2022:
(in millions) |  | 2023 |  | 2022
APBO at beginning of period |  | $ | 241 |  |  | $ | 330 |
Service cost |  | 14 |  |  | 19 |
Interest cost |  | 12 |  |  | 9 |
Benefits paid |  | (9) |  |  | (11) |
Actuarial (gain) loss |  | 11 |  |  | (106) |
APBO at end of period |  | $ | 269 |  |  | $ | 241 |
During 2023, the Company recorded an $11 million actuarial loss as an increase to the APBO with an offset to AOCI. This 2023 actuarial loss is reflected above and resulted from changes in certain key assumptions used to determine the Company’s year-end obligation. The assumption change that resulted in the largest portion of the actuarial loss was a decrease in the discount rate used. All plans are unfunded, and benefits are paid as they become due. Estimated future benefit payments expected to be paid are $15 million in 2024, $18 million in 2025, $19 million in 2026, $20 million in 2027, $21 million in 2028, and $127 million for the next five years thereafter. The following table reconciles the funded status of the plans to the accrued postretirement benefit cost recognized in Other noncurrent liabilities on the Company’s Consolidated Balance Sheet as of December 31, 2023 and 2022.
(in millions) |  | 2023 |  | 2022
Funded status |  | $ | (269) |  |  | $ | (241) |
Unrecognized net actuarial gain |  | (151) |  |  | (173) |
Unrecognized prior service cost |  | 2 |  |  | 3 |
Accumulated other comprehensive income |  | 149 |  |  | 170 |
Consolidated Balance Sheet liability |  | $ | (269) |  |  | $ | (241) |
The consolidated periodic postretirement benefit cost for the years ended December 31, 2023, 2022, and 2021, included the following:
(in millions) |  | 2023 |  | 2022 |  | 2021
Service cost |  | $ | 14 |  |  | $ | 19 |  |  | $ | 25 |
Interest cost |  | 12 |  |  | 9 |  |  | 10 |
Amortization of net gain |  | (10) |  |  | (2) |  |  | — |
Net periodic postretirement benefit cost |  | $ | 16 |  |  | $ | 26 |  |  | $ | 35 |
Service cost is recognized within Salaries, wages, and benefits expense, and all other costs are recognized in Other (gains) losses, net in the Consolidated Statement of Income. Unrecognized prior service cost is expensed using a straight-line amortization of the cost over the average future service of Employees expected to receive benefits under the plans. Actuarial gains are amortized utilizing the minimum amortization method. The following actuarial assumptions were used to account for the Company’s postretirement benefit plans at December 31, 2023, 2022, and 2021:
|  | 2023 |  | 2022 |  | 2021
Weighted-average discount rate |  | 5.20 | % |  | 5.60 | % |  | 2.90 | %
Assumed healthcare cost trend rate (a) |  | 6.25 | % |  | 6.50 | % |  | 6.25 | %
(a)The assumed healthcare cost trend rate is expected to be 6.25% for 2024, then decline gradually to 4.75% by 2030 and remain level thereafter. The selection of a discount rate is made annually and is selected by the Company based upon comparison of the expected future cash flows associated with the Company’s future payments under its consolidated postretirement obligations to a yield curve created using high quality bonds that closely match those expected future cash flows. This rate decreased during 2023 due to market conditions. The assumed healthcare trend rate is also reviewed at least annually and is determined based upon both historical experience with the Company’s healthcare benefits paid and expectations of how those trends may or may not change in future years.

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